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Learning Objectives

Learning Objectives. After studying this chapter, you should be able to: 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

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Learning Objectives

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  1. Learning Objectives After studying this chapter, you should be able to: • 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

  2. Chapter Outline • What Is a Product? • Product and Service Decisions • Branding Strategy: Building Strong Brands • Services Marketing

  3. What Is a Product? © Bradley Johnson Products, Services, and Experiences • A productis anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want. • E.g. soap, toothpaste

  4. What Is a Product? Products, Services, and Experiences • Service is a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in ownership. • E.g., Doctor’s exam, legal advice

  5. Products, Services, and Experiences Experiencesrepresent what buying the product or service will do for the customer. E.g., Disney, Lego, Toys “R” Us © Audry Drapier © Bradley Johnson What Is a Product?

  6. What Is a Product? Levels of Products and Services • Core benefits • Actual product • Augmented product

  7. What Is a Product? Levels of Product and Services Core benefitsrepresent what the buyer is really buying. Actual productrepresents the design, brand name, and packaging that delivers the core benefit to the customer. Augmented productrepresents additional services or benefits of the actual product.

  8. What Is a Product? Discussion Question: Describe the core, actual, and augmented levels of Microsoft’s Windows XP Professional operating software: Core – A software application that enables a PC to function Actual – A well-designed, high-quality, branded, and packaged computer operating system that provides a variety of features that are important to the user Augmented – An operating system software application that offers a series of channel and consumer services. The channel member can obtain favorable pricing and credit terms, training, engineering support, etc. The consumer can get online support, version updates, access to forums and communities, etc.

  9. What Is a Product? Product and Service Classifications • Consumer products • Industrial products

  10. What Is a Product? Product and Service Classifications • Consumer productsare products and services bought by final consumers for personal consumption. • Classified by how consumers buy them • Convenience products • Shopping products • Specialty products • Unsought products

  11. What Is a Product? Product and Service Classifications • Convenience productsare consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort. • Newspapers • Candy • Fast food

  12. What Is a Product? Product and Service Classifications • Shopping productsare consumer products and services that the customer compares carefully on suitability, quality, price, and style. • Furniture • Cars • Appliances

  13. What Is a Product? Product and Service Classifications • Specialty productsare consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. • Designer watches • Branded fashion wear • High-end electronics

  14. What Is a Product? Product and Service Classifications • Unsought productsare consumer products that the consumer does not know about or knows about but does not normally think of buying. • Life insurance • Funeral services • Blood donations

  15. What Is a Product? Discussion Question: Classify the following consumer products • A laptop computer • A surgeon • Automobile tires

  16. What Is a Product? • A laptop computer – shopping good: most people purchase a laptop infrequently, and when they purchase it, they usually conduct extensive research and comparison of brands and features • A surgeon – Specialty good: There is usually little comparison between doctors as most patients collect only a few names • Automobile tires – it depends on the individual and the situation. If a consumer has a luxury brand of car and will consider only “designer” tires, this is a specialty good; for most consumers, tires are a shopping good, and they will be heavily influenced by price and brand name; in some situations, the tires could be an unsought good. If one was traveling and had a flat tire in an unknown area he would probably be towed to a local station and with little product knowledge, agree to a tire carried by the local station

  17. What Is a Product? Product and Service Classifications • Industrial productsare 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 items • Supplies and services

  18. What Is a Product? Product and Service Classifications • Materials and partsinclude raw materials and manufactured materials and parts usually sold directly to industrial users. • Wheat • Lumber • Iron • Cement

  19. What Is a Product? Product and Service Classifications • Capital items are industrial products that aid in the buyer’s production or operations. • Buildings • Elevators • Computers

  20. What Is a Product? Product and Service Classifications • Supplies and Services include operating supplies, and repair and maintenance items, as well as maintenance and repair services and business advisory services. • Copy papers • Stationary • Training service • Market research/Advertising service

  21. What Is a Product? Organizations, Persons, Places, and Ideas • Organization marketing consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward an organization.

  22. What Is a Product? Organizations, Persons, Places, and Ideas • Person marketing consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward particular people. • Andy Lau • Stephanie Sun • Siti Nuraliza

  23. What Is a Product? © Jeff Christiansen Organizations, Persons, Places, and Ideas • Place marketing consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward particular places. • Tourism, e.g. the Great Wall of China, Walt Disney World.

  24. What Is a Product? Organizations, Persons, Places, and Ideas • Social marketing is the use of commercial marketing concepts and tools in programs designed to influence individuals’ behavior to improve their well-being and that of society. • Public health campaigns

  25. Product and Service Decisions Individual Product & Service Decisions – A single product Product Line Decisions - A group of related products Product Mix Decisions – The set of product lines and items offered to customers by a particular seller These tools helps the planner to properly view the product so it can achieve competitive superiority and better product strategy.

