Chapter 7
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1
Objectives

Understand products and the major
classifications of products and services

Learn the decisions companies make
regarding their products and services

Understand branding strategy

Identify the four characteristics that
affect the marketing of a service

Realize additional product issues
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Marketing Process
Understan
ding the
market
place and
customer
needs and
wants
Research
customer and
the market
place
Managing
marketing
information
and customer
data
Design a
customerdriven
marketing
strategy
Select
customer to
serve: market
segmentation
and targeting
Decide on
value
proposition:
differentiation
and positioning
Construct
marketing
program
that
deliver
superior
value
Build
profitable
relationshi
p and
create
customer
delight
Product and
service design:
building a
strong brand
Customer
relationship
management:
build strong
relationship
with chosen
customers
Create satisfied
loyal customer
Partner
relationship
management :
build a strong
relationship
with marketing
partners
Increase share
of market and
share of
customer
Price Create
real value
Distribution
manage
demand and
supply chain
Promotion
Communicating
the value
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Capture
value from
the
customers
to create
profits
Capture
customer life
time value
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What Is A Product

Product, Service, and Experience
●
A Product is
“Anything offered to a market for attention, acquisition, use, or
consumption that might satisfy a need or want.”
 Service
“A form of product that consists of activities, benefits or
satisfactions offered for sale that are essentially intangible
and do not result in the ownership of anything.”
 Experience
The customer experience with the product, service or the
company.
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What Is A Product

Product, Service, and Experience
 Market offerings may consist of a combination of
goods and services
 Experiences are used to differentiate offerings
Canned
foods
Readymade
clothes
Automobiles
Draperies,
Carpets
Restaurant
meals
Repairs:
auto, house,
landscaping
Air
travel
Insurance,
Consulting,
Teaching
The goods and services continuum
MOSTLY GOODS
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MOSTLY SERVICES
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What Is A Product

Levels of Product and Services
Augmented
Product
 Core benefit, what the
buyer really want.
 Actual, and
 Augmented product
Actual
Product
Delivery
and
credit
Brand
Name
Quality
level
After
sales
service
Features
Core
benefit
Design
Packaging
Institution
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Warranty
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What Is The Benefits Of This Product
Seller’s
services
Product
quality
Seller’s
reputation
Physical
characteristics
of goods
Price
Brand
Colour
Product
warranty
Packaging
Design
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Product And Service Classifications
Product and service fall into two broad classes based on
the type of consumer use them
Product and Service
Classifications
industrial products
Consumer products
Purchased for further
processing or for use in
conducting a business,
and they classified based
on the purpose for which
the product is bought
Purchased for personal
consumption, and they
classified based on how
consumer
go
about
buying them.
Convenie
nce
products
Shopping
products
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Specialty
products
Unsought
products
Materials
and
parts
Capital
Supplies
and
services
Other marketable
entities
organizat
ions,
persons,
places,
and
ideas.
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Marketing Considerations For Consumer Products
Marketing
Considerations
Convenience
Shopping
Specialty
Unsought
Customer buying
behavior
Frequent purchases
bought with minimal
buying effort and
little comparison
shopping
Less frequent
purchases
More planning and
shopping effort,
comparisons of
brands on price,
quality, style.
Strong brand
preference and
loyalty, requires
special purchase
effort, little brand
comparisons, and
low price sensitivity
Little product
awareness and
knowledge (or if
aware, sometimes
negative interest)
Price
Low price
Higher price than
convenience good
High price
Pricing varies
Distribution
Widespread
distribution
Selective distribution
in fewer outlets
Exclusive distribution
in only one or few
outlets per market
area
Distribution varies
Promotion
Mass promotion by
producer
Advertising and
personal selling by
both producer and
resellers
Carefully targeted
promotion by both
producer and
resellers
Aggressive
advertising
and personal selling
by producers and
resellers
Key Word
Distribution
Service
Brand image and
loyalty
Promotion
Examples
Toothpaste,
magazines, laundry
detergent
Major appliances,
televisions, furniture,
clothing
Luxury goods, such
as Rolex watches or
fine crystal
Life insurance, blood
donations
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Industrial Products
Industrial
products
Materials
and
parts
Price and
service are the
major
marketing
factors.
Raw material
consist of farm
products
(cotton), and
natural
products (fish,
crude
petroleum).
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Manufactured
materials and
parts
consist of
component
materials
(cement), and
component
parts (small
motors, tires)
Supplies
and
services
Capital
Items
Products that
aid the buyer's
production or
operation
Installations
consist of
major
purchases
(factories), and
fixed
equipment
(generators)
Accessory
equipment
include
portable factory
equipment and
tools(hand
tools), and
office
equipments
(computers)
Supplies are
the
convenience
product of
industrial filed
Supplies
include
operating
supplies
(paper), and
repair
maintenance
items (paint,
nails)
Business
service
includes
maintenance
and repair
service
(computer
repair), and
business
advisory
service (legal).
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Other Marketable Entities
Organizational Marketing
Activities to create, maintain, or change the
attitudes and behavior of target consumers
toward an organization. Both profit and notfor-profit practice organization marketing.
corporate image advertising
Person Marketing
applies to political candidates,
entertainment sports figures, and
professionals
Other
Marketable
Entities
Place Marketing
Social Marketing
relates to tourism
promotes ideas
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Product And Service Decisions

