CHAPTER 13
Branding and Packaging
Lecture Outline
(Transparency Figure 13A: Chapter Outline)
I. Branding
A. Definitions of Branding Terms
1. A brand is a name, term, symbol, design, or other feature that identifies one seller’s good or service as distinct from those of other sellers.
(Transparency Figure 13B)
2. A brand name is that part of a brand that can be spoken, including letters, words, and numbers; a brand name is often a product’s only distinguishing characteristic.
3. A brand mark is an element of a brand that cannot be spoken, often a symbol or design.
4. A trademark is a legal designation indicating that the owner has exclusive use of the brand or part of that brand and that others are prohibited by law from using it.
5. A trade name is the full legal name of an organization rather than the name of a specific product.
B. Value of Branding
1. To Buyers
a) Brands help buyers identify specific products that they like and do not like, which facilitates the purchase of those items that satisfy individual needs.
b) A brand helps a buyer evaluate the quality of products, especially when the person lacks the ability to judge a product’s characteristics; that is, a brand may symbolize a certain quality level to a purchaser, and the person in turn lets that perception of quality represent the quality of the item.
(Transparency Figure 13E)
c) A brand helps reduce a buyer’s perceived risk of purchase.
d) A brand can give buyers the psychological reward that comes from owning a brand that symbolizes status.
2. To Sellers
a) Sellers’ brands identify each firm’s products, which makes repeat purchasing easier for consumers.
b) To the extent that buyers become loyal to a specific brand, the firm’s market share for that product achieves a certain level of stability, which allows the firm to use its resources more efficiently.
c) When a firm develops some degree of customer loyalty to a brand, it can maintain a fairly consistent price for the product instead of having to cut the price repeatedly to attract customers.
C. Brand Loyalty
1. Brand loyalty is a customer’s favorable attitude toward a specific brand, which affects the likelihood of consistent purchase of this brand when the need arises for a product in that product category; brand loyalty can be categorized into three levels.
(Transparency Figure 13C)
a) Brand recognition occurs when a customer is aware that a brand exists and views it as an alternative to purchase if his or her brand is unavailable or if the other available brands are unfamiliar to the customer.
b) Brand preference is a stronger degree of brand loyalty. A customer definitely prefers one brand over competitive offerings and will purchase the brand if available, but will not go out of his or her way to find it.
c) Brand insistence is the strongest degree of brand loyalty, in which a customer strongly prefers a specific brand, will accept no substitute, and will go to great lengths to acquire it.
2. Although brand loyalty is a challenge to build, it makes a significant contribution to a sustainable competitive advantage.
3. Brand loyalty seems to be on the decline.
a) This is due in part to marketers’ increased reliance on sales, coupons, and other promotions, and in part to the array of similar products from which customers can choose.
b) Several recent studies indicate that brand loyalty is declining for all age groups and especially among consumers 50 and over.
D. Brand Equity
(Transparency Figure 13.1)
1. Brand equity is the marketing and financial value associated with a brand’s market strength.
(Transparency Figure 13B)
(Transparency Figure 13G)
2. The elements of brand equity include proprietary brand assets, such as patents and trademarks, as well as brand name awareness, brand loyalty, perceived brand quality, and brand association.
(Transparency Table 13.1)
a) Awareness of a brand name leads to familiarity, and familiar brands are more likely to be viewed as more reliable and of more acceptable quality.
b) Customers with brand loyalty are less vulnerable to competitors’ actions and provide brand visibility and reassurance to potential new customers.
c) Perceived brand quality helps to support a premium price, allowing a marketer to avoid severe price competition because a brand name can actually stand for and be used to judge actual quality.
d) Marketers associate a particular lifestyle or certain personality with a specific brand to appeal to consumers who can relate to the image.
(Transparency Figure 13D)
3. Although brand equity is difficult to measure, one company will pay a premium to purchase a brand from another company because it is less risky than developing its own.
(Transparency Figure 13H)
E. Types of Brands
1. Manufacturer brands are initiated by producers and ensure that producers are identified with their products at the point of purchase.
a) A manufacturer brand usually requires that a producer get involved with distribution, promotion, and (to some extent) pricing decisions.
b) The producer tries to stimulate demand for the product, which tends to encourage intermediaries to make the product available.
2. Private distributor brands (or private brands, store brands, or dealer brands) are initiated and owned by resellers; manufacturers are not identified on the products.