  26. Product and Service Decisions Individual Product and Service Decisions Product attributes Branding Packaging Labeling Product support services

  27. Product and Service Decisions Individual Product and Service Decisions • Product attributesare the benefits of the product or service • Quality • Features • Style and design

  28. Product and Service Decisions Individual Product and Service Decisions • Define “Quality” in terms of the lack of defects or creating customer value and satisfaction • Quality levelis the level of quality that supports the product’s positioning. • Performance qualityis the ability of a product to perform its functions. • Conformance consistencyis freedom of defects and consistency in delivering a targeted level of performance.

  29. Product and Service Decisions Individual Product and Service Decisions • Product featuresare a competitive tool for differentiating a product from competitors’ products Assessed based on the value to the customer versus the cost to the company. • Product style and design add value to customer value. • Style describes the appearance of the product. • Designcontributes to a product’s usefulness as well as to its looks.

  30. Individual Product and Service Decisions Brandis the name, term, sign, or design, or a combination of these, that identifies the maker or seller of a product or service. Product and Service Decisions

  31. Product and Service Decisions Individual Product and Service Decisions • Branding help buyers identify benefits • Quality • Consistency • Branding provide legal protection for sellers can aid in • Segmentation • Communicate product features

  32. Product and Service Decisions Individual Product and Service Decisions • Packaging involves designing and producing the container or wrapper for a product. • Label identifies the product or brand, describes attributes, and provides promotion. • Product support services augment actual products. Companies must continually: • Assess the value of current services to obtain ideas for new ones • Assess the costs of providing these services • Develop a package of services to satisfy customers and provide profit to the company

  33. Product and Service Decisions Product Line Decisions Product lineis 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.

  34. Product and Service Decisions Product Line Decisions • Product linelength is the number of items in the product line. • Product line can be lengthened in two ways: • Line stretching(lengthen beyond its current range) • Line filling (adding more items within the present range of the line)

  35. Product Line Decisions Product line stretchingis when a company lengthens its product line beyond its current range. Downward Upward Combination of both Product and Service Decisions

  36. Product and Service Decisions Product Line Decisions Line stretching Downward product line stretchingis used by companies at the upper end of the market to plug a market hole or respond to a competitor’s attack. Upward product line stretchingis by companies at the lower end of the market to add prestige to their current products. Combination line stretchingis used by companies in the middle range of the market to achieve both goals of upward and downward line stretching.

  37. Product and Service Decisions Product Line Decisions • Product line fillingoccurs when companies add more items within the present range of the line. • More profits • Satisfying dealers • Excess capacity • Plugging holes to fend off competitors

  38. Product and Service Decisions Product Mix Decisions • Product mix consists of all the product lines and items that a particular seller offers for sale. • Width • Length • Depth • Consistency

  39. Product and Service Decisions Product Mix Decisions Product mix width is the number of different product lines the company carries. Product mix lengthis the total number of items the company carries within its product lines.

  40. Product and Service Decisions Product Line Decisions Product mix depthis the number of versions offered of each product in the line. Consistency is how closely the various product lines are in end use, production requirements, or distribution channels.

  41. Branding Strategy: Building Strong Brands Brand represents the consumer’s perceptions and feelings about a product and its performance. It is the company’s promise to deliver a specific set of features, benefits, services, and experiences consistently to the buyers.

  42. Branding Strategy: Building Strong Brands • Brand equityis the positive differential effect that knowing the brand name has on customer response to the product or service. – The extent to which customers are willing to pay more for the brand • Customer equityis the value of the customer relationships that the brand creates. – A powerful brand forms a basis for building strong and profitable customer relationships • Brand valuationis the process of estimating the total financial value of the brand.

  43. Branding Strategy: Building Strong Brands • Brand strategy decisions include: • Brand positioning • Brand name selection • Brand sponsorship • Brand development

  44. Brand Positioning Position brands at any of three levels: Product attributes(Giordano is positioned by each season’s assortment of styles, colors and low price) Product benefits (Giordano save your money through its great price and time through its assortment of products for the whole family) Product beliefs and values (Giordano also positions itself as fun. Its ads are somewhat silly at times and always show the models having a lot of fun wearing Giordano clothes. This is different from other retailers who advertise using model with intense, serious, and seductive facial expressions) http://www.youtube.com/watch?v=67DhFt2NM8Y http://www.youtube.com/watch?v=dXEtFDVBSVQ Branding Strategy: Building Strong Brands

  45. Branding Strategy: Building Strong Brands Brand Name Selection • Desirable qualities • Suggests benefits and qualities • Easy to pronounce, recognize, and remember • Distinctive • Extendable • Translatable for the global economy • Capable of registration and legal protection

  46. Branding Strategy: Building Strong Brands Brand Sponsorship Manufacturer’s brand Private brand Licensed brand Co-brand

  47. Co-Branded Differentiator WestinWORKOUT powered by Reebok

  48. Brand Sponsorship Private brands provide retailers with advantages. Product mix control Slotting fees for manufacturers’ brands Higher margins Exclusivity Branding Strategy: Building Strong Brands

  49. Branding Strategy: Building Strong Brands Brand Development In terms of Brand name & Product category Line extensions Brand extensions Multibrands New brands

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