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Kotler, Armstrong
Principles of Marketing 4e
Chapter 8
Products: Goods, Services and
Experiences
Chapter Objectives (1)
1.
Describe the nature of product in marketing management.
2.
Explain the concept of the goods–services continuum.
3.
Define the term product, including the core, actual and
augmented product.
4.
Explain product classifications, and contrast the differing
types of consumer products and business-to-business
products.
5.
Explain services classifications and discuss the marketing of
services.
Chapter Objectives (2)
6. Discuss an extended notion of product that
includes marketing persons, experiencing events,
places, political ideas, causes, non-profit services,
and fundraising endeavours.
7. Outline the range of individual product decisions
marketers make, discussing the product attributes
of quality, features and design.
8. Discuss branding, and contrast the differences
among line extensions, brand extensions,
multibrands and new brands.
Chapter Objectives (3)
9. Illustrate product line and product mix
decisions, describing stretching and filling
the product line length, line modernisation,
line featuring and line width.
10. List some of the considerations marketers
face in making international product
decisions, including whether or not to
standardise or adapt product and
packaging.
What is a Product?
• A product is anything that can be offered to a market
for attention, acquisition, use or consumption that
might satisfy a want or need.
It includes physical objects, services, persons,
places, organisations and ideas.
– The most basic level is the core product, which addresses
the question: What is the buyer really buying?
– Actual products may have as many as five characteristics:
a quality level, features, styling, a brand name, &
packaging.
– Augmented product, additional consumer services and
benefits built around the core and actual products.
Descriptions of a product's quality, features, style,
brand name, and packaging identify the:
A.
B.
C.
D.
E.
core product
actual product
augmented product
tangible product
intangible product
Figure 8.2 Three Levels of Product
Figure 8.3 An Illustration of the
Three Levels of Product
Product Classifications (1)
• Consumer Products
– Products bought by final consumers for personal
consumption.
• Convenience Products
– Consumer goods and services that the customer usually
buys frequently, immediately and with the minimum of
comparison and buying effort.
• Shopping Products
– Consumer goods and services that the customer, in the
process of selection and purchase, compares on the basis
of suitability, quality, price and style.
Product Classifications (2)
• Speciality Products
– Consumer goods and services with unique
characteristics or brand identification for
which a significant group of buyers is willing to
make a special purchase effort.
• Unsought Products
– Consumer goods and services that the
consumer either doesn’t know about or knows
about but doesn’t normally think of buying.
Table 8.2 Marketing Considerations for
Consumer Products
Business-to-Business (B2B)
Products
• B2B products: Goods bought by individuals and
organisations for further processing or for use in
conducting a business.
• The three groups of business products:
– Materials and parts– industrial goods that enter the
manufacturer’s product completely, including raw materials
and manufactured materials and parts.
– Capital items- industrial goods and services that enter the
finished product partly, including installations and
accessory equipment.
– Supplies and services- industrial goods and services that
don’t enter the finished product at all.
Figure 8.4 Classification of
Business Products
Services
• Service organisations offer customers
something that is intangible: the interaction
does not result in the ownership of
anything that endures.
• Services are responsible for over 70%of
‘total value added’ and over 80% of ‘total
employment’ in Australia.
Characteristics of Services
• Intangibility
• High involvement and personal
nature
• Variability of service encounters
• Synchronous delivery and
consumption
• Perishability of services
Service Quality Measures
• Service consumption mostly involves
people in service encounters,
services are experiential in nature
and often require special measures
to assess quality such as mystery
shoppers.
Extending the Classification of
Goods and Services (1)
• Event marketing
– Combines elements of marketing goods with those of
services, particularly the experiential aspects of sporting,
entertainment and other staged events delivered over a
period of time.
• Person marketing
– People such as athletes need to be marketed before they
can be used for endorsements. In similar manner
politicians are marketed.
• Political marketing
– Politicians market themselves as well as political
ideologies and their political parties.
Extending the Classification of
Goods and Services (2)
• Cause marketing
– Marketing an idea or social cause such as nuclear-free
living or catching public transport to and from work. Causerelated marketing positions a brand by telling customers
that part of the selling price will be given to charity or a
good cause.
• Non-profit marketing
– Marketing as practised by a variety of organisations whose
aim is to make surpluses so as to continue their
operations, but who don’t seek to make profits for
shareholders.
