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7 Product, Services, and Branding Strategy 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 that services require. 7-2 What is a Product? • 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, or some combination thereof. 7-3 What is a Service? • A form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. – Examples: banking, hotel, airline, retail, tax preparation, home repairs. 7-4 The Product-Service Continuum Sugar Pure Tangible Good Restaurant College Education Pure Service 7-5 BMW & Daimler Electric PARIS—Two ofScooters the splashiest premieres at the Paris Motor Show Thursday weren't the sleek coupes or roadsters that typically steal the show but electric scooters unveiled by BMW AG's Mini and Daimler AG's Smart, which also went a step further by displaying an electric bicycle. Though all are concept designs, executives at both companies said they will determine within weeks whether to ready them for production, using the reaction in Paris to make the final decision. "It's a very attractive concept for us," said Thomas Weber, Daimler's management board member responsible for R & D. “This is a huge market.” Honda Motor Co. plans to launch its own allelectric scooter in Japan later this year, while Peugeot aims to re-enter the market in 2011 after its first foray 15 tears ago. A recent study by Pike Research estimates some 466 million electric bikes, motorcycles and scooters will be sold world-wide over the next six years.The majority of sales are expected in China, where some 100 MM electric bicycles are already on the road. 9-6 7-6 The Folding Bike Goes Cool Once the pocket protector of the cycling world, these adaptable rides have evolved into a stylish mode of transport 9-7 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 7-7 Levels of a Product 7-8 Consumer Products • Products and services bought by final consumers for personal consumption. 7-9 Convenience Products • Purchased frequently and immediately • Low priced • Mass advertising • Many purchase locations – Examples: candy, soda, newspapers 7-10 Shopping Products • Bought less frequently • Higher price • Fewer purchase locations • Comparison shop – Examples: furniture, clothing, cars, appliances 7-11 Specialty Products • Special purchase efforts • High price • Unique characteristics • Brand identification • Few purchase locations – Examples: Lamborghini, Rolex Watch 7-12 Unsought Products • New innovations • Products consumers do not want to think about • Require much advertising and personal selling • Examples: life insurance, cemetery plots, blood donation 7-13 Industrial Products • Those purchased for further processing or for use in conducting business. 7-14 Industrial Products Materials and Parts Raw materials, manufactured materials, and parts Capital Items Products that aid in buyer’s production or operations Supplies and Services Operating supplies, repair, and maintenance items 7-15 Other Market Offerings • Organizations: Profit (businesses) and nonprofit (schools and churches). • Persons: Politicians, entertainers, sports figures, doctors, and lawyers. • Places: create, maintain, or change attitudes or behavior toward particular places (e.g., tourism). • Ideas (social marketing): Public health campaigns, environmental campaigns, family planning, or human rights. 7-16 Organization Marketing Companies use corporate image advertising to market themselves to various publics. General Electric Stands for “imagination at work.” 7-17 Individual Product Decisions 7-18 Product and Service Attributes Quality Performance and Satisfaction Includes Level & Consistency Features Differentiates a product from the competition; assessed based on value and cost Style & Design Style = Appearance Design = heart of the product 7-19 Product Design The innovative Discover 2GO card is a gottahave-it accessory for people who want to dash off to the gym, the mall, or a restaurant with nothing more than their keys and a credit card. 7-20 New Looks on Old Ideas 9- xxxxxxxxxxxxx Xxxxxxxxxxxxxxx xxxxxxxxxxxxxxx 7-21 The power of the press A new process will make solid-state rechargeable batteries that should greatly outperform existing ones The new development is the work of Planar Energy of Orlando, Florida—a company spun out of America’s National Renewable Energy Laboratory in 2007. The firm is about to complete a pilot production line that will print lithium-ion batteries onto sheets of metal or plastic, like printing a newspaper. Planar says its cells will be more reliable than conventional lithium-ion cells, will be able to store two to three times more energy in the same weight and will last for tens of thousands of recharging cycles. They could also be made for a third of the cost. Branding • Creating, maintaining, protecting, and enhancing products and services. • A brand is a name, term, sign, symbol, or design, or a combination of these, that identifies the maker or seller of a product or service. 7-23 Branding • Advantages to buyers: – Product identification – Product quality • Advantages to sellers: – Basis for product’s quality story – Provides legal protection – Helps to segment markets 7-24 Packaging • Designing and producing the container or wrapper for a product. • Developing a good package: – Packaging concept – Package elements – Product safety – Environmental concerns 7-25 Innovative Packaging Dutch Boy recently came up with a long overdue innovation—paint in plastic containers with twist-off caps. 7-26 "The packet has long been the bane of our consumers," said Dave Ciesinski, vice president of Heinz Ketchup. "The biggest complaint is there is no way to dip and eat it on-the-go.“ Heinz has long struggled to find a design that lets diners dip or squeeze ketchup that could also be sold at a price acceptable to its restaurant customers. For this effort, it bought its design team a used minivan two years ago to test if their ideas really worked while eating on the road. Heinz sells more than 11 million cases of its ketchup packets in the U.S. every year and it will continue to sell the traditional packet. The new packet is in test markets in the Midwest and Southeast and will roll out at select fast-food 27 restaurants in the fall (of 2010). 7-27 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 7-28 Innovative Labeling Innovative labeling can help to promote a product. 7-29 Labeling Design 30 7-30 Product Support Services • Assess the value of current services and obtain ideas for new services. • Assess the cost of providing the services. • Put together a package of services that delights the customers and yields profits for the company. 7-31 Product Line Decisions Product Line Length Number of Items in the Product Line Stretching Filling Lengthen beyond current range. Lengthen within current range Can be: Downward Upward Both Directions 7-32 Two-Way Stretch Marriott added the Renaissance Hotels line to serve the upper end of the market and the TownePlace Suites line to serve the moderate and lower ends. 7-33 Line Extension Click the picture above to play video As Marriott’s product extension grew in popularity, it extended the product further. 7-34 Product Mix Decisions • Product Mix: all of the product lines and items that a particular seller offers for sale. • Width: the number of different product lines the company carries. • Depth: the number of versions offered of each product in the line. • Consistency: how closely related the various lines are. 7-35 Brand Equity • The positive differential effect that knowing the brand name has on customer response to the product or service. • Provides: – More brand awareness and loyalty – Basis for strong, profitable customer relationships 7-36 Major Brand Strategy Decisions 7-37 Brand Positioning • Can position brands at any of three levels. Product Attributes Product Benefits Beliefs and Values 7-38 Brand Name Selection • Desirable qualities for a brand name include: 1. It should suggest product’s benefits and qualities 2. It should be easy to pronounce, recognize, and remember 3. It should be distinctive 4. It should be extendable 5. It should translate easily into foreign languages 6. It should be capable of registration and legal protection 7-39 Brand Sponsorship Manufacturer’s Brands Co-Branding Four Options Private Brands Licensed Brands 7-40 Line Extensions Morton sells an entire line of salts and seasonings for every occasion. 7-41 Brand Development • Line Extension: introduction of additional items in a given product category under the same brand name (e.g., new flavors, forms, colors, ingredients, or package sizes). • Brand Extension: using a successful brand name to launch a new or modified product in a new category. 7-42 Brand Development • Multibranding: offers a way to establish different features and appeal to different buying motives. • New Brands: developed based on belief that the power of its existing brand is waning and a new brand name is needed. Also used for products in new product category. 7-43 This Is Your Brain . . . . Big brand requires less brain work (top) than weaker one. 7-44 Slide 11-90 Nature and Characteristics of a Service 7-45 Discussion Question • How can an airline deal with the intangibility, inseparability, variability, and perishability of its service offering? 7-46 The Service-Profit Chain 7-47 Major Service Marketing Tasks • Managing Service Differentiation: – Develop a differentiated offer, delivery, and image. • Managing Service Quality: – Be customer obsessed, set high service quality standards, have good service recovery, empower front-line employees. • Managing Service Productivity: – Train current employees or hire new ones, increase quantity and sacrifice quality, harness technology. 7-48 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 7-49 Rest Stop: Reviewing the Concepts 1. Define product and the major classifications of products and services. 2. Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. 3. Discuss branding strategy—the decisions companies make in building and managing their brands. 7-50 Rest Stop: Reviewing the Concepts 4. Identify the four characteristics that affect the marketing of a service and the additional marketing considerations that services require. 5. Discuss two additional product issues: socially responsible product decisions and international product and services marketing. 7-51 Q: All the following are examples of products except: 1. physical objects. 2. events. 3. places. 4. all the above are examples of products. AK, 7e – Chapter 7 7-52 Q: The _____ economy is one in which people outsource entire activities to someone else in order to create memorable events. 1. agrarian 2. goods-based 3. service 4. experience AK, 7e – Chapter 7 7-53 Q: Luxury goods such as Rolex watches or expensive crystal are examples of _____ products. 1. convenience 2. specialty 3. sought 4. shopping AK, 7e – Chapter 7 7-54 Q: Product quality includes both _____ quality and _____ quality. 1. 2. 3. 4. performance, conformance consistent, conformance persistent, conformance product, service AK, 7e – Chapter 7 7-55 Q: All the following are examples of product line decisions except: 1. downward extension. 2. horizontal extension. 3. upward extension. 4. line filling. AK, 7e – Chapter 7 7-56 Q: Mercedes introduced C-Class cars for $30,000 without hurting its ability to sell other models priced at $100,000 or more. The new car was an example of successful: 1. downward extension. 2. sideward extension. 3. upward extension. 4. line filling. AK, 7e – Chapter 7 7-57 Q: Avon markets more than 1,300 items and K-Mart stocks more than 15,000 items. These items are examples of: 1. product line. 2. line filling. 3. product mix. 4. line extension. AK, 7e – Chapter 7 7-58 Q: The extent to which products in a product mix are related to each other constitutes a product mix’s: 1. 2. 3. 4. depth. width. consistency. match. AK, 7e – Chapter 7 7-59 Q: When two companies place their brand names on the same product, they are _______ the product. 1. licensing 2. private branding 3. multibranding 4. co-branding AK, 7e – Chapter 7 7-60 Q: _____ is the value of a brand. 1. Brand equity 2. Brand power 3. Brand preference 4. Brand insistence AK, 7e – Chapter 7 7-61 Q: Because services cannot be stored for later sale or use, they are: 1. intangible. 2. perishable. 3. inseparable. 4. variable. AK, 7e – Chapter 7 7-62 Q: Which of the following is not a part of the service-profit chain? 1. Internal service quality 2. External service quality 3. Satisfied and productive employees 4. Satisfied and loyal customers AK, 7e – Chapter 7 7-63 Q: Hotels and resorts charge lower prices in the off-season to offset the ______________ of service characteristics. 1. inseparability 2. variability 3. intangibility 4. perishability AK, 7e – Chapter 7 7-64 Q: Do you think we should enact legislation that would curb the number of lawsuits filed every year? 1. Yes 2. No AK, 7e – Chapter 7 7-65