©2003 south-western chapter 8 version 3e1 chapter product concepts 8 8 prepared by deborah baker...
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Chapter 8 Version 3e 1©2003 South-Western
chapterProduct ConceptsProduct Concepts
88
Prepared byPrepared byDeborah BakerDeborah Baker
Texas Christian UniversityTexas Christian University
Chapter 8 Version 3e 2©2003 South-Western
chapter
Learning ObjectivesLearning Objectives
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1.1. Define the term Define the term product.product.
2.2. Classify consumer products.Classify consumer products.
3. Discuss the importance of services to the 3. Discuss the importance of services to the economyeconomy
4.4. Identify the differences between services Identify the differences between services and goods.and goods.
5. 5. Explain why services marketing is Explain why services marketing is important to manufacturersimportant to manufacturers
Chapter 8 Version 3e 3©2003 South-Western
chapter
Learning Objectives (continued)Learning Objectives (continued)
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6. Define the terms 6. Define the terms product item, product line, product item, product line, and product mixand product mix
7. Describe marketing uses of branding7. Describe marketing uses of branding
8. Describe marketing uses of packaging 8. Describe marketing uses of packaging and labeling.and labeling.
9.9. Describe how and why product warranties Describe how and why product warranties are important marketing tools.are important marketing tools.
Chapter 8 Version 3e 4©2003 South-Western
Learning Objective Learning Objective 11
Define the term Define the term product.product.
Chapter 8 Version 3e 5©2003 South-Western
ProductProduct
Everything, both favorable
and unfavorable, that
a person receives
in an exchange.
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Chapter 8 Version 3e 6©2003 South-Western
What is a Product?What is a Product?
Promotion
Product Product is
the “heart” ofMarketing
Mix
Product Product is
the “heart” ofMarketing
Mix
Place (Distribution)
Price
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Chapter 8 Version 3e 7©2003 South-Western
Learning Objective Learning Objective 22
Classify consumer products.Classify consumer products.
Chapter 8 Version 3e 8©2003 South-Western
Product ClassificationsProduct Classifications
BusinessBusinessProductProduct
BusinessBusinessProductProduct
Consumer Consumer ProductProduct
Consumer Consumer ProductProduct
A product used to manufacture other goods or services, to facilitate an
organization’s operations, or to resell to other consumers.
A product used to manufacture other goods or services, to facilitate an
organization’s operations, or to resell to other consumers.
Product bought to satisfy an individual’s personal wants
Product bought to satisfy an individual’s personal wants
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Chapter 8 Version 3e 9©2003 South-Western
Types of Consumer ProductsTypes of Consumer Products
UnsoughtProducts
UnsoughtProducts
SpecialtyProductsSpecialtyProducts
ShoppingProducts
ShoppingProducts
ConvenienceProducts
ConvenienceProducts
ConsumerProducts
ConsumerProducts
BusinessProductsBusinessProducts
PRODUCTSPRODUCTS
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Chapter 8 Version 3e 10©2003 South-Western
Types of Consumer ProductsTypes of Consumer Products22
ConvenienceProduct
ConvenienceProduct
ShoppingProduct
ShoppingProduct
SpecialtyProduct
SpecialtyProduct
UnsoughtProduct
UnsoughtProduct
A relatively inexpensive item that merits little shopping effort.A relatively inexpensive item that merits little shopping effort.
A product that requires comparison shopping, because it is usually more expensive and found in fewer stores.
A product that requires comparison shopping, because it is usually more expensive and found in fewer stores.
A particular item that consumerssearch extensively for and are reluctant to accept substitutes.
A particular item that consumerssearch extensively for and are reluctant to accept substitutes.
A product unknown to the potential buyer or a known product that the buyer does not actively seek.
A product unknown to the potential buyer or a known product that the buyer does not actively seek.
Chapter 8 Version 3e 11©2003 South-Western
Types of Consumer ProductsTypes of Consumer Products
SpecialtyProducts
ConvenienceProducts
ShoppingProducts
UnsoughtProducts
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Chapter 8 Version 3e 12©2003 South-Western
Learning Objective Learning Objective 33
Discuss the importance of services to the economy.
Chapter 8 Version 3e 13©2003 South-Western
ServiceService
The result of applying
human or mechanical
efforts to people or objects.
