Product and Services Strategy Chapter 8 Product and Services Strategy

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

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

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

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

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 Lamborghini, 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

Product Classifications Industrial Products Materials and Parts Capital Items Supplies and Services

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.

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

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

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

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

Four Brand Strategies (Fig. 8.4) Line Extension Dannon Yogurt Flavors Multibrands Seiko Lasalle & Pulsar Brand Extension Barbie Electronics New Brands Windex (by acquisition) Brand Name Existing New Product Category

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.

Discussion Connections List as many specific examples as you can find of each of the following: brand licensing, co-branding, line extensions, and brand extensions. Can you find a single brand that has done all of these? Pick and describe a familiar brand that has been widely extended. What are the benefits and dangers for this specific brand?

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.

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.

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.

Product Line Decisions Product Line Length Number of Items in the Product Line Stretching Lengthen beyond current range Filling Lengthen within current range Two-Way Downward Upward

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

Discussion Connections Using P&G’s Web site (www.pg.com) , 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?

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

The Service-Profit Chain Internal Service Quality Healthy Service Profits and Growth Satisfied and Loyal Customers Satisfied and Productive Service Employees Greater Service Value

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.

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

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.