978-0134292663 Chapter 9 Lecture Notes

Unlock access to all the studying documents.

View Full Document

Part 3: Develop the Value Proposition for the Customer

Chapter 9

Product II: Product Strategy, Branding, and Product Management

I. CHAPTER OVERVIEW

Today successful product management is more important than ever. As more and more competitors enter the

global marketplace and as technology moves forward at an ever-increasing pace, products are created, grow,

reach maturity, and decline at faster and faster speeds.

In this chapter, students learn about the life of the product. They learn that a product includes benefits,

features, styling, branding, labeling, and packaging. Strategic decisions must be made about each of these

elements. These decisions must complement each other creating an overall product strategy.

II. CHAPTER OBJECTIVES

Discuss the different product objectives and strategies a firm may choose.

1. Discuss the different product objectives and strategies a firm may choose.

2. Understand how firms manage products throughout the product life cycle.

3. Explain how branding and packaging strategies contribute to product identity.

4. Describe how marketers structure organizations for new and existing product management.

III. CHAPTER OUTLINE

►MARKETING MOMENT INTRODUCTION

Play “Name that Trademark.” Have students draw trademarks on the board and see if their peers can

recognize them. Note that how even with poor artistic ability, everyone recognizes the “golden arches.”

p. 263 REAL PEOPLE, REAL CHOICES—HERE’S MY PROBLEM AT

QUACKER OATS

For the last several years, Quaker had been operating under a “master

brand strategy,” which applied a singular brand position, message, and

look and feel across all Quaker products and sub-brands. It also targeted

the same, universal audience. The campaign, called “Quaker Up,”

carried the message that Quaker could deliver good energy through

whole grain oats.

Quaker, however, was not seeing the halo across the full portfolio. It

was clear that some products were benefiting from the singular message

more than others. Would using the Quaker Up/energy message across all

products and sub-brands drive return on investment (ROI) as effectively

and efficiently as having a separate message for each product?

Becky had two options:

1. Continue on the current path with the same brand positioning and

target through the master brand approach.

2. Explore a new positioning and target through a consumer deep dive

Part 3: Develop the Value Proposition for the Customer

that could halo across all products yet be customized with different

reasons to believe (meaning proof that the brand delivers the benefits

that it promises) for each.

The vignette ends by asking the student which option he/she would

choose.

REAL PEOPLE, REAL CHOICES

Becky chose option #2.

p. 264

P. 264

p. 265

1. PRODUCT PLANNING: DEVELOP PRODUCT

OBJECTIVES AND PRODUCT STRATEGY

Strategies the product plan outlines spell out how the firm expects to

develop a value proposition that will meet marketing objectives. The

continual process of product management guides product planning,

which is the systematic and usually team-based approach to

coordinating all aspects of a product’s marketing initiative including all

elements of the marketing mix. In some companies, product

management is sometimes also called brand management, and the terms

refer to essentially the same thing. The organization members that

coordinate these processes are called product managers or brand

managers.

1.1 Getting Product Objectives Right

Clearly stated product objectives provide focus and direction. They

should support the broader marketing objectives of the business unit in

addition to being consistent with the firm’s overall mission. To be

effective, product-related objectives must be measurable, clear and

unambiguous—and feasible. In addition, they must indicate a specific

period.

Competitive intelligence and an up-to-date knowledge of competitive

product innovations are important to develop product objectives.

Above all, these objectives should consider the long-term implications

of product decisions. Planners who sacrifice the long-term health of the

firm to reach short-term sales or financial goals choose a risky course.

Product planners may focus on one or more individual products at a

time, or they may look at a group of product offerings as a whole.

Figure 9.1

Process: Steps to

Manage Products

p. 265 1.2 Objectives and Strategies for Individual Products

Some product strategies focus on a single new product. Strategies for

individual products may be quite different for new products, for

regional products, and for mature products. For new products, the

objectives relate to successful introduction. For mature products,

product objectives may focus on breathing new life into a product while

holding on to the traditional brand personality. For products that have

achieved success at the local or regional market, it may be decided to

introduce them nationally.

p. 266 1.3 Objectives and Strategies for Multiple Products Figure 9.2

Chapter 9: Product II: Product Strategy, Branding, and Product Management

P.266

p. 267

P. 268

A larger firm often sells a set of related products. This means that

strategic decisions affect two or more products simultaneously. The firm

must think in terms of its entire portfolio of products. Product planning

means developing product line and product mix strategies encompassing

multiple offerings.

A product line is a firm’s total product offering to satisfy a group of

target customers. The number of separate items within the same

category determines the product line length. We describe a large

number of variations in a product line as a full line that targets many

customer segments to boost sales potential. A limited-line strategy, with

fewer product variations, can improve the firm’s image if consumers

perceive it as a specialist with a clear, specific position in the market.

Organizations may decide to extend their product line by adding more

brands or models when they develop product strategies.

When a firm stretches its product line, it must decide on the best

direction to go. If a firm’s current product line includes middle and

lower-end items, an upward line stretch adds new items—higher priced

entrants that claim better quality or that offer more bells and whistles.

Conversely, a downward line stretch augments a line when it adds items

at the lower end. Here the firm must take care not to blur the images of

its higher-priced, upper-end offerings. In some cases, a firm may decide

that its target is too small a market. In this case, the product strategy

may call for a two-way stretch that adds products at both the upper and

lower ends. A filling-out strategy adds sizes or styles not previously

available in a product category. In other cases, the best strategy may be

to contract a product line, particularly when some of the items are not

profitable.

Whenever a manufacturer extends a product line or a product family,

there is risk of cannibalization. This occurs when the new item

eats up sales of an existing brand as the firm’s current customers simply

switch to the new product.

Process: Objectives

for Single and

Multiple Products

Use website here: www.pg.com

P&G example of long and wide product lines

Use website here: www.marriott.com

Click on different brands and note the different target market and positioning of the product lines.

p. 268 1.4 Product Mix Strategies

A firm’s product mix describes its entire range of products.

When they develop a product mix strategy, planners usually consider

the product mix width: the number of different product lines the firm

produces. If it develops several different product lines, a firm reduces

the risk of putting all its eggs in one basket. Normally, firms develop a

mix of product lines that have some things in common.

P.268

1.5 Quality as a Product Objective: TQM and Beyond

Product objectives often focus on product quality: the overall ability of

the product to satisfy customers’ expectations. Quality is tied to how

customers think a product will perform, and not necessarily to some

Exhibit: Ballast

Point

Part 3: Develop the Value Proposition for the Customer

P. 269

technological level of perfection. Product quality objectives coincide

with marketing objectives for higher sales and market share and to the

firm’s objectives for increased profits.

►ETHICS CHECK

Find out what other students taking this course would do and why at

www.mymktlab.com

Realizing that that no product can be 100 percent green, is it ethical for

a marketer to promote a product to customers as “green” anyway?

The total quality management (TQM) revolution in American

industry is a business philosophy that calls for company-wide

dedication to the development, maintenance, and continuous

improvement of all aspects of the company’s operations.

