1. Product and Services Strategy
Chapter 8
Product and Services Strategy

2. Road Map: Previewing the Concepts
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.

3. 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

4. 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

5. 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

6. Levels of Product (Fig. 8-1)

7. Product Classifications: Consumer
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
Require much advertising &
personal selling
i.e Life insurance, blood donation

8. Product Classifications: Industrial
Materials and Parts
Raw materials, manufactured
materials, and parts
Capital Items
Industrial products that aid in
buyer’s production or operations
Supplies and Services
Operating supplies, repair/
maintenance items

9. 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, new residents, and tourism.
Ideas (social ideas marketing) – Public health campaigns, environmental campaigns, and others such as family planning, or human rights.

10. Individual Product Decisions (Fig. 8-2)

11. 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
Differentiates the Product from Competitors’ Products
Process of Designing a Product’s Style & Usefulness

12. Branding Advantages to Branding Brand Equity Higher brand loyalty
Buyers:
Identification
Quality and value
Sellers
Tells a story
Provides legal protection
Helps segments markets
Brand Equity
Higher brand loyalty
Name awareness
Perceived quality
Strong brand associations
Patents, trademarks, channel relationships

13. Brands and Brand Symbols (p. 292)
Powerful brands such as these have brand equity:
Coca-Cola brand - $69 billion
IBM brand - $53 billion
Offers defense against fierce price competition.

14. Major Branding Decisions (Fig. 8-3)

15. Four Brand Strategies (Fig. 8-4)
Product Category
Line Extension
Dannon Yogurt Flavors
Brand Extension
Barbie Electronics
Existing
New
Existing
Multibrands
Seiko Lasalle & Pulsar
New Brands
Windex (by acquisition)
Brand Name
New

16. 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.

17. Interactive Student Assignments
Consider the following thought questions, formulate an answer, pair with the student on your right, share your thoughts with one another, and respond to questions from your instructor.
We can find Coke in six or more varieties; Tide in Ultra, Liquid, and Unscented versions; and Crest Gel with sparkles for kids.
List some of the issues these brand extensions raise for the manufacturers, retailers, and consumers.
Brand extensions have become a very common way to launch a new product. For the manufacturer extending a successful brand has many advantages. It allows a new product to capitalize on the success of an established brand, as in the cases of Coca-Cola, Crest, and Tide. Both consumers and the trade are aware of the new product's heritage, so the manufacturer does not need to spend nearly as much to create brand-name awareness. This strategy also improves the chance of obtaining retail distribution for the new brand. If the brand fails, however, it can reflect poorly on other products carrying the same brand name.
Brand extensions are less attractive for retailers. While this strategy does improve the odds of a new brand succeeding, it may make shelf usage less efficient. If the new extension takes some of its sales from the older brand, sales per square foot may fall. Overall management of the number of items to stock becomes more difficult.
Brand extensions offer interesting trade-offs for consumers. An established brand name on a new product offers certain assurances of quality, but also expectations that may or may not be met. New Coke failed both as a new product and as a line extension because it did not meet consumers' expectations of what Coke should be. Unscented Tide, for example, is closer to what consumers expected of Tide. However, the liquid has succeeded because it offers the same basic benefits of Tide--excellent cleaning and a fresh scent-in a liquid form that many now prefer. Crest has also succeeded because the basic benefit of the brand-reliable cavity prevention-remains the same regardless of its color or dispenser.

18. Packaging
Designing and producing the container or wrapper for a product.
Steps in developing a good package:
Packaging concept,
Develop specific elements of the package,
Elements must support product’s position and marketing strategy.

19. 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

20. Product Support Services
Companies use product support services as a major tool in gaining 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.

21. Product Line Decisions
Product Line Length
Number of Items in the Product Line
Stretching
Lengthen beyond current range
Filling
Lengthen within current range
Both Directions
Downward
Upward

22. Procter & Gamble's Product Mix
Product Mix Decisions
Procter & Gamble's Product Mix
Baby Care
Beauty Care
Fabric & Home
Food &
Health Care
Care
Beverage
Width – number of different product lines
Length – total number of items the company carries within product lines
Depth – number of versions offered of each product in line
Six Toothpastes
in Line
Crest Multicare
Crest Cavity
Protection
Crest Tartar
Protection

23. Nature and Characteristic of a Service (Fig. 8-5)

24. Discussion Question
Illustrate how a movie theater can deal with the intangibility, inseparability, variability, and perishability of the services it provides.
Intangibility --There is not much that a theater can do to make a movie tangible, though a few movies are promoted with posters or other souvenir objects that viewers can keep. The theater itself is tangible, and it should be made attractive, comfortable, and clean. Movies must start on time, and the snack bar should be run efficiently with fresh, tasty food and good service. Most agree that the variety of food offered and service has improved in the last few years.
Inseparability--When people see a bad movie, they blame the movie, not the theater. When the theater is too cold or the popcorn stale, though, they may decide not to patronize it in the future, even if that means driving farther to another theater or missing a movie they might otherwise watch. Therefore, theater managers must recognize that the surroundings and the employees are important parts of the movie-going experience, and ensure that the experience is as enjoyable as possible.
Variability--Employee training is important for maintaining service quality. Theaters must offer the same service whether there are three people or three hundred in the audience.
Perishability--Movie time is highly perishable. To smooth out demand, many theaters charge different prices at different times of day or have bargain prices on particular days of the week. They also adjust employee schedules or duties to have the appropriate number of workers for different levels of demand. Theaters could be more creative in this area than they have been. For example, selling movie passes good for unlimited admission to nonblockbuster movies at off-peak times would be a way of increasing income at no real marginal cost, because the expense to the theater of showing a movie is the same whether a seat is empty or taken.

25. The Service-Profit Chain (Fig. 8-6)

26. Marketing Strategies for Service Firms
Managing Service Differentiation
Develop differentiated offer, delivery, and image.
Managing Service Quality
Empower front-line employees,
Become “Customer obsessed,”
Set 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
Well-designed Web site

27. 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

28. Rest Stop: Reviewing the Concepts
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.