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Master in Marketing and Communication Module 8 Product, Services, and Brands: Building Customer Value Lecture 8 - slide 1 Product, Services, and Branding Strategy Topic Outline • What Is a Product? • Product and Services Decisions • Branding Strategy: Building Strong Brands • Services Marketing Lecture 8 - slide 2 What Is a Product? 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 Experiences represent what buying the product or service will do for the customer http://www.jordans.com/ Lecture 8 - slide 3 What Is a Product? Levels of Product and Services Lecture 8 - slide 4 What Is a Product? Levels of Product and Services • Core benefits represent what the buyer is really buying. • Actual product represents the design, brand name, and packaging that delivers the core benefit to the customer. • Augmented product represents additional services or benefits of the actual product. Lecture 8 - slide 5 What Is a Product? Product and Service Classifications Consumer products Industrial products Lecture 8 - slide 6 What Is a Product? Product and Service Classifications • Consumer products are products and services for personal consumption • Classified by how consumers buy them – – – – Convenience products Shopping products Specialty products Unsought products Lecture 8 - slide 7 What Is a Product? Product and Service Classifications Convenience Shopping Specialty Unsought Lecture 8 - slide 8 Marketing considerations for consumer products Lecture 8 - slide 9 What Is a Product? Product and Service Classifications Convenience products are consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort • Newspapers • Candy • Fast food Lecture 8 - slide 10 What Is a Product? Product and Service Classifications Shopping products are consumer products and services that the customer compares carefully on suitability, quality, price, and style • Furniture • Cars • Appliances Lecture 8 - slide 11 What Is a Product? Product and Service Classifications Specialty products 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 Lecture 8 - slide 12 What Is a Product? Product and Service Classifications Unsought products 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 Lecture 8 - slide 13 What Is a Product? Product and Service Classifications Industrial products are products purchased for further processing or for use in conducting a business • Classified by the purpose for which the product is purchased Lecture 8 - slide 14 What Is a Product? Product and Service Classifications Capital items are industrial products that aid in the buyer’s production or operations Materials and parts include raw materials and manufactured materials and parts usually sold directly to industrial users Supplies and services include operating supplies, repair and maintenance items, and business services http://www.cbiz.com/ Lecture 8 - slide 15 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 Lecture 8 - slide 16 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 http://www.rachaelray.com/ http://www.rachaelray.com/ Lecture 8 - slide 17 What Is a Product 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 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 Lecture 8 - slide 18 Product and Service Decisions Individual Product and Service Decisions Lecture 8 - slide 19 Product and Service Decisions Individual Product and Service Decisions Product attributes are the benefits of the product or service • Quality • Features • Style and design Lecture 8 - slide 20 Product and Service Decisions Individual Product and Service Decisions Product quality includes level and consistency • Quality level is the level of quality that supports the product’s positioning • Conformance quality is the product’s freedom from defects and consistency in delivering a targeted level of performance Lecture 8 - slide 21 Product and Service Decisions Individual Product and Service Decisions Product features 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 Lecture 8 - slide 22 Product and Service Decisions Individual Product and Service Decisions Style describes the appearance of the product Design contributes to a product’s usefulness as well as to its looks Lecture 8 - slide 23 Product and Service Decisions Individual Product and Service Decisions Brand is the name, term, sign, or design—or a combination of these—that identifies the maker or seller of a product or service Brand equity is the differential effect that the brand name has on customer response to the product and its marketing Lecture 8 - slide 24 Product and Service Decisions Individual Product and Service Decisions Packaging involves designing and producing the container or wrapper for a product Labels identify the product or brand, describe attributes, and provide promotion Lecture 8 - slide 25 Product and Service Decisions Individual Product and Service Decisions Product support services augment actual products Lecture 8 - slide 26 Product and Service Decisions Product Line Decisions Product line 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 • fall within given price ranges Lecture 8 - slide 27 Product line decisions • Product Line Length. This refers to the number of products in the line. The line is too short if adding items increases profits; too long if dropping items increases profits. Company objectives of full-line offerings may decrease strict profit criterion on length. • Product Line Stretching. This occurs when a company lengths its product line beyond its current range. Downward stretch offers items to lower end of the market. Upward stretch introduces items to high end of market. Two-way stretch extends