Product Differentiation and Design

• Summary
• What Is A Product?
• Product differentiation
• Design
• Luxury products
• Environmental Issues
• Product and Brand Relationships
• Packaging, Labeling, Warranties, and Guarantees
TABLE OF CONTENTS

• Product is the first and most important element of the
marketing mix. Product strategy calls for making coordinated
decisions on product mixes, product lines, brands, and
packaging and labeling.
• In planning its market offering, the marketer needs to think
through the five levels of the product: the core benefit, the
basic product, the expected product, the augmented product,
and the potential product, which encompasses all the
augmentations and transformations the product might
ultimately undergo.
SUMMARY

• Products can be nondurable goods, durable goods, or services.
In the consumer-goods category are convenience goods
(staples, impulse goods, emergency goods), shopping goods
(homogeneous and heterogeneous), specialty goods, and
unsought goods.
• The industrial-goods category has three subcategories:
materials and parts (raw materials and manufactured
materials and parts), capital items (installations and
equipment), and supplies and business services (operating
supplies, maintenance and repair items, maintenance and
repair services, and business advisory services).
SUMMARY

• Brands can be differentiated on the basis of product form,
features, performance, conformance, durability, reliability,
repairability, style, customization, and design, as well as such
service dimensions as ordering ease, delivery, installation,
customer training, customer consulting, and maintenance and
repair.
• Design is the totality of features that affect how a product
looks, feels, and functions. A well-designed product offers
functional and aesthetic benefits to consumers and can be an
important source of differentiation.
• Luxury brands command price premiums and often have a
strong lifestyle component. They can require some special
considerations in how they are sold.
SUMMARY

• Products and their packaging must be designed to reduce
adverse environmental impact as much as possible.
• Most companies sell more than one product. A product mix
can be classified according to width, length, depth, and
consistency.
• These four dimensions are the tools for developing the
company’s marketing strategy and deciding which product
lines to grow, maintain, harvest, and divest. To analyze a
product line and decide how many resources to invest in it,
product line managers need to look at sales and profits and
market profile
SUMMARY

• A company can change the product component of its
marketing mix by lengthening its product via line stretching
(down-market, up-market, or both) or line filling, by
modernizing its products, by featuring certain products, and
by pruning its products to eliminate the least profitable.
• Brands are often sold or marketed jointly with other brands.
Ingredient brands and co-brands can add value, assuming they
have equity and are perceived as fitting appropriately.
• Physical products must be packaged and labeled. Well-
designed packages can create convenience value for
customers and promotional value for producers. Warranties
and guarantees can offer further assurance to consumers.
SUMMARY

In this chapter we will address the following questions:
• What are the characteristics of products and how do
marketers classify products?
• How can companies differentiate products?
• Why is product design important and what factors affect a
good design?
• How can a company build and manage its product mix and
product lines?
• How can companies combine products to create strong co-
brands or ingredient brands?
• How can companies use packaging, labeling, warranties, and
guarantees as marketing tools?
Copyright©2012Pearson
Education9-9
LEARNING OBJECTIVES

WHAT IS A PRODUCT?
• A product is anything that can be
offered to a market to satisfy a
want or needs such as:
Physical Goods
Services
Experiences
Events
Persons
Places
Properties
Organizations
Information
Ideas

WHAT IS A PRODUCT?
Five Product Levels
• There are five product levels

WHAT IS A PRODUCT?
Product Levels: The Customer-value Hierarchy
• The fundamental level is the core
benefit: the service or benefit
the customer is really buying.
Marketers must see themselves
as benefit providers
Core Benefit
Basic Product
Expected Product
Augmented Product
Potential Product

WHAT IS A PRODUCT?
• At the second level, the marketer
must turn the core benefit into a
basic product
Core Benefit
Basic Product
Expected Product
Augmented Product
Potential Product

WHAT IS A PRODUCT?
• At the third level, the marketer
prepares an expected product, a
set of attributes and conditions
buyers normally expect when
they purchase this product
Core Benefit
Basic Product
Expected Product
Augmented Product
Potential Product

