Chapter 8 Creating Offerings.pptx

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Principles of Marketing

Chapter 8- Creating Offerings

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Why do we consume?

• Looking for broad-strokes here:–We have a need and we want to satisfy them

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Offerings

• What products and services are designed to deliver value to the consumer.– Can be to fulfill needs, satisfy wants, or both

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Offerings

• Product– Tangible good people can buy, sell, and own• The actual singing bowl, mat, and mallet

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Offerings

• Feature– Characteristic of the offering• What particular pitch (D5 in this case), the materials

used, or the location of it’s creation

• Benefit–When a feature satisfies a need or a want• The benefit I will receive from the singing bowl is both

tangible (relaxation) and intangible (satisfying my bohemian nature). More on this in a second

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Offerings

• Price– Amount paid to receive and offering’s benefits

• Total cost of ownership (TCO)– Total amount someone pays to own, use, and

eventually dispose of a product• TCO for a car is the price of the car plus gas, oil,

insurance, fluids, tires, repairs, etc.

– As a consumer, you should always investigate all costs before purchase• TCO for Birkenstocks versus knockoffs

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Offerings

• Service– An action that provides a buyer with an intangible

benefit (you can’t “hold” what you are paying for)• Massage, haircut, gym membership, etc.• This also includes what you receive from a product (like

the bohemian thing from my singing bowl)

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Product-dominant Approach to Marketing

• In previous eras of marketing (industrial revolution), the focus was on the product and the product alone. – The way to be successful was to create better and

cheaper products• Sometimes, this mean’t making a product someone

needed

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Service-Dominant Approach to Marketing

• The current approach in marketing– Think of it as the added service component to a

sale and how consumers are integrated in the process

– Integrates the service, product, and price into an offering• For a high-tech good (high involvement) would you

rather have a higher price with better service, or a lower price with no service?

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Product levels and lines

• Technology platform- the core technology which an offering is built– All* mats are sustainably made in the same

process

• Sometimes the technology is designed for something else– Heart medication/ED drug, poster/post-it notes

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Product level and lines

• Product lines– Line depth- a line is either broad (Naked juice,

where there are dozens of flavor and type combinations) or narrow (Manduka mats, where there are few variations)

– Line extension- new but similar product is added to the product line (Manduka LiveON)

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Product level and lines

• Product lines– Line breadth (sometimes called width) how many

different product lines a company has.• Manduka has mats, towels, and props

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Product Mix

• The entire assortment of products that a firm offers

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Line Depth

Line Width

Product Mix

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Consumer Offerings

• Generally fall into four categories:– Convenience offering– Shopping offering– Specialty offering– Unsought offering

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Convenience Offering

• Products and services consumers generally don’t want to put too much effort into shopping for since they see too little difference between brands– Bread

• This offering is very similar to an impulse purchase– Only difference is the lack of planning in an

impulse purchase

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Shopping Offering

• An offering that a consumer will make an effort to compare and select a brand.

• There will be a large amount of effort expelled on making a shopping purchase–With this type of purchase, if the store is out of the

product, you will go to a different store to buy the one you set-out to buy

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Specialty Offering

• Highly differentiated offerings with highly differentiated marketing by the firms

• Generally much higher margin• Generally purchased less frequently than

convenience offerings

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Unsought Offerings

• Offering that consumers don’t want to shop for until they are forced to (funeral service, towing services, etc.)

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Types of B2B Offerings

• Categorized by how they are used.• Generally fall into the following categories:– Capital equipment offerings– Raw materials offerings– Original equipment manufacturer offering–Maintenance, repair, and operations offering– Facilitating offering

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Capital Equipment Offerings

• Equipment purchased and used for more than one year and depreciated over its useful life (machinery)

• Offerings like this generally are directly marketed since those people making the buying decisions are interdepartmental and can be complex.

