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Chapter 8

Product and Services Strategy

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Road Map: Previewing the ConceptsDefine 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.

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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 need.Includes:

Physical ObjectsServicesEventsPersonsPlacesOrganizationsIdeasCombinations of the above

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What is a Service?A SERVICESERVICE 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:

BankingHotelsTax preparationHome repair services

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Products, Services, and Experiences

Pure Tangible

Good

Pure Service

Soap

Tangible Good With

Accompanying Services

Auto With Accompanyi

ng Repair Services

Hybrid Offer

Restaurant

Service With

Accompanying Minor Goods

Airline Trip With

Accompanying Snacks

Doctor’s Exam

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Levels of Product (Fig. 8-1)

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Unsought ProductsUnsought Products

New innovations Products consumers don’t want to think about Require much advertising &personal selling i.e Life insurance, blood donation

Product Classifications: Consumer

Specialty ProductsSpecialty Products

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

Shopping ProductsShopping Products

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

Convenience ProductsConvenience Products

Buy frequently & immediately Low priced Mass advertising Many purchase locations i.e Candy, newspapers

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Supplies and Services Operating supplies, repair/

maintenance items

Supplies and Services Operating supplies, repair/

maintenance items

Materials and PartsRaw materials, manufactured

materials, and parts

Materials and PartsRaw materials, manufactured

materials, and parts

Capital ItemsIndustrial products that aid in

buyer’s production or operations

Capital ItemsIndustrial products that aid in

buyer’s production or operations

Product Classifications: Industrial

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Product Classifications:Other Marketable Entities

Activities 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, new residents, and tourism.Ideas (social ideas marketing) – Public health campaigns, environmental campaigns, and others such as family planning, or human rights.

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Individual Product Decisions (Fig. 8-2)

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Product Quality Product Quality

Product FeaturesProduct Features

Product Style & Design

Product Style & Design

Ability of a Product to Perform Its Functions; Includes Level &

Consistency

Ability of a Product to Perform Its Functions; Includes Level &

Consistency

Differentiates the Product from Competitors’ ProductsDifferentiates the Product

from Competitors’ Products

Process of Designing a Product’s Style & Usefulness

Process of Designing a Product’s Style & Usefulness

Developing a Product or Service Involves Defining the Benefits that it Will Offer Such

as:

Product Attributes

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BrandingAdvantages to Branding

Buyers:• Identification• Quality and value

Sellers• Tells a story• Provides legal

protection• Helps segments

markets

Brand EquityHigher brand loyaltyName awarenessPerceived qualityStrong brand associationsPatents, trademarks, channel relationships

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Brands and Brand Symbols (p. 292)

Powerful brands such as these have brand equity:

Coca-Cola brand - $69 billionIBM brand - $53 billion

Offers defense against fierce price competition.

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Major Branding Decisions (Fig. 8-3)

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Line ExtensionDannon Yogurt Flavors

MultibrandsSeiko Lasalle & Pulsar

Brand ExtensionBarbie Electronics

New BrandsWindex (by acquisition)

Bra

nd

Nam

e

Existing New

Product Category

Existing

New

Four Brand Strategies (Fig. 8-4)

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Brand StrategyLine Extension

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

Brand ExtensionExisting brand names extended to new or modified product categories.

MultibrandsNew brand names introduced in the same product category.

New BrandsNew brand names in new product categories.

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Consider the following thought questions, formulate an answer, pair with the student on your right, share your thoughts with one another, and respond to questions from your instructor.

We can find Coke in six or more varieties; Tide in Ultra, Liquid, and Unscented versions; and Crest Gel with sparkles for kids. List some of the issues these brand extensions raise for the manufacturers, retailers, and consumers.

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PackagingDesigning and producing the container or wrapper for a product.Steps in developing a good package:

Packaging concept,Develop specific elements of the package,Elements must support product’s position and marketing strategy.

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

Identifies product or brandDescribes several things about the productPromotes the product through attractive graphics

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Product Support ServicesCompanies use product support services as a major tool in gaining 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.

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Stretching

Lengthen beyond current range

Product Line LengthProduct Line LengthNumber of Items in the Product Line

Product Line LengthProduct Line LengthNumber of Items in the Product Line

Both Directions

Downward

Upward

Filling

Lengthen within current range

Product Line Decisions

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Product Mix DecisionsProcter & Gamble's Product Mix

Baby Care Beauty Care Fabric & HomeCare

Food &Beverage

Crest TartarProtection

Crest CavityProtection

Crest Multicare

Six Toothpastes in Line

Health Care

Width – number of different product lines

Length – total number of items the company carries within product lines

Depth – number of versions offered of each product in line

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Nature and Characteristic of a Service (Fig. 8-5)

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Illustrate how a movie theater can deal with the intangibility, inseparability, variability, and perishability of the services it provides.

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The Service-Profit Chain (Fig. 8-6)

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Marketing Strategies for Service Firms

Managing Service Differentiation

Develop differentiated offer, delivery, and image.

Managing Service QualityEmpower front-line employees,Become “Customer obsessed,”Set high service quality standards,Watch service performance closely.

Managing Service Productivity

Train current or new employees better,Work on quality as well as quantity,Utilize technologyWell-designed Web site

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Decide Which Products & Services to IntroduceDecide Which Products & Services to Introduce

Decide How Much to Standardize or Adapt Decide How Much to Standardize or Adapt

Packaging Presents New ChallengesPackaging Presents New Challenges

Service Marketers Face Special ChallengesService Marketers Face Special Challenges

Trend Toward Global Service Companies Will ContinueTrend Toward Global Service Companies Will Continue

International Product and Services Marketing

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Rest Stop: Reviewing the ConceptsDefine 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.