the line both upward and downward. • Product Line Filling. This adds items within the existing product range of the line. Lecture 8 - slide 28 Product and Service Decisions Product Mix Decisions Product mix (or product portfolio) consists of all the products and items that a particular seller offers for sale • Width • Length • Depth • Consistency Lecture 8 - slide 29 Four dimensions of the product mix • Mix Width. This refers to how many product lines the company carries. (Unilever producing cooking oil, toilet soap, cosmetics etc) • Mix Length. This refers to the total number of items the company carries within its product lines. • Mix Depth. This refers to how many versions are offered of each product in the line (such as size of packaging and different formulations). • Mix Consistency. This refers to how closely related the various product lines are in end use, production requirements, distribution channels, or other ways. Lecture 8 - slide 30 Product Mix - Example Product lines Cosmetics • Lipstick • Powder • Eye shadow • …. Colors • Green • Blue • Black •…. Sublines Length Application modes • Pencil • Roll on • Powder •… Width Jewellery • Ring • Bracelet • Necklace •…. Fashion • Skirt • Shirt • Trousers •… Depth Lecture 8 - slide 31 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 Lecture 8 - slide 32 Branding Strategy: Building Strong Brands Brand Positioning Brand strategy decisions include: • Product attributes • Product benefits • Product beliefs and values Lecture 8 - slide 33 Branding Strategy: Building Strong Brands Brand Name Selection Desirable qualities 1. Suggest benefits and qualities 2. Easy to pronounce, recognize, and remember 3. Distinctive 4. Extendable 5. Translatable for the global economy 6. Capable of registration and legal protection Lecture 8 - slide 34 In-Class Exercise Brand Name! • Form groups of three to five. Complete the following task: Using the qualities that a good brand name should possess, create a brand name for a personal care product that has the following positioning statement: “Intended for sports participants and enthusiasts, _________ is a deodorant that combines effective odor protection with an enduring and seductive fragrance that will enhance your romantic fortunes.” • Each group will share its findings with the class. Lecture 8 - slide 35 Branding Strategy: Building Strong Brands Brand Sponsorship Manufacturer’s brand Private brand Licensed brand Co-brand Lecture 8 - slide 36 Branding Strategy: Building Strong Brands Brand Development Strategies Lecture 8 - slide 37 Nature and characteristics of a service A service is any activity or benefit that one party can offer to another which is essentially intangible and does not result in the ownership of anything. Lecture 8 - slide 38 The tangible-intangible continuum for goods and services • Most company offerings to customers contain an element of service and this is illustrated by the service continuum. Lecture 8 - slide 39 Categorising offerings along the service continuum • Pure tangible goods – toothpaste • Tangible goods accompanied by one or more service – computer and warranty • Hybrid offer consists of equal parts of goods and services – restaurants • Service with accompanying minor goods – air travel • Pure service – teaching, consulting Lecture 8 - slide 40 Services Marketing Nature and Characteristics of a Service Lecture 8 - slide 41 Tangibilising service offerings Lecture 8 - slide 42 Services Marketing Types of Service Industries • Government • Private not-for-profit organizations • Business services Lecture 8 - slide 43 Marketing strategies for service firms • • • • • • • Additional Ps The service profit chain Internal marketing Interactive marketing Managing differentiation Managing service quality Managing productivity Lecture 8 - slide 44 Additional Ps of services marketing People Physical environment Process Lecture 8 - slide 45 Shangri-La focuses on its people as a selling proposition Source: Shangri-La International Hotel Management Limited/TBWA Hong Kong Lecture 8 - slide 46 Services Marketing Marketing Strategies for Service Firms Service-profit chain 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 Lecture 8 - slide 47 Types of marketing in service industries Lecture 8 - slide 48 Services Marketing Marketing Strategies for Service Firms Internal marketing 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 Lecture 8 - slide 49 Services Marketing Marketing Strategies for Service Firms Interactive marketing means that service quality depends heavily on the quality of the buyerseller interaction during the service encounter Lecture 8 - slide 50 Services Marketing Service Differentiation Managing service differentiation creates a competitive advantage from the offer, delivery, and image of the service • Offer can include distinctive features • Delivery can include more able and reliable customer contact people, environment, or process • Image can include symbols and branding Lecture 8 - slide 51 Services Marketing Service Quality Managing service quality provides a competitive advantage by delivering consistently higher quality than its competitors Service quality always varies depending on interactions between employees and customers Lecture 8 - slide 52 Services Marketing Service Productivity 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 Lecture 8 - slide 53 Exercise Services Marketing Consider a service that you currently manage or that you would like to manage. • How can you make your service “tangible”? • What strategies would you adopt about these specific elements of the service marketing mix? – People – Physical – Processes Lecture 8 - slide 54