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WEEK 7 & 8:
SHAPING THE MARKETOFFERINGS
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Setting Product Strategy
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Discussion Questions
1. What are the characteristics of a
product, and how do marketers classify
products?
2. How can companies differentiateproducts?
3. Why is product design important and
what factors affect a good design?
4. How can a company build and manage
its product mix and product lines?
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Discussion Questions
5. How can companies combine productsto create strong co-brands or ingredient
brands?
6. How can companies use packaging,labeling, warranties, and guarantees as
marketing tools?
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Marketing Planning
Needs
Wants
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Components of the Market
Offering
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Product Characteristics/Classifications
Experiences
Events
Properties
Organizations
Information
Ideas
Places
Persons
Services
Goods
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Five Product Levels
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Product Levels
Customer-value
Hierarchy
Potential Product
(Future augmentations)
Core Benefit(Rest and sleep)
Basic Product
(Bed, bathroom, towels)
Expected Product
(Clean bed, fresh towels)
Augmented Product(Free Internet; free breakfast)
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Product Classifications
Nondurable goods
Services
Durable goods
Durability and Tangibility
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Product Classifications
Consumer-Goods
Convenience goods
Shopping goods
Specialty goods
Unsought goods
Staples Impulse goods
Emergency goods
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Product Classifications
Industrial-Goods
Raw materials
Materials and Parts
Manufactured
materialsCapital Items
Installations
EquipmentSupplies andbusiness Services
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Product and Services Differentiation
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Product Differentiation
Form
Customization
Performance
Reliability
Features
Durability
Conformance
Repairability
Style
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Services Differentiation
Ordering Ease
Delivery &
Returns
Installation
Training
Maintenance & Repair
Customer
Consulting
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Design
Functional
Benefits
AestheticBenefits
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Product and Brand Relationships
Product Hierarchy
Product Systems/Mixes
Product Line Analysis
Product Line Length
Product Mix Pricing
Co-Branding
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Product Hierarchy
Need Family
Product Family
Product Class
Product Line
Product Type
Item
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Product Systems and Mixes
Product SystemProduct
Mix
Width
Length
Depth
Consistency
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Proctor & Gamble Product Mix
Detergents Toothpaste Bar SoapDisposable
Diapers
Paper
Products
Ivory Snow Gleem Ivory Pampers Charmin
Dreft Crest Camay Luvs Puffs
Tide Zest Bounty
Cheer Safeguard
Dash Oil of OlayBold
Gain
Era
Product Mix Width
Product
Line
Length
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Product Line Analysis
Sales and Profit
Market Profile
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Product-Item Contributions
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Product Map
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Product Line Length
Line stretching
Up-market stretch
Down-market stretch
Two-way
stretch
Line modernization,featuring, and pruning
Line filling
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Product Mix Pricing
Product line pricing
Optional-feature pricing
Captive-product pricing
Two-part pricing
By-product pricing Product-bundling pricing
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Co-Branding and Ingredient Branding
Co-Branding Same-company
Joint venture
Multi-sponsor
Retail co-branding
Ingredient Branding
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Packaging and Labeling
Packaging Objectives1. Brand identification
2. Persuade
3. Protection
4. At-home storage5. Aid consumption
Labeling Objectives
1. Identify
2. Grade
3. Describe
4. Promote
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Discussion Questions
1. How do we define and classify services,
and how do they differ from goods?
2. What are the new services realities?
3. How can we achieve excellence inservices marketing?
4. How can we improve service quality?
5. How can goods marketers improve
customer-support services?
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The Nature of Services
2008 2018Loss of 1.2 million jobs
2008 2018
Gain of 14.6 million jobs
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Service Sectors
Business
Government
Private nonprofit
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An act or performance one party can
offer to another that essentially
intangible and does not result in theownership of anything.
