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Chapter 16
CONSUMER BEHAVIOR AND PRODUCT STRATEGY
AUTHORS' OVERVIEW OF THE CHAPTER
As noted at the beginning of the chapter, many marketing experts believe that product strategy is the most important
element of the marketing mix. We emphasize that developing effective product strategies requires matching the
product or service to the consumers in the target market. In this chapter, we discuss how understanding consumers'
affect and cognition, behavior, and environments can help marketers develop effective product strategies. In fact,
each of the "applications" chapters in Section 5 stresses the need to understand the consumer/product relationship.
However, this detailed consumer analysis has a special relevance for product strategy.
Product Affect and Cognition. We begin this chapter by discussing the important affective and cognitive state of
product satisfaction/dissatisfaction. We describe consumers' prepurchase expectations or beliefs about likely
product performance, and we discuss what happens when those expectations are either confirmed or disconfirmed
when the consumer buys and uses the product or service.

Negative disconfirmation (poorer performance than expected) leads to dissatisfaction, negative attitudes,
weak intentions to buy, and less likely repeat purchase.

Positive disconfirmation or confirmation leads to satisfaction, more positive attitudes, and stronger
intentions to buy.
To account for these processes, we present Oliver's model of the satisfaction/dissatisfaction process (see Exhibit
16.2). We also discuss a possible outcome of dissatisfaction--complaining to the retailer or manufacturer.
Product Behavior. Next, we discuss two key product-related behaviors--product contact and brand loyalty. Product
contact involves behaviors that bring a consumer into contact with the product so that it can be purchased. This
would include traveling to a store, finding the product in the store, reading about a product in a catalog, etc. Brand
loyalty refers to an intrinsic commitment to repeatedly purchase a particular brand. Conversely, variety-seeking is a
cognitive commitment to purchase different brands. We discuss several approaches to measuring and understanding
brand loyalty behaviors and their implications for developing marketing strategies.
The Product Environment. Then, we discuss the product environment--the product-related aspects of the general
environment. Of course, a huge number of potential factors are present in the product environment. As examples,
we focus on two, product attributes and packaging factors, and we give examples of their relevance for designing
product strategies. It is important to identify how consumers react to product attributes and to package factors, as
they will interpret them in terms of their own knowledge. Moreover, consumers' meanings may be quite different
from those of marketing managers.
Product Strategy. Finally, we review two key factors involved in analyzing consumer/product relationships in order
to develop effective product strategies. First, we identify several characteristics of consumers that are related to
product purchase. Consumers differ in their likelihood of purchasing at different stages of the product life cycle--e.g.
innovators, early majority, and laggards (see Exhibit 16.5). As one's primary customers change over the product life
cycle, marketers should monitor their characteristics--their affective reactions, cognitions, and behaviors. Changes in
these factors are likely to require continual changes in the marketing mix, if the company's marketing strategies are to
remain effective. Of course, the dynamic relationships between these all these factors are reflected in the Wheel of
Consumer Analysis.
We also identify several product characteristics that are relevant considerations in developing strategies, especially
for new products. Among others, we discuss trialability, simplicity, relative advantage over competitors, and the
symbolic meanings conveyed by the product. We give examples of how these factors can influence product
strategies.
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KEY CONCEPTS AND ISSUES
 Confirmation/disconfirmation processes involved in consumer satisfaction and dissatisfaction
 Brand loyalty/variety seeking
 Aspects of the product environment relevant to adoption
 Changes over the product life cycle and the resulting need to change marketing strategies, too
 Characteristics of consumers relevant for product adoption--innovators, early majority, laggards, etc.
 Characteristics of products relevant for adoption--trialability, simplicity, etc.
OUTLINE OF CHAPTER TOPICS
Chapter 16. CONSUMER BEHAVIOR AND PRODUCT STRATEGY
A. Timberland
B. Product Affect and Cognition
1. Satisfaction/Dissatisfaction
C. Product Behaviors
1. Product contact
2. Brand loyalty/Variety Seeking
D. The Product Environment
1. Product attributes
2. Packaging
a. Package sizes
b. Package colors
c. Brand identification and label information
E. Product Strategy
1. Characteristics of consumers
2. Characteristics of products
a. Compatibility
b. Trialability
c. Observability
d. Speed
e. Simplicity
f. Competitive advantage
g. Product symbolism
h. Marketing strategy
F. Back to ... Timberland
G. Marketing Strategy in Action: Harley-Davidson, Inc.
TEACHING OBJECTIVES
After completing this chapter, students should be able to:
 describe the factors that affect consumers' satisfaction or dissatisfaction with a product.
 identify some consequences of consumer dissatisfaction.
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 define the concepts of brand loyalty and variety-seeking and discuss their importance for marketing.
 identify key cognitive, behavior, and environmental factors that should be considered in developing a
product strategy.
 explain how consumers' cognitions, behaviors, and environments change over the product life cycle and
require changes in marketing strategies.
 discuss the several characteristics of consumers that influence new product adoption.
 discuss several characteristics of products that influence new product introduction.
TEACHING IDEAS AND SUGGESTIONS
Overview. Depending on your interest and experience, this material could be covered in one or two class periods.
The class will be more interesting and fun if most of the time is devoted to analyzing issues and problems associated
with actual product strategies. This will give students experience in thinking about how to "do" consumer analysis
and in translating consumer concepts into marketing strategies.
In-Class Exercise: Analyzing Consumers' Cognitions, Behaviors, and Environments. We think it is particularly
important for students to gain experience in identifying and analyzing factors relevant for developing product
strategies. Perhaps the most effective way to accomplish this is to present the class with an actual product strategy
problem and ask them to critically evaluate it. In our experience, such a discussion can last the entire period and will
generate numerous opportunities for you to point out key concepts and ideas from the text (brand loyalty,
satisfaction/dissatisfaction, stage in product life cycle, characteristics of products and consumers), without having to
lecture on these points.