• Experiences marketing
– Adding value for customers buying products and services
through customer participation and connection by
managing the environmental aspects of the relationship.
Figure 8.5 Individual Product
Decisions
Individual Product Decisions
• Product Attribute Decisions
– Product quality is the ability of a product to
perform its functions; it includes the product’s
durability, reliability, precision, ease of operation
and repair, and other valued attributes.
Product Attribute Decisions
• Product Features
– A product can be offered with varying features.
From a basic model to a higher level e.g. car
industry.
• Product Design
– The process of designing a product’s style and
function: creating a product that is attractive;
easy, safe and inexpensive to use and service;
and simple and economical to produce and
distribute.
Branding
• Consumers view a brand as an important
part of the product, and branding can add
value to a product.
• Powerful brand names have consumer
franchise: they gain brand recognition
and can ultimately command strong
consumer loyalty –they have brand
equity.
Branding
• A brand is a name, term, sign, symbol or
design, or a combination of these intended
to identify the goods or services of one
seller to a group of sellers and to
differentiate them from those of the
competitors.
Figure 8.6 An Overview of
Branding Decisions
The most enduring meanings of a brand
are its:
A. attributes and benefits
B. values, benefits, attributes, and
personality
C. personality, attributes, and benefits
D. values, culture, and personality
E. attributes, benefits, and values
Four Levels of Brand Meaning
• Attributes
– A brand brings to mind certain attributes such as ‘high
prestige’.
• Benefits
– Customers buy functional and emotional benefits.
• Values
– A brand says something about the buyers’ values.
• Personality
– A brand also projects a personality-if the brand were a
person, what kind of person would it be?
Brand Equity
• The value of a brand based on the extent
to which it has high brand loyalty, name
awareness, perceived quality, strong
brand associations, and other assets such
as patents, trademarks and channel
relationships.
To Brand or Not to Brand
• Branding is strong that hardly anything
goes unbranded.
• Generic products are unbranded, and
plainly packaged, less expensive versions
of common products.
• In Australia, the market share for generics
has dropped in recent years.
Brand Name Selection
• Desirable qualities for a brand name include:
– It should suggest something about the product’s
benefits and qualities.
– It should be easy to pronounce, recognise and
remember.
– The brand name should be distinctive.
– The name should translate easily into foreign
languages.
– The name be capable of registration and legal
protection.
Brand Sponsor Decision
• Manufacturers’ brand
– Created and owned by the producer of a product or
service.
• Private brand
– Created and owned by a reseller of a product or service.
• Licensing
– Some companies license names or symbols previously
created by other manufacturers.
• Co-branding
– The practice of using the established brand names of two
different companies on the same product.
Arnott's biscuits with M&M candies in them would
be an example of the use of a __________
strategy.
A.
B.
C.
D.
E.
line extension
co-branding
repositioning
brand extension
line filling
Brand Strategy
• There are four brand strategy choices:
–
–
–
–
Line extension
Brand extension
Multibrands
New brands
• Brand Repositioning
– May be necessary due to competitive action, or
due to implementation of a new strategy, a
marketer might need to change both the product
and its image to better meet customer
expectations with its brands.
Figure 8.7 Four Brand Strategies
Packaging
• The activities of designing and producing
the container or wrapper for a product.
• Labelling is part of packaging and consists
of printed information appearing on or with
the package.
• Product-Support Services- more
companies are using product support
services as a major tool in gaining
competitive advantage.
Product Line Decisions
• A 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 or fall within given price
ranges.
• Product line length
– Stretching downward
– Stretching upward
– Stretching both ways
Figure 8.8 Product Line Stretching
Decisions
Product Mix Decisions
• A product mix is the set of all product lines and
items that a particular seller offers for sale.
• The product mix can be described as having
breadth, length, depth and consistency.
– Breadth is the number of different product lines.
– Length is the total number of items the company carries.
– Depth is 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, and distribution
channels.
International Product Decisions
• International marketers face decisions such as what products
to introduce and in which countries. Then, how much to
standardise or adapt their products for world markets.
• Standardisation helps with a consistent image and lower
manufacturing costs, no duplication of research and
development, advertising and product design.
• However, consumers around the world differ in their cultures,
attitudes and buying behaviours. Also, markets vary in
economic conditions, competition, legal requirements and
physical environments that means companies must respond
to the differences.