1. 8-1 Chapter 8 Product and Services Strategy PRINCIPLES OF MARKETING

2. 8-2 What is a Product? Anything that can be offered to a market for attention, acquisition, use or consumption. Satisfies a want or a need. Includes: –Physical Products –Services –Persons –Places –Organizations –Ideas –Combinations of the above

3. 8-3 What Is a Service? Activities, benefits, or satisfactions offered to a market that are essentially intangible and do not result in the ownership of anything. –Examples:, hotel, airline, retail, tax preparation, home repairs. Pure Tangible Good Pure Service Sugar RestaurantLawyer

4. 8-4 Levels of Product Brand Name Quality Level Packaging Design Features Delivery& Credit Installation Warranty After- Sale Service Core Benefit or Service Core Benefit or Service Actual Product Actual Product Core Product Core Product Augmented Product Augmented Product

5. 8-5 Product Classifications Consumer Products Convenience Goods –Bought frequently and immediately –Low price –Many purchase locations –Examples: candy, soda, newspapers Shopping Goods –Bought less frequently –High price –Fewer purchase locations –Comparison shop –Examples: cars, furniture, appliances Specialty Products –Special purchase efforts –High price –Unique characteristics –Brand importance –Few purchase locations –Example: Rolex watches, Ferrari cars Unsought Products –New innovations –Consumers may not want to purchase or think about them –Examples: blood donation,, insurance

6. 8-6 Product Classifications Industrial Products Supplies and Services (maintenance items) Supplies and Services (maintenance items) Materials and Parts(raw material and manufactured material) Materials and Parts(raw material and manufactured material) Capital Items(that aid in buyer Production or operation equipments) Capital Items(that aid in buyer Production or operation equipments)

7. 8-7 Individual Product Decisions Product Attributes Branding Packaging Labeling Product Support Services

8. 8-8 Product Attribute Decisions Defines the benefit that it will offer these benefits are communicated by product attributes Quality(freedom from defects) Performance Quality has two dimensions level and consistency Level mean matching the benchmark Conformance quality Product Features Features are competitive tool that differentiate the company product from competitor Consumers generally value benefits, not features Style and design Another way to add costumer valve is through distinctive product style and design.

9. 8-9 Brands Advantages of Brand Names Brand Equity Loyalty Attributes Quality & Value Consistency Identification Awareness Credibility Association A brand is a name, term, sign, symbol, or design, or a combination of these that identifies the maker or seller of a product or service.

10. 8-10 Packaging Container, wrapper or “external face” for a product. Good packages –market the brand effectively –protect the internal elements –protect the external elements –don’t become “stale” over time –ensure product safety –are responsive to local environmental and social concerns Labeling Printed information appearing on or with the package. Performs several functions: Identifies or reinforces identification of product/brand Provides “valuable” information about product contents or ingredients Co-promotes the product along with packaging

11. 8-11 Product - Support Services Companies design its support services to profitably meet the needs of target customers. Example HP total care A group of related products manufactured by a single company. For example, a cosmetic company's makeup product line might include foundation, concealer, powder, blush, eyeliner, eyeshadow, mascara and lipstick products that are all closely related. Product Line

12. 8-12 Product Line Length Number of Items in the Product Line Product Line influence by objective and resources Up selling example series model Cross selling example new product HP computer and printers Product Line Length Number of Items in the Product Line Product Line influence by objective and resources Up selling example series model Cross selling example new product HP computer and printers Product Line Decisions Line Stretching Lengthen beyond current range Line Filling Product line filling is the addition of further items to the current line of products that a company is dealing in. Eg. Maruti Suzuki had launched Alto in the year 2000 which was a product between two other models of Maruti- Maruti 800 and Maruti Zen. Basically, it was an effort on part of the company to fill the gap that existed in the market segment by introducing this new model ALTO. Downward Upward Both ways

13. 8-13 Width Width - number of different product lines Length Length - total number of items within the lines Length Length - total number of items within the lines Depth Depth - number of versions of each product Product Mix - all the product lines offered Product Mix - all the product lines offered Product Mix Decisions Consistency Colgate has four product line, oral care, personal care, home care and pet nutrition. personal care line includes body wash, liquid soap, after shave size, color, flavors, and other distinguishing characteristics Colgate Max fresh, Colgate kid, Colgate sparkling white

14. 8-14 Characteristics of Services

15. 8-15 Satisfied and Productive Service Employees (satisfied loyal hardworking) Satisfied and Productive Service Employees (satisfied loyal hardworking) Greater Service Value Greater Service Value Internal Service Quality ( employees selection, training, quality work) Internal Service Quality ( employees selection, training, quality work) Healthy Service Profits and Growth Healthy Service Profits and Growth Satisfied and Loyal Customers Satisfied and Loyal Customers Marketing Strategies for Service Firms The service profit chain

16. 8-16 Marketing Strategies for Service Firms Managing Service DifferentiationManaging Service Differentiation –Develop offer that differentiate you like no wait, car rent, banking services and high speed internet in a hotel. Managing Service QualityManaging Service Quality –Empower employees –Become “Customer obsessed” –Develop high service quality standards –Watch service performance closely Managing Service ProductivityManaging Service Productivity –Train current or new employees –Increase quantity by decreasing quality –Utilize technology

17. 8-17 Branding Strategy: Building Strong Brands Brand represents the consumer’s perceptions and feelings about a product and its performance. It is the company’s promise to deliver a specific set of features, benefits, services, and experiences consistently to the buyers Brand Loyalty –Definition: Willingness to re-purchase due to favorable brand impressions Brand Equity –Definition: The positive effect that knowing the brand name has on consumer response to the product. –Psychological Value –Financial Value

18. 8-18 Building Strong Brands

19. 8-19 Brand Positioning Brands can be positioned at three levels: –Product features/ attributes »Least desirable »Easily copied –Brand benefits –Beliefs and values »Hits consumers on a deeper level, tapping “universal” emotions.

20. 8-20 Brand Name Selection Good Brand Names: 1.Straightforwardly suggest the product’s benefits and qualities. 2.Are easy to spell, pronounce, recognize, and remember. 3.Are distinctive and memorable. 4.Are extendable into different product lines (i.e. facilitate brand extensions). 5.Translate easily into foreign languages. 6.Provide the maximum legal protection from infringement

21. 8-21 Brand Sponsorship Manufacturer’s brands –Also called “National Brands” output under own brand name Private-label brands –Also called “Store” or “Distributor” Brands manufacturer give to the reseller who give them the name  Licensing(some companies license name created by other manufacturer or well know celebrity or character from popular movie)  Co-branding(when two establish brand name make a common product)

22. 8-22 Brand Development

23. 8-23 Line Extension Line extension refers to the expansion of an existing product line. For instance, a soft drink manufacturer might introduce a "Diet" or "Cherry" variety to its cola line. n short, line extension adds variety to its existing product for the sake of reaching a more diverse customer base and enticing existing customers with new options. Brand Extension Brand Extension is a marketing strategy according to which, a well known brand uses the same brand name to enter into a totally unrelated product category. It is done primarily to leverage on the existing brand equity. Some marketers argue that since building a brand is costly affair, once you have built a brand you should leverage its value by using the same brand name to other new categories as well. Multibranding –appeal to different buying motives and segments »Example: Toyota sells Corolla, Camry, Scion, Yarris New brands: –waning power of existing brands –products in new product category –Can develop (Black & Decker develops De Walt) or buy (i.e. Wendy’s buys Baja Fresh)