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Chapter 8 Version 3e 14©2003 South-Western
The Importance of ServicesThe Importance of Services
79% of workers are inservice sector
79% of workers are inservice sector
Services account for 76% of U.S. GDP
Services account for 76% of U.S. GDP
Service occupations will be responsible for all job growth
through 2005
Service occupations will be responsible for all job growth
through 2005
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Chapter 8 Version 3e 15©2003 South-Western
Learning Objective Learning Objective 44
Discuss the differences between services and goods.
Chapter 8 Version 3e 16©2003 South-Western
How Services Differ from GoodsHow Services Differ from Goods44
IntangibilityIntangibility
InseparabilityInseparability
HeterogeneityHeterogeneity
PerishabilityPerishability
CharacteristicsThat
DistinguishServices
CharacteristicsThat
DistinguishServices
Chapter 8 Version 3e 17©2003 South-Western
Characteristics of ServicesCharacteristics of Services44
IntangibilityIntangibilityIntangibilityIntangibility
InseparabilityInseparabilityInseparabilityInseparability
HeterogeneityHeterogeneityHeterogeneityHeterogeneity
PerishabilityPerishabilityPerishabilityPerishability
Services that cannot be touched, seen, tasted, heard, or felt in the
same manner as goods.
Services that cannot be touched, seen, tasted, heard, or felt in the
same manner as goods.
A characteristic of services that allows them to be produced and
consumed simultaneously.
A characteristic of services that allows them to be produced and
consumed simultaneously.
A characteristic of services that makes them less standardized
and uniform than goods.
A characteristic of services that makes them less standardized
and uniform than goods.
A characteristics of services that prevents them from being stored,
warehoused, or inventoried.
A characteristics of services that prevents them from being stored,
warehoused, or inventoried.
Chapter 8 Version 3e 18©2003 South-Western
Learning Objective Learning Objective
Explain why services marketing is important to manufacturers.
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Chapter 8 Version 3e 19©2003 South-Western
Services Marketing in Services Marketing in ManufacturingManufacturing
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Chapter 8 Version 3e 20©2003 South-Western
Learning Objective Learning Objective
Define the terms Define the terms product item, product item, product line, product line, andand product mix product mix..
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Chapter 8 Version 3e 21©2003 South-Western
Product Items, Lines, and MixesProduct Items, Lines, and Mixes
Product ItemProduct Item
Product LineProduct Line
Product MixProduct Mix
A specific version of a product that can be designated as a distinct offering among an organization’s products.
A specific version of a product that can be designated as a distinct offering among an organization’s products.
A group of closely-related product items.
A group of closely-related product items.
All products that an organization sells.
All products that an organization sells.
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Chapter 8 Version 3e 22©2003 South-Western
Gillette’s Product Lines and MixGillette’s Product Lines and Mix66
Blades and Writingrazors Toiletries instruments Lighters
Mach 3 Series Paper Mate CricketSensor Adorn Flair S.T. Dupont Trac II ToniAtra Right GuardSwivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry LookTwin Injector Dry Idea Techmatic Brush Plus
Width of the product mixWidth of the product mix
De
pth
of
the
pro
du
ct
line
sD
ep
th o
f th
e p
rod
uc
t lin
es
Chapter 8 Version 3e 23©2003 South-Western
Benefits of Product LinesBenefits of Product Lines
Equivalent QualityEquivalent Quality
Efficient Sales andDistribution
Efficient Sales andDistribution
Standardized Components
Standardized Components
Package UniformityPackage Uniformity
Advertising EconomiesAdvertising Economies
Why Form Why Form Product Lines?Product Lines?
Why Form Why Form Product Lines?Product Lines?
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Chapter 8 Version 3e 24©2003 South-Western
Product Mix WidthProduct Mix Width
Diversifies risk Capitalizes on established reputations
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The number of product
lines an organization offers.
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Product Line DepthProduct Line Depth
Attracts buyers with different preferencesIncreases sales/profits by further
market segmentation Capitalizes on economies of scaleEvens out seasonal sales patterns
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The number of product
items in a product line.
