Product, Services, and Branding Strategies Chapter 9

Objectives Be able to define product and know the major classifications of products and services. Understand the decisions companies make regarding their individual products and services, product lines, and product mixes. Understand how firms build and manage their brands.

Objectives Know the four characteristics of services and the additional marketing considerations that services require. Review additional product issues related to social responsibility and international marketing.

c Cosmetics Industry Cosmetics companies sell billions of dollars worth of products Consumers buy more than just a particular smell The “promise”, image, company, name, package, and ingredients are all part of the product, as are the stores where it is sold.

Definition Product Anything offered to a market for attention, acquisition, consumption or use that might satisfy a need or want.

Definition 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.

What is a Product? Products, Services, & Experiences Market offerings, pure tangible goods, pure services, experiences Experiences include zoos and aquariums

Three Levels of Product Figure 9-1: Three Levels of Product

Discussion Question Describe the core benefit, actual product, and augmented product aspects of an automobile purchase.

What is a Product? Product and service classifications fall into two broad classes based on the types of buyers who use them: Consumer products Industrial products

Types of Consumer Products What is a Product? Types of Consumer Products Frequent purchases bought with minimal buying effort and little comparison shopping Low price Widespread distribution Mass promotion by producer Convenience Shopping Specialty Unsought

Types of Consumer Products What is a Product? Types of Consumer Products Less frequent purchases requiring more shopping effort and price, quality, and style comparisons. Higher priced than convenience goods Selective distribution in fewer outlets Advertising and personal selling by producer and reseller Convenience Shopping Specialty Unsought

Types of Consumer Products What is a Product? Types of Consumer Products Strong brand preference and loyalty, requires special purchase effort, little brand comparisons, and low price sensitivity High price Exclusive distribution Carefully targeted promotion by producers and resellers Convenience Shopping Specialty Unsought

Discussion Question How can tropical fish be a convenience good, specialty good, or shopping good to different consumers? Provide examples.

Types of Consumer Products What is a Product? Types of Consumer Products Little product awareness and knowledge (or if aware, sometimes negative interest) Pricing varies Distribution varies Aggressive advertising and personal selling by producers and resellers Convenience Shopping Specialty Unsought

Pay Now . . . Die Later Selling Cemetery Plots The Goal: Sell plots to baby boomers prior to an actual death in the family – “preneed policies”. Special Challenges: Emotional – marketing done at the wrong time could boomerang. Opportunities: Many states treat preneed policies as tax exempt, and now allow cemeteries to have funeral homes. On-site funeral homes provide greater convenience. Source: “Pay now, die later: Consumers urged not to delay that final decision,” Marketing News; Chicago; Oct 24, 1994; by Shermach, Kelly; Volume: 28 Issue: 22 Start Page: 1

Pay Now . . . Die Later Selling Cemetery Plots Unusual Promotions: Buy one plot get a second for a penny “Heaven Can Wait” cemetery run Boy Scout campouts at cemeteries Other Advertising: Freestanding inserts “Penny pincher” bags Lakeview Cemetery: Brochure direct mail with map and open plots designated Stresses need to preplan as a method of sparing loved ones Other Sales Methods: Grief information Via clergy members Source: “Pay now, die later: Consumers urged not to delay that final decision,” Marketing News; Chicago; Oct 24, 1994; by Shermach, Kelly; Volume: 28 Issue: 22 Start Page: 1

What is a Product? Product and Service Classifications Industrial products are those purchased for use in conducting a business or those purchased as ingredients or components to be used in manufacturing. Materials and parts Capital items Supplies and services

Industrial products also include business services, such as landscaping, technology, food services, or custodial.

What is a Product? Product and Service Classifications “Products” also include 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 campaigns promote ideas

Social marketing promotes ideas or causes for the purpose of improving an individual’s well-being or the well-being of society.

Product & Service Decisions Product attributes Quality, features, style and design Branding Packaging Labeling Product support services Key Decisions Individual Product Product Line Product Mix

Individual Product and Service Decisions Figure 9-2: Individual Product and Service Decisions

Product & Service Decisions Innovative product design can help revitalize a company, such as with the Apple iMac.

Product & Service Decisions Brand: A name, term, sign, symbol, design, or a combination of these, that identifies the maker or sellers of a product or service.

