1. 1Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Product and Services Concepts Prepared by Deborah Baker Texas Christian University Chapter 8

2. 2Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Learning Objectives 1.Define the term product. 2. Classify consumer products. 3. Discuss the importance of services to the economy. 4.Discuss the differences between services and goods.

3. 3Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Learning Objectives (continued) 5.Define the terms product items, product line, and product mix. 6.Describe marketing uses of branding 7.Describe marketing uses of packaging and labeling. 8.Describe how and why product warranties are important marketing tools.

4. 4Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Learning Objective Define the term product. 1 1 On Line http://www.coleman.com On Line http://www.coleman.com

5. 5Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Product Everything, both favorable and unfavorable, that a person receives in an exchange. 1 1

6. 6Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning What Is a Product? Promotion Place (Distribution) PriceProduct Product is the “heart” of Marketing Mix 1 1

7. 7Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Learning Objective Classify consumer products. 2 2

8. 8Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Product Classifications BusinessProductBusinessProduct ConsumerProductConsumerProduct A product used to manufacture other goods or services, to facilitate an organization’s operations, or to resell to other consumers. Product bought to satisfy an individual’s personal wants Product bought to satisfy an individual’s personal wants 2 2

9. 9Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Types of Consumer Products Unsought Products Unsought Products Specialty Products Specialty Products Shopping Products Shopping Products Convenience Products Convenience Products Consumer Products Consumer Products Business Products Business Products PRODUCTS 2 2

10. 10Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Types of Consumer Products Convenience Product Convenience Product Shopping Product Shopping Product Specialty Product Specialty Product Unsought Product Unsought Product 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 that consumers search extensively for and are reluctant to accept substitutes. A particular item that consumers search extensively for and are reluctant to accept substitutes. A product unknown to the potential buyer or a known product that the buyer does not actively seek. 2 2

11. 11Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Learning Objective Discuss the importance of services to the economy. 3 3

12. 12Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Service The result of applying human or mechanical efforts to people or objects. 3 3

13. 13Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning The Importance of Services 79% of workers are in service sector 79% of workers are in service sector Services account for 76% of U.S. GDP Service occupations will be responsible for all net job growth through 2005 3 3

14. 14Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Service-Producing Industries and Job Growth 3 3

15. 15Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Learning Objective Discuss the differences between services and goods. 4 4

16. 16Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning How Services Differ from Goods Services Are Intangible Performances Services Are Intangible Performances Services Are Produced and Consumed Simultaneously Services Have Greater Variability Services Are Perishable 4 4 On Line http://www.nationalamusements.com http://www.amctheatres.com http://www.movietickets.com On Line http://www.nationalamusements.com http://www.amctheatres.com http://www.movietickets.com

17. 17Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Learning Objective Define the terms product item, product line, and product mix. 5 5

18. 18Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Product Items, Lines, and Mixes Product Item Product Line Product Mix A specific version of a product that can be designated as a distinct offering among an organization’s products. A group of closely-related product items. All products that an organization sells. 5 5

19. 19Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Gillette’s Product Lines and Mix Blades andWriting razorsToiletriesinstrumentsLighters Mach 3 Series Paper Mate Cricket SensorAdorn Flair S.T. Dupont Trac IIToni Atra Right Guard Swivel Silkience Double-Edge Soft and Dri Lady Gillette Foamy Super Speed Dry Look Twin Injector Dry Idea Techmatic Brush Plus Width of the product mix Depth of the product lines 5 5

20. 20Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Benefits of Product Lines Equivalent Quality Efficient Sales and Distribution Standardized Components Standardized Components Package Uniformity Advertising Economies 5 5

21. 21Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Product Mix Width  Diversifies risk  Capitalizes on established reputations The number of product lines an organization offers. 5 5

22. 22Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Product Line Depth  Attracts buyers with different preferences  Increases sales/profits by further market segmentation  Capitalizes on economies of scale  Evens out seasonal sales patterns The number of product items in a product line. 5 5

23. 23Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Adjustments Product Modification Product Repositioning Product Line Extension or Contraction Product Line Extension or Contraction Adjustments to Product Items, Lines, and Mixes 5 5 On Line http://www.unilever.com On Line http://www.unilever.com

24. 24Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Types of Product Modifications Quality Modification Functional Modification Style Modification 5 5

25. 25Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Planned Obsolescence The practice of modifying products so those that have already been sold become obsolete before they actually need replacement. 5 5

26. 26Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Repositioning Changing Demographics Declining Sales Changes in Social Environment Why reposition established brands? 5 5

