Principles of Marketing Chapter 7: Products, Services, & Brands to Build Customer Value

What is a “Product”; “Service”? Text’s Definitions: A product: Anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need Include more than just tangible objects, but also services, events, persons, places, organizations, etc. A 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 Dr. James Carver – Auburn University

Dr. James Carver – Auburn University What is a “Product”?* Definition used for this class: (see Ch. 1 – Slide 9 for first use) Products: Either a tangible good or intangible service that is purchased in some way (e.g., cash, bartered, etc.) and is intended to satisfy a want or need More commonly referred to within the discipline as a Market Offering Services: Are all services used to facilitate & support a market offering Dr. James Carver – Auburn University

Dr. James Carver – Auburn University A Market Offering The “foundation” of profitable relationships... “Physical Make-up” is a continuum from Entirely tangible ~ toothpaste To entirely intangible ~ haircut Majority fall “in-between” ~ dinner at a restaurant Increased commoditization at the “product level” Fueled a shift towards a more “Service-Dominant Logic”* (Vargo and Lusch 2004; Lusch and Vargo 2006) Viewed as “bundles of services” or “brand experiences” What does Disney sell again? ~ Magic; Dreams; Anything is Possible Makes “copying” & “me-too” much more difficult Underscores “why” customers buy ~ a solution Dr. James Carver – Auburn University

Dr. James Carver – Auburn University A “View” of the Product A “product” can be “seen” at three “levels” Where each “level” adds more value Core-customer value The basic “service” or “solution” one is desiring Recall the drill-bit example? Actual product In essence the “service delivery vehicle”* The design, packaging, features, quality-level, brand name, etc. Augmented product Additional customer services and benefits Warranties, user manuals, product support, web communities, etc. “Completes” the overall experience after the purchase Dr. James Carver – Auburn University

Product Classification “Consumer” products: Remember “products” can be an intangible service which is purchased* Those products bought by final consumers for personal consumption These are then further classified by how they’re purchased as either a: “Convenience”, “shopping”, “specialty”, or “unsought” good. Dr. James Carver – Auburn University

Dr. James Carver – Auburn University Convenience Goods Those products purchased frequently, and typically immediately, with little, to no, comparison shopping. Typically… Low priced. Promoted through mass advertising and sales promotions. “Intensively”* distributed within a geographic area To highlight convenience Common examples include candy, soda, newspapers, etc. “Divertive” competition* most likely with these goods Dr. James Carver – Auburn University

Dr. James Carver – Auburn University Shopping Goods Those products bought less frequently, and typically involve more planning and effort, with brand comparisons occurring on the basis of price, quality, style, etc. Typically… Higher priced. Promoted in a more targeted effort by both the producer and seller Value’s affected by where, who, and how sold “Selectively”* distributed within a geographic area Common examples are furniture, clothing, cars, appliances. Dr. James Carver – Auburn University

Dr. James Carver – Auburn University Specialty Goods Those products that have strong brand preference and loyalty, involve special purchasing effort, with little, to no, comparison shopping. Typically… (Very) high priced. Carefully targeted promotion effort by both producer and sellers Tend to be “exclusively”* or very selectively distributed in a geographic area. Examples include Ferrari and Rolex watches Dr. James Carver – Auburn University

Dr. James Carver – Auburn University Unsought Goods Those products that have little product awareness or knowledge of the brand, and sometimes even negative interest in the class. Nothing is really “typical”… Pricing strategies vary. Distribution strategies vary. Require aggressive advertising and personal selling by both producer and resellers. Common examples include life insurance, cemetery plots, blood donation. Dr. James Carver – Auburn University

Dr. James Carver – Auburn University Industrial Products Those purchased for further processing (i.e., components or raw materials) or those used in conducting business. Key distinction between consumer and industrial products is the purpose for which an item is bought (i.e., home or business use). Consider 2 mowers bought by you; one for home & other for maintaining your personal business’ landscape – both are not consumer goods Dr. James Carver – Auburn University

Types of Industrial Goods Materials and parts: Raw materials, manufactured materials, and parts. Capital items: Products that aid in buyer’s production or operations. Supplies and services: Operating supplies, maintenance, and repair items. Dr. James Carver – Auburn University

Individual Product Decisions They are a function of… The product’s attributes Remember again product can be a service Branding Packaging Labeling Product Support Services “Services” as we will use the term within this class* Dr. James Carver – Auburn University