Product & Service Decisions Packaging involves designing a container or wrapper for a product

Product & Service Decisions Many aspects of a food product’s label are dictated by law

Product & Service Decisions Support services via the web include FAQ files, email queries, live chat with customer service personnel, and software updates 1-800 Flowers

Product & Service Decisions Product line length Line stretching: adding products that are higher or lower priced than the existing line Line filling: adding more items within the present price range Key Decisions Individual Product Product Line Product Mix

Discussion Question Would you classify Tide’s product line as an example of line stretching or line filling? Why?

Product & Service Decisions Product line width: Number of different product lines carried by company Product line depth: Number of different versions of each product in the line Product line consistency Key Decisions Individual Product Product Line Product Mix

Branding Strategy Brands are powerful assets that must be carefully developed and managed. Both Tiger Woods and Nike can be considered brands

Branding Strategy Brands with strong equity have many competitive advantages: High consumer awareness Strong brand loyalty Helps when introducing new products Less susceptible to price competition

Major Brand Strategy Decisions Figure 9-3: Major Brand Strategy Decisions

Brand Strategy Key Decisions Three levels of positioning: Product attributes Least effective Benefits Beliefs and values Taps into emotions Key Decisions Brand Positioning Brand Name Selection Brand Sponsorship Brand Development

Brand Strategy Key Decisions Brand Positioning Brand Name Selection Good Brand Names: Suggest something about the product or its benefits Are easy to say, recognize and remember Are distinctive Are extendable Translate well into other languages Can be registered and legally protected Key Decisions Brand Positioning Brand Name Selection Brand Sponsorship Brand Development

Discussion Question Evaluate the brand name for the product at left according to the criteria previously listed. Would you have chosen this name for this product?

Brand Strategy Key Decisions Manufacturer brands Brand Positioning Brand Name Selection Brand Sponsorship Brand Development

Brand Strategy Key Decisions Private (store) brands Brand Positioning Costly to establish and promote Higher profit margins Key Decisions Brand Positioning Brand Name Selection Brand Sponsorship Brand Development

Brand Strategy Key Decisions Licensed brands Brand Positioning Name and character licensing has grown Key Decisions Brand Positioning Brand Name Selection Brand Sponsorship Brand Development

Brand Strategy Key Decisions Brand Positioning Brand Name Selection Co-branding Advantages Broader consumer appeal Greater brand equity Efficient means of expansion into new product categories Limitations Complex legal contracts Requires careful coordination of IMC Requires that partners trust one another Key Decisions Brand Positioning Brand Name Selection Brand Sponsorship Brand Development

Brand Strategy Key Decisions Brand Positioning Brand Name Selection Line extensions Minor changes to existing products Brand extensions Successful brand names help introduce new products Multibrands Multiple product entries in a product category New brands New product category Key Decisions Brand Positioning Brand Name Selection Brand Sponsorship Brand Development

Brand Development Strategies Figure 9-4: Brand Development Strategies

Line Extensions May Feature Different Things Brand Strategy Line Extensions May Feature Different Things Flavors Colors Forms Ingredients Package Sizes

Services Marketing Services Account for 74% of U.S. gross domestic product. Service industries include business organizations, government, and private not-for-profit organizations.

Four Services Characteristics Figure 9-5: Four Services Characteristics

BusinessNow Site59 Video Clip The perishability of services such as airline seats creates special challenges for marketers Click the picture above to play video

Three Types of Marketing in Services Industries Figure 9-6: Three Types of Marketing in Services Industries

Services Marketing Service Firm Marketing Strategies The Service-Profit Chain Internal Marketing: service firms train and effectively motivate their employees to work as a team to satisfy the customer Interactive Marketing: recognizes that service quality depends heavily on the quality of buyer-seller interaction

Services Marketing Service Firm Marketing Strategies Managing Service Differentiation British Airways differentiates its service by offering first-class world travelers private “demi-cabins”

Services Marketing Service Firm Marketing Strategies Managing Service Quality One method of differentiation Customer retention is often the best measure Top service firms are “customer obsessed” Service recovery and employment empowerment are key Managing Service Productivity Many methods of enhancing productivity Key is to avoid reducing quality

Additional Product Considerations Product Decisions and Social Responsibility Acquisitions and mergers Legal compliance Product liability issues Warranties

Additional Product Considerations International Product and Services Marketing Special challenges: Which products should be marketed internationally? Should the products be standardized or adapted for world markets? How should packaging be adapted? How can other barriers be overcome?