Describe a product problem facing an actual company or describe an actual product strategy decision
that some company recently made.
Examples can be found in the business press. Product redesign problems (should we change key
attributes?) or a new product introduction decision (go or no go?) will work well. For example,
Coca-Cola changed the basic Coke formula in 1986. In 1989, McDonald's considered introducing
a pizza product in their stores. In more recent years, McDonald’s began testing the McDonalds 3
in 1 concept which offers three different restaurant experiences in one including the option of table service
with a vast food variety of brand new selections from Sandwich & Platter Shop and Bakery & Ice Cream
Shop menus, in addition to traditional McDonald's favorites.

Ask students to dissect and critique the product strategy. Challenge students to role-play the marketing
management of the company in question and work through the consumer analyses and strategy decisions
required.
Throughout the discussion, emphasize the consumer issues and analyses that can help managers
make more effective product strategy decisions.
Students should note that the first step is to identify the relevant target market (or markets) for the
product. Then, students should consider the key aspects of consumer analysis in making product
strategy decision(s). The Wheel of Consumer Analysis will be useful in structuring and guiding
student's analyses.

Show a transparency of the Wheel of Consumer Analysis (Exhibit 16.1) to help students keep the key
factors and their interactions in mind during the discussion.
Students should identify relevant consumers' cognitions--including beliefs, attitudes, and intentions
toward competing products as well as the more symbolic meanings associated with the product.
Students should examine the means-ends chains of meanings associated with the key product
attributes.
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Students should identify relevant consumers' behaviors toward the product and/or competing
products and brands.
They can refer back to the generic behaviors discussed in Chapter 11--information
acquisition, shopping, transaction, use, and disposal behaviors.
Product use or consumption behaviors are of particular interest for product decisions,
including how, when, and how frequently consumers use the product. Other relevant
behaviors include product contact and product purchase (brand loyalty).
Students should also identify relevant aspects of the environments in which these behaviors occur.
For instance, what are the key environmental stimuli in the product use situation--time of
day or year, social factors such as the presence of other people, physical setting (at home
or elsewhere), weather, etc.?
In addition, the competitive environment should be considered--e.g., what are the major
product attributes or packaging characteristics of competitors' products?

Jot these factors on the chalkboard as they come up in the discussion; then ask your class to identify the
most important factors in each category.
Which factors are most relevant to the relationship between the target segment and the product?
These are the factors that a marketing manager should focus on. Managers cannot consider every
factor.

Finally, challenge students to use their consumer analysis to critique the current strategy and begin
developing a more effective product strategy.
For instance, what product characteristics should be designed? Should the new product be
introduced? Should we extend the brand name to a new product?
Possible Mini-Lecture: Product Attributes. This chapter provides an opportunity to remind students that product
attributes, per se, do not have much meaning for consumers. As we discussed in Chapter 4, consumers tend to
interpret (think about) product attributes in terms of their outcomes, both immediate (functional and psychosocial
consequences) and longer-term (value satisfaction).

