P

Products and Services, PLC, Branding, Packaging and labeling Strategies

Product and Services

Objectives

1. To understand the concept of a product2. To explain how to classify products3. To examine the concepts of product item

product line, and product mix and understand how they are connected

4. To understand the product life cycle and its impact on marketing strategies

5. To understand why some products fail and some succeed

Product?

• A Product is defined as – Anything that can be offered to a market

for attention, acquisition, use, or consumption that might satisfy a want or need.

– It can be tangible (a good) or intangible (a service or an idea) or a combination of both.

E.g. Sony DVD player, an advice from family doctor.

What Is a Product? (cont’d)

• Why Buyers Purchase a Product– To get the benefits and satisfaction that

they think the product will provide– Symbols and cues provided by marketing

help consumers make judgments about products.

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The three levels of a product

functional features, performance,perceived value, image,

technology

Delivery, installation, guarantees, after-sales service,

spare parts

brand, quality, design, packaging, price,country of origin, staff behavior, size

Core productbenefits

Productattributes

Support services

Ability to standardize product elements

Low

High

Product, Services, and Experiences?

• A company’s market offering often includes both tangible goods and services. Each component can be a minor or a major part of the total offer.

• To differentiate their offers, beyond simply making products and delivering services, companies are staging , marketing, and delivering memorable customer experiences.

Levels Of Product and Services(Cont’d)• The most basic level is the core benefit,

which address the question what is the buyer really buying?

• At the second level, product planners must turn the core benefit into an actual product. They need to develop product and service features, design, a quality level, brand name, and packaging.

• Finally, product planners must build an augmented product around the core benefit and actual product by offering additional consumer services and benefits.

Service?

• A Service is defined as – Any activity or benefit that one party can

offer to another that is essentially intangible and does not result in the ownership of anything.

– E.g. Banking , Hotels, Airlines, Home repair services etc.

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Characteristics of services

Intangibility

Perishability

Heterogeneity

Inseparability

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Four Categories Of Services

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Four Categories Of ServicesPeople Processing

People Processing

Customers must:

physically enter the service factory

co-operate actively with the service operation

Managers should think about process and output from customer’s perspective

to identify benefits created and non-financial costs:

- Time, mental, physical effort

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Simple Flowchart for Delivery of People-Processing Service

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Possession ProcessingPossession processing

Customers are less physically involved compared to people processing services

Involvement is limited

Production and consumption are separable

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Possession-Processing Service Simple Flowchart for Delivery

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Mental Stimulus Processing

●Mental Stimulus Processing

●Ethical standards required when customers who depend on such services can potentially be manipulated by suppliers

●Physical presence of recipients not required

●Core content of services is information-based

Can be ‘inventoried’

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Simple Flowchart for Delivery of Mental Stimulus Processing

Service

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Information Processing

Information Processing

Information is the most intangible form of service output,

But may be transformed into enduring forms of service output

Line between information processing and mental stimulus processing may be blurred.

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Simple Flowchart for Delivery of Information-Processing

Service

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Categories of supplementary service

• Information• Consultation/advice• Order taking• Hospitality

• Safekeeping• Exceptions• Billing• Payment

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A service product comprises all elements of service performance, both tangible and intangible, that create value for customers.

The service concept is represented by:A core product,Accompanied by supplementary servicesThe combination of core and supplementary

services is often referred as Augmented Services.

Core product &Supplementary services

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Designing a Service Concept (1)Core Product

Central component that supplies the principal, problem-solving benefits customers seek

Supplementary ServicesAugment the core product, facilitating its use and

enhancing its value and appealDelivery Processes

Used to deliver both the core product and each of the supplementary services

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Integration of Core Product, Supplementary Elements and

Delivery Process (Fig. 4.3)

Classification of

Products

Consumer Business

InstallationsAccessory equipment

Raw materials

Component parts

Process materials

MRO supplies

Business services

1. Conveniencea. Stapleb. Emergency

c. ImpulseC i. PureC ii. SuggestedC iii. ReminderC iv. Planned

2. Shopping

3. Specialty

4. Unsought

PRODUCTS

Classifying Products

Consumer Products– Products purchased to

satisfy personal and family needs

Business Products– Products bought to use

in an organization’s operations, to resell, or to make other products (raw materials and components)

Consumer Products

• Convenience Products– Relatively inexpensive, frequently

purchased items for which buyers exert minimal purchasing effort• Marketed through many retail outlets• Relatively low per-unit gross margins• Little promotional effort at the retail level• Packaging is an important marketing mix

element

Consumer Products (cont’d)

• Shopping Products– Items for which buyers are willing to

expend considerable effort in planning and making purchases• Do not have brand loyalty appeal• Require fewer retail outlets• Gross margins are higher• Supported (servicing and promoting the

product) by both the producer and channel members

Consumer Products (cont’d)

• Specialty Products– Items with unique characteristics that

buyers are willing to expend considerable effort to obtain• Are pre-selected by the consumer• Have no close substitutes or alternatives• Are available in a limited

number of retail outlets• Have high gross margins

Consumer Products (cont’d)