WHAT IS A PRODUCT?
• At the fourth level, the marketer
prepares an augmented product
that exceeds customer
expectations. In developed
countries, brand positioning and
competition take place at this
level
• Differentiation arises and
competition increasingly occurs
on the basis of product
augmentation.
• Each augmentation adds cost,
however, and augmented
benefits soon become expected
benefits and necessary points-of-
parity in the category
Core Benefit
Basic Product
Expected Product
Augmented Product
Potential Product

WHAT IS A PRODUCT?
• At the fifth level stands the
potential product, which
encompasses all the possible
augmentations and
transformations the product or
offering might undergo in the
future
Core Benefit
Basic Product
Expected Product
Augmented Product
Potential Product

WHAT IS A PRODUCT?
Product ClassificationSchemes
• Marketers have traditionally
classified products on the basis
of characteristics:
• durability,
• tangibility, and
• use (consumer or industrial).
• Each product type has an
appropriate marketing-mix
strategy
Durability
Tangibility
Use (consumer
or industrial)

WHAT IS A PRODUCT?
Durability And Tangibility
• Non-durable goods are
tangible goods normally
consumed in one or a few
uses, like bread and soap.
• Because these goods are
consumed quickly and
purchased frequently, the
appropriate strategy is to
make them available in many
locations charge only a small
markup, and advertise heavily
to induce trial and build
preference
• Non durable goods
• Durable goods
• Services

WHAT IS A PRODUCT?
Durability And Tangibility
• Durable goods are tangible goods
that normally survive many uses:
refrigerators, machine tools and
clothing.
• Durable products normally
require more personal selling
and service, command a higher
margin and require more seller
guarantees.
• Durable goods
• Services

WHAT IS A PRODUCT?
DurabilityAndTangibility
• Services are intangible,
inseparable, variable, and
perishable products.
• As a result, they normally require
more quality control, supplier
credibility, and adaptability.
• Examples include haircuts and
repairs.
• Durable goods
• Services

WHAT IS A PRODUCT?
Consumer Goods Classification
• There are four types of
consumer goods.
Convenience
Shopping
Specialty
Unsought

WHAT IS A PRODUCT?
• Goods are those the customer
usually purchases frequently,
immediately, and with a
minimum of effort,
• e.g. tobacco products, soaps, and
newspaper
Convenience
Shopping
Specialty
Unsought

WHAT IS A PRODUCT?
• Goods that the customer, in the
process of selection and
purchase, characteristically
compares on such bases as
suitability, quality price, and
style.
• e.g. furniture and clothing.
Convenience
Shopping
Specialty
Unsought

WHAT IS A PRODUCT?
• Unique characteristics or brand
identification for which a suf-
ficient number of buyers are
willing to make a special
purchasing effort, e.g. cars,
stereo components,
photographic equipment
Convenience
Shopping
Specialty
Unsought

WHAT IS A PRODUCT?
• Goods are those the consumer
does not know about or does not
normally think buying, like smoke
detectors.
Convenience
Shopping
Specialty
Unsought

WHAT IS A PRODUCT?
IndustrialGoods Classification
• We can distinguish three groups
of industrial goods:
• materials and parts,
• capital items, and
• supplies and business
services.
• Materials and parts are goods
that enter the manufacturer's
product completely fall into two
classes: raw materials and
manufactured materials and
parts
Materials and
parts
Capital items
Supplies/business
services

WHAT IS A PRODUCT?
VideoTime–“Thethreewaysthatgooddesignmakesyou
happy”
“Design critic Don Norman turns his
incisive eye toward beauty, fun,
pleasure and emotion, as he looks
at design that makes people happy.
He names the three emotional cues
that a well-designed product must
hit to succeed”.
 Donald Arthur Norman is the
director of The Design Lab at
University of California, San
Diego. He is widely regarded for
his expertise in the fields of
design, usability engineering, and
cognitive science.
 https://www.youtube.com/watch
?v=RlQEoJaLQRA

