1. Principles of Marketing Chapter 7: Products, Services, & Brands to Build Customer Value

2. What is a “Product”; “Service”?
Text’s Definitions:
A product:
Anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need
Include more than just tangible objects, but also services, events, persons, places, organizations, etc.
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
Dr. James Carver – Auburn University

3. Dr. James Carver – Auburn University
What is a “Product”?*
Definition used for this class: (see Ch. 1 – Slide 9 for first use)
Products:
Either a tangible good or intangible service that is purchased in some way (e.g., cash, bartered, etc.) and is intended to satisfy a want or need
More commonly referred to within the discipline as a Market Offering
Services:
Are all services used to facilitate & support a market offering
Dr. James Carver – Auburn University

4. Dr. James Carver – Auburn University
A Market Offering
The “foundation” of profitable relationships...
“Physical Make-up” is a continuum from
Entirely tangible ~ toothpaste
To entirely intangible ~ haircut
Majority fall “in-between” ~ dinner at a restaurant
Increased commoditization at the “product level”
Fueled a shift towards a more “Service-Dominant Logic”* (Vargo and Lusch 2004; Lusch and Vargo 2006)
Viewed as “bundles of services” or “brand experiences”
What does Disney sell again? ~ Magic; Dreams; Anything is Possible
Makes “copying” & “me-too” much more difficult
Underscores “why” customers buy ~ a solution
Dr. James Carver – Auburn University

5. Dr. James Carver – Auburn University
A “View” of the Product
A “product” can be “seen” at three “levels”
Where each “level” adds more value
Core-customer value
The basic “service” or “solution” one is desiring
Recall the drill-bit example?
Actual product
In essence the “service delivery vehicle”*
The design, packaging, features, quality-level, brand name, etc.
Augmented product
Additional customer services and benefits
Warranties, user manuals, product support, web communities, etc.
“Completes” the overall experience after the purchase
Dr. James Carver – Auburn University

6. Product Classification
“Consumer” products:
Remember “products” can be an intangible service which is purchased*
Those products bought by final consumers for personal consumption
These are then further classified by how they’re purchased as either a:
“Convenience”, “shopping”, “specialty”, or “unsought” good.
Dr. James Carver – Auburn University

7. Dr. James Carver – Auburn University
Convenience Goods
Those products purchased frequently, and typically immediately, with little, to no, comparison shopping.
Typically…
Low priced.
Promoted through mass advertising and sales promotions.
“Intensively”* distributed within a geographic area
To highlight convenience
Common examples include candy, soda, newspapers, etc.
“Divertive” competition* most likely with these goods
Dr. James Carver – Auburn University

8. Dr. James Carver – Auburn University
Shopping Goods
Those products bought less frequently, and typically involve more planning and effort, with brand comparisons occurring on the basis of price, quality, style, etc.
Typically…
Higher priced.
Promoted in a more targeted effort by both the producer and seller
Value’s affected by where, who, and how sold
“Selectively”* distributed within a geographic area
Common examples are furniture, clothing, cars, appliances.
Dr. James Carver – Auburn University

9. Dr. James Carver – Auburn University
Specialty Goods
Those products that have strong brand preference and loyalty, involve special purchasing effort, with little, to no, comparison shopping.
Typically…
(Very) high priced.
Carefully targeted promotion effort by both producer and sellers
Tend to be “exclusively”* or very selectively distributed in a geographic area.
Examples include Ferrari and Rolex watches
Dr. James Carver – Auburn University

10. Dr. James Carver – Auburn University
Unsought Goods
Those products that have little product awareness or knowledge of the brand, and sometimes even negative interest in the class.
Nothing is really “typical”…
Pricing strategies vary.
Distribution strategies vary.
Require aggressive advertising and personal selling by both producer and resellers.
Common examples include life insurance, cemetery plots, blood donation.
Dr. James Carver – Auburn University

11. Dr. James Carver – Auburn University
Industrial Products
Those purchased for further processing (i.e., components or raw materials) or those used in conducting business.
Key distinction between consumer and industrial products is the purpose for which an item is bought (i.e., home or business use).
Consider 2 mowers bought by you; one for home & other for maintaining your personal business’ landscape – both are not consumer goods
Dr. James Carver – Auburn University

12. Types of Industrial Goods
Materials and parts:
Raw materials, manufactured materials, and parts.
Capital items:
Products that aid in buyer’s production or operations.
Supplies and services:
Operating supplies, maintenance, and repair items.
Dr. James Carver – Auburn University

13. Individual Product Decisions
They are a function of…
The product’s attributes
Remember again product can be a service
Branding
Packaging
Labeling
Product Support Services
“Services” as we will use the term within this class*
Dr. James Carver – Auburn University

