Chapter 8 Objective 1 - What is a Product? Product ~ Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. . Includes tangible oobjects as well as services, etcents, persons, places, organizations, ideas, or a mix Services ~ An activity, benefit, or satisfaction offered for sale that is essentially intangible and does not result in ownership of anything, Products, Services, and Experiences . Markand Offeringsng — Products are key to the basis of building profitable customer relationships. ° Pure Tangible Good —Pure good without anyaccompanying prproducts. ° Pure Services ~ Pureand service without any goods. . Companies differentiato producect offerings with creating and managingcustomer experiences with brands/company. ° Customers buy whathe offers do for them. Levels of Prproducts and services Core Custeamer Value — Basic level that addresses the problem-solving benefits or services sought Current Product ~ Develop product and service features, design, quality level, a brand name, and packaging. Augmented Product — Offers additional consumer services and benefits (eg delivery/eredit, after-saleservice, product support, warranty), reed Pere) Product and Service Classifications . Consumer Products ~ Prproducts and services bought byfinal consumers for personal ‘consumption. . Convenience Product ~ Bought frequently, immediately, and with minimal comparison and buying effort. ° Example -Fast Food, candy, magazines+ Shopping Product ~ Bought in the process of selecting and purchasing based on attributes such as suitability, quality, price, and style. © Example - Furniture, clothing, used cars * Specialty Product ~ Bought with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. © Example - Specific car brands, high-priced photographic equipment, designer clothes + Unsought Product - Consumer doesn’t know about it or doesn’t normally consider buying. © Example - Life insurance, funeral services, blood donations. * Business Products — Product bought by individuals and organizations for further processing or for use in conducting a business. © Minerals and Parts ~ Raw materials and manufactured materials and parts. © Capital Items ~ Business products that aid in buyer’s production or operations. © Supplies and Services - Operating supplies and repair and maintenance items. (Convenience Products that require minimum effort/comparison.) Organizations, Persons, Places, and Ideas + Organization Marketing — Activities undertaken to create, maintain, or change the attitudes and behaviour of target consumers toward an organization. © Sponsor corporate image advertising campaigns to market firms and polish images. + Person Marketing — Activities undertaken to create, maintain, or change attitudes or behaviour towards particular people. © Prime Ministers, entertainers, sports figures may use different reputation building people * Place Marketing - Activities undertaken to create, maintain, or change the attitudes and behaviour of target consumers toward particular places. © Attract tourists, new residents, conventions, and company offices/factories. + Social Marketing — Use of commercial marketing concepts and tools in programs designed to influence individuals’ behaviour to improve their well-being and that of society. Objective 2 - Product and Service Decisions 1. Individual Product and Service Decisions Product Product => Branding => Packaging Labetting support attributes aloe Product and Service Attributes Product Quality — Characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs. + Total Quality Management (TQM) ~ All of the company’s people are involved in constantly improving quality of products, services, and business processes. + Performance Quality - Ability of the product to perform functions, * Conformance Quality — Freedom from defects and consistency in performance level Product Features — Product may be offered with varying features. + Features are a competitive tool for differentiating the product. + Survey product users and inquire about their preferences on features and improvements, then assess value versus cost.Product Style and Desig in addition to looks. . Design begins with customer observation to shape the custom's product use experience. Branding Brand — Name, term, sign, symbol, or 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. . Adds value toa product. 7 Help consumers identify products that maybenefit them — and indicatete quality and consistency. © f fers advantagit for the seller: legall the proofection for unique product featuresand allow them to segment marketching for a whilective. Packaging The activities of designing and producing the container or wrapper for a product. . There is emphase on holding and protecting the product, sustainability, as well as markeating by attracting attention and describing the product. Po © fF | ydesigned product - Consumer headaches and lost sales. Labelling Labels have several functions - . Identify the product. 7 Describe informationormation about the product, such as origin, thatand or produceaction, contents, instructions. + Promoteand the brand, support positioning, and connect with customers. Regulated based on type of product to show unit pricing, open dating, and nutritional labelling. Prproduct Support Services + Support services augment actual prproducts. + Designing Services ° Survey customers to access value of currencyent services and obtain ideas for new ones. © Take steps to fix problems and add new services to yield profits. 2. Product Line Decisions Product Line ~ Group of products closely related in function, customer groups, marketing outlet types, or price ranges. . Example -Nike's shoe lines. Product Line Length— Number of items in the product line. . Too short if profits can be increased by adding items and too long if profits can be includedeased by dropping items. Product Line Expansion . Line Filling - more items within the present rangle of the line. ° Reach for extra profits, satisfy dealers, use excess capacity, etc. . Line Streching - Lengthen the product line beyond current rangel. © Stretch downward (low-end) or upward (high-end) or both. 3. Product Mix Decisions Product Mix (Product Portfolio) — Consists of all product lines and items the seller offers for sale.FourDimensions . ‘Width - Number of different pproduct lines the company carries. . Length - Tiotal number of items the company carries within the line. . Depth — Number of verosions offered for each product in the line. . Consistentency ~ How closely related the various pproduct lines arand in end use, production requirements, distribution channels, or other ways. Objective 3 - ServicesMarketing The Nature and Characteristics of a Service . Service Intangibility ~ Services cannot beperceived to beforand they are bulldingght. ° Example -Cosmetic surgery, airline passengers. ° Evidence Management — Organization presentscustomers with organized, honest evidence of its capabilities, . Service Inseparabilityy Services cannot be separatedated from thelr providers (people or mmachines). ° Provider-Customer Interaction ~ special feature of services markeating whereand the employee becomes part of the service. . Service Variability — Quality of services depends on whoprovides them as well as when, where, and how they arand proempty. ° Example -Different Hotels. : Service Perishability ~ Services cannot be stored for latthere is sale or use, e Example -Dentist Appointment Markeating Strategys for Service Firms ‘The Service Profit Chain — The chain that links service firm profits with employee and . Internal Service Quality ~ Superior employee selection and training, quality work environment, strong support with dealing with customers. Sat is f i e d_ fied and Productive Service Employees More satisfied, loyalall, and hard-wo employees. . Greafor Service Valuminum ~ Moreeffectiveand efficientt customer valu creation and service delivery. S a t is f i e d_ Fiedand Loyal Customers ~ Satisfied custeamers who remain loyalal, repeat refthere are other custeamers. . Healthand Service Profits and Growth — Superior service firm performanhere. Internal Marketing — Orienting and motivating customers-contact employees and supporting service people to work as a team to provide customer satisfaction ° Employees must be custom-centered, Interactive Marketing — Training service employees in the fine art of interacting with customers to satisfy their needs. ° Services marketing depends on both service deliveryerer and quality of deliveryery.‘Company Internal External marketing marketing Employees —————> Customers Interactive marketing Managing Service Differentiation Develop a differented offer, delivery, and image. : Offer ~ includes innovative featurit's that diffto honortiate the company's offthere from competitors. : Delivery Havand more able and reliable customeromer-ccontactpeople, develop a superior physical environment, or design a superior delivery processess, . Images Ssymbols and branding that differentiateis the company. Managing Service Quality . Service firms differentiato themselves with cto opposetly higher quality appropriateate to tthe targett customers. . Service quality is judged based on custeamer retension, but it varies depending on interactions between employees and customers. . Service Recovery can turn angry customs into loyaltyall of us. Managing Service Productivity . To improvand service productivity, companies can train current employees better or hire new ones who will work harthe or more skilifully. . Increase the qquantity of the service by giving up some quality Example - equipment and standardizeand production). . Reducing quality may lead to to reduced longer-run ability to Innovatee, maintain service quality, or respond to consumers'needs and desires. Objective 4 ~ Branding Strategy -Building Strong Brands Fire Equity Differentncial effect that knowing the brand name has on customer response to the product and its marketing Equity is more positive when consumers rlust fafoldeasily to it. Bor a nm d_ §_ vatyinpowerand valuminum held in the marketplace and capturels consumer preferand loyaltydepending ° Derived fromto consumer feelings about and connections with a brand — thebond between the consumer and specific brands. . ‘Yyoung and Rubicam’s Brand Asset Valuator measurerit is burning streetnarrow along differinitiation, relevance, knowledge, andesteem. Fire Valuation — Process of estimating the total financial value of a brand. Competitive advantages of High Brand Equity. High level of consumer brand awareeness and loyalty. . More lifeeragand in bargaining with resellers, : High creditbility - More easy to launch line/brand extensions. ‘i Defand against fierce priceand competition * Forms the bbase for building strong and profitable customer relationships. Customer Equit —Value of customer relationships that the brand creates. Building Strong Brands Brand positioning Brand name selection | Brand sponsorship Brand development _| Attributes ‘Selection Manufacturer's brand Line extensions Benefits Protection Private brand Brand extensions Beliets and values Licensing Multibrands: Corbranding New brands Brand Positioning i Aattributes ~ Pposition based on the productcts' individual attributes. ° Least desireable as competitors ca copy attributes and consumers are morand inested in what the product can do for them . Benