PRODUCT AND SERVICE
STRATEGIES
Professor Chip Besio
Cox School of Business
Southern Methodist University
What Is the Product?
Augmented Product
Installation
Packaging
Brand
Name
Delivery
& Credit
Quality
Level
Core Features
Benefit
or
Design
Service
AfterSale
Service
Actual Product
Warranty
Core Product
Types of Products



Consumer
Industrial
Other Entities




Organizations
Persons
Places
Ideas
Types of Products
CONSUMER PRODUCTS
Convenience Products
Shopping Products
>
>
>
>
>
>
>
>
Buy frequently & immediately
Low priced
Many purchase locations
Includes:
• Staple goods
• Impulse goods
• Emergency goods
Buy less frequently
Gather product information
Fewer purchase locations
Compare for:
• Suitability & Quality
• Price & Style
Specialty Products
Unsought Products
>
>
>
>
> New innovations
> Products consumers don’t
want to think about
> Require much advertising &
personal selling
Special purchase efforts
Unique characteristics
Brand identification
Few purchase locations
Types of Products
INDUSTRIAL PRODUCTS
Materials and
Parts
Capital
Items
Supplies and
Services
Characteristics of Services
Intangibility
Can’t be seen, tasted, felt, heard,
or smelled before purchase
Inseparability
Can’t be separated from service
providers
Variability
Perishability
Quality depends on who provides
them and when, where and how
Can’t be stored for later sale or use
Individual Product Strategy
Decisions
 Attributes
 Packaging
 Labeling
 Product Support
Product Attributes - Where Do
They Come From?
Quality
Design
Features
Packaging
Competitive
Advantages
Sales
Tasks
Packaging
Product
Safety
Identifies
Labeling
Promotes
Describes
Multi-Product Strategy
Decisions
 Branding
 Product Lines
 Product Mix
 Variety
 Assortment
Major Brand Decisions
Brand Name
Selection
Protection
Brand Sponsor
Manufacturer’s Brand**Co-branding
Private Brand**Licensed Brand
Brand Strategy
Line Extensions***Brand Extensions
Multi-brands***New Brands
Brand Strategy
Brand Name
Product Category
Currently Served
New
Existing
Line
Extension
Brand
Extension
New
Multi-brand
New
Brand
Brand Strategy
 Line Extension
 Existing brand names extended to new forms,
sizes, and flavors of an existing product category
 Brand Extension
 Existing brand names extended to new product
categories
 Multi-brands
 New brand names introduced in the same product
category
 New Brands
 New brand names in new product categories
Brand Strategy
BRAND EXTENSION
 Brand associations determine which brand
extensions will be successful
B
8
Close-Up
Cheerios
Crest
C
Froot Loops
6
4
4
2
2
0
REALITY
Breath Mint
Coors
IBM
Budweiser
E
8
Higher price,
6 & benefits
C 4
0
Moisturizer
Deodorant
8
6
4
2
E
0
Source: Wes Hutchinson
Lollipops
Apple
Segment 2
2 D
Waffles
Irish Spring
6
4
0
Higher income
Toothbrush
Camay
8
D
8
Original
6
Market
2
New
VideoMarket
Games Cellular Phone
0
Bottled
Water
Scotch
Brand Strategy
BRAND EXTENSION
Close-Up's singles-oriented,
"romantic" image extended best to
breath mints; Crest's family-oriented
"dental health" image extended best
to toothbrushes.
B
Close-Up
8
Original
6
Market
4
4
2
2
Breath Mint
Lollipops
Coors
Irish Spring
IBM
Budweiser
6
2 D
Waffles
Apple
Segment 2

0
Higher income
Toothbrush
Camay
8
4
Froot Loops
8
6
0
REALITY
D
Cheerios
Crest
C

E
 
E
8
Higher price,
6 & benefits
Moisturizer
Deodorant
Source: Wes Hutchinson
6
C 
4
4
2
2
0
0
8
New
Video Market
Games CellularPhone
0
Bottled
Water
Scotch
Apple's "user-friendly" image
extended best to video games; IBM's
"serious business" image extended
best to cellular phones.
Product Mix
Variety - number of
different product
lines
Product Mix all the product
lines offered
Assortment number of items
within product lines
Services are now a larger part of the U.S. gross domestic
product (GDP)
THE UNIQENESS OF SERVICES
THE FOUR I’S OF SERVICES

Four I’s of Services
• Intangibility – Cannot perceive
with 5 senses
• Inseparability – cannot separate from
provider
• Inconsistency – can vary with each occasion
• Inventory – in people based services,
inventory goes home each night
 The result - Idle Production Capacity
Inventory carrying costs of services depend on
the cost of employees and equipment
THE UNIQENESS OF SERVICES
THE CONTINUUM & CLASSIFICATION OF SERVICES

Service Continuum

Classifying Services
• Delivery by People or Equipment
• Profit or Nonprofit Organizations
• Government Sponsored
The service continuum shows how offerings can
vary in their balance of goods and services
Services can be classified as equipment-based or
people-based