Chapter 10 – Managing Successful Products, Services, and Brands
21
e. The disadvantages of a multibranding strategy may outweigh its benefits:
3. Private Branding Strategy.
a. Private branding:
• Is a branding strategy:
b. Private branding is popular because:
4. Mixed Branding Strategy.
a. Is a branding strategy:
• Where a firm markets products under its own name(s) and that of a
reseller…
IV. PACKAGING AND LABELING PRODUCTS [LO4]
• Packaging is a component of a product that refers to any container in which it is
offered for sale and on which label information is conveyed.
• A label is an integral part of the package that typically identifies:
a. The product or brand.
b. Who made it.
Chapter 10 – Managing Successful Products, Services, and Brands
22
e. Package contents and ingredients.
• The customer’s first exposure to a product is the package and label.
• The package and label are an expensive and important part of marketing strategy.
MARKETING MATTERS
Customer Value: Creating Customer Value through Packaging—
Pez Heads Dispense More Than Candy
experience” for customers beyond the candy: fun, which translates into a 98 percent
awareness level for Pez among teenagers and 89 percent among mothers with children. Pez
has not advertised its product for years. With that kind of awareness, who needs advertising?
A. Creating Customer Value and Competitive Advantage through Packaging and
Labeling
Packaging and labeling:
1. Communication Benefits.
a. A major benefit of packaging:
• Is the information on the label conveyed to the consumer, such as:
2. Functional Benefits.
Chapter 10 – Managing Successful Products, Services, and Brands
23
a. Packaging often plays an important functional role, such as:
b. The convenience dimension of packaging is becoming increasingly important.
c. Consumer protection has become an important function of packaging:
d. Functional features of packaging also can affect product quality.
3. Perceptual Benefits.
a. Packaging and labeling also create perception in consumers’ minds.
• A package’s color, shape, and graphics distinguishes it from other brands.
• A package can connote:
• A package can:
– Convey a brand’s positioning.
• A package and labeling can:
b. Successful marketers recognize that changes in packages and labels can
update and uphold a brand’s image in consumers’ minds.
c. Because labels list a product’s source:
• Brands competing in the global marketplace can benefit from “country of
origin or manufacture” perceptions.
Chapter 10 – Managing Successful Products, Services, and Brands
24
B. Packaging and Labeling Challenges and Responses
Package and label designers face four challenges.
1. Connecting with Customers.
a. Packages and labels must be continually updated to connect with customers.
2. Environmental Concerns.
a. The amount, composition, and disposal of packaging material receives much
attention due to the:
• Growth of solid waste.
3. Health, Safety, and Security Issues.
a. A majority of U.S. and European consumers believe companies should make
4. Cost Reduction.
a. About 80 percent of packaging material used in the world consists of paper,
plastics, and glass.
Chapter 10 – Managing Successful Products, Services, and Brands
V. THE MARKETING OF SERVICES [LO 10-5]
• Careful management of the four Ps—product, price, place, and promotion—is
important when marketing services.
A. Product (Service)
• Managers of products and services must design the product/service concept with
the features and benefits that customers desire.
• Because services are intangible and more difficult to describe:
a. The brand name or identifying logo of the service organization is particularly
important when…
B. Price
• With services, price is referred to in various ways:
a. Hospitals (charges). d. Hotels (rates).
Chapter 10 – Managing Successful Products, Services, and Brands
26
C. Place (Distribution)
• Because of the inseparability of services from the producer, place or distribution
is a major factor in a service marketing strategy.
• Competition:
a. Has forced many service firms to consider the value of convenient
distribution.
b. Find new ways of distributing services to customers.
• Technology:
D. Promotion
• The value of promotion, specifically advertising, for many services is to:
a. Show the benefits of purchasing the service.
• In most cases, promotional concerns of services are similar to those of products.
• Publicity has played a major role in the promotional strategy of nonprofit services
Chapter 10 – Managing Successful Products, Services, and Brands
27
E. People
• Many services depend on people for the creation and delivery of the customer
service experience.
a. The nature of the interaction between employees and customers strongly
• Service providers integrate their activities to connect with customers at each
F. Physical Environment
• The customer’s perception of the service is influenced by the:
a. Appearance of the environment in which the service is delivered.
• The physical evidence of the service:
a. Includes all the tangibles surrounding the service.
• Service firms:
a. Need to manage physical evidence to convey the proper impression of the
service to the customer.
