CHAPTER 9

Product, Services, and Branding Strategies

WHAT IS A PRODUCT? Anything that can be offered to a

market for attention ,acquisition ,use or consumption that might satisfy a want or need.

SERVICES

Any activity or benefit that one party can offer to another that is essentially intangible and does not result in ownership of anything.

PRODUCT, SERVICES, AND EXPERIENCES Product is a key element in the market

offering. A company’s market offering often

includes both tangible goods and services. Each component can be a minor or major part of the total offer. Ex.Pure tangible goodPure services

Companies differentiate their offers by developing and delivering total customer experiences.

BEYOND PRODUCTS AND SERVICES: WELCOME TO THE EXPERIENCE ECONOMY

Experiences are sometimes confused with services, but experiences are as distinct from services as services are distinct from goods.

Whereas products and services are external, experiences exist only in the mind of the individual.

FOR EXAMPLE: In the entertainment industry:

At restaurants:

At stores:

LEVELS OF PRODUCTS AND SERVICES

LEVELS OF PRODUCTS AND SERVICES Three Levels:

The most basic level is the core benefit, which addresses the question What is the buyer really buying?. When designing products, marketers must first define the core , problems-solving benefits or services that consumers seek.

At the second level, product planners must turn the core benefit into an actual product. They need to develop product and services features, design, a quality level, a brand name, and packaging.

Finally, product planners must build augmented product around the core benefit and actual product by offering additional consumer services and benefits.

PRODUCT AND SERVICE CLASSIFICATIONS Consumer products – bought by final

customers for personal consumption.

Convenience products – Consumer product that the customer usually buys frequently, immediately, and with a minimum of comparison and buying effort.

Shopping products – Consumer goods that the customer, in the process of selection and purchase, characteristically compares on such bases as suitability, quality, price and style.

PRODUCT AND SERVICE CLASSIFICATIONS

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

Unsought products – Consumer product that the consumer either does not know about or knows about but does not normally think of buying.

PRODUCT AND SERVICE CLASSIFICATIONS Industrial products – purchased for further

processing or for use in conducting a business.Materials and parts – includes raw materials and

manufactured material and parts.Capital items – are industrial products that aid in

the buyer’s production or operations, including installations and accessory equipment.

Supplies and services – Supplies are the convenience products of the industrial field because they are usually purchased with a minimum of effort or comparison. Business services include maintenance and repair services and business advisory services.

ORGANIZATIONS, PERSONS, PLACES AND IDEASMarketers have broadened the concept of a product to

include other market offerings. Such as: Organization Marketing – consists of activities

undertaken to create, maintain or change the attitudes and behavior of target consumers toward an organization. Corporate Image Advertising – a major tool

companies use to market themselves to various publics.

Person Marketing - consists of activities undertaken to create, maintain or change attitudes or behavior toward particular people.

Place Marketing – involves activities undertaken to create, maintain or change attitudes or behavior toward particular places.

Ideas – can also be marketed. Social Marketing – the design, implementation, and

control of programs seeking to increase the acceptability of a social idea, cause, or practice among a target group.

PRODUCT AND SERVICE DECISIONS

Marketers make product and services decisions at three levels:

1. Individual Product Decisions2. Product Line Decisions3. Product Mix Decisions

INDIVIDUAL PRODUCT DECISIONS

o Product Attributes• Product Quality – the ability of a product

to perform it’s functions; it includes the product’s overall durability, reliability, precision, ease of operation and repair and other valued attributes.

• Total Quality Management(TQM) – is an approach in which all the company’s people are involved in constantly improving the quality of products, services and business processes.

INDIVIDUAL PRODUCT DECISIONSTwo Quality Level Performance Quality – the ability

of a product to perform its functions.

Conformance Quality – freedom form defects and consistency in delivering a targeted level of performance.

• Product Features – are a competitive tool for differentiating the company’s product from competitor’s product.

• Product Style and Design – style simply describes the appearance of a product and design is the larger concept of style.

o Branding – gives the seller several advantage.

• Brand – a name, term, sign, symbol, or design, or a combination of these, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors.

o Packaging – the activities of designing and producing the container or wrapper for a product.

o Labeling – printed information appearing on or with the package. It has been affected in recent times by the following:

• Unit Pricing – stating the price per unit of standard measure.

• Open Dating – stating the expected shelf life of the product.