TQM firms promote the attitude among employees that everybody

working there serves its customers—even employees who never interact

with people outside the firm. In such cases, employees’ customers are

internal customers—other employees with whom they interact. In this

way, TQM maximizes customer satisfaction by involving all employees,

regardless of their function, in efforts to continually improve quality.

The internal customer mind-set comprises the following four beliefs:

(1) employees who receive my work are my customers, (2) meeting the

needs of employees who receive my work is critical to doing a good

job, (3) it is important to receive feedback from employees who receive

my work, and (4) I focus on the requirements of the person who

receives my work.

Ripped from the

Headlines:

Ethical/Sustainable

Decisions in the Real

World

p. 269

p. 270

Around the world, many companies look to the uniform standards of the

International Organization for Standardization (ISO) for quality

guidelines. The ISO 9000 is a broad set of guidelines that establishes

voluntary standards for quality management. These guidelines insure

that an organization’s products conform to the customer’s requirements.

In 1996, the ISO developed ISO 14000 standards, which concentrate

on “environmental management.” This means the organization works to

minimize any harmful effects it may have on the environment.

One way that companies can improve quality is to use the Six Sigma

method. The term Six Sigma comes from the statistical term sigma,

which is a standard deviation from the mean. Six Sigma refers to six

standard deviations from a normal distribution curve. In practical terms,

that translates to no more than 3.4 defects per million—getting it right

99.9997 percent of the time. As you can imagine, achieving that level of

quality requires a very rigorous approach (try it on your term papers—

even when you use spell-check!), and that is what Six Sigma offers. The

method involves a five-step process called “DMAIC” (define, measure,

Exhibit: Timerland

Figure 9.3

Snapshot: Product

Quality

Chapter 9: Product II: Product Strategy, Branding, and Product Management

analyze, improve, and control).

In some cases, product quality means durability. Reliability also is an

important aspect of product quality. For many customers, a product’s

versatility and its ability to satisfy their needs are central to product

quality. For other products, quality means a high degree of precision.

Quality, especially in business-to-business products, also relates to ease

of use, maintenance, and repair. Yet, another crucial dimension of

quality is product safety. Finally, the quality of products such as a

painting, a movie, or even a wedding gown relates to the degree of

aesthetic pleasure they provide. Of course, evaluations of aesthetic

quality differ dramatically among people: To one person, quality a

mobile device may mean simplicity, ease of use, and a focus on

reliability in voice signal (think a basic Samsung or LG flip phone),

while to another it’s the cornucopia of applications and multiple

communication modes available (think Apple iPhone).

p. 271 2. MARKETING THROUGHOUT THE PRODUCT LIFE

CYCLE

The product life cycle (PLC) is a useful way to explain how the

market’s response to a product and marketing activities change over the

life of a product. Product marketing strategies must evolve and change

as they continue through the product life cycle.

p. 271 2.1 Introduction Stage

In the introduction stage, customers get the first chance to purchase the

good or service. During this early stage, a single company usually

produces the product.

During the introduction stage, the goal is to get first-time buyers to try

the product. Sales (hopefully) increase at a steady but slow pace. The

company usually does not make a profit during this stage.

Research-and-development (R&D) costs and heavy spending for

advertising and promotional efforts cut into revenue.

During the introduction stage, pricing may be high to recover the R&D

costs or low to attract large numbers of consumers. An introduction

stage can be quite long. Many products never make it past the

introduction stage.

Marketing during this stage often focuses on informing consumers

about the product, how to use it, and its promised benefits. However, it

is not as easy as it sounds: Would you believe that the most recent data

indicate that as many as 95 percent of new products introduced each

year fail?

Figure 9.4

Snapshot: The

Product Life Cycle

Figure 9.5

Snapshot: Marketing

Mix Strategies

through the Product

Life Cycle

p. 273 2.2 Growth Stage

In the growth stage, sales increase rapidly while profits increase and

peak. Marketing’s goal is to encourage brand loyalty by convincing the

market that this brand is superior to others. In this stage, marketing

strategies may include the introduction of product variations to attract

market segments and increase market share.

When competitors appear, marketers must use heavy advertising and

Exhibit: Snuggie

Blanket

Part 3: Develop the Value Proposition for the Customer

other types of promotion. Price competition may develop, driving

profits down. If pricing was set high initially, it may be reduced to meet

the increasing competition.

p. 273 2.3 Maturity Stage

The maturity stage of the product life cycle is usually the longest.

Sales peak and then begin to level off and even decline while profit

margins narrow. Competition grows intense when remaining

competitors fight for their share of a shrinking pie. Price reductions and

reminder advertising may be used to maintain market share. Sales are

often to replace a “worn-out” item or to take advantage of product

improvements. During the maturity stage, firms will try to sell their

product through as many outlets as possible because availability is

crucial in a competitive market.

To remain competitive and maintain market share during the maturity

stage, firms may tinker with the marketing mix in order to extend this

profitable phase for their product.

►Marketing Moment In-Class Activity

Pick a variety of products in the mature stage (ketchup, salad dressing, laundry detergent, etc.) and have

students brainstorm product “improvements” to maintain consumer interest in the product (such as colored

Ketchup, scented laundry detergent, etc.)

p. 274 2.4 Decline Stage

The decline stage of the product life cycle is characterized by a

decrease in product category sales. Although a single firm may still be

profitable, the market as a whole begins to shrink, profits decline, there

are fewer variations of the product, and suppliers pull out. In this stage,

there are usually many competitors, with none having a distinct

advantage.

A firm’s major product decision in the decline stage is whether to keep

the product. If the firm decides to keep the product, advertising and

other marketing communications may be decreased to cut costs, and

prices may be reduced if the product can remain profitable.

If the firm decides to drop the product, it can eliminate it in two ways:

(1) phase it out by cutting production in stages and letting existing

stocks run out, or (2) simply dump the product immediately.

E-commerce is now a significant factor for marketing. Some products

that would have died a natural death in brick-and-mortar stores continue

to sell online to a cadre of fans, backed by zero marketing support

(translation: high profits for the manufacturer).

The Cutting Edge

Social Media Brings

Products Back to

Life

p. 274 3. BRANDING AND PACKAGING: CREATE PRODUCT

IDENTITY

Successful marketers keep close tabs on their products’ life cycle status,

and they plan accordingly. Equally important, though, is to give that

product an identity and a personality.

Chapter 9: Product II: Product Strategy, Branding, and Product Management

p. 274 3.1 What’s in a Name (or a Symbol)?

A brand is a name, a term, a symbol, or any other unique element of a

product that identifies one firm’s product(s) and sets it apart from the

competition.

How does a firm select a good brand name? Good brand designers say

there are four “easy” tests: easy to say, easy to spell, easy to read, and

easy to remember. The name should also “fit” four ways: Fit the target

market, Fit the product’s benefits, Fit the customer’s culture, and Fit

legal requirements.