You might find a current marketing example involving product attributes, and ask students to discuss the
meaning of the attribute and the relevant marketing strategies.
For instance, oat bran was a "hot" attribute in 1989. In 1990, low fat was an important attribute for
processed food products. In 2002, low carbohydrate was an attribute consumers valued.
Means-end analysis can be used to explore the deeper meanings of the attribute and help marketers understand the
bases for the consumer/product relationship.
It is interesting how people (and marketers) sometimes treat the "absence of a negative attribute" as a kind
of attribute, itself. Consider the trend for "fat-free" foods in the U.S. in the late 1980s and early 1990s.
Kraft Foods introduced a new line of fat-free baked goods under its Entenmann's brand name. This was in
addition to their other no-fat products--Kraft Free salad dressings (6 calories per serving vs. 50 for regular),
Kraft Free cheese slices (45 calories per slice vs. 90), Light 'n Lively yogurt (50 calories per serving vs.
150), and Sealtest ice cream (100 calories per serving vs. 140). In 1990, Kraft developed dozens of other
fat-free products.
Why did Kraft move so strongly in promoting the fat-free attribute? For one thing, the American culture
was changing. People had become increasingly concerned about fat and the calories that come from fat.
This trend was evidenced by a drop in Kraft's full-fat ice cream sales in 1989 by 53 million gallons from
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1986 levels. Sales of low-fat products, on the other hand, had increased. For instance, sales of low-fat
cheese slices jumped 40 percent from 1987 to 1989.
Kraft's big problem was to introduce these new low-fat products without cannibalizing (eating into the sales
of) its other products, especially its "light" products that already offered lower levels of fat, calories, and
cholesterol.
Kraft's competitors must have thought that the company was onto the right trend, because they began
introducing low-fat products of their own. In 1990, Campbell Soup's Pepperidge Farm launched its first
low-calorie desserts and snack products, and Sara Lee introduced a line of low-fat individual frozen
desserts. [Source: Lois Therrien, "Kraft is Looking for Fat Growth from Fat-Free Foods," Business Week,
March 26, 1990, pp. 100-101.]
Sometimes a company has trouble with the quality control of a product attribute. For example, many car companies
have had to recall certain models to fix defective product attributes. This can create dissatisfaction and may have
serious negative effects on company image and sales.
Consider the problem faced by Perrier in 1989 when minute traces of benzene were found in some bottles of
Perrier. The contamination was traced to improper maintenance on the filters at the bottling plant.
Although this was not a significant health hazard, the Perrier Group of America (the U.S. division) recalled
all bottles from the shelf, poured the product "down the drain," and recycled all the packaging materials.
The company felt this was necessary to protect the "purity" image (an abstract attribute) that Perrier had
developed. When production and distribution of Perrier resumed, the company backed it with an $8 million
advertising and promotion campaign.
Interestingly, this product recall did not seem to have created long-term problems for the company. Most
consumers thought the company handled the potential crisis well and said they would drink Perrier in the
future.
Many so-called "new" products (with "new" attributes) are really just minor modifications of existing product
attributes and, therefore, are not really that new.
For instance, line extensions have become very popular. Usually these are just minor modifications of
existing product attributes. For instance, Ocean-Spray introduced Cran-Strawberry Drink as a lineextension to their other cranberry-based juice drinks.
Partly, line-extensions are a reaction to the extraordinary high costs and risks of developing and marketing a
truly new product on a national scale. In this age of Me-Too-ism, adding a new attribute (a new drink
flavor) to an existing brand makes some economic sense. For instance, Nabisco might create and market a
new cookie at a cost in the neighborhood of $20 million, while introducing Fudge Covered Oreo (a line
extension involving a minor modification of the basic product) costs only a fraction of that.
Can the line-extension product strategy be carried too far? Is it possible for the brand equity created for the
original brand to "run out?"
Some analysts think that many American companies have already done so, including Nabisco. The
heart of Nabisco's business is the 150+ varieties of cookies and crackers they market including
such well-known brand names as Oreo, Chips Ahoy!, Fig Newtons, Ritz and Premium Crackers,
and Triscuit Wafers.
Although Nabisco had been introducing new products at a steady rate, few were truly new. In
1987, for instance, Nabisco introduced 18 new products, all of them either copies of a competitor's
product or variations (minor attribute changes) of their own products. For instance, Quackers
(small duck-shaped flavored crackers) and American Classic cocktail crackers were very similar to
Pepperidge Farm's Goldfish and gourmet cracker lines, respectively.
Example: New Product Attributes. Sometimes new product attributes can be extremely important and can make a
brand successful. Products that offer the consumer something new and important or time-savings are more likely to
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be hits. Most "new" products are "me-too" products. But companies don't always know what they have, and success
sometimes occurs accidentally.
Consider what happened when scientists at Proctor and Gamble invented a combination shampoo and
conditioner that tested very positively. But, P&G didn't create a new brand based on this innovation.
Instead the new attribute was added to Pert shampoo, then with only 2% of the U.S. market, creating Pert
Plus. The reasoning was that a completely new brand was too risky (shampoo buyers are notoriously fickle
and brand loyalty is low). Also, in the mid 1980s, P&G was preoccupied with bigger new product
introductions, including Tartar Control Crest and Liquid Tide.
At first, P&G did not support the brand with special advertising or promotions. The reasoning was, why put
a lot of money into a 2% brand? But consumers flocked to the new brand, doubling sales within 6 months.
In short, the new product attribute was a big hit. By 1990, Pert Plus was the number one brand with a 12%
share of the highly fragmented, 1.4 billion market, competing against more than 1000 brands.
Many other companies decided to bring out their own combination shampoo/conditioner brands. They
faced a difficulty marketing problem. Pert Plus "owned" the positioning of a dual shampoo/conditioner.
The innovative company who "gets there first" may own a strong position in consumers’ minds that is
difficult to dislodge. It as if the first and dominant brand (IBM, Xerox, Pert Plus) is the product category.
Competitors somehow must counter that advantage, or compete as a cheaper, me-too brand. [Source:
Alecia Swasy, "How Innovation at P&G Restored Luster to Washed-Up Pert and Made It No. 1," The Wall
Street Journal, December 6, 1990, pp. B1 & B7.]
In-Class Exercise: Dissatisfaction. The overriding goal of business must be to create and keep customers.
Satisfied customers tend to remain as buyers; dissatisfied customers go elsewhere to make their purchases. Thus, the
concept and processes of consumer satisfaction/dissatisfaction, and the factors that lead to satisfaction or
dissatisfaction, are critically important for marketers to monitor and understand. An in-class example may help
students understand the model of satisfaction/dissatisfaction presented in the text.

Ask students to describe a particularly satisfying or dissatisfying purchase or consumption experience.
Alternatively, give a brief example of a disconfirmation experience from your personal experience or
one gleaned from the current business press.
Dissatisfaction experiences are quite common. In a 1986 survey, fully 1/3 of 800 Michigan
consumers answered yes to the question, "In the past year have you had an unpleasant experience
with a business, service, or retail store that irritated you to the point that you no longer want to do
business with them?" Most complaints dealt with "service" (63 percent mentioned), but other
factors were also mentioned--bad experiences with personnel (37 percent), poor complaint
handling (23 percent), the product or service itself (22 percent), and cost or billing practices (16
percent).

Select a couple of interesting examples and have the class analyze them in terms of Richard Oliver's
model of the satisfaction process (see Exhibit 16.2). Show a transparency of the model to guide the
discussion.

Encourage the class to ask various questions to probe the student presenting the example to identify the
elements in the satisfaction model.
What were your prepurchase expectations (attitudes, intentions)?
What happened in product performance?
How did you feel about this disconfirmation experience? What beliefs, attitudes and/or intentions
were changed?

Encourage other students to compare their experiences with the same product.

