principles of marketing chapter 7: products, services, & brands to build customer value

Principles of Marketing

Chapter 7:Products, Services, & Brands

to Build Customer Value

What is a “Product”; “Service”?

• Text’s Definitions:A product:

• Anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need

Include more than just tangible objects, but also services, events, persons, places, organizations, etc.

A service:• A form of product that consists of activities, benefits, or

satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything

Dr. James Carver – Auburn University

What is a “Product”?*

• Definition used for this class: (see Ch. 1 – Slide 9 for first use)

Products:• Either a tangible good or intangible service that is

purchased in some way (e.g., cash, bartered, etc.) and is intended to satisfy a want or need

• More commonly referred to within the discipline as a Market Offering

Services:• Are all services used to facilitate & support a market

offering


A Market Offering

• The “foundation” of profitable relationships...“Physical Make-up” is a continuum from

• Entirely tangible ~ toothpaste• To entirely intangible ~ haircut

Majority fall “in-between” ~ dinner at a restaurant

Increased commoditization at the “product level”• Fueled a shift towards a more “Service-Dominant Logic”*

(Vargo and Lusch 2004; Lusch and Vargo 2006)

Viewed as “bundles of services” or “brand experiences”• What does Disney sell again? ~ Magic; Dreams; Anything is Possible

Makes “copying” & “me-too” much more difficult Underscores “why” customers buy ~ a solution


A “View” of the Product

• A “product” can be “seen” at three “levels”• Where each “level” adds more value

1. Core-customer value• The basic “service” or “solution” one is desiring

• Recall the drill-bit example?

2. Actual product• In essence the “service delivery vehicle”*

• The design, packaging, features, quality-level, brand name, etc.

3. Augmented product• Additional customer services and benefits

• Warranties, user manuals, product support, web communities, etc.• “Completes” the overall experience after the purchase


Product Classification

• “Consumer” products:• Remember “products” can be an intangible service which is purchased*

Those products bought by final consumers for personal consumption

These are then further classified by how they’re purchased as either a:

• “Convenience”, “shopping”, “specialty”, or “unsought” good.


Convenience Goods

• Those products purchased frequently, and typically immediately, with little, to no, comparison shopping.Typically…

• Low priced.• Promoted through mass advertising and sales promotions.• “Intensively”* distributed within a geographic area

To highlight convenience Common examples include candy, soda, newspapers, etc.

• “Divertive” competition* most likely with these goods


Shopping Goods

• Those products bought less frequently, and typically involve more planning and effort, with brand comparisons occurring on the basis of price, quality, style, etc.Typically…

• Higher priced.• Promoted in a more targeted effort by both the producer and

seller Value’s affected by where, who, and how sold

• “Selectively”* distributed within a geographic area Common examples are furniture, clothing, cars, appliances.


Specialty Goods

• Those products that have strong brand preference and loyalty, involve special purchasing effort, with little, to no, comparison shopping.Typically…

• (Very) high priced.• Carefully targeted promotion effort by both producer and

sellers• Tend to be “exclusively”* or very selectively distributed in a

geographic area. Examples include Ferrari and Rolex watches


Unsought Goods

• Those products that have little product awareness or knowledge of the brand, and sometimes even negative interest in the class.Nothing is really “typical”…

• Pricing strategies vary.• Distribution strategies vary.• Require aggressive advertising and personal selling by

both producer and resellers. Common examples include life insurance, cemetery plots,

blood donation.


Industrial Products

• Those purchased for further processing (i.e., components or raw materials) or those used in conducting business.

Key distinction between consumer and industrial products is the purpose for which an item is bought (i.e., home or business use).

• Consider 2 mowers bought by you; one for home & other for maintaining your personal business’ landscape – both are not consumer goods


Types of Industrial Goods

• Materials and parts:• Raw materials, manufactured materials, and parts.

• Capital items:• Products that aid in buyer’s production or operations.

• Supplies and services:• Operating supplies, maintenance, and repair items.


Individual Product Decisions

• They are a function of…

The product’s attributes• Remember again product can be a service

BrandingPackagingLabelingProduct Support Services

• “Services” as we will use the term within this class*


Product Attributes

• Product quality dimensions:• Performance quality• “Conformance” quality

• Product feature considerations:• Value to consumer• Cost to company

• Product style and design:• Shapes the buyer’s usage experience


Branding

• Definition:Corresponds to the building and managing brands.