When it comes to graphics for a brand symbol, name, or logo, the rule is

that it must be recognizable and memorable. In addition, it should have

visual impact.

Discussion: Identify five of your favorite brand names. List reasons for selecting these brand names.

P. 275 A trademark is the legal term for a brand name, brand mark, or trade

character. The symbol for legal registration in the United States is a

capital “R” in a circle: ®. Marketers register trademarks to make their

use by competitors illegal.

A firm can claim protection for a brand even if it has not legally

registered it. In the United States, common-law protection exists if the

firm has used the name and established it over a period of time.

Use the following website for examples of well-known trademarks:

www.frompatenttoprofit.com

p. 275

p. 276

3.2 Why Brands Matter

A brand is a lot more than just the product it represents—the best brands

build an emotional connection with their customers. Marketers spend

huge amounts of money on new-product development, advertising, and

promotion to develop strong brands. When they succeed, this investment

creates brand equity. This term describes a brand’s value over and

above the value of the generic version of the product.

Marketers identify different levels of loyalty, or lack thereof, by

observing how customers feel about the product. At the lowest level,

customers really have no loyalty to a brand and they will change brands

for any reason—often they will jump ship if they find something else at

a lower price. At the other extreme, some brands command fierce

devotion, and loyal users will go without rather than buy a competing

brand.

The truly successful brands, however, are those that truly “bond” with

their customers so that people feel they have a real relationship with the

product. Here are some of the types of relationships a person might have

with a product:

Self-concept attachment

Nostalgic attachment

Interdependence

Love

Part 3: Develop the Value Proposition for the Customer

p. 276

p. 265

Ultimately, the way to build strong brands is to forge strong bonds with

customers—bonds based on brand meaning. This concept encompasses

the beliefs and associations that a consumer has about the brand. In

many ways, the practice of brand management revolves around the

management of meanings. Brand managers, advertising agencies,

package designers, name consultants, logo developers, and public

relations firms are just some of the collaborators in a global industry

devoted to the task of meaning management.

Brand equity means that a brand enjoys customer loyalty because people

believe it is superior to the competition. For a firm, brand equity

provides a competitive advantage because it gives the brand the power

to capture and hold on to a larger share of the market and to sell at prices

with higher profit margins.

Nowadays, for many consumers brand meaning builds virally as people

spread its story online. The method of brand storytelling captures the

notion that powerful ideas do self-propagate when the audience is

connected by digital technology. It conveys “the constant reinvention

inherent in interactivity in that whether it’s blogging, content creation

through YouTube or other means, or social media, there will always be

new and evolving perceptions and dialogues about a brand real-time.

The following is a list of ten characteristics of the world’s top brands:

1. The brand excels at delivering the benefits customers

truly desire.

2. The brand stays relevant.

3. The pricing strategy is based on consumers’ perceptions

of value.

4. The brand is properly positioned.

5. The brand is consistent.

6. The brand portfolio and hierarchy make sense.

7. The brand makes use of and coordinates a full repertoire

of marketing activities to build equity.

8. The brand’s managers understand what the brand means

to consumers.

9. The brand is given proper support, and that support is

sustained over the long run.

10. The company monitors sources of brand equity.

Because of the existing brand equity, a firm is able to sell its brand

extension at a higher price than if it had given it a new brand, and the

brand extension will attract new customers immediately. Of course, if

the brand extension does not live up to the quality or attractiveness of its

namesake brand equity will suffer, as will brand loyalty and sales. One

other related approach is sub-branding, or creating a secondary brand

within a main brand that can help differentiate a product line to a desired

target group.

Table 9.1

Dimensions of

Brand Meaning

Chapter 9: Product II: Product Strategy, Branding, and Product Management

Sometimes a brand’s meaning simply becomes so entrenched with a

particular consumer group that it can be tough to find ways to branch

out and achieve new users through extensions.

Activity:

Ask students to develop a list of possible new brand extensions for the following products:

Pepsi

Band-Aid

Kool-Aid

►Marketing Moment In-Class Activity

Ask students to identify the top brands in their mind (it may be Abercrombie, Guess, or a B2B like FedEx or

UPS). How does the brand illustrate these top 10 characteristics? For example, FedEx is expensive but

worthwhile (value) for fast, reliable delivery; FedEx is consistent (same colors), FedEx is positioned

properly (upscale, expensive delivery service), etc.

p. 277

3.3 Branding Strategies

Because brands contribute to a marketing program’s success, a major

part of product planning is to develop and execute branding strategies.

Marketers have to determine which branding strategy approach(es) to

use. Figure 9.6 illustrates the options: individual or family brands,

national or store brands, generic brands, licensing, and co-branding.

3.3.1 Individual Brands versus Family Brands

Part of developing a branding strategy is to decide whether to use a

separate, unique brand for each product item—an <emphasis>individual

brand strategy</emphasis>—or to market multiple items under the

same brand name—a <keyterm id=”ch09term24″

linkend=”gloss09_024″ preference=”0″ role=”strong”>family

brand</keyterm> or <emphasis>umbrella brand</emphasis> strategy.

Individual brands may do a better job of communicating clearly and

concisely what the consumer can expect from the product, while a

well-known company like Apple may find that its high brand equity in

other categories (like computers) can sometimes “rub off” on a new

brand (like the iPod and iPhone). The decision often depends on

characteristics of the product and whether the company’s overall product

strategy calls for introduction of a single, unique product or for the

development of a group of similar products.

Figure 9.6

Snapshot: Branding

Strategies

Exhibit:

Campbell’s Chunk

Soup ad

p. 279 3.3.2 National and Store Brands

Retailers today often are in the driver’s seat when it comes to deciding

what brands to stock and push. In addition to choosing from producers’

brands, called <keyterm id=”ch09term25″ linkend=”gloss09_025″

preference=”0″ role=”strong”>national or manufacturer

brands</keyterm>, retailers decide whether to offer their own

versions. <keyterm id=”ch09term26″ linkend=”gloss09_026″

preference=”0″ role=”strong”>Private-label

brands</keyterm>, also called <emphasis>store

brands</emphasis>, are the retail stores or chain’s exclusive trade name.