Encourage students to explore how differing levels of pretrial expectations or differing degrees of
disconfirmation might affect post-trial attitudes and intentions.
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Possible Mini-Lecture: Strategies for Dealing with Complaint Behaviors. What should a company do for
dissatisfied customers? According to the experts, just about anything that it can. Studies show that dissatisfied
customers tell about twice as many people about their bad experiences as satisfied customers discuss their good
experiences. Yet a company can enhance their image and even generate brand loyalty simply by listening to
complaints. Actually doing something about them is even better.
The purpose of business is to create and keep a customer. The lesson to be learned here is that it is much easier (and
much cheaper) to keep a customer than to create a new one. Listening to complaints is one way to keep your
customers.
Paradoxically, complaining is a good thing from the marketer's perspective. According to some research
estimates, only 9 percent of unhappy customers who do not complain buy the product again (they take their
business elsewhere). However, 19 percent of customers who complain, but do not gain a resolution, remain
as customers. And, fully 54 percent of consumers whose complaint was resolved remained a customer.
As one consultant put it, "The trick is getting customers to complain to the company" [not to their friends].
Consider what British Airlines (once termed "Bloody Awful" by British travelers) does to insure that it gets
to hear customers' complaints and has a chance to turn unhappy customers into loyal supporters. BA placed
several small complaint booths in London's airports. There, disgruntled passengers can immediately vent
their frustrations as soon as they get off the plane. Complaints are recorded on video tape, and managers
review all the tapes and get back to the customers. In 1988, BA posted one of the highest net incomes of all
international airlines; just six years earlier, BA had been one of the biggest money losers.
Large companies have had to go high-tech to keep an ear to consumers' complaints. For instance, General Electric
has a state-of-the-art customer service center in Louisville, Kentucky, that including a giant computerized database
containing 750,000 answers to questions about 8,500 models in 120 product lines. The center handles about three
million calls a year, of which 15 percent are complaints. GE treats this $8 million a year operation very seriously
indeed. GE maintains GE claims that its people satisfactorily handle about 90 percent of inquiries on the first call.
The automotive industry is following suit; Ford is developing its own 800-number system modeled after GE's.
Some researchers have estimated that these sophisticated complaint mechanisms, including 800 telephone numbers,
can actually make money for the company. Average return on investment in such technology is about 100 percent
for appliance businesses, perhaps as much as 170 percent for banks, and even higher for retailers where top-quality
service is essential. A VP at American Express said, "Better complaint handling equals higher customer satisfaction
equals higher brand loyalty equals higher profitability." [Source: Patricia Sellers, "How To Handle Customers'
Gripes," Fortune, October 24, 1988, pp. 87-96.]
In-Class Exercise: Brand Loyalty. Although most signs point to overall decreases in brand loyalty, many products
still enjoy a significant number of brand loyal customers. Thus, even in today's volatile markets, brand loyalty is an
important concept for marketers, especially those who sell frequently purchased products.
There is a massive research literature on brand loyalty, although most of it was published before the mid-1970s. If
you have an interest in brand loyalty, you could elaborate the discussion in the text.

For instance, it asks students to contrast behavioral approaches to measuring and thinking about brand
loyalty (the approach we emphasize in the text) with a cognitive approach.
In the latter approach, marketers would emphasize brand involvement, beliefs, attitudes, and
purchase intentions. Students should think about ways of combining the behavioral and cognitive
approaches.

Another approach is to ask students to identify products to which they are brand loyal and explain why.
Focus the discussion on why some people consistently purchase the same brand.
Students should discuss behavioral-based and cognitively-based brand loyalty. Some students will
mention positive attitudes and beliefs about the brand (perhaps a higher level of brand
involvement--some personal relevance for the brand). Other consumers may mention that
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coupons, rebates, or usually low prices reinforce their consistent brand purchases and work to
maintain the behavior.

Encourage students to discuss more subtle variations in their brand purchase behaviors.
Are they completely consistent in their brand purchases, or do they switch among a few brands?
Are they multi-brand loyal? If the latter, what factors contribute to this purchase pattern?
In-Class Exercise: Characteristics of New Products (Innovations). The text mentions several characteristics of
innovative products that influence their eventual marketing success. Exhibit 16.6 lists these characteristics.

You might ask students to think of new products they have noticed lately, and discuss them in terms of
these characteristics.
Here are a couple of examples of new products that you could describe in class if necessary. In 1992,
Seagram Company went on a new-product binge. Even though sales of wine coolers and distilled spirits
continued to decline, Seagram developed a variety of new brands and line extensions, as part of a long-term
strategy to introduce new products to the market. Each of the products was intended to provide a unique
advantage or consequence for customers; me-too products were not desired.
Consider two new brands in the distilled-spirits category. Both are flavored which distinguishes
them from other brands and both are lower in alcohol content (about 70 proof rather than 80 or
90). Thus these products were aimed at consumer trends towards more flavor and lower alcohol.

Coyote--an herb-and spice-flavored tequila, initially sold most in the southwest.

Somers--an imported citrus-flavored gin to compete with Absolut's Citron vodka.
In 1992, Seagrams tested Spritzer, a malt-based cooler, along with 2-Calorie Quest, a flavored
sparkling water, containing Nutra-Sweet.
Other new products by Seagrams included:

Godiva chocolate liquor, under a licensing agreement with Campbells, owner of the
Godiva brand of chocolates.

Seagram's Light--a lower calorie brand extension of the wine cooler line.

Taos--a lightly carbonated, clear, wine-based cooler introduced in 1991 and positioned
as an aperitif.

Twister and Twister Light--lightly carbonated juice drinks.

Pure Tropics--refrigerated exotic juice blends.
Seagram's strategy was to introduce many new brands and products, but to move cautiously before rolling
them out for national distribution. The idea was to minimize risk. In fact, some brands may never be
distributed on a national basis. Coyote, for example, although being considered for export to Europe and
Australia, is likely to remain in the Southwest where the bulk of U.S. tequila sales occur. [Source: Gary
Levin, "Seagram Pours On Unique Potions in New Product Wave," Advertising Age, June 8, 1992, p. 16]
Possible Mini-Lecture: Importance of New Product Strategy. The lifeblood of many companies is the new
product development program. Even for companies with a highly defined product mix, new products are important.
Consider the case of McDonald's.
In 1990, McDonald's was facing some major challenges. After years of double-digit growth, sales increased
only 6 percent in 1989. Why the slow-down? The competition was greater than ever. People showed signs
of becoming more fickle and miserly. Some stayed at home and zapped their "fast" food in the microwave.
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Others defected to competing chains, lured by deep price discounts. To remain competitive, McDonald's
has had to introduce a series of new products.
The standard McDonald's menu in 1990 was 33 products (not counting size variations), up 25 percent from
1980, and still growing. Over the years, McDonald's has added Big Macs, salads, chicken nuggets,
decaffeinated coffee, sausage on a biscuit, McDLT's, and other once new products. Now the latest menu
addition is likely to be McDonald's pizza.
McDonald's pizza will come in four varieties made from fresh toppings on a 14-inch frozen dough.
McDonald's devised an oven that can bake the pies in 5-1/2 minutes compared to 10 to 20 minutes for an
average pie. Reports are that the product, while certainly not gourmet pizza, is surprisingly good. Initial
pricing was moderate at $5.85 for a plain tomato and cheese to $9.50 for the works.
Interestingly, McDonald's flubbed at its first two attempts to develop a successful McPizza. A product tried
in 1984 was really a calzone, a dough "envelope stuffed with pizza-like ingredients. A second McPizza
tried in 1986 was an oval pizza for one person, but failed on appearance grounds. This time the company
ran a 24-store test market in Indiana and Kentucky and then expanded the new product testing to three
larger cities--Hartford, Connecticut; Fresno, California; and Las Vegas, Nevada. As of mid-1990,
McDonald's still had not decided whether to "go national" with the new product, but it seemed likely.
McDonald's had several reasons to keep trying for a pizza product. For one thing, pizza was the most
popular evening dish sold in U.S. restaurants. Since McDonald's would sell McPizza only at the dinner
period (after 4 p.m.), a pizza product could give McDonald's sales a real boost at the slowest time of day in
most stores. Of course, there is very heavy competition in the pizza market, including home delivery.
Would a 5-1/2 minute, good-but-not-great pizza be enough to lure couch potatoes from their homes?
In the meanwhile, McDonald's was considering other new products such as meals served in a basket instead
of wrapped in paper and perhaps seafood items. The years to come will tell if McDonald's can maintain its
fast-food image and still attract customers with a broader menu of new non-hamburger products. [Source:
Ronald Henkoff, "Big Mac Attacks With Pizza," Fortune, February 26, 1990, pp. 87-89.]
In-Class Exercise: Packaging as Product Strategy. The text describes packaging decisions as part of product
strategy and gives several examples. This is an interesting topic and can generate some good discussions in class.
Students should have no trouble with the following exercise.

Ask students to find an example of a product strategy in which packaging is an especially important
ingredient and come to class prepared to discuss its influence on consumers.
Packaging, of course, contains and protects the product as it moves through the channels of
distribution. Packaging also has a promotion function.
Increasingly, packaging is a major aspect of product strategies, especially for food products and
personal care products. In some cases packaging is so important that it becomes part of the total
product, sometimes indistinguishable with the product inside.
A company developed a plastic wrap so strong that it can be boiled, microwaved, or
frozen. But, it is also very tough to open, at least along any of the flat surfaces. The
advantage of this package is that tearing it along any of the pointed edges is incredibly
easy--the bag seems to fall open. The secret is dozens of tiny perforations.
Packaging also conveys information to consumers about ingredients, warnings, and appropriate
uses. A package that conveys useful information can give a company a differential advantage over
its competition.
Consider this example. A problem with some microwavable frozen food products is that
consumers are not sure they are heated thoroughly. Biting into still-frozen chicken
marsala is not a pleasant experience. But the guesswork is eliminated by a new type of
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package used for Armour frozen entrees. The package has a patch on the lid that changes
to blue when the food inside is properly cooked.
The attributes of packaging can combine with the attributes of the product to create a "joint"
product. In some cases the package and product are so intertwined that they are not separable--i.e.,
the consumer sees them as one product.
For instance, a Chicago company developed a plastic wrap that extends the shelf life of a
partially baked, preservative-free croissant from one week to over 90 days. Or, what
about the squeeze bottles with a drinking tube that have become popular ways to sell soft
drinks?
Finally, remember that some types of packaging are sold directly to consumers (foils, films, plastic
bags). Consumers buy packaging products to keep their leftover foods in, for example. Consider
the huge market that Tupperware commands.
One company sells plastic "bellows" bottles that expand as they are filled and collapse as
they are emptied. Not only do they take up less space in the refrigerator, but by keeping
air out, liquids remain fresher.
PROJECT
This project is intended to give students experience in analyzing product strategies. They could write up this project
to be handed in for evaluation, and/or to bring to class for discussion.
Product Strategies
This project is intended to give you experience in analyzing product strategies.
 Find a recent description of a product strategy in the business press.
 Identify and describe the target market.
 Describe the product strategy.
 Analyze the likely impact of the strategy on the affect, cognitions, behaviors, and environments of
consumers in the target market.
 Critically evaluate this product strategy. How could it be improved?
 Write up your analysis and hand it in (or bring it to class for discussion).
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NOTES AND ANSWERS TO REVIEW AND DISCUSSION QUESTIONS
1. Describe the process by which the consumer comes to experience satisfaction or dissatisfaction. Illustrate each
result with an experience of your own.
This review question forces students to review the psychological and behavioral processes involved in
satisfaction/dissatisfaction experiences. Exhibit 16.2 presents a model students could use as a framework or
guide for developing their answers.
Students should know that satisfaction/dissatisfaction are summary or global affective responses. Feelings
of satisfaction and dissatisfaction result from a comparison of pretrial expectations with perceptions of
product performance during consumption. This explanation is called the disconfirmation paradigm.
Consumers form prepurchase expectations of product performance based on their previous experience with
the category. Feelings of satisfaction and dissatisfaction are created when actual product performance
disconfirms those pretrial expectations.
After purchase and consumption, consumers may be disappointed if product performance is less
favorable than expected. This negative disconfirmation of expectations may lead to dissatisfaction.
However, if the product performance is better than anticipated, consumers' expectations are
positively disconfirmed, leading to satisfaction with the product.
Presumably, product performance that confirms (positive) expectations also produces a feeling of
satisfaction.
Individual examples of satisfaction/dissatisfaction will vary, of course. Students should be able to identify
the differences in expectations that influence their responses.

Ask students to think about expectations associated with ordering a hamburger and fries at
McDonald's versus Burger King versus some local restaurant. Another good example of
disconfirmation occurs with varying expectations that people have when they go to a movie.
2. Gather several consumer complaints from friends or classmates and make recommendations for marketing
strategies to prevent similar problems.
This simple application exercise should help students understand the nature of consumer dissatisfaction and
how marketers can deal with consumer complaints. It can form the basis for a fun exercise and stimulating
in-class discussion.
One reason for gathering the complaints of other people is to help students step outside their own personal
perceptions and behaviors and think about the dissatisfaction issues from a managerial perspective.
Of course, there is no one right set of answers. Students should be able to suggest some aspects of product
strategy based on specific complaints. They should consider the appropriate level of product quality for the
target segment and the price level, helping consumers develop more realistic expectations, and developing
procedures for insuring quality control essential to consistent product/service performance. You probably
will need to remind students to consider the costs of the strategies they recommend.
3.
Explain each of the four categories in Exhibit 16.3. Offer an example of a product for which your purchasing
patterns fit each category.
The four brand categories and some examples are:
i.
ii.
Brand loyalty, which is an intrinsic commitment to repeatedly purchase a particular brand. For
example, a consumer might prefer Gleem toothpaste and be unwilling to purchase or use any other.
Repeat purchase behavior, which is the repetitive purchase of a brand without a commitment to do
so, such as purchasing a brand when it is on sale. For example, a consumer may buy Ultrabrite
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iii.
iv.
toothpaste because it is on sale or is the cheapest brand, but has no commitment to purchasing this
brand.
Variety seeking, which is a cognitive effort to purchase different brands because of such things as
the stimulation involved in trying different things, curiosity, novelty, or overcoming the boredom
with the same old thing. For example, a golfer might purchase many different drivers during a
season, or a few of them.
Derived Varied Behavior, which is the purchase of different brands, based on external cues rather
than a commitment to do so. For example, a consumer might purchase many different brands of
soda pop based on which is on sale or cheapest when they are shopping.
4. Recommend a marketing strategy for a brand that competes with one for which you are a brand-loyal heavy
user. How successful do you believe the strategy would be, and why?
This rather difficult application question will require some serious thinking focused on changing the
behavior patterns of a target segment of consumers. Exhibit 16.4 could be a useful framework for
developing an answer.
Students should recognize that these consumers have strong behavior patterns (consistent brand purchase)
and probably strong and positive beliefs, attitudes and purchase intentions, too. Because these behavior
patterns may be very entrenched, changing consumers' brand preferences and purchases is likely to be
difficult.
Marketers will want to conduct a trade-off analysis to make sure that the probable benefits of doing
so outweigh the costs. Is this segment important enough (profit potential, market share, etc.) to
make the effort worthwhile?
If the purchase behavior has a strong cognitive base (purchase is based on beliefs about the product
attributes and consequences), marketing strategies will probably provide new information to the target
consumers. This information must convince consumers that the new brand is better than their favorite or at
least that the competing brand is worthy of trial. An important part of the strategy should be to get
consumers to try the new brand and see for themselves. Passing out free samples is a possible approach.
The hope here is that this product information would change existing cognitions and lead to a positive
decision process to buy the new brand.
If the behavior is largely influenced by environmental factors, the marketing strategy must change the
relevant environmental stimuli. For instance, marketers might give consumers a special reward for buying
(or trying) the new product.
No doubt, some students will offer examples of marketing strategies that are either expensive (massive free
sampling) or difficult to implement. You should point out that potential marketing strategies should be
carefully evaluated in terms of its costs and likely benefits.
Students should recognize that appropriate strategies will vary by product category. A strategy that might
work for selling a luxury car (a Lexus) to loyal Mercedes customers might not be appropriate for the
toothpaste or running shoe markets.
5. Identify the key stimuli in the product environment that influence your purchasing behavior for: (a) soft drinks,
(b) frozen pizza, (c) shampoo, and (d) jeans.
This simple review question reminds students that the external environment can have big effects on
consumers' behaviors.
Since the products suggested here are widely purchased by students in many different retail outlets and in a
variety of situations, there are lots of environmental factors to be discussed. Students should have no
trouble identifying many influential environmental factors. The discussion should sensitize students to the
many problems and opportunities that managers face in dealing with environmental factors.
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For each of the product categories, multiple brands will be available within the purchase environment, so
product variables, such as product attributes and packaging, would impact purchasing behaviors.
Students should be able to list other influential factors such as point-of-purchase stimuli (displays and signs)
and general characteristics of the retail environment (type and size of store, merchandise assortments).
Students should also mention social factors such as reference groups and family influences. Students should
identify those elements that are controlled by the manufacturer, competing manufacturers, and the retailer.
6. To which adopter category do you belong in general? Explain.
This review question asks students to introspect about their "typical" new product reactions. The objective
of the question is to review differences in adopter categories by relating those concepts to the realities of
students' own responses.
Students will probably mention that there are personality traits such as "adventuresomeness" and "selfconfidence" that make some people more likely to be among the first, in the middle, or among the last to try
new products.
However, a more reasonable answer is that "it depends". Some people will be among the first to try new
products in certain product categories, but may be later to adopt innovations in other product categories.
No one has the time or money or the inclination to be innovative in all categories. Few students
will be laggards in all categories, even with their tight budgets.
This approach should lead students to a deeper analysis of their innovative behavior. They should
consider their level of knowledge and involvement with certain product categories.
To make this discussion more concrete focus on a specific new product or service that has recently become
available.