(Transparency Figure 13.2)
a) Retailers and wholesalers use private distributor brands to develop more efficient promotion, generate higher gross margins, and change store images.
b) Private distributor brands give retailers or wholesalers freedom to purchase products of a specified quality at the lowest cost without disclosing the identity of the manufacturer.
c) Traditionally, private brands have appeared in packaging that directly imitates the packaging of competing manufacturers’ brands without significant legal ramifications; but the legal risks are increasing for private brands.
d) Some private brands are produced by companies that specialize in making only private distributor brands, while other private brands are made by producers of manufacturer brands.
(1) Both find it difficult at times to ignore the opportunities that come from producing private distributor brands.
(2) If a producer decides not to produce a private brand for a reseller, a competitor probably will.
(3) Also, the production of private distributor brands allows the producer to use excess capacity during periods when its own brands are at nonpeak production.
3. Generic brands indicate only a product category and do not include the company name or other identifying terms.
a) Generic brands are usually sold at lower prices than are comparable branded items.
(Building Customer Relationships: The Power of Private Distributor Brands)
b) Sales of generic brands account for less than half of a percent of all grocery sales.
F. Selecting a Brand Name
(Transparency Figure 13F)
1. Marketers should consider a number of factors when selecting a brand name.
a) The name should be easy for customers to say, spell, and recall.
b) If possible, the brand name should suggest the product’s uses and special characteristics in a positive way and avoid negative or offensive references.
c) If a marketer intends to use a brand for a product line, the brand must be designed to be compatible with all products in the line.
d) A brand should be designed so that it can be used and recognized in all types of media.
e) Brand names can be created from single or multiple words, initials, numbers, or combinations of these.
f) To avoid terms that have negative connotations, marketers sometimes use fabricated words that have no meaning.
2. Brand names can be created internally by the organization, by outside consultants, or by hiring a company specializing in brand name development.
3. Even though branding considerations apply to both goods and services, there are some special dimensions of service branding.
a) The brand name of a service is usually the same as the company name.
b) Service brands must be flexible enough to encompass a variety of current services as well as new ones that a company might offer in the future.
c) Service marketers often use a symbol along with a brand name to make the brand distinctive and to convey an image.
G. Protecting a Brand
1. Marketers should take steps to protect their exclusive rights to a brand.
a) Marketers should design a brand name that they can protect easily through registration; this protects trademarks for ten years and allows them to be renewed indefinitely.
b) The company should be certain that the selected brand is unlikely to be considered as infringement on any brand already registered with the U.S. Patent and Trademark Office.
2. Using some of the following methods, a marketer must guard against letting a brand name become a generic term used to refer to a general product category because generic terms cannot be protected as exclusive brand names.
a) Firms can spell the name with a capital letter.
b) They can use the name as an adjective to modify the name of the general product class.
c) Including the word "brand" just after the name is helpful.
d) Firms can indicate that the brand is trademarked with the symbol ®.
3. In 1988, the Trademark Law Revision Act was enacted to increase the value of the federal registration system relative to foreign competitors and to protect consumers from counterfeiting, confusion, and deception.
4. In many foreign countries brand registration is not possible. The first firm to use a brand in such a country automatically has the rights to it.
5. Brand counterfeiting is harmful because the usually inferior counterfeit product undermines consumers’ confidence in their loyalty to the brand and reduces the brand owners’ revenues from marketing their legitimate products.
H. Branding Policies
1. In establishing branding policies, the firm must decide whether to brand its products at all.
a) When an organization’s product is homogeneous and similar to competitors’ products, it may be difficult to brand.
b) Raw materials are hard to brand because of the homogeneity of these products and their physical characteristics.
2. If a firm chooses to brand its products, it may opt for one or more branding policies.
a) Individual branding is a policy of naming each product differently.
(1) A major advantage of individual branding is that when an organization introduces a poor product, the negative images associated with it do not contaminate the company’s other products.
(2) Individual branding policies may facilitate the use of market segmentation when a firm wishes to enter many segments of the same market; separate, unrelated names can be used with each brand aimed at a specific segment.
b) In family branding, all of the firm’s products are branded with the same name or at least part of the name; family branding is beneficial because the promotion of one item with the family brand promotes the firm’s other products.
c) In brand-extension branding, a firm uses one of its existing brand names as part of a brand for an improved or new product that is usually in the same product category as the existing brand.
