Principles Of Marketing

8

Pr in ciples of M arketin g

Pr od uct, S ervic es, and Br andi ng St rategy

Le arning Obj ectives After studying this chapter, you should be able to: 2. Define product and the major classifications of products and services 3. Describe the decisions companies make regarding their individual products and services, product lines, and product mixes 4. Discuss branding strategy—the decisions companies make in building and managing their brands 5. Identify the four characteristics that affect the marketing of a service and the additional marketing considerations that services require 8-2

Chapt er Out li ne

2. 3. 4.

5.

What Is a Pr oduct? Product a nd S ervice Decis ions Bra nd in g Str at egy: Bui ldi ng St rong Bra nd s Servi ce s Ma rk etin g

8-3

Wha t Is a P ro duct ? Products, Services, and Experiences Product is anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want • Soap • Toothpaste

8-4

Wha t Is a P ro duct ? Products, Services, and Experiences Servi ce 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 • Doctor’s exam • Legal advice 8-5

Wha t Is a P ro duct ? Products, Services, and Experiences

Ex perience s represent what buying the product or service will do for the customer • Disney • American Girl • Toys “R” Us

8-6

Wha t Is a P ro duct ? Levels of Product and Services

• • •

Core benefits Actual product Augmented product

8-7

Wha t Is a P ro duct ? Levels of Product and Services Co re be nef its represent what the buyer is really buying Act ual pro duct represents the design, brand name, and packaging that delivers the core benefit to the customer Au gmen ted pr oduct represents additional services or benefits of the actual product 8-8

Wha t Is a P ro duct ? Product and Service Classifications • •

Consumer products Industrial products

8-9

Wha t Is a P ro duct ? Product and Service Classifications Consu me r p rodu cts are products and services for personal consumption • Classified by how consumers buy them • • • •

Convenience product Shopping products Specialty products Unsought products 8-10

Wha t Is a P ro duct ? Product and Service Classifications Conveni ence pr oduct s are consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort • Newspapers • Candy • Fast food 8-11

Wha t Is a P ro duct ? Product and Service Classifications Shop pi ng prod uc ts are consumer products and services that the customer compares carefully on suitability, quality, price, and style • Furniture • Cars • Appliances 8-12

Wha t Is a P ro duct ? Product and Service Classifications Spe cia lt y produ ct s are 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 • Medical services • Designer clothes • High-end electronics 8-13

Wha t Is a P ro duct ? Product and Service Classifications Unsoug ht pr oducts are 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 8-14

Wha t Is a P ro duct ? Product and Service Classifications In dust ria l produ ct s 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 8-15

Wha t Is a P ro duct ? Product and Service Classifications Ma teria ls a nd pa rt s include raw materials and manufactured materials and parts usually sold directly to industrial users • Wheat • Lumber • Iron • Cement 8-16

Wha t Is a P ro duct ? Product and Service Classifications Ca pi tal it ems are industrial products that aid in the buyer’s production or operations • Buildings • Elevators • Computers

8-17

Wha t Is a P ro duct ? Organizations, Persons, Places, and Ideas Or ga ni zation ma rketi ng consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward an organization

8-18

Wha t Is a P ro duct ? Organizations, Persons, Places, and Ideas Person mar keti ng consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward particular people • Donald Trump

8-19

Wha t Is a P ro duct ? Organizations, Persons, Places, and Ideas Pla ce ma rketi ng consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward particular places • Tourism

8-20

Wha t Is a P ro duct ? Organizations, Persons, Places, and Ideas Socia l ma rketi ng 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 campaign • Tourism

8-21

Pro duc t and Se rvic e D ecisions Individual Product and Service Decisions • • • • •

Product attributes Branding Packaging Labeling Product support services 8-22

Pro duc t and Se rvic e D ecisions Individual Product and Service Decisions Product a ttri butes are the benefits of the product or service • Quality • Features • Style and design

8-23

Pro duc t and Se rvic e D ecisions Individual Product and Service Decisions Quality in terms of the product or service is the lack of defects Quality in terms of the customer is the value and satisfaction provided by the product or service 8-24