PRODUCT DIFFERENTIATION
Section 2

• Products must be differentiated
• Differentiated products can create significant competitive advantages
Differentiated
products
Competitive
advantages

• Means for product
differentiation include
• form,
• features,
• performance quality,
• conformance quality,
• durability,
• reliability,
• reparability,
• style and
• customization
• Design has become an
increasingly important
differentiator
Form
Features
Performance Quality
Conformance Quality
Durability
Reliability
Reparability
Style
Customization

• The size, shape, or physical
structure of a product
Form
Features
Performance Quality
Conformance Quality
Durability
Reliability
Reparability
Style
Customization

• A company can identify and
select appropriate new features
by surveying recent buyers and
then calculating customer value
versus company cost for each
potential feature and should
avoid feature fatigue
Form
Features
Performance Quality
Conformance Quality
Durability
Reliability
Reparability
Style
Customization

• Performance level is the level at
which the product’s primary
characteristics operate: low,
average, high, or superior
Form
Features
Performance Quality
Conformance Quality
Durability
Reliability
Reparability
Style
Customization

• The degree to which all produced
units are identical and meet
promised specifications
Form
Features
Performance Quality
Conformance Quality
Durability
Reliability
Reparability
Style
Customization

• A measure of the product’s
expected operating life under
natural or stressful conditions, is a
valued attribute for vehicles,
kitchen appliances, and other
durable goods
Form
Features
Performance Quality
Conformance Quality
Durability
Reliability
Reparability
Style
Customization

• A measure of the probability that
a product will not malfunction or
fail within a specified time period,
and high reliability can garner a
price premium.
Form
Features
Performance Quality
Conformance Quality
Durability
Reliability
Reparability
Style
Customization

• Ease of fixing a product when it
malfunctions or fails
Form
Features
Performance Quality
Conformance Quality
Durability
Reliability
Reparability
Style
Customization

• The product’s look and feel to
the buyer and creates
distinctiveness that is hard to
copy
Form
Features
Performance Quality
Conformance Quality
Durability
Reliability
Reparability
Style
Customization

• Customized products and
marketing allow firms to be
highly relevant and
differentiating by finding out
exactly what a person wants—
and doesn’t want—and
delivering on that
Form
Features
Performance Quality
Conformance Quality
Durability
Reliability
Reparability
Style
Customization

SERVICE DIFFERENTIATION
• Means for service differentiation
include
• Ordering ease
• Delivery
• Installation
• Customer training
• Customer Consulting
• Maintenance and repair
• Returns
Ordering ease
Delivery
Installation
Customer training
Customer Consulting
Maintenance and repair
Returns

• Describes how easy it is for the
customer to place an order with
the company
Ordering ease
Delivery
Installation
Customer training
Customer Consulting
Returns

• Refers to how well the product or
service is brought to the
customer, including speed,
accuracy, and care throughout
the process.
Ordering ease
Delivery
Installation
Customer training
Customer Consulting
Returns

• Refers to the work done to make
a product operational in its
planned location.
Ordering ease
Delivery
Installation
Customer training
Customer Consulting
Returns

• Helps the customer’s employees
use the vendor’s equipment
properly and efficiently
Ordering ease
Delivery
Installation
Customer training
Customer Consulting
Returns

• Includes data, information
systems, and advice services the
seller offers to buyers
Ordering ease
Delivery
Installation
Customer training
Customer Consulting
Returns

• Programs help customers keep
purchased products in good
working order; critical in
business-to-business settings
Ordering ease
Delivery
Installation
Customer training
Customer Consulting
Returns

• Inconvenient, embarrassing; bad
for providers when returned
merchandise, not in re-sellable
condition, lacks proper proof of
purchase, or is returned to the
wrong store
Ordering ease
Delivery
Installation
Customer training
Customer Consulting
Returns