3. Marketers share a common concern that if a brand is extended too many times or extended too far away from its original product category, the brand can be significantly weakened.
4. Branding policy is influenced by the number of the firm’s products, the characteristics of its target markets, the competing products available, and the firm’s resources.
I. Co-Branding
Co-branding is the use of two or more brands on one product; marketers employ co-branding to capitalize on the brand equity of multiple brands.
1. The two brands can be owned by the same company.
2. Co-branding capitalizes on the trust and confidence customers have in the brands involved.
3. The brands should not lose their identities, and it should be clear to customers which brand is the main brand.
4. When a co-branded product is unsuccessful, both brands are implicated in the product failure.
5. To gain customer acceptance, the brands involved must represent a complementary fit in the minds of buyers.
6. Co-branding can help an organization differentiate its products from those of its competitors.
7. Co-branding can also take advantage of the distribution capabilities of co-branding partners.
J. Brand Licensing
Brand licensing is an agreement whereby a company permits another organization to use its brand on other products for a licensing fee.
1. A growing number of companies are letting approved manufacturers use their trademarks on other products for a licensing fee.
2. Advantages of licensing include extra revenue, low cost, free publicity, new images, and trademark protection.
3. Disadvantages of licensing include lack of manufacturing control and too many unrelated products bearing the same name.
II. Packaging
Packaging involves the development of a container and a graphic design for a product.
A. Packaging Functions
1. Packaging protects the product or maintains its functional form by reducing damage that could affect its usefulness and increase costs.
2. The size or shape of a package may relate to the product’s storage, convenience of use, or replacement rate.
3. Packaging promotes a product by communicating its features, uses, benefits, and image.
B. Major Packaging Considerations
1. Marketers should conduct research to determine exactly how much customers are willing to pay for package designs.
2. Developing tamper-resistant packaging is very important.
3. Marketers should consider how much consistency among their package designs is desirable.
a) If a firm’s products are unrelated or aimed at vastly different target markets, no consistency may be the best policy.
b) With family packaging, a firm designs similar packaging for all its products or includes one major design element in every package; sometimes this approach is used only for lines of products.
4. Marketers must consider the package’s promotional role.
a) The package can be used to attract customers’ attention and encourage them to examine the product.
b) Through verbal and nonverbal symbols, the package can inform potential buyers about the product’s content, features, uses, advantages, and hazards.
c) A firm can create desirable images and associations by using certain colors, designs, shapes, and textures in packages.
d) A package may perform a promotional function when it is designed to be safer or more convenient to use if such characteristics stimulate demand.
e) To develop a package that has definite promotional value, a designer must consider size, shape, texture, color, and graphics.
(1) Beyond the obvious minimal limitation that the package must be large enough to hold the product, a package can be designed to appear taller or shorter.
(2) The shape of the package can help communicate a particular message.
(3) Color on packages is often used to attract attention; people associate certain feelings and connotations with specific colors.
5. Marketers must consider whether to develop packages that are environmentally responsible. Marketers must carefully balance society’s desires to preserve the environment against consumers’ desires for convenience.
(Tech Know: Technology Brings Eye Catching Colors to Packaging)
C. Packaging and Marketing Strategy
(Transparency Table 13.2)
1. Packaging can be a major component of a marketing strategy.
a) A new cap or closure, a better box or wrapper, or a more convenient container size may give a firm a competitive advantage.
b) The right type of package for a new product can help it gain market recognition very quickly.
c) Marketers should view packaging as a major strategic tool for convenience products.
2. Altering the Package
Marketers alter packaging for a number of reasons.
a) A package may be redesigned because new product features need to be highlighted.
b) Packages may be altered to make the product safer or more convenient to use.
c) Marketers may change a package because new packaging materials become available.
d) Marketers may alter a package to reposition an existing product.
3. Secondary-Use Packaging
A secondary-use package is one that can be reused for purposes other than its initial use.
a) Secondary-use packages can be viewed by customers as adding value to products.
b) Secondary-use packaging can be used to stimulate unit sales.
4. Category-Consistent Packaging
Category-consistent packaging is used to package products in line with the packaging practices associated with a particular product category.
5. Innovative Packaging
Innovative packaging such as a unique cap, design, applicator, or other feature will sometimes be used by marketers to make the product completely distinctive.
a) Using innovative packaging can be effective if the innovation makes the product safer or easier to use.
b) Unique packages sometimes make brands stand out next to their competitors.
c) Using innovative packaging usually requires a considerable amount of resources.