• A brand’s purpose (and what it is): Is a name, term, sign, symbol, design, or a

combination of these, that… Identifies the products or services of one seller or

group of sellers, and…Differentiates them from those of competitors.


Branding

• Provides advantages for both…

Buyers, in that:Helps identify productsActs as a cue for product quality and consistency

Sellers, in that:• Basis for product’s “quality story”• Provides legal protection• Helps to segment markets


Packaging

• Packaging: Involves designing and producing the container or

wrapper for a product.

Ideally, good packages should:• Help to market the brand, while…

Protecting the contents Providing convenience and ease of use Ensuring product and user/child safety, and Addressing environmental concerns.


Labeling

• Definition:The printed information appearing on or with the

package, including the product name.

Performs several functions:• Helps to identify the product or brand• Describes several things about the product (information)• Promotes the product through attractive graphics

Important to meet with regulations established and enforced by the government


Product Support Services

• Our term “Services”Critical to monitor on routine basis:

• Talk with customers to assess the value and quality of current services and to obtain ideas for new services

• Fix problems and put together a package of new services that delights the customers and while still yielding profits for the company

New technologies can often enhance many support service offerings with cheaper costs incurred


Product Line Decisions

• A Product LineA group of products that are closely related

because of: (1 of 3 reasons)*• Same end-run use or function

Most common

• Same end-run customer Example: Little Misses department

• Same price level Example: “Dollar” merchandise


Product Line “Mix” Decisions

• Product mix: The set of all of the product lines and items that a

particular seller offers for sale.

• Product mix dimensions include: Width

• Number of different product lines the company carries

Breadth (or Assortment)*• Number of different brands within a line*

Depth• Number of different SKUs (stock-keeping-units) within a brand*

Consistency• How closely related are one’s various lines


Uniqueness of anIntangible Product (Service)

• Four unique characteristics:• Intangibility

Cannot be seen, tasted, felt, heard, or smelled before purchase

• Inseparability Cannot be separated from their providers

• Variability Quality depends on who provides them, as well as when,

where, and how they are delivered

• Perishability Cannot be stored for later sale or use

• Simultaneously produced and consumed*


Building Strong Brands

• Brand equity: Is the differential effect that knowing the brand

name has on customer response to the product or its marketing.

• Is a valuable asset that offers many competitive advantages, and

• Builds strong and profitable customer relationships that result in loyal customers (i.e., customer equity).


Major Brand Strategy Decisions

• Brands are assets that must be carefully developed and managed via:

Brand positioning

Brand name selection

Brand sponsorship

Brand development


Brand Positioning

• Marketers can position brands clearly in customers’ minds at any of three levels:

Product attributesProduct benefitsBeliefs and values

• A Brand’s Mission (Statement)The vision of what the brand must be and do when

positioning the brand.


Brand Name Selection

• Desirable qualities for a brand name: It should:

• Suggest the product’s benefits and qualities• Be easy to pronounce, recognize, and remember• Be distinctive• Be extendable• Translate easily into foreign languages, and• Be capable of registration and legal protection.


Brand Sponsorship

• Brand sponsorship options include:National brands (e.g., Sony)

• Also called manufacturer brands

Store brands (e.g., Archer Farms)• Also called private labels

Licensed brands• Name or character licensing

Co-branded goods (e.g., credit cards)• Can creates broader appeal and brand equity


Brand Development

• Options include:• Line extension:

• Extending an existing brand name to new forms, colors, sizes, ingredients, or flavors within a product category.

• Brand extension: • Extending an existing brand name to new product categories.

• Multibranding: • Offers a way to establish different features and appeal to different customer

segments, lock up more reseller shelf space, and capture a larger market share.

• New brands: • Developed based on belief that the power of its existing brand is waning

and a new brand name is needed. Also used for products in a new product category.


principles of marketing chapter 7: products, services, & brands to build customer value

Documents

product service

intangible service

product support

product levelfueled

producta product

form of product

service delivery vehicle

bundles of services