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Chapter 8 Product and Services Strategy 8-1 Road Map: Previewing the Concepts Define 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. 8-2 What is a Product? A PRODUCT 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 Objects Services Events Persons Places Organizations Ideas Combinations of the above 8-3 What is a Service? A SERVICE 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: Banking Hotels Tax preparation Home repair services 8-4 Products, Services, and Experiences Tangible Good Pure With Tangible Accompanying Good Services Soap Hybrid Offer Service With Accompanying Minor Goods Pure Service Auto With Airline Trip Accompanying Restaurant With Doctor’s Repair Accompanying Exam Services Snacks 8-5 Levels of Product (Fig. 8-1) 8-6 Product Classifications: Consumer Convenience Products Shopping Products Buy frequently & immediately Buy less frequently Specialty Products Unsought Products Special purchase efforts New innovations Low priced Mass advertising Many purchase locations i.e Candy, newspapers High price Unique characteristics Brand identification Few purchase locations i.e Lamborghini, Rolex Higher price Fewer purchase locations Comparison shop i.e Clothing, cars, appliances Products consumers don’t want to think about Require much advertising & personal selling i.e Life insurance, blood donation 8-7 Product Classifications: Industrial Materials and Parts Raw materials, manufactured materials, and parts Capital Items Industrial products that aid in buyer’s production or operations Supplies and Services Operating supplies, repair/ maintenance items 8-8 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. 8-9 Individual Product Decisions (Fig. 8-2) 8-10 Product Attributes Developing a Product or Service Involves Defining the Benefits that it Will Offer Such as: Product Quality Ability of a Product to Perform Its Functions; Includes Level & Consistency Product Features Differentiates the Product from Competitors’ Products Product Style & Design Process of Designing a Product’s Style & Usefulness 8-11 Branding Advantages to Branding Buyers: • Identification • Quality and value Sellers • Tells a story • Provides legal protection • Helps segments markets Brand Equity Higher brand loyalty Name awareness Perceived quality Strong brand associations Patents, trademarks, channel relationships 8-12 Brands and Brand Symbols (p. 292) Powerful brands such as these have brand equity: Coca-Cola brand - $69 billion IBM brand - $53 billion Offers defense against fierce price competition. 8-13 Major Branding Decisions (Fig. 8-3) 8-14 Four Brand Strategies (Fig. 8-4) Product Category Existing Brand Name Existing New New Line Extension Dannon Yogurt Flavors Brand Extension Barbie Electronics Multibrands Seiko Lasalle & Pulsar New Brands Windex (by acquisition) 8-15 Brand Strategy Line Extension Existing brand names extended to new forms, sizes, and flavors of an existing product category. Brand Extension Existing brand names extended to new or modified product categories. Multibrands New brand names introduced in the same product category. New Brands New brand names in new product categories. 8-16 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. 8-17 Packaging Designing 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. 8-18 Labeling Printed information appearing on or with the package. Performs several functions: Identifies product or brand Describes several things about the product Promotes the product through attractive graphics 8-19 Product Support Services Companies 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. 8-20 Product Line Decisions Product Line Length Number of Items in the Product Line Stretching Filling Lengthen beyond current range Lengthen within current range Downward Both Directions Upward 8-21 Product Mix Decisions Procter & Gamble's Product Mix Baby Care Beauty Care Fabric & Home Care Food & Beverage 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 Health Care Six Toothpastes in Line Crest Multicare Crest Cavity Protection Crest Tartar Protection 8-22 Nature and Characteristic of a Service (Fig. 8-5) 8-23 Illustrate how a movie theater can deal with the intangibility, inseparability, variability, and perishability of the services it provides. 8-24 The Service-Profit Chain (Fig. 8-6) 8-25 Marketing Strategies for Service Firms Managing Service Differentiation Develop differentiated offer, delivery, and image. Managing Service Quality Empower 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 technology Well-designed Web site 8-26 International Product and Services Marketing Decide Which Products & Services to Introduce Decide How Much to Standardize or Adapt Packaging Presents New Challenges Service Marketers Face Special Challenges Trend Toward Global Service Companies Will Continue 8-27 Rest Stop: Reviewing the Concepts Define 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. 8-28