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6 Product Concepts Essentials of Marketing Lamb, Hair, McDaniel
Chapter 9 Product Concepts Product Concepts CHAPTER 9 Essentials of Marketing Lamb, Hair, McDaniel 6 Designed by Eric Brengle B-books, Ltd. Prepared by Deborah Baker Texas Christian University
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Learning Outcomes LOI LO2 LO3 LO4 Define the term product
Chapter 9 Product Concepts Learning Outcomes LOI Define the term product Classify consumer products Discuss the importance of services to the economy Discuss the differences between services and goods LO2 LO3 LO4
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Define the term product
Chapter 9 Product Concepts What Is a Product? LOI Define the term product
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What Is a Product? LOI Product
Chapter 9 Product Concepts LOI What Is a Product? Product Everything, both favorable and unfavorable, that a person receives in an exchange. Tangible Good Service Idea
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Product is the starting point of Marketing Mix
Chapter 9 Product Concepts LOI What Is a Product? Product is the starting point of Marketing Mix Promotion Place (Distribution) Price Product Notes: The product offering is the heart of an organization’s marketing program. Price, distribution, and promotion strategies can not be determined until the firm has a product to sell. A product is everything, both favorable and unfavorable, that a person receives in an exchange. Well-conceived price, distribution, and promotion strategies have little value without a strong product offering.
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REVIEW LEARNING OUTCOME
Chapter 9 Product Concepts LOI Define the term product Product Good Service Idea
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Types of Consumer Products
Chapter 9 Product Concepts LO2 Types of Consumer Products Classify consumer products
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A product bought to satisfy an individual’s personal needs or wants
Chapter 9 Product Concepts Types of Products Business Product Consumer A product used to manufacture other goods or services, to facilitate an organization’s operations, or to resell to other consumers. A product bought to satisfy an individual’s personal needs or wants Notes: Products can be classified as either business or consumer products. The classification as a business or consumer product depends on the buyer’s intentions. LO2
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Types of Consumer Products
Chapter 9 Product Concepts LO2 Types of Consumer Products Unsought Products Specialty Shopping Convenience Consumer Business Notes: Chapter 6 described seven categories of business products: (have students name these) major equipment, accessory equipment, component parts, processed materials, raw materials, supplies, and services. Consumer products are classified into four types: convenience products, shopping products, specialty products, and unsought products. This approach organizes products by the effort used to shop for them.
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Types of Consumer Products
Chapter 9 Product Concepts LO2 Types of Consumer Products Market Development Diversification Increase market share among existing customers Attract new customers to existing products Introduce new products into new markets Create new products for present markets Convenience Product Shopping Specialty Unsought A relatively inexpensive item that merits little shopping effort A product that requires comparison shopping, because it is usually more expensive and found in fewer stores A particular item for which consumers search extensively and are reluctant to accept substitutes A product unknown to the potential buyer or a known product that the buyer does not actively seek Discussion/Team Activity: Name products and services that fall into each of the consumer product categories: Convenience: candy, soft drinks, deodorant, aspirin, hardware, dry cleaning. Shopping: Homogeneous shopping products such as washers, dryers, televisions. Decisions are based on the lowest-priced brand with the desired features. Heterogeneous shopping products are essentially different, for example furniture, clothing, housing, universities. Decisions are highly-individual and based on “finding the best product for me.” Specialty: fine watches, expensive automobiles, gourmet restaurants. Unsought: new products, insurance, burial plots, encyclopedias.
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REVIEW LEARNING OUTCOME
Chapter 9 Product Concepts LO2 Consumer Products
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The Importance of Services
Chapter 9 Product Concepts LO3 The Importance of Services Discuss the importance of services to the economy
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Chapter 9 Product Concepts
LO3 Service Service The result of applying human or mechanical efforts to people or objects. Notes: A service is the result of applying human or mechanical efforts to people or objects. Services involve a deed, a performance, or an effort that cannot be physically possessed. The marketing process is the same for all types of products, whether they are goods or services. In fact, many manufacturing firms can point to service as a major factor in their success. Services offered by the manufacturer are important to buyers, and is often a factor in the importance of purchasing products. For example, copiers. Services have some unique characteristics and marketing strategies need to be adjusted for these characteristics.
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REVIEW LEARNING OUTCOME The Importance of Services
Chapter 9 Product Concepts LO3 REVIEW LEARNING OUTCOME The Importance of Services Notes: The service sector accounts for 69 percent of U.S. gross domestic product and 83 percent of U.S. employment. The demand for services is expected to continue. As a result of demographic shifts, services are expected to account for nearly all net job growth through the year (The aging population will need nursing care, physical therapy, and social workers.)
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How Services Differ from Goods
Chapter 9 Product Concepts LO4 How Services Differ from Goods Discuss the differences between services and goods
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How Services Differ from Goods
Chapter 9 Product Concepts LO4 How Services Differ from Goods Intangible Inseparable Heterogeneous Perishable Notes: Intangibility: Services cannot be touched, seen, tasted, heard, or felt in the same way as goods. Services cannot be stored and are easy to duplicate. Tangible cues are often used to communicate a service’s quality and nature. Facilities are a critical tangible part of a service experience. Produced and Consumed Simultaneously: Goods are produced, sold, and then consumed. In contrast, services are often sold, produced, and consumed at the same time. Consumers are involved in the production of the services that they buy. The quality of services depends on the quality of employees. Greater variability: Services are less standardized and uniform than goods—a characteristic known as heterogeneity. Because services are labor-intensive, consistency and quality control can be hard to achieve. Standardization and training help increase consistency and reliability. Perishability: Services cannot be stored, warehoused, or inventoried. If not used, the revenue is lost. One of the most important challenges in many service industries, such as hotels and airlines, is finding ways to synchronize supply and demand. Deep discounts and off-peak pricing strategies encourage demand during nonpeak times.
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How Services Differ from Goods
Chapter 9 Product Concepts LO4 How Services Differ from Goods Intangibility Search Qualities Experience Qualities Credence Qualities Notes: Compared to goods, services tend to exhibit fewer search qualities. A search quality is a characteristic that can be easily assessed before purchase. An experience quality is a characteristic that can be assessed only after use. A credence quality is a characteristic that consumers may have difficulty assessing even after purchase because they do not have the necessary knowledge or experience. Online Web MD What elements of Web MD Web site communicate the search, experience, and credence qualities of the services offered by online medical consultant? Online
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