mkt notes

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Topic 5: Product, Services, and Branding Strategy

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Learning Objectives

After studying this chapter, you should be able to:1. Define product and the major classifications of products and

services2. Describe the decisions companies make regarding their

individual products and services, product lines, and product mixes

3. Discuss branding strategy—the decisions companies make in building and managing their brands

4. Identify the four characteristics that affect the marketing of a service and the additional marketing considerations that services require

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Chapter Outline – cont’d

1.What Is a Product?

2. Product classifications

3. Individual Product Decisions

4. Product Line Decisions

5. Product Mix Decisions

6. Product and Service Decisions

Marketing

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Chapter Outline –cont’d

7. Branding Strategy: Building Strong Brands

8. International product and Services

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Part 1 - What Is a Product?

1.1 The product- Service ContinuumProducts, Services, and Experiences

Product is anything that can be offered in a market for attention, acquisition, use, or consumption that might

satisfy a need or want • It can consist of pure tangible goods e.g.• Soap, toothpaste, food, etc.• A hybrid offer consists of equal parts of goods and

services.

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What Is a Product?

Products, Services, and Experiences

Service is a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in ownership

• The other extremes are pure services which are non-tangible e.g.

• banking, medical, insurance, telephone• Doctor’s exam• Legal advice and etc.

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What Is a Product?

Experiences represent what buying the product or service will do for the customer

• Disneyland• American Girl• Toys “R” Us• A Fiji unique experience

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Products, Services, and Experiences

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What Is a Product?

Three levels of Product

• Core benefits – stands at the center of the total product –represents what the is actually buying?

• Actual product – build around the core product: as many as five characteristics.e.g quality level, features, design, brand name, packaging, that delivers the core benefit to the customer.

• Augmented product – build around the core and actual products by offering additional consumer services and benefits.

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1.2 Levels of Product and Services

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Levels of Product and Services – cont’d

Core benefit Or

Service

Packaging

Fea

ture

s

Design

Brand

Nam

e

Quality level

Installation

Afte

r-sa

le s

ervi

ce

warranty

Delivery and C

redit

Augmented product

Actual Product

Core Product

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PART 2-PRODUCT CLASSIFICATIONS

2.0 Product Classification Products and services falls into two broad classes

based on the types of consumers that use them :

- consumer products and industrial products.

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Product Classifications

2.1 Consumer products - are products and services for personal consumption

Classified by how consumers buy them :• Convenience products are consumer products and services

that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort e.g newspapers, candy,fast food etc.

Shopping products are consumer products and services that the customer compares carefully on suitability, quality, price, and style e.g furniture, cars, appliances etc.

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PART 2- PRODUCT CLASSIFICATIONS –CONT’D

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Specialty products are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort eg.

- Specific brands ,types of car, medical services, designer clothes, high-end electronics etc.

Unsought products are consumer products that the consumer does not know about or knows about but does not normally think of buying – until consumers know of them through advertising, personal selling and other marketing efforts.e.g

- Life insurance - Funeral services - Blood donations

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2.2 Industrial products - are products purchased for further processing or for use in conducting a business.

• It is classified by the purpose for which the product is purchased e.g. if a company buys a lawn mower for use around home, the lawn mower is a consumer product.

if the same consumer buys the same lawn more for use in a landscaping business , the lawn more is an industrial product. e.g

There are three groups of industrial products : Materials and Parts, Capital items, Supplies and services

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Materials and parts include raw materials and manufactured materials and parts usually sold

directly to industrial users includes: - Farm products: wheat, cotton, livestock, fruits,vegegetable etc. - Natural products:lumber,fish,iron, - Manufactured material tires,iron,cement,wires,

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Capital items -are industrial products that aid in the buyer’s production or operations including:

- installations : such as buildings, factories, offices, fixed equipment, drill presses, large computer systems, elevators etc.

Suppliers and Services : supplies include :operating supplies: lubricants, coal, paper, pencil and repair and maintenance items :paint, nails, broom etc.

• Business services include: maintenance, and repair services and business advisory services: legal, management consulting,

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In recent years marketers have broadened the concept of a product beyond tangible products and services, to include other marketable entities: organizations, Persons, Places and ideas.

- Organization marketing - organization often carries out activities to ‘sell’ the organization itself.

It consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward an organization

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2.3 Organizations, Persons, Places, and Ideas


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Person marketing - consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward particular people e.g.

-President Bush, Obama skillfully marketed themselves - Michael Jordan & Tiger Woods –use marketing to promote career to improve

career & income. - Professionals such as: doctors, lawyers, accountants, architects Place Marketing –involves activities undertaken to create, maintain, or

change attitudes or behavior toward particular places. e.g Almost every country, city and state, markets its tourist attractions. Business site: involves factories, stores, offices, warehouses,etc.

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Organizations, Persons, Places, and Ideas

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Idea marketing – all marketing is a marketing of an idea, whether it be general idea or specific idea.

Similar to social-marketing, it includes the creation and implementation of program designed to influence individuals’ behavior to improve their well-being and that of society such as; family planning, human rights and racial equality and etc.


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• Product attributes -are the benefits of the product or service: quality,

features, style and design.

3.1 Product Quality - Quality in terms of the product or service is the freedom

from defects and the delivering of a targeted level of performance

Quality in terms of the customer is the value and satisfaction provided by the

product or service

Product quality includes level and consistency:

• Quality level is the level of quality that supports the product’s positioning

• Performance quality is the ability of a product to perform its functions

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PART 3 : Individual Product and Service Decisions

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PART 3 : Individual Product Decisions -Cont’d

Individual Product and Service Decisions

3.2 Product features - are a competitive tool for differentiating a product from competitors’ products.

• Product features are assessed based on the value to the customer versus the cost to the company

3.3 Product Design and style –Style describes the appearance of the product Design contributes to a product’s usefulness as well as to its looks, can be eye

catching or yawn inspiring. A sensational type may grab attention. - Unlike Style – design is more than skin deep- it goes to the very heart of a

product. - Good design can attract attention, improve product performance,, cut

production costs, and give the product a strong competitive advantage in the target market. e.g electric razors, hair dryer etc.

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user

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3.4 Brand is the name, term, sign, or design, or a combination of these, that identifies the maker or seller of a product or service

Perhaps the most distinctive skill of professional marketers is their ability to create , maintain, protect, and enhance brands of its production and services.

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Branding Strategy: Building Strong Brands

Brand represents the consumer’s perceptions and feelings about a product and its performance.

It is the company’s promise to deliver a specific set of features, benefits, services, and experiences consistently to the buyers

Brand vary in the amount of power and value they have in the market place. A powerful brand has high brand equity.

3.4.1.Brand equity - is the positive differential effect that knowing the brand name has on customer response to the product or service

Brand equity provides competitive advantage:• Consumer awareness and loyalty• Benefits –identify products that benefit them. • Beliefs and value –the brand becomes the basis on which a whole story can be built on

the product quality.- World top brands include superpowers like: Coca Cola, Campbell’s, Disney, Kodak,

Sony, Mercedes- Benz, McDonald’s

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3.4.2.Brand valuation is the process of estimating the total financial value of the brand 3.4.3 Brand strategy decisions include:• Brand positioning• Brand name selection• Brand sponsorship• Brand developmentBrand Positioning -decisions include:• Product attributes• Product benefits• Product beliefs and values – how brand is positioned on consumers mind Brand Name Selection• Suggests benefits and qualities – a good name can add greatly to a product’s success.• Easy to pronounce, recognize, and remember• Distinctive – brand name suggest about the product’s benefits and qualities.• Extendable – brand name should translate easily into foreign languages.• Translatable for the global economy

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3.4.4 Brand Sponsorship• Manufacturer’s brand – have long dominated the retail scene. In recent times an

increasing number of retailers and wholesalers have created their own private brands.• Private brand – where wholesalers created their own private brands• Licensed brand – Most manufacturers take years and spend millions to create their

own brand names.• Some companies license names or symbols using names of well known celebrities,

characters from popular movies and books e.g Bill Blass, Calvin Klein, Pierre Gardin etc.

