Setting Product Strategy. 12-2 At the heart of a great brand is a great product.

Setting Product Strategy

12-2

At the heart of a great brand is a great product

12-3

Product

Anything that can be offered to a market to satisfy a want or need.

12-4

Five Hotel (Product) Levels

• Core benefits—rest and sleep

• Basic product—bed, bathroom, towels, desk, dresser, and closet

• Expected product—clean bed, fresh towels, working lamps, relative degree of quiet

• Augmented product—cable TV

• Potential product—high speed internet connection

12-5

Consumer Goods Classification

Convenience

Unsought

Shopping

Specialty

Emergency

12-6

Industrial Goods Classification

Materials and parts

Supplies/

business servicesCapital items

12-7

Product Differentiation

• Product form• Features• Performance• Conformance• Durability• Reliability• Reparability

• Style• Design• Ordering ease• Delivery• Installation• Customer training• Customer consulting• Maintenance

12-8

Product Line Analysis

Convenience

ItemsMonitors, Printers

Core product

Basic computers

Staples

Faster CPUs

SpecialtiesDigital moviemaking

12-9

Line Stretching

Down-Market StretchDown-Market Stretch

Up-Market StretchUp-Market Stretch

Two-Way StretchTwo-Way Stretch

12-10

Line Filling

12-11

Product-Mix Pricing

• Product-line pricing (pricing points)• Optional-feature pricing (electric window controls)• Captive-product pricing (razor and the razor

blades)• Two-part pricing (fixed free plus a variable cost—

telephone minimum plus long distance)• By-product pricing (after mass of product

produced)• Product-bundling pricing (group of products at a

reduced price of products sold separately)

12-12

Product Line Pricing

12-13

Two-Part Pricing

12-14

Co-branding

12-15

Ingredient Branding

12-16

Packaging: The 5th P

All the activities of designing and producingthe container for a product.

12-17

Packaging has been influenced by…

Self-service(supermarkets)

Self-service(supermarkets)

Consumer affluence (willing to pay for convenience)

Consumer affluence (willing to pay for convenience)

Company/brand image(recognition of company or brand)

Company/brand image(recognition of company or brand)

Innovation opportunityInnovation opportunity

12-18

Innovations in Packaging

12-19

Functions of Labels

Identifies

Grades

Describes

Promotes

12-20

Warranties and Guarantees

Designing and Managing Services

12-22

IBM has moved from a goods business to a service business

12-23

Service

Any act of performance that oneparty can offer another that is

essentially intangible and does notresult in the ownership of anything;

its production may or may notbe tied to a physical product.

12-24

Service Sectors

Government(courts, hospitals, etc.)

Private

Nonprofit(museums, churches, etc.)

Manufacturing(accountants, legal staff, etc.)

Business(airlines, banks, etc.)

Retail(cashiers, clerks, etc)

12-25

General Motors’ OnStar Service

12-26

Categories of Service Mix

Pure tangible good—soap, saltPure tangible good—soap, salt

Good w/ accompanying services—cars and computers

Good w/ accompanying services—cars and computers

Hybrid--restaurantsHybrid--restaurants

Service w/ accompanying goods—airlines serve food and drinks

Service w/ accompanying goods—airlines serve food and drinks

Pure service—baby sittingPure service—baby sitting

12-27

Service Distinctions

• Equipment-based (vending machines) or people-based (window washing)

• Service processes (fast-food, buffet)

• Client’s presence required (Brain surgery) or not (car repair)

• Personal needs (personal needs) or business needs (business service)

• Objectives (profit or non-profit) and ownership (private or public)

12-28

Continuum of Evaluation for Different Types of Products

12-29

Distinctive Characteristics of Services

Intangibility

Inseparability

Variability

Perishability

12-30

Mayo Clinic’s Tangible Cues

12-31

Blue Man Group includes 33 different performers

12-32

How to Increase Quality Control

Invest in good hiring and training procedures

Monitor customer satisfaction

Standardize the service-performance process

12-33

Matching Demand and SupplyDemand side• Differential pricing

– Shift demand from peak to off-peak

• Nonpeak demand– cultivate

• Complementary services– Cocktail lounges

• Reservation systems– Manage demand levels

Supply side• Part-time employees

– Hired to serve peak demand

• Peak-time efficiency– Perform only essential tasks

during peak periods• Increased consumer

participation– Consumer fill out their own

medical records• Shared services

– Several hospitals can share medical-equipment purchases

• Facilities for future expansion– Buy surrounding land for

later development

12-34

Consumer-Friendly Services

12-35

Factors Leading to Customer Switching Behavior

• Pricing—high, increases, unfair, deceptive• Inconvenience—locations/hours• Core Service Failure—billing errors• Service Encounter Failures--unresponsive• Response to Service Failure—negative • Competition—found better service• Ethical Problems—cheat, unsafe• Involuntary Switching—provider closed

12-36

Gaps that Cause Unsuccessful Service Delivery

• Gap between consumer expectation and management perception

• Gap between management perception and service-quality specifications

• Gap between service-quality specifications and service delivery

• Gap between service delivery and external communications

• Gap between perceived service and expected service

12-37

Determinants of Service Quality

Reliability-dependably and accurately

Responsiveness-prompt service

Assurance-trust and confidence

Empathy-caring

Tangibles-appearance

12-38

Best Practices

• Strategic Concept—customer obsessed

• Top-Management Commitment—service quality

• High Standards-reliable• Self-Service Technologies• Monitoring Systems• Satisfying Customer

Complaints• Satisfying Employees

12-39

Customer Importance and Performance Ratings for an Auto Dealership

12-40

Developing Brand Strategies for Services

Choosing Brand Elements—logos, symbols

Establishing Image

Dimensions--associations

Devising Branding

Strategy—price and quality

12-41

Customer Worries

Failure frequency

(reliability)

Downtime

(dependability)

Out-of-pocket costs

(maintenance and repair)

12-42

Marketing Discussion

Colleges and universities can be classified as service organizations.How can you apply the marketing

principles developed in this chapterto your school? Do you have anyadvice as to how it could become

a better service marketer?