• The physical environment provides an opportunity for the firm to send consistent
G. Process
• Process refers to the actual procedures, mechanisms, and flow of activities by
which the service is created and delivered.
Chapter 10 – Managing Successful Products, Services, and Brands
28
• Each service encounter provides customers with the evidence on which to judge
the service.
b. The customer contact audit can serve as a basis for ensuring better service
creation and delivery processes for these service encounters.
• Most services have a limited capacity due to:
a. The inseparability of the service from the service provider.
b. The perishable nature of the service.
• Customers must be at the service provider’s location at the time the service is
• Capacity management integrates the service component of the marketing mix
with efforts to influence consumer demand.
• Service organizations must manage the availability of their offerings so that:
b. The organization’s assets are used in ways that will maximize the return on
investment (ROI).
Chapter 10 – Managing Successful Products, Services, and Brands
29
LEARNING REVIEW
10-7. What is the difference between a line extension and a brand extension?
10-8. Explain the role of packaging in terms of perception.
10-9. How do service businesses use off-peak pricing?
Chapter 10 – Managing Successful Products, Services, and Brands
30
APPLYING MARKETING KNOWLEDGE
1. Listed below are three different products in various stages of the product life cycle.
What marketing strategies would you suggest to these companies? (a) Canon digital
cameras—maturity stage, (b) Hewlett-Packard tablet computers—growth stage, and
(c) handheld manual can openers—decline stage.
Answers:
a. Canon digital cameras (maturity). Canon must try to generate demand in the face of
b. Hewlett-Packard tablet computers (growth). HP must generate awareness by
c. Handheld manual can openers (decline). Handheld can opener firms may choose to
2. It has often been suggested that products are intentionally made to break down or
wear out. Is this strategy a planned product modification approach?
Answer: Sellers rarely make products deliberately intended to break down or wear out but
3. The product manager of GE is reviewing the penetration of trash compactors in
American homes. After more than two decades in existence, this product is in
relatively few homes. What problems can account for this poor acceptance?
What is the shape of the trash compactor life cycle?
Answers:
a. Poor acceptance. The trash compactor is a high-learning product. The problems for
poor acceptance include convincing consumers there is a benefit to compacting trash.
31
4. For years, Ferrari has been known as the manufacturer of expensive luxury
automobiles. The company plans to attract the major segment of the car-buying
market that purchases medium-priced automobiles. As Ferrari considers this trading-
down strategy, what branding strategy would you recommend? What are the trade-
offs to consider with your strategy?
Answers:
a. Branding strategy recommendation. Due to the brand equity in the Ferrari name, a
multibranding strategy should be employed since the medium-priced car is targeted at a
Chapter 10 – Managing Successful Products, Services, and Brands
32
BUILDING YOUR MARKETING PLAN
For the product offering in your marketing plan,
1. Identify (a) its stage in the product life cycle and (b) key marketing mix actions that
might be appropriate, as shown in Figure 10-1.
2. Develop (a) branding and (b) packaging strategies, if appropriate for your offering.
Answer: Similarly, Question #2b applies mainly to a marketing plan for a physical product.
Chapter 10 – Managing Successful Products, Services, and Brands
33
TEACHING NOTE FOR VIDEO CASE VC-10
Justin’s: Managing a Successful Product With Passion
This case describes how Justin’s uses the product management concepts described in
Chapter 10, and a passion for good-tasting food, to create and deliver its successful brand of
organic nut butters and peanut butter cups. Justin and his team are so passionate about their nut
butter enterprise the web site proclaims that Justin’s is “Making a Butter World!”
Synopsis
Justin’s founder, Justin Gold, started the company in his kitchen. He used a basic food
processor to make jars of homemade nut butters to sell at the local farmer’s market. The
popularity of the product led to distribution in select retailers, including Whole Foods. The
company’s big breakthrough, though, was when Justin decided to package nut butter in a squeeze
Hormel’s acquisition of Justin’s provided sophisticated brand management expertise and
a variety of brand management tools. The product life cycle concept, a multibranding strategy,
and package design and labeling expertise were all benefits of the partnership with Hormel.
Teaching Suggestions
This case provides exposure to an inspiring entrepreneurial success story, an acquisition
by a larger firm, and the application of many of the product management tools described in
Chapter 10. The case also allows students to make comparisons of Justin’s marketing challenges
in the early stages of the product life cycle to Hormel’s marketing of a mature product (Skippy).