Principles of
Contemporary Marketing
Kurtz & Boone
Chapter 11
Product and Service
Strategies
CHAPTER 11 Product and Service Strategies
Chapter Objectives
1.
Define product and distinguish between goods and services
and how they relate to the goods-services continuum.
2.
Outline the importance of the service sector in today’s
marketplace.
3.
List the classifications of consumer goods and services and
briefly describe each category.
4.
Identify each of the types of business goods and services.
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
Chapter Objectives
5.
Discuss how quality is used by marketers as a product strategy.
6.
Explain why firms develop lines of related products.
7.
Describe the way marketers typically measure product mixes
and make product mix decisions.
8.
Explain the concept of the product lifecycle.
9.
Describe how a firm can extend a product’s lifecycle, and
explain why certain products may be deleted.
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
What is a Product?
o Product - Bundle of physical, service, and symbolic
attributes designed to satisfy a customer’s wants and
needs
o People buy want satisfaction, not objects
o Example: Consumers buy televisions because they want
entertainment, not because they want a box with a
screen
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
What are Goods and Services?
o Services - Intangible tasks that satisfy the needs of
consumer and business users
o Goods - Tangible products that customers can see,
hear, smell, taste, or touch
o Goods–services continuum - Spectrum along which
goods and services fall according to their attributes,
from pure good to pure service
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
Characteristics of Services
o Intangible
o Inseparable from the service providers
o Perishable
o Cannot be standardized
o Buyers play important roles in the creation and
distribution of services
o Wide variations in service standards
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
Quality as a Product Strategy
o Quality is a key component to a firm’s success in a
competitive marketplace
o The efforts to create and market high-quality goods
and services have been referred to as total quality
management (TQM)
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
Worldwide Quality Programs
o ISO 9001:2000 standards implemented by the
European Union define international, generic criteria
for quality management and assurance
o The U.S. member body of ISO is the National
Institute of Standards and Technology
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
Benchmarking
o Measuring quality by comparing performance against
industry leaders
o Involves three main activities:
o Identifying manufacturing or business processes that
need improvement
o Comparing internal processes to those of industry
leaders
o Implementing changes for quality improvement
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
Quality of Services
o Determined by five variables:
o Tangibles
o Reliability
o Responsiveness
o Assurances
o Empathy
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
Development of Product Lines
o Product line - Series of related products
o Desire to grow
o Growth potential is limited if a company focuses on a
single product
o Example: L. L. Bean began by selling a single style of
boots but has grown by selling a variety of products
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
The Product Mix
o Assortment of product lines and individual product
offerings
o Product mix width
o Number of product lines a firm offers
o Product mix length
o Number of different products a firm sells
o Product mix depth
o Variations in each product that the firm markets
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
Extending the Product Lifecycle
o Increasing frequency of use
o Increasing the number of users
o Finding new uses
o Changing package sizes, labels, or product quality
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.
CHAPTER 11 Product and Service Strategies
Product Deletion Decisions
o Marketers prune product lines and eliminate marginal
products to preserve limited resources
o Firms may carry unprofitable items to carry a complete
product line
o Shortages or raw materials can prompt a firm to
discontinue production
o Firm may drop products that don’t fit into the
direction in which it plans to grow
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.