Marketing Chapter 4: Products

Study Notes

A product is everything a person receives in an exchange, including both favorable and unfavorable aspects.
Products can be tangible (e.g. a pair of shoes) or intangible (e.g. a haircut).

Branding is the main tool used to distinguish a product from competitors.
A brand is a name, term, symbol, design, or combination that identifies a seller's products and differentiates them from others.
A brand name is the part of a brand that can be spoken, including letters, words, and numbers.
Brand marks are the non-spoken elements of a brand, such as symbols or logos.

Branding has three main purposes: product identification, repeat sales, and new product sales.
Product identification allows marketers to distinguish their products from others.
Repeat sales are generated through satisfied customers who identify products they wish to buy again.
New product sales are facilitated through brand awareness and loyalty.

Firms may choose to use manufacturers' brands, private (distributor) brands, or both.
Manufacturers' brands are the brand names of manufacturers (e.g. Kodak).
Private brands, also known as private labels or store brands, are owned by wholesalers or retailers (e.g. Tesco brand).

A trademark is the exclusive right to use a brand or part of a brand.
Trademarks can include shapes, colors, designs, phrases, abbreviations, and sounds.

Packaging has three main functions: containing and protecting products, promoting products, and facilitating storage, use, and convenience.
A fourth function of packaging is to facilitate recycling and reduce environmental damage.

Containing and protecting products: packaging enables manufacturers to market products in specific quantities and protects products from breakage, evaporation, and other conditions.
Promoting products: packaging differentiates a product from competing products and associates a new product with a family of other products from the same manufacturer.
Facilitating storage, use, and convenience: packaging innovations make products easier to handle, open, and reclose, and extend the product's shelf life.

New products offer advantages such as increased sales, increased margins, increased product loyalty, more resale opportunities, greater market responsiveness, and a sustained leadership position.

A new-product strategy links the new-product development process with the objectives of the marketing department, business unit, and corporation.
The new-product development process includes idea generation, idea screening, business analysis, development, test marketing, and commercialization.

Sources of new-product ideas include customers, employees, distributors, vendors, competitors, R&D, and consultants.

The first filter in the product development process, which eliminates ideas that are inconsistent with the organization's new-product strategy or are obviously inappropriate.

Preliminary figures for demand, cost, sales, and profitability are calculated.
Questions asked during this stage include: What is the likely demand for the product? What impact would the new product have on total sales, profits, market share, and return on investment?

The R&D or engineering department develops a prototype of the product.
The marketing department decides on the product's packaging, branding, labeling, and so forth.

A limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation.

The final stage of the new-product development process, which sets several tasks in motion, including production, inventory, shipping, sales force training, and advertising.