1. Product and Services Strategy
Chapter 8
Product and Services Strategy

2. What is a Product?
A Product is anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need.
Includes:
Physical Objects
Services
Events
Persons
Places
Organizations
Ideas
Combinations of the above

3. What is a Service?
A Service 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

4. Products, Services, and Experiences
Service With Accompanying Minor Goods
Tangible Good With Accompanying Services
Pure Tangible Good
Hybrid Offer
Pure Service
Auto With Accompanying Repair Services
Airline Trip With Accompanying Snacks
Soap
Restaurant
Doctor’s Exam
The Product-Service Continuum

5. Levels of Product (Fig. 8.1)
Brand
Name
Quality
Level
Packaging
Design
Features
Delivery
& Credit
Installation
Warranty
After-
Sale
Service
Core
Benefit or
Actual Product
Core Product
Augmented Product

6. Product Classifications Consumer Products
Convenience Products
Buy frequently & immediately
Low priced
Mass advertising
Many purchase locations
i.e Candy, newspapers
Shopping Products
Buy less frequently
Higher price
Fewer purchase locations
Comparison shop
i.e Clothing, cars, appliances
Specialty Products
Special purchase efforts
High price
Unique characteristics
Brand identification
Few purchase locations
i.e Porsche, Rolex
Unsought Products
New innovations
Products consumers don’t
want to think about these products
Require much advertising &
personal selling
i.e Life insurance, blood donation

7. Product Classifications Other 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.

8. Individual Product Decisions (Fig. 8.2)
Product Attributes
Branding
Labeling
Packaging
Product Support Services

9. Product Attributes
Developing a Product or Service Involves Defining the Benefits that it Will Offer Such as:
Product Quality
Product Features
Product Style
& Design
Ability of a Product to Perform Its Functions; Includes Level & Consistency
Help to Differentiate the Product from Those of the Competition
Process of Designing a Product’s Style & Function

10. Branding Advantages of Brand Names Brand Equity Consistency
Quality & Value
Attributes
Identification
Advantages of
Brand Names
Brand
Equity
High Brand
Loyalty
Strong Brand
Association
Name Awareness
Perceived Quality

11. Major Branding Decisions (Fig. 8.3)
Brand Name Selection
Selection
Protection
Major Branding Decisions (Fig. 8.3)
Brand Sponsor
Manufacturer’s Brand
Private Brand
Licensed Brand
Co-branding
Brand Strategy
Line Extensions
Brand Extensions
Multibrands
New Brands

12. Four Brand Strategies (Fig. 8.4)
Line Extension
Multibrands
Brand Extension
New Brands
Brand Name
Existing
New
Product Category

13. Brand Strategy Line Extension Brand Extension Multibrands New Brands
Existing brand names extended to new forms, sizes, and flavors of an existing product category.
Brand Extension
Existing brand names extended to new or modified product categories.
Multibrands
New brand names introduced in the same product category.
New Brands
New brand names in new product categories.

14. 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.

15. 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.

16. 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.

17. Product Mix Decisions Consistency
Width - number of different product lines
Consistency
Length - total number of items
in product lines
Product Mix -
all the product
lines & items
offered
Depth - number of versions of each product

18. Discussion Connections
Using P&G’s Web site ( , its annual report, or other sources, develop a list of all the company’s product lines and individual products. What surprises you about this list of products?
Is P&G’s product mix consistent?
What overall strategy or logic appears to have guided the development of this product mix?

19. Nature and Characteristic of a Service
Intangibility
Inseparability
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.
Variability
Perishability

20. 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.

21. International Product and Services Marketing
Decide Which Products & Services to Introduce
Decide How Much to Standardize or Adapt
Packaging Presents New Challenges
International Product and Services Marketing
Service Marketers Face Special Challenges
Trend Toward Global Service Companies Will Continue

22. Review of Concept Connections
Define product and the major classifications of products and services.
Describe the roles of product and service branding, packaging, labeling, and product support services.
Explain the decisions companies make when developing product lines and mixes.
Identify the four characteristics that affect the marketing of a service.
Discuss the additional marketing considerations for services.