Walmart, for example, sells store brand Sam’s Cola and Sam’s cookies

along with national brands such as Coke and Oreos. During the recent

recession store brands gained substantially in popularity for many

Part 3: Develop the Value Proposition for the Customer

value-conscious shoppers, and the projection is that many consumers

will not switch back to the parallel national brands as the economy

rebounds because they are satisfied with the private labels.

p. 279 3.3.3 Generic Brands

An alternative to either national or store branding is <keyterm

id=”ch09term27″ linkend=”gloss09_027″ preference=”0″

role=”strong”>generic branding</keyterm>, which is no

branding at all. Generic branded products are typically packaged in

white with black lettering that names only the product itself (for

example, “Green Beans”). Generic branding is one strategy to meet

customers’ demand for the lowest prices on standard products such as

dog food or paper towels. Generic brands first became popular during

the inflationary period of the 1980s when consumers became especially

price conscious because of rising prices. Lately, they have experienced

resurgence with the soft economy.

p. 279 3.3.4 Licensing

S<para>ome firms choose to use a <keyterm id=”ch09term28″

linkend=”gloss09_028″ preference=”0″

role=”strong”>licensing</keyterm> strategy to brand their

products. This means that one firm sells another firm the right to use a

legally protected brand name for a specific purpose and for a specific

period. Why should an organization sell its name? Licensing can provide

instant recognition and consumer interest in a new product, and this

strategy can quickly position a product for a certain target market as it

trades on the high recognition of the licensed brand among consumers in

that segment. A familiar form of licensing occurs when movie producers

license their properties to manufacturers of a seemingly infinite number

of products.

p. 280 3.3.5 Cobranding

Co-branding benefits both partners when combining the two brands

provides more recognition power than either enjoys alone. A new and

fast-growing variation on co-branding is ingredient branding in which

branded materials become “component parts” of other branded products.

Exhibit:

Jelly Belly ad

p. 280

Use website here: www.happymeal.com Example of co-branding with

McDonald’s.

3.4 Packages and Labels: Branding’s Little Helpers

A <keyterm id=”ch09term31″ linkend=”gloss09_031″ preference=”0″

role=”strong”>package</keyterm> is the covering or container

for a product, but it is also a way to create a competitive advantage.

Therefore, the important functional value of a package is that it protects

the product. In addition to protecting the product, effective packaging

makes it easy for consumers to handle and store the product.

Over and above these utilitarian functions, however, the package

communicates brand personality. Effective product packaging uses

colors, words, shapes, designs, and pictures to provide brand and name

identification for the product. In addition, packaging provides product

Figure 9.7

Snapshot: Functions

of Packaging

Chapter 9: Product II: Product Strategy, Branding, and Product Management

p. 281

facts including flavor, fragrance, directions for use, suggestions for

alternative uses (for example, recipes), safety warnings, and ingredients.

Packaging may also include warranty information and a toll-free

telephone number for customer service.

► METRICS MOMENT

Companies, marketing research firms, and creative agencies create

metrics of brand equity because this is an important way to assess

whether a branding strategy has been successful.

Each of the following approaches to measuring brand equity has some

good points and some bad points:

1. Customer mind-set metrics</emphasis> focus on consumer

awareness, attitudes, and loyalty toward a brand.

2. Product-market outcome metrics</emphasis> focus on the

ability of a brand to charge a higher price than the one

unbranded equivalent charges.

3. Financial market metrics</emphasis> consider the purchase

price of a brand if it is sold or acquired.

4. A team of marketing professors proposed a simpler measure that

they claim reliably tracks the value of a brand over time. Their

<emphasis>revenue premium</emphasis> metric compares the

revenue a brand generates with the revenue generated by a

similar private-label product (that doesn’t have any brand

identification). In this case, brand equity is just the difference in

revenue (net price times volume) between a branded good and a

corresponding private label.

Apply the Metrics

Work with one or more other students to come up with a short

list of five to seven of your collective favorite brands.

Consider the various aspects of branding you’ve read about in

this chapter. What characteristics of each brand caused you to

include it on your short list?

p. 282

<para>A final communication element is the <keyterm

id=”ch09term32″ linkend=”gloss09_032″ preference=”0″

role=”strong”>Universal Product Code

(UPC)</keyterm>, which is the set of black bars or lines printed on

the side or bottom of most items sold in grocery stores and other

mass-merchandising outlets. The UPC is a national system of product

identification. It assigns each product a unique 10-digit number.

Exhibit: QR Code

p. 282

3.4.1 Design Effective Packaging

Effective package design involves a multitude of decisions.

</para><para>Planners must consider the packaging of other brands in

the same product category.

Sustainable packaging involves one or more of the following:

elements of the packaging that can be produced from previously used

Exhibit:

Edy’s Ice Cream ad

Part 3: Develop the Value Proposition for the Customer

p. 283

materials, elements of the packaging that use materialsin their

development that can be repurposed after use, the use of materials that

require fewer resources to cultivate, and the use of materials and

processes that are generally less harmful to the environment. Finally,

there are many specific decisions brand managers must make to ensure

a product’s packaging reflects well on its brand and appeals to the

intended target market.

Copycat packaging is designed to mimic the look of a similar or

functionally identical national branded product often meant to lead the

consumer to perceive the two products as comparable.

Exhibit: Copycat

Packaging

p. 283 3.4.2 Labeling Regulations

The Federal Fair Packaging and Labeling Act of 1966 controls package

communications and labeling in the United States. This law aims to

make labels more helpful to consumers by providing useful information.

More recently, the requirements of the Nutrition Labeling and

Education Act of 1990 forced food marketers to make sweeping changes

in how they label products. Since August 18, 1994, the U.S. Food and

Drug Administration (FDA) requires most foods sold in the United

States to have labels telling, among other things, how much fat,

saturated fat, cholesterol, calories, carbohydrates, protein, and vitamins

are in each serving of the product.

As of January 1, 2006, the FDA also requires that all food labels list the

amount of trans fats in the food, directly under the line for saturated fat

content.

p. 284

4. ORGANIZE FOR EFFECTIVE PRODUCT

MANAGEMENT

Like all elements of the marketing mix, product strategies are only as

effective as their managers make them and carry them out.

4.1 Manage Existing Products

In small firms, a single marketing manager usually handles the

marketing function. She is responsible for new-product planning,

advertising, working with the company’s few sales representatives,

marketing research, and just about everything else. However, in larger

firms, there are a number of managers who are responsible for different

brands, product categories, or markets.

4.1.1 Brand Managers

Each brand may have its own <keyterm id=”ch09term34″

linkend=”gloss09_034″ preference=”0″ role=”strong”>brand

manager</keyterm> who coordinates all marketing activities for

a brand; these duties include positioning, identifying target markets,

research, distribution, sales promotion, packaging, and evaluating the

success of these decisions.

Figure 9.8

Snapshot: Types of

Product Management

Chapter 9: Product II: Product Strategy, Branding, and Product Management

p. 285

4.1.2 Product Category Managers

Some larger firms have such diverse product offerings that they need

coordination that is more extensive. Organizing for product

management may include <keyterm id=”ch09term35″

linkend=”gloss09_035″ preference=”0″ role=”strong”>product

category managers</keyterm>, who coordinate the mix of

product lines within the more general product category and who

consider the addition of new-product lines based on client needs.

4.1.3 Market Managers

Some firms have developed a <keyterm id=”ch09term36″

linkend=”gloss09_036″ preference=”0″ role=”strong”>market

manager</keyterm> structure in which different people focus on

specific customer groups rather than on the products the company

makes. This type of organization can be useful when firms offer a

variety of products that serve the needs of a wide range of customers.

p. 285 4.2 Organize for New-Product Development

Because launching new products is so important, the management of

this process is a serious matter. In some instances, one person handles

new-product development, but within larger organizations, new-product

development usually requires many people. Often especially creative

people with entrepreneurial skills get this assignment.

