1. Chapter 11 Product and Service Strategies
Principles of
Contemporary Marketing
Kurtz & Boone
Chapter 11 Product and Service Strategies

2. Chapter Objectives
Define product and distinguish between goods and services and how they relate to the goods-services continuum.
Outline the importance of the service sector in today’s marketplace.
List the classifications of consumer goods and services and briefly describe each category.
Identify each of the types of business goods and services.
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

3. Chapter Objectives
Discuss how quality is used by marketers as a product strategy.
Explain why firms develop lines of related products.
Describe the way marketers typically measure product mixes and make product mix decisions.
Explain the concept of the product lifecycle.
Describe how a firm can extend a product’s lifecycle, and explain why certain products may be deleted.
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

4. What is a Product?
Product - Bundle of physical, service, and symbolic attributes designed to satisfy a customer’s wants and needs
People buy want satisfaction, not objects
Example: Consumers buy televisions because they want entertainment, not because they want a box with a screen
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

5. What are Goods and Services?
Services - Intangible tasks that satisfy the needs of consumer and business users
Goods - Tangible products that customers can see, hear, smell, taste, or touch
Goods–services continuum - Spectrum along which goods and services fall according to their attributes, from pure good to pure service
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

6. Copyright © 2012 by South Western, a division of Cengage Learning
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

7. Characteristics of Services
Intangible
Inseparable from the service providers
Perishable
Cannot be standardized
Buyers play important roles in the creation and distribution of services
Wide variations in service standards
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

8. Copyright © 2012 by South Western, a division of Cengage Learning
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

9. Copyright © 2012 by South Western, a division of Cengage Learning
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

10. Copyright © 2012 by South Western, a division of Cengage Learning
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

11. Copyright © 2012 by South Western, a division of Cengage Learning
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

12. Quality as a Product Strategy
Quality is a key component to a firm’s success in a competitive marketplace
The efforts to create and market high-quality goods and services have been referred to as total quality management (TQM)
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

13. Worldwide Quality Programs
ISO 9001:2000 standards implemented by the European Union define international, generic criteria for quality management and assurance
The U.S. member body of ISO is the National Institute of Standards and Technology
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

14. Benchmarking
Measuring quality by comparing performance against industry leaders
Involves three main activities:
Identifying manufacturing or business processes that need improvement
Comparing internal processes to those of industry leaders
Implementing changes for quality improvement
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

15. Quality of Services Determined by five variables: Tangibles
Reliability
Responsiveness
Assurances
Empathy
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

16. Development of Product Lines
Product line - Series of related products
Desire to grow
Growth potential is limited if a company focuses on a single product
Example: L. L. Bean began by selling a single style of boots but has grown by selling a variety of products
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

17. The Product Mix
Assortment of product lines and individual product offerings
Product mix width
Number of product lines a firm offers
Product mix length
Number of different products a firm sells
Product mix depth
Variations in each product that the firm markets
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

18. Copyright © 2012 by South Western, a division of Cengage Learning
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

19. Extending the Product Lifecycle
Increasing frequency of use
Increasing the number of users
Finding new uses
Changing package sizes, labels, or product quality
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.

20. Product Deletion Decisions
Marketers prune product lines and eliminate marginal products to preserve limited resources
Firms may carry unprofitable items to carry a complete product line
Shortages or raw materials can prompt a firm to discontinue production
Firm may drop products that don’t fit into the direction in which it plans to grow
Copyright © 2012 by South Western, a division of Cengage Learning. All rights reserved.