Marketers make product and service
decisions at three levels
 Individual product decisions.
 Product line decisions.
 Product mix decisions.
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Individual Product And Service
Decisions
Individual
Product
decisions
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Product And Service Attributes
Product and Service Attributes
Product
Quality
- Quality level
refers
to
-performance
quality- “the ability of a
product to perform its
function”
- Quality consistency
refers to -conformance
quality“freedom
from
defect and consistency in
delivering a targeted level of
performance”
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Product
Feature
- The starting point is a
product without any extra
- Adding features creates
higher level.
How can company identify
new features and decide
which ones to choose?
- Periodically survey buyers
who used the product
- Company assess each
feature’s value to customer
versus its cost to the
company.
Product Style
and Design
- Style
Describes the appearance of
a product.
It can be eye-catching but
doesn’t necessarily make
the product perform better.
-Design (industrial
designing - ergonomic)
Good design contributes to a
product’s usefulness as well
as to its look.
A good design begins with a
deep
understanding
of
customer needs.
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Branding
®
“is the name, term, sign, symbol, or design, or a
combination of these, intended to identify the
goods or service of one seller and distinguish it
from all others.
Branding helps buyers to:


Identify the products that might benefit them.
Brands says something about product quality and
consistency.
Branding helps the seller to:

The brand name become the basis on which whole story can
be built about a product’s special qualities.
Brand name and trademark provide legal protection.

Branding helps the seller to segment markets.

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Brand – Brand Mark –
Trademark
Brand name
words, letters and
numbers that can be
vocalised.
E.g. Nike.
Tr a d e m a r k
Brand mark
a recognisable
symbol, design, letter
or colouring that is
visual.
E.g. Nike’s swoosh

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a term for a brand
that is given legal
protection in its
totality.
E.g. Nike’s swoosh
and positioning
statement
‘Just
do it.’
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Packaging
“the activities of designing and producing the
container or wrapper for a product”
 Package includes





Primary container
Secondary package
Shipping package
Labeling, and printing information.
Why the packaging an important marketing tool?
 Increased competitions, and retail stores clutter
 The package is the seller’s last chance to influence
buyers.


Product safety is a packaging concern (temperresistant packages.
Using environmentally responsible packaging
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Packaging Strategy
Family
packaging
Changing the
packaging
• The use of one design or other key packaging element to
integrate the packaging of two or more individual items
• Re-design of package.
Re-use
packaging
• Glass jars re-used as a glass.
• Refill containers.
Multiple
packaging:
• The practice of placing several units in one container.
• Used to increase consumer’s consumption of products (e.g.
toilet roll six pack).
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Labeling
“A label is the part of a product that carries
information about the product itself or about the
seller. It is used to communicate useful information
to customers”
Identify
Describe
Several
things
about the
product
The
product or
the brand
Promote
Support the
product
positioning
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Label
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Labeling

Labeling has been affected in recent times by
 Unit pricing:
stating the price per unit
 Open dating:
stating the expected shelf life of the product.
 Nutritional labeling:
stating the nutritional value in the product.
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Product Support Service

A company offer usually include some support
service, which can be minor or a major part of the
total offering.
1- survey the
customers

