Chapter 13 Developing and Managing Brand and Product Categories 379
be encouraged at this stage
c. Business analysis
i. The new product’s potential market, growth rate,
competitive strengths, and compatibility with
and technical requirements
v. Firms willing to invest money and time during these
stages tend to be more successful at generating
viable ideas and creating successful products
d. Development
i. Financial outlays increase substantially as a firm
converts an idea into a physical product
ii. This is a joint responsibility of its engineers—who
e. Test marketing
i. The new product is often test marketed to gauge
consumer reactions or to verify that it will perform
well in a real-life environment
ii. If the product does well, the firm can proceed to
commercialization
f. Commercialization
i. The product is ready for full-scale marketing
ii. Substantial expenses are required—for marketing
strategies and production facilities, and acquaint the
sales force, marketing intermediaries, and potential
customers with the new product.
380 Part 4 Product Decisions
Assessment Check Questions
8.1. Where do ideas for new products come from? New-product
8.2. What is concept testing? Concept testing subjects the product idea to
8.3. What happens in the commercialization stage? When a new-product
idea reaches the commercialization stage, it is ready for full-scale
marketing.
Chapter Objective 9: Explain the relationship between product safety and product liability.
Key Terms: product liability
PowerPoint Basic: 20–21
PowerPoint Expanded: 41–43
1. Product safety and liability
a. A product can fulfill its mission of satisfying consumer needs
2. Who regulates product safety?
a. Federal and state legislation play a major role in regulating
product safety
b. The Consumer Products Safety Commission (CPSC) has
jurisdiction over every consumer product category except
food, automobiles, and a few other products regulated by
other federal agencies
i. This agency has the authority to ban products, order
recalls or redesigns, and inspect production facilities
c. The Food and Drug Administration (FDA) must approve all
food, medications, and health-related devices
d. Product liability lawsuits filed against firms have risen
sharply in recent years, and the potential for legal action in
overseas markets has also increased
i. Firms have responded by stepping up efforts to
ensure product safety, with warnings prominently on
labels
ii. Changes in product design have reduced hazards
iii. Product liability insurance has become essential to
3. Strategic Implications of Marketing in the 21st Century
a. Successful marketers integrate development of product,
branding, and development of brand identity to make it
compatible with the firm’s strategies and mission
Assessment Check Questions
9.1. What is the role of the Consumer Product Safety Commission? The
9.2. What safety issues come under the jurisdiction of the Food and Drug
Administration? The Food and Drug Administration must approve food,
medications, and health-related devices such as wheelchairs.
ANSWERS AND TEACHING NOTES TO CHAPTER EXERCISES
Chapter 13 Assurance of Learning Review
1. What are the three stages marketers use to measure brand loyalty?
Answer: Marketers measure brand loyalty in three stages: recognition, preference, and insistence. Brand
recognition occurs as consumers become familiar with the new item—once people have used a product,
seen it advertised, or noticed it in stores, it moves from the unknown to the known category. Brand
2. Identify and briefly describe the different types of brands.
382 Part 4 Product Decisions
Answer: Brands are classified in several ways: manufacturers’ or national, private, family, and individual
brands. A manufacturer’s brand belongs to a well-known and established corporation, defines the
common idea of a brand and is widely recognizable (examples: Coke, Tide, Campbell’s). A private brand
is offered by wholesalers or retailers, expanding options to consumers with the growth of large chain
3. Why is brand equity so important to companies?
Answer: Brand equity is the added value that a certain brand name gives to a product. It’s important
because high brand equity means large market shares and less worry about price, leading to higher
4. What are the characteristics of an effective brand name?
Answer: An effective brand name should be easy to pronounce, recognize, and remember, so a short
name meets these requirements. It should give buyers the correct connotation of the product’s image. It
5. What role does packaging play in helping create brand loyalty and brand equity?
Answer: Brand loyalty and equity can be encouraged and enhanced through effective, recognizable, and
appropriate packaging. Packages capture the attention of buyers, establish a common identity for a
6. What is category management and what role does it play in the success of a product line?
Answer: The task of managing a brand was traditionally given to a brand manager. But today’s
manufacturers often sell 80 percent of their products to national retail chains, so many use category
