Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
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
Copyright © 2018 Pearson Education, Inc.
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
Copyright © 2018 Pearson Education, Inc.
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
Copyright © 2018 Pearson Education, Inc.
Part 3: Develop the Value Proposition for the Customer
P. 269
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
Copyright © 2018 Pearson Education, Inc.
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
Copyright © 2018 Pearson Education, Inc.
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.
Copyright © 2018 Pearson Education, Inc.
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
Copyright © 2018 Pearson Education, Inc.
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
Copyright © 2018 Pearson Education, Inc.
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
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
Copyright © 2018 Pearson Education, Inc.
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
Copyright © 2018 Pearson Education, Inc.
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></para>
<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
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
Copyright © 2018 Pearson Education, Inc.
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
p. 284
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
Copyright © 2018 Pearson Education, Inc.
Chapter 9: Product II: Product Strategy, Branding, and Product Management
p. 285
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
Copyright © 2018 Pearson Education, Inc.
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
Copyright © 2018 Pearson Education, Inc.
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?
Copyright © 2018 Pearson Education, Inc.
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.
Copyright © 2018 Pearson Education, Inc.
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
Copyright © 2018 Pearson Education, Inc.
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.
Copyright © 2018 Pearson Education, Inc.
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.
Copyright © 2018 Pearson Education, Inc.
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)?
Copyright © 2018 Pearson Education, Inc.
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
Copyright © 2018 Pearson Education, Inc.
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.
Copyright © 2018 Pearson Education, Inc.
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
Copyright © 2018 Pearson Education, Inc.
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
Copyright © 2018 Pearson Education, Inc.
i
