8-18-1

Chapter 8Chapter 8

Product and Services

Strategy

8-28-2What is a Product?What is a Product?

• A ProductProduct is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or a need.

• Includes:– Physical Objects

– Services

– Persons

– Places

– Organizations

– Ideas

– Combinations of the above

8-38-3What is a Service?What is a Service?

• A ServiceService is a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and don’t result in the ownership of anything.

• Examples include:– Banking

– Hotels

– Tax Preparation

– Home Repair Services

8-48-4Levels of ProductLevels of Product

BrandName

QualityLevel

Packaging

Design

Features

Delivery& Credit

Installation

Warranty

After-Sale

Service

CoreBenefit

orService

CoreBenefit

orService

ActualProduct

ActualProduct

CoreProduct

CoreProduct

AugmentedProduct

AugmentedProduct

8-58-5Product ClassificationsConsumer ProductsProduct ClassificationsConsumer Products

Shopping ProductsShopping Products

> Buy less frequently> Higher price> Fewer purchase locations> Comparison shop

Clothing, cars, appliances

Convenience ProductsConvenience Products

> Buy frequently & immediately> Low priced> Mass advertising> Many purchase locations

Fast Food, Candy, Newspapers

Specialty ProductsSpecialty Products

> Special purchase efforts> High price> Unique characteristics> Brand identification> Few purchase locations

Lamborghini, Rolex

Unsought ProductsUnsought Products

> New innovations> Products consumers don’t want to think about> Require much advertising & personal selling

Life insurance, blood donation

8-68-6Product ClassificationsIndustrial ProductsProduct ClassificationsIndustrial Products

Suppliesand

Services

Suppliesand

Services

Materialsand

Parts

Materialsand

Parts

CapitalItems

CapitalItems

8-78-7

Activities to create, maintain, or change the Activities to create, maintain, or change the attitudes or behavior of target consumers attitudes or behavior of target consumers

toward the followingtoward the following::

• OrganizationsOrganizations - - Profit (businesses) and nonprofit (schools and churches).

• PersonPerson - - Political and sports figures, entertainers, doctors, lawyers and business people.

• PlacePlace - - Business sites and tourism.

• Social IdeasSocial Ideas - - Reduce smoking, clean air, conservation.

Product ClassificationsOther Marketable EntitiesProduct ClassificationsOther Marketable Entities

8-88-8Individual Product DecisionsIndividual Product DecisionsProduct

Attributes

ProductAttributes

BrandingBranding

PackagingPackaging

LabelingLabeling

Product SupportServices

Product SupportServices

8-98-9Product Attribute DecisionsProduct Attribute Decisions

QualityQualityQualityQualityFeaturesFeaturesFeaturesFeatures

DesignDesignDesignDesign

8-108-10BrandsBrands

Advantagesof

Brand Names

BrandEquity

Advantagesof

Brand Names

BrandEquity LoyaltyLoyalty

AttributesAttributes

Quality & ValueQuality & ValueConsistencyConsistency

IdentificationIdentification

AwarenessAwarenessCredibilityCredibility

Defense AgainstCompetition

Defense AgainstCompetition

8-118-11

Brand StrategyBrand StrategyNew Brands

Line ExtensionsBrand Extensions

Multibrands

New BrandsLine Extensions

Brand ExtensionsMultibrands

Brand SponsorBrand Sponsor

Manufacturer’s BrandPrivate Brand

Licensed BrandCo-branding

Manufacturer’s BrandPrivate Brand

Licensed BrandCo-branding

Brand Name SelectionBrand Name Selection

SelectionProtection

SelectionProtection

Major Branding Decisions Major Branding Decisions

8-128-12Brand StrategiesBrand Strategies

Line ExtensionDannon Yogurt Flavors

MultibrandsSeiko Lasalle & Pulsar

Brand ExtensionHonda Motorcycles

New BrandsWindex (by acquisition)B

ran

d N

ame

Existing New

Product Category

Existing

New

8-138-13Brand StrategyBrand Strategy

• Line ExtensionLine Extension– Existing brand names extended to new forms, sizes, and

flavors of an existing product category.

• Brand ExtensionBrand Extension– Existing brand names extended to new product

categories.

• MultibrandsMultibrands– New brand names introduced in the same product

category.

• New BrandsNew Brands– New brand names in new product categories.

8-148-14Packaging and Labeling ProductsPackaging and Labeling Products

PromotesPromotesIdentifiesIdentifies

Competitive Advantages

Competitive Advantages

DescribesDescribes

Sales TasksSales Tasks Product SafetyProduct SafetyPackaging

Labeling

Packaging

Labeling

8-158-15Product - Support ServicesProduct - Support Services

• Step 1. Survey customers to assess the value of current services and to obtain ideas for new services.

• Step 2. Assess costs of providing desired services.

• Step 3. Develop a package of services to delight customers and yield profits to the company.

Companies should design its support services to profitably meet the needs of target customers and gain

competitive advantage.

How?

8-168-16

Product Line LengthProduct Line LengthNumber of Items in the Product Line

Product Line LengthProduct Line LengthNumber of Items in the Product Line

Product Line DecisionsProduct Line Decisions

StretchingStretching

Lengthen beyond current range

FillingFilling

Lengthen within current range

Downward

Upward

8-178-17

WidthWidth - number of different

product lines

WidthWidth - number of different

product lines

LengthLength - total number of itemsin product lines

LengthLength - total number of itemsin product lines

Depth Depth - number of versions of each product

Depth Depth - number of versions of each product

Product Mix - Product Mix - all the product lines & items

offered

Product Mix - Product Mix - all the product lines & items

offered

Product Mix DecisionsProduct Mix Decisions

Co

nsi

sten

cy

8-188-18

IntangibilityIntangibility

InseparabilityInseparability

VariabilityVariability

PerishabilityPerishability

Can’t be seen, tasted, felt, heard, or smelled before purchase.

Can’t be separated from service providers.

Quality depends on who provides them and when, where and how.

Can’t be stored for later sale or use.

Characteristics of ServicesCharacteristics of Services

8-198-19

Satisfied and Productive Service

Employees

Satisfied and Productive Service

Employees

Greater ServiceValue

Greater ServiceValue

Internal Service QualityInternal Service Quality

Healthy ServiceProfits and Growth

Healthy ServiceProfits and Growth

Satisfied and LoyalCustomers

Satisfied and LoyalCustomers

The Service-Profit ChainThe Service-Profit Chain

8-208-20Marketing Strategies for ServiceFirmsMarketing Strategies for ServiceFirms

• Managing Service DifferentiationManaging Service Differentiation– Develop differentiated offer, delivery and image.

• Managing Service QualityManaging Service Quality– Empower front-line employees,

– Become “Customer obsessed”,

– Develop high service quality standards,

– Watch service performance closely.

• Managing Service ProductivityManaging Service Productivity– Train current or new employees,

– Increase quantity by decreasing quality,

– Utilize technology.

8-218-21Rest Stop:Reviewing the Concepts

Rest Stop:Reviewing the Concepts

• Define product and the major classifications of products and services.

• Describe the roles of product and service branding, packaging, labeling, and product-support services.

• Explain the decisions that companies make when developing product lines and mixes.

• Identify the four characteristics that affect the marketing of a service.

• Discuss the additional marketing considerations that services require.