Introduction to Product Decisions Preview • Product and the major classifications of products and services • Decisions companies make about each product and service, product lines, and product mixes • Branding strategy–the decisions firms make in building and managing their brands • Four characteristics that affect the marketing of a service and the additional marketing considerations that services require 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 • Tangible goods and services are products 3 What is a Service? 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 include banking, hotels, airlines, tax preparation, home repair service 4 Market Offerings • Continuum ranges from pure tangible goods (with no services) to pure services (with no good component) with many combinations in between • Pure good: Camay soap • Pure service: Legal representation • Combination: Restaurant meal • Creating and managing customer experiences differentiates offerings 5 Levels of a Product • Core benefit • What the consumer is really buying • Actual product • Includes the brand name, features, design, packaging, quality level • Augmented product • Additional services and benefits such as delivery and credit, instructions, installation, warranty, service 6 Consumer Products • Products and services bought by final consumers for personal consumption • Classified by how consumers buy them • • • • Convenience Shopping Specialty Unsought 7 Convenience Product • Purchased frequently and immediately when needed • Low priced • Mass produced and advertised • Many purchase locations • Examples include candy, soda, sports newspapers and magazines 8 Shopping Product • • • • Bought less frequently Higher price Fewer purchase locations Comparison shopping advisable given range of consumer needs and wants • Examples include furniture, clothing, cars, appliances, sports and exercise equipment 9 Specialty Product • • • • • Special purchase efforts High price Unique characteristics Brand identification Few purchase locations • Example include Rolex watch, Ping golf clubs, Izod sport shirt, Nike Air Jordan, Titleist Pro v1 10 Unsought Product • New innovations • PC when first introduced • Products consumers do not want to think about • Examples include life insurance and cemetery plots • Require much advertising and personal selling 11 Product Decisions • • • • • Product attributes Branding Packaging Labeling Product support services 12 Product Attributes • Product quality • Performance quality—ability to perform functions • Conformance quality—freedom from defects and consistency • Features • Mix depends on value to consumer and cost to company • Style and design • Influences experience (e.g., ergonomics) 13 Branding • 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 • Ries and Trout (in Positioning: The Battle for Your Mind) argue that information overload means consumers can only remember first brand in a market position • e.g., Miller Lite first beer positioned as light 14 Branding (cont.) • Advantages to buyers • Identifies product with known features and quality • Even commodities branded • e.g., Dole, Chiquita • Advantages to sellers • Basis for product’s quality story • Brand X golf balls—long distance and great feel • Provides legal protection for unique features • Helps segment markets • e.g., Toyota vs. Lexus 15 Packaging • Designing and producing the container or wrapper for a product • e.g., golf ball sleeve, tennis ball can • Developing a good package • • • • Reinforce brand message (marketing) Protect contents (consistency) Ensure product safety (leakage, spoilage) Address environmental concerns (disposal) 16 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 17 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 18 Product Line Decisions • Product line length • Number of items in a product line • Adjust line length by • Stretching • Downward • Upward • Both directions • Filling 19 Product Mix Decisions • Product mix • All product lines and items that a seller offers for sale • Product mix dimensions include • Length: number of items in a line • Width: number of different product lines the company carries • Depth: number of versions offered of each product in the line • Consistency: closeness of various lines 20 Brand Equity • 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 21 Major Brand Strategy Decisions Brands are assets that must be carefully developed and managed via • • • • Brand positioning Brand name selections Brand sponsorship Brand development 22 Brand Positioning Can position brands at any of three levels • Product attributes (lowest) • Product benefits • Beliefs and values (highest) 23 Desirable Qualities for a Brand Name • Should suggest product’s benefits and qualities • Should be easy to pronounce, recognize, and remember • Should be distinctive • Should be extendable • Should translate easily into foreign languages • Should be capable of registration and legal protection 24 Brand Sponsorship • Manufacturer’s brands • Also called national brands • Private brands • Also called store or distributor brands • Licensed brands • Co-branding 25 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 26 Brand Development • Multibranding • Offers 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 27 Nature and Characteristics of a Service • Intangibility • Services cannot be seen, tasted, felt, heard, or smelled before purchase • Inseparability • Services cannot be separated from their providers • Variability • Quality of services depends on who provides them and when, where, and how they are delivered • Perishability • Services cannot be stored for later sale or use 28 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 frontline employees • Managing service productivity • Train current employees or hire new ones, increase quantity and sacrifice quality, harness technology 29 Recap—What was Covered? • Product and the major classifications of products and services • Decisions companies make about each product and service, product lines, and product mixes • Branding strategy–the decisions firms make in building and managing their brands • Four characteristics that affect the marketing of a service and the additional marketing considerations that services require 30