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Products, Services, and Brands

Building Customer Value

Chapter 7

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

Product

• An activity, benefit, or satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything

Service

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What Is a Product?

• Tangible objects, services, events, persons, organizations, places, ideas, or a mixture of these

• Services are a form of product

• Activities, benefits, or satisfactions offered for sale

• Essentially intangible

• Do not result in the ownership of anything

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Products, Services and Experiences

• Market offerings often include both tangible goods and services

• Pure tangible good

• Pure service

• Many companies now marketing experiences

Olive Garden sells more than just Italian food—it serves up an idealized Italian family meal experience

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Figure 7.1 - Three Levels of Products

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Levels of Products and Services

• Core customer value

• What the consumer is really buying

• Actual product

• Brand name, service features, design, packaging, and quality level

• Augmented product

• Additional services and benefits such as delivery and credit, instructions, installation, warranty, and service

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Consumer Products

• A product bought by final consumers for personal consumption

• Classified by how consumers buy them

Convenience products

Shopping products

Specialty products

Unsought products

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Convenience Products

• Consumer products that customers usually buy frequently, immediately, and with minimal comparison and buying effort

• Low priced

• Placed in many locations to make them readily available

• E.g. Laundry detergent, candy, magazines, and fast food

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Shopping products

• Consumer products that the customer, in the process of selecting and purchasing, usually compare on such attributes as suitability, quality, price, and style

• Less frequently purchased

• Distributed through fewer outlets

• Greater sales support

• E.g. Furniture, clothing, used cars

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Specialty products

• Consumer products with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort

• Different brands are not usually compared

• E.g. Specific brands of cars, high-priced photographic equipment, designer clothes, and the services of medical or legal specialists

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Unsought Products

• Consumer products that the consumer either does not know about or knows about but does not normally consider buying

• Require a lot of advertising, personal selling, and other marketing efforts

• New innovations are generally unsought till advertised

• Known but unsought products and services are life insurance, preplanned funeral services

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Industrial Products

• Products bought by individuals and organizations for further processing or for use in conducting a business

Materials and Parts

Capital items

Supplies and services

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Organizations

• Organization marketing consists of activities undertaken to create, maintain, or change the attitudes and behavior of target consumers toward an organization

• Business firms sponsor public relations or corporate image marketing campaigns to market themselves and polish their images

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Organization Marketing

• IBM’s Smarter Planet campaign markets IBM as a company that helps improve the world’s IQ

This ad tells how IBM technologies are helping to create safer food supply chains

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Persons

• Person marketing consists of activities undertaken to create, maintain, or change attitudes or behavior toward particular people

• Organizations use well-known personalities to help sell their products or causes

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Places and Ideas

• Place marketing

• Involves activities undertaken to create, maintain, or change attitudes or behavior toward particular places

• Idea marketing

• Social marketing: The use of commercial marketing concepts and tools in programs designed to influence individuals’ behavior to improve their well-being and that of society

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Figure 7.2 - Individual Product Decisions

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Product and Service Attributes

• Product quality: The characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs

• Product features

• Differentiate the company’s product from competitors’ products

• Product style and design

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Branding

• A name, term, sign, symbol, or 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

• Customers attach meanings to brands and develop brand relationships

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Packaging and Labeling

• Packaging: Designing and producing the container or wrapper for a product

• Protects the product

• Attracts customers and closes the sale

• Labels

• Identify the product

• Describe the product

• Promote the brand

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Product Support Services

• An important part of the customer’s overall brand experience

• Firms must survey customers to assess the value of current services and obtain ideas for new ones

Nordstrom thrives on stories about its after-sale service. It wants to “Take care of customers, no matter what it takes,” before, during, and after the sale

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• A group of products that are closely related 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

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Product Line Decisions

Adding more items within the present range of the line

Line filling

• Reaching for extra profits

• Satisfying dealers

• Using excess capacity

• Keeping out competitors

Lengthening the product line beyond the current range

Line stretching

• Downward, to cater to lower-end segments

• Upward, to add prestige to existing products

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• The set of all product lines and items that a particular seller offers for sale

