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MARKETING MANAGEMENT
12 & 13
Setting Product &
Service Strategy
Kotler
Keller
Chapter Questions
At the heart of a great brand is a
great product
• What are the characteristics of products and how
can they be classified?
• How can companies differentiate products?
• How can a company build and manage its
product mix and product lines?
• How can companies combine products to create
strong co-brands or ingredient brands?
• How can companies use packaging, labeling,
warranties, and guarantees as marketing tools?
• How do we define and classify services and how
do they differ from goods?
Product
A product is anything that can be
offered to a market to satisfy a want or
need, including physical goods,
services, experiences, events, persons,
places, properties, organizations,
information, and ideas.
What is a Service?
A service is any act of performance that
one party can offer another that is
essentially intangible and does not result in
the ownership of anything; its production
may or may not be tied to a physical
product.
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Figure 12.1 Components of the
Market Offering
Figure 12.2 Five Product Levels
12-9
Customer Value Hierarchy
• Core benefits – what consumers are really
buying – e.g., hotel rest & sleep
• Basic product – hotel room include a bed,
bathroom, etc
• Expected product – expect clean bed and
fresh towels
• Augmented product – exceeds customer
expectations through positioning
• Potential product – search new products to
satisfy customers and distinguish offers.
Consumer Goods Classification
Convenience
Shopping
Specialty
Unsought
Durability and Tangibility
Nondurable
goods
Durable
goods
Services
Product Systems and Mixes
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Product system
Product mix
Product assortment
Product line
Depth
Width
Consistency
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Product Line Analysis
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Line Stretching
High sales, heavily promoted, low margins
Down-Market Stretch
Core product
Specialties
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Staples
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low sales, not promoted, higher margins
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High sales, less promotion, higher margins
Up-Market Stretch
Two-Way Stretch
Convenience
items
low sales, highly promoted, higher margins
Line Filling
Co-branding
Ingredient Branding
Product-Mix Pricing
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Product-line pricing
Optional-feature pricing
Captive-product pricing
Two-part pricing
By-product pricing
Product-bundling pricing
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Product Line Pricing
Two-Part Pricing
Packaging: The 5th P
Packaging has been influenced byB
Self-service
Consumer affluence
All the activities of designing and producing
the container for a product.
Company/brand image
Innovation opportunity
Innovations in Packaging
Functions of Labels
Identifies
Grades
Describes
Promotes
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Warranties and Guarantees
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