7. Describe the different product development strategies.
Answer: Market development strategy promotes existing products in new markets. Product development
8. What are the five stages of the consumer adoption process?
Answer: The stages in the consumer adoption process are as follows: Awareness—individuals first learn
9. Describe the different ways companies can organize to develop new products.
384 Part 4 Product Decisions
Answer: To develop new products, firms may hire outside contractors, or use one of the following
methods: New-product committees, the most common arrangement, bring together experts from areas
such as marketing, finance, engineering, manufacturing, research, and accounting. New-product
10. List the six steps in the new-product development process.
Answer: The six phases of the new product development process are as follows: Idea generation—ideas
are solicited from many sources—customers, sales force, R&D specialists, competitors, suppliers,
Projects and Teamwork Exercises
1. What types of advertisements did students bring in? What elements were used to market a product or
service? Which product or service? How did they use an effective brand name, brand mark, packaging,
and overall trade dress? Have the class review all ads and discuss whether the advertisements
demonstrate a strong brand identity for the good or service.
.
Point Value: 1
BUSPROG: Reflective Thinking
DISC: Strategy
Learning Objective: 13-5
Topic: A-head: Product Identification
Chapter 13 Developing and Managing Brand and Product Categories 385
Bloom’s: Application
Difficulty: Moderate
2. Have students display the original packages in the classroom. Then have the class look at each and
decide what might be improved. What updates could be made? What design improvements? What about
color, texture, materials, visibility of name, etc? Now have each student show the new design created,
explaining what was changed and why.
3. Initiate a discussion by listing the categories of consumer adopters on the board—consumer
innovators, early adopters, early majority, late majority, and laggards. Ask the students to draft a
questionnaire which they can administer to each other. The data can then be collected and converted
into a bar graph or chart.
Difficulty: Moderate
4. Have students compare notes from their lists of the product labels they read, and what they focus on
when reading them. Are there certain products whose labels they always read, and others they never
read? Ask for a show of hands from those who regularly read nutritional information on food products,
labels on clothing, or directions for operating a small appliance or electrical product. Is there too little
information on some products? Is there such a thing as too much information?
5. Have students give their opinions on the nature of brand loyalty, and the way some products are
marketed particularly to give it an air of exclusivity and privilege even if it comes with a high price.
Students could be asked to look at Louis Vuitton ads online or copies of ads could be made available for
them. A discussion could be initiated about the ads and questions about consumption could be raised –
Do people buy dreams? Are they aware they are being manipulated by companies? Why is it important to
buy ‘branded’ goods? Students will come up with interesting answers to these questions.
386 Part 4 Product Decisions
Critical-Thinking Exercises
1. In this chapter, you learned that American Girl has expanded its products beyond the original
American Girl dolls, intended for nine-year-old girls. Why has this strategy worked for the company?
Identify another well-known product that appeals to a specific age group. Do you think a similar strategy
would be successful? Why or why not?
Answer: American Girl makes dolls that appeal to every section of the American population, and reflect
the diverse ethnic and cultural roots in the country. Initially, the company’s target consumers were nine–
2. General Mills and several other major food makers have begun producing organic foods. But they
have deliberately kept their brand names off the packaging of these new products, thinking that the kind
of customer who goes out of his or her way to buy organic products is unlikely to trust multinational
brands. Other companies, however, such as Heinz, PepsiCo, and Tyson Foods, are betting that their
brand names will prove to be persuasive in the $28 billion organic foods market. Which strategy do you
think is more likely to be successful? Why?
Answer: Expect a range of responses. You may want to mention to students that the evidence from the
marketplace about whether or not most consumers are willing to pay premiums for organic products is
3. The former mayor of New York City called for a ban on super-sized sugary drinks at delis, fast-food
restaurants, and sports areas in the city, saying that obesity is a national epidemic and New York should
Chapter 13 Developing and Managing Brand and Product Categories 387
take the lead in doing something about the problem. While some consumer groups backed the proposed
ban, other industry groups and companies objected. Do you think such a ban would help in the fight
against obesity? If you were a marketing manager for a fast–food restaurant chain, how would you handle
the situation if such a ban gets approved?