27. 27Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Product Line Extension Adding additional products to an existing product line in order to compete more broadly in the industry. 5 5

28. 28Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Product Line Contraction  Some products have low sales or cannibalize sales of other items  Resources are disproportionately allocated to slow-moving products  Items have become obsolete because of new product entries Symptoms of Product Line Overextension 5 5

29. 29Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Learning Objective Describe marketing uses of branding. 6 6

30. 30Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Brand A name, term, symbol, design, or combination thereof that identifies a seller’s products and differentiates them from competitors’ products. 6 6

31. 31Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Branding Brand Name Brand Name Brand Mark Brand Mark Brand Equity Brand Equity That part of a brand that can be spoken, including letters, words, and numbers. The elements of a brand that cannot be spoken. The elements of a brand that cannot be spoken. The value of company and brand names. 6 6

32. 32Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Benefits of Branding Product Identification Repeat Sales New Product Sales 6 6 On Line http://www.tide.com On Line http://www.tide.com

33. 33Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning An Effective Brand Name  Is easy to pronounce  Is easy to recognize and remember  Is short, distinctive, and unique  Describes the product, use, and benefits  Has a positive connotation  Reinforces the product image  Is legally protectable 6 6

34. 34Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning The World’s Most Valuable Brands 6 6

35. 35Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Branding Strategies Brand No Brand Manufacturer’s Brand Private Brand Individual Brand Family Brand Combi- nation Individual Brand Family Brand Combi- nation 6 6

36. 36Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Generic Brand A no-frills, no-brand-name, low-cost product that is simply identified by its product category. 6 6

37. 37Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Manufacturers’ Brands Versus Private Brands Manufacturers’BrandManufacturers’Brand PrivateBrandPrivateBrand The brand name of a manufacturer. A brand name owned by a wholesaler or a retailer. Also known as a private label or store brand. 6 6

38. 38Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Advantages of Manufacturers’ Brands  Develop customer loyalty  Attract new customers  Enhance prestige  Offer rapid delivery, can carry less inventory  Ensure dealer loyalty 6 6

39. 39Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Advantages of Private Brands  Earn higher profits  Less pressure to mark down prices  Manufacturer may drop a brand or become a direct competitor to dealers  Ties customer to wholesaler or retailer  No control over distribution of manufacturers’ brands 6 6

40. 40Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Individual Brands Versus Family Brands IndividualBrandIndividualBrand FamilyBrandFamilyBrand Using different brand names for different products. Marketing several different products under the same brand name. Marketing several different products under the same brand name. 6 6

41. 41Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Cobranding 6 6 Ingredient Branding Cooperative Branding Complementary Branding Types of Cobranding On Line http://www.postcereal.com http://www.quakeroats.com On Line http://www.postcereal.com http://www.quakeroats.com

42. 42Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Trademarks  Many parts of a brand and associated symbols qualify for trademark protection  The mark has to be continuously protected  Rights continue for as long as it is used A Trademark is the exclusive right to use a brand 6 6

43. 43Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Learning Objective Describe marketing uses of packaging and labeling. 7 7

44. 44Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Packaging FunctionsofPackagingFunctionsofPackaging Contain and Protect Promote Facilitate Storage, Use, and Convenience Facilitate Storage, Use, and Convenience Facilitate Recycling 7 7

45. 45Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Labeling Persuasive  Focuses on promotional theme  Information is secondary Informational  Helps make proper selections  Lowers cognitive dissonance  Includes use/care 7 7 On Line http://www.fda.gov On Line http://www.fda.gov

46. 46Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Universal Product Codes A series of thick and thin vertical lines (bar codes), readable by computerized optical scanners, that represent numbers used to track products. 7 7

47. 47Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Learning Objective Describe how and why product warranties are important marketing tools. 8 8

48. 48Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Product Warranties Warranty Express Warranty Express Warranty Implied Warranty A confirmation of the quality or performance of a good or service. A written guarantee. An unwritten guarantee that the good or service is fit for the purpose for which it was sold. (UCC) An unwritten guarantee that the good or service is fit for the purpose for which it was sold. (UCC) 8 8

49. 49Chapter 8 Essentials of Marketing 4e Lamb Hair McDaniel ©2005 South-Western/Thomson Learning Product Warranties WarrantiesWarranties Written Guarantee Implied Warranty ExpressWarrantyExpressWarranty Unwritten Guarantee 8 8 On Line http://www.landsend.com http://www.llbean.com On Line http://www.landsend.com http://www.llbean.com