Principles of Marketing Chapter 7: Products, Services, & Brands to Build Customer Value.
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Transcript of Principles of Marketing Chapter 7: Products, Services, & Brands to Build Customer Value.
Principles of Marketing
Chapter 7:Products, Services, & Brands
to Build Customer Value
What is a “Product”; “Service”?
• Text’s Definitions:A product:
• Anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need
Include more than just tangible objects, but also services, events, persons, places, organizations, etc.
A service:• A form of product that consists of activities, benefits, or
satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything
Dr. James Carver – Auburn University
What is a “Product”?*
• Definition used for this class: (see Ch. 1 – Slide 9 for first use)
Products:• Either a tangible good or intangible service that is
purchased in some way (e.g., cash, bartered, etc.) and is intended to satisfy a want or need
• More commonly referred to within the discipline as a Market Offering
Services:• Are all services used to facilitate & support a market
offering
Dr. James Carver – Auburn University
A Market Offering
• The “foundation” of profitable relationships...“Physical Make-up” is a continuum from
• Entirely tangible ~ toothpaste• To entirely intangible ~ haircut
Majority fall “in-between” ~ dinner at a restaurant
Increased commoditization at the “product level”• Fueled a shift towards a more “Service-Dominant Logic”*
(Vargo and Lusch 2004; Lusch and Vargo 2006)
Viewed as “bundles of services” or “brand experiences”• What does Disney sell again? ~ Magic; Dreams; Anything is Possible
Makes “copying” & “me-too” much more difficult Underscores “why” customers buy ~ a solution
Dr. James Carver – Auburn University
A “View” of the Product
• A “product” can be “seen” at three “levels”• Where each “level” adds more value
1. Core-customer value• The basic “service” or “solution” one is desiring
• Recall the drill-bit example?
2. Actual product• In essence the “service delivery vehicle”*
• The design, packaging, features, quality-level, brand name, etc.
3. Augmented product• Additional customer services and benefits
• Warranties, user manuals, product support, web communities, etc.• “Completes” the overall experience after the purchase
Dr. James Carver – Auburn University
Product Classification
• “Consumer” products:• Remember “products” can be an intangible service which is purchased*
Those products bought by final consumers for personal consumption
These are then further classified by how they’re purchased as either a:
• “Convenience”, “shopping”, “specialty”, or “unsought” good.
Dr. James Carver – Auburn University
Convenience Goods
• Those products purchased frequently, and typically immediately, with little, to no, comparison shopping.Typically…
• Low priced.• Promoted through mass advertising and sales promotions.• “Intensively”* distributed within a geographic area
To highlight convenience Common examples include candy, soda, newspapers, etc.
• “Divertive” competition* most likely with these goods
Dr. James Carver – Auburn University
Shopping Goods
• Those products bought less frequently, and typically involve more planning and effort, with brand comparisons occurring on the basis of price, quality, style, etc.Typically…
• Higher priced.• Promoted in a more targeted effort by both the producer and
seller Value’s affected by where, who, and how sold
• “Selectively”* distributed within a geographic area Common examples are furniture, clothing, cars, appliances.
Dr. James Carver – Auburn University
Specialty Goods
• Those products that have strong brand preference and loyalty, involve special purchasing effort, with little, to no, comparison shopping.Typically…
• (Very) high priced.• Carefully targeted promotion effort by both producer and
sellers• Tend to be “exclusively”* or very selectively distributed in a
geographic area. Examples include Ferrari and Rolex watches
Dr. James Carver – Auburn University
Unsought Goods
• Those products that have little product awareness or knowledge of the brand, and sometimes even negative interest in the class.Nothing is really “typical”…
• Pricing strategies vary.• Distribution strategies vary.• Require aggressive advertising and personal selling by
both producer and resellers. Common examples include life insurance, cemetery plots,
blood donation.
Dr. James Carver – Auburn University
Industrial Products
• Those purchased for further processing (i.e., components or raw materials) or those used in conducting business.
Key distinction between consumer and industrial products is the purpose for which an item is bought (i.e., home or business use).
• Consider 2 mowers bought by you; one for home & other for maintaining your personal business’ landscape – both are not consumer goods
Dr. James Carver – Auburn University
Types of Industrial Goods
• Materials and parts:• Raw materials, manufactured materials, and parts.
• Capital items:• Products that aid in buyer’s production or operations.
• Supplies and services:• Operating supplies, maintenance, and repair items.
