Chapter 7 slides

Products, Services, and
Building Customer Value
Chapter 7
Rest Stop: Previewing the Concepts
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
Rest Stop: Previewing the Concepts
Identify the four characteristics that affect
the marketing of services and the additional
marketing considerations that services
Discuss branding strategy—the decisions
companies make in building and managing
their brands
First Stop: Nike: Building a Deep-Down
Brand-Customer Relationship!
• Sales dip indicates Nike’s loss of connection
with customers
• Nike renews focus on customer relationships
• Uses community-oriented, digitally led, social
networking tools
• Result - Market share growth in the U.S.
• Anything that can be offered to a
market for attention, acquisition, use, or
consumption that might satisfy a want
or need
• An activity, benefit, or satisfaction
offered for sale that is essentially
intangible and does not result in the
ownership of anything
What Is a Product?
• Tangible objects, services, events, persons,
organizations, places, ideas, or a mixture of
• Services are a form of product
• Activities, benefits, or satisfactions offered for
• Essentially intangible
• Do not result in the ownership of anything
Products, Services and Experiences
• Market offerings
often include both
tangible goods and
• Pure tangible good
• Pure service
• Many companies
now marketing
Olive Garden sells more than just
Italian food—it serves up an idealized
Italian family meal experience
Figure 7.1 - Three Levels of Products
Levels of Products and Services
• Core customer value
• What the consumer is really buying
• Actual product
• Brand name, service features, design, packaging,
and quality level
• Augmented product
• Additional services and benefits such as delivery
and credit, instructions, installation, warranty, and
Consumer Products
• A product bought by final consumers for
personal consumption
• Classified by how consumers buy them
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Convenience Products
• Consumer products that customers usually
buy frequently, immediately, and with
minimal comparison and buying effort
• Low priced
• Placed in many locations to make them readily
• E.g. Laundry detergent, candy, magazines, and
fast food
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Shopping products
• Consumer products that the customer, in the
process of selecting and purchasing, usually
compare on such attributes as suitability,
quality, price, and style
Less frequently purchased
Distributed through fewer outlets
Greater sales support
E.g. Furniture, clothing, used cars
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Specialty products
• Consumer products with unique
characteristics or brand identification for
which a significant group of buyers is willing
to make a special purchase effort
• Different brands are not usually compared
• E.g. Specific brands of cars, high-priced
photographic equipment, designer clothes, and
the services of medical or legal specialists
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Unsought Products
• Consumer products that the consumer either
does not know about or knows about but
does not normally consider buying
• Require a lot of advertising, personal selling, and
other marketing efforts
• New innovations are generally unsought till
• Known but unsought products and services are
life insurance, preplanned funeral services
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Industrial Products
• Products bought by individuals and
organizations for further processing or for use
in conducting a business
and Parts
Supplies and
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• Organization marketing consists of activities
undertaken to create, maintain, or change
the attitudes and behavior of target
consumers toward an organization
• Business firms sponsor public relations or
corporate image marketing campaigns to
market themselves and polish their images
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Organization Marketing
• IBM’s Smarter Planet
campaign markets
IBM as a company
that helps improve
the world’s IQ
This ad tells how IBM technologies are
helping to create safer food supply
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• Person marketing consists of activities
undertaken to create, maintain, or change
attitudes or behavior toward particular
• Organizations use well-known personalities to
help sell their products or causes
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Places and Ideas
• Place marketing
• Involves activities undertaken to create,
maintain, or change attitudes or behavior toward
particular places
• Idea marketing
• Social marketing: The use of commercial
marketing concepts and tools in programs
designed to influence individuals’ behavior to
improve their well-being and that of society
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Figure 7.2 - Individual Product
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Product and Service Attributes
• Product quality: The characteristics of a
product or service that bear on its ability to
satisfy stated or implied customer needs
• Product features
• Differentiate the company’s product from
competitors’ products
• Product style and design
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• A name, term, sign, symbol, or design, or a
combination of these, that identifies the
products or services of one seller or group of
sellers and differentiates them from those of
• Customers attach meanings to brands and
develop brand relationships
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Packaging and Labeling
• Packaging: Designing and producing the
container or wrapper for a product
• Protects the product
• Attracts customers and closes the sale
• Labels
• Identify the product
• Describe the product
• Promote the brand
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Product Support Services
• An important part of
the customer’s
overall brand
• Firms must survey
customers to assess
the value of current
services and obtain
ideas for new ones
Nordstrom thrives on stories about its
after-sale service. It wants to “Take care
of customers, no matter what it takes,”
before, during, and after the sale
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Product line
• 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
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Product Line Decisions
Line filling
Adding more items within the present range of
the line
• Reaching for extra profits
• Satisfying dealers
• Using excess capacity
• Keeping out competitors
Line stretching
Lengthening the product line beyond the
current range
• Downward, to cater to lower-end segments
• Upward, to add prestige to existing products
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Product mix
• The set of all product lines and items that
a particular seller offers for sale
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Product Mix Decisions
The number of different product lines
the company carries
The number of items within a product
The number of versions offered of
each product in the line
Consistency How closely related various lines are
in end use
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The Product Mix
Campbell’s product mix consists of three major product lines. Each
product line consists of several sublines. Each line and subline has
many individual items
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Figure 7.3 - Four Service
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The Nature and Characteristics of a
• The service
provider’s task is to
make the service
tangible in one or
more ways and send
the right signals
about quality
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The Service-Profit Chain
• The chain that links service firm profits with
employee and customer satisfaction
• The five links
Internal service quality
Satisfied and productive service employees
Greater service value
Satisfied and loyal customers
Healthy service profits and growth
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Figure 7.4 - Three Types of Service
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Services Marketing
Traditional marketing via the 4 “Ps”
Orienting and motivating customer-contact
employees and the supporting service people to
work as a team to provide customer satisfaction
marketing Training service employees in the fine art of
interacting with customers to satisfy their needs
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Marketing at Work
• Web retailer Zappos
prioritizes excellent
customer service
• Zappos knows that
happy customers
begin with happy,
dedicated, and
energetic employees
Enthusiastic employees make
outstanding brand
ambassadors for Zappos
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Managing Service Differentiation
• Developing a differentiated offer, delivery,
and image
• The offer can include features that set one
company’s offer apart from competitors’ offers
• Service delivery can be differentiated with better
customer-contact people or a superior delivery
• Images can be differentiated through symbols
and branding
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Managing Service Quality and
• Managing service quality
• Identify what customers expect
• Set high quality standards
• Emphasize service recovery in case of a mistake
• Managing service productivity
• Train current employees better or hire new ones
• Increase quantity by reducing quality
• Use technology
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Building Strong Brands
• Brand equity: The
differential effect
that knowing the
brand name has on
customer response
to the product or its
Consumers sometimes bond very
closely with specific brands. To
this customer, this isn’t just a cup
of coffee, it’s a deeply satisfying
Dunkin’ Donuts brand experience
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Figure 7.5 – Major
Brand Strategy Decisions
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Brand Positioning
• Marketers can
position brands
clearly in customers’
minds at any of
three levels
• Product attributes
• Product benefits
• Beliefs and values
Successful brands engage
customers on an emotional level,
as does this ad, which suggests the
connection that hardcore users
have with the WD-40 brand
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Brand Name Selection
• A brand name should:
Suggest the product’s benefits and qualities
Be easy to pronounce, recognize, and remember
Be distinctive
Be extendable
Translate easily into foreign languages
Be capable of registration and legal protection
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Brand Sponsorship
Products are marketed under the manufacturer’s
own name
Store brands Brands created and owned by a reseller of a
product or service
For a fee, companies use names and symbols
created by other companies
Co-branding Occurs when two established brand names of
different companies are used on the same product
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Brand Sponsorship
• Sellers of children’s
products attach an
almost endless list of
character names to
clothing, toys, school
supplies, linens,
dolls, lunch boxes,
cereals, and other
SpongeBob alone has generated
more than $8 billion in sales and
licensing fees over the past decade
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Marketing At Work
• Consumer frugality
results in increased
sales of store brands
• Store brands now
offer much greater
selection, and are
rapidly achieving
name-brand quality
Walmart’s store brands account
for a whopping 40 percent of its
sales, and its Great Value brand is
the nation’s largest single food
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Brand Development
Extending an existing brand name to
new forms, colors, sizes, ingredients, or
flavors within a product category
Extending an existing brand name to
new product categories
Multibrands Marketing many different brands in a
given product category
Created for new product category, or
New brands when interest in existing brands
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Figure 7.6 - Brand Development
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Managing Brands
• Communicate the
brand’s positioning
• Manage all brand
touch points
• Train employees to
live the brand
• Audit the brands’
strengths and
Brands are not maintained by
advertising but by customers’
brand experiences
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Rest Stop: Reviewing the Concepts
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
7 - 48
Rest Stop: Reviewing the Concepts
Identify the four characteristics that affect
the marketing of services and the additional
marketing considerations that services
Discuss branding strategy—the decisions
companies make in building and managing
their brands
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