1. What were some of the key steps that made Caterpillar the
industry leader in earth-moving machinery? Explain how
Caterpillar’s products differ from competitors’.
2. Discuss Caterpillar’s future. What should it do next with its
product line? Where is the future growth for this company?
Caterpillar - Questions

• What were some of the key steps that made Caterpillar the industry leader
in earth-moving machinery? Explain how Caterpillar’s products differ from
competitors’
• In terms of the concept of “product,” Caterpillar has re-invented its
product—from the physical product, to its services provided, to its research
and development, to its “local” emphasis with its equipment, CAT today has
a different line up of products than the CAT of old. Examples include: 56%
of its business is in capital equipment and the remaining percentage in
services. CAT is focused on high-tech machinery i.e.,: hybrid, and has divided
its product strategy into three segments to meet the needs of its customers.
• Discuss Caterpillar’s future. What should it do next with its product line?
Where is the future growth for this company?
• Student’s answers will vary but good students will cite material from this
chapter regarding the customer-value hierarchy—core benefit, basic
product, expected product, augmented product, and potential product to
defend their positions on where Caterpillar’s future lies.
Caterpillar - Answers

DESIGN
What Is Design?
• The totality of features that affect
the way the product looks, feels,
and functions, offers a potent
way to differentiate and position
a company’s products and
services.

DESIGN
Design Insights
• The emotional power of design
and the importance to
consumers of look and feel as
well as function, so design is
exerting a stronger influence in
categories where it once played a
small role
Design
Leaders
Power of
Design
Approaches
to Design

DESIGN
Design Insights
• In a visually oriented culture,
transmitting brand meaning and
positioning through design is
critical
Design
Leaders
Power of
Design
Approaches
to Design

DESIGN
Design Insights
• A well-designed product is easy
to manufacture and distribute.
To the customer, it is pleasant to
look at and easy to open, install,
use, repair, and dispose of. The
designer must take all these goals
into account
Design
Leaders
Power of
Design
Approaches
to Design

DESIGN
VideoTime–“Thefirstsecretofgreatdesign”
“As human beings, we get used to
"the way things are" really fast. But
for designers, the way things are is
an opportunity”
• Tony Fadell is an American
engineer, inventor, designer,
entrepreneur, and angel investor.
He served as the Senior Vice
President of the iPod division at
Apple Inc., from March 2006 to
November 2008 and is known as
"one of the fathers of the iPod“
for his work on the first
generations of Apple's music
player.
• https://www.youtube.com/watch
?v=9uOMectkCCs

• Design is often an important aspect of luxury products,
though these products also face some unique issues
because the brand and its image are often key
competitive advantages that create enormous value and
wealth.
LUXURY PRODUCTS

LUXURY PRODUCTS
Characterizing LuxuryBrands
• Higher priced; often about social
status and who a customer was
or perhaps wanted to be
• Become more about style and
substance, combining personal
pleasure and self-expression

LUXURY PRODUCTS
• Common denominators of luxury
brands are quality and
uniqueness
• Winning formula for many is
craftsmanship, heritage,
authenticity, and sometimes
extravagant price

LUXURY PRODUCTS
• Luxury brands that successfully
extended their brands vertically
across a range of price points are
usually the most immune to
economic downturns.
• Ralph Lauren, successfully
marketed an aspirational luxury
brand across a wide range of
products. Besides clothing and
fragrances, Lauren boutiques sell
linens, candles, beds, couches,
dishware, photo albums, and
jewelry.

LUXURY PRODUCTS
Growing Luxury Brands
• Luxury brands that successfully
extended their brands vertically
across a range of price points are
usually the most immune to
economic downturns.
• Ralph Lauren, successfully
marketed an aspirational luxury
brand across a wide range of
products.
• Besides clothing and fragrances,
Lauren boutiques sell linens,
candles, beds, couches,
dishware, photo albums, and
jewelry.

