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Chapter 12
Category and Brand
Management,
Product
Identification, and
New-Product
Development
Chapter Objectives
1. Explain the benefits of category and brand
management.
2. Identify the different types of brands.
3. Explain the strategic value of brand equity.
4. Discuss how companies develop strong identities
for their products and brands.
5. Identify and briefly describe each of the four
strategies for new-product development.
6. Describe the consumer adoption process.
7. List the stages in the process for developing new
products.
8. Explain the relationship between product safety
and product liability.
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Creating and Protecting a Strong Identity
for Products
 Branding is the process
of creating that identity.
 Buyers respond to
branding by making
repeat purchases
because they identify
the item with the name
of its producer.
 Pillsbury’s Doughboy
creates an identity for
the brand.
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Managing Brands for Competitive
Advantage
 Brand: name, term, sign, symbol, design, or
some combination that identifies the products of
a firm while differentiating them from the
competition’s
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 Rolex
Several examples
of the Rolex®
brand can be seen
in this
advertisement
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 Brand Loyalty
Brand recognition: Consumer awareness
and identification of a brand.
Brand preference: Consumer reliance on
previous experiences with a product to
choose that product again.
Brand insistence: Consumer refusals of
alternatives and extensive search for
desired merchandise.
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Types of Brands
 Generic product:
item characterized by
plain label, with no
advertising and no
brand name
SOAP
SODA
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 Manufacturers’
brand or
National Brand:
brand name
owned by a
manufacturer or
other producer
 Tabasco
A manufacturer’s
brand
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 Private brands: brand name placed on products
marketed by wholesalers and retailers
Figure 12.2: Arizona private brand at JCPenney
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 Craftsman and Kenmore:
private brands at Sears
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Captive brands:
national brands
that are sold
exclusively by a
retail chain
Kmart
Kmart’s captive
brands include
women’s
clothing with the
Jaclyn Smith
Label (from TV’s
Charlie’s
Angels)
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 Family brand:
brand name that
identifies several
related products
 Heinz
A well known family
brand
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 Figure 12.3
Products Marketed by Honda Using a
Family Brand
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 Individual brand:
unique brand
name that
identifies a
specific offering
within a firm’s
product line and
that is not
grouped under a
family brand
 Irish Spring Sport
Colgate-Palmolive
using individual
branding for
soaps
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 Brand equity: added value that a respected,
well-known brand name gives to a product in
the marketplace.
Brand equity increases the likelihood that
consumers will recognize the firm’s product
when they make purchase decisions
A strong brand equity can contribute to
buyers’ perceptions of product quality
Branding can also reinforce customer
loyalty and repeat purchases
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 Brand Equity
The Young &
Rubicam Model:
Brand Asset
Valuator
90,000
consumers
Four dimensions
of brand
personality as
viewed by
consumers
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 The Role of Category and Brand Managers
Brand manager: Marketing professional
charged with planning and implementing
marketing strategies and tactics for a brand
Category management: Product
management system in which a category
manager—with profit and loss
responsibility—oversees a product line
[sometimes within a customer].
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Product Identification
 Brand name: part of a brand consisting of
words or letters that form a name that
identifies and distinguishes a firm’s offering
from those of its competitors
 Brand mark: symbol or pictorial design that
identifies a product
 Generic name: branded name that has
become a generically descriptive term for a
class of products (e.g., nylon, aspirin,
kerosene, and zipper)
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 Slinky
An effective
brand name
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 Trademark: legal
protection which
confers the exclusive
right to user brand
name, trade mark,
and any slogan or
product name
abbreviation
 The red disk, brand
name, and distinctive
bottle design are all
Coca-Cola trademarks
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 Oscar Mayer
Received
trademark
protection for its
slogan and
Wienermobile.
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 Developing Global Brand Names and
Trademarks
Potentially an acute problem for
international marketers
An excellent brand name or symbol in one
country may prove disastrous in another
Trademarks that are effective in their home
countries may fare less well in other
cultures
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 Figure 12.6
The World’s 10 Most
Valuable Brands
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Packaging
 A package serves three major objectives:
Protection against damage, spoilage, and
pilferage
Assistance in marketing the product
Cost effectiveness
 Labeling
Label
Universal Product Code (UPC)
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 Clean Shower
Labels
performing an
informational
function
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 Brand extension:
application of a
popular brand
name to a new
product in an
unrelated product
category
 Example: Utility
Lighter – A Bic
Brand Extension
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 Line extensions refers to new sizes, styles,
or related products
Coca-Cola line extensions
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 Brand licensing:
practice allowing
other companies to
use a brand name
in exchange for a
payment
Nabisco
Licenses Its
Oreo Brand to
Post Cereal
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New Product Planning
 As a firm’s offerings enter the maturity and
decline stages of the product life cycle, it must
add new items to continue to prosper
 Alternative Product Development Strategies
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 Product Development Strategies
Product positioning: consumers’
perceptions of a product’s attributes, uses,
quality, and advantages and disadvantages
in relation to those of competing brands
Cannibalization: a loss of sales of the
current product due to competition from a
new product in the same line
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 Good Seasons
Promoting new
ways to use a
salad dressing
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The Consumer Adoption Process
 Adoption process: Stages that consumers
go through in learning about a new product,
trying it, and deciding whether to purchase it
again.
Awareness
Interest
Evaluation
Trial
Adoption or rejection
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 Consumer innovator: People who purchase
new products almost as soon as the products
reach the market
 Diffusion process: Process by which new
goods or services are accepted in the
marketplace
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 Figure 12.8
Categories of Adopters Based on Relative
Times of Adoption
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 Identifying Early Adopters
Substantial benefits may be obtained by
locating the likely first buyers of new
products (innovators and early adopters)
Suggestions for modifying the product may
be obtained from these individuals
Acceptance or rejection of the innovation
by innovators and early adopters can help
forecast sales
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 Rate of Adoption Determinants
Characteristics of a product innovation that
influence its adoption rate include:
Relative advantage – a far superior
innovation
Compatibility – fits with potential adopters
values and experiences
Complexity – relative difficulty of
understanding the innovation
Possibility of trial use – reduce risk
Observability – ability to observe the
innovation’s superiority [demonstrations]
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 Organizing for New Product Development
New-Product Committees
New-Product Departments
Product Managers
Venture Teams
Task forces
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New Product Development Process
 New product development process: six stages
through which new product ideas progress
before being introduced to the overall market
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 Idea Generation
New product ideas come from many sources
including:
Sales force, Customers, Employees, R&D
specialists, The competition, Suppliers,
Retailers, Independent inventors
 Screening
Screening separates ideas with commercial
potential from those that cannot meet
company objectives
Checklists of development standards can
be helpful at this stage
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 Business Analysis
The business analysis consists of assessing the
new product’s market potential, growth rate,
likely competitive strengths, and compatibility of
the proposed product with organizational
resources
Concept testing
 Development
Converting an idea into a physical product
Requires interaction among many of the firm’s
departments
Prototypes may go through many changes
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 Test Marketing
Test marketing: Introduction of a trial version of a
new product supported by a complete marketing
campaign to a selected city of television coverage
area
Some firms skip this stage, moving directly to
full-scale commercialization
 Commercialization
In this stage, the firm establishes marketing
strategies, and funds outlays for production and
marketing
The sales force, marketing intermediaries and
potential customers are acquainted with the
new product
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End of Chapter Twelve
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