• Nutritional Labeling – stating the nutritional values in the product.

o Product Line Decisions• Product Line – a group of products that are closely

related because they function in a similar manner.• Product Line Length – the number of items in the

product line. Product Line Stretching – occurs when a company lengthen

its product line beyond its current range. Product Line Filling – adding more items within the present

range of the line.

o Product Mix Decisions• Product Mix or Product Assortment – the set of all product

lines and items that a particular seller offers for sale.1. Product Mix Width – refers to the number of different product

lines the company carries.2. Product Mix Length – the total number of items the company

carries within its product lines.3. Product Line Depth – the number of versions offered of each

product in the line.4. Consistency – how closely related the various product lines are

in end use, production requirements, distribution channels, or some other way.

BRANDING STRATEGY: BUILDING STRONG BRANDSA strong brand is a valuable asset. Brand Equity – the positive differential effect

that knowing the brand name has on customer response to the product or service.

Brand Valuation – the process of estimating the total financial value of a brand.

Customer Equity – the value of the customer relationship that the brand creates.

BUILDING STRONG BRANDS

BRAND POSITIONINGMarketers need to position their brands

clearly in target customer’s minds. They can position brands at any of three levels.

At the lowest level, they can position the brand on product attributes. Consumers are interested in what the attributes will do for them.

A brand can be better positioned by associating it’s name with a desirable benefit.

The strongest brands are positioned on beliefs and values. These brands pack an emotional wallop.

BRAND NAME SELECTION A good name can add greatly to a

product’s success. SELECTION

1. It should suggest something about the product’s benefits and qualities.

2. It should be easy to pronounce, recognize and remember.

3. The brand name should be distinctive. 4. It should be extendable. 5. The name should translate easily into foreign

languages. 6. It should be capable of registration and legal

protection.

Once chosen, the brand name must be protected.

BRAND SPONSORSHIP Manufacturer’s Brands – national brand Private Brands – a brand created and

owned by a reseller of a product or service.

Licensing – can provide an instant and proven brand name.

Co-Branding – the practice of using the established brand names of two different companies on the same product.

BRAND DEVELOPMENT Line Extensions – using a successful brand

name to introduce additional items in a given product category under the same brand name, such as new flavors, forms, colors, added ingredients, or package sizes.

Brand Extensions – using a successful brand name to launch a new or modified product in a new category.

Multibrands – offers a way to establish different features and appeal to different buying motives.

New Brands – a company may create a new brand name when it enters a new product category for which none of the company’s current brand names is appropriate.

SERVICES MARKETINGService industry vary greatly. Governments – offers services through

courts, employment services, hospitals, military services, police and fire departments, postal service and schools.

Private-not-for-profit Organizations – offers services through museums , charities, churches, colleges, foundations and hospitals.

Business Organizations – offers services through airlines, banks, hotels, insurance companies, consulting firms, medical and law practices, entertainment companies, real estate firms, advertising and research agencies and retailers.

THE NATURE AND CHARACTERISTICS OF A SERVICE

MARKETING STRATEGIES FOR SERVICE FIRMSJust like manufacturing businesses, good

service firms use marketing to position themselves strongly in chosen target markets.

SERVICE PROFIT CHAIN – links service firms profits with employee and customer satisfaction.

Internal Service Quality Satisfied and Productive Service Employees Greater Service Value Satisfied and Loyal Customers Healthy Service Profits and Growth

Internal Marketing – marketing by a service firm to train and effectively motivate its customer contact employees and all the supporting service people to work as a team to provide customer satisfaction.

Interactive Marketing - marketing by a service firm that recognizes that perceived service quality depends heavily on the quality of buyer-seller interaction.

RITZ-CARLTON: TAKING CARE OF THOSE WHO TAKE CARE OF CUSTOMERSRitz-Carlton, a chain of luxury hotels

renowned for outstanding service, caters to the top 5 percent of corporate and leisure travellers.

His success is based on a simple philosophy: To take care of customers, you must first take care of those who take care of customers. Satisfied employees deliver high service value, which then creates satisfied customers. Satisfied customers, in turn, create sales and profits for the company.

Managing Service Differentiation The solution to price competition is to develop a

differentiated offer, delivery and image.

Managing Service Quality Customer retention is perhaps the best

measure of quality – a service firms’ ability to hang on to its customers depends on how consistently it delivers value to them.

Managing service Productivity We often think of technology’s power to save

time and costs in manufacturing companies, it also has great and often untapped potential to make service workers more productive.

ADDITIONAL PRODUCT CONSIDERATIONS Product Decisions and Social

ResponsibilityMarketers should consider carefully a

number of public policy issues and regulations involving acquiring or dropping products, patent protection, product quality and safety, and product warranties.

International Product and Services MarketingCompanies must respond to the differences

by adapting their product offering.