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MANAGING BRANDS FOR COMPETITIVE ADVANTAGE. •  Brand Name, term, sign, symbol, design, or some combination that identifies the products of one firm while differentiating them from the competition’s. • Brands have a powerful influence on consumer behavior. BRAND LOYALTY

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MANAGING BRANDS FORCOMPETITIVE ADVANTAGE

• Brand Name, term, sign, symbol, design, or some combination that identifies the products of one firm while differentiating them from the competition’s.

• Brands have a powerful influence on consumer behavior.

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BRAND LOYALTY

• Measured in three stages:

• Brand recognition Consumer awareness and identification of a brand.

• Brand preference Consumer reliance on previous experiences with a product to choose that product again.

• Brand insistence Consumer refusal of alternatives and extensive search for desired merchandise.

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BRAND LOYALTY

• Measured in three stages:

• Brand recognition Consumer awareness and identification of a brand.

• Brand preference Consumer reliance on previous experiences with a product to choose that product again.

• Brand insistence Consumer refusal of alternatives and extensive search for desired merchandise.

TYPES OF BRANDS

• Brands classified in a number of ways.

• Generic products Products characterized by plain labels, no advertising, and the absence of brand names.

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Manufacturer’s Brands versus Private Brands

• Manufacturer’s brand Brand name owned by a manufacturer or other producer.

• Examples: Sony, Pepsi, Dell.

• Private brands—brands offered by wholesalers and retailers.

• Account for one of every five items sold in the United States.

Captive Brands

• National brands sold exclusively by a retail chain.

• Example: Target’s sale of products by Michael Graves.

Family and Individual Brands

• Family brand Single brand name that identifies several related products.

• Individual brand—uniquely identifies the item itself.

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BRAND EQUITY

• Brand equity Added value that a respected, well-known brand name gives to a product in the marketplace.

• Strong brand equity

• Increases likelihood customers will recognize firm’s product or product line.

• Can contribute to buyers’ perceptions of product quality.

• Can reinforce customer loyalty and repeat purchases.

• Facilitates expansion into international markets.

• Built sequentially on four dimensions: differentiation, relevance, esteem, and knowledge.

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THE ROLE OF CATEGORY AND BRAND MANAGEMENT

• Category management Product management system in which a category manager—with profit and loss responsibility—oversees a product line.

• Help retailer’s category buyer maximize sales for the whole category, not just particular manufacturer’s product.

• Also identify opportunities for growth, set performance targets, and create marketing strategy.

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PRODUCT IDENTIFICATION

• Products identified in the marketplace by brand names, symbols, and distinctive packaging.

• Choices about how to identify products are a major strategic decision.

BRAND NAMES AND BRAND MARKS

• Brand name Part of a brand consisting of words or letters that form a name that identifies and distinguishes a firm’s offerings from those of its competitors.

• Brand mark—symbol or pictorial design that distinguishes a product.

• Effective brand names are easy to pronounce, recognize, and remember.

• Should give buyers correct connotation of product’s image and qualify for legal protection.

• Brand name loses protection when class of products generally comes to be known by that name. Examples include nylon, kerosene, and zipper.

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TRADEMARKS

• Trademark Brand for which the owner claims exclusive legal protection.

Protecting Trademarks

• Gives firm exclusive legal right to use brand name, brand mark, and any slogan name or product name appreciation.

• Example: Former Beatles and their representatives sued Apple Computer, claiming its iPod product violated the trademarks for Apple Corps, the Beatles record label.

• Firms can also seek protection for packaging elements and product features.

Trade Dress

• Visual cues in branding that create an overall look.

• Examples: McDonald’s golden arches, Merrill Lynch’s bull.

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DEVELOPING GLOBAL BRAND NAMES AND TRADEMARKS

• An excellent name or symbol in one country may be a poor choice in another.

• Some sounds are common to most languages, such as o, k, and short a, so names such as Coca-Cola and Texaco tend to work well worldwide.

PACKAGING

• Can powerfully influence buyers’ decisions.

• Many companies conduct research to develop and evaluate packaging.

Protection Against Damage, Spoilage, and Pilferage

• Protection against damaging was original purpose of packaging.

• Packaging can help overcome consumer fears of tampering.

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Assistance in Marketing the Product

• Many firms use biodegradable and recyclable materials to respond to consumer preferences.

• Packaging must help product capture the shopper’s attention.

• Can enhance convenience for buyers.

