A Global Perspective
8
Philip Kotler
Gary Armstrong
Swee Hoon Ang
Siew Meng Leong
Chin Tiong Tan
Oliver Yau Hon-Ming
Product, Services, and
Branding Strategy
8-1
Learning Objectives
After studying this chapter, you should be able to:
1. Define product and the major classifications of products
and services
2. Describe the decisions companies make regarding
their individual products and services, product lines,
and product mixes
3. Discuss branding strategy—the decisions companies
make in building and managing their brands
4. Identify the four characteristics that affect the marketing
of a service and the additional marketing
considerations that services require
8-2
Chapter Outline
1. What Is a Product?
2. Product and Service Decisions
3. Branding Strategy: Building Strong
Brands
4. Services Marketing
8-3
What Is a Product?
Products, Services, and Experiences
•
A product is anything that can be offered in a
market for attention, acquisition, use, or
consumption that might satisfy a need or want.
• E.g. soap, toothpaste
© Bradley Johnson
8-4
What Is a Product?
Products, Services, and Experiences
•
Service is a form of product that consists of
activities, benefits, or satisfactions offered for
sale that are essentially intangible and do not
result in ownership.
• E.g., Doctor’s exam, legal advice
8-5
What Is a Product?
Products, Services, and Experiences
Experiences represent what buying the
product or service will do for the customer.
• E.g., Disney, Lego, Toys “R” Us
© Audry Drapier
•
© Bradley Johnson
8-6
What Is a Product?
Levels of Products
and Services
•
Core benefits
•
Actual product
•
Augmented
product
8-7
What Is a Product?
Levels of Product and Services
•
Core benefits represent what the buyer is
really buying.
•
Actual product represents the design, brand
name, and packaging that delivers the core
benefit to the customer.
•
Augmented product represents additional
services or benefits of the actual product.
8-8
What Is a Product?
Discussion Question: Describe the core, actual, and
augmented levels of Microsoft’s Windows XP
Professional operating software:
Core – A software application that enables a PC to function
Actual – A well-designed, high-quality, branded, and packaged
computer operating system that provides a variety of features that
are important to the user
Augmented – An operating system software application that offers a
series of channel and consumer services. The channel member
can obtain favorable pricing and credit terms, training, engineering
support, etc. The consumer can get online support, version
updates, access to forums and communities, etc.
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What Is a Product?
Product and Service Classifications
•
Consumer products
•
Industrial products
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What Is a Product?
Product and Service Classifications
•
Consumer products are products and
services bought by final consumers for
personal consumption.
•
Classified by how consumers buy them
•
Convenience products
•
Shopping products
•
Specialty products
•
Unsought products
8-11
What Is a Product?
Product and Service Classifications
•
Convenience products are consumer
products and services that the customer
usually buys frequently, immediately, and with a
minimum comparison and buying effort.
• Newspapers
• Candy
• Fast food
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What Is a Product?
Product and Service Classifications
•
Shopping products are consumer products
and services that the customer compares
carefully on suitability, quality, price, and style.
• Furniture
• Cars
• Appliances
8-13
What Is a Product?
Product and Service Classifications
•
Specialty products are consumer products
and services with unique characteristics or
brand identification for which a significant group
of buyers is willing to make a special purchase
effort.
• Designer watches
• Branded fashion wear
• High-end electronics
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What Is a Product?
Product and Service Classifications
•
Unsought products are consumer products
that the consumer does not know about or
knows about but does not normally think of
buying.
• Life insurance
• Funeral services
• Blood donations
8-15
What Is a Product?
Discussion Question: Classify the following consumer
products
• A laptop computer
• A surgeon
• Automobile tires
8-16
What Is a Product?
•
A laptop computer – shopping good: most people purchase a
laptop infrequently, and when they purchase it, they usually
conduct extensive research and comparison of brands and
features
•
A surgeon – Specialty good: There is usually little comparison
between doctors as most patients collect only a few names
•
Automobile tires – it depends on the individual and the situation.
If a consumer has a luxury brand of car and will consider only
“designer” tires, this is a specialty good; for most consumers, tires
are a shopping good, and they will be heavily influenced by price
and brand name; in some situations, the tires could be an
unsought good.
If one was traveling and had a flat tire in an unknown area he
would probably be towed to a local station and with little product
knowledge, agree to a tire carried by the local station
8-17
What Is a Product?
Product and Service Classifications
•
Industrial products are products purchased
for further processing or for use in conducting a
business.
•
Classified by the purpose for which the product
is purchased
• Materials and parts
• Capital items
• Supplies and services
8-18
What Is a Product?
Product and Service Classifications
•
Materials and parts include raw materials and
manufactured materials and parts usually sold
directly to industrial users.
• Wheat
• Lumber
• Iron
• Cement
8-19
What Is a Product?
Product and Service Classifications
•
Capital items are industrial products that aid in
the buyer’s production or operations.
• Buildings
• Elevators
• Computers
8-20
What Is a Product?
Product and Service Classifications
•
Supplies and Services include operating
supplies, and repair and maintenance items, as
well as maintenance and repair services and
business advisory services.
• Copy papers
• Stationary
• Training service
• Market research/Advertising service
8-21
What Is a Product?
Organizations, Persons, Places, and Ideas
•
Organization marketing consists of activities
undertaken to create, maintain, or change
attitudes and behavior of target consumers
toward an organization.
8-22
What Is a Product?
Organizations, Persons, Places, and Ideas
•
Person marketing consists of activities
undertaken to create, maintain, or change
attitudes and behavior of target consumers
toward particular people.
• Andy Lau
• Stephanie Sun
• Siti Nuraliza
8-23
What Is a Product?
Organizations, Persons, Places, and Ideas
•
© Jeff Christiansen
Place marketing consists of activities
undertaken to create, maintain, or change
attitudes and behavior of target consumers
toward particular places.
• Tourism, e.g. the Great Wall of China, Walt
Disney World.
8-24
What Is a Product?
Organizations, Persons, Places, and Ideas
•
Social marketing is the use of commercial
marketing concepts and tools in programs
designed to influence individuals’ behavior to
improve their well-being and that of society.
• Public health campaigns
8-25
Product and Service Decisions
Individual Product & Service Decisions – A
single product
Product Line Decisions - A group of related
products
Product Mix Decisions – The set of product lines
and items offered to customers by a particular
seller
These tools helps the planner to properly view the
product so it can achieve competitive
superiority and better product strategy.
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Product and Service Decisions
Individual Product and Service Decisions
•
Product attributes
•
Branding
•
Packaging
•
Labeling
•
Product support services
8-27
Product and Service Decisions
Individual Product and Service Decisions
•
Product attributes are the benefits of the
product or service
• Quality
• Features
• Style and design
8-28
Product and Service Decisions
Individual Product and Service Decisions
•
Define “Quality” in terms of the lack of defects or
creating customer value and satisfaction
•
Quality level is the level of quality that supports
the product’s positioning.
– Performance quality is the ability of a product to
perform its functions.
– Conformance consistency is freedom of defects
and consistency in delivering a targeted level of
performance.
8-29
Product and Service Decisions
Individual Product and Service Decisions
•
Product features are a competitive tool for
differentiating a product from competitors’ products
Assessed based on the value to the customer versus the cost to
the company.
•
Product style and design add value to customer
value.
– Style describes the appearance of the product.
– Design contributes to a product’s usefulness as well as to its
looks.
8-30
Product and Service Decisions
Individual Product and Service Decisions
•
Brand is the name, term, sign, or design, or
a combination of these, that identifies the
maker or seller of a product or service.
8-31
Product and Service Decisions
Individual Product and Service Decisions
•
Branding help buyers identify benefits
– Quality
– Consistency
•
Branding provide legal protection for sellers
can aid in
– Segmentation
– Communicate product features
8-32
Product and Service Decisions
Individual Product and Service Decisions
•
Packaging involves designing and producing the
container or wrapper for a product.
