What is a Product? A product is anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.
What is a Product? (continued) The term product can refer to –the full product profile (4Ps) –part of the customer- company exchange Company offers something (a flight), and the customer offers something in return (payment)
Exchange Find profitable intersection between –What customers want Utilize marketing research to find answers –value, quality, specific features and benefits, etc. –What the firm is well-suited offer
Relationship Marketing Successful exchanges can lead to loyalty and satisfaction –Marketers benefit from turning short- term exchanges into long-term customer relationships
Discussion Question Can you explain the statement, It costs six times more to get a new customer than to retain a current customer?
Goods Service Continuum
Tangibility Services are more intangible than goods –Pure goods are tangible socks –Pure service are intangible medical procedure –A mix has tangible and intangible components rental cars
Search, Experience, Credence Search Qualities –May be evaluated prior to purchase socks Experience Qualities –Require trial or consumption before evaluation restaurants Credence Qualities –Difficult to judge even post-consumption medical procedures
Search, Experience, Credence Goods are dominated by search and experience qualities Services are dominated by experience and credence qualities –Many services are mostly intangible; thus, marketers need to signal quality to customers through marketing actions
Perishability & Inseparability Services are simultaneously produced and consumed –Perishability: Services are more perishable than goods Marketers must try to even out demand –Inseparability: Services are more impacted by the interaction between the service provider and the customer than goods
Variability Services are more variable than goods –Due to changing needs, abilities, etc. of the service provider and customer Self-service and equipment can decrease variability –Try to reduce bad variability Errors in the system –Try to improve good variability Customization for customers unique needs
Goods & Services Differences between goods and services influence business decisions –Advertising, branding, pricing, logistics, etc. Thinking beyond traditional services… –Professional services –Purchase experiences –On-line shopping
Beyond Traditional Services In some purchases, customers purchase the whole experience –Museums, NikeTown, Volkswagens Transparent Factory Online purchases are a mix of goods and service –Understanding implications of this mix are important
Core vs. Value Added Core is essential to the product offering Value-added is supplemental –Can utilize value-added to differentiate
Satisfaction Core elements are expected by customers –If core elements are substandard, dissatisfaction can be triggered Marketers can affect level of dis/satisfaction through value-addeds –For example, luxurious rooms may lead to high satisfaction
Defining Core Elements Focus on the benefits and value being offered not just the product offerings Do not define elements too broadly
Dynamic Strategies Core businesses might change as the industry changes or as the firms competencies change –Ask… What business are we in? What benefits do we want to provide to the consumer? Who is our competition?
Dynamic Strategies Define competition broadly
Dynamic Strategies-Corporate Focus on a firms core strengths –Pepsi acquired restaurants then divested to focus on core strengths
Product Mix Product mix –A companys product lines Breadth –Number of product lines Depth –Number of products in a line
Discussion Questions Which company has the most depth? Which company has the most breadth?
Product Line Strategies
Discussion Question Which strategy below does your university current utilize? Explain.
Study Question 1 The three kinds of products are _____ shopping and specialty purchases. –a. promotion –b. simple –c. quality –d. convenience
Study Question 2 Julia is at her local grocery store for her weekly shopping and grabs a three-pack of toothpaste. There is still another tube left in her medicine cabinet but she doesnt want to run out and is afraid she will forget to purchase it later. Julias purchase is a _____ purchase. –a. shopping –b. specialty –c. destination –d. convenience
Study Question 3 With _____ purchases, you expect your customers to be somewhat more price sensitive. –a. quality –b. lower involvement –c. high involvement –d. brand
Study Question 4 Which of the following are pure goods? –a. rock concerts –b. sporting events –c. DVDs –d. consulting
Study Question 5 _____ attributes are those that require some trial or consumption before evaluation. –a. Search –b. Credence –c. Product –d. Experience
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