2- assess the
cost of providing
the service
3- develop a
package of
services.
Companies are now using technologies to provide
support service that were not possible before.
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Product Line Decision
 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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Product Line Length
 The number of items in the product line.
 It is influenced by company objectives and resources:
•Up-selling
•Cross-selling
•Protect against economic swing
Line stretching:
adding products that are higher
or lower priced than the existing
line
Line filling:
more items within the
present price range
(Arial)
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Upward
stretching
Example:
Toyota - Lexus
Downward
stretching
Example:
Mercedes –
C-Class Car
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Product Mix Decisions

Product mix
 Also known as product assortment or product
portfolio
 Consists of all the product lines and items that a
particular seller offers for sale
Product Line
Depth:
Number of versions
offered of each
product in the line.
Product Mix
Consistency:
how closely related
the various product
lines
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Product Mix
Length:
The total number of
items the company
carries within its
product lines
Product Mix
Dimensions
Product Mix Width:
the number of
different product
lines the company
carry.
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Product Mix Dimensions

These product mix dimensions provide the handles for
defining the company’s product strategy.
Widenin
g
How the
company can
increase its
Business?
Lengthe
n
• The existing
product lines
become
more full-line
Deepen
• Add more
versions of
each product
consist
ency
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• Adding new product lines, the
new lines build on the company
reputation in its other lines
• More or less
consistency.
• Depending on whether
it wants to have a
strong reputation in a
single filed or in several
fields
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Brand Equity
“is the positive differential effect that knowing
the brand name has on customer response
to the product or service”

One measure of equity is the extent to
which customers are willing to pay more for
the brand (Coke drinkers will pay a 50 percent
premium, and Volvo users a 40 percent premium)

Brand valuation: is the process of
estimating the total financial value of a
brand. (Coca-Cola is almost $67 billion, Microsoft
$61 billion)
Brand Equity

Brands with strong equity have many
competitive advantages:
High consumer
awareness
Strong brand loyalty
Powerful brand forms the
basis for building strong
and profitable customer
relationship.
• The company has more
leverage in bargaining with
resellers.
Less susceptible to
price competition
Helps when
introducing new
products
• The company can more
easily launch line and brand
extensions.
Brand Strategy Decisions –
Building Strong Brands
Brand
positioning
- Attributes
- Benefits
- Beliefs and
values
Brand name
selection
- Selection
- Protection
Brand
sponsorship
Manufacturer's
brand
- Private brand
- Licensing
- Co-branding
Brand
development
- Line
extensions
- Brand
extensions
- Multibrand
- New brands
Three levels of positioning
Beliefs and values
Taps into emotions
Benefits
Product attributes
Less effective
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Brand Positioning

The marketers should establish a mission for the
brand and a vision of what the brand must be and
do.

A brand is the company’s promise to deliver a
specific set of features, benefits, services, and
experiences, consistently to the buyers.

The brand promise must be simple and honest.
Brand Name Selection

Good Brand Names:
 Suggest something about the product or its





benefits (OFF! Bug spray)
Are easy to say, recognize and remember –
short names helps. (Tide)
Are distinctive (Lexus)
Are extendable (Amazon.com)
Translate well into other languages
Can be registered and legally protected
Brand Sponsorship
Manufacturers’
brands
• National brand
Private (store)
brands
Licensed brands
Co-branding
• Costly to establish
and promote
• Higher profit
margins
• Exclusive products
that can’t be bought
from competitors,
thus more customer
loyalty
• Name and
character (SpiderMan – Winnie the
Pooh)
• licensing has
grown.
• Additional revenues
and brand
recognition.
• Two established
brand names of
different companies
are used on the
same product.
• Advantages:
• 1-greater brand
apple and equity,
• 2-company
expansion
• Disadvantages:
1-complex legal
process,
2-marketing efforts
coordination,
3-both should care
for each other.
Brand Development

Line Extensions
 Minor changes to existing products
 It is a low-cost and a low-risk to introduce new product to
meet customer desires for variety.
 Line extensions
May Feature Different: Flavors, Colors, Forms, Ingredients,
Package Sizes
Product category

Brand Extensions
 Successful brand names help introduce
Existing
New
Line
extension
Brand
extension
multibrand
s
New
brands
new products

Multibrands
Existing
 Multiple product entries in
a product category
(new segment )

New Brands
 New product category
Brand Name
New
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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