Pro duc t and Se rvic e D ecisions Individual Product and Service Decisions Product quality includes level and consistency • Qua lity level is the level of quality that supports the product’s positioning • Performa nce q ual ity is the ability of a product to perform its functions

8-25

Pro duc t and Se rvic e D ecisions Individual Product and Service Decisions Qua lit y cons is tenc y is the freedom from defects and the delivering of a targeted level of performance

8-26

Pro duc t and Se rvic e D ecisions Individual Product and Service Decisions Product f eatu res are a competitive tool for differentiating a product from competitors’ products Product features are assessed based on the value to the customer versus the cost to the company 8-27

Pro duc t and Se rvic e D ecisions Individual Product and Service Decisions Product style and design add value to customer value St yle describes the appearance of the product Desig n contributes to a product’s usefulness as well as to its looks 8-28

Pro duc t and Se rvic e D ecisions Individual Product and Service Decisions Bra nd is the name, term, sign, or design, or a combination of these, that identifies the maker or seller of a product or service

8-29

Pro duc t and Se rvic e D ecisions Individual Product and Service Decisions Consumer benefits • Quality • Consistency Seller benefits • Segmentation • Communicate product features 8-30

Pro duc t and Se rvic e D ecisions Individual Product and Service Decisions Packa gi ng involves designing and producing the container or wrapper for a product La bel identifies the product or brand, describes attributes, and provides promotion

8-31

Pro duc t and Se rvic e D ecisions Individual Product and Service Decisions 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 8-32

Pro duc t and Se rvic e D ecisions Product Line Decisions Product l ine is 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 8-33

Pro duc t and Se rvic e D ecisions Product Line Decisions Product l ine lengt h is the number of items in the product line • Line stretching • Line filling

8-34

Pro duc t and Se rvic e D ecisions Product Line Decisions Product l in e st retchi ng is when a company lengthens its product line beyond its current range • Downward • Upward • Combination of both 8-35

Pro duc t and Se rvic e D ecisions Product Line Decisions Down war d product lin e s tre tch ing is used by companies at the upper end of the market to plug a market hole or respond to a competitor’s attack Upwa rd pro du ct li ne st ret ch in g is by companies at the lower end of the market to add prestige to their current products 8-36

Pro duc t and Se rvic e D ecisions Product Line Decisions Combi na tion li ne s tr etchin g is used by companies in the middle range of the market to achieve both goals of upward and downward line stretching

8-37

Pro duc t and Se rvic e D ecisions Product Line Decisions Product l ine fi ll ing occurs when companies add more items within the present range of the line • More profits • Satisfying dealers • Excess capacity • Plugging holes to fend off competitors 8-38

Pro duc t and Se rvic e D ecisions Product Mix Decisions Product mi x consists of all the products and items that a particular seller offers for sale • Width • Length • Depth • Consistency 8-39

Pro duc t and Se rvic e D ecisions Product Mix Decisions Product mi x wi dt h is the number of different product lines the company carries Product mi x lengt h is the total number of items the company carries within its product lines

8-40

Pro duc t and Se rvic e D ecisions Product Line Decisions Product l ine dept h is the number of versions offered of each product in the line Consi stency is how closely the various product lines are in end use, production requirements, or distribution channels 8-41

Branding St ra tegy: Buil ding St rong Brands Bra nd 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

8-42

Branding St ra tegy: Buil ding St rong Brands Bra nd equi ty is the positive differential effect that knowing the brand name has on customer response to the product or service

8-43

Branding St ra tegy: Buil ding St rong Brands Brand equity provides competitive advantage • Consumer awareness and loyalty • Benefits • Beliefs and value

8-44

Branding St ra tegy: Buil ding St rong Brands Cus tomer equi ty is the value of the customer relationships that the brand creates Bra nd va lua ti on is the process of estimating the total financial value of the brand

8-45

Branding St ra tegy: Buil ding St rong Brands Brand strategy decisions include: • Brand positioning • Brand name selection • Brand sponsorship • Brand development

8-46

Branding St ra tegy: Buil ding St rong Brands Brand Positioning Brand strategy decisions include: • Product attributes • Product benefits • Product beliefs and values

