Chapter 8 Product and Services Strategy. What is a Product? Anything that can be offered to a market for attention, acquisition, use or consumption. Satisfies.

Chapter 8

Product and Services Strategy

What is a Product?What is a Product?• Anything that can be offered to a market for

attention, acquisition, use or consumption.• Satisfies a want or a need.• Includes:

–Physical Products–Services–Persons–Places–Organizations–Ideas–Combinations of the above

What is a Service?

• A ServiceService is a form of product that consist of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything.

• Examples include:– Banking

– Hotels

– Tax Preparation

– Home Repair Services

Products, Services, and Experiences

Pure Tangible

Good

Pure Service

Soap

Tangible Good With

Accompanying Services

Auto With Accompanyi

ng Repair Services

Hybrid Offer

Restaurant

Service With

Accompanying Minor Goods

Airline Trip With

Accompanying Snacks

Doctor’s Exam

Product Levels

BrandName

Quality

Packaging

Styling

Features

Delivery& Credit

Installation

Warranty

After-Sale

Service

CoreBenefit

orService

CoreBenefit

orService

Actual ProductActual Product Core ProductCore Product

Augmented ProductAugmented Product

Fig 8-1

Unsought ProductsUnsought Products

New innovations Products consumers don’t want to think about these products Require much advertising &personal selling i.e Life insurance, blood donation

Product ClassificationsConsumer Products

Specialty ProductsSpecialty Products

Special purchase efforts High price Unique characteristics Brand identification Few purchase locations i.e Lamborghini, Rolex

Shopping ProductsShopping Products

Buy less frequently Higher price Fewer purchase locations Comparison shop i.e Clothing, cars, appliances

Convenience ProductsConvenience Products

Buy frequently & immediately Low priced Mass advertising Many purchase locations i.e Candy, newspapers

Suppliesand

Services

Suppliesand

Services

Materialsand

Parts

Materialsand

Parts

CapitalItems

CapitalItems

Product ClassificationsIndustrial Products

Business Services:

This advertisementfrom ServiceMasteroffers servicesranging fromcustodial, grounds ,technology, andenergy management.

Cl ic k or pre ss spa cebar to return.

Product ClassificationsOther Marketable Entities

• Activities undertaken to create, maintain, or change the attitudes and behavior toward the following:– Organizations - Profit (businesses) and nonprofit

(schools and churches).– Persons – Politicians, entertainers, sports figures,

doctors and lawyers.– Places - Business sites and tourism.– Ideas (social ideas marketing) – public health

campaigns, environmental campaigns, and others such as family planning, or human rights.

Place Marketing:Vacation spotsare the subject of most place marketing

Click or p ress space bar to re tu rn.

Individual Product Decisions (Fig. 8.2)

Product Attributes

Branding

Packaging

Labeling

Product Support Services

Product Quality Product Quality

Product FeaturesProduct Features

Product Style & Design

Product Style & Design

Ability of a Product to Perform Its Functions;

Includes Level & Consistency

Ability of a Product to Perform Its Functions;

Includes Level & Consistency

Help to Differentiate the Product from Those of the

Competition

Help to Differentiate the Product from Those of the

Competition

Process of Designing a Product’s Style & Function

Process of Designing a Product’s Style & Function

Developing a Product or Service Involves Defining the Benefits that it Will Offer Such

as:

Product Attributes

Design over per formance:

The iMac has less features than many computer s, but its unt radit ional design gr abbed it a number two spot on the best -sell ing computer list only a month af ter it s introduct ion.

Click to return.

Advantagesof

Brand Names

BrandEquity

Advantagesof

Brand Names

BrandEquity

Strong Brand Association

Strong Brand Association

AttributesAttributes

Quality & ValueQuality & ValueConsistencyConsistency

IdentificationIdentification

Perceived QualityPerceived QualityName AwarenessName Awareness

High Brand Loyalty

High Brand Loyalty

Branding

This Land-O-Lakes ad shows the depth of the brand.

Brand StrategyLine Extensions

Brand ExtensionsMultibrandsNew Brands

Brand StrategyLine Extensions

Brand ExtensionsMultibrandsNew Brands

Brand SponsorManufacturer’s Brand

Private BrandLicensed Brand

Co-branding

Brand SponsorManufacturer’s Brand

Private BrandLicensed Brand

Co-branding

Brand Name SelectionSelectionProtection

Brand Name SelectionSelectionProtection

Major Branding Decisions (Fig. 8.3)

Line ExtensionDannon Yogurt Flavors

MultibrandsSeiko Lasalle & Pulsar

Brand ExtensionBarbie Electronics

New BrandsWindex (by acquisition)B

rand

Nam

e

Existing New

Product Category

Existing

New

Four Brand Strategies (Fig. 8.4)

Good Brand Names:

Suggest product benefits

Become distinctive

Are free from poor foreignlanguage meanings

Suggest product qualities

Are easy to pronounce,recognize, remember

Packaging• Activity of designing and producing

the container or wrapper for a product.

• Packaging used to just contain and protect the product.

• Packing now has promotional value and marketers should:– Establish a packaging concept,– Develop specific elements of the

package,– Tie together elements to support the

positioning and marketing strategy.

This business-to-business ad offers to provideecologically sound packaging.

Besides its impact on theenvironment, what aspectsof packaging canhelp/hinder product sales?

How have these products become known by their packaging:•Cracker Jacks?•Capri Sun?

Labeling

• Printed information appearing on or with the package.

• Performs several functions:– Identifies product or brand

– Describes several things about the product

– Promotes the product through attractive graphics.

A classic labeling example .

What about thi s l abe l he lps to se ll the pr oduc t?

Click or press spacebar to r et urn.

Product - Support Services

Companies should design its support services to profitably meet the needs of target

customers and gain competitive advantage.

How?

Step 1. Survey customers to assess the value of current services and to obtain ideas for new services.Step 2. Assess costs of providing desired services.Step 3. Develop a package of services to delight customers and yield profits to the company.

Product Line LengthProduct Line LengthNumber of Items in the Product Line

Product Line LengthProduct Line LengthNumber of Items in the Product Line

Product Line DecisionsProduct Line Decisions

StretchingStretching

Lengthen beyond current range

FillingFilling

Lengthen within current range

Downward

Upward

WidthWidth - number of different

product lines

WidthWidth - number of different

product lines

LengthLength - total number of itemswithin the lines

LengthLength - total number of itemswithin the lines

Depth Depth - number of versions of each product

Depth Depth - number of versions of each product

Product Mix - Product Mix - all the product

lines offered

Product Mix - Product Mix - all the product

lines offered

Product Mix DecisionsProduct Mix Decisions

Co

nsi

sten

cy

IntangibilityIntangibility

InseparabilityInseparability

VariabilityVariability

PerishabilityPerishability

Can’t be seen, tasted, felt, heard, or smelled before purchase.

Can’t be separated from service providers.

Quality depends on who provides them and when, where and how.

Can’t be stored for later sale or use.

Nature and Characteristic of a Service

Marketing Strategies for Service Firms

• Managing Service Differentiation– Develop differentiated offer, delivery and image.

• Managing Service Quality– Empower front-line employees,– Become “Customer obsessed”,– Develop high service quality standards,– Watch service performance closely.

• Managing Service Productivity– Train current or new employees better,– Work on quality as well as quantity,– Utilize technology.

Service Differentiation

Offer

Image

Delivery

Service Firm Marketing Strategies

Additional Ps to service marketing:– People– Physical evidence– Process

Interactive marketing– Functional quality– Technical quality