Clear differentiation must exists between these
brands, minimizing the potential for consumer
confusion and brand cannibalization
Each also must live up to the core promise of
the parent brand, reducing chances of hurting
the parent’s image
Horizontal extensions into new categories can
also be tricky for luxury brands.
Much of the growth in luxury brands in recent
years has been geographical.
LUXURY PRODUCTS

LUXURY PRODUCTS
• Globalization, new technologies,
financial crises, shifting consumer
cultures, and other forces require
luxury brand marketers to be
skillful and adept at their brand
stewardship to succeed.
Factors
Affecting
Luxury Brand
Marketers
Globalization
New
Technologies
Financial
Crises
Shifting
Consumer
Cultures
Other Forces

LUXURY PRODUCTS
Marketing Luxury Brands
• Luxury brand marketers
have been issued the
following guidelines:-
Maintain a premium image for
luxury brands; control the
image
Create many intangible brand
associations and an aspirational
image
Align all marketing program to
ensure high-quality products
and services and pleasurable
and consumption experiences

LUXURY PRODUCTS
Logos, symbols, packaging,
signage - can be important
drivers of brand equity for
luxury products
Secondary associations from
linked personalities, events,
countries, and other entities
can boost luxury-brand equity
as well
Luxury brands must carefully
control distribution via a
selective channel strategy.

LUXURY PRODUCTS
Luxury brands must employ a
premium pricing strategy, with
strong quality cues and few
discounts and markdowns
Brand architecture for luxury
brands must be managed
carefully
Competition for luxury brands
must be defined broadly
because it often comes from
other categories

• Trend for luxury brands is to wrap personal experiences around
the products
• Some luxury marketers have struggled to find the appropriate
online selling and communication strategies for their brand
• Success depends on getting the right balance of classic and
contemporary imagery and continuity and change in
marketing programs and activities
LUXURY PRODUCTS

LUXURY PRODUCT
VideoTime–“GlobalTrendsInLuxuryHospitality”
“Jerry shares from his vast
collection of stories from a stellar
career. His takeaways? Service is
nobility, service leads to success,
and service deserves recognition”.
• Gerard Jerry Inzerillo has been
Chief Executive Officer of EMTG
LLC since May 12, 2014. Mr.
Inzerillo has been Chief Executive
and President of IMG Artists LLC
since April 2012
• https://www.youtube.com/watch
?v=hDIaq6B0ITY

ENVIRONMENTAL ISSUES
Section 5

• Many firms are considering ways to reduce the negative
environmental consequences of conducting business, and
some are changing the manufacture of their products or the
ingredients that go into them.
ENVIRONMENTAL ISSUES

PRODUCT AND BRAND RELATIONSHIPS
Section 6

Item
Product type
Product line
Product class
Product family
Need family
The Product Hierarchy
Each product can be related to other products to ensure that a firm is offering
and marketing the optimal set of products

• Also called stock-keeping unit or
product variant.
• A distinct unit within a brand or
product line distinguishable by
size, price, appearance, or some
other attribute.
Item
Product type
Product line
Product class
Product family
Need family

• A group of items within a product
line that share one of several
possible forms of the product
Item
Product type
Product line
Product class
Product family
Need family

• A group of products within a
product class that are closely
related because they perform a
similar function, are sold to the
same customer groups, are
marketed through the same
outlets or channels, or fall within
given price ranges.
• A product line may consist of
different brands, a single family
brand, or an individual brand that
has been line extended
Item
Product type
Product line
Product class
Product family
Need family

• A group of products within the
product family recognized as
having a certain functional
coherence, also known as a
product category.
Item
Product type
Product line
Product class
Product family
Need family

• All the product classes that can
satisfy a core need with
reasonable effectiveness
Item
Product type
Product line
Product class
Product family
Need family

• The core need that underlies the
existence of a product family.
Item
Product type
Product line
Product class
Product family
Need family

• Product system is a group of diverse but related items that function
in a compatible manner. For example, the extensive iPod product
system includes headphones and headsets, cables and docks,
armbands, cases, power and car accessories, and speakers.
ProductSystemsAndMixes

• Product mix (aka product
assortment) is the set of all
products and items a
particular seller offers for sale

These four product mix expand
its business in four ways.
• It can add new product lines,
thus widening its product mix.
• It can lengthen each product
line.
• It can add more product
variants to each product and
deepen its product mix.
• It can pursue more product
line consistency.