Service
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Categories of Service Mix
Pure TangibleGood
PureService
Tangible Goodminor service
Hybrid
Major service,
minor good
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Continuum of Evaluation for Products
h
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Service Characteristics
Empty seatsPerishability
Intangibility
Inseparability
Variability
ibili
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Intangibility
Place
People
Equipment
Communication material
Symbols
Price
Physical Evidence & Presentation
I bili
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Inseparability
Work with Larger GroupsAdd More Service Providers
Work Faster
V i bili
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Variability
Good Hiring and Training
Monitor Satisfaction
Offer Guarantees
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Overnight Hotel Stay Blueprint
P i h bilit
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Perishability
Empty seats
Differential Pricing
Nonpeak Demand
Complementary
ServicesReservation Systems
N S i R liti
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New Services Realities
Customer EmpowermentU
nited
BreaksGui
tar
Customer Coproduction
Satisfying Employees
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Root Cause of Customer Failure
A hi i E ll i S i
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Achieving Excellence in Services
Differentiating Services
Marketing Excellence
Best Practices
M k ti E ll
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Marketing Excellence
Preparing, pricing, distributing,
promoting the service
Training/motivating employees
External
Internal
Interactive Serving the client
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Marketing in Service Industries
Best Practices of Top Service Companies
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Best Practices of Top Service Companies
Management
Commitment
StrategicConcept
High
StandardsProfit Tiers
Monitoring
Systems
Satisfy
Customercomplaints
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Importance-Performance Analysis
Differentiating Services
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Differentiating Services
Innovation with services
Primary and secondary service options
Managing Service Quality
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Managing Service Quality
Bored Employees
Unresponsive Employees
Why Customers Switch Services
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Why Customers Switch Services
Pricing
Response to Failure
Ethical Issues
Competition
Service Failure
What Customers Want from Providers
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What Customers Want from Providers
Knowledgeable employees
Address needs on first contact
Treat me like a valued customer
Demonstrates desire to meet my needsCan quickly access information
Good value for the money
Courteous employees
Is a company/brand I can trust
Treats me fairly
Provides relevant/personalized service
0% 10% 20% 30% 40% 50% 60% 70%
65%
64%
62%
54%
49%
49%
45%
43%
38%
31%
Managing Customer Expectations
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Managing Customer Expectations
Experience
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Service-Quality Model
Determinants of Service Quality
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Reliability
Responsive
AssuranceEmpathy
Tangibles
Determinants of Service Quality
Managing Product Support Services
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Managing Product-Support Services
Customer Worries
Failure frequency
Downtime
Out-of-pocket costs
Manufacturer Strategies
Guarantees
Service contracts Extended warranties
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Developing
Pricing Strategies
and Programs
Discussion Questions
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Discussion Questions
1. How do consumers process and evaluate prices?
2. How should a company set prices initially for
products or services?
3. How should a company adapt prices to meetvarying circumstances and opportunities?
4. When should a company initiate a price change?
5. How should a company respond to a
competitors price change?
Marketing Mix
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Marketing Mix
Product Price
PromotionPlace
Revenue
Producer
Cost
Cost
Cost
Pricing
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Pricing
Bargaining
$31.50 $33.50
Price
Forms
FunctionsComponents
Changing Price Environment
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Changing Price Environment
Instant Price Comparisons
Ill pay $235.00
Name Your Own Price
Get Products Free
Buyers
Changing Price Environment
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$29.99 $19.99 $24.99
Changing Price Environment
Sellers
Monitor Customers
Selective Pricing
Negotiate Prices
How Companies Price
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How Companies Price
Pricing Department
Small Business Owner
Product-line Managers
(w/guidance)
Consumer Psychology and Pricing
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Consumer Psychology and Pricing
Reference Prices
Price-Quality Inferences
Price Endings
$1.99
A Black T-Shirt
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A Black T Shirt
Armani - $275
Gap - $14.90
H&M - $7.90
Setting the Price
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Select Final Price
Setting the Price
1
Price Method
Competitor Analysis
2
3
4
5
6
Estimate Costs
Determine DemandPricing Objective
Selecting the Pricing Objective
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Selecting the Pricing Objective
Survival
Maximum Current Profit
Maximum Market Share
Maximum Market Skimming
Product-Quality LeadershipOther Objectives
Determining Demand
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Determining Demand
Price sensitivity
Estimating demand curves
Price Elasticity of Demand
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Inelastic and Elastic Demand
Estimating Costs
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Estimating Costs
DemandPrice Ceiling
Costs
Profit
Price
Price Floor
Estimating Costs
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Estimating Costs
Fixed Costs
(overhead)
Variable Costs Total Costs
Types of costs
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Costs at Varying Levels of Production
Estimating Costs
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Estimating Costs
Accumulated Production
Experience Curve(Learning Curve)
Estimating Costs
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Estimating Costs
Target Costing
Market research Design engineers
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The Experience Curve
Analyzing Competitors Offers
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Analyzing Competitors Offers
Worth to Customer
Costs Reaction
Price
Selecting a Pricing Method
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Selecting a Pricing Method
Pricing Methods
Markup
Target-return
Perceived-Value
Value Going-rate
Auction-type
High Price
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Three Cs
Model for
Price Setting
Ceiling price
Customers assessment
of unique product
features
Orienting point
Competitors prices
and prices of
substitutes
Costs
Floor Price
High Price
(No possible
demand at this price)
Low Price
(No possible
profit at this price)
Markup Pricing
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p g
Variable cost per toaster $10
Fixed costs $300,000
Expected unit sales 50,000
Target-Return Pricing
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g g
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Target-Return Pricing
Perceived-Value Pricing
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g
Customers perceived-value
Performance $$$
Warranty $
Customer support $
Reputation $$
Value Pricing
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g
P1 P2C1 C2
Level of
Quality
THOUSANDS OF
LOW PRICES
EVERY DAYthroughout the store
EDLP
High
LowPricing
Going-Rate Pricing
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g g
Follow the Leader
Commodities
Auction Pricing
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g
English auction
(ascending bids)
Dutch auction(descending bids)
Sealed-bid auction
Selecting the Final Price
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g
Brand
Quality
Impact on others
Pricing Policies
Gain-and-risk-sharing
Adapting the Price
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p g
Geographic Pricing
Price Discounts
and Allowances
Promotional Pricing
Differentiated Pricing
Dealing with Price Changes
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g g
Raising Prices
Cutting Prices