Ask who has tried a new hamburger outlet which just opened in your community, or who has seen the
latest movie, or who has tried a new sun screen product.
7. Describe characteristics of new products that would be useful for predicting success and for prescribing effective
marketing strategies.
This simple review question concerns the characteristics of new products or innovations as discussed in the
text (see Exhibit 16.6)
Students should be able to define the key characteristics of compatibility, trialability, observability, speed,
simplicity, relative advantage and product symbolism.
Marketing managers can analyze these characteristics of a new product to assess the likelihood of positive
consumer response and to identify potential problems which might be overcome through creative strategy
development.
For example, if trial behaviors are difficult for consumers, marketers might need to develop a
creative strategy to generate use experiences overcome this point of resistance. For instance, a car
dealer might drive a new car over to a consumer's house so that they could take a test drive.
8. Discuss the problems and advantages that could be associated with appealing to innovators when marketing a
new consumer packaged good.
This application question will require some thought beyond the brief discussion in the text.
Students could start by defining innovators. By definition, innovators are venturesome and willing to take
risks. Because they are willing to try new things, innovators are crucial to the success of a new product.
For instance, innovators serve as models for the early adopters that follow them.
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There are problems in marketing to innovators, however. Because there are relatively few innovators, and
they are present throughout the social system, innovators may be hard to identify and find. They may be
expensive to reach in the market.
Another problem is that innovators' desire for the new will stimulate them to try other new things even after
buying your product. Innovators are probably less brand loyal than the typical consumer. We would expect
that true innovators are not interested in me-too modifications and minor line-extensions.
Also, if their product experiences are not good, the negative word-of-mouth communication can hurt the
introduction of the product, perhaps even killing it. Finally, since innovators tend to be very knowledgeable
and experienced in the category, they are difficult to please.
9. Analyze the consumer/product relationships for a new pre-sweetened cereal product. Include both product and
consumer characteristics.
This review/applications question asks for personal ideas and will produce idiosyncratic answers. By this
point in the course, students' analyses should be relatively detailed and sophisticated.
First, students should identify the specific target segments of consumers for this product. These could
include young children, mothers, older children and teenagers who eat cereal.
Students should also consider the situations in which cereal is eaten. It is common for some consumers to
eat cereal at "nontraditional" times, including after school as a snack, for lunch, a late-night snack, and even
for dinner by harried single consumers too tired to cook a meal. The product category may have different
salient meanings in these different situations. A consumer/situation segmentation scheme might be useful.
Students then should consider which product attributes are salient for these consumer/situation
segments. Product attributes could include the cereal grain; its color, shape, type of sweetening;
the packaging; brand name; price; etc. Students should also mention the characteristics of
innovative products (see Exhibit 16.6) to assess the likelihood and conditions of success for the
product.
Then, students should analyze the consumer/product relationship for these types of consumers.
They should definitely consider consumers' levels of involvement with both the product category
and specific brands. Consumers' knowledge about the product category is also relevant.
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NOTES TO DISCUSSION QUESTIONS FOR MARKETING STRATEGY IN ACTION--HarleyDavidson, Inc. - Motorcycle Division
Overview. This case discusses one of the most remarkable turnarounds in corporate history, the saga of HarleyDavidson, Incorporated. While the company did well in the 50s and 60s, increased competition by Japanese
manufacturers led to near bankruptcy by 1985. Through a variety of financial, manufacturing, management, and
marketing changes, the company rebounded to be the market leader in the super heavyweight (850 cc and larger)
motorcycle market. In 1990, Harley-Davidson products were of excellent quality and premium-priced, and the
company was highly profitable. Harley-Davidson controlled over 60 percent of the super heavyweight market and its
customers were quite brand loyal. The case briefly describes this American success story.
Suggestions for Discussion Questions
1. What kind of consumer owns a Harley?
This question is designed to get students to think about consumer/product relationships for motorcycles in
general and Harleys in particular. While there is a group of hard-core gang-member types who ride Harleys
and whose life revolves around their bikes, most owners are likely much different than this. This can be
seen b first reviewing the demographics of purchasers in the early 1990s versus the early 2000s:
Gender:
Early 2000s
91% male
Early 1990s
94% male
Median Age:
47 years old
34.5 years old
Median Income:
$80,000
$40,000
It is clear that the demographics of Harley purchasers had changed a good deal. Purchasers are still
primarily male, but are considerably older and wealthier than even 10 years before. Many are professional
people who ride with their spouses on luxury cruisers and are more conservative. This market has the
money to purchase an expensive motorcycle used primarily for recreation. The traditional market for
motorcycles (males 18-25) are more likely to buy less expensive Japanese bikes.
2. What accounts for Harley owners' satisfaction and brand loyalty?
This question is designed to complete the discussion started with the first question. As noted in the chapter,
one of the most powerful differential advantages a product can have is product symbolism--what the
product or brand means to the consumer and the meanings and feelings consumers experience in purchasing
and using the product. Following are some of the reasons why Harleys have significant meanings for their
owners:

