Product Labeling

PRODUCT LABELING
The label on a product is an important selling point for a
company’s product. Of all product purchase decisions, 70
percent or more are made at the point of purchase, and
the product label is an important element in assisting consumers
to make those decisions. Product labels perform
several functions: to identify the product; to promote the
product; and to provide essential, often required, information
about the product and its use. Thus, the product
label may make or break the sale of a product. In addition
to the marketing aspect, certain legal requirements must
be met in order for the label to be compliant with federal
regulations. When a company designs a label it must take
all of these factors into consideration.
IDENTIFICATION
The brand name is the central focus on the label for identifying
a product. Nevertheless, such elements as the
logos, brand marks, color schemes, designs, and graphics
may also serve to identify a specific brand. The opportunity
to quickly identify a specific product is often important
to consumers, because it allows them to choose a
brand with which they have had experience or previous
knowledge. Additionally, the identification of the manufacturer
and/or distributor is often required and may be of
interest to the buyer.
PROMOTION
The brand name may be enough to persuade a consumer
to buy a particular product, but often the label must also
promote the product. Creative, attractive, and colorful

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graphics are needed to allow the product to “pop out” of
the wide array of products surrounding it on the shelf and
gain the attention of the consumer. Persuasive characteristics
or attributes of the product, such as “low fat” or “vitamin
enriched,” may be prominently displayed on the label
to promote the sale of the product.
INFORMATION
Although some products can be identified adequately by
brand name alone, many require more complete identification
of their nature and use. In short, the purpose of the
label is to provide useful and relevant information about
the product, as well as to help to market the product.
Processed foods, patented drugs, textiles, and numerous
other products are required by law to carry a fairly complete
list of their ingredients. This specific information is
extremely important so that consumers (for example,
those who are allergic to certain ingredients) do not use a
product that may harm them.
Companies may also provide additional information
on their labels that is not legally required. One reason to
do so is that consumer groups often publicly protest about
the lack of information on labels and request more. Furthermore,
when a competitor starts including more information
or redesigns its label to make it more user-friendly,
a company might decide to modify its own label to prevent
losing sales.
Labels may also include a list of ingredients, Universal
Product Code, open dating, nutritional labeling, and
unit pricing. Ingredients are listed in the order of their
prominence, by weight, in the product. The Universal
Product Code is a combination of electronically readable
lines (the bar code) and numbers identifying the product
and providing inventory and pricing information for producers
and resellers. Open dating informs consumers
about the expected life of the product so they can avoid
products that may be spoiled. This information is especially
important for such perishable items as milk, eggs,
and other products with a short shelf life. Nutritional
labeling specifies the amount of calories, total fat, cholesterol,
dietary fiber, sodium, minerals, vitamins, and protein
in processed foods.
Nonprescription medicine labels shown with warnings printed on them before and after the labeling system changes in 1999. AP
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Product Labeling
The label also discloses the percentage daily values
per serving for each item based on a 2,000-calorie-per-day
diet. This information can be useful for consumers who
have special dietary needs or are trying to maintain a
healthy, balanced diet. Although most often found on the
store shelf, unit pricing is occasionally included on the
product label and shows the price per unit of standard
measure (weight or volume).
Product labels also provide other useful information
for consumers. One of the most common features on any
label is directions on how the product should be used, or
if food, prepared. An example is directions on clothing
indicating how to clean and store the items. Another
example is directions on either prescription or over-thecounter
medications that provide information on how
many pills should be taken and warn of possible drug
interactions.
Moreover, most products that could be toxic if
ingested have a warning about this on the package, as well
as instructions on what to do in case of an emergency.
This type of label has two main purposes. The first is to
help the consumer in case the product is improperly used.
The second is to help prevent lawsuits by consumers who
misuse products. Generally speaking, more disclosure
about the potential hazards of a product provides the
company greater legal protection. Nevertheless, no product
warning, even a detailed one, can completely prevent
all lawsuits.
Most companies also use one or more of three other
labels on their products. The first type, known as a grade
label, identifies the quality of the product by a letter, such
as “grade A,” or with a word, such as “prime.” The second
type, an informative label, uses phrases such as “Keep
refrigerated after opening” to help consumers use the
product appropriately. The third type, a descriptive label,
describes the benefits or positive attributes of the product.
LEGAL ISSUES
The federal government sets forth legal requirements that
form a key element of product label design. Federal regulations
regarding products and food have become progressively
more numerous since the 1960s, due in large part to
consumer activism and media attention. The most important
of these regulations and laws are discussed here.
At the start of the twentieth century, responding to
consumer pressure, the federal government created two
government regulatory bodies: the U.S. Food and Drug
Administration (FDA), which regulates interstate commerce
in foods and drugs, and the Federal Trade Commission
(FTC), whose role is to combat deceptive and
unfair-trade practices. Both agencies have broad powers to
interpret and enforce laws and regulations. Most companies
make a strong effort to comply with federal laws that
regulate product labels and advertising.
Numerous laws have been designed to protect consumers,
including:
• Wheeler-Lea Amendment (1938) to the Federal
Trade Commission Act: Controls deceptive and misleading
advertising
• Lanham Trademark Act (1946): Provides protections
for and regulations of brand names, brand marks,
trade names, and trademarks
• Federal Hazardous Substance Labeling Act (1960):
Requires warnings on the labels of all household-use
products that contain potentially hazardous ingredients
• Child Protection Act (1966): Strengthens the Federal
Hazardous Substance Labeling Act by prohibiting
the sale of dangerous toys and other articles that
are used by children, especially items containing
electrical, mechanical, or thermal hazards
• Fair Packaging and Labeling Act (1966): Primarily
outlaws deceptive packaging of certain consumer
goods; also requires adequate information on the
quantity and composition of product contents, and
promotes packaging practices that make it easier to
compare prices. In order to comply with the law, the
following information must be included on the
label: name of commodity and manufacturer, net
quantity of contents expressed in the appropriate
category (ounces/grams, pints, liters), and relevant
ingredient information.
• Cigarette Labeling Act (1965): Requires that all cigarette
packages and ads contain the statement:
“Warning: The Surgeon General has determined
that cigarette smoking is dangerous to your health”
• Consumer Product Safety Act (1972): Established
the Consumer Product Safety Commission and gave
it broad powers to carry out product tests, set safety
standards, ban or seize hazardous products, and
issue both civil and criminal complaints against
business firms that fail to meet product safety
requirements
• Federal Trade Commission Improvement Act
(1975): Expanded the authority of the FTC in various
ways; in particular, it gave the FTC the power
to set rules concerning warranties on consumer
products and provide consumers with redress in the
form of class-action lawsuits
• Nutrition Labeling and Education Act (1990): Clarified
and strengthened the FDA’s legal authority to
require nutrition labeling on foods and established

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the circumstances under which claims may be made
about the nutrients in foods. The act covers only
nutrients or substances in food that “nourish”; it
does not in any way regulate nonnutrient substances
in foods. Moreover, the act requires that labels disclose
the amount of specified nutrients in foods.
Every covered food should have a uniform nutrition
label disclosing the amount of calories, fat, salt, and
other nutrients. In order to make this information
meaningful, the act requires the FDA to issue standards
providing that uniform servings be noted on
the food label. Where the full labeling is impractical,
the act provides for an exemption or requires that
the information be provided in a modified form.
Restaurants, for example, are exempted.
• Federal Trademark Dilution Act (1995): Grants
trademark owners the right to protect trademarks
and requires relinquishment of names that match or
parallel existing trademarks
SEE ALSO Packaging; Promotion
BIBLIOGRAPHY
Kotler, Philip, and Armstrong, Gary (2006). Principles of marketing
(11th ed.). Upper Saddle River, NJ: Pearson Prentice-
Hall.
Kotler, Philip, and Keller, Kevin (2006). Marketing management:
Analysis, planning, implementation, and control (12th ed.).
Upper Saddle River, NJ: Pearson Prentice Hall.
Lascu, D. N., and Clow, K. E. (2004). Marketing frontiers: Concepts
and tools. Cincinnati: Atomic Dog.
Pride, William M., and Ferrell, O. C. (2006). Marketing concepts
and strategies. Boston: Houghton Mifflin.
Solomon, M. R., Marshall, G. W., and Stuart E. W. (2006).
Marketing: Real people, real choices. Upper Saddle River, NJ:
Pearson Prentice-Hall.
