Chapter 6: Creating Offerings

by Jeff Tanner and Mary Anne Raymondby Jeff Tanner and Mary Anne Raymond

Principles of Marketing

Chapter 6Chapter 6Creating OfferingsCreating Offerings

©2010 Flat World Knowledge, Inc.


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Learning Objectives1.Distinguish between the three major components of an offering: product, price, and service.2.Explain, from both a product-dominant and a service-dominant approach, the mix of components that comprise different types of offerings.3.Distinguish between product platforms and product lines.

What Composes an Offering?What Composes an Offering?

• Products can be either a good, which is tangible, or a service, which is intangible.

• Many products have attributes of a good and a service.

• Products have features which are a characteristic of the offering.

• Offerings have a price that is paid for the product benefits.

• Total cost of ownership (TCO) is the amount paid to own, use, and dispose of a product.


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Products, Cost of OwnershipProducts, Cost of Ownership

• Service is an action that provides a buyer with an intangible benefit.– A haircut is an example of a service.

• Many tangible products have intangible service components attached to them.– A meal in a restaurant has both tangible

and intangible features.


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ServiceService


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The Product-Dominant Approach to The Product-Dominant Approach to MarketingMarketing


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In addition to the offering itself, marketers should consider what services it takes for the customer to acquire their offerings.

The Service-Dominant Approach to The Service-Dominant Approach to MarketingMarketing

• Technology platform is the core technology

on which a product is built.• Some new offerings take a technology

platform and rebundle its benefits.• Technology platforms are not limited to

tangible products.• A product line is a group of related

offerings.


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Product Levels and Product LinesProduct Levels and Product Lines

• Line depth—the number of functionally related products in a firm’s product line.

• Line extension—when a new similar product is added to a line.

• Line breadth—distinct, product lines of a company.

• Product mix—the entire assortment of products that a firm offers.


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Product Lines and MixesProduct Lines and Mixes

• Companies market offerings composed of a combination of tangible and intangible characteristics for certain prices.

• During the Industrial Revolution, firms focused primarily on products.

• The service-dominant perspective to marketing integrates three different dimensions of an offering.

• An offering is based on a technology platform.• A product line is a group of similar offerings.• A product line can be deep and/or broad.• The entire assortment of products that a company

offers is called the product mix.


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Key TakeawaysKey Takeaways

Types of Consumer OfferingsTypes of Consumer Offerings

Learning Objectives1.Define the various types of offerings

marketed to individual consumers.2.Explain why a single offering might be

marketed differently to different types of consumers.


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Consumer Offerings Fall Consumer Offerings Fall into Four General Categoriesinto Four General Categories

• Convenience offerings, shopping offerings, specialty offerings, and unsought offerings are the major types of consumer offerings.

• Convenience offerings often include life’s necessities (bread, milk, fuel, etc.), for which there is little difference across brands.

• Shopping goods do vary, and many consumers develop strong preferences for some brands versus others.

• Specialty goods are even more exclusive. Unsought goods are a challenge for marketers because customers do not want to have to shop for them until they need them.


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Learning Objectives1.Define the various types of offerings

marketed to businesses.2.Identify some of the differences with

regard to how the various types of business offerings are marketed.


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Types of Business-to-Business (B2B) Types of Business-to-Business (B2B) OfferingsOfferings

• Capital equipment—equipment purchased and used for more than one year.

• Raw materials—are materials firms offer other firms so they can make a product or provide a service.

• OEM or components—raw materials, manufactured materials, and component parts used to make a final product.

• MRO or maintenance, repair, and operating—Janitorial supplies or hardware used to repair equipment.

• Facilitating— includes products and services that support a company’s operations but are not part of the final product it sells such as supplies.


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Primary Categories of B2B Primary Categories of B2B OfferingsOfferings

• Business buyers purchase various types of offerings to make their own offerings.

• Types of products they use are raw materials, manufactured materials, and component parts and assemblies.

• MRO (maintenance, repair, and operations) offerings are those that keep a company’s depreciable assets in working order.

• Facilitating offerings are products and services a company purchases to support its operations but are not part of the firm’s final product.


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Learning Objectives1.Understand the branding decisions firms

make when they’re developing new products.

2.Identify the various levels of packaging for new products.


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Branding, Labeling, and PackagingBranding, Labeling, and Packaging

• Branding—the set of activities designed to create a brand and position it in the minds of consumers.

• Brand name—the spoken part of a brand’s identity.

• Brand mark—the symbol associated with a brand.

• Cannibalization—occurs when a firm’s new offering eats into the sales of one of its older offerings.


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BrandingBranding

• Packaging has to fulfill a number of important functions, including:– communicating the brand and its benefits– protecting the product from damage and

contamination during shipment, as well as damage and tampering once it’s in retail outlets

– preventing leakage of the contents– presenting government-required warning and

information labels


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PackagingPackaging

• Primary packaging holds a single retail unit of a product.

• Secondary packaging holds a single wholesale unit of a product.

• Tertiary packaging is packaging designed specifically for shipping and efficiently handling large quantities.


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Packaging UnitsPackaging Units

• A brand is a name, picture, design, symbol, or combination of them that is used by a seller to identify its offerings and differentiate them from competitors’ offerings.

• Branding is the set of activities designed to create a brand and position it relative to competing brands in the minds of consumers.

• A brand extension involves utilizing an existing brand name or brand mark for a new product or category (line) of products.

• Cannibalization occurs when a company’s new offering eats into the sales of one of its older offerings.

• Packaging protects products from damage, contamination, leakage, and tampering.

• Packaging is also used to communicate the brand and its benefits, product warnings, and proper use.


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Learning Objectives1.Understand the people involved in

creating and managing offerings.2.Recognize the differences in

organizing product marketing for consumers versus B2B companies.


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Managing the OfferingManaging the Offering

• Brand manager—the person responsible for all business decisions regarding one brand.

• Product manager—someone with business responsibility for a particular product or product line.

• Category manager—has responsibility for business decisions within a broad grouping of offerings.

• Market manager—is responsible for business decisions within a market.


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Product Management PositionsProduct Management Positions

• Brand managers decide what products are to be marketed and how.

• Category managers are found in consumer markets.

• Market managers can be found in both B2C and B2B markets.

• In some companies, the vice president of marketing or other executive is responsible for the brands.


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Chapter 6: Creating Offerings

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Chapter 6: Creating Offerings