Chapter 12

1. Chapter 12 Category and Brand Management, Product Identification, and New-Product Development

2. Chapter Objectives • Explain the benefits of category and brand management. • Identify the different types of brands. • Explain the strategic value of brand equity. • Discuss how companies develop strong identities for their products and brands. • Identify and briefly describe each of the four strategies for new-product development. • Describe the consumer adoption process. • List the stages in the process for developing new products. • Explain the relationship between product safety and product liability.

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

4. Brand Loyalty • 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 refusals of alternatives and extensive search for desired merchandise.

5. Types of Brands • Generic product: item characterized by plain label, with no advertising and no brand name • Manufacturers’ brand or National Brand: brand name owned by a manufacturer or other producer • Private brands: brand name placed on products marketed by wholesalers and retailers • Captive brands: national brands that are sold exclusively by a retail chain

6. Family brand: brand name that identifies several related products • Individual brand: unique brand name that identifies a specific offering within a firm’s product line and that is not grouped under a family brand

7. Brand equity: added value that a respected, well-known brand name gives to a product in the marketplace. • Young & Rubicam Model: • Brand Asset Valuator (see text)

8. Brand manager: Marketing professional charged with planning and implementing marketing strategies and tactics for a brand • Category management: Product management system in which a category manager—with profit and loss responsibility—oversees a product line.

9. Product Identification • Brand 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: symbol or pictorial design that identifies a product • Generic name: branded name that has become a generically descriptive term for a class of products (e.g., nylon, aspirin, kerosene, and zipper)

10. Trademark: legal protection which confers the exclusive right to user brand name, trade mark, and any slogan or product name abbreviation

11. Trade Dress: visual cues used in branding to create an overall look • The McDonald’s arches provide an example of trade dress • Developing Global Brand Names and Trademarks • An excellent brand name or symbol in one country may prove disastrous in another

12. Packaging: A package serves three major objectives: • Protection against damage, spoilage, and pilferage • Assistance in marketing the product • Cost effectiveness • Labeling • Label • UniversalProductCode (UPC)

13. Brand 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

14. Brand licensing: practice allowing other companies to use a brand name in exchange for a payment • Nabisco Licenses Its Oreo Brand to Post Cereal

15. New Product Planning • 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

16. 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

17. Consumer innovator: People who purchase new products almost as soon as the products reach the market • Identifying Early Adopters • Substantial benefits may be obtained by locating the likely first buyers of new products (innovators and early adopters) • Diffusion process: Process by which new goods or services are accepted in the marketplace

18. Rate of Adoption Determinants • Characteristics of a product innovation that influence its adoption rate include: • Relative advantage • Compatibility • Complexity • Possibility of trial use • Observability

19. Organizing for New Product Development • New-Product Committees • New-Product Departments • Product Managers • Venture Teams • Task forces

20. New Product Development Process • Idea GenerationSales force, Customers, Employees, R&D specialists, The competition, Suppliers, Retailers, Independent inventors • ScreeningSeparates ideas with commercial potential from those that cannot meet company objectives • Business AnalysisConsists of assessing the new product’s market potential, growth rate, likely competitive strengths, and compatibility of the proposed product with organizational resources

21. DevelopmentConverting an idea into a physical product • Test MarketingIntroduction of a trial version of a new product supported by a complete marketing campaign to a selected city of television coverage area • CommercializationThe firm establishes marketing strategies, and funds outlays for production and marketing

22. Product Safety and Liability • Product Liability: responsibility of manufacturers and marketers for injuries and damages caused by their products