Chapter 8Product and Services Strategy

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What is a Product?A Product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need. Includes:

Physical Objects Services Events Persons Places Organizations Ideas Combinations of the above

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What is a Service?A Service is a form of product that consist of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. Examples include:

Banking Hotels Tax Preparation Home Repair Services3

Products, Services, and ExperiencesTangible Good Pure With Tangible Accompanying Good ServicesHybrid Offer

Service With Accompanying Minor Goods

Pure Service

Soap

Auto With Airline Trip Accompanying Restaurant With Doctors Repair Accompanying Exam Services Snacks

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Levels of Product (Fig. 8.1)Augmented Product Installation Packaging Delivery & Credit Brand Name Quality Level

Core Benefit or Service

Features

Design

AfterSale Service

Warranty Actual Product Core Product5

Product Classifications Consumer ProductsConvenience Products Buy frequently & immediately

Shopping Products Buy less frequently

Low priced Mass advertising Many purchase locations i.e Candy, newspapers

Higher price Fewer purchase locations Comparison shop i.e Clothing, cars, appliances

Specialty Products Special purchase efforts

Unsought Products New innovations

High price Unique characteristics Brand identification Few purchase locations i.e Lamborghini, Rolex

Products consumers dont want to think about these products Require much advertising & personal selling i.e Life insurance, blood donation6

Product Classifications Industrial ProductsMaterials and Parts Capital Items Supplies and Services7

Product Classifications Other Marketable EntitiesActivities undertaken to create, maintain, or change the attitudes and behavior toward the following:

Organizations - Profit (businesses) and nonprofit (schools and churches). Persons Politicians, entertainers, sports figures, doctors and lawyers. Places - Business sites and tourism. Ideas (social ideas marketing) public health campaigns, environmental campaigns, and others such as family planning, or human rights. 8Place Marketing:Va cation spots are the subject of most place marketingCli ck orp ress space bar to r et u rn.

Individual Product Decisions (Fig. 8.2)Product Attributes Branding Labeling

PackagingProduct Support Services9

Product AttributesDeveloping a Product or Service Involves Defining the Benefits that it Will Offer Such as:Product QualityProduct Features Product Style & Design Ability of a Product to Perform Its Functions; Includes Level & Consistency Help to Differentiate the Product from Those of the Competition Process of Designing a Products Style & Function10

This Land-O-Lakes ad shows the depth of the brand.

BrandingConsistency Quality & Value

Attributes

Advantages of Brand Names Brand Equity

Identification

High Brand Loyalty Name Awareness

Strong Brand Association Perceived Quality11

Major Branding Decisions (Fig. 8.3)Brand Name SelectionSelection Protection

Manufacturers Brand Private Brand Licensed Brand Co-branding

Brand Sponsor

Brand StrategyLine Extensions Brand Extensions Multibrands New Brands

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Four Brand Strategies (Fig. 8.4)Product Category Existing Existing Brand Name Line Extension Dannon Yogurt Flavors New

Brand Extension Barbie Electronics

New

Multibrands Seiko Lasalle & Pulsar

New Brands Windex (by acquisition)

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Brand StrategyLine Extension

Existing brand names extended to new forms, sizes, and flavors of an existing product category.

Brand Extension

Existing brand names extended to new or modified product categories.New brand names introduced in the same product category. New brand names in new product categories.14

Multibrands

New Brands

Discussion ConnectionsList as many specific examples as you can find of each of the following:

brand licensing, co-branding, line extensions, and brand extensions.

Can you find a single brand that has done all of these? Pick and describe a familiar brand that has been widely extended. What are the benefits and dangers for this specific brand?15

This business-to-business ad offers to provide ecologically sound packaging.Besides its impact on the environment, what aspects of packaging can help/hinder product sales? How have these products become known by their packaging: Cracker Jacks? Capri Sun?

Packaging

Activity of designing and producing the container or wrapper for a product. Packaging used to just contain and protect the product. Packing now has promotional value and marketers should:

Establish a packaging concept, Develop specific elements of the package, Tie together elements to support the positioning and marketing strategy.16

A classic labeling example .

LabelingPrinted information appearing on or with the package. Performs several functions:

What about thi s l abe l he lps to se ll the pr oduc t?Click or pres s s pacebar to r et urn.

Identifies product or brand Describes several things about the product Promotes the product through attractive graphics.17

Product - Support ServicesCompanies should design its support services to profitably meet the needs of target customers and gain competitive advantage.How? 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.18

Product Line DecisionsProduct Line LengthNumber of Items in the Product Line

StretchingLengthen beyond current range

FillingLengthen within current range

Downward Two-Way Upward19

Product Mix DecisionsWidth - number of different product lines

Consistency

Length - total number of items in product lines Depth - number of versions of each product

Product Mix all the product lines & items offered

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Discussion ConnectionsUsing P&Gs Web site (www.pg.com) , its annual report, or other sources, develop a list of all the companys product lines and individual products. What surprises you about this list of products? Is P&Gs product mix consistent? What overall strategy or logic appears to have guided the development of this product mix?21

Nature and Characteristic of a ServiceIntangibilityCant be seen, tasted, felt, heard, or smelled before purchase. Cant be separated from service providers. Quality depends on who provides them and when, where and how. Cant be stored for later sale or use.22

Inseparability Variability

Perishability

The Service-Profit ChainHealthy Service Profits and GrowthInternal Service Quality

Satisfied and Loyal Customers

Satisfied and Productive Service Employees

Greater Service Value23

Marketing Strategies for Service FirmsManaging Service Differentiation

Develop differentiated offer, delivery and image. Empower front-line employees, Become Customer obsessed, Develop high service quality standards, Watch service performance closely. Train current or new employees better, Work on quality as well as quantity, Utilize technology.24

Managing Service Quality

Managing Service Productivity

International Product and Services MarketingDecide Which Products & Services to Introduce Decide How Much to Standardize or Adapt Packaging Presents New Challenges

Service Marketers Face Special Challenges Trend Toward Global Service Companies Will Continue25

Review of Concept ConnectionsDefine 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 companies make when developing product lines and mixes. Identify the four characteristics that affect the marketing of a service. Discuss the additional marketing considerations for services. 26