Managing Products

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Managing Products

• John T. Drea
• Associate Professor of Marketing
• Western Illinois University

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Brand Terms

• Brand A name, term, sign, symbol or design
  intended to identify and differentiate
  goods/services from other producers.
• Brand Equity the added value a brand gives to a
  product beyond the functional benefits provided.
• Top brands for brand equity Coca-Cola, Marlboro,
  Nestle

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5 Levels of Consumer Attitude Towards a Brand

• 1. Customer changes brands, especially for price
  reasons (commoditization)
• 2. Customer is satisfied - no reason to change.
• 3. Customer is satisfied, and would incur costs
  if a change was made
• 4. Customer values the brand and thinks of it as
  a friend.
• 5. Customer is devoted to the brand

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Managing Brand Equity

• A brand name needs to be carefully managed so it
  doesnt depreciate in value.
• maintain and improve brand awareness
• improve perceived brand quality
• create positive brand associations

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Managing Brand Equity

• To manage brand equity, you need
• continuous R D investment,
• skillful advertising,
• good customer service,
• a product which addresses important needs.
• It is important not to undertake short-term
  tactical actions which undermine the value of the
  brand in the long run

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Extending the Product Life Cycle

• Product modification (industry-wide)
• Increasing the frequency of use
• Adding new uses for a product category
• Adding new users to a product category

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Overview of the Branding Process Five Decisions
To brand or not to brand?
The brand-sponsor decision
The brand name decision
The brand strategy decision
The brand repositioning decision
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To brand or not to brand?
Question Why would a company want to have a
brand name?
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The brand-sponsor decision

• Manufacturers Brand
• National Brand (IBM, Maytag, Hart Schaffner
  Marx)
• Private Brand (store brand)
• Advantages Profitability, exclusive brands help
  differentiate
• Disadvantages requires work to set up, requires
  promotional resources

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The brand-sponsor decision

• The effect of private brands has been a power
  shift from manufacturers to retailers.
• Shift from brand ladder concept to brand parity
  concept.
• National brands need to work harder to
  differentiate themselves and justify price
  premiums

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The brand-sponsor decision

• Licensed Brands allowing an existing brand to be
  used on anothers product for a royalty
• Examples Disney licensed The Lion King for
  over 1 billion of merchandise in 1994 alone.
  Gucci, Christian Dior, Pierre Cardin also
  frequently allow their names to be licensed.

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The brand-sponsor decision

• Coca-Cola
• Caterpillar
• Winnebago
• Coppertone
• Fabrege
• Virgin Group (airline, music)

• Clothing
• Work clothes boots
• Camping supplies
• Swimwear
• Jewelry
• Multimedia personal computers

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The brand name decision

• Individual Brand Names
• Examples Bisquick, Gold Medal, Betty Crocker,
  Nature Valley (all by General Mills)
• No tie to manufacturer if it fails
• Potentially creates more excitement
• Allows a high quality manufacturer to sell a
  lower quality product without damaging reputation
  (Seiko and Pulsar watches)

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The brand name decision

• Blanket name for all products
• Example Heinz, General Electric
• Development costs are lower
• Less advertising required to create name
  recognition
• Stimulus generalization can help if existing
  brand name is good

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The brand name decision

• Separate family names for all products
• Examples Kenmore, Craftsman, Homart (Sears)
• Advisable when products are very different
• Combination Name (company name followed by
  individual brand name)
• Example Kelloggs Rice Krispies.
• Helps to legitimize new products

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Desirable characteristics Ideally, a brand name
should...

• Suggest something of the products benefits
  (Craftsman, BeautyRest)
• Suggest product qualities (Sunkist, Spic Span)
• Be easy to pronounce, recognize, remember (Tide,
  Crest, Puffs) (Hyundai?)
• Be distinctive (Exxon, Mustang, Kodak)
• Not carry poor meanings in other cultures

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The brand strategy decision

• Line Extensions Existing brand name extended to
  new sizes and flavors (ex Frosted Cheerios)
• Advantages Higher rate of survival, works well
  for symbolic brands
• Disadvantages Brand names can lose meaning

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The brand strategy decision

• Brand Extension an existing brand names used to
  launch a product in a different category (Ex
  Honda lawnmowers, Honda snowmobiles)
• Advantages Instant recognition, earlier
  acceptance, saves some advertising expenditures
• Disadvantages Can damage respect for brand if
  new product is poor, can dilute brand

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The brand strategy decision

• Multibrands introducing several brands into the
  same product category.
• Advantage allows you to lock up more shelf
  space, can protect flanks from competitors,
  useful if you acquire brands that have loyal
  followings
• Disadvantage all brands may end up being low
  share, dissipates resources, cannibalization may
  occur if not well planned

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The brand strategy decision

• New Brands Development of a new brand name
• Does the new product need help from an existing
  brand?
• Are existing names appropriate for the new
  product?
• Would a new product failure damage the existing
  brand name?
• Developing new brands can be very expensive!

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The brand strategy decision

• Co-branding two or more well-known brands
  combined in a single offer
• Examples Volvo with Michelin tires, Intel with
  several PC manufacturers, Citibank Advantage
  Credit Card (w/ American Airlines)
• Useful to the component manufacturer to achieve
  differentiation, but a difficult sell unless
  the component is already differentiated

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The brand repositioning decision

• Changing the perceptual position of a brand in
  the eyes of consumers
• Done to respond to competitor positions, or to
  changing consumer tastes
• Examples 7-Up, Mountain Dew