• Name and character licensing has become a big business in recent years.• Co-brand – The practice of using the established brand names of two different

companies on the same product e.g - Pillsbury joined Nabisco to create Oreo bars. - Ford and Eddie Bauer co-branded a sport utility vehicle – Ford Explorer Co-branding offers many advantages- because its brand dominates in a different category.

The combination of brands create broader consumer appeal and greater brand equity.

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Brand strategy – cont’d3.4.5.Brand Development Line extensions -occur when a company extends existing brand

names to new forms, colors, sizes, ingredients, or flavors of an existing product category e.g.

- Dannon introduced lately several line extensions, include seven new yogurt flavors, a fat-free yogurt and a large-economy size yogurt.

Brand extensions extend a brand name to a new or modified product

in a new category e.g - Honda -allows Honda to advertise that it can ‘fit’ six Honda’s in a two

car garage. - Brand extensions give the new product an instant recognition and

faster acceptance.

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3.4.6. Brand Development

Multibrands- are additional brands in the same category e.g Procter & Gamble markets many different brands in each of its product categories.

- Multibrands offer different features and appeal to different buying motives.

New brands – a company may create a new brand name when it enters a new product category for which none of the company’s current brand names are appropriate .

That is - are used when existing brands are inappropriate for new products in new product categories or markets

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Individual Product Decisions –cont’d

3.5 Packaging – involves designing and producing the container or wrapper for a product.

Tradionally the primary function of the packaging is to contain and protect the product, now it has become an important marketing tool.

Now packaging has perform many tasks: Attracting attention, describing the product, and even

making the sale. Companies has recognized the power of good

packaging , to create instant consumer recognition of the company or brand.

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3.6 Labeling – Labels may range from single tags attached to products to complex graphics that are part of the package.

Identify several functions: identify the product or brand, such as the name Sunkist stamped on oranges.

The label describes several things about the product: who made it, where it was made, when it was made, its contents, how it is to be used, and how to use it safely.

Labels promote product through attractive graphics and also can mislead customers by failing to:

- describe important ingredients - include needed safety warnings.

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3.7 Product Support Services – Customer service is another element of product strategy A company's offer of product to the marketplace includes some

services, which can be a minor or a major part of the total offer. A company should design its product and support services to

profitably meets the needs of target customers. More and more companies are using product support services

to profitably meet the needs of target customers.

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Product line - is a group of products that are closely related because they function in a similar manner and are: - are sold to the same customer groups

- are marketed through the same types of outlets

- or fall within given price ranges We have looked at product strategy decisions such

as branding , packaging, labeling, and support services for individual products

But product strategy also calls for building a product line.

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PART 4 : PRODUCT LINE DECISIONS

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Product line Decisions – cont’d

Product line filling occurs when companies add more items within the present range of the line for:

• Create growth in sales and profits• Satisfying dealers• Excess capacity –adding more items within the present range• Plugging holes to fend off competitors Product line depth - is the number of versions offered of each product in the line Consistency - is how closely the various product lines are in end

use, production requirements, or distribution channels

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Product mix consists of all the products and items that a particular seller offers for sale

• Width -refers to the number of product lines the company carriers e.g. Procter & Gamble markets have wide product mix consisting of many product lines : paper, food household cleaning, cosmetics, medicinal ,personal care products etc.

• Length –refers to the total number of items the company carriers within its product line. e.g. Procter & Gamble sells 11 types of laundry detergents, 8 types of hand soaps, 6 types of shampoos, and four types of dishwashing detergents.