8-47

Branding St ra tegy: Buil ding St rong Brands Brand Name Selection Desirable qualities • Suggests benefits and qualities • Easy to pronounce, recognize, and remember • Distinctive • Extendable • Translatable for the global economy 8-48

Branding St ra tegy: Buil ding St rong Brands Brand Sponsorship • • • •

Manufacturer’s brand Private brand Licensed brand Co-brand

8-49

Branding St ra tegy: Buil ding St rong Brands Brand Sponsorship Private brands provide retailers with advantages • Product mix control • Slotting fees for manufacturers’ brands • Higher margins • Exclusivity 8-50

Branding St ra tegy: Buil ding St rong Brands Brand Development • • • •

Line extensions Brand extensions Multibrands New brands

8-51

Branding St ra tegy: Buil ding St rong Brands Brand Development Li ne extens ions occur when a company extends existing brand names to new forms, colors, sizes, ingredients, or flavors of an existing product category Bra nd ex tens ions extend a brand name to a new or modified product in a new category 8-52

Branding St ra tegy: Buil ding St rong Brands Brand Development Mul ti bra nds are additional brands in the same category New bra nds are used when existing brands are inappropriate for new products in new product categories or markets 8-53

Branding St ra tegy: Buil ding St rong Brands Managing Brands Requires: • Continuous brand communication • Customer-centered training • Brand audits

8-54

Se rvices Market ing Types of Service Industries • • •

Government Private not-for-profit organizations Business services

8-55

Se rvices Market ing Nature and Characteristics of a Service • • • •

Intangibility Inseparability Variability Perishability

8-56

Se rvices Market ing Nature and Characteristics of a Service Int ang ibi li ty refers to the fact that services cannot be seen, tasted, felt, heard, or smelled before they are purchased Insepa ra bil it y refers to the fact that services cannot be separated from their providers 8-57

Se rvices Market ing Nature and Characteristics of a Service Va ri abi li ty refers to the fact that service quality depends on who provides it as well as when, where, and how it is provided Peris hab ili ty refers to the fact that services cannot be stored for later sale or use 8-58

Se rvices Market ing Marketing Strategies for Service Firms In addition to traditional marketing strategies, service firms often require additional strategies • Service-profit chain • Internal marketing • Interactive marketing 8-59

Se rvices Market ing Marketing Strategies for Service Firms Ser vi ce- profit ch ai n links service firm 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 8-60

Se rvices Market ing Marketing Strategies for Service Firms In tern al mar ket ing means that the service firm must orient and motivate its customer contact employees and supporting service people to work as a team to provide customer satisfaction Internal marketing must precede external marketing

8-61

Se rvices Market ing Marketing Strategies for Service Firms In tera ctive mar ke tin g means that service quality depends heavily on the quality of the buyer-seller interaction during the service encounter • Service differentiation • Service quality • Service productivity 8-62

Se rvices Market ing Marketing Strategies for Service Firms Ma na gin g ser vi ce dif fer en tia tio n creates a competitive advantage from the offer, delivery, and image of the service • Offer can include distinctive features • Deli ve ry can include more able and reliable customer contact people, environment, or process • Ima ge can include symbols and branding 8-63

Se rvices Market ing Marketing Strategies for Service Firms Ma na gin g ser vi ce qual it y provides a competitive advantage by delivering consistently higher quality than its competitors Service quality always varies depending on interactions between employees and customers 8-64

Se rvices Market ing Marketing Strategies for Service Firms Service recovery can turn disappointed customers into loyal customers • Empower employees • • •

Responsibility Authority Incentive 8-65

Se rvices Market ing Marketing Strategies for Service Firms Managing service productivity refers to the cost side of marketing strategies for service firms • Employee recruiting, hiring, and training strategies • Service quantity and quality strategies 8-66

Po werPoi nt created by: Ro nal d Hei ml er  

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Dow lin g C oll ege, MBA Georg etown Univ ers ity, BS Busin ess Ad mi nis trati on Ad jun ct Profes sor, LIM Col leg e, NY Ad jun ct Profes sor, Lon g Island Univ ers ity, NY Lectu re r, C alif orn ia Poly tec hni c State Univ ers ity, Pomon a, CA Pres id en t, Walter He iml er, I nc .