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Chapter 7 Product, Services, and Branding Strategy
Professor Marshall Queens College
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What is a Product? 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, or some combination thereof.
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What is a Service? A form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. Examples: banking, hotel, airline, retail, tax preparation, consulting, home repairs.
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Three levels of a Product
Augmented Product Delivery After- and sale credit service Installation Warranty Actual Product Brand Features Name Quality Design level Packaging Core Benefit
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Consumer Products Products and services bought by final consumers for personal consumption. Classified based on how consumers buy them. Includes: Convenience Products Shopping Products Specialty Products Unsought Products
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Convenience Products Purchased frequently & immediately Low priced
Mass advertising Many purchase locations Examples: candy, soda, newspapers
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Shopping Products Bought less frequently Higher price
Fewer purchase locations Comparison shop Examples: furniture, clothing, cars, appliances
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Specialty Products Special purchase efforts High price
Unique characteristics Brand identification Few purchase locations Examples: Lamborghini, Rolex Watch
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Unsought Products New innovations
Products consumers do not want to think about Require much advertising and personal selling Examples: life insurance, cemetery plots, blood donation
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Industrial Products Those purchased for further processing or for use in conducting business. If a consumer buys a lawnmower for use at home, it is a consumer product. If the same consumer buys a lawn mower for use at his landscaping business, it is an industrial product.
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Industrial Products Materials and Parts: Capital Items:
Raw materials, manufactured materials and parts Capital Items: Products that aid in buyer’s production or operations Supplies and Services: Operating supplies, repair, and maintenance items
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Other Market Offerings
Organizations: Profit (businesses) and nonprofit (schools and churches). Designed to create or change attitudes Persons: Politicians, entertainers, sports figures, doctors, and lawyers. When you start your career, you will be marketing yourself! Places: create, maintain, or change attitudes or behavior toward particular places (e.g., tourism). I Love New York Virginia is for Lovers It’s like a Whole Other Country - Texas Ideas (social marketing): Public health campaigns, environmental campaigns, family planning, or human rights. Truth Campaign – anti smoking Anti drug Conservation The Ad Council – leader in PSAs (public service announcements)
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Individual Product Decisions
Product support services Product attributes Branding Packaging Labeling
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Product and Service Attributes
Quality includes durability, reliability, precision, ease of operation and repair Total Quality Management (TQM) is an approach in which all of the company’s people are involved in constantly improving the quality of products, services, and business processes. This is an entire field (quality assurance). Features Can be offered with all sorts of features; different models. Style & Design Style is just the appearance of the product Design goes to the heart of the product Example: iPod comes in different storage capacities (features). The style is small, sleek. The design is stylish, portable, unique, fashionable.
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Product Line Decisions
A product line is a group of products that are closely related. They might function in a similar manner, or might be sold to the same groups, or might fall in the same price ranges. Product Line Length # of items in the product line Too short if we can increase profit by adding items Too long if we can increase profit by removing items Stretching Downward – add a low end product Upward – add a high end product Both directions – example: Marriott Filling – add items in between high and low
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Product Mix Decisions Product Mix (or product assortment): all of the product lines and items that a particular seller offers for sale. Width: the number of different product lines the company carries. Maui Jim = 6 Depth: the number of versions offered of each product in the line. Maui Jim = average of 5 Consistency: how closely related the various lines are. Maui Jim = very consistent
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Branding Creating, maintaining, protecting, and enhancing products and services. 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.
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Branding Advantages to buyers: Advantages to sellers:
Product identification Product quality Advantages to sellers: Basis for product’s quality story Provides legal protection Helps to segment markets
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Brand Equity The positive differential effect that knowing the brand name has on customer response to the product or service. How much more are you willing to pay for the brand of your choice? Provides: More brand awareness and loyalty Basis for strong, profitable customer relationships Brand Valuation – the process of estimating total financial value of a brand One study found that customers are willing to pay 20% more for the brand of their choice relative to its nearest competitor. Tide & Heinz lovers will pay a 100% premium. Loyal Coke drinkers will pay a 50% premium.