Harley-Davidson is the only remaining American motorcycle. For consumers who value
buying American products, Harley is the only alternative. In times when the country rallies
together, such as during the war with Iraq, nationalism is strong. Harley is also a symbol of
survival of traditional values, since it has been around since 1903. Meanwhile, all other
American motorcycle companies have failed.

Harleys have a macho image. While the company does not want the product to have an image
that is too rough and hard core, it would not want the product image to be too bland, clean, or
average. Many films such as Terminator II and Easy Rider feature macho characters riding
Harleys. The company is apparently successful in controlling its image from being too hard
core, since many older consumers purchase the product.

Harleys are expensive and a prestige product. There is no question that Harleys have excellent
product quality and high resale value. The premium prices, redesigned dealerships, and high
quality catalogs and advertising enhance the Harley image as a prestige product.
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
There is a mystique to owning a Harley. This image is fostered by advertising such as the
following quote from the 1991 Harley-Davidson catalog:
To the average citizen, it's a motorcycle. To the average motorcyclist, it's a Harley. To
the Harley owner, it's something else entirely, something special. Once you've got your
Harley, it's much more than a piece of machinery or a way to get around. In a sense, it
actually owns you. It occupies you even when you're not riding it. It's part of your life.
And while you might not ever be able to explain it to anyone who doesn't know, you
know; the trip certainly doesn't end after the road does. Different? Most wouldn't have it
any other way.

Motorcycles, particularly Harleys, have deep meaning to their owners. Motorcyclists often like
to talk about their bikes, clean and polish them, look at them and buy accessories for them. The
product may have many symbolic values such as freedom and excitement. The many
customizing options for motorcycles, particularly for Harleys, suggest that motorcycles can be
changed to be an extension of the owner's self. The knowledge and skills necessary to drive a
motorcycle effectively may be highly valued by some consumers.
Finally, as noted by Willie G. in the case, designing Harleys is "almost like being in the fashion business."
In discussing this issue, it may be useful to compare the consumer/product relationships of owning a Harley
with those of owning a piece of fine jewelry.
3. What role do you think the Harley Owner Group plays in the success of the company?
The Harley Owner Group (HOG) likely plays two important roles.
First, it provides Harley management with direct feedback on its products and suggestions for
product improvement. It is an excellent way for the company to stay close to its customers and to
develop a clear understanding of what they want out of their motorcycles.
Second, the Harley Owner Group adds a social dimension to the purchase of a Harley. It allows
owners to meet other people who have similar values and interests and enjoy motorcycling. The
HOG chapters go on rallies together and have a number of social events throughout the year. The
group also provides social reinforcement for purchasing new bikes and Harley accessories by
admiring these purchases after they are made.
4. What threats do you think Harley-Davidson faces in the next few years?
This question is designed to get students to recognize that in spite of Harley-Davidson's excellent product
and market position, there are serious threats to the company. These include:

Product Safety. While Harleys are as safe or safer than other brands of motorcycles, motorcycle
accidents do injure and kill many consumers each year. Research by the Insurance Institute for
Highway Safety has found that in a crash, a person is 17 times more likely to die on a motorcycle than
in a car. The question of motorcycle safety threatens the survival of the industry. For example,
manufacturers can no longer produce three-wheeled all-terrain vehicles because they were judged to be
unsafe. Perhaps the same thing could happen to two-wheeled motorcycles. In addition, more and more
states are making motorcycle helmets required for motorcycle use. Some consumers may quit
motorcycling if helmets are required.


In discussing this question, you could ask if motorcycles are inherently unsafe or whether it is
the drivers who are at fault. This ethical issues and issues of manufacturer responsibility. The
discussion could be extended to include automobiles, bicycles and other products whose use
results in injuries and deaths to see whether students have any insights or recommendations for
increasing product safety.
Competition. There is no question that the four Japanese companies--Honda, Kawasaki, Suzuki and
Yamaha--are formidable competitors who produce quality products and know how to market them.
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Perhaps American-made Harley-Davidson doesn't mean as much to younger consumers as it does to
older people, and this works in favor of Japanese competitors. Younger consumers may also prefer the
newer styles and faster Japanese bikes which also are significantly less expensive than Harleys. If
buyers of Japanese bikes from the 1970s and early 80s return to motorcycling as they get older, they
may prefer the bikes of their youth rather than a Harley-Davidson.

Aging of the Market. As noted earlier, the median age of Harley buyers has continued to increase. The
problem is that, at some point, many people feel they are too old to ride safely and get out of
motorcycling. Unless Harley can develop products that appeal to a younger market at a price they can
afford, it is in danger of losing its place in the market.
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