• Unsought Products– Products purchased to solve a sudden

problem, products of which the customers are unaware, and products that people do not necessarily think about buying• Price and other features not

considered• No consideration of substitutes

or alternatives• Purchased infrequently

Business Products

• Installations– Facilities and non portable

major equipment• Office buildings, factories

and warehouses, production lines, very large machines

• Accessory Equipment– Equipment used in production or office activities

• File cabinets, small motors, calculators, and tools

Business Products (cont’d)

• Raw Materials– Basic natural materials that become part of a

physical product such as ores, water, lumber, grains, and eggs

• Component Parts– Items that become part of the

physical product• Finished items ready for assembly• Items needing little processing before

assembly• Computer chips, engine blocks,

girders, and paints

Business Products (cont’d)

• Process Materials– Materials that are not

readily identifiable when used directly in the production of other products such as screws, knobs, and handles

• MRO Supplies– Maintenance, repair, and operating items that

facilitate production and do not become part of the finished product such as cleaners, rubber bands, and staples

Business Products (cont’d)

• Business Services– The intangible products that

many organizations use in their operations such as cleaning, legal, consulting, and repair service

Product Line And Product Mix

Product Line and Product Mix

• Product Item– A specific version of a product

• Product Line– A group of closely related product

items viewed as a unit because of marketing, technical, or end-use considerations

WholeMilk

WholeMilk

SkimMilk

2%Milk

Product Line and Product Mix (cont’d)

• Product Mix– The total group of products that an

organization makes available to customers– Width of product mix

• The number of product lines a company offers– Depth of product mix

• The average number of different products in each product line

Product Life Cycles and Marketing Strategies

• Product Life Cycle– The progression of a

product through four stages

introductiongrowthMaturitydecline

The Four Stages of the Product Life Cycle

FIGURE 11.2

The Product Life Cycle

• Introduction– The initial stage of a product’s life cycle—

its first appearance in the marketplace—when sales start at zero and profits are negative

The Product Life Cycle (cont’d)

• Growth– The stage of a product’s life cycle when

sales rise rapidly and profits reach a peak.

The Product Life Cycle (cont’d)

• Maturity– The stage of a product’s life cycle when

the sales curve peaks and starts to decline and profits continue to fall

Product Life Cycle (cont’d)

• Decline– The stage of a product’s life cycle when

sales fall rapidly

Why Some Products Fail and Others Succeed

• Reasons for Product Failure– Product’s value or features did not match

customer needs– Ineffective or inconsistent branding that failed to

convey the right message or image to customers– Technical or design problems– Poor market timing– Overestimation of market size– Ineffective promotion– Insufficient distribution

Branding

Objectives

1. The value of branding2. Brand loyalty3. Components of brand equity4. The types of brands and their benefits5. How to select and protect brands6. Types of branding policies

Objectives (cont’d)

7. Co-branding and brand licensing8. The packaging functions, design

considerations and how packaging is used in marketing strategies

9. The functions of labeling and some legal issues pertaining to labeling

Branding: Key Terms

• Brand– An identifying name, term, design, or symbol– One item, family of items, or all items of a

seller• Corvette, Chevrolet, General Motors

• Brand Name– The part of a brand that can be spoken– Words, letters, numbers

• Union 76, NBA, 49’ers

Branding: Key Terms (cont’d)

• Brand Mark– The part of a brand not made up of words– Symbols or designs

• Nike (swoosh), Mercedes (star), McDonald’s (arches)

• Trademark– A legal designation of exclusive use of a

brand• Coca-Cola®, Hewlett-Packard®

Branding: Key Terms (cont’d)

• Trade Name– Full legal name of an organization

• American Telephone and Telegraph Corporation (AT&T)

• All day I dream about sports (ADIDAS)

Value of Branding

i. For Consumersii. For Marketers

Value of Branding

• For Consumers– Helps speed consumer purchases by

identifying specific preferred products– Provides a form of self-expression and

status– Evaluates product quality to reduce the

risk of purchase

Value of Branding (cont’d)

• For Marketers– Identifies & differentiates a firm’s products

from competing products– Helps in the introduction of new products– Facilitates the promotion of all same-brand

products– Faster the development of brand loyalty– Can create valuable intangible assets

Brand Loyalty: Key Terms

• Brand Loyalty“A customer’s favorable attitude toward a

specific brand.”

• Brand Recognition“A customer’s awareness that a brand

exists and is an alternative purchase.”

Brand Loyalty: Key Terms (cont’d)

• Brand Preference“The degree of brand loyalty in which a

customer prefers one brand over competitive offerings.”

• Brand Insistence“The degree of brand loyalty in which a

customer strongly prefers a specific brand and will accept no substitute.”

• Brand Equity– The positive differential effect that knowing

the brand name has on customer response to the product or service. • Competitive Advantage• Valuable Asset• More leverage in bargaining with resellers.• Carries high credibility• Profitable set of loyal customers

Major Elements of Brand Equity

Types of Brands

i. Manufacturer Brandsii. Private Distributor Brandsiii. Generic Brands

Types of Brands• Manufacturer Brands

– Brands initiated by producers• Private Distributor Brands

– Brands initiated and owned by resellers• Dealer brands, private

brands, store brands• Generic Brands

– Brands indicating only the product category

Brand Positioning

• Attributes– Position the brand on product attributes.

