Chapter-8. Learning goals

Learning goals
Define product and the major classifications of products and services
Describe the decisions companies make regarding their individual products and services, product lines, and product mixes
Discuss branding strategy-the decisions companies make in building and managing their brands
Identify the four characteristics that affect the marketing of a service and the additional marketing considerations that services require
Discuss two additional product issues: socially responsible product decisions and international product and services marketing

What Is a Product?
Product: Anything offered to a market that satisfies a want or need.
Includes: physical objects, services, events, persons, places, organizations, ideas, or some combination thereof.

Product, Services, and Experiences
Services: Activities, benefits, or satisfactions offered to a market that are essentially intangible and do not result in the ownership of anything.
Examples: banking, hotel, airline, retail, tax preparation, home repairs.
Experiences: Entertainment industry
Example: Disney land, cinemas, etc.

Three Levels of Product

Is Microsoft Windows XP Professional operating software a product or a service?
Describe its core, actual, and augmented levels.
Three Levels of Product

Classification of Products and Services
Consumer products are products and services for personal consumption
Classified by how consumers buy them
Convenience product
Shopping products
Specialty products
Unsought products

Classification of Products and Services
Convenience Goods
Bought frequently and immediately
Low price
Many purchase locations
Examples: candy, soda, newspapers
Shopping Goods
Bought less frequently
High price
Fewer purchase locations
Comparison shop
Examples: cars, furniture, appliances

Classification of Products and Services
Specialty Products
Special purchase efforts
High price
Unique
characteristics
Brand importance
Few purchase locations
Example: Rolex watches, Ferrari cars
Unsought Products
New innovations
Consumers may not want to purchase or think about them
Examples: blood donation, cemetery plots, insurance

Industrial products are products purchased for further processing or for use in conducting a business
Classified by the purpose for which the product is purchased
Materials and parts
Capital
Raw materials
Classification of Products and Services

Organizations, Persons, Places, and Ideas
Marketed to create, maintain, or change the attitudes or behavior toward the following:
Organizations: Profit (businesses) and nonprofit (schools and churches).
Person: Political and sports figures, entertainers, doctors and lawyers.
Place: Business sites and tourism.
Social: Reduce smoking, clean air, etc.
Classification of Products and Services

Product and Service Decision
Marketers make product and service decisions at three level:
1. Individual product decision
2. Product line decision
3. Product mix decision.

1.Individual Product and Service Decisions

1.Individual Product and Service Decisions
Product and Service Attributes
Quality
Performance quality
Conformance quality
Features
Competitive tool for differentiating product
Should be valued by the customer as determined through market research
Style and Design
Good design contributes to product’s usefulness as well as looks

1.Individual Product and Service Decisions
Branding
Brand: a name, term, sign, symbol, or design that identifies the product
Branding can add value to a product
Branding helps buyers
Identify products
Determine quality
Branding helps sellers
Convey product quality
Provide legal protection
Segment markets

1.Individual Product and Service Decisions
Branding – Advantages
Advantages to buyers:
Eases product identification
Simplifies the purchase process
Signal of quality
“Repository of Trust” (- Jordan)
Advantages to sellers:
Drive loyalty to company and its products
Provides legal protection
Helps segment markets (i.e. “Branded Variants”)

1.Individual Product and Service Decisions
Click to Procter and Gamble Co. website to see how well you know their brands
Branding

1.Individual Product and Service Decisions
9-
Packaging
Container, wrapper or “external face” for a product.
Functions of packaging
Contain and protect
Promote the product
Differentiate the product

9-
Labeling
Serves to identify the product
Describes the product
Promotes the product
Must be careful not to:
Mislead customers
Fail to describe ingredients
Fail to include safety warnings
1.Individual Product and Service Decisions

1.Individual Product and Service Decisions
Product support services
Survey customers regularly to assess current customer service
Companies use a mix of phone, email, fax, Internet and interactive voice and data technologies

2. Product Line Decisions
Product line
A group of products that are closely related because they may…
function in a similar manner
are sold to the same customer groups
Market through the same types of outlets
fall within given price ranges
Ex: Nokia, Toyota, L’Oreal, etc.

Product line length
Line stretching: adding products that are higher or lower priced than the existing line
Downward- Ex: Daimler Chrysler (Mercedes C-class)
Upward- Ex: Toyota (Lexus), Nissan (Infinity)
Both directions- Ex: Marriott hotels
Line filling: adding more items within the present price range
Ex: Sony Walkman line (solar-powered, waterproof, CD, etc.)
2.Product Line Decisions

2.Product Line Decisions
Mercedes C-class
Toyota - Lexus

2. Product Line Decisions
Marriott offers a full line of hotel brands,
each aimed at a different market.

3. Product Mix Decisions
Product Mix
Also known as product assortment
Consists of all the product lines and items that a particular seller offers for sale
Width: # of product lines
Length: # of products in lines
Depth: # of versions of each product carried
Consistency: how closely related the product lines are

Branding Strategy: Building Strong Brand
Brands are powerful assets that must be carefully developed / managed.
Brands with strong equity have many competitive advantages:
High consumer awareness
Strong brand loyalty
Helps when introducing new products
Less susceptible to price competition
High credibility

Branding Strategy: Building Strong Brand
Brand Loyalty
Willingness to re-purchase due to favorable brand impressions
Brand Equity
The positive effect that knowing the brand name has on consumer response to the product.
Psychological Value
Financial Value
The Link between Brand Loyalty & Brand Equity

Branding Strategy: Building Strong Brand

Major Brand Strategy Decisions

Brand Positioning
Brands can be positioned at three levels:
Product features/ attributes
Least desirable
Easily copied
Brand benefits
i.e. Volvo (safety), Nike (Performance), Lexus (quality)
Beliefs and values
Hits consumers on a deeper level, tapping emotions.

Brand Name Selection
Good Brand Names:
Suggest something about the product or its benefits
Are easy to say, recognize and remember
Are distinctive
Are extendable into different product lines (i.e. facilitate brand extensions).
Translate well into other languages
Can be registered and legally protected

Brand Sponsorship
Manufacturer’s brands
Also called “National Brands” (Tide, Coke, Pringles, etc.)
Private (store) brands
Costly to establish and promote
Higher profit margins
Licensed brands
Name and character licensing has grown
Co-branding
Advantages/ disadvantages

Brand Development
Line extensions
Minor changes to existing products
Brand extensions
Successful brand names help introduce new products
Multibrands
Multiple product entries in a product category
Example: Toyota sells Corolla, Camry, Scion, Yarris
New brands
New product category

Brand Development Strategies

Services Marketing
Four Service Characteristics