1. Topic Seven: creating marketing offers(1)
Product Strategy

2. Objectives Product Characteristics
Building & Managing the Product Mix & Product Lines
Brand Decisions
Packaging & Labeling
Product life cycle
Developing new product
Service

3. Components of the Market Offering
Value-based prices
Services mix
and quality
Product features
Attractiveness of
the market offering

4. Five Product Levels Potential product Augmented product
Expected product
Basic product
Core benefit

5. Consumer-Goods Classification
Convenience Products
Shopping Products
Buy frequently & immediately
Low priced
Many purchase locations
Includes:
Staple goods
Impulse goods
Emergency goods
Buy less frequently
Gather product information
Fewer purchase locations
Compare for:
Suitability & Quality
Price & Style
Specialty Products
Unsought Products
Special purchase efforts
Unique characteristics
Brand identification
Few purchase locations
New innovations
Products consumers don’t want to think about.
Require much advertising &
personal selling

6. Product Mix Width - number of different product lines
Consistency
Length - total number of items
within the lines
Product Mix -
all the product
lines offered
Depth - number of versions of each product

7. Product-Line Length Line Stretching Downmarket Upmarket Two-way
Line Filling
Line Modernization
Line Featuring & Line Pruning

8. Two-Way Product-Line Stretch: Marriott Hotels
Quality
Economy
Standard
Good
Superior
Marriott
Marquis
(Top
executives)
High
Marriott
(Middle
managers)
Above
average
Price
Average
Courtyard
(Salespeople)
Fairfield Inn
(Vacationers)
Low

9. What is a Brand?
Attributes
Benefits
Values
Culture
User
Personality

10. Satisfied & Switching Cost (customer will change)
Brand Equity
Devoted
to Brand
Values the Brand
(brand as friend)
Satisfied & Switching Cost
Satisfied Customer
(no reason to change)
No Brand Loyalty
(customer will change)

11. An Overview of Branding Decisions
Repositioning
Decision
Brand-
Sponsor
Decision
Brand-
Name
Decision
Brand-
Strategy
Decision
Branding
Decision
Brand
No brand
Manu-
facturer
brand
Distribu-
tor
(private)
Licensed
Individual
brand
names
Blanket
family
name
Separate
Company-
individual
Line
extension
Brand
Multi-
brands
New
Cobrands
Reposi-
tioning No
reposi-

12. Brand Strategies Brand Extension New Brand Name Product Category Line
Existing
Multibrands
Brands

13. Good Brand Names: Suggest Product Benefits Distinctive Lack Poor
Foreign
Language
Meanings
Qualities
Easy to:
Pronounce
Recognize
Remember

14. Why Package Crucial as a Marketing Tool
Self-service
Consumer affluence
Company & brand image
Opportunity for innovation

15. Labels
Identify
Describe
Promote

16. Sales & Profit Life Cycles
Time
Sales & profits ($)
Introduction
Growth
Maturity
Decline

17. Four Introductory Marketing Strategies
Price
Low
High
Promotion
Rapid-
skimming
strategy
Slow-
skimming
strategy
Rapid-
penetration
strategy
Slow-
penetration
strategy

18. Maturity Stage Market Modification Product Modification
Marketing-Mix Modification

19. Decline Stage Decrease investment
Resolve uncertainties - stable investment
Selective niches
Harvesting
Divesting

20. Market Evolution
Emergence
Growth
Maturity
Decline

21. Why New Products Fail “Over Championing” Overestimated Demand
Poor Design
Poor Marketing Execution
High Development Costs
Strong Competitive Reaction

22. Challenges in NPD Idea Shortage Fragmented Markets
Social & Governmental Constraints
Cost
Capital Shortage
Need for Speed
Shorter Product Life Cycles

23. New Product Development Process
Marketing
Strategy
Development
Business
Analysis
Product
Development
Concept
Development
and Testing
Market
Testing
Idea
Screening
Commercialization
Idea
Generation

24. Probability of Success
commercialization
given technical
completion X
Probability of
economic
success given
commercialization X
Overall
probability
of success =
Probability
of technical
completion

25. Concept Development & Testing
1. Develop Product Ideas into
Alternative Product Concepts
Concept Development & Testing
2. Concept Testing - Test the Product
Concepts with Groups of Target Customers
3. Choose the Best One

26. Product & Brand Positioning
(a) Product-positioning
map
(breakfast market)
b) Brand-positioning
map
(instant breakfast market)
Expensive
Slow
Inexpensive
Quick
High price/oz.
Low in calories
Low price/oz.
High in calories
Brand C
Brand B
Brand A
Bacon
and
eggs
Pancakes
Instant
breakfast
Cold
cereal
Hot

27. Consumer-Goods Market Testing
Sales-
Wave
Research
Test offering trail to
a sample of
consumers in
successive
periods.
Simulated
Test Market
Test in a simulated
shopping environment
to a sample of
consumers.
Standard
Full marketing campaign
in a small number of
representative cities.
Controlled
A few stores that have
agreed to carry new
products for a fee.

28. Commercialization
Whom
Product
Price
Place
Promotion
When
Where

29. Time of adoption innovations
Adopter Categorization of the Basis of Relative Time of Adoption of Innovations
2 1/2%
Innovators
13 1/2%
Early
adopters
34%
Early
majority
34%
Late
majority
16%
Laggards
Time of adoption innovations

30. Characteristics of the Innovation Rate of Adoption
Relative advantage
Compatibility
Complexity
Divisibility
Communicability

31. Categories of Service Mix
Pure
Service
Tangible
Good w/
Services
Major
w/ Goods
Hybrid

32. Service characteristics
Intangibility
Services cannot
be seen, tasted,
felt, heard, or
smelled before
purchase
Inseparability
Services cannot
be separated
from their
providers
Services
Variability
Quality of
services depends
on who provides
them and when,
where, and how
Perishability
Services cannot
be stored for
later sale or use

33. Overcoming service challenges
Intangibility
Use cues to
make it tangible
Inseparability
Increase
productivity of
providers
Services
Variability
Standardize
service
production
& delivery
Perishability
Match supply
and demand

34. Three Types of Marketing in Service Industries
Company
Customers
External
marketing
Internal
marketing
Cleaning/
maintenance
services
Financial/
banking
services
Restaurant
industry
Employees
Interactive
marketing

35. Service Differentiation
Offer
Delivery
Image

36. Service-Quality Model
Expected service
Management perceptions
of consumer expectations
Marketer
Consumer
Gap 1
Service delivery (including
pre- and post-contacts)
Gap 3
Translation of perceptions
to service-quality specifications
Gap 2
Gap 5
Perceived service
External
communi-
cations to
consumers
Gap 4
Personal needs
Past experience
Word-of-mouth
communications

37. Determinants of Service Quality
Reliability
Responsiveness
Assurance
Empathy
Tangibles

38. Service Excellence Strategic Concept Top-Management Commitment
High Standards
Monitoring Systems
Satisfying Customer Complaints
Satisfying Both Employees & Customers
Managing Productivity

39. Importance-Performance Analysis
A. Concentrate here
B. Keep up the good work
D. Possible overkill
C. Low priority
Extremely important
Slightly important
Excellent performance
Fair performance 1 2 9 11 13 12 14 3 4 5 6 7 8 10
# = Attributes

40. Service marketing mix
4P’s
People
Process
Physical evidence