1 Chapter 8 Product and Services Strategy

2 What is a Product? Product A Product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need. Includes: Physical Objects Services Events Persons Places Organizations Ideas Combinations of the above

3 What is a Service? Service A Service is a form of product that consist of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. Examples include: Banking Hotels Tax Preparation Home Repair Services

4 Products, Services, and Experiences Pure Tangible Good Pure Service Soap Tangible Good With Accompanying Services Auto With Accompanying Repair Services Hybrid Offer Restaurant Service With Accompanying Minor Goods Airline Trip With Accompanying Snacks Doctor’s Exam

5 Brand Name Quality Level Packaging Design Features Delivery & Credit Installation Warranty After- Sale Service Core Benefit or Service Core Benefit or Service Actual Product Core Product Augmented Product Levels of Product (Fig. 8.1)

6 Unsought Products  New innovations  Products consumers don’t want to think about these products  Require much advertising & personal selling i.e Life insurance, blood donation Product Classifications Consumer Products Specialty Products  Special purchase efforts  High price  Unique characteristics  Brand identification  Few purchase locations i.e Lamborghini, Rolex Shopping Products  Buy less frequently  Higher price  Fewer purchase locations  Comparison shop i.e Clothing, cars, appliances Convenience Products  Buy frequently & immediately  Low priced  Mass advertising  Many purchase locations i.e Candy, newspapers

7 Supplies and Services Supplies and Services Materials and Parts Materials and Parts Capital Items Capital Items Product Classifications Industrial Products

8 Product Classifications Other Marketable Entities Activities undertaken to create, maintain, or change the attitudes and behavior toward the following: Organizations - Profit (businesses) and nonprofit (schools and churches). Persons – Politicians, entertainers, sports figures, doctors and lawyers. Places - Business sites and tourism. Ideas (social ideas marketing) – public health campaigns, environmental campaigns, and others such as family planning, or human rights.

9 Individual Product Decisions (Fig. 8.2) Product Attributes Branding Packaging Labeling Product Support Services

10 Product Quality Product Features Product Style & Design Product Style & Design Ability of a Product to Perform Its Functions; Includes Level & Consistency Help to Differentiate the Product from Those of the Competition Process of Designing a Product’s Style & Function Developing a Product or Service Involves Defining the Benefits that it Will Offer Such as: Product Attributes

11 Advantages of Brand Names Brand Equity Advantages of Brand Names Brand Equity Strong Brand Association Strong Brand Association Attributes Quality & Value Consistency Identification Perceived Quality Name Awareness High Brand Loyalty High Brand Loyalty Branding

12 Brand Strategy Line Extensions Brand Extensions Multibrands New Brands Brand Strategy Line Extensions Brand Extensions Multibrands New Brands Brand Sponsor Manufacturer’s Brand Private Brand Licensed Brand Co-branding Brand Sponsor Manufacturer’s Brand Private Brand Licensed Brand Co-branding Brand Name Selection Selection Protection Brand Name Selection Selection Protection Major Branding Decisions (Fig. 8.3)

13 Line Extension Dannon Yogurt Flavors Multibrands Seiko Lasalle & Pulsar Brand Extension Barbie Electronics New Brands Windex (by acquisition) Brand Name ExistingNew Product Category Existing New Four Brand Strategies (Fig. 8.4)

14 Brand Strategy Line Extension Existing brand names extended to new forms, sizes, and flavors of an existing product category. Brand Extension Existing brand names extended to new or modified product categories. Multibrands New brand names introduced in the same product category. New Brands New brand names in new product categories.

15 Packaging Activity of designing and producing the container or wrapper for a product. Packaging used to just contain and protect the product. Packing now has promotional value and marketers should: Establish a packaging concept, Develop specific elements of the package, Tie together elements to support the positioning and marketing strategy.

16 Labeling Printed information appearing on or with the package. Performs several functions: Identifies product or brand Describes several things about the product Promotes the product through attractive graphics.

17 Product - Support Services Companies should design its support services to profitably meet the needs of target customers and gain competitive advantage. How? Step 1. Survey customers to assess the value of current services and to obtain ideas for new services. Step 2. Assess costs of providing desired services. Step 3. Develop a package of services to delight customers and yield profits to the company.

18 Stretching Lengthen beyond current range Product Line Length Number of Items in the Product Line Product Line Length Number of Items in the Product Line Two-Way Downward Upward Filling Lengthen within current range Product Line Decisions

19 Width Width - number of different product lines Length Length - total number of items in product lines Length Length - total number of items in product lines Depth Depth - number of versions of each product Product Mix - all the product lines & items offered Product Mix - all the product lines & items offered Consistency Product Mix Decisions

20 Intangibility Inseparability Variability Perishability Can’t be seen, tasted, felt, heard, or smelled before purchase. Can’t be separated from service providers. Quality depends on who provides them and when, where and how. Can’t be stored for later sale or use. Nature and Characteristic of a Service

21 Satisfied and Loyal Customers Satisfied and Loyal Customers Greater Service Value Greater Service Value Healthy Service Profits and Growth Healthy Service Profits and Growth Satisfied and Productive Service Employees Satisfied and Productive Service Employees Internal Service Quality Internal Service Quality The Service-Profit Chain

22 Marketing Strategies for Service Firms Managing Service Differentiation Develop differentiated offer, delivery and image. Managing Service Quality Empower front-line employees, Become “Customer obsessed”, Develop high service quality standards, Watch service performance closely. Managing Service Productivity Train current or new employees better, Work on quality as well as quantity, Utilize technology.

23 Decide Which Products & Services to Introduce Decide How Much to Standardize or Adapt Packaging Presents New Challenges Service Marketers Face Special Challenges Trend Toward Global Service Companies Will Continue International Product and Services Marketing