</para>

<para>The challenge in large companies is to enlist specialists in

different areas to work together in <keyterm id=”ch09term37″

linkend=”gloss09_037″ preference=”0″ role=”strong”>venture

teams</keyterm>. These teams focus exclusively on the

new-product development effort.

REAL PEOPLE, REACH CHOICES: HERE’S MY CHOICE AT

GENERAL MILLS

Becky chose option #2.

IV. END-OF-CHAPTER ANSWER GUIDE

Chapter Questions and Activities

 CONCEPTS: TEST YOUR KNOWLEDGE

9.1 What are some reasons a firm might determine it should expand a product line? What are some

reasons for contracting a product line? Why do many firms have a product mix strategy?

When a firm has a large number of product variations in its product line, it is said to carry a full line. A

company that adopts a limited line strategy markets a smaller number of product variations. In

developing product strategies, organizations may decide to extend their product line—that is, add more

items to an existing product line. Alternatively, if the company does decide to stretch its product line, it

must decide on the best direction to extend it. It can go upward to top–of-the-line items, downward to

items on the lower end, do both by implementing a two-way stretch, or follow a filling-out strategy

Part 3: Develop the Value Proposition for the Customer

where only certain items are added to fill holes in the line. Contraction of the product line normally

occurs when the company wants to remove unprofitable items from the line. A product mix is the total set

of all products offered for sale by a firm, including all product lines sold to all customer groups. A

product mix strategy is necessary because of all the possible products that can be carried in a company’s

product line. Coordination of marketing efforts becomes essential.

9.2 Why is quality such an important product strategy objective? What are the dimensions of product

quality? How has e-commerce affected the need for quality product objectives?

Product objectives often address product quality or the product’s ability to satisfy customers. Product

quality is tied to customer expectations of product performance. It can mean durability, reliability, degree

of precision, ease of use and repair, safety, or degree of aesthetic pleasure. Product quality objectives are

likely to focus on the level and the consistency of product quality. E-commerce has allowed consumers

and companies to exchange information in ways never before possible in the past. There are chat rooms,

product-rating sites, shopping bots, and almost instant contact possibilities with companies. If a customer

is unhappy with quality, he or she can tell many people about concerns via e-mail or even a website.

Sharing negative experiences is a big problem for some companies. See Figure 9.4 for more information.

9.3 Explain the product life cycle concept. What are the stages of the product life cycle?

The four-stage product life cycle (PLC) concept helps to explain the diffusion of an innovation. The first

or introduction stage is characterized by slow growth. The growth stage is characterized by increased

sales, decreasing prices, high profits, and product improvements. The maturity stage shows indications

that the products’ sales are leveling off, new competitors are not entering the market, and the leading

firms improve product quality while decreasing price. During the decline stage, sales continue to

decrease and many firms abandon the product. See Figures 9.5 and 9.6 for a more detailed description of

the product life cycle concept and its phases or stages.

9.4 How are products managed during the different stages of the product life cycle?

Phases:

Introduction—the goal in this stage is to get first-time buyers to try the product. Prices are often high

in this stage and profits are nonexistent.

Growth—in this phase marketing strategies may include the introduction of product variation to

attract market segments and grow market share. Heavy advertising is also necessary as competition

increases.

Maturity—sales have peaked, profit margins begin to narrow, and competition is intense and

shrinking. To remain competitive and maintain market share, firms may tinker with the marketing

mix, especially the product. Attracting new users is also crucial in this phase.

Decline—the major decision is whether or not to keep the product. Decisions regarding how to phase

out the product must be made.

9-5 What is a brand? What are the characteristics of a good brand name? How do firms protect their brands?

A brand is a name, a term, a symbol, or any other unique element of a product that identifies one firm’s

product(s) and sets it apart from the competition. Brands are important because they help to develop and

maintain customer loyalty and create value or brand equity. A brand should be selected that has a positive

connotation, is memorable, reproducible, and recognizable, and can be legally protected. In addition, the

Chapter 9: Product II: Product Strategy, Branding, and Product Management

brand name should be easy to say, easy to spell, easy to read, and easy to remember. Lastly, the brand

should fit the target market, fit the product’s benefits, fit the consumer’s culture, and fit legal

requirements. To protect a product legally, the brand name or symbol or other distinctive aspects can

receive legal trademark protection.

9-6 What is a brand extension? What is sub-branding?

Products with strong brand equity provide exciting opportunities for marketers. A firm may leverage a

brand’s equity brand extensions—new products it sells with the same brand name. Because of the

existing brand equity, a firm is able to sell its brand extension at a higher price. Sub-branding refers to

creating a secondary brand within a main brand that can help differentiate a product line to a desired

target group. Virgin is the king of sub-brands, having launched Virgin Atlantic to Virgin America, Virgin

Mobile, Virgin Megastore,

9.7 What are individual and family brands? A national brand? A store brand?

Individual brand—a brand used for one product only.

Family brand—a brand used with a number of different product lines.

National or manufacturer brand—brand name owned by the manufacturer.

Private distributor or store brand—brand name used for products sold by a certain retailer.

9-8 What does it mean to license a brand? What is cobranding?

Some firms choose to use licensing to brand their products. Typically, a licensing agreement means that

one firm sells another firm the right to use a legally protected brand name for a specific purpose and for a

specific period. Firms choose a licensing strategy because it can provide instant recognition and

consumer interest and it can be important in positioning a product to a particular market segment.

Cobranding benefits partners when combining two brands provides more recognition power than either

one enjoys alone.

9-9 What are the functions of packaging? What are some important elements of effective package design?

A package is the covering or container for a product and serves to protect a product and allow for easy

use and storage. In addition, the colors, words, shapes, designs, pictures, and materials used in the

package design communicate a product’s identity, benefits, and other important product information.

Package designers must consider cost, product protection, and communication in creating a package that

is functional, aesthetically pleasing, and not harmful to the environment. See Figure 9.8 for additional

details.

9-10 What should marketers know about package labeling?

Labels should:

Help consumers by providing useful information.

Be legally responsible in their description of their product.

Be accurate.

9.11 Describe some of the different ways firms organize the marketing function to manage existing products.

What are the ways firms organize for the development of new products?

Part 3: Develop the Value Proposition for the Customer

One way that firms manage existing products is with individual brand managers who supervise all the

marketing activities for a single brand. Other firms may include product category managers to

coordinate the activities of individual brands. Sometimes firms feel that it is best to focus on specific

customer groups and structure product management with a number of market managers. In large firms,

new product managers can develop marketing for the many different new products the firm develops

New products can also be managed by venture teams, groups of specialists from different areas who

work together for a single new product. Finally, new product development may be the result of

partnering, in which two (or more) different companies form an alliance and work together to create a

new product.