• Benefits– Position the brand by associating its

name with a desirable benefit.• Beliefs & Values

– Position the brand on strong beliefs and values.

Selecting a Brand Name• The Name Should be

Easy to say, spell, and recall. Indicate the product’s major benefits. Suggest the product’s major uses and special

characteristics. Distinctive, setting it apart from competing brands. Compatible with all products

in line. Designed for use and recognition

in all types of media.

Protecting a Brand• Degree of brand

protection through registration

–Fanciful

–Arbitrary

–Suggestive

–Descriptive

–Generic

• Surnames and descriptive, geographic, or functional names are also difficult to protect.

• Registration with the Patent and Trademark Office protects a brand for ten years with indefinite renewals.

MostMost

LeastLeast

Branding Policies

• Individual Branding• Family Branding• Brand-Extension Branding

Branding Policies• Individual Branding

A policy of naming each product differentlyAvoids stigmatizing all products due to a

failed product

• Family BrandingBranding all of a firm’s products with the

same namePromotion of one item also promotes all

other products

Branding Policies (cont’d)

• Brand-Extension Using an existing brand name for an

improved or new productProvides support for new products through

established brand name and image

Branding and Other Marketing Strategies

Co-Branding

• Using two or more brands on one product to capitalize on the brand equity (customer confidence and trust) of multiple brands

• Brands involved must represent a complementary fit in the minds of consumers.

• Helps differentiate a firm’s product from those of its competitors

• Helps take advantage of distribution capabilities of co-branding partners

Brand Development

• A company has four choices when it comes to developing brands. It can introduce:

1. Line extension2. Brand extension3. Multibrands4. New brands

BRAND DEVELOPMENT (cont’d)

• LINE EXTENSION:Line extension occurs when a company

introduces additional items in a given product category under the same brand name such as new flavors, forms, color, ingredients, or package size.

• Brand Extension:Brand extension is using a successful brand

name to launch a new or modified product in a new category

BRAND DEVELOPMENT (cont’d)• MultibrandsCompanies often introduce additional brands in

the same categories. For example proctor and gamble markets many different brands in each of its product categories such as shampoo, conditioners etc.

New brandsA company might believe that the power of its

existing brand name may be decreasing and a new brand name is needed or a company may create a new brand name when it enters a new product category for which none of the company's current brand name is appropriate.

Brand Licensing

• An agreement whereby a company permits another organization to use its brand on other products for a licensing fee

• Advantages– Low-cost and/or free publicity– Revenues from royalty fees

• Disadvantages– Lack of manufacturing control– Creating too many unrelated products– Licensing arrangements can fail

Packaging

• Involves the development of a container and a graphic design for a product

• Packaging Functions– Protect the product from

damage– Offer convenience to

consumers– Prevent waste and make

storage easier– Promote the product by

communicating its features, uses, benefits, and image

Major Packaging Considerations

• Cost of Packaging– Limited consumer willingness to pay for better

packaging• Tamper-Resistant Packaging

– FDA regulations and consumer safety concerns

• Family Packaging– Similar packaging for all of a

firm’s products or packaging that has one common design element

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Major Packaging Considerations (cont’d)

• Promotional Role (Informing the Consumer)– Verbal and nonverbal

symbols– Size, shape, texture, color,

and graphics• Reseller Needs

– Transportation, storage, and handling

• Environmentally Responsible– Biodegradable and recyclable

Packaging and Marketing Strategy

• Altering the Package– To update style and to meet increased

competition– To highlight new features– To take advantage of new packaging materials– To make the product safer or easier to use– To reduce packaging costs

• Secondary-Use Packaging– Reusable packaging adds customer value

• Innovative Packaging– Unique features or ways of packaging that make a

product more distinct from its competitors

Labeling

• Labeling– Providing identifying, promotional, legal, or

other information on package labels• Universal Product Code (UPC)

– A series of electronically readable lines identifying a product and containing inventory and pricing information

Labeling (cont’d)

• Purposes of Labels– Help identify the product

• Display brand name and unique graphics– Support promotional efforts for the product

• Coupons, discounts, product features– Provide information on product origin i.e. in

which country it is made in

Product Line Decision• A product line is a group of products that

are closely related because they function in a similar manner are sold to the same customers groups, are marked the same type of outlets, or fall within the given price ranges.

• Examples:1. Nike has several lines of athletic shoes2. Nokia has several lines of

telecommunication products

Product line (cont’d)• The major product line decision

involves product line length i.e. the number of items in the product line.

• A company can lengthen its product line in two ways:

1. Line stretching2. Line filling

Line Stretching• Product line stretching occurs when a company

lengthen its product line beyond its current range. This is done when :

1. Company located at the upper end of the market can stretch their line downward

2. Company located at the lower end of the market can stretch their line upwards

3. Company located at the middle end of the market can stretch their line in both directions.

Line Filling• Line filling is adding more items within

the present range of the line• Reasons for product line filling are:

1. Adding more items within the present range of the line

2. Satisfying dealers3. Being the leading full line company