Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-1

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-2 McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 8 Product and Service Concepts

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-3 Objectives Understanding the difference between goods and services Differentiate between consumer and business products, and discuss the different types of each Recognize that marketers need to appreciate the perspective of the consumer Define and discuss the importance of product quality, product design, branding, packaging, and customer service Explain how the different product components need to be integrated to meet the needs of customers

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-4 Products Goods Serivces Product  Product is defined as an idea, a physical entity, a service, or any combination of the three that is an element of exchange to satisfy individual or business objectives. Anything that provides benefits. Goods  Goods are defined as physical products such as cars, soft drinks other concrete entities. Services  Services are normally defined as nonphysical products such as a haircut, a football game, or a doctor’s diagnosis.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-5 Types of Products Goods: Physical products with form and substance Services: Non-physical products usually involving performance Consumer Products: Those used by consumers for their own use and satisfaction. Business Products: Those used in the running of a business or in the manufacture of products for resale.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-6 The Goods/Services Continuum

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-7 Characteristics and Strategies for Services Tangible: goods are tangible but services are not. Perishability: goods are stored and can be perished while services are not stored. Separability: goods are produced, stored, and sold while services are typically produced and consumed at the same time. Variability: goods can be produced in abundance with similar qualities while services are always variable.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-8 Characteristics and Strategies for Services Service CharacteristicService Strategy IntangibleAssociate service with something tangible PerishableManage demand to utilize supply InseparableCapitalize advantages of person providing service VariableStandardize service delivery as much as possible

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 1-9 Consumer and Business Products

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Types of Consumer Products Convenience Products Shopping Products Specialty Products

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Types of Business Products Capital Products Production Products Operational Products

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Product Components Product Components Product Features Quality Design Branding Packaging Service Features Purchase services Usage services

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Product Components: QUALITY Quality represents how well a product does what it is supposed to do. Increasing quality increases sales. Personal perception of quality affect purchases. Quality is defined differently for different types of products e.g. prestige related products consumer consider utility along with glamour and distinction.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Design includes styling, aesthetics, and function of a product. Focus on product design is to improve performance and reduce production cost. Another current focus is to add more features in the product and make it user friendly. Product Components: DESIGN

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Distinguishing your products from those of your competitors is branding. Brand: a name, term, sign, symbol, design, or combination that a firm uses to identify its products and differentiate them from those of competitors Brand name: the element of a brand that can be vocalized, such IBM, Tide, Apple etc. Brand mark: the element of a brand that cannot be vocalized, such MGM lion, the Buick symbol, or the Nike Swoosh. Trademark: a brand or part of a brand that is registered with the Patent and Trademark office. Product Components: BRANDING

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Importance of Branding Branding is important for both consumers and marketers. Branding facilitates buying for consumer. Branding provides psychological benefits to consumers. Branding differentiates products from those of competitors for marketers.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Building Brands

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Types of Brands Generics (Products typically not branded) Manufacturer Brand (National brand or regional brand) Distributor Brand (Store brand, private brand, or private label)

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved The World’s 10 Most Valuable Brands 1 Coca-Cola Microsoft IBM GE Intel Nokia Disney McDonald’s Marlboro Mercedes21.0 Rank Brand2002 Brand Value ($billions)

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Keys to Choosing A Brand Name Is easy to pronounce, recognize, and remember. Is distinctive in some way. Can be translated into other languages.

Irwin/McGraw-Hill Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved Product Components: Packaging and Customer Service Packaging is the covering and wrapping of the product. It includes a label, a printed description of the product on the package. Customer service is the assistance provided to help a customer with the purchase or use of a product.