Product mix

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Product Mix Decisions

The number of different product lines the company carries

Width

The number of items within a product line

Length

The number of versions offered of each product in the line

Depth

How closely related various lines are in end use

Consistency

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Figure 7.3 - Four Service Characteristics

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The Nature and Characteristics of a Service

• The service provider’s task is to make the service tangible in one or more ways and send the right signals about quality

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The Service-Profit Chain

• The chain that links service firm profits with employee and customer satisfaction

• The five links

• Internal service quality

• Satisfied and productive service employees

• Greater service value

• Satisfied and loyal customers

• Healthy service profits and growth

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Figure 7.4 - Three Types of Service Marketing

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Services Marketing

Traditional marketing via the 4 “Ps”

External marketing

Orienting and motivating customer-contact employees and the supporting service people to work as a team to provide customer satisfaction

Internal marketing

Training service employees in the fine art of interacting with customers to satisfy their needs

Interactive marketing

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Marketing at Work

• Web retailer Zappos prioritizes excellent customer service

• Zappos knows that happy customers begin with happy, dedicated, and energetic employees

Enthusiastic employees make outstanding brand ambassadors for Zappos

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Managing Service Differentiation

• Developing a differentiated offer, delivery, and image

• The offer can include features that set one company’s offer apart from competitors’ offers

• Service delivery can be differentiated with better customer-contact people or a superior delivery process

• Images can be differentiated through symbols and branding

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Managing Service Quality and Productivity

• Managing service quality

• Identify what customers expect

• Set high quality standards

• Emphasize service recovery in case of a mistake

• Managing service productivity

• Train current employees better or hire new ones

• Increase quantity by reducing quality

• Use technology

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Building Strong Brands

• Brand equity: The differential effect that knowing the brand name has on customer response to the product or its marketing Consumers sometimes bond very

closely with specific brands. To this customer, this isn’t just a cup of coffee, it’s a deeply satisfyingDunkin’ Donuts brand experience

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Figure 7.5 – Major Brand Strategy Decisions

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Brand Positioning

• Marketers can position brands clearly in customers’ minds at any of three levels• Product attributes• Product benefits• Beliefs and values

Successful brands engage customers on an emotional level, as does this ad, which suggests the connection that hardcore users have with the WD-40 brand

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Brand Name Selection

• A brand name should:• Suggest the product’s benefits and qualities

• Be easy to pronounce, recognize, and remember

• Be distinctive

• Be extendable

• Translate easily into foreign languages

• Be capable of registration and legal protection

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Brand Sponsorship

Products are marketed under the manufacturer’s own name

National brands

Brands created and owned by a reseller of a product or service

Store brands

For a fee, companies use names and symbols created by other companies

Licensing

Occurs when two established brand names of different companies are used on the same product

Co-branding

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Brand Sponsorship

• Sellers of children’s products attach an almost endless list of character names to clothing, toys, school supplies, linens, dolls, lunch boxes, cereals, and other items

SpongeBob alone has generated more than $8 billion in sales and licensing fees over the past decade

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Marketing At Work

• Consumer frugality results in increased sales of store brands

• Store brands now offer much greater selection, and are rapidly achieving name-brand quality

Walmart’s store brands account for a whopping 40 percent of its sales, and its Great Value brand is the nation’s largest single food brand

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Brand Development

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

Line extension

Extending an existing brand name to new product categories

Brand extension

Marketing many different brands in a given product category

Multibrands

Created for new product category, or when interest in existing brands decreases

New brands

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Figure 7.6 - Brand Development Strategies

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Managing Brands

• Communicate the brand’s positioning

• Manage all brand touch points

• Train employees to live the brand

• Audit the brands’ strengths and weaknesses

Brands are not maintained by advertising but by customers’ brand experiences