Product Strategies: Branding and Packaging Decisions

The nature, scope, and importance of branding in product planning
The various branding elements
The different types of brands
Packaging

Brand
any word, name, symbol, or device or any combination thereof used by a manufacturer or merchant to identify this goods and distinguish them from those manufactured or sold by others (Lanham Trade-Mark Act)
any sign, or any combination of signs, capable of distinguishing the goods or services of one undertaking from those of other undertakings, shall be capable of constituting a trademark. Such signs, in particular words including personal names, letters, numerals, figurative element5s and combinations of colours as well as any combination of such signs, shall be eligible for registration as trademarks (WTO)

A brand is a name, term, design, or symbol (or combination) that identifies a business or organization and its products.

Brands include:
Brand Name
Brand Mark
Trade Name
Trade Character
Trademark

Brands can include a number of elements:
Brand name – the word, group of words, letters, or numbers representing a brand that can be spoken. Ex: Mountain Dew, PT Cruiser, SnackWells
Also called a product brand

Brand mark – the part of the brand that is a symbol or brand name – it may include distinctive coloring or lettering. It usually is not spoken

Trade name – identifies the company or a division of a particular corporation – the legal name a company uses when it does business. Ex: Kellogg’s, Dell, Xerox
Also called a corporate brand.

Trade character – a brand mark with human form or characteristics. Ex: Jolly Green Giant, Pillsbury Doughboy, Kellogg’s Tony the Tiger

Trademark – a brand name, brand mark, trade name, trade character, or a combination of these that is given legal protection by the federal government
Trademarks are followed by a registered trademark symbol

Functions of Brand
create identification and brand awareness
guarantee a certain level of quality, quantity, and satisfaction
help with promotion

Branding decisions

Generating Brands
Hard to find the right name
Generated by employees, computer programs, PR agencies
Most companies do research to determine if the brand name is effective

Types of Brands
National Brands
Private Brands
Generic Brands

National Brands
Also called “manufacturer brands.”
Examples: Pepsi, Kellogg’s, IBM.
National brands generate the majority of sales for most product categories: 70% of all food products, 65% of all appliances, 80% of all gasoline are sold under national brands.

National brands not only identify a given product but also indicate a standard quality and price.
They appeal to people who want CONSISTENT quality, dependable product performance, status, and who will NOT take risks with unknown products.

Private Brands
Owned and initiated by wholesalers and retailers.
There is NOT a manufacture name on the product.
They appeal to those who are price conscience.
They carry higher gross margins for the retailers.
Example; Craftman tools, Kenmore

Generic Brands
“no frills” products and do not carry a brand name.
Found usually in grocery stores/discount stores.

Generics
Unbranded products are generally 30-50% lower than nationally advertised brands and 10-15% less than private.

Branding Decisions
Branding vs. No Brand
Private Brand vs. Manufacturer's Brand
Single Brand versus Multiple Brands (in one country)
Local Brands vs. Worldwide Brand

A branding model for decision making

Branding vs. No Brand
Commodity
- unbranded or undifferentiated product
- sold by grade, not by brands
- flexibility in quality and quantity control
- lower production costs along with lower marketing and legal costs.
- demand being strictly a function of price

Branding vs. No Brand
Product
- value-added commodity
- better identification and awareness
- promotion and differentiation
- consumer confidence, brand loyalty, and repeat sales
- possible to use premium pricing
- allowing effective branding

Private Brand vs.
Manufacturer’s Brand
Distributor's (Private) Brand
lower retail price for price-sensitive consumers
higher profit margin for distributor
Manufacturer's Brand
better image and market acceptance
no promotion hassles for distributor

Private Brand vs.
Manufacturer’s Brand
"Least Dependent Person" Hypothesis
- least dependent person is stronger party
- stronger party has more resources and market acceptance
- least dependent person is likely to prevail on brand choice

Types of Brands
National Brands –owned and initiated by manufacturers. Ex: General Electric, Heinz, and Motorola.
When consumers buy food products, they buy manufacturer brands nearly 75 percent of the time.

Private Distributor Brands – also called Private Brands, Store Brands, or Dealer Brands – owned and initiated by wholesalers and retailers. Ex: Radio Shack and Kmart, Craftsman, Kirkland
This type of brand can be controlled by retailers and it yields the highest profits.

Single Brand vs. Multiple Brands (in one country)
Single Brand
- full attention for maximum impact
- based on assumption of market homogeneity
Multiple Brands
- market segmentation
- based on assumption of market heterogeneity

Local Brands vs. Worldwide Brand
Worldwide Brand
- based on assumption of market homogeneity
- uniform brand image
- convenient identification
- status and prestige
- maximum market impact
- lower production costs
- lower advertising costs

Local Brand vs. Worldwide Brands
Local Brands
- allowing quality variations
- easier pronunciation by local consumers
- avoiding negative connotation.
- avoiding legal complications
- circumventing price control
- discouraging gray marketing

Brand Characteristics
short and easy to pronounce (in local languages)
suggesting product benefits without negative connotations
unique or distinctive (or capable of being distinctive)

Hierarchy of Registration Eligibility
Fanciful Mark
Arbitrary Mark
Suggestive Mark
Descriptive Mark
Generic Mark

Hierarchy of Registration Eligibility
Fanciful Mark
- coined solely for purpose of identifying a particular product
- strongest legal protection
Arbitrary Mark
- ordinary word that is used on a product in a totally nondescriptive way
Suggestive Mark
- subtly indicating something about a product
- requiring consumers to use imagination to link the mark to a product's characteristic

Hierarchy of Registration Eligibility
Descriptive Mark
- immediately conveying a product's characteristic, quality, or feature
- not requiring consumers to use imagination
Generic Mark
- identifying a product rather than its manufacturer/marketer
- no legal protection

Generic Brands – represent a general product category and do not carry a company or brand name. The packaging only describes the product – “pancake mix” or “paper towels”
Often priced below branded products

Packaging
Functions
Functional: protection
Promotional
Modification
Mandatory
Optional

Questions for self study
Branding Decisions
Branding Levels and Alternatives
- Branding vs. No Brand
- Private Brand vs. Manufacturer's Brand
Single Brand versus Multiple Brands
Local Brands vs. Worldwide Brand