1-1. 1-2 McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 8 Product and Service Concepts.

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1-2McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

Chapter 8Chapter 8

Product and Service ConceptsProduct and Service ConceptsProduct and Service ConceptsProduct and Service Concepts

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After studying this chapter you should be able to:After studying this chapter you should be able to:

Understand the differences between goods and services.

Differentiate between consumer and business products, and discuss the different types of each.

Recognize that marketers need to appreciate the perspective of the consumer.

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Define and discuss the importance of product quality, product design, branding, packaging, and customer service.

Explain how the different product components need to be integrated to meet the needs of customers.

After studying this chapter you should be able to:After studying this chapter you should be able to:

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What Is a Product?

Product:An idea, a physical entity (a good), a

service, or any combination of the three that is an element of exchange to satisfy individual or business objectives .

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Types of Products

Goods:Physical products

with form and substance

Services:Non-physical products

usually involving performance

Consumer Products:Those used by

consumers for their own use and satisfaction.

Business Products:Those used in the

running of a business or in the manufacture of products for resale.

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The Goods/Services Continuum

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Product Differentiation

Product Differentiation: Exists when a firm’s

offerings differ or are perceived to differ from those of competing firms on any attribute, including price.

Product Differentiation: Exists when a firm’s

offerings differ or are perceived to differ from those of competing firms on any attribute, including price.

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Goods and Services

Goods: Physical

products.

Goods: Physical

products. Services:

Nonphysical products.

Services: Nonphysical

products.

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Characteristics and Strategies for Services

Service Characteristic Service Strategy

Intangible Associate service with something tangible

Perishable Manage demand to utilize supply

Inseparable Capitalize advantages of person providing service

Variable Standardize service delivery as much as possible

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Consumer and Business Products

Consumer Products: Products that are

purchased by consumers for their own personal use.

Business Products: Products purchased by

a firm or organization for its own use.

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Consumer and Business Products

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Types of Consumer Products

Convenience

Products

Shopping

Products

Specialty

Products

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Types of Business Products

Capital Products

Production Products

Operational Products

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Product Components

ProductComponents

Product Features

• Quality

• Design

• Branding

• Packaging

Service Features

• Purchase services

• Usage services

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Branding

Brand: A name, term, sign,

symbol, design, or combination that a uses to identify its products and differentiate them from those of competitors.

Brand Name: The element of a brand

that can be vocalized:

• IBM

• Tide

• Snickers

• Diet Coke

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Branding

Brand Mark: The element of a brand

that cannot be vocalized:

• MGM Lion• The Buick symbol• The Nike Swoosh

Trademark: A brand or part of a

brand that is registered with the U.S. Patent and Trademark Office.

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Building Brands

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Types of Brands

Generics(Products typically not branded)

Manufacturer Brand (National brand or

regional brand)

Distributor Brand (Store brand, private brand,

or private label)

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The World’s 10 Most Valuable Brands

1 Coca-Cola 69.6

2 Microsoft 64.1

3 IBM 51.2

4 GE 41.3

5 Intel 30.9

6 Nokia 30.0

7 Disney 29.3

8 McDonald’s 26.4

9 Marlboro 24.2

10 Mercedes 21.0

Rank Brand 2002 Brand Value ($billions)

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Keys to Choosing A Brand Name

Is easy to

pronounce,

recognize,

and

remember.

Is

distinctive

in some

way.

Can be translated into other languages.

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Packaging

Label:A printed description of the product on the package.

Package: The container or wrapper for a product.

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Functions of Packaging

Protecting the product until consumed.

Storing the product until consumed.

Facilitating consumption of the product.

Promoting the product.

Facilitating disposal of the product.

Protecting the product until consumed.

Storing the product until consumed.

Facilitating consumption of the product.

Promoting the product.

Facilitating disposal of the product.

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Customer Service

Customer Service:

Describes the assistance provided to help a customer with the purchase or use of a product.

Important Elements of Customer Service: Providing information

about product alternatives.

Training in product use.

Credit and financing services.