Dr. James Carver – Auburn University
Individual Product Decisions
• They are a function of…
The product’s attributes• Remember again product can be a service
BrandingPackagingLabelingProduct Support Services
• “Services” as we will use the term within this class*
Dr. James Carver – Auburn University
Product Attributes
• Product quality dimensions:• Performance quality• “Conformance” quality
• Product feature considerations:• Value to consumer• Cost to company
• Product style and design:• Shapes the buyer’s usage experience
Dr. James Carver – Auburn University
Branding
• Definition:Corresponds to the building and managing brands.
• A brand’s purpose (and what it is): Is a name, term, sign, symbol, design, or a
combination of these, that… Identifies the products or services of one seller or
group of sellers, and…Differentiates them from those of competitors.
Dr. James Carver – Auburn University
Branding
• Provides advantages for both…
Buyers, in that:Helps identify productsActs as a cue for product quality and consistency
Sellers, in that:• Basis for product’s “quality story”• Provides legal protection• Helps to segment markets
Dr. James Carver – Auburn University
Packaging
• Packaging: Involves designing and producing the container or
wrapper for a product.
Ideally, good packages should:• Help to market the brand, while…
Protecting the contents Providing convenience and ease of use Ensuring product and user/child safety, and Addressing environmental concerns.
Dr. James Carver – Auburn University
Labeling
• Definition:The printed information appearing on or with the
package, including the product name.
Performs several functions:• Helps to identify the product or brand• Describes several things about the product (information)• Promotes the product through attractive graphics
Important to meet with regulations established and enforced by the government
Dr. James Carver – Auburn University
Product Support Services
• Our term “Services”Critical to monitor on routine basis:
• Talk with customers to assess the value and quality of current services and to obtain ideas for new services
• Fix problems and put together a package of new services that delights the customers and while still yielding profits for the company
New technologies can often enhance many support service offerings with cheaper costs incurred
Dr. James Carver – Auburn University
Product Line Decisions
• A Product LineA group of products that are closely related
because of: (1 of 3 reasons)*• Same end-run use or function
Most common
• Same end-run customer Example: Little Misses department
• Same price level Example: “Dollar” merchandise
Dr. James Carver – Auburn University
Product Line “Mix” Decisions
• Product mix: The set of all of the product lines and items that a
particular seller offers for sale.
• Product mix dimensions include: Width
• Number of different product lines the company carries
Breadth (or Assortment)*• Number of different brands within a line*
Depth• Number of different SKUs (stock-keeping-units) within a brand*
Consistency• How closely related are one’s various lines
Dr. James Carver – Auburn University
Uniqueness of anIntangible Product (Service)
• Four unique characteristics:• Intangibility
Cannot be seen, tasted, felt, heard, or smelled before purchase
• Inseparability Cannot be separated from their providers
• Variability Quality depends on who provides them, as well as when,
where, and how they are delivered
• Perishability Cannot be stored for later sale or use
• Simultaneously produced and consumed*
Dr. James Carver – Auburn University
Building Strong Brands
• Brand equity: Is the differential effect that knowing the brand
name has on customer response to the product or its marketing.
• Is a valuable asset that offers many competitive advantages, and
• Builds strong and profitable customer relationships that result in loyal customers (i.e., customer equity).
Dr. James Carver – Auburn University
Major Brand Strategy Decisions
• Brands are assets that must be carefully developed and managed via:
Brand positioning
Brand name selection
Brand sponsorship
Brand development
Dr. James Carver – Auburn University
Brand Positioning
• Marketers can position brands clearly in customers’ minds at any of three levels:
Product attributesProduct benefitsBeliefs and values
• A Brand’s Mission (Statement)The vision of what the brand must be and do when
positioning the brand.
Dr. James Carver – Auburn University
Brand Name Selection
• Desirable qualities for a brand name: It should:
• Suggest the product’s benefits and qualities• Be easy to pronounce, recognize, and remember• Be distinctive• Be extendable• Translate easily into foreign languages, and• Be capable of registration and legal protection.
Dr. James Carver – Auburn University
Brand Sponsorship
• Brand sponsorship options include:National brands (e.g., Sony)
• Also called manufacturer brands
Store brands (e.g., Archer Farms)• Also called private labels
Licensed brands• Name or character licensing
Co-branded goods (e.g., credit cards)• Can creates broader appeal and brand equity
Dr. James Carver – Auburn University
Brand Development
• Options include:• Line extension:
• Extending an existing brand name to new forms, colors, sizes, ingredients, or flavors within a product category.
• Brand extension: • Extending an existing brand name to new product categories.
• Multibranding: • Offers a way to establish different features and appeal to different customer
segments, lock up more reseller shelf space, and capture a larger market share.
• New brands: • Developed based on belief that the power of its existing brand is waning
and a new brand name is needed. Also used for products in a new product category.
Dr. James Carver – Auburn University