PRODUCTS, SERVICES, AND
BRANDS: BUILDING CUSTOMER
VALUE
Product:
Any thing that can be offered to a market for attention,
acquisition, use or consumption that might satisfy a want
or need.
Service
Any activity or benefit that one party can offer to another
that is essentially intangible and does not result in the
ownership of anything
LEVEL OF PRODUCT AND SERVICES
Augmented Product
Actual Product
Delivery
and
Credit
Brand
Name
Quality
Level
Core
Customer
Value
AfterFeatures sale
Service
Design
Packaging
Product
Support
Warranty
Product and Service Classifications
Product or service
Consumer products
Industrial products
Materials
and parts
Convenience
Specialty
Unsought
Shopping
Homogeneous
Raw
Material
heterogeneous Farm
Products
Natural
Products
Staple
Impulse
Emergency
Supplies and
services
Capital
items
Manufactured Installation
Material
and
accessory
Equipment
Operating Supplies
and repair and
maintenance item
Component
Materials
Component
Parts
Business Service
and Business
advisory Service
Types of Consumer Products




Convenience
Shopping
Specialty
Unsought
 Frequent purchases bought with
minimal buying effort and little
comparison shopping
 Low price
 Widespread distribution
 Mass promotion by producer
Types of Consumer Products
 Less frequent purchases




Convenience
Shopping
Specialty
Unsought
 More shopping effort for
comparisons.
 Higher than convenience good
pricing
 Selective distribution in fewer
outlets
 Advertising and personal selling
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Types of Consumer Products




Convenience
Shopping
Specialty
Unsought
 Strong brand preference and loyalty,
requires special purchase effort, little
brand comparisons, and low price
sensitivity
 High price
 Exclusive distribution
 Carefully targeted promotions
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Types of Consumer Products




Convenience
Shopping
Specialty
Unsought
 Little product awareness and knowledge
(or if aware, sometimes negative interest)
 Pricing varies
 Distribution varies
 Aggressive advertising
and personal selling by producers and
resellers
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Product and Service
Classifications
 Organizations, persons, places, and ideas
 Organizational marketing makes use of
corporate image advertising
 Person marketing applies to political
candidates, entertainment sports figures, and
professionals
 Place marketing relates to tourism
 Social marketing promotes ideas
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Product and Service Decisions
Key Decisions
 Product attributes
 Quality, features, style
 Individual Product
 Product Line
 Product Mix
and design




Branding
Packaging
Labeling
Product support
services
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Goal 2: Learn decisions companies make regarding products
Product attributes
Quality:
The characteristics of a product or service that bear on its
ability to satisfy stated or implied customer needs.
Total quantity management (TQM): is an approach in
which all the company’s people are involved in constantly
improving the quality of products, services, and business
process.
product Quality has two dimensions:
i) Quality Level
ii) Consistency
Product Features:
The company can create higher-level models by adding more
features. Feature are a competitive tools for differentiating
the company’s product from competitors‘ product.
Product Style and Design
Another way to add customer value is through distinctive
product style and design. Design is larger concept than style.
Style simple describes the appearance of a products. A
sensational style may grab attention and produce pleasing
aesthetics, but it does not necessarily make the product
perform better.
Good design contributes to a product’s usefulness s well as to
its looks. Design begins with a deep understanding of
customer needs. More than simple creating product or
service attributes, it involves shaping the customer’s
product-use experience.
Brand
A name, term, sign, symbol, design, or combination of
these that identifies the products or services of one seller
or group of sellers and differentiates them from those of
competitors.
Packaging
The activities designing and producing container or wrapper
for a product.
It perform many sales task:
• Attracting attention
• Describing the product
• Making the sale
Innovative packaging can give a company an advantage
over competitors and boost sales.
Product safety has also become a major packaging concern.
In making packaging decision , the company also must heed
growing environment concern. Fortunately, many
companies have gone ”green” by reducing their packaging
and using environmentally responsible packaging materials.
See these amazing Bags
Labeling
Labels range from simple tags attached to products to
complex graphics that are part of the package.
They perform several functions:
The labels identify the product or brand
Label might describe several things about product.
Label might help to promote the brand, support it
positioning and connect with customers
Labels have become an important element in broader
marketing campaigns.
Product and Service Decisions
Key Decisions
 Individual Product
 Product Line
 Product Mix
 Product line
 A group of products that
are closely related
because they may:
 function in a similar manner
 be sold to the same
customer groups,
 be marketed through the
same types of outlets
 fall within given price
ranges
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The major Product line Decision involves Product Line Length.
Product Line Length is the number of items in the product line.
Product Line is too short –
If the manager can increase profits by adding items.
Product Line is too long –
If the manager can increase profits by dropping items.
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Product Line length is influenced by company objectives
and resources.
For example:
Objectives - allow for upselling.
BMW – 3-series models to 5- and series models.
Objectives – allow cross-selling.
Hewlett-Packard - printer and cartridges.
Objectives – protect against economic swings.
Gap runs several clothing-store chains
(Gap, Old Navy, and Banana Republic)
A company can extend its product line two ways:
Line filling :
Reasons :
Reaching for extra profits
Satisfying dealers
Using excess capacity
Being the leading full-line company
Plugging holes to keep out competitors.
If Line Filling is overdone:
Cannibalization
Customer confusion
Line stretching : a company lengthens its product line beyond
its current range.
The company can stretch its line:
Downward
Upward
Both Direction
Downward: companies located at the upper end of the market
can stretch their line downwards.
Example: Honda introduced Honda Jaz
Upward: companies stretch upward In order to add prestige to
their current product.
Example: Tata Motors introduce Tata Indigo
Both Direction Example: Marriott.
Product Mix
Also known as product assortment
Consists of all the product lines and items that a particular seller
offers for sale.
Example :
Sony – Sony Electronics, Sony Computer Entertainment (games)
Sony Pictures Entertainment ( movies, TV shows music, DVDs),
Sony Financial Services (life insurance, banking, and other
offerings).
A company’ product mix has four important dimensions:
Width – the number of different product lines the company
carries.
Length – the total number of items the company carries within
its product lines.
Depth – refers to the number of versions offered of each
product in the line.
Example: Sony – TV- tube, flat panel, rear projection, front
projection, HD, or low resolution.
Consistency – the product mix refers to how closely related
the various product lines are in end use, production
requirements, distribution channels
Product and Service Decisions
Key Decisions
 Individual Product
 Product Line
 Product Mix
 Product mix width:
 Number of different
product lines carried by
company
 Product mix depth:
 Number of different
versions of each product
in the line
 Product mix
consistency
Branding Strategy: Building
Strong Brand
Brand equity is the positive differential effect that
knowing the brand name has on customer response to
the product or its marketing .
A brand has a positive brand equity when consumers
react more favorably to it rather than to a generic or
unbranded version of the same product.
Brands vary in the amount of power and value they
hold in the marketplace.
Ad agency Young & Rubicam’s Brand Assets Valuator measures
brand strength along four consumer perception dimensions:
Differentiations (what makes the brand stand out)
Relevance ( how consumers feel it meets their needs)
Knowledge (how much consumers know about the brand)
Esteem
( how highly consumers respect and regard the
brand)
A brand with strong brand equity rate high on all of these
dimensions.
Brand valuation is the process of estimating the total financial value
of a brand.
Brand value of
Google
Coca-Cola
$86 billion.
$58 billion
Brands with strong equity have many competitive
advantages:




High consumer awareness
Strong brand loyalty
Helps when introducing new products
Less susceptible to price competition
A powerful brand forms the basis for building strong and
profitable customer relationships.
The fundamental asset underlying brand equity is
customer equity- the value of the customer relationships
that the brand creates.
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Brand Positioning
Brand Name Selection
Attributes
Selection
Benefits
Protection
Benefits and values
Brand Sponsorship
Manufacturer’s brand
Major
Brand Strategy
Decisions
Private brand
Licensing
Co-branding
Brand Development
Line extensions
Brand extension
Multiband
New brands
Brand Positioning
Three levels of positioning:
Product attributes
Least effective – because competitors can easily copy attributes.
Customers are not interested in attributes as such; they are interested
in what the attributes will do for them.
Benefits
Volvo (safety), FedEx (guaranteed on-time delivery),
Nike (performance), Mercedes Benz (Quality)
Beliefs and values
Taps into emotions.
Example: Pampers (Parent-child relationship and total baby care)
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Brand Name Selection
Good Brand Names:
Suggest something about the product or its benefits. (Fair and lovely)
Are easy to say, recognize and remember. (Tide, Nirma, Dell )
Are distinctive. (Lexus, Indica)
Are extendable. (Aarong, Akiz)
Translate well into other languages. Standard Oil of New Jersey Exxon – Enco (a stalled engine when pronounced in Japanese.)
Can be registered and legally protected
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Brand Sponsorship
Manufacturer brands ( Sony and Kellogg’s)
Private (store, Distributor) brands ( Agora, Almas, nandan etc.)
 Costly to establish and promote
 Higher profit margins
Licensed brands
 Name and character licensing has grown
Co-branding (Citibank and Jet Airways – Jet Citi Travel Card)
 Advantages / disadvantages
Brand Development Strategies
Product category
Brand name
Existing
Existing
New
Line
extension
New
Brand
Extension
Multibrand New brands
Brand Development
Line extensions : Extending an existing brand name to new forms, colors, sizes,
ingredients, or flavors of an existing products category.
Example : Bata – regular shoes, premium shoes, sports shoes, sandals, socks, etc.
Brand extensions : Extending an existing brand name to new product categories.
Example: Nestle – maggi brand to launch several new lines : Maggi Noodles, Maggi
Tomato Ketchup, and Maggi Soup.
Advantages:
 Gives a new product instant recognition and faster acceptance.
 Saves high advertising costs.
Risks:
 The extension may confuse the image of the main brand.
 If a brand extension fails, it may harm consumer attitudes towards the other
product carrying the same brand name.
 A brand name may be appropriate to a particular new product, even if it is well
made satisfying.
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Multibrands
Companies often introduce additional brands in the same category.
Example: Unilever, Procter & Gamble
Multibrand offer s a way to establish different features and appeal to
different buying motives. It also allows a company to lock up more
reseller shelf space.
The major drawback of
multibranding is that each
brand might obtain only a
small market share, and none
may be very profitable.
New brands
A company might believe that the power of its existing brand
name is waningand a new brand name is needed. Or it may
create a new brand name when it enters a new product category
for which none of the company’s current brand names are
appropriate.
Managing Brands
 Brands are known through advertising,
personal experience, word of mouth, the
Internet
 Everyone in the company represents the
brand
 Companies need to periodically run a
brand audit
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Services Marketing
 Services
 A major characteristics of services – they
cannot be seen, tasted, felt, heard, or smelled
before they are bought.
Service industries include business organizations,
government, and private not-for-profit
organizations.
Characteristics of Services
Intangibility
Inseparability
Service cannot be
seen, tasted, felt,
heard, or smelled
before purchase
Services can’t be
separated from
providers
services
Variability
Perishability
Quality of services
depends on who
provides them and
when, where, and
how
Services can’t be
inventoried for later
sale 0r use
Service Firm Marketing Strategies
 The Service-Profit Chain
 Internal Marketing
 Interactive Marketing
 Managing Service Differentiation
 Managing Service Quality
 Managing Service Productivity
The Service-Profit Chain
1
2
Internal
service quality
Satisfied and productive
service employees
5
3
Healthy service
profits and growth
Greater
service value
4
Satisfied
and loyal
customers
Internal Marketing
Orienting and motivating customer-contact employees and supporting
service people to work as a team to provide customer satisfaction.
Example: Pizza Hut
Interactive marketing
Training service employees in the fine art of interacting with customers to
satisfy their needs.
Three types of service marketing
Company
External
marketing
Internal
marketing
Employees
Interactive
marketing
Customers
Managing Service Differentiation
Example : British Airways Spa Service
Managing Service Quality
• 100% defect free service
• Service Recovery
• Empower front-line service employees- to give them the
authority, responsibility and incentives they need to
recognize, care about, and tend to customer needs.
Managing Service Productivity
• Train current employees
• Hire new employees who will work harder or more skillfully.
• “Industrialize the service” by adding equipment and
standardizing production
Product Decisions and
Social Responsibility
 Acquiring and dropping products
 Patent protection
 Product quality and safety
 Product warranties
International Product and
Services Marketing
 Special challenges:
 Which products should be marketed
internationally?
 Should the products be standardized or adapted
for world markets? Packaging?
Discussion?