• In offering a product line, companies normally develop a basic
platform and modules that can be added to meet different
customer requirements and lower production costs,
• e.g. Car manufacturers build cars around a basic platform.
Homebuilders show a model home to which buyers can add
additional features.
ProductLineAnalysis

ProductLineAnalysis
• Product line managers
• need to know the sales and
profits of each item in their
line to determine which items
to build, maintain, harvest, or
divest and
• need to understand each
product line’s market profile
and image.
Sales and
Profit
Market
Profile and
Image

ProductLineAnalysis
• Every company’s product
portfolio contains products with
different margins. Companies
should recognize that different
items will allow for different
margins and respond differently
to changes in level of advertising.
Sales and
Profit
Market
Profile and
Image

ProductLineAnalysis
The product line manager must
review how the line is positioned
against competitors’ lines.
• A product map shows which
competitors’ items are
competing against company X’s
items.
• The map also reveals possible
locations for new items.
• Another benefit of product
mapping is that it identifies
market segments.
Sales and
Profit
Market
Profile and
Image

One objective is to create a product
line to induce up-selling
A different objective is to create a
product line that facilitates cross-
selling
Companies seeking high market
share and market growth will
generally carry longer product lines
ProductLineLength

Those emphasizing high profitability
will carry shorter lines consisting of
carefully chosen items.
Product lines tend to lengthen over
time.
A company lengthens its product
line in two ways: line stretching and
line filling
ProductLineLength

LineStretching
Line Stretching occurs when a company
lengthens its product line beyond its
current range, whether down-market,
up-market, or both ways. Down-Market
Stretch: A company positioned in the
middle market may want to introduce a
lower-priced line for any of three
reasons:
• The company may notice strong
growth opportunities.
• The company may wish to tie up
lower-end competitors who might
otherwise try to move up-market.
• The company may find the middle
market stagnating or declining
Down-Market Stretch
Up-Market Stretch
Two-Way Stretch
Line Filling

LineStretching
Up-Market Stretch: enter the high
end of the market to achieve more
growth, realize higher margins, or
simply position themselves as full-
line manufacturers.
• Some companies use their own
names
• Some companies create new
names
• Some brands have used
modifiers to signal a quality
improvement
Down-Market Stretch
Up-Market Stretch
Two-Way Stretch
Line Filling

LineStretching
Two-Way Stretch: companies
serving the middle market
might stretch their line in both
directions.
Down-Market Stretch
Up-Market Stretch
Two-Way Stretch
Line Filling

LineStretching
• Line Filling: lengthening the
product line by adding more
items within the present
range; overdone if it results in
cannibalization and confusion
Down-Market Stretch
Up-Market Stretch
Two-Way Stretch
Line Filling

ProductMixPricing
• The firm searches for a set of
prices that maximizes profits
on the total mix.
Product Line Pricing
Optional-Feature Pricing
Captive-Product Pricing
Two-Part Pricing (fixed fee
plus a variable usage fee)
By-Product Pricing
Product-Bundling Pricing

Co-brandingAndIngredientBranding
• Co-Branding: also called dual
branding or brand bundling -
two or more well-known
brands are combined into a
joint product or marketed
together in some fashion.
Same-
company
co-branding
Joint-
venture co-
branding

Product can be convincingly positioned by
virtue of the multiple brands.
Co-branding can generate greater sales from
the existing market and open opportunities
for new consumers and channels.
It can also reduce the cost of product
introduction because it combines two well-
known images and speeds adoption
Co-branding may be a valuable means to
learn about consumers and how other
companies approach them
Co-brandingAdvantages