23. New-Product Development and Product Life-Cycle Strategies
Chapter 9
New-Product Development and Product Life-Cycle Strategies

24. New-Product Development Strategies
Strategies for Obtaining New Product Ideas
Acquired
Companies
Original
Products
Acquired
Patents
Product
Improvements
Acquired
Licenses
Product
Modifications
New
Brands

25. Causes of New Product Failures
One study estimated that as many as 80% of new consumer packaged products failed.
Only about 40% of new consumer products are around 5 years after introduction.
Why?
Overestimation of market size,
Product design problems,
Product incorrectly positioned, priced or advertised,
Product may have been pushed despite poor marketing research findings,
Costs of product development, or
Competitive actions

26. Improving New-Product Success
New product success depends on having a:
Unique superior product (one with higher quality, features, and value in use), &
Well-defined product concept (a defined target market, product requirements, and benefits).
To create successful new products, the company must:
understand its customers, markets and competitors, &
develop products that deliver superior value to customers.

27. New Product Development Process Sources of New product Ideas
Idea Generation is the Systematic Search for New Product Ideas Obtained Internally From Employees and Also From:
Customers
Competitors
Distributors
Suppliers

28. Product Life Cycle (Fig. 9.2)
Time
Product
Develop-
ment
Introduction
Profits
Sales
Growth
Maturity
Decline
Losses/
Investments ($)
Sales and
Profits ($)
Sales and Profits Over the Product’s Life From Inception to Demise

29. Applications of the Product Life Cycle
The PLC concept can describe a:
Product class which has the longest life cycles (i.e. gas-powered cars),
Product form which tend to have the standard PLC shape (i.e. minivans),
Brand which can change quickly because of changing competitive attaches and responses (i.e. Ford Taurus),
Style which is a basic and distinctive mode of expression,
Fashion which is a popular style in a given field,
Fad which is a fashion that enters quickly, is adopted quickly and declines fast.

30. Problems Using the PLC
The PLC Concept Can Help in Developing Good Marketing Strategies for Different Stages of the Product Life-Cycle, However Some Problems Can Arise:
Trouble identifying Which Stage of the PLC the Product Is In
Difficult to Forecast the Sales Level, the Length of Each Stage, and Shape of the PLC
Strategy is Both a Cause and a Result of the Product’s Life Cycle

31. Introduction Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Costs
Profits
Marketing Objectives
Product
Price
Low sales
High cost per customer
Negative or low
Create product awareness and trial
Offer a basic product
Usually is high; use cost-plus formula
Distribution
High distribution expenses
Advertising
Build product awareness among early adopters and dealers

32. Growth Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Costs
Profits
Marketing Objectives
Product
Price
Rapidly rising sales
Average cost per customer
Rising profits
Maximize market share
Offer new product features, extensions, service, and warranty
Price to penetrate market
Distribution
Increase number of distribution outlets
Advertising
Build awareness and interest in the mass market

33. Maturity Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Peak sales
Costs
Low cost per customer
Profits
High profits, then lower profits
Marketing Objectives
Maximize profits while defending market share
Product
Diversify brand and models
Price
Price to match or best competitors
Distribution
Build more intensive distribution
Advertising
Stress brand differences and benefits

34. Maturity Stage of the PLC
Modifiying the Market
Company tries to increase consumption of the current product.
Modifying the Product
Changing characteristics such as quality, features, or styles to attract new users.
Modifying the Marketing Mix
Company tries to improve sales by changing one or more marketing mix elements.

35. Decline Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Costs
Profits
Marketing Objectives
Product
Price
Declining sales
Low cost per customer
Declining profits
Reduce expenditure and maintain, reposition, harvest or drop the product
Phase out weak items
Cut price
Distribution
Go selective: phase out unprofitable outlets
Advertising
Reduce to level needed to retain
hard-core loyal customers

36. Review of Concept Connections
Explain how companies find and develop new-product ideas.
Describe the stages of the product life-cycle.
Describe how marketing strategies change during the product’s life-cycle.