Download Principles of Marketing

principles of MARKETING
Chapter 8
Products and Services
Strategies
© 2002 Pearson Education Canada
Inc.
8-1
Chapter Objectives
• Define product and its classifications
• Describe the roles of product/service
branding, packaging, labelling, and product
support services
• Explain product line/mix development
decisions
• Identify characteristics that affect services
• Discuss additional considerations for services
© 2002 Pearson Education Canada
Inc.
8-2
Product and Services Strategies:
What is a Product?
A cluster of benefits that can be offered to a
market for attention, acquisition, use, or
consumption that might satisfy a want or a
need.
It includes physical objects, services, persons,
places, organizations, and ideas.
© 2002 Pearson Education Canada
Inc.
8-3
Product and Services Strategies:
What is a Service?
Any activity or benefit that one party can offer
to another that is essentially intangible and
does not result in the ownership of anything
tangible.
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What is a Product?
The Product-Service Continuum
Pure tangible
good
Hybrid
offer
Service
Dominated offerings
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Inc.
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Levels of Product
Installation
Augmented product
Packaging
Actual product
Brand
Delivery name Core Features
benefit
and
Core product
or
credit
service
AfterQuality
Sale
level
Design
service
Warranty
© 2002 Pearson Education Canada
Inc.
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Product Classifications:
Consumer Products
Specialty
products
Unsought
products
Types of
Consumer
Products
Convenience
products
Shopping
products
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Inc.
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Product Classifications:
Industrial Products
• Capital items
– Installations
– Accessory equipment
• Materials and parts
– Raw materials
– Manufactured
materials and parts
• Supplies and services
– Business services
© 2002 Pearson Education Canada
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Product Classifications:
Marketable Entities
• Organizations
– Image advertising
• Persons
• Places
– Business site
marketing
– Tourism marketing
• Ideas
– Social marketing
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Individual Product Decisions
Packaging
Labelling
Product
attributes
Product
Support
Services
© 2002 Pearson Education Canada
Inc.
Branding
8-10
Product Attributes:
Quality
• The ability of a product to
perform its functions
including:
–
–
–
–
–
overall durability
reliability
precision
ease of operation/repair
other valued attributes
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Product Attributes:
Quality
• Performance quality
• Conformance quality
• Total quality
management
• Return on quality
• Improve customer
value
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Inc.
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Product Attributes:
Features and Design
• Features as a tool for differentiation
• Value of features versus cost to company
• Style based solely on visual impact
– Does not make product perform better
• Design contributes to usefulness
• Two together = attention, improved
performance, cut costs, competitive
advantage
© 2002 Pearson Education Canada
Inc.
8-13
Branding
• Name, term, sign,
symbol or design or a
combination intended
to identify goods or
services of a seller or
group to differentiate
them from competitors
• “Battle of the brands”
© 2002 Pearson Education Canada
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Branding
Buyer’s viewpoint
• Gives personality
• Helps find products
with desired benefits
• Aids repeat purchase
• Suggests quality of
product
Seller’s viewpoint
• Basis of product story
• Gives legal protection
• Helps in segmenting
markets
• Symbol of ongoing
promise
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Inc.
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Branding
• Four levels of
meaning
–
–
–
–
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Attributes
Benefits
Values
Personality
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Brand Equity
• High consumer brand
awareness
• Brand loyalty
• Leverage bargaining
with resellers
• Aids launch of line
and brand extensions
• Defence against fierce
price competition
• THE major enduring
asset
• Set of loyal customers
• Customer equity
• Customer lifetime
value
© 2002 Pearson Education Canada
Inc.
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Major Branding Decisions
•
•
To brand or
not to brand
Brand name
selection
Brand
No brand
•
•
Brand sponsor
Brand strategy
Brand
repositioning
Selection
Protection
•
•
•
•
Manufacturer’s brand
Private brand
Licensed brand
Co-branding
•
•
•
•
New brands
Line extensions
Brand extensions
Multibrands
•
•
© 2002 Pearson Education Canada
Inc.
Brand repositioning
No brand repositioning
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Brand Name Selection:
Desirable Qualities
• Suggest benefits and
qualities
• Easy to pronounce,
recognize, and remember
• Distinctive
• Translate easily
• Capable of registration
and legal protection
Craftsman
© 2002 Pearson Education Canada
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Brand Sponsor:
Manufacturer vs. Private
• Manufacturer’s brands vs. private brands
– Private often hard to establish
– Private may yield higher profit margins
– Private offers exclusivity
• Slotting fees
• Private brands gaining quality and
increasing sales
• Personal brands
© 2002 Pearson Education Canada
Inc.
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Brand Sponsor:
Licensing and Co-Branding
• Licensing
– Provides instant and proven brand name
– Royalties paid
• Co-branding
– Two established brand names of different
companies on the same product
– Broad consumer appeal and minimal risk and
investment
– Legal contracts, coordination, and trust
© 2002 Pearson Education Canada
Inc.
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Four Brand Strategies
Brand Name
Product Category
Existing
New
Existing
Line
extension
Brand
extension
New
Multibrands
New brands
© 2002 Pearson Education Canada
Inc.
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Packaging:
Developing a Good Package
•
•
•
•
•
•
“The 5th P”
Primary container
Secondary package
Shipping package
Labelling
Contains and protects
product
• As a marketing tool
•
•
•
•
•
Reinforce positioning
Competitive advantage
Packaging concept
Product safety
“Green” packaging
© 2002 Pearson Education Canada
Inc.
8-23
Labelling:
Key Functions
•
•
•
•
Identify product or brand
Describe product characteristics
Provide promotional and design elements
Legal and ethical issues
– Avoid misleading or dangerous practices
– Consumer Packaging and Labelling Act
– Weights and Measures Act
© 2002 Pearson Education Canada
Inc.
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Product Support Services
• Major tool for
competitive advantage
• Design for target
customer needs and
profit
• Survey needs and
wants
• Assess costs versus
benefits
© 2002 Pearson Education Canada
• Internet
Inc.
8-25
Product Decisions and Social
Responsibility
• Competition Act
• Legal obligations to
stakeholders
• Patent laws
• Hazardous Products
Act
• Food and Drug Act
• Product liability
© 2002 Pearson Education Canada
Inc.
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Product Line Decisions:
Stretching Downward
Present products
High
Price
New products
Quality
Low
Low
High
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Product Line Decisions:
Stretching Upward
New products
High
Price
Present products
Quality
Low
Low
High
© 2002 Pearson Education Canada
Inc.
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Product Line Decisions:
Stretching Both Ways
New Products
High
Price
Present products
New products
Quality
Low
Low
High
© 2002 Pearson Education Canada
Inc.
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Product Line Decisions
Selected Proctor and Gamble Products
Product Mix Width
Fabric Care
Household
Care
Personal
Cleaning
Ivory Snow
Ivory
Ivory
Secret
Comet
Camay
Sure
Mr. Clean
Olay
Swiffer
Coast
Product Dryel
Line
Length Tide
Joy
Cheer
Zest
Oxydol
Safeguard
© 2002 Pearson Education Canada
Inc.
Deodorants
Old Spice
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Services Marketing:
Service Sector Organizations
• Governments
• Private non-profits
• Service businesses
© 2002 Pearson Education Canada
Inc.
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Four Service Characteristics
Intangibility
Inseparability
Cannot be seen
tasted, felt or
smelled before
purchasing
From the
provider
Services
Variability
Perishability
Depends on who
provides and under
what conditions
© 2002 Pearson Education Canada
Inc.
Cannot be stored
for resale
or later use
8-32
The Service Profit Chain
• Focus on both customer and employee
satisfaction
–
–
–
–
–
Healthy service profits and growth
Satisfied and loyal customers
Greater service value
Satisfied and productive service employees
Internal service quality
© 2002 Pearson Education Canada
Inc.
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Three Types of Marketing
In Service Industries
Company
Internal
marketing
Employees
External
marketing
Interactive
marketing
© 2002 Pearson Education Canada
Inc.
Customers
8-34
The Service-Profit Chain
• Managing Service
Differentiation
– Innovative features
– Service delivery
– Service image
• Managing Service Quality
– Exceed expectations
– Perceived must exceed
expected
– Credibility and reliability
– Responsiveness
– Tangible cues
– Empowerment
– Customer obsessed
– Top management commitment to
quality
– Watch performance closely
© 2002 Pearson Education Canada
Inc.
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The Service-Profit Chain
• Managing Productivity
–
–
–
–
Train employees better
Hire better staff
Trade off with quality
Harness technology
© 2002 Pearson Education Canada
Inc.
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International Product and
Services Marketing
•
•
•
•
•
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Which countries to enter?
Which products to introduce?
How much to standardize or adapt?
Suitable packaging approach?
Follow clients overseas?
Non-tariff barriers to services?
© 2002 Pearson Education Canada
Inc.
8-37
Chapter Review
• What is a product and its major
classifications?
• What are the important elements affecting
“product”?
• How do you develop a product line/mix?
• What affects the marketing of a service?
• What additional considerations affect
services?
© 2002 Pearson Education Canada
Inc.
8-38