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Adjustments Adjustments
Product Modification
Product Modification
ProductRepositioning
ProductRepositioning
Product LineExtension or Contraction
Product LineExtension or Contraction
Adjustments to Adjustments to Product Items,Product Items,
Lines, and MixesLines, and Mixes
Adjustments to Adjustments to Product Items,Product Items,
Lines, and MixesLines, and Mixes
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Chapter 8 Version 3e 27©2003 South-Western
Product ModificationsProduct Modifications66
Types of Types of Product Product
ModificationsModifications
Types of Types of Product Product
ModificationsModifications
Quality Modification
Quality Modification
Functional ModificationFunctional
Modification
Style Modification
Style Modification
Chapter 8 Version 3e 28©2003 South-Western
Planned ObsolescencePlanned Obsolescence
The practice of modifying
products so those that
have already been sold
become obsolete before
they actually need
replacement.
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Chapter 8 Version 3e 29©2003 South-Western
RepositioningRepositioning
Changing Demographics
Changing Demographics
Declining SalesDeclining Sales
Changes in Social Environment
Changes in Social Environment
Why reposition Why reposition established brands?established brands?
Why reposition Why reposition established brands?established brands?
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Chapter 8 Version 3e 30©2003 South-Western
Product Line ExtensionProduct Line Extension
Adding additional products
to an existing product line
in order to compete more
broadly in the industry.
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Chapter 8 Version 3e 31©2003 South-Western
Product Line ContractionProduct Line Contraction66
Some products have low sales or cannibalize sales of other items
Resources are disproportionately allocated to slow-moving products
Items have become obsolete because of new product entries
Symptoms of Symptoms of Product Line Product Line
OverextensionOverextension
Symptoms of Symptoms of Product Line Product Line
OverextensionOverextension
Chapter 8 Version 3e 32©2003 South-Western
Learning Objective Learning Objective
Describe marketing uses of branding.Describe marketing uses of branding.
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Chapter 8 Version 3e 33©2003 South-Western
BrandBrand
A name, term, symbol,
design, or combination
thereof that identifies a
seller’s products and
differentiates them from
competitors’ products.
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Chapter 8 Version 3e 34©2003 South-Western
BrandingBranding
Brand Name
Brand Name
BrandMark
BrandMark
Brand EquityBrand Equity
MasterBrand
MasterBrand
That part of a brand that can be spoken, including letters, words, and numbers.
That part of a brand that can be spoken, including letters, words, and numbers.
The elements of a brand that cannot be spoken.
The elements of a brand that cannot be spoken.
The value of company and brand names.The value of company and brand names.
A brand so dominant that it comes to mind immediately when a product category,
use, attribute, or benefit is mentioned.
A brand so dominant that it comes to mind immediately when a product category,
use, attribute, or benefit is mentioned.
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Chapter 8 Version 3e 35©2003 South-Western
Benefits of BrandingBenefits of Branding77
Product Identification
Product Identification
Repeat SalesRepeat Sales
New Product Sales
New Product Sales
Branding Branding distinguishes distinguishes products from products from
competitioncompetition
Branding Branding distinguishes distinguishes products from products from
competitioncompetition
Chapter 8 Version 3e 36©2003 South-Western
An Effective Brand NameAn Effective Brand Name
Is easy to pronounce
Is easy to recognize and remember
Is short, distinctive, and unique
Describes the product, use, and benefits
Has a positive connotation
Reinforces the product image
Is legally protectable
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Chapter 8 Version 3e 37©2003 South-Western
Master BrandsMaster Brands
Baking Soda Baking Soda
Adhesive BandagesAdhesive Bandages
RumRum
GelatinGelatin
SoupSoup
Cream CheeseCream Cheese
CrayonsCrayons
Petroleum Jelly Petroleum Jelly
Arm & Hammer Arm & Hammer
Band-AidBand-Aid
BacardiBacardi
Jell-OJell-O
Campbell’sCampbell’s
PhiladelphiaPhiladelphia
CrayolaCrayola
Vaseline Vaseline
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Chapter 8 Version 3e 38©2003 South-Western
Branding StrategiesBranding Strategies
BrandBrand No BrandNo Brand
Manufacturer’s Brand
Manufacturer’s Brand Private BrandPrivate Brand
IndividualBrand
IndividualBrand
Family Brand
Family Brand
Combi-nation
Combi-nation
IndividualBrand
IndividualBrand
Family Brand
Family Brand
Combi-nation
Combi-nation
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Chapter 8 Version 3e 39©2003 South-Western
Generic BrandGeneric Brand
A no-frills, no-brand-name,
low-cost product that is
simply identified by its
product category.
