Marketing Management Dawn Iacobucci © 2010 South-Western, a part of Cengage Learning

Products: Good & Services Chapter 5

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, Volkswagen’s 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 firm’s 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 firm’s core strengths Pepsi acquired restaurants then divested to focus on core strengths

Product Mix Product mix Breadth Depth A company’s product lines 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 D

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 doesn’t want to run out and is afraid she will forget to purchase it later. Julia’s purchase is a _____ purchase. a. shopping b. specialty c. destination d. convenience D

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 B

Which of the following are pure goods? Study Question 4 Which of the following are pure goods? a. rock concerts b. sporting events c. DVDs d. consulting C

Study Question 5 _____ attributes are those that require some trial or consumption before evaluation. a. Search b. Credence c. Product d. Experience D

Video http://www.cengage.com/marketing/book_content/0324784430_iacobucci/videos/ch05.html D