Thomas R. Baird
Michael J. Milbier
PRODUCT LINES
The product mix of a company is the total composite of
products offered by that organization. A product line is a
group of products within the product mix that are closely
related, either because they function in a similar manner,
are sold to the same customer groups, are marketed
through the same types of outlets, or fall within given
price ranges.
Product-line decisions are concerned with the combination
of individual products offered in a given line. The
responsibility for a given product line resides with a
product-line manager (sometimes called a product-group
manager), who supervises several product managers who,
in turn, are responsible for individual products within the
line. A product is a distinct unit within the product line
that is distinguishable by size, price, appearance, or some
other attribute. Decisions about a product line are usually
incorporated into a divisional-level marketing plan, which
specifies changes in the product lines and allocations to
products in each line. Product-line managers normally
have the following responsibilities: (1) Consider expansion
of a given product line; (2) consider products for
deletion from the product line; (3) evaluate the effects of
product additions and deletions on the profitability of
other items in the line; and (4) allocate resources to individual
products in the line on the basis of marketing
strategies recommended by product managers.
One strategy organizations can employ to help sell
their products is to use brand-identification strategies.
Brand identification is generally defined as creating a
brand with positive consumer benefits, resulting in consumer
loyalty and repeat purchasing. Other benefits of
brand identification include (1) strong in-store recognition,
(2) stronger competition against competitors’ products,
(3) better distribution, and (4) better in-store shelf
position. Organizations have four basic types of branding
available: individual brand names, family brand names,
product-line brand names, and corporate brand names.
Individual brand names can be used to establish
brand identification without reference to an integrated
product line or to the corporate name. Each brand is sold
individually and stands or falls on its own. Family brand
names involve the opposite strategy—including the firms’
total product mix under one family name. The corporate
name, rather than the brand name, is emphasized in order
to leverage the high-quality name of the organization.
This can reduce advertising and marketing costs. Productline
brand names involve a strategy midway between an
individual brand name and a family brand name strategy.
All brands within the product line have a common name.
Product-line brand names are used when a company produces
diverse product lines that require separate identification.
Some companies employ the corporate brand
name strategy. This strategy associates a strong corporate
entity with a brand while maintaining the brand’s individuality.
If successful, it provides the advantages of both a
family brand name and an individual brand name strategy.
An important concept for any product-line manager
is the product life cycle, which is defined as the various
stages a product goes through (introduction, growth,
maturity, and decline). The primary function of the introduction
stage is to create a solid brand name for the new
product. Television, Internet, radio, and print advertiseeobf_

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ments are coordinated to provide the maximum brand
awareness. In the growth stage, the company focuses on
creating loyalty to the specific product and also attempts
to make minor improvements. Advertising emphasizes the
benefits of the product, since the name is already known.
When the maturity stage begins, sales start to level off
because of increased competition, changes in consumer
behavior, or technological advances that make the product
less desirable than that of its competitors. In this stage, a
company may decide to put limited resources into an
advertising campaign to boost sales or create a new image.
In addition, minor adjustments might be made to packaging
(e.g., a new label) to reattract consumers. The decline
stage occurs when sales begin to decline. The company
needs to choose between modifying the product to
increase sales or discontinuing the product when it finally
cannot generate acceptable profits.
The product life cycle is an extremely important element
when a company reviews its product line. One of
the best ways to extend the life of a product and product
line is for a company to use a revitalization strategy. When
this tactic is used, the company changes the marketing
plan and looks for new markets for the existing product
line and the products within it. Here too it is critical that
the company is successful in repositioning the product to
new market segments. Another method used to extend the
life cycle of a product line is a line-modernization strategy,
which focuses on either upgrading the entire product line
or modernizing specifics products within the line in order
to spark new consumer interest in the product or entire
product line.
Other general product-line strategies include productline
additions, product-line deletions, and holding strategy.
Product-line additions involve adding new products
to a product line so new market segments can be covered.
Product-line deletions involve removing a product that
has not performed well or is not making enough money.
A holding strategy involves maintaining the status quo.
The product line stays the same and no major modifications
or marketing strategy changes are planned. In order
to have a profitable product line, the product line manager will need to employ a variety of the strategies