6. Multiple Packaging
Marketers sometimes package products in twin packs, tri-packs, six-packs, or other forms of multiple packaging.
a) Multiple packaging is likely to increase demand because it increases the amount of the product available at the point of consumption.
b) Multiple packaging is not appropriate for infrequently used products.
c) Multiple packaging can make products easier to handle and store, and facilitate special price offers.
d) Multiple packaging may increase consumer acceptance of a product by encouraging buyers to try it several times.
7. Handling-Improved Packaging
Packaging may be changed to make it easier to handle in the distribution channel.
a) Changes made might involve the outer carton, special bundling, shrinkwrapping, or palletizing.
b) Sometimes the shape of a package may be changed to facilitate handling.
c) Outer containers are sometimes changed so that they will more easily proceed through automated warehousing systems.
D. Criticisms of Packaging
1. Some packages suffer from functional problems; they do not work well or are inconvenient.
2. Certain types of packages have a questionable impact on the environment.
3. Much packaging criticism focuses on safety problems such as packages with sharp edges or those using aerosol propellants.
4. Sometimes packages are perceived as deceptive.
a) Shapes, colors, or designs sometimes make a product appear larger than it actually is.
b) Inconsistent use of size designations can lead to customer confusion.
c) Sometimes the cost of the package is higher than the cost of the product itself.
III. Labeling
A. Labeling involves providing identifying, promotional, legal, or other information on package labels.
1. Labels carry varying amounts of information.
2. A label can be part of the package itself or a separate feature attached to the package.
3. The type of information a label contains may include several things:
a) The brand name and mark
b) The registered trademark symbol
c) Package size and content
d) Product features
e) Nutritional information
f) Type and style of product
g) Number of servings
h) Care instructions
i) Directions for use
j) Safety precautions
k) The name and address of the manufacturer
l) Expiration dates
m) Seals of approval
n) Other facts
4. For many products, the label includes a universal product code (UPC), which is a series of electronically readable lines identifying a product and providing inventory and pricing information.
5. Labels can facilitate the identification of a product by displaying the brand name in combination with a unique graphic design.
6. By drawing attention to products and their benefits, labels can strengthen an organization’s promotional efforts by containing these items:
a) The offer of a discount
b) Larger package size at the same price
c) Information about a new or improved product feature
7. Federal laws and regulations specify information that must be included on labels of certain products.
a) Garments must be labeled with the name of the manufacturer, country of manufacture, fabric content, and cleaning instructions.
b) Nonedible items like shampoo and detergent must include both safety precautions and directions for use.
8. The 1966 Fair Packaging and Labeling Act focuses on mandatory labeling requirements, voluntary adoption of packaging standards by firms within industries, and the provision of power to the Federal Trade Commission and the Food and Drug Administration to establish and enforce packaging regulations.
(Transparency Figure 13I)
9. The Nutrition Labeling Act of 1990 requires the FDA to review food labeling and packaging, focusing on nutrition content, label format, ingredient labeling, food descriptions, and health messages, regulating much of the labeling on more than 250,000 products.
a) Any food product for which a nutritional claim is made must have nutrition labeling.
b) Information on food labels must include:
(1) Number of servings per container
(2) Serving size
(3) Number of calories per serving
(4) Number of calories derived from fat
(5) Number of carbohydrates
(6) Amounts of specific nutrients, such as vitamins
B. The use of new technology in the production and processing of food has led to additional food labeling issues. The FDA now requires specific logos for irradiated food products and has issued voluntary guidelines pertaining to biotech ingredients.
C. Despite legislation to make labels as accurate and informative as possible, questionable labeling practices persist. For example, the FDA amended its regulations to forbid producers of vegetable oil from making "no cholesterol" claims on their labels.
D. Another area of concern is "green labeling."
1. Consumers who are committed to making environmentally responsible purchasing decisions are sometimes fooled by labels.
2. Several manufacturers have been accused of "greenwashing" customers, using misleading claims to sell products by playing on customers’ concern for the environment.
E. Of concern to many manufacturers are the Federal Trade Commission’s guidelines regarding "Made in U.S.A." labels.
1. The FTC requires that all, or virtually all, of a product’s components be made in the United States if the label says "Made in U.S.A."
2. The FTC considered changing the standard to "substantially all," but rejected the idea.