PRODUCTS, SERVICES, AND BRANDS: BUILDING CUSTOMER VALUE Product: Any thing that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. 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

Core Customer Value Actual Product Features Design Brand Name Quality Level Packaging Augmented Product After- sale Service Warranty Product Support Delivery and Credit LEVEL OF PRODUCT AND SERVICES

Product and Service Classifications Consumer productsIndustrial products Convenience Shopping Specialty Unsought Supplies and services Materials and parts Capital items Raw Material Manufactured Material Farm Products Natural Products Component Materials Component Parts Installation and accessory Equipment Operating Supplies and repair and maintenance item Business Service and Business advisory Service Product or service Staple Impulse Emergency Homogeneous heterogeneous

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

8 - 5  Convenience  Shopping  Specialty  Unsought  Less frequent purchases  More shopping effort for comparisons.  Higher than convenience good pricing  Selective distribution in fewer outlets  Advertising and personal selling Types of Consumer Products

8 - 6  Convenience  Shopping  Specialty  Unsought  Strong brand preference and loyalty, requires special purchase effort, little brand comparisons, and low price sensitivity  High price  Exclusive distribution  Carefully targeted promotions Types of Consumer Products

8 - 7  Convenience  Shopping  Specialty  Unsought  Little product awareness and knowledge (or if aware, sometimes negative interest)  Pricing varies  Distribution varies  Aggressive advertising and personal selling by producers and resellers Types of Consumer Products

8 - 8 Product and Service Classifications  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 promotes ideas

8 - 9 Product and Service Decisions  Individual Product  Product Line  Product Mix  Product attributes  Quality, features, style and design  Branding  Packaging  Labeling  Product support services Key Decisions Goal 2: Learn decisions companies make regarding products

Product attributes Quality: The characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs. Total quantity management (TQM): is an approach in which all the company’s people are involved in constantly improving the quality of products, services, and business process. product Quality has two dimensions: i) Quality Level ii) Consistency

Product Features: The company can create higher-level models by adding more features. Feature are a competitive tools for differentiating the company’s product from competitors‘ product.

Product Style and Design Another way to add customer value is through distinctive product style and design. Design is larger concept than style. Style simple describes the appearance of a products. A sensational style may grab attention and produce pleasing aesthetics, but it does not necessarily make the product perform better. Good design contributes to a product’s usefulness s well as to its looks. Design begins with a deep understanding of customer needs. More than simple creating product or service attributes, it involves shaping the customer’s product-use experience.

Brand A name, term, sign, symbol, design, or combination of these that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors.

Packaging The activities designing and producing container or wrapper for a product. It perform many sales task: Attracting attention Describing the product Making the sale Innovative packaging can give a company an advantage over competitors and boost sales. Product safety has also become a major packaging concern. In making packaging decision, the company also must heed growing environment concern. Fortunately, many companies have gone ”green” by reducing their packaging and using environmentally responsible packaging materials.

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Labeling Labels range from simple tags attached to products to complex graphics that are part of the package. They perform several functions: The labels identify the product or brand Label might describe several things about product. Label might help to promote the brand, support it positioning and connect with customers Labels have become an important element in broader marketing campaigns.

Product and Service Decisions  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 Key Decisions  Individual Product  Product Line  Product Mix

The major Product line Decision involves Product Line Length. Product Line Length is the number of items in the product line. Product Line is too short – If the manager can increase profits by adding items. Product Line is too long – If the manager can increase profits by dropping items.

Product Line length is influenced by company objectives and resources. For example: Objectives - allow for upselling. BMW – 3-series models to 5- and series models. Objectives – allow cross-selling. Hewlett-Packard - printer and cartridges. Objectives – protect against economic swings. Gap runs several clothing-store chains (Gap, Old Navy, and Banana Republic)

A company can extend its product line two ways: Line filling : Reasons : Reaching for extra profits Satisfying dealers Using excess capacity Being the leading full-line company Plugging holes to keep out competitors. If Line Filling is overdone: Cannibalization Customer confusion

Line stretching : a company lengthens its product line beyond its current range. The company can stretch its line:Downward Upward Both Direction Downward: companies located at the upper end of the market can stretch their line downwards. Example: Honda introduced Honda Jaz Upward: companies stretch upward In order to add prestige to their current product. Example: Tata Motors introduce Tata Indigo Both Direction Example: Marriott.

Product Mix Also known as product assortment Consists of all the product lines and items that a particular seller offers for sale. Example : Sony – Sony Electronics, Sony Computer Entertainment (games) Sony Pictures Entertainment ( movies, TV shows music, DVDs), Sony Financial Services (life insurance, banking, and other offerings).

A company’ product mix has four important dimensions: Width – the number of different product lines the company carries. Length – the total number of items the company carries within its product lines. Depth – refers to the number of versions offered of each product in the line. Example: Sony – TV- tube, flat panel, rear projection, front projection, HD, or low resolution. Consistency – the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels

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

Branding Strategy: Building Strong Brand Brand equity is the positive differential effect that knowing the brand name has on customer response to the product or its marketing. A brand has a positive brand equity when consumers react more favorably to it rather than to a generic or unbranded version of the same product. Brands vary in the amount of power and value they hold in the marketplace.

Ad agency Young & Rubicam’s Brand Assets Valuator measures brand strength along four consumer perception dimensions: Differentiations (what makes the brand stand out) Relevance ( how consumers feel it meets their needs) Knowledge (how much consumers know about the brand) Esteem ( how highly consumers respect and regard the brand) A brand with strong brand equity rate high on all of these dimensions. Brand valuation is the process of estimating the total financial value of a brand. Brand value of Google $86 billion. Coca-Cola$58 billion

Brands with strong equity have many competitive advantages:  High consumer awareness  Strong brand loyalty  Helps when introducing new products  Less susceptible to price competition A powerful brand forms the basis for building strong and profitable customer relationships. The fundamental asset underlying brand equity is customer equity- the value of the customer relationships that the brand creates.

Brand Positioning Attributes Benefits Benefits and values Brand Name Selection Selection Protection Brand Sponsorship Manufacturer’s brand Private brand Licensing Co-branding Brand Development Line extensions Brand extension Multiband New brands Major Brand Strategy Decisions

Brand Positioning Three levels of positioning: Product attributes Least effective – because competitors can easily copy attributes. Customers are not interested in attributes as such; they are interested in what the attributes will do for them. Benefits Volvo (safety), FedEx (guaranteed on-time delivery), Nike (performance), Mercedes Benz (Quality) Beliefs and values Taps into emotions. Example: Pampers (Parent-child relationship and total baby care)

Brand Name Selection Good Brand Names: Suggest something about the product or its benefits. (Fair and lovely) Are easy to say, recognize and remember. (Tide, Nirma, Dell ) Are distinctive. (Lexus, Indica) Are extendable. (Aarong, Akiz) Translate well into other languages. Standard Oil of New Jersey - Exxon – Enco (a stalled engine when pronounced in Japanese.) Can be registered and legally protected

Brand Sponsorship Manufacturer brands ( Sony and Kellogg’s) Private (store, Distributor) brands ( Agora, Almas, nandan etc.) CCostly to establish and promote HHigher profit margins Licensed brands NName and character licensing has grown Co-branding (Citibank and Jet Airways – Jet Citi Travel Card) AAdvantages / disadvantages

Line extension Brand Extension Multibrand New brands Product category Existing New Existing New Brand name Brand Development Strategies

Brand Development Line extensions : Extending an existing brand name to new forms, colors, sizes, ingredients, or flavors of an existing products category. Example : Bata – regular shoes, premium shoes, sports shoes, sandals, socks, etc. Brand extensions : Extending an existing brand name to new product categories. Example: Nestle – maggi brand to launch several new lines : Maggi Noodles, Maggi Tomato Ketchup, and Maggi Soup. Advantages:  Gives a new product instant recognition and faster acceptance.  Saves high advertising costs. Risks:  The extension may confuse the image of the main brand.  If a brand extension fails, it may harm consumer attitudes towards the other product carrying the same brand name.  A brand name may be appropriate to a particular new product, even if it is well made satisfying.

Multibrands Companies often introduce additional brands in the same category. Example: Unilever, Procter & Gamble Multibrand offer s a way to establish different features and appeal to different buying motives. It also allows a company to lock up more reseller shelf space. The major drawback of multibranding is that each brand might obtain only a small market share, and none may be very profitable.

New brands A company might believe that the power of its existing brand name is waningand a new brand name is needed. Or it may create a new brand name when it enters a new product category for which none of the company’s current brand names are appropriate.

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

Services Marketing  Services  A major characteristics of services – they cannot be seen, tasted, felt, heard, or smelled before they are bought. Service industries include business organizations, government, and private not-for-profit organizations.

Characteristics of Services Intangibility Service cannot be seen, tasted, felt, heard, or smelled before purchase Intangibility Service cannot be seen, tasted, felt, heard, or smelled before purchase Inseparability Services can’t be separated from providers Inseparability Services can’t be separated from providers Variability Quality of services depends on who provides them and when, where, and how Variability Quality of services depends on who provides them and when, where, and how Perishability Services can’t be inventoried for later sale 0r use Perishability Services can’t be inventoried for later sale 0r use services

Service Firm Marketing Strategies  The Service-Profit Chain  Internal Marketing  Interactive Marketing  Managing Service Differentiation  Managing Service Quality  Managing Service Productivity

The Service-Profit Chain 1 Internal service quality 2 Satisfied and productive service employees 3 Greater service value 4 Satisfied and loyal customers 5 Healthy service profits and growth

Internal Marketing Orienting and motivating customer-contact employees and supporting service people to work as a team to provide customer satisfaction. Example: Pizza Hut Interactive marketing Training service employees in the fine art of interacting with customers to satisfy their needs. Company CustomersEmployees Internal marketing External marketing Interactive marketing Three types of service marketing

Managing Service Differentiation Example : British Airways Spa Service Managing Service Quality 100% defect free service Service Recovery Empower front-line service employees- to give them the authority, responsibility and incentives they need to recognize, care about, and tend to customer needs. Managing Service Productivity Train current employees Hire new employees who will work harder or more skillfully. “Industrialize the service” by adding equipment and standardizing production

Product Decisions and Social Responsibility  Acquiring and dropping products  Patent protection  Product quality and safety  Product warranties

International Product and Services Marketing  Special challenges:  Which products should be marketed internationally?  Should the products be standardized or adapted for world markets? Packaging?

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