Answer: Student answers will vary. Some of them might be of the opinion that a ban would not serve any
purpose at all and ultimately it is the consumer who needs to make decisions after reading the
4. Brand names contribute enormously to consumers’ perception of a brand. One writer has argued that
alphanumeric brand names, such as the Toyota RAV4, Jaguar’s XF-type sedan, the Xbox game console,
and the GTI from Volkswagen, can translate more easily overseas than “real” names such as Golf, Jetta,
and Escalade. What other advantages and disadvantages can you think of for each type of brand name?
Do you think one type is preferable to the other? Why?
Answer: Expect a range of answers. Alphanumeric brand names use a mix of letters and numerals.
There are plenty of registered alphanumeric brands in use and most of them are popular with consumers,
Ethics Exercise
As mentioned in the chapter, some analysts predict bar codes may be replaced by a wireless technology
called radio-frequency identification (RFID), a system of installing tags containing tiny computer chips on,
say, supermarket items. These chips automatically radio the location of an item to a computer network
1. Do you think RFID poses a threat to consumer privacy? Why or why not?
2. Do you think the technology’s possible benefits to marketers outweigh the potential privacy concerns?
Are there also potential benefits to consumers, and if so, what are they?
3. How can marketers reassure consumers about privacy concerns if RFID comes into widespread use?
This exercise outlines some of the privacy issues raised by RFID (radio frequency identification). Several
large retailers, including Walmart and Target, are pushing for broad adoption of RFID. A product’s RFID,
which will replace its UPC, will allow suppliers and retailers to keep better track of inventory. Privacy
advocates worry that RFID tags will provide too much information that might be identified with individual
Internet Exercises
1. Ferrari brand. Visit the Ferrari website. Review the material and prepare a report outlining how
Ferrari—a company that produces products that only a handful of consumers can afford—has been able
to build such a strong, recognizable brand.
http://www.ferrari.com
2. Trademark disputes. Search an Internet news site, such as Google News (http://news.google.com),
and the U.S. Patent & Trademark Office (http://www.uspto.gov) for recent trademark dispute cases.
Select two of these cases and prepare a summary of each. Does the number of trademark dispute cases
appear to be growing? If so, what is one possible explanation for this increase?
Students are expected to research the cases of trademark disputes, and prepare a report on two of the
most interesting, or controversial cases. Few students can research the change in the number of cases,
3. Brand equity. Several sources compile lists each year of the world’s most valuable brands. Two are
Bloomberg Businessweek magazine and a consulting firm called Brand Finance. Visit both websites and
review the most recent lists of the world’s most valuable brands. How many firms are represented on
both lists? Where are these firms located? What criteria do Businessweek and Brand Finance use in
determining brand equity? Which brands have improved their values the most over the past couple of
years?
Case 13.1 Chobani Greek Yogurt Focuses on Tradition—Questions for Critical Thinking
1. What factors account for the rising popularity of Greek yogurt?
Answer: Greek yogurt is thicker, creamier, and has a slight sour taste. Also, it has more protein and less
2. Do you think the sales trend will continue upward? Why or why not?
Video Case 13.2 —At Zappos, Passion Is Paramount—Questions for Critical Thinking
1. Describe how Zappos is building brand equity along the four dimensions of brand personality.
Answer: Zappos can create differentiation by offering superior customer service and unique items such
as its couture line and also by developing its own private label. The company can create relevance by
2. What steps might Zappos take to build its private brands without endangering its relationship with the
producers of manufacturing brands?
Answer: Zappos should continue to develop niche products that its larger, branded partners do not offer.
Part 4 Video Case: The Line between Content and Commerce—Questions for Critical Thinking
1. How would you describe Food Network’s product mix in terms of width, length, and depth?
Answer: Compared to major network stations such as ABC, NBC, and CBS, Food Network’s product mix
2. Where would you place Food Network in the product life cycle? What steps could marketers take to
extend its lifecycle?
Answer: The Food Network is somewhere between the growth and maturity stage. Specific types of
programs (cooking), as well as specific programs (“Barefoot Contessa”) have been on the air for at least
competitive networks).
3. What sets Food Network brand apart from those of other networks? How has social media helped
Food Network enhance its brand equity?