Risks and lack of control in becoming aligned with another
brand in consumers’ minds
Consumer expectations of co-brands are likely to be high, so
unsatisfactory performance could have negative
repercussions for both brands
If the other brand enters a number of co-branding
arrangements, overexposure may dilute the transfer of any
association. It may also result in a lack of focus on existing
brands.
Consumers may feel less sure of what they know about the
brand
Co-branding Disadvantages

• For host products whose brands are not that strong, ingredient brands can provide
differentiation and important signals of quality
• An interesting take on ingredient branding is self-branded ingredients that
companies advertise and even trademark
• Ingredient brands try to create enough awareness and preference for their product
so consumers will not buy a host product that doesn’t contain it. Many
manufacturers make components or materials that enter final branded products but
lose their individual identity
IngredientBranding

Consumers must believe the ingredient
matters to the performance and success
of the end product. Ideally, this intrinsic
value is easily seen or experienced
Consumers must be convinced that not
all ingredient brands are the same and
that the ingredient is superior
A distinctive symbol or logo must signal
that the host product contains the
ingredient. Symbol or logo “seal” and is
simple and versatile, credibly
communicating quality and confidence
“Pull” and “push” program must help
consumers understand the advantages
of the branded ingredient. Channel
members must offer support such as
consumer advertising and promotions.
What Are The Requirements For Successful
Ingredient Branding?

VideoTime–“Theartofinnovation”
"Rethink. Redefine. Recreate." His talk is
titled "The Art of Innovation.“
 Guy Takeo Kawasaki is an American
marketing specialist, author, and
Silicon Valley venture capitalist. He
was one of the Apple employees
originally responsible for marketing
their Macintosh computer line in
1984. He popularized the word
evangelist in marketing the
Macintosh and the concepts of
evangelism marketing and technology
evangelism.
 https://www.youtube.com/watch?v=
Mtjatz9r-Vc

PACKAGING, LABELING, WARRANTIES,
AND GUARANTEES
Section 7

PACKAGING
WhatIsTheFifthP?
• Packaging, sometimes called
the 5th P, is all the activities of
designing and producing the
container for a product.
• Packaging is important
because it is the buyer’s first
encounter with the product
Draws the consumer in and
encourages product choice
Acts as a “five-second
commercial” for the product
Affects consumers’ later product
experiences when they open it
and use what’s inside
Packaging may be an important
part of a brand’s equity

Self-service (more choices; less explanation)
Consumer affluence (increases willingness to pay for the convenience,
appearance, dependability, and prestige of better packages).
Company and brand image (recognition of the company or brand)
Innovation opportunity (make products more convenient and easier to use)
PACKAGING
FactorsContributingToTheEmphasisOnPackaging

• Identify the brand
• Convey descriptive and persuasive information
• Facilitate product transportation and protection
• Assist at-home storage
• Aid product consumption
PACKAGING
PackagingObjectives

It identifies the product or brand
The label might describe the product: who made
it, where and when, what it contains, how it is to
be used, and how to use it safely
The label might promote the product through
attractive graphics
In 1914, the Federal Trade Commission Act held
that false, misleading, or deceptive labels or
packages constitute unfair competition
PACKAGING
FunctionsOfLabels

PACKAGING
WarrantiesAndGuarantees
• Warranties are formal
statements of
expected product
performance by the
manufacturer. Products under
warranty can
be returned to
the
manufacturer
or designated
repair center
for repair,
replacement,
or refund.
Whether
expressed or
implied,
warranties are
legally
enforceable
Extended
warranties and
service
contracts can
be extremely
lucrative for
manufacturers
and retailers

PACKAGING
WarrantiesAndGuarantees
• Many sellers offer
either general or
specific guarantees
Guarantees reduce the
buyer’s perceived risk
They suggest that the product
is of high quality and the
company and its service
performance are dependable
They can be especially helpful
when the company or product
is not well known or when the
product’s quality is superior to
that of competitors.

Product Differentiation and Design

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