BK12e Ch12 Basic

Part 4: Product Decisions
11. Product and Service

Strategies
12. Category and Brand

Management, Product
Identification, and New-
Product Development
Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter 12
Category and Brand
Management,
Product
Identification, and
New-Product
Development
Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.
Chapter Objectives
1. Explain the benefits of category and brand
management.
2. Identify the different types of brands.
3. Explain the strategic value of brand equity.
4. Discuss how companies develop strong identities for
their products and brands.
5. Identify and briefly describe each of the four
strategies for new-product development.
6. Describe the consumer adoption process.
7. List the stages in the process for developing new
products.
8. Explain the relationship between product safety and
product liability.
Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-3
Managing Brands for Competitive
Advantage
 Branding is the process of creating that identity.

 Buyers respond to branding by making repeat
purchases because they identify the item with
the name of its producer.
 Brand: name, term, sign, symbol, design, or
some combination that identifies the products of
a firm while differentiating them from the
competition’s
 Brand Loyalty
Brand recognition:
recognition Consumer awareness
and identification of a brand.
Brand preference:
preference Consumer reliance on
previous experiences with a product to
choose that product again.
Brand insistence:
insistence Consumer refusals of
alternatives and extensive search for
desired merchandise.
Types of Brands
 Generic product:
product item characterized by
plain label, with no advertising and no brand
name
 Manufacturers’ brand or National Brand:
Brand
brand name owned by a manufacturer or
other producer
 Private brands:
brands brand name placed on
products marketed by wholesalers and
retailers
 Captive brands:
brands national brands that are
sold exclusively by a retail chain
 Family brand:
brand brand name that identifies
several related products
 Individual brand:
brand unique brand name that
identifies a specific offering within a firm’s
product line and that is not grouped under a
family brand
 Brand equity:
equity added value that a respected,
well-known brand name gives to a product in
the marketplace.
Brand equity increases the likelihood that
consumers will recognize the firm’s product
when they make purchase decisions
A strong brand equity can contribute to
buyers’ perceptions of product quality
Branding can also reinforce customer
loyalty and repeat purchases
 Brand Equity
The Young &
Rubicam Model:
Brand Asset
Valuator
 The Role of Category and Brand Managers
Brand manager:
manager Marketing professional
charged with planning and implementing
marketing strategies and tactics for a brand
Category management:
management Product
management system in which a category
manager—with profit and loss responsibility
—oversees a product line.
Copyright © 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved. 12-
Product Identification
 Brand name:
name part of a brand consisting of
words or letters that form a name that
identifies and distinguishes a firm’s offering
from those of its competitors
 Brand mark:
mark symbol or pictorial design that
identifies a product
 Generic name:
name branded name that has
become a generically descriptive term for a
class of products (e.g., nylon, aspirin,
kerosene, and zipper)
 Trademark:
Trademark legal protection which confers the
exclusive right to user brand name, trade mark,
and any slogan or product name abbreviation
 Trade Dress:
Dress visual cues used in branding to
create an overall look
The distinctive shape of Philips light bulbs and
the McDonald’s arches provide an example of
trade dress
 Developing Global Brand Names and
Trademarks
Potentially an acute problem for
international marketers
An excellent brand name or symbol in one
country may prove disastrous in another
Trademarks that are effective in their home
countries may fare less well in other
cultures
Packaging
 A package serves three major objectives:

Protection against damage, spoilage, and
pilferage
Assistance in marketing the product
Cost effectiveness
 Labeling
Label
Universal Product Code (UPC)
 Brand extension:
extension application of a
popular brand name to a new product in
an unrelated product category
 Line extensions refers to new sizes,

styles, or related products
 Brand licensing:
licensing practice allowing other
companies to use a brand name in
exchange for a payment
New Product Planning
 As a firm’s offerings enter the maturity and
decline stages of the product life cycle, it must
add new items to continue to prosper
 Alternative Product Development Strategies
 Product Development Strategies
Product positioning: consumers’
perceptions of a product’s attributes, uses,
quality, and advantages and
disadvantages in relation to those of
competing brands
Cannibalization: a loss of sales of the

current product due to competition from a
new product in the same line
The Consumer Adoption Process
 Adoption process: Stages that consumers

go through in learning about a new product,
trying it, and deciding whether to purchase it
again.
Awareness
Interest
Evaluation
Trial
Adoption or rejection
 Consumer innovator:
innovator People who purchase
new products almost as soon as the products
reach the market
 Diffusion process:
process Process by which new
goods or services are accepted in the
marketplace
 Figure 12.8
Categories of Adopters Based on Relative
Times of Adoption
 Identifying Early Adopters
Substantial benefits may be obtained by
locating the likely first buyers of new
products (innovators and early adopters)
Suggestions for modifying the product may
be obtained from these individuals
Acceptance or rejection of the innovation
by innovators and early adopters can help
forecast sales
 Rate of Adoption Determinants
Characteristics of a product innovation that
influence its adoption rate include:
 Relative advantage
 Compatibility
 Complexity
 Possibility of trial use
 Observability
 Organizing for New Product Development
New-Product Committees
New-Product Departments
Product Managers
Venture Teams
 Task forces
New Product Development Process
 New product development process: six stages
through which new product ideas progress
before being introduced to the overall market
 Idea Generation
New product ideas come from many sources
including:
Sales force, Customers, Employees, R&D
specialists, The competition, Suppliers,
Retailers, Independent inventors
 Screening
Screening separates ideas with commercial
potential from those that cannot meet
company objectives
Checklists of development standards can
be helpful at this stage
 Business Analysis
The business analysis consists of assessing the
new product’s market potential, growth rate,
likely competitive strengths, and compatibility of
the proposed product with organizational
resources
Concept testing
 Development
Converting an idea into a physical product
Requires interaction among many of the firm’s
departments
Prototypes may go through many changes
 Test Marketing
Test marketing: Introduction of a trial version of a
new product supported by a complete marketing
campaign to a selected city of television coverage
area
Some firms skip this stage, moving directly to
full-scale commercialization
 Commercialization
In this stage, the firm establishes marketing
strategies, and funds outlays for production and
marketing
The sales force, marketing intermediaries and
potential customers are acquainted with the
new product
Product Safety and Liability
 Product Liability:
Liability responsibility of
manufacturers and marketers for injuries
and damages caused by their products

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Part 4: Product Decisions

11. Product and Service

12. Category and Brand

 Branding is the process of creating that identity.

 A package serves three major objectives:

 Line extensions refers to new sizes,

Cannibalization: a loss of sales of the

 Adoption process: Stages that consumers

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