14. Dr. James Carver – Auburn University
Product Attributes
Product quality dimensions:
Performance quality
“Conformance” quality
Product feature considerations:
Value to consumer
Cost to company
Product style and design:
Shapes the buyer’s usage experience
Dr. James Carver – Auburn University

15. Dr. James Carver – Auburn University
Branding
Definition:
Corresponds to the building and managing brands.
A brand’s purpose (and what it is):
Is a name, term, sign, symbol, design, or a combination of these, that…
Identifies the products or services of one seller or group of sellers, and…
Differentiates them from those of competitors.
Dr. James Carver – Auburn University

16. Dr. James Carver – Auburn University
Branding
Provides advantages for both…
Buyers, in that:
Helps identify products
Acts as a cue for product quality and consistency
Sellers, in that:
Basis for product’s “quality story”
Provides legal protection
Helps to segment markets
Dr. James Carver – Auburn University

17. Dr. James Carver – Auburn University
Packaging
Packaging:
Involves designing and producing the container or wrapper for a product.
Ideally, good packages should:
Help to market the brand, while…
Protecting the contents
Providing convenience and ease of use
Ensuring product and user/child safety, and
Addressing environmental concerns.
Dr. James Carver – Auburn University

18. Dr. James Carver – Auburn University
Labeling
Definition:
The printed information appearing on or with the package, including the product name.
Performs several functions:
Helps to identify the product or brand
Describes several things about the product (information)
Promotes the product through attractive graphics
Important to meet with regulations established and enforced by the government
Dr. James Carver – Auburn University

19. Product Support Services
Our term “Services”
Critical to monitor on routine basis:
Talk with customers to assess the value and quality of current services and to obtain ideas for new services
Fix problems and put together a package of new services that delights the customers and while still yielding profits for the company
New technologies can often enhance many support service offerings with cheaper costs incurred
Dr. James Carver – Auburn University

20. Product Line Decisions
A Product Line
A group of products that are closely related because of: (1 of 3 reasons)*
Same end-run use or function
Most common
Same end-run customer
Example: Little Misses department
Same price level
Example: “Dollar” merchandise
Dr. James Carver – Auburn University

21. Product Line “Mix” Decisions
Product mix:
The set of all of the product lines and items that a particular seller offers for sale.
Product mix dimensions include:
Width
Number of different product lines the company carries
Breadth (or Assortment)*
Number of different brands within a line*
Depth
Number of different SKUs (stock-keeping-units) within a brand*
Consistency
How closely related are one’s various lines
Dr. James Carver – Auburn University

22. Uniqueness of an Intangible Product (Service)
Four unique characteristics:
Intangibility
Cannot be seen, tasted, felt, heard, or smelled before purchase
Inseparability
Cannot be separated from their providers
Variability
Quality depends on who provides them, as well as when, where, and how they are delivered
Perishability
Cannot be stored for later sale or use
Simultaneously produced and consumed*
Dr. James Carver – Auburn University

23. Building Strong Brands
Brand equity:
Is the differential effect that knowing the brand name has on customer response to the product or its marketing.
Is a valuable asset that offers many competitive advantages, and
Builds strong and profitable customer relationships that result in loyal customers (i.e., customer equity).
Dr. James Carver – Auburn University

24. Major Brand Strategy Decisions
Brands are assets that must be carefully developed and managed via:
Brand positioning
Brand name selection
Brand sponsorship
Brand development
Dr. James Carver – Auburn University

25. Dr. James Carver – Auburn University
Brand Positioning
Marketers can position brands clearly in customers’ minds at any of three levels:
Product attributes
Product benefits
Beliefs and values
A Brand’s Mission (Statement)
The vision of what the brand must be and do when positioning the brand.
Dr. James Carver – Auburn University

26. Dr. James Carver – Auburn University
Brand Name Selection
Desirable qualities for a brand name:
It should:
Suggest the product’s benefits and qualities
Be easy to pronounce, recognize, and remember
Be distinctive
Be extendable
Translate easily into foreign languages, and
Be capable of registration and legal protection.
Dr. James Carver – Auburn University

27. Dr. James Carver – Auburn University
Brand Sponsorship
Brand sponsorship options include:
National brands (e.g., Sony)
Also called manufacturer brands
Store brands (e.g., Archer Farms)
Also called private labels
Licensed brands
Name or character licensing
Co-branded goods (e.g., credit cards)
Can creates broader appeal and brand equity
Dr. James Carver – Auburn University

28. Dr. James Carver – Auburn University
Brand Development
Options include:
Line extension:
Extending an existing brand name to new forms, colors, sizes, ingredients, or flavors within a product category.
Brand extension:
Extending an existing brand name to new product categories.
Multibranding:
Offers a way to establish different features and appeal to different customer segments, lock up more reseller shelf space, and capture a larger market share.
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 a new product category.
Dr. James Carver – Auburn University