•
Label identifies the product or brand, describes
attributes, and provides promotion.
•
Product support services augment actual products.
Companies must continually:
– Assess the value of current services to obtain ideas for new
ones
– Assess the costs of providing these services
– Develop a package of services to satisfy customers and provide
profit to the company
8-33
Product and Service Decisions
Product Line Decisions
•
Product line is 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.
8-34
Product and Service Decisions
Product Line Decisions
•
Product line length is the number of items in
the product line.
•
Product line can be lengthened in two ways:
– Line stretching (lengthen beyond its current
range)
– Line filling (adding more items within the present
range of the line)
8-35
Product and Service Decisions
Product Line Decisions
•
Product line stretching is when a company
lengthens its product line beyond its current
range.
• Downward
• Upward
• Combination of both
8-36
Product and Service Decisions
Product Line Decisions
Line stretching
•
Downward product line stretching is used by
companies at the upper end of the market to plug a
market hole or respond to a competitor’s attack.
•
Upward product line stretching is by companies at
the lower end of the market to add prestige to their
current products.
•
Combination line stretching is used by companies in
the middle range of the market to achieve both goals of
upward and downward line stretching.
8-37
Product and Service Decisions
Product Line Decisions
•
Product line filling occurs when companies
add more items within the present range of the
line.
• More profits
• Satisfying dealers
• Excess capacity
• Plugging holes to fend off competitors
8-38
Product and Service Decisions
Product Mix Decisions
•
Product mix consists of all the product lines
and items that a particular seller offers for sale.
• Width
• Length
• Depth
• Consistency
8-39
Product and Service Decisions
Product Mix Decisions
•
Product mix width is the number of different
product lines the company carries.
•
Product mix length is the total number of
items the company carries within its product
lines.
8-40
Product and Service Decisions
Product Line Decisions
•
Product mix depth is the number of versions
offered of each product in the line.
•
Consistency is how closely the various
product lines are in end use, production
requirements, or distribution channels.
8-41
Branding Strategy:
Building Strong Brands
•
Brand represents the consumer’s perceptions
and feelings about a product and its
performance. It is the company’s promise to
deliver a specific set of features, benefits,
services, and experiences consistently to the
buyers.
8-42
Branding Strategy:
Building Strong Brands
•
Brand equity is the positive differential effect
that knowing the brand name has on customer
response to the product or service. – The extent
to which customers are willing to pay more for the
brand
•
Customer equity is the value of the customer
relationships that the brand creates. – A powerful
brand forms a basis for building strong and profitable
customer relationships
•
Brand valuation is the process of estimating
the total financial value of the brand.
8-43
Branding Strategy:
Building Strong Brands
• Brand strategy decisions include:
• Brand positioning
• Brand name selection
• Brand sponsorship
• Brand development
8-44
Branding Strategy:
Building Strong Brands
Brand Positioning
•
Position brands at any of three levels:
– Product attributes (Giordano is positioned by each season’s
assortment of styles, colors and low price)
– Product benefits (Giordano save your money through its great price
and time through its assortment of products for the whole family)
– Product beliefs and values (Giordano also positions itself as fun. Its
ads are somewhat silly at times and always show the models having a
lot of fun wearing Giordano clothes. This is different from other retailers
who advertise using model with intense, serious, and seductive facial
expressions)
http://www.youtube.com/watch?v=67DhFt2NM8Y
http://www.youtube.com/watch?v=dXEtFDVBSVQ
8-45
Branding Strategy:
Building Strong Brands
Brand Name Selection
•
Desirable qualities
• Suggests benefits and qualities
• Easy to pronounce, recognize, and remember
• Distinctive
• Extendable
• Translatable for the global economy
• Capable of registration and legal protection
8-46
Branding Strategy:
Building Strong Brands
Brand Sponsorship
•
Manufacturer’s brand
•
Private brand
•
Licensed brand
•
Co-brand
8-47
Co-Branded Differentiator
WestinWORKOUT powered by Reebok
8-48
Branding Strategy:
Building Strong Brands
Brand Sponsorship
Private brands provide retailers with advantages.