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PART 5: PRODUCT MIX DECISIONS

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PART 5: PRODUCT MIX DECISIONS –con’td

• Depth - refers to the number of versions offered to each product in the line e.g Procter & gambles Crest toothpaste comes in three sizes and two formulations (paste & gel)

• Consistency – of the product mix refers to how closely related the various product line are in: end use, production requirements, distribution channels and some other way. e.g Procter & Gamble are consistent insofar as they are consumer products that goes through the same distribution channels. Are inconsistent if they perform different functions for buyers.

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PART 5: PRODUCT MIX DECISIONS –con’td

• A company can increase its business in four ways:

• It can add new product lines, thus widening its product mix. In this way, its new lines build on the company’s reputation in its other lines.

• The company can lengthen its existing product lines to become a more fulltime company. Or it can add more versions of each product and thus deepen its product mix.

• Finally, the company can pursue more product line consistency –or-less depending on whether it wants to have a strong reputation in a single field or in several fields.

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PART 6 : Services Marketing

One of the major world trends in the recent years has been the dramatic growth of services.

USA has become the world’s first service economy. Service now generate 74% of US GPA (Gross Domestic Product)

Services industries includes: banking, insurance, communications, travel, entertainment, and service now accounts for almost 60% in economy in develop countries around the world.

Service industries vary greatly : Government, private organizations, and business organizations.

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PART 6 : Services Marketing –cont’d

Nature and Characteristics of Service Activities involved includes: renting a room,

depositing money in the bank, travelling on an airplane, getting a haircut, having a car repaired, watching a professional sport, seeing a movies, and getting advice from a lawyer, all involve buying a service.

A company must consider four special service characteristics when designing marketing programs: intangibility, inseparability, variability, and perishability.

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Services Marketing – cont’d

6.0 Nature and Characteristics of a Service

Intangibility refers to the fact that services cannot be seen, tasted, felt, heard, or smelled before they are purchased. e.g

- people undergoing cosmetic surgery - purchasing of an airline ticket – have nothing a ticket and promise of safe delivery to

destinations. - ( People have top draw conclusions about quality, safety of service purchased )Inseparability refers to the fact that services cannot be separated from their providers,

whether involving people or machines e.g. It is a provider- customer interaction, both the provider and the customer affect the service outcome.

Variability refers to the fact that service quality depends on who provides it as well as when, where, and how it is provided e.g.

- Marriott have reputations for providing better services. - At a reception desk , the employee may be cheerful and efficient whereas another

standing just a few feet away, my be unpleasant and slow.

Perishability refers to the fact that services cannot be stored for later sale or use

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Services Marketing – cont’d

Marketing Strategies for Service Firm Just like manufacturing business, good service firms use

marketing to position themselves strongly in chosen target markets.

Because services differ from tangible products, they often require additional marketing approaches

In product business, product are fairly standardized and sit on shelves waiting for customers.

But in service business, the customer and frontline service employee interact to create the service.

Effective interaction, depends on the skills of frontline service employees and on the service production and support processes backing these employees.

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Services Marketing –cont’d

Marketing Strategies for Service Firms

In addition to traditional marketing strategies, service firms often require additional strategies:

• Service-profit chain – chain that links service firm profits with employee and customer satisfaction includes: superior employee selection & training, quality work environment,etc.

• Internal marketing -train and effectively motivate its customer contact employees, teamwork etc

• Interactive marketing - to emphasize on the quality and importance of buyer-seller interaction.

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Services Marketing -cont’d

Marketing Strategies for Service Firms

Managing service differentiation creates a competitive advantage from the offer, delivery, and image of the service

• Offer – the solution to price competition is to develop a differentiated offer , delivery and image.

• Offer can include innovative features, different from competitors e.g. airline industry.

• Delivery -can include more able and reliable customer contact people, environment, or desi8gning a superior delivery process e.g ATM in banking

• Image : differentiate through symbols and branding e. Harris bank of Chicago adopted the lion as its symbol – confers an mage of strength on the bank.

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TOPIC 7 – THE END

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