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Chapter 8 Version 3e 40©2003 South-Western
Manufacturers’ Brands VersusManufacturers’ Brands VersusPrivate BrandsPrivate Brands
Manufacturers’ Manufacturers’ BrandBrand
Manufacturers’ Manufacturers’ BrandBrand
Private Private BrandBrand
Private Private BrandBrand
The brand name of a manufacturer.The brand name of a manufacturer.
A brand name owned by a wholesaler or a retailer.
A brand name owned by a wholesaler or a retailer.
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Chapter 8 Version 3e 41©2003 South-Western
Advantages of Advantages of Manufacturers’ BrandsManufacturers’ Brands
Develop customer loyalty
Attract new customers
Enhance prestige
Offer rapid delivery, can carry less inventory
Ensure dealer loyalty
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Chapter 8 Version 3e 42©2003 South-Western
Advantages of Advantages of Private BrandsPrivate Brands
Earn higher profits
Less pressure to mark down prices
Manufacturer may drop a brand or become a direct competitor to dealers
Ties to wholesaler or retailer
No control over distribution of manufacturers’ brands
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Chapter 8 Version 3e 43©2003 South-Western
Individual Brands VersusIndividual Brands VersusFamily BrandsFamily Brands
Individual Individual BrandBrand
Individual Individual BrandBrand
Family Family BrandBrand
Family Family BrandBrand
Using different brand names for different products.
Using different brand names for different products.
Marketing several different products under the same
brand name.
Marketing several different products under the same
brand name.
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Chapter 8 Version 3e 44©2003 South-Western
CobrandingCobranding
IngredientBranding
IngredientBranding
Cooperative Branding
Cooperative Branding
Complementary Branding
Complementary Branding
Types of CobrandingTypes of CobrandingTypes of CobrandingTypes of Cobranding
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Chapter 8 Version 3e 45©2003 South-Western
TrademarksTrademarks
Many parts of a brand and associated symbols qualify for trademark protection
The mark has to be continuously protected
Rights continue for as long as it is used
A Trademark is the exclusive A Trademark is the exclusive right to use a brandright to use a brandA Trademark is the exclusive A Trademark is the exclusive right to use a brandright to use a brand
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Chapter 8 Version 3e 46©2003 South-Western
Learning Objective Learning Objective
Describe marketing uses of Describe marketing uses of packaging and labeling.packaging and labeling.
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Chapter 8 Version 3e 47©2003 South-Western
PackagingPackaging
Contain and ProtectContain and Protect
FunctionsFunctionsofof
PackagingPackaging
FunctionsFunctionsofof
PackagingPackaging
PromotePromote
Facilitate Storage, Use, and Convenience
Facilitate Storage, Use, and Convenience
Facilitate RecyclingFacilitate Recycling
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Chapter 8 Version 3e 48©2003 South-Western
LabelingLabeling
PersuasivePersuasive
Focuses on promotional theme
Information is secondary
InformationalInformational
Helps make proper selections
Lowers cognitive dissonance
Includes use/care
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Chapter 8 Version 3e 49©2003 South-Western
Universal Product CodesUniversal Product Codes
A series of thick and thin
vertical lines (bar codes),
readable by computerized
optical scanners, that
represent numbers used
to track products.
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Chapter 8 Version 3e 50©2003 South-Western
Learning Objective Learning Objective
Describe how and why Describe how and why product warranties are product warranties are
important marketing tools.important marketing tools.
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Chapter 8 Version 3e 51©2003 South-Western
Product WarrantiesProduct Warranties
WarrantyWarranty
ExpressWarrantyExpressWarranty
Implied WarrantyImplied
Warranty
A confirmation of the quality or performance of a good or service.A confirmation of the quality or performance of a good or service.
A written guarantee.A written guarantee.
An unwritten guarantee that the good or service is fit for the purpose for which it was sold. (UCC)
An unwritten guarantee that the good or service is fit for the purpose for which it was sold. (UCC)
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Chapter 8 Version 3e 52©2003 South-Western
Product WarrantiesProduct Warranties
WarrantiesWarrantiesWarrantiesWarranties
Written Guarantee
Implied Implied WarrantyWarrantyImplied Implied WarrantyWarranty
Express Express WarrantyWarrantyExpress Express WarrantyWarranty
Unwritten Guarantee
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