Chapter 11 Product and Service Strategies Principles of Contemporary Marketing Kurtz & Boone Chapter 11 Product and Service Strategies

Chapter Objectives Define product and distinguish between goods and services and how they relate to the goods-services continuum. Outline the importance of the service sector in today’s marketplace. List the classifications of consumer goods and services and briefly describe each category. Identify each of the types of business goods and services. Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

Chapter Objectives Discuss how quality is used by marketers as a product strategy. Explain why firms develop lines of related products. Describe the way marketers typically measure product mixes and make product mix decisions. Explain the concept of the product lifecycle. 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.

What is a Product? Product - Bundle of physical, service, and symbolic attributes designed to satisfy a customer’s wants and needs People buy want satisfaction, not objects 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.

What are Goods and Services? Services - Intangible tasks that satisfy the needs of consumer and business users Goods - Tangible products that customers can see, hear, smell, taste, or touch 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.

Copyright © 2012 by South Western, a division of Cengage Learning Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

Characteristics of Services Intangible Inseparable from the service providers Perishable Cannot be standardized Buyers play important roles in the creation and distribution of services Wide variations in service standards Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

Copyright © 2012 by South Western, a division of Cengage Learning Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

Copyright © 2012 by South Western, a division of Cengage Learning Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

Copyright © 2012 by South Western, a division of Cengage Learning Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

Copyright © 2012 by South Western, a division of Cengage Learning Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

Quality as a Product Strategy Quality is a key component to a firm’s success in a competitive marketplace 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.

Worldwide Quality Programs ISO 9001:2000 standards implemented by the European Union define international, generic criteria for quality management and assurance 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.

Benchmarking Measuring quality by comparing performance against industry leaders Involves three main activities: Identifying manufacturing or business processes that need improvement Comparing internal processes to those of industry leaders Implementing changes for quality improvement Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

Quality of Services Determined by five variables: Tangibles Reliability Responsiveness Assurances Empathy Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

Development of Product Lines Product line - Series of related products Desire to grow Growth potential is limited if a company focuses on a single product 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.

The Product Mix Assortment of product lines and individual product offerings Product mix width Number of product lines a firm offers Product mix length Number of different products a firm sells Product mix depth Variations in each product that the firm markets Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

Copyright © 2012 by South Western, a division of Cengage Learning Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

Extending the Product Lifecycle Increasing frequency of use Increasing the number of users Finding new uses Changing package sizes, labels, or product quality Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

Product Deletion Decisions Marketers prune product lines and eliminate marginal products to preserve limited resources Firms may carry unprofitable items to carry a complete product line Shortages or raw materials can prompt a firm to discontinue production 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.