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Chapter 8 Product and Services Strategy 1 What is a Product? A Product is 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 Combinations of the above 2 What is a Service? A Service is a form of product that consist of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. Examples include: Banking Hotels Tax Preparation Home Repair Services 3 Products, Services, and Experiences Tangible Good Pure With Tangible Accompanying Good Services Soap Hybrid Offer Service With Accompanying Minor Goods Pure Service Auto With Airline Trip Accompanying Restaurant With Doctor’s Repair Accompanying Exam Services Snacks 4 Levels of Product (Fig. 8.1) Augmented Product Installation Packaging Delivery & Credit Brand Name Quality Level Core Benefit or Service Features Design AfterSale Service Warranty Actual Product Core Product 5 Product Classifications Consumer Products Convenience Products Buy frequently & immediately Low priced Mass advertising Many purchase locations i.e Candy, newspapers Shopping Products Buy less frequently Higher price Fewer purchase locations Comparison shop i.e Clothing, cars, appliances Specialty Products Unsought Products Special purchase efforts New innovations High price Unique characteristics Brand identification Few purchase locations i.e Lamborghini, Rolex Products consumers don’t want to think about these products Require much advertising & personal selling i.e Life insurance, blood donation 6 Product Classifications Industrial Products Materials and Parts Capital Items Supplies and Services 7 Product Classifications Other Marketable Entities Activities undertaken to create, maintain, or change the attitudes and behavior toward the following: Organizations - Profit (businesses) and nonprofit (schools and churches). Persons – Politicians, entertainers, sports figures, doctors and lawyers. Places - Business sites and tourism. Ideas (social ideas marketing) – public health campaigns, environmental campaigns, and others such as family planning, or human rights. 8 Place Marketing: Vacation spots are the subject of most place marketing Click orp ress space bar to re tu rn. Individual Product Decisions (Fig. 8.2) Product Attributes Branding Labeling Packaging Product Support Services 9 Product Attributes Developing a Product or Service Involves Defining the Benefits that it Will Offer Such as: Product Quality Ability of a Product to Perform Its Functions; Includes Level & Consistency Product Features Help to Differentiate the Product from Those of the Competition Product Style & Design Process of Designing a Product’s Style & Function 10 This Land-O-Lakes ad shows the depth of the brand. Branding Consistency Quality & Value Attributes Advantages of Brand Names Identification High Brand Loyalty Brand Equity Strong Brand Association Name Awareness Perceived Quality 11 Major Branding Decisions (Fig. 8.3) Brand Name Selection Selection Protection Brand Sponsor Manufacturer’s Brand Private Brand Licensed Brand Co-branding Brand Strategy Line Extensions Brand Extensions Multibrands New Brands 12 Four Brand Strategies (Fig. 8.4) Product Category Brand Name Existing New Existing Line Extension Dannon Yogurt Flavors Brand Extension Barbie Electronics New Multibrands Seiko Lasalle & Pulsar New Brands Windex (by acquisition) 13 Brand Strategy Line Extension Existing brand names extended to new forms, sizes, and flavors of an existing product category. Brand Extension Existing brand names extended to new or modified product categories. Multibrands New brand names introduced in the same product category. New Brands New brand names in new product categories. 14 Discussion Connections List as many specific examples as you can find of each of the following: brand licensing, co-branding, line extensions, and brand extensions. Can you find a single brand that has done all of these? Pick and describe a familiar brand that has been widely extended. What are the benefits and dangers for this specific brand? 15 This business-to-business ad offers to provide ecologically sound packaging. Besides its impact on the environment, what aspects of packaging can help/hinder product sales? How have these products become known by their packaging: •Cracker Jacks? •Capri Sun? Packaging Activity of designing and producing the container or wrapper for a product. Packaging used to just contain and protect the product. Packing now has promotional value and marketers should: Establish a packaging concept, Develop specific elements of the package, Tie together elements to support the positioning and marketing strategy. 16 A classic labeling example . Labeling What about thi s l abe l he lps to se ll the pr oduc t? Click or pres s s pacebar to r et urn. 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. 17 Product - Support Services Companies should design its support services to profitably meet the needs of target customers and gain competitive advantage. How? Step 1. Survey customers to assess the value of current services and to obtain ideas for new services. Step 2. Assess costs of providing desired services. Step 3. Develop a package of services to delight customers and yield profits to the company. 18 Product Line Decisions Product Line Length Number of Items in the Product Line Stretching Filling Lengthen beyond current range Lengthen within current range Downward Two-Way Upward 19 Product Mix Decisions Consistency Width - number of different product lines Length - total number of items in product lines Product Mix all the product lines & items offered Depth - number of versions of each product 20 Discussion Connections Using P&G’s Web site (www.pg.com) , its annual report, or other sources, develop a list of all the company’s product lines and individual products. What surprises you about this list of products? Is P&G’s product mix consistent? What overall strategy or logic appears to have guided the development of this product mix? 21 Nature and Characteristic of a Service Intangibility Inseparability Variability Perishability Can’t be seen, tasted, felt, heard, or smelled before purchase. Can’t be separated from service providers. Quality depends on who provides them and when, where and how. Can’t be stored for later sale or use. 22 The Service-Profit Chain Healthy Service Profits and Growth Internal Service Quality Satisfied and Productive Service Employees Satisfied and Loyal Customers Greater Service Value 23 Marketing Strategies for Service Firms Managing Service Differentiation Develop differentiated offer, delivery and image. Managing Service Quality Empower front-line employees, Become “Customer obsessed”, Develop high service quality standards, Watch service performance closely. Managing Service Productivity Train current or new employees better, Work on quality as well as quantity, Utilize technology. 24 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 25 Review of Concept Connections 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 for services. 26