4. How might Food Network marketers use social media to speed the adoption rate of a new television
show?
Answer: Social media could help Food Network speed the adoption of a new television show by creating
COLLABORATIVE LEARNING EXERCISES
Creating a Brand
Purpose:
To understand the importance of branding
Background:
All entrepreneurs need to understand the need for branding. Branding increases the visibility of a
product and consequently helps in its sales.
Relationship to Text:
Managing Brands for Competitive Advantage
Estimated Class Time:
About 10 minutes
Brand Names
Purpose:
392 Part 4 Product Decisions
To emphasize the varied origins of effective brand names
Background:
A surprising number of students are planning to start their own businesses, so choosing the right
name is understandably a hot topic for many of them. This exercise is designed to explore the
genesis of successful brand names, in an effort to provide understanding and inspiration.
Relationship to Text:
Brand Names and Brand Marks
Estimated Class Time:
About 20 minutes
Preparation/Materials:
You will need to make a copy of the list of brands (below) for each student.
Exercise:
Divide your students into small groups and give each person the list of brands in the table below.
Direct the teams to extrapolate different sources of brand names from the brands in the table (and
encourage them to use any other brand names to support their thinking.)
Lunchables
Southwest Airlines
Great Western Bank
Nike
McDonald’s
Apple
Dove shampoo
Dell
Kellogg
Marlboro
Tropicana
Vanguard
Ford Motor Company
Bank of America
Tide detergent
Cosmopolitan magazine
Hewlett Packard
Playboy
Gap
Subway
Reebok
DreamWorks
Amazon
U.S. News & World Report
George Foreman grills
Intel
Disney
Yahoo
Citibank
Victoria’s Secret
Craftsman tools
American Airlines
Virgin Records
Wachovia
Google
Students seem to love this exercise, perhaps for its relevance to their own business plans.
Categories that typically emerge include the following:
• Location-based—refers to either the area-served or the place of origin. Examples: Southwest
Airlines, Bank of America
Chapter 13 Developing and Managing Brand and Product Categories 393
Questions for Reflection:
• Can a name fall into more than one category? What are some examples (e.g., E-Bay is both
descriptive and evocative)?
• In the face of increasing competition, more and more names for recently established brands
Trademarks
Purpose:
To explore the value of trademarks
Background:
Brand identifiers for many products go far beyond brand names, sometimes including symbols,
packaging, colors, and other elements of trade dress. This exercise is designed to help students
internalize the value of trademarks and trade dress, while flexing their creative muscles.
Relationship to Text:
Trademarks
Estimated Class Time:
About 10 minutes
Preparation/Materials:
Students will need paper and a pen or pencil.
Exercise:
Share the following brand identifiers with your class: McDonald’s golden arches, the Merrill Lynch
bull, the Nike Swoosh, the color brown for UPS, the bitten apple for Apple. Help them brainstorm
identifiers for additional brands. Then, break the class into small groups and assign at least two
Questions for Reflection:
• What role should the government play in protecting trademarks? Why?
• Should any trademark “knock–offs” be legal? Why or why not?
The Roles of Packaging
Purpose:
To explore the various roles of packaging
Background:
In the face of increasing competition, packaging in today’s market must accomplish a wide range
of objectives. This exercise is designed to help students recognize and evaluate the multiple
functions of packaging.
394 Part 4 Product Decisions
Relationship to Text:
Packaging
Estimated Class Time:
About 15 minutes
Preparation/Materials:
Choose a kid’s cereal with a hardworking package, and bring as many boxes as you have small
groups. (This exercise also works if each group has a different brand of kids’ cereal.) Students will
also need unlined paper and pens or pencils.
Exercise:
Divide your class into small groups and distribute the cereal boxes to each group. Give them
about five minutes to determine all of the functions of the package. Possibilities include:
• Grabbing attention
Then, direct each group to determine which functions the package could do better, and to develop
and sketch an improved version of the package with the class. To boost excitement, you may
want to have them vote on the best new package, with a few extra credit points as an added
incentive.
Questions for Reflection:
• Does packaging matter more for some categories than for others? Why?
• What are examples of products that use packaging to create a competitive edge?