•
Product mix control
•
Slotting fees for manufacturers’ brands
•
Higher margins
•
Exclusivity
8-49
Branding Strategy:
Building Strong Brands
Brand Development
In terms of Brand name & Product category
•
Line extensions
•
Brand extensions
•
Multibrands
•
New brands
8-50
Branding Strategy:
Building Strong Brands
Brand Development
•
Line extensions occur when a company
extends existing brand names to new forms,
colors, sizes, ingredients, or flavors of an
existing product category.
8-51
Branding Strategy:
Building Strong Brands
Brand Development
•
Brand extensions extend a brand name to a
new or modified product in a new category.
8-52
Branding Strategy:
Building Strong Brands
Brand Development
•
Multibrands are additional brands in the same
category.
8-53
Branding Strategy:
Building Strong Brands
Brand Development
New brands are used when existing brands
are inappropriate for new products in new
product categories or markets.
© Nate Grigg
© Ged Carroll
•
1970s-1990s
Sony's Trinitron Color TV
2000 and beyond
Sony’s BRAVIA widescreen LCD TV
8-54
Branding Strategy:
Building Strong Brands
Managing Brands
•
Requires:
• Continuous brand communication
• Customer-centered training
• Brand audits
8-55
Services Marketing
Types of Service Industries
Service industries vary greatly:
•
Government – courts, employment services,
hospitals, military services, police and fire department,
postal services, and schools
•
Private not-for-profit organizations – Museums,
charities, churches, colleges, foundations, and
hospitals
•
Business services
8-56
Services Marketing
Nature and Characteristics of a Service
•
Intangibility
•
Inseparability
•
Variability
•
Perishability
8-57
Services Marketing
Nature and Characteristics of a Service
•
Intangibility refers to the fact that services cannot be
seen, tasted, felt, heard, or smelled before they are
purchased.
•
Inseparability refers to the fact that services cannot be
separated from their providers.
•
Variability refers to the fact that service quality
depends on who provides it as well as when, where,
and how it is provided.
•
Perishability refers to the fact that services cannot be
stored for later sale or use.
8-58
Services Marketing
Marketing Strategies for Service Firms
•
In addition to traditional marketing strategies,
service firms often require additional strategies:
• Service-profit chain
• Internal marketing
• Interactive marketing
8-59
Services Marketing
Marketing Strategies for Service Firms
•
Service-profit chain links service firm profits
with employee and customer satisfaction.
• Internal service quality
• Satisfied and productive service employees
• Greater service value
• Satisfied and loyal customers
• Healthy service profits and growth
8-60
Services Marketing
Marketing Strategies for Service Firms
•
Internal marketing means that the service firm
must orient and motivate its customer contact
employees and supporting service people to
work as a team to provide customer
satisfaction.
•
Internal marketing must precede external
marketing.
8-61
Services Marketing
Marketing Strategies for Service Firms
•
Interactive marketing means that service
quality depends heavily on the quality of the
buyer-seller interaction during the service
encounter.
•
Three major marketing tasks
• Service differentiation
• Service quality
• Service productivity
8-62
Services Marketing
Marketing Strategies for Service Firms
•
Managing service differentiation creates a
competitive advantage from the offer, delivery,
and image of the service.
• Offer can include distinctive features.
• Delivery can include more able and reliable
customer contact people, environment, or process.
• Image can include symbols and branding.
8-63
Services Marketing
Marketing Strategies for Service Firms
•
Managing service quality provides a
competitive advantage by delivering
consistently higher quality than its competitors.
•
Service quality always varies depending on
interactions between employees and
customers.
The first step is to empower employees
Responsibility, Authority and Incentives they need
to recognize, care about, and tend to customer needs
8-64
Services Marketing
Marketing Strategies for Service Firms
•
Managing service productivity refers to the
cost side of marketing strategies for service
firms.
• Employee recruiting, hiring, and training
strategies
• Service quantity and quality strategies
8-65