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Raw Materials Offerings

• Materials that firms offer other firms so that they can make a product of provide a service

• The chairs you are sitting in are made of wood, metal, cloth, and filler. Each of these components at one time was a raw material–When the materials, such as the iron, is purchased

and turned into a finished good that isnt a stand-alone product, such as a thin sheet of iron, it is called manufactured material.

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Raw Materials Offerings

• Since raw materials are generally commodities, they are sold based on price and availability. – *caveat: while some materials are a commodity,

they can be different levels of a commodity making them somewhat distinct (leather, wood, etc.)

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Original Equipment Manufacturing

• Manufacturer or assembler of a final product• OEM components are parts like a hard drive

that are put into the final product (computer)

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Maintenance, repair, and operations

• Products and services used to keep a company functioning (janitorial supplies, repair hardware, etc.)

• Some products can be purchased at a retailer, but some have to be purchased through a specialty dealer –Most stores will have below a one inch hex bolt.

Over that, bolts will need to be purchased from a specialty location

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Facilitating Offerings

• Products and services that support a company’s operations but are not part of the final product it sells–Marketing research, transportation services, office

supplies, computer supplies, etc.– Though these are not part of a final product, they

are certainly important

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Branding, Labeling, and Packaging

• Brand- name, picture, design, or symbol used by a seller to identify its offerings and to differentiate from competitors

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Branding, Labeling, and Packaging

• Branding- set of activities* designed to create a brand and position in the minds of consumers.– *Everything is involved with branding

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Branding, Labeling, and Packaging

• Would this type of advertisement work for Apple?

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Branding, Labeling, and Packaging

• Brand name– Spoken part of a brand’s identity• Google, Manduka, Mont Blanc,

• Brand Mark- – symbol of the brand (can be words, symbol, or both)

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Branding, Labeling, and Packaging

• Brand extension– Utilizing an existing brand name or brand mark for

a new category• Virgin-> Virgin Mobile

– Beneficial when wanting to add credibility to a new line• Only works if there is a good name behind the brand

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Branding, Labeling, and Packaging

• Cannibalization– New offering eating into the sales of the older

offerings• Toyota creating Scion

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Packaging Decision

• Package can be a part of the brand itself

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Packaging Decisions

• Functions:– Communicate the brand and benefits– Protecting the product from damage and

contamination– Prevent leakage of contents– Present governmentally mandated warnings and

information

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Packaging Decisions

• Primary packaging– Single unit* for retail sale

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Packaging Decisions

• Secondary packaging– Holds a single wholesale unit of a product– No warnings or information labels, but still

branded

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Packaging Decisions

• Tertiary packaging– Designed specifically for shipping and efficient

handling of large quantities

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Managing the Offering

• Depending on the size of the offering, there could be multiple positions in place for management of an offering

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Managing the Offering

• Brand manager– Responsible for all business decisions regarding

offerings within one brand• Can be major undertaking or simple depending on the

offering

– Mostly found in consumer products

• Product manager– For non-consumer products (since some branding

decisions aren’t necessary in a B2B setting)• Think: Copy machines or business communications

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Managing the Offering

• Category manager– At a business level, responsible for business

decisions within a broad grouping of offerings• P&G J&J

– Each brand has its own manager that reports to the category manager

– At the retail level, a category manager is responsible for multiple brands

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Managing the Offering

• Market manager– Responsible for business decisions within a market

(region, market segment, distribution channel)• Regional manager for McCormick spices

– In a B2B setting, the market manager will most likely be a segment of professionals (doctors offices, etc.)

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Managing the Offering

• In this B2B setting, all of the customers in a particular industry are called a vertical market and are generally overseen by a vertical market manager– This is beneficial since: most buying needs and

processes are going to be similar in an industry and– channels of communication are going to be the

same within an industry (most doctors offices buy products through a rep)

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For Next Time

• We will have a guest presentation, please be attentive and respectful. I am a vengeful god when irritated.