• Example: Squeezable bottles of honey and ketchup.

Cost-Effective Packaging

• Packaging cost must be reasonable.

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Labeling

• Label carries an item’s brand name or symbol, the name and address of the manufacturer or distributor, information about the product’s composition and size, and recommended uses.

• Labels are both promotional and informational.

• Subject to legal restrictions.

• Universal Product Code (UPC)—numerical bar codes printed on packages.

• Reduce labor costs and improve inventory control.

• Radio-frequency identification (RFID) tags—electronic chips that carry encoded product identification.

• May one day replace some functions of UPC codes.

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BRAND EXTENSIONS

• Brand extension Strategy of attaching a popular brand name to a new product in an unrelated product category.

• Development by Mattel of Barbie-branded high-end clothing and accessories for women from their teens through their 30s.

BRAND LICENSING

• Authorizing other companies to use a firm’s brand name.

• Brand’s owner receives royalties, typically four to eight percent of wholesale revenues.

• Can hurt a brand if the licensed product is poor quality or ethically incompatible with the brand.

• Another risk is overextending the brand.

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NEW-PRODUCT PLANNING

• Firms must add new products in order to continuing prospering as other items reach the later stages of the product life cycle.

PRODUCT DEVELOPMENT STRATEGIES

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• Product positioning—refers to consumers’ perceptions of a product’s attributes, uses, quality, and advantages and disadvantages relative to competing brands.

• Market development—concentrates on finding new markets for existing products.

• Product development—introduction of new products into identifiable or established markets.

• Product diversification—focuses on developing entirely new products for new markets.

• Firms must avoid cannibalization—introducing a new product that adversely affects sales of existing products.

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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.

• Consumers go through five stages:

• Awareness—individuals first learn of the new product, but they lack full information about it.

• Interest—potential buyers begin to seek information about it

• Evaluation—they consider the likely benefits of the product.

• Trial—they make trial purchases to determine its usefulness.

• Adoption/rejection—decide whether to use the product regularly.

• Example: Schick gave away samples of its Quattro razor to move buyers through the evaluation and trial stages.

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ADOPTER CATEGORIES

• Consumer innovators People who purchase new products almost as soon as the products reach the market.

• Diffusion process Process by which new goods or services are accepted in the marketplace.

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IDENTIFYING EARLY ADOPTERS

• Firms who reach early buyers can treat them as a test market.

• Tend to be younger, have higher social status, are better educated, and enjoy higher incomes than other consumers.

Rate of Adoption Determinants

• Relative advantage—increases the product’s adoption rate.

• Compatibility—innovation consistent with the values and experiences of potential adopters.

• Complexity—difficulty understanding the innovation can slow the speed of acceptance.

• Possibility of trial use—can accelerate the rate of adoption.

• Observability—observing an innovation’s superiority increase the adoption rate.

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ORGANIZING FOR NEW PRODUCT DEVELOPMENT

• Firms must be organized so personnel can stimulate and coordinate new-product development.

New-Product Committees

• Most common arrangement for new-product development.

• Primarily review and evaluate others’ new product plans rather than develop their own.

• Tend to move slowly and conservatively in large companies.

New-Product Departments

• Encourage innovation as a full-time activity.

• Department head typically has substantial authority.

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Product Managers

• Another term for a brand manager; supports the marketing strategies of an individual product or product line.

• Set prices, develop advertising and sales promotion programs, and work with sales representatives in the field.

• Most consumer-goods companies have adopted a category management structure, as discussed earlier in the chapter.

Venture Teams

• Gathers a group of specialists from different areas of an organization to work together in developing new products.

• Has a flexible lifespan.

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THE NEW-PRODUCT DEVELOPMENT PROCESS

• Firms must usually generate dozens of ideas to produce one successful product.

• New products have an 80 percent failure rate.

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PRODUCT SAFETY AND LIABILITY

• Manufacturers must design their products to protect users from harm.

• Product liability—responsibility of manufacturers and marketers for injuries and damages caused by their products.

• Example: Poison Prevention Packaging Act, which requires drug manufacturers to put product in child-resistant packaging.

• Consumer Product Safety Commission has jurisdiction over most consumer product categories.

• Food and Drug Administration approves food, medications, and health-related devices.

• Liability lawsuits are increasing domestically and internationally.

• To counter increased litigation and legislation, some companies sponsor voluntary improvements in safety standards.

• Safety planning and testing can be an effective marketing tool.