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Major Brand Strategy Decisions
Brand name selections Brand positioning Brand sponsorship Brand development
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Brand Positioning Can position brands at any of three levels:
Product attributes – Dove soap ¼ cleansing cream Competitors can easily copy attributes Product benefits – Dove soap benefit of softer skin Volvo (safety), Nike (performance), FedEx (overnight), Lexus (quality) Beliefs and values (Emotion) - Dove soap softer skin will make you more attractive
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Brand Name Selection Desirable qualities for a brand name include:
It should suggest product’s benefits and qualities OFF!, Craftsman, Beautyrest It should be easy to pronounce, recognize, and remember Tide, Crest, Puffs It should be distinctive Kodak It should be extendable Amazon.com (started as bookseller but expanded to other products) It should translate easily into foreign languages It should be capable of registration and legal protection See Video Case: Accenture
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Brand Sponsorship Manufacturer’s brands
Private brands (store brands) – Sears created Kenmore & Craftsman Licensed brands – character names: Scooby-Doo, Sesame Street, Donald Duck Co-branding – Mattel teamed with Coca-Cola to create Soda Fountain Sweetheart Barbie
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Brand Development Line Extension: introduction of additional items in a given product category under the same brand name (e.g., new flavors, forms, colors, ingredients, or package sizes). Brand Extension: using a successful brand name to launch a new or modified product in a new category. Involves some risk: Heinz pet food – bad idea Multibranding: (introduce additional brands in the same product category) offers a way to establish different features and appeal to different buying motives. New Brands: developed based on belief that the power of its existing brand is waning and a new brand name is needed. Also used for products in new product category.
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Packaging Designing and producing the container or wrapper for a product. Usually involves the primary container, secondary disposable package, and shipping container Packaging is an important marketing tool: attract attention and describe the product Creating a package involves: Packaging concept Package elements Product safety Environmental concerns
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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 Legal concerns No deceptive labels Unit pricing (price per unit), open dating (shelf life), nutritional labeling
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Product Support Services
Assess the value of current services and obtain ideas for new services. Assess the cost of providing the services. Put together a package of services that delights the customers and yields profits for the company. Examples: Warranties, customer service, extended service plans, etc.
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Nature and Characteristics of a Service
Intangibility Cannot be seen, felt, tasted, or smelled Inseparability Cannot be separated from their providers Services Variability Quality depends on who provides the services and when, where and how it is done Perishability Services cannot be stored for later use
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Major Service Marketing Tasks
Managing Service Differentiation: Develop a differentiated offer, delivery, and image. Managing Service Quality: Be customer obsessed, set high service quality standards, have good service recovery, empower front-line employees. Managing Service Productivity: Train current employees or hire new ones, increase quantity & sacrifice quality, harness technology. Example: Airlines offer in-flight movies and frequent flyer programs Cellular phone companies: ‘Can you hear me now?’, Rollover minutes
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International Product and Services Marketing
Decide which products and services to introduce Decide how much to standardize or adapt Packaging presents new challenges (translation) Service marketers face special challenges Trend toward global service companies will continue Example Deutsche Bank (Germany, England, Frank, Asia, America)
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Video Case Accenture (14 minutes)
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Thoughts What is the core service that Accenture offers? What are the supplemental services? The core is probably consulting services or advice. Supplemental services would include speed of service, quality, cost, interactions with Accenture’s personnel, hard copies of reports and databases generated, etc. What are the tangibles and intangibles that a consulting firm delivers? Tangibles are fewer (e.g., the report, the people, the offices) than intangibles (the quality of the advice, the vision). What makes branding difficult for a professional service? Why is it critical to the firm’s success? Branding is difficult for any service, mostly because of the lack of heterogeneity (your experience of Accenture varies with every phone call, with different consultants, and even with the same consultant at different points in a project). Branding is important because it signals credibility and expertise.