 ACTIVITIES: APPLY WHAT YOU’VE LEARNED

9-12 In Class, 10–25 Minutes for Teams You have been asked to give a presentation on the product life cycle to

a small group of students who are interning at your firm this summer. Describe each of the stages of the

product life cycle—introduction, growth, maturity, and decline—and give examples of products in the

various stages. Include examples of products that are in transition stages as well as examples of some

product failures and some products that have been discontinued.

The product life cycle explains how products go through four stages from birth to death. During the

introduction stage, marketers seek to get buyers to try the product and may use high prices to recover

R&D costs. During the growth stage, characterized by rapidly increasing sales, marketers may introduce

new product variations. In the maturity stage, sales peak and level off. Marketers respond by adding

desirable new product features or market-development strategies. During the decline stage, firms must

decide whether to phase a product out slowly, drop it immediately, or, if there is residual demand, keep

the product.

Students can select products and give examples of them in various stages of the product life cycle.

9-13 For Further Research (Individual) Select a company that has products under the same corporate brand

name that includes products that represent a down- ward line stretch as well as products that represent an

upward line stretch. Identify at least one product that fits within each category and identify what specific at-

tributes separate each from the other.

MyMarketingLab for answers to Assisted Graded Questions

9-14 Creative Homework/Short Project You have been recently promoted at P&G and have been tasked with

identifying five cobranding opportunities. These cobranded products could be P&G products or a P&G

product cobranded with another firm’s brand. Describe each of the cobranding opportunities and define the

advantages that would result from each.

Co-branding benefits both partners when combining the two brands provides more recognition power than

either enjoys alone. For example, Frito-Lay sells K.C. Masterpiece–flavored potato chips. Sony markets its

line of digital Cyber-shot cameras that use Zeiss lenses which are world famous for their sharpness. Sony is

known for its consumer electronics. Combining the best in traditional camera optics with a household name

in consumer electronics helps both brands. Students can discuss the various benefits of co-branding for P&G

products such as Pampers or Bounty with products from other well-known companies such as Seventh

Generation or Meyers, brands known for being environmentally friendly.

Chapter 9: Product II: Product Strategy, Branding, and Product Management

9-15 For Further Research (Individual) The wine industry over the years has undergone a number of

changes in the elements that make up the packaging of a bottle (or other type of individual

package) of wine sold for consumption. Conduct research to identify some of the specific differences in

the features of wine’s packaging. Identify both the pros and cons of each packaging approach observed from

a sustainability and marketing perspective (that is, consider different preferences and ideas held by different

segments of the wine market affected by the related packaging features).

Using the Internet, students can research the differences in the features of wine’s packaging. This

assignment could be used as a small-group project. Student groups can share their findings with the class.

9-16 In Class, 10–25 Minutes for Teams Assume that you are working in the marketing department of a major

manufacturer of athletic shoes. Your firm is introducing a new product, a line of disposable sports clothing.

That’s right—wear it once and toss it! You wonder if it would be better to market the line of clothing with a

new brand name or use the family brand name that has already gained popularity with your existing products.

Make a list of the advantages and disadvantages of each strategy. Develop your recommendation.

This exercise somewhat follows the rationale developed in the chapter with respect to product line

extension and quality issues. As product lines are extended, a brand grows. There are benefits from

extensions (as the students will list); however, watering-down a brand name is also a hazard. This is

especially true if the new line extension is perceived as radically different or inferior to the core line.

Switching to an alternative brand name, while losing certain extension advantages, does have merit. Students

should be able to effectively argue these points.

9-17 In Class, 10–25 Minutes for Teams As an entrepreneur, you know you want to open a new grocery store,

but you aren’t sure what kind of products you want to carry. Discuss the importance of national brands, store

brands, and generic brands. Which brand or brands will your new story carry? Briefly explain your decision.

A brand should be selected that has a positive connotation and that is recognizable and memorable. Brand

names should fit the target market, the product’s benefits, the customer’s culture, and legal requirements.

Brands are important because they help maintain customer loyalty and because brand equity or value means

a firm is able to attract new customers.

Firms may develop individual brand strategies or market multiple items with a family or umbrella brand

strategy. Individual brands may do a better job of communicating clearly and concisely what the consumer

can expect from the product, National or manufacturer brands are owned and sold by producers, whereas

private-label or store brands carry the retail or chain store’s trade name. Students can select products for a

new grocery store and decide which branding strategy to use. They should explain the rationale behind their

decision.

9-18 For Further Research (Individual) Find an example of a brand extension that you believe negatively

impacted consumer perceptions of the brand. Explain why you believe this to be the case by citing aspects of

the brand extension that you believe were most detrimental as well as specific evidence, if available.

Students can find print or digital examples of brand extensions that have negatively impacted consumer

perceptions of the brand. For example, some brands of yogurt have brand extensions with so much sugar that

the entire brand is negatively perceived.

9-19 Creative Homework/Short Project Assume that you have been recently hired by Kellogg, the cereal

manufacturer. You have been asked to work on a plan for redesigning the packaging for Kellogg’s cereals. In

a role-playing situation, present the following report to your marketing superior: Discussion of the problems

or complaints customers have with current packaging.

a. Several different package alternatives

Part 3: Develop the Value Proposition for the Customer

b. Your recommendations for changing packaging or for keeping the packaging the same.

Before beginning this exercise, it is suggested that students visit a grocery store to familiarize

themselves with packaging of Kellogg’s and other cereal brands. The students will notice color, jazzy

names, contests, and other gimmicks that normally are associated with cereal merchandising.

However, ask students to also look for alternative packaging such as foil pouches, plastic tubes, or

even plastic or glass jars of cereal. This may spur their creativeness when it comes to offering

packaging alternatives. Lastly, if students will go to the websites of the various national cereal

manufacturers (such as Kellogg’s, C.W. Post, Nabisco, or Quaker Oats), the students will often find a

historical display of name brands and packaging over the years. Some cereal brands are fifty to

seventy-five years old and have gone through many changes.

9-20 For Further Research (Individual) You are interested in the role that Six Sigma plays with regard to

product quality. Using the Internet, research the concept of Six Sigma and find at least two case

studies on companies that employ Six Sigma in their day-to-day activities. Summarize your findings

in a short report.

The term <emphasis>Six Sigma</emphasis> comes from the statistical term

<emphasis>sigma</emphasis>, which is a standard deviation from the mean. Six Sigma refers to six

standard deviations from a normal distribution curve. In practical terms, that translates to no more

than 3.4 defects per million—getting it right 99.9997 percent of the time. As you can imagine,

achieving that level of quality requires a very rigorous approach, and that is what Six Sigma offers.

The method involves a five-step process called “DMAIC” (<emphasis>define</emphasis>,

<emphasis>measure</emphasis>, <emphasis>analyze</emphasis>,

<emphasis>improve</emphasis>, and <emphasis>control</emphasis>).

Using the Internet, students can research companies that employ Six Sigma methods and find two

case studies on company activities. They can summarize their findings in a report.

 APPLY MARKETING METRICS

The chapter introduced you to the concept of brand equity, an important measurement of the value vested in a

product’s brand in and of itself. Different formulas for calculating brand equity exist. One well-publicized

approach is that of Interbrand, which annually publishes its Best 100 Global Brands list. Go to the location

on the Interbrand website where they provide these rankings for the present and past years

www.interbrand.com, then click on “Best Global Brands.” Peruse the list of brands and select any five in

which you have interest. For each, observe whether brand equity has been trending up or down over the past

few years.

9-21 How does Interbrand explain the changes (or stability) in each?

This will prove to be a very interesting activity for most students—many brands on this list inspire strong

emotional response from many students.

9-22 Do you agree with Interbrand’s assessment or do you have another opinion about why your brand’s equity

is what it is?

This question should stimulate an interesting conversation among students. An additional assignment would

be to develop a paper in which students expand on their prediction of future trending for specific brands.

Chapter 9: Product II: Product Strategy, Branding, and Product Management

 CHOICES: WHAT DO YOU THINK?

9-23 Critical Thinking Brand equity means that a brand enjoys customer loyalty, perceived quality, and

brand-name awareness. To what brands are you personally loyal? What is it about the product that creates

brand loyalty and, thus, brand equity?

MyMarketingLab for answers to Assisted Graded Questions

9-24 Critical Thinking Are there specific products that you purchase where branding does not matter and has

never mattered to you? What characteristics of the related products and your own individual preferences can

help explain why this might be the case?

Students can discuss their shopping habits and give examples of products purchased without concern for

branding. One example might be the purchase of a prescription drug from a well-known company versus

buying a generic brand at a far lower price. Price is a factor in selecting name-brand products.

9-25 Critical Thinking Quality is an important product objective, but quality can mean different things for

different products, such as durability, precision, aesthetic appeal, and so on. What does quality mean for the

following products?

a. Smart phone

b. Pop-up tent

c. Athletic wear

d. Vacuum cleaner

e. Pet food

f. College education

Each student will have different impressions of what quality means for these products. What would be the

value of these impressions? The impressions point out to the marketer a variety of issues that must be

addressed in promotion and segmentation if the consumer is truly to be reached. If competitors reach the

consumer with better quality statements and messages, then the competitors will probably get the

consumer’s business. Observe how many students put down more than one characteristic for each of the

above items.

9-26 Critical Thinking Many times firms take advantage of their popular, well-known brands by developing

brand extensions because they know that the brand equity of the original or parent brand will be

transferred to the new product. If a new product is of poor quality, it can damage the reputation of the

parent brand, while a new product that is of superior quality can enhance the parent brand’s reputation.

What are some examples of brand extensions that have damaged and that have enhanced the parent brand

equity?

Some examples to get the discussion started are:

Positive examples—Reese’s, the maker of Reese’s Peanut Butter Cups candy, is now marketing a

line of peanut butter; Grey Poupon, a product of the Nabisco Foods Group, has added salad

dressings to its traditional mustard offerings; Bull’s Eye Steak Sauce is an extension of the Bull’s

Eye Bar-B-Que sauce; Harley-Davidson has a line of male fragrances.

Negative examples—New Coke’s addition to the established Coca-Cola line as a potential

replacement for what is now called Coca-Cola Classic; in the 1980s Cadillac produced a

“mini-Cadillac” to offset declining sales to imports and the Cadillac buyer saw it as an inferior

and cheap version of the American classic luxury car.

Part 3: Develop the Value Proposition for the Customer

9-27 Ethics According to a U.K. study of 1,000 people, 91 percent felt that “the way company behaves

towards its customers and communities is influential when making a purchase.”i Do you share the

same belief? Have you ever looked up, for example, a company’s environmental initiatives before

making a purchase? How important is a brand’s ethical behavior to you? Have you ever not

purchased a brand because of the ethics of the company behind the brand?

MyMarketingLab for answers to Assisted Graded Questions

9-28 Critical Thinking Sometimes marketers seem to stick with the same packaging ideas year after year

regardless of whether they are the best possible design. Following is a list of products. For each one,

discuss what (if any) problems you have with the package of the brand you use. Then think of ways

the package could be improved. Why do you think marketers don’t change the old packaging? What

would be the results if they adopted your package ideas?

a. Dry cereal

b. Laundry detergent

c. Frozen orange juice

d. Gallon of milk

e. Potato chips

f. A loaf of bread

To do this project it would probably be better to place the students in small groups and let them

exchange their ideas and present the results to the class. Common problems that the students will have

experienced with packages are that the packages are often difficult to get into, they tear too easily, they

won’t reseal, they leak, they cause spilling or dripping, and they don’t fit the place where they will be

stored. Remind the students the function of packages and the costs associated with producing and then

changing a package. From a reseller perspective, packages must also fit into shelves in stores and must

be stackable (in most instances). Ask the students if they can name some of the communication

advantages and disadvantages to changing a package design. Can they remember a package change

recently for one of their favorite products? What did they like or not like about the change in packaging?

9-29 Critical Thinking In recent years, for packaged products the FDA has proposed that companies

include the percentage daily value for added sugar on the nutrition label. The primary reasoning behind this

proposal is that it would provide information on added sugars comparable to what consumers have been

exposed to for nutrients such as saturated fat and sodium that the FDA advises should be limited in

consumption. Do you think that this update to include added sugar is necessary? Do you believe that this

update will alter how people consume and make consumption decisions on products containing added

sugars? Explain the reasoning behind your answers.

Using the Internet, students can research labeling updates from the FDA. They can discuss the

importance of providing current nutrition facts to consumers and offer opinions about whether the

American public will change their eating and drinking habits.

9-30 Ethics If a company knows that a snack or beverage is typically consumed in a single sitting (such as a

bottle of soda or a bag of chips), is it ethical for that company to include on the product’s nutrition label

values based on the identification of multiple servings within the product (that is, the nutrition values

displayed would represent a single serving of the product that is less than the whole product, making it

necessary to multiply those values by the number of servings to identify the total nutritional value of the

package)?

Chapter 9: Product II: Product Strategy, Branding, and Product Management

Students can discuss the implications of truth in advertising. Are health-risks present? Most consumers

take the nutrition label at face value and don’t calculate the difference between single servings and

multiple servings.

9-31 Critical Thinking Should a brand be viewed as socially responsible if the parent company of which the

brand is a part engages in activities in direct contradiction to (and generally outweighing) the socially

responsible actions engaged in by the brand itself?

Students can find examples online of parent companies engaging in actions that are not socially

responsible. They can discuss whether or not a brand is affects.

9-32 Ethics You learned in this chapter that it’s hard to legally protect brand names across product categories—

Quaker and Apple, for example, and also Delta—which is an airline and a faucet. But what about the ethics

of borrowing a name and applying it to some unrelated products? Think of some new business you might like

to start up. Now consider some possible names for the business that are already in use as brands in other,

unrelated categories. Do you think it would be ethical to borrow one of those names? Why or why not?

Students may have strong opinions on this question, resulting in some heated discussion. You might ask

students to visit the web to determine if the examples of dual brand names existing in the marketplace were

accidental or purposeful. This might also be a good time to discuss how firms seek to prevent their brand

name from becoming a generic name for a product category. How many of them go to the store to buy

Kleenex even if not that brand of tissues?

 MINI-PROJECT: LEARN BY DOING

In any supermarket in any town, you will surely find thousands of examples of product packaging. This

miniproject is designed to give you a better understanding of how branding, cobranding, and packaging all

work together to compete for your purchasing dollars.

a. Go to a typical supermarket in your community.

b. Select two product categories of interest to you: ice cream, cereal, laundry detergent, soup, frozen

meals, and so on.

c. For each product category, visit that area of the store. Write down a list of the three items that attract

your attention first. Identify what it was about the product that attracted your attention (the brand,

cobrand, or package design).

d. For each of the three products, identify which you are most likely to buy based on the first look alone.

Explain why you chose this product.

9-33 Pick up each of three products and study their package design and any information you can find about the

product. Now which product are you most likely to buy? Explain why you chose this product.

The purpose of the mini-project listed in the chapter is to develop an understanding of branding,

cobranding, and packaging as it exists in the marketplace.

9-34 Present a summary to your class on what you learned about the brands and packaging in your two product

categories.

Through specific questions (or exercises), individuals (or teams) are asked to review the marketing

practices of national manufacturers of grocery products (selected items are given to the students) by

visiting a local grocery store. During the visit, students are asked to make lists of brands in chosen

Part 3: Develop the Value Proposition for the Customer

product categories and identify what about the product attracted their attention. Students should conclude

their project by writing a descriptive report of their findings and experiences.

Instructors may wish to extend the deadline for this assignment so students have many opportunities to

visit, write their report, and report their findings.

V. MARKETING IN ACTION CASE: REAL CHOICES AT BLUE

DIAMOND

Summary of Case

Blue Diamond Growers, almond growers, is dedicated to discovering and building customers by establishing

new products, finding new uses, and creating new opportunities. Core brands include Blue Diamond roasted

almonds, Almond Breeze almond milk, and Nut Thins nut and rice cracker snacks. The original product,

snack almonds, already comes in many tasty varieties but that doesn’t stop Blue Diamond from seeking out

new ways to grow the brand. The latest family of flavors is branded “Bold,” with tastes described as “bold,

brash and daring enough to stand out in any crowd.” example flavors include Sriracha, Jalapeno

Smokehouse, Wasabi & Soy Sauce, and habanero BBQ.

Because of growing consumer desire for lower fat and more nutritious alternatives, milk drinkers have been

seeking alternatives to dairy. Almond Breeze Almond milk is low in calories and saturated fat, and is a good

source of calcium and vitamin E. Nut Thins are a crunchy cracker made with rice and nuts. They are

promoted as ideal for snacking or as a tasty appetizer. A recent growth approach for Blue Diamond is a line

of honey-flavored products. The new theme is applied across its Snack Almonds, Nut Thins, and Almond

Breeze brands. Honey is growing in popularity as a great natural alternative to sugar. Clearly Blue Diamond

is using products and branding successfully to spark new growth opportunities. The question is: How do they

keep up the momentum?

Suggestions for Presentation

This case could be assigned for various out-of-class or in-class discussion activities.

Out-of-Class

Compare and contrast the similarities and differences between Blue Diamond’s products and other competing

companies from a marketing standpoint. Also consider other non-dairy competitors such as purveyors of

coconut milk and coconut milk products. Which would you buy?

Evaluate the strengths and weaknesses of Blue Diamond products packs and other similar competitors’

products. Do you feel one is superior to the others?

In-Class

Discuss how the nut industry is affected and influenced by the product life cycle.

As a class project, conduct a SWOT analysis focused on the marketing aspects for Blue Diamond.

Chapter 9: Product II: Product Strategy, Branding, and Product Management

You Make the Call

9-35 What is the decision facing Blue Diamond?

Blue Diamond is using products and branding successfully to spark new growth opportunities. The question

is: How do they keep up the momentum?

9-36 What factors are important in understanding this decision situation?

The following factors are important in understand this decision situation:

How to utilize a potential growth opportunity for products that are lower in fat and have nutritional

benefits?

New almond beverages represent another significant area for growth.

Choosing the correct ingredients and flavors for Blue Diamond is not easy.

Dealing with different customer groups can pose dilemmas.

How should Blue Diamond develop its branding strategy?

Educating customers about the nutritional value of almond products.

9-37 What are the alternatives?

Students might recommend a variety of different alternatives. Some possibilities are:

Expend a significant effort and allocate a large budget to a marketing campaign for new almond

products.

Conduct extensive marketing research to monitor customer attitudes about almond products to adjust

Blue Diamond’s marketing strategy.

Research new almond products

9-38 What decision(s) do you recommend?

Students may actually need to recommend more than one alternative in order to meet the decision

requirements. They should, however be encouraged to discuss which alternative actions are more critical and

the possible positive and negative outcomes of each alternative.

9-39 What are some ways to implement your recommendations?

Students may make a variety of suggestions for implementation depending on their recommendations.

These may include specific promotion activities, specific pricing, and research activities.

 MYMARKETINGLAB

Go to mymktlab.com for Auto-graded writing questions as well as the following assisted-graded writing

questions:

9-40 Creative Homework/Short Project. You may think of your college or university as an organization that

offers a line of different educational products. Assume that you have been hired as a marketing consultant by

your university to examine and make recommendations for extending its product line. Develop alternatives

that the university might consider:

a. Upward line stretch

Part 3: Develop the Value Proposition for the Customer

b. Downward line stretch

c. Two-way stretch

d. Filling-out stretch

Describe how each extension might be accomplished. Evaluate each alternative.

9-41 Creative Homework/Short Project. Assume that you are the vice president of marketing for a firm that

markets a large number of specialty food items (gourmet sauces, marinades, relishes, and so on). Your firm is

interested in improving its marketing management structure. You are considering several alternatives: using a

brand manager structure, having product category managers, or focusing on market managers. Outline the

advantages and disadvantages of each type of organization. What is your recommendation?

WEB RESOURCES

Pearson Education, Inc.: www.mymktlab.com

Black and Decker product lines: www.blackanddecker.com

The ISO 14000 family addresses various aspects of environmental management: www.iso.org

DuPont helps package many of the world’s top-selling products: www.dupont.com

Patent Office website: www.uspto.gov

Pepsi products: www.pepsi.com

Coke products: www.coca-colacompany.com

Examples of well-known trademarks: www.frompatenttoprofit.com

Marriott Hotels home page listing all hotel brands: www.marriott.com

P&G example of long and wide product lines: www.pg.com

Six Sigma information: www.isixsigma.com

Planet feedback website: www.planetfeedback.com

Example of co-marketing with McDonald’s Happy Meals: www.happymeal.com