1. CHAPTER 11 Product and Service Strategies Chapter Objectives 1
Define product and distinguish between goods and services and how they relate to the goods-services continuum.
Explain the importance of the service sector in today’s marketplace.
List the classifications of consumer goods and services and briefly describe each category. 4
Describe each of the types of business goods and services.
Explain how quality is used by marketers as a product strategy.
Explain why firms develop lines of related products. 7
Describe the way marketers typically measure product mixes and make product mix decisions.
Explain the concept of the product life cycle and identify the different stages.
Describe how a firm can extend a product’s life cycle, and explain why certain products may be deleted. 5 8 2 6 3 9

2. • Marketing mix Blending of the four strategy elements —product, distribution, promotion, and price—to fit the needs and preferences of a specific target market.
• Marketers develop strategies to sell both tangible goods and intangible services.

3. WHAT ARE GOODS AND SERVICES?
WHAT IS A PRODUCT?
• People buy want satisfaction, not objects.
• Product Bundle of physical, service, and symbolic attributes designed to satisfy a customer’s wants and needs.
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.

4. IMPORTANCE OF THE SERVICE SECTOR
• Service sector makes up more than two-thirds of the U.S. economy.
• U.S. has maintained a trade surplus in services every year since the 1970.
• Homeshoring Hiring workers to do jobs from their homes.
• Marketing is growing in importance in the service sector.

5. CLASSIFYING GOODS AND SERVICES FOR CONSUMER AND BUSINESS MARKETS
• Consumer (B2C) products Product destined for use by ultimate consumers.
• Business (B2B) products. Product that contributes directly or indirectly to the out- put of other products for resale; also called industrial or organizational product.
• Some products fall into both categories.

6. TYPES OF CONSUMER PRODUCTS
Specialty Products
Unsought Products
Convenience Products
Shopping Products

7. CLASSIFYING CONSUMER SERVICES
• Marketers rely on five questions to classify services:
• What is the nature of the service?
• What type of relationship does the service organization have with its customers?
• How much flexibility is there for customization and judgment on the part of the service provider?
• Do demand and supply for the service fluctuate?
• How is the service delivered?
APPLYING THE CONSUMER PRODUCTS CLASSIFICATION SYSTEM
• Buying behavior and marketing mix choices patterns differ for different product types.

8. TYPES OF BUSINESS PRODUCTS
• Categories emphasize product use rather than consumer buying behavior.
Installations
Business Services
MRO Supplies
Raw Materials
Accessory Equipment
Components

9. QUALITY AS A PRODUCT STRATEGY
• Total quality management (TQM) Continuous effort to improve products and work processes with the goal of achieving customer satisfaction and world-class performance.
WORLDWIDE QUALITY PROGRAMS
• Leadership of several large U.S. corporations led to quality revolution of the 1980s.
• U.S. Congress established the Malcolm Baldrige National Quality Award to recognize excellence in quality management.
• ISO 9002 standards implemented by the European Union define international criteria for quality management and assurance.
• U.S. member body of ISO is National Institute of Standards and Technology.

10. BENCHMARKING QUALITY OF SERVICES
• Purpose is to achieve superior performance that results in a competitive advantage.
• 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.
QUALITY OF SERVICES
• Service encounter—point at which customer and service provider interact, which usually determines the customer’s perception of the quality of service.
• Service quality—expected and perceived quality of a service offering.

11. DEVELOPMENT OF PRODUCT LINES
• Product line Series of related products offered by one company.
DESIRE TO GROW
• Growth potential limited if company focuses on a single product.
ENHANCING COMPANY’S POSITION IN THE MARKET
• Entire lines of products make company more important to consumers and marketing intermediaries.
OPTIMAL USE OF COMPANY RESOURCES
• Spreading operations costs over a series of product lines reduces the average production and marketing costs of each product.

12. THE PRODUCT MIX PRODUCT MIX DECISIONS
• Assortment of product lines and individual product offerings that the company sells.
• 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 in its mix.
PRODUCT MIX DECISIONS
• Firms evaluate the effectiveness of the width, length, and depth to make decisions about adding or eliminating products from their offerings.
• Line extension—adding individual offerings that appeal to different market segments while remaining closely related to the existing product line.

13. THE PRODUCT LIFE CYCLE STAGES IN THE PRODUCT LIFE CYCLE
• Product life cycle Progression of a product through introduction, growth, maturity, and decline stages.
STAGES IN THE PRODUCT LIFE CYCLE
Introduction
Growth
Maturity
Decline

14. EXTENDING THE PRODUCT LIFE CYCLE
• Product life cycles can be extended indefinitely as a result of marketers’ decisions.
INCREASING FREQUENCY OF USE
• Convincing current customers to buy a product more frequently boosts total sales even if no new buyers enter the market.
INCREASING THE NUMBER OF USERS
• Attracting new customers who have not previously used the product.

15. CHANGING PACKAGE SIZES, LABELS, OR PRODUCT QUALITY
FINDING NEW USES
• New applications extend a product’s life cycle.
CHANGING PACKAGE SIZES, LABELS, OR PRODUCT QUALITY
• Example: Food marketers produce packages designed to appeal to one-person households.
• Example: Kraft’s 100-calorie Snack Packs, which package snacks in 100 calorie amounts.

16. PRODUCT DELETION DECISIONS
• Marketers prune product lines and eliminate marginal products to preserve limited resources.
• Firms may carry poor performing 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.