Page 319 - Foundations of Marketing

286 Part 4 | Product and Price Decisions

Packaging and Labeling Act. The National Conference on Weights and Measures formed a
task force to review the issue but has not yet reached a conclusion. The FDA has not weighed
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in on the matter.
Of concern to many manufacturers are the Federal Trade Commission’s (FTC) guidelines
regarding “Made in USA” labels, a growing problem owing to the increasingly global nature
of manufacturing. Additionally, many countries attach high brand value to American-made
brands, including Russia, India, Brazil, and China, giving companies an even greater incentive
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to adopt the “Made in USA” label. 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 USA.” Although the FTC
recently considered changing its guidelines to read “substantially all,” it rejected this idea and
maintains the “all or virtually all” standard. In light of this decision, the FTC ordered New
Balance to stop using the “Made in USA” claim on its athletic shoe labels because some com-
ponents (rubber soles) are made in China. The “Made in USA” labeling issue has not been
totally resolved. The FTC criteria for using “Made in USA” are likely to be challenged and
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subsequently changed.

Chapter Review

1. Understand the concept of a product. 4. Understand the product life cycle and its
A product is a good, a service, an idea, or any combination impact on marketing strategies.
of the three received in an exchange. It can be either tangible The product life cycle describes how product items in an
or intangible and includes functional, social, and psychologi- industry move through four stages: introduction, growth,
cal utilities or benefits. When consumers purchase a product, maturity, and decline. The sales curve is at zero at introduc-
they are buying the benefits and satisfaction they think the tion, rises at an increasing rate during growth, peaks during
product will provide. the maturity stage, and then declines. Profits peak toward the
end of the growth stage of the product life cycle.
2. Understand how products are
classified. 5. Describe the product adoption process.
Products can be classified on the basis of the buyer’s inten- When customers accept a new product, they usually do so through
tions. Consumer products are those purchased to satisfy per- a five-stage adoption process. The first stage is awareness, when
sonal and family needs. Business products are purchased for buyers become aware that a product exists. Interest, the second
use in a firm’s operations, to resell, or to make other prod- stage, occurs when buyers seek information and are receptive to
ucts. Consumer products can be subdivided into convenience, learning about the product. The third stage is evaluation; buyers
shopping, specialty, and unsought products. Business prod- consider the product’s benefits and decide whether to try it. The
ucts can be classified as installations, accessory equipment, fourth stage is trial; during this stage, buyers examine, test, or try
raw materials, component parts, process materials, MRO the product to determine if it meets their needs. The last stage is
supplies, and business services. adoption, when buyers actually purchase the product and use it
whenever a need for this general type of product arises.
3. Explain the concepts of product line and
product mix and understand how they are 6. Explain the major components of branding,
connected. including brand types, branding policies, and
brand protection.
A product item is a specific version of a product that can
be designated as a distinct offering among an organiza- A brand is a name, term, design, symbol, or any other feature
tion’s products. A product line is a group of closely related that identifies one seller’s good or service and distinguishes
product items that are considered a unit because of mar- it from those of other sellers. Branding helps buyers to iden-
keting, technical, or end-use considerations. The compos- tify and evaluate products, helps sellers to facilitate product
ite, or total, group of products that an organization makes introduction and repeat purchasing, and fosters brand loyalty.
available to customers is called the product mix. The width Brand equity is the marketing and financial value associated
of the product mix is measured by the number of product with a brand’s strength. It represents the value of a brand to
lines the company offers. The depth of the product mix is an organization. The four major elements underlying brand
the average number of different products offered in each equity include brand name awareness, brand loyalty, per-
product line. ceived brand quality, and brand associations.

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