Dr. James Carver – Auburn University Product Attributes Product quality dimensions: Performance quality “Conformance” quality Product feature considerations: Value to consumer Cost to company Product style and design: Shapes the buyer’s usage experience Dr. James Carver – Auburn University

Dr. James Carver – Auburn University Branding Definition: Corresponds to the building and managing brands. A brand’s purpose (and what it is): Is a name, term, sign, symbol, design, or a combination of these, that… Identifies the products or services of one seller or group of sellers, and… Differentiates them from those of competitors. Dr. James Carver – Auburn University

Dr. James Carver – Auburn University Branding Provides advantages for both… Buyers, in that: Helps identify products Acts as a cue for product quality and consistency Sellers, in that: Basis for product’s “quality story” Provides legal protection Helps to segment markets Dr. James Carver – Auburn University

Dr. James Carver – Auburn University Packaging Packaging: Involves designing and producing the container or wrapper for a product. Ideally, good packages should: Help to market the brand, while… Protecting the contents Providing convenience and ease of use Ensuring product and user/child safety, and Addressing environmental concerns. Dr. James Carver – Auburn University

Dr. James Carver – Auburn University Labeling Definition: The printed information appearing on or with the package, including the product name. Performs several functions: Helps to identify the product or brand Describes several things about the product (information) Promotes the product through attractive graphics Important to meet with regulations established and enforced by the government Dr. James Carver – Auburn University

Product Support Services Our term “Services” Critical to monitor on routine basis: Talk with customers to assess the value and quality of current services and to obtain ideas for new services Fix problems and put together a package of new services that delights the customers and while still yielding profits for the company New technologies can often enhance many support service offerings with cheaper costs incurred Dr. James Carver – Auburn University

Product Line Decisions A Product Line A group of products that are closely related because of: (1 of 3 reasons)* Same end-run use or function Most common Same end-run customer Example: Little Misses department Same price level Example: “Dollar” merchandise Dr. James Carver – Auburn University

Product Line “Mix” Decisions Product mix: The set of all of the product lines and items that a particular seller offers for sale. Product mix dimensions include: Width Number of different product lines the company carries Breadth (or Assortment)* Number of different brands within a line* Depth Number of different SKUs (stock-keeping-units) within a brand* Consistency How closely related are one’s various lines Dr. James Carver – Auburn University

Uniqueness of an Intangible Product (Service) Four unique characteristics: Intangibility Cannot be seen, tasted, felt, heard, or smelled before purchase Inseparability Cannot be separated from their providers Variability Quality depends on who provides them, as well as when, where, and how they are delivered Perishability Cannot be stored for later sale or use Simultaneously produced and consumed* Dr. James Carver – Auburn University

Building Strong Brands Brand equity: Is the differential effect that knowing the brand name has on customer response to the product or its marketing. Is a valuable asset that offers many competitive advantages, and Builds strong and profitable customer relationships that result in loyal customers (i.e., customer equity). Dr. James Carver – Auburn University

Major Brand Strategy Decisions Brands are assets that must be carefully developed and managed via: Brand positioning Brand name selection Brand sponsorship Brand development Dr. James Carver – Auburn University

Dr. James Carver – Auburn University Brand Positioning Marketers can position brands clearly in customers’ minds at any of three levels: Product attributes Product benefits Beliefs and values A Brand’s Mission (Statement) The vision of what the brand must be and do when positioning the brand. Dr. James Carver – Auburn University

Dr. James Carver – Auburn University Brand Name Selection Desirable qualities for a brand name: It should: Suggest the product’s benefits and qualities Be easy to pronounce, recognize, and remember Be distinctive Be extendable Translate easily into foreign languages, and Be capable of registration and legal protection. Dr. James Carver – Auburn University

Dr. James Carver – Auburn University Brand Sponsorship Brand sponsorship options include: National brands (e.g., Sony) Also called manufacturer brands Store brands (e.g., Archer Farms) Also called private labels Licensed brands Name or character licensing Co-branded goods (e.g., credit cards) Can creates broader appeal and brand equity Dr. James Carver – Auburn University

Dr. James Carver – Auburn University Brand Development Options include: Line extension: Extending an existing brand name to new forms, colors, sizes, ingredients, or flavors within a product category. Brand extension: Extending an existing brand name to new product categories. Multibranding: Offers a way to establish different features and appeal to different customer segments, lock up more reseller shelf space, and capture a larger market share. New brands: Developed based on belief that the power of its existing brand is waning and a new brand name is needed. Also used for products in a new product category. Dr. James Carver – Auburn University