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Copyright © 2005 Pearson Education Canada Inc. Product, Service, and Branding Strategies •Chapter 10 •Powerpoint slides •Extendit! version •Instructor name •Course name •School name •Date Principles of Marketing: 6th Canadian Edition Learning Objectives 10.2 Copyright © 2005 Pearson Education Canada Inc. • After studying this chapter, you should be able to: – Define product and the major classifications of products and services – Describe the decisions companies make regarding their individual products and services, product lines, and product mixes – Discuss branding strategy-the decisions companies make in building and managing their brands – Identify the four characteristics that affect the marketing of a service and the additional marketing considerations that services require – Discuss two additional product issues: socially responsible product decisions and international product and services marketing Principles of Marketing: 6th Canadian Edition Copyright © 2005 Pearson Education Canada Inc. Opening Vignette: Cosmetics Industry 10.3 • The cosmetics industry sells billions of dollars worth of products • This industry illustrates the concept of product as being more than just a physical set of ingredients • Consumers buy the product and its promise of something more • Growth in services dedicated to pampering or changing the individual; spas, treatments, plastic surgery • Health, wellness, and beauty industry has crossed gender lines and boomed due to age structure of the population and our media culture focused on looking young • Consumers have voted with their wallets: they want brands that deliver desired benefits as perceived by them Principles of Marketing: 6th Canadian Edition What is a Product? 10.4 Copyright © 2005 Pearson Education Canada Inc. • Product: – Anything that can be offered for attention, acquisition, use, or consumption to satisfy a need or want – Physical object, services, persons, organizations, ideas, or experiences • Service: – Any activity or benefit that can be offered that is intangible and does not result in the ownership of anything • Experiences: – Exist in the mind of the consumer – Are memorable Principles of Marketing: 6th Canadian Edition Three Levels of Product 10.5 Copyright © 2005 Pearson Education Canada Inc. • Core product: – Problem solving services or benefits that consumers purchase the product for – We want holes, but we buy drills and bits Figure 10.1 • Actual product: – A product’s parts, quality, features, design, brand name and other attributes received • Augmented product: – Additional consumer services and benefits built around the core and actual product – Add value and differentiate the product from its competition Principles of Marketing: 6th Canadian Edition Copyright © 2005 Pearson Education Canada Inc. Summary of Product Classifications • Consumer goods: – Convenience goods – Shopping goods – Specialty goods – Unsought goods 10.6 • Industrial goods: – Materials and parts – Capital items – Supplies and services • Marketable offerings: – Organizations – Person marketing – Place marketing – Social (ideas) marketing Principles of Marketing: 6th Canadian Edition Consumer Goods Classifications 10.7 Copyright © 2005 Pearson Education Canada Inc. • Convenience product: – Purchased often, immediately, and with a minimum of comparison and buying effort – Snack foods, toiletries, food products • Shopping product: – Purchased less frequently, the consumer compares suitability, quality, price, and design; more time and effort – Furniture, clothing, vehicles, hotels, major appliances Principles of Marketing: 6th Canadian Edition Consumer Goods Classifications (continued) 10.8 Copyright © 2005 Pearson Education Canada Inc. • Specialty product: – Purchased infrequently, products with unique characteristics or brand identification; buyers are willing to make a special purchasing effort – Luxury goods, designer clothes, electronic equipment • Unsought products: – Products that consumers do not know about or would not normally think about buying; usually require personal selling effort – Life insurance, funeral arrangements, blood donations, encyclopedias Principles of Marketing: 6th Canadian Edition Copyright © 2005 Pearson Education Canada Inc. Marketing Considerations 10.9 Principles of Marketing: 6th Canadian Edition Copyright © 2005 Pearson Education Canada Inc. Industrial Goods Classifications 10.10 • Industrial product: Products bought for further processing or for use in conducting a business • Materials and parts: raw materials and components; sold directly to manufacturers • Capital items: facilities, equipment, installations, and accessories, used in the buyer’s operations • Supplies and services: operating supplies, repair and maintenance items, and business services Principles of Marketing: 6th Canadian Edition Organizations, Persons, Places, and Ideas 10.11 Copyright © 2005 Pearson Education Canada Inc. • Organization marketing: create, maintain, or change the attitudes and behaviour of target consumers toward an organization; use corporate image advertising and public relations • Person marketing: create, maintain, or change the attitudes and behaviour toward a person; used in politics, entertainment, and professions • Place marketing: create, maintain, or change the attitudes and behaviour toward a place; used in tourism and economic development • Social marketing: programs to increase the acceptability of a social idea, cause, or practice within target groups Principles of Marketing: 6th Canadian Edition 10.12 Product and Service Attributes Copyright © 2005 Pearson Education Canada Inc. • Product quality: the ability of a product to perform its functions; durability, reliability, precision, ease of operation and repair, and other valued attributes – Level: performance quality – it has a cost (Reader’s Digest) – Consistency: conformance quality (meeting expectations – crucial) • Product features: aspects of the product, used to differentiate the product from its competition, and add value – Must compare the cost of providing features to the perceived value held by consumers Figure 10.2 Principles of Marketing: 6th Canadian Edition Product and Service Attributes (continued) 10.13 Copyright © 2005 Pearson Education Canada Inc. • Product style: the appearance of the product; may be used to attract • attention, but may not contribute to better performance (Kleenex boxes) Product design: the characteristics of a product that determine its usefulness – Includes appearance, but also features, construction, and materials (the design of a shampoo is not the box but what the liquid is made of) • Branding: a name, term, sign, or symbol used to identify the goods of a seller, and to differentiate them from its competition; branding is used to convey product attributes, segment markets, and provide legal protection for its manufacturers or retailers Figure 10.2 Principles of Marketing: 6th Canadian Edition Product and Service Attributes (continued) 10.14 Copyright © 2005 Pearson Education Canada Inc. • Packaging: the activities of designing and producing the container or wrapper for a product; the package: – Holds the contents, protects the product, (ensure compatibility with the product and use of the consumer) – Store, identify, and ship the product; provide a place for labelling – Can be used as a promotional tool (Viagra) • Labelling: tags or graphics that are used to: – Identify the product, indicate the product’s weight or measure, – Provide a description and/or instructions for use, – Ingredients, nutritional information, and warnings (beware of legal issues – food, pharmaceutical) Figure 10.2 Principles of Marketing: 6th Canadian Edition Product Line Decisions 10.15 Copyright © 2005 Pearson Education Canada Inc. • Product line: – Group of closely related products due to function, similar target markets, outlets sold in, or similar pricing • Length: number of items in the line • Line stretching: adding items to either end of the line, can be upwards, downwards, or both • Line filling: adding items within the product line (vertical) • Product mix: set of all product lines • Width: # of product lines • Length: # of products in lines • Depth: # of versions of each product carried • Consistency: how closely related the product lines are Principles of Marketing: 6th Canadian Edition Copyright © 2005 Pearson Education Canada Inc. Product Line Decisions 10.16 • Line length • Product mix • Width • Length • Depth • Consistency Principles of Marketing: 6th Canadian Edition 10.17 Major Brand Strategy Decisions Copyright © 2005 Pearson Education Canada Inc. • Brand equity: – Positive differential effect that knowing the brand name has on customer response to the product or service – Value of the brand based on awareness, recognition, loyalty – Major enduring asset of a company; outlasts products, facilities – Used for line and brand extension strategies – The value comes from the benefit guarantee to the customer • Brand positioning: – Levels: product attributes, desirable benefits (the consequence of the use), beliefs and values (Botox – me, me, me) Figure 10.3 Principles of Marketing: 6th Canadian Edition Major Brand Strategy Decisions (continued) 10.18 Copyright © 2005 Pearson Education Canada Inc. • Brand name selection: a brand name should: – – – – – – – Suggest something about the product’s benefits and qualities Be easy to pronounce, recognize, and remember Be distinctive Be extendable to allow expansion to other product categories Have the ability to be translated into other languages Be capable of being registered and legally protected Be protected from becoming known as the generic for its product category (Nylon) Figure 10.3 Principles of Marketing: 6th Canadian Edition Major Brand Strategy Decisions (continued) 10.19 Copyright © 2005 Pearson Education Canada Inc. • Brand sponsorship: four options: – Manufacturer’s (national) brands, private (store) brand (president’s choice), licensed brand (Pocahonta, Louis St-Laurent), or cobranding – Dominance of manufacturer’s brands have been challenged by private label branding used by retailers (products are often made by the same manufacturer) – Issues: slotting fees charged, increased profitability of private label for retailers, and control of shelf space Figure 10.3 Principles of Marketing: 6th Canadian Edition 10.20 Brand Development Strategies • Line extension: introducing additional items under the same brand Copyright © 2005 Pearson Education Canada Inc. name; new flavours, forms, colours, added ingredients, package sizes • Brand extension: using a successful brand name to launch a new or modified product in a new category (Virgin) • Multibrands: introducing additional brands within the same product category (Procter and Gamble, GM) Figure 10.4 • New brands: creating a new brand name when entering a new product category Principles of Marketing: 6th Canadian Edition 10.21 Four Service Characteristics Copyright © 2005 Pearson Education Canada Inc. • 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 Figure 10.5 Principles of Marketing: 6th Canadian Edition 10.22 Copyright © 2005 Pearson Education Canada Inc. The Service Profit Chain • The chain that links service firm profits with employee and customer satisfaction • Question: if this is the case, then why do most service employees struggle to earn more than minimum wage and parttime hours? Internal service quality (Selection, environment support) Satisfied and productive Service employees (loyal, hard-working) Greater service value (enable value creation – work with customer) Satisfied and loyal customers (retain, refer) Healthy service profits and growth (efficient delivery of service, grow with customer) Principles of Marketing: 6th Canadian Edition 10.23 Marketing in Service Industries • Internal marketing: marketing by a service firm to train and Copyright © 2005 Pearson Education Canada Inc. motivate customer contract employees to provide customer satisfaction • Interactive marketing: – marketing by a service firm that recognizes that perceived service quality depends on the quality of the buyerseller interaction Figure 10.6 Principles of Marketing: 6th Canadian Edition Managing Service Differentiation • Copyright © 2005 Pearson Education Canada Inc. • • 10.24 To avoid having to compete on the basis of price: - customers perceive service providers having the same competence therefore go for better price – losing proposition Service marketers want to differentiate their offer by: – Innovative features, service delivery, images or symbols, service quality (do it right the first time) or recovery efforts (accept and correct your mistakes, but also ensure that the customer is not at fault) – Empowering front line employees is helpful (make them understand that they are a key player in the delivery of the service, get them to use their judgement) A focus on service productivity is necessary for profitability but not at the expense of quality (Air Canada and boarding passes – never forget that customers need and enjoy the interactivity with a human – they must know that it has a cost) Principles of Marketing: 6th Canadian Edition Additional Product Considerations 10.25 Copyright © 2005 Pearson Education Canada Inc. • Product decisions and social responsibility – – – – Government regulation Food and product safety Pricing and advertising Labelling, weights, and measures – Hazardous products – Product liability • International product and service marketing – – – – Standardization versus local adaptation Electrical standards, packaging Cultural differences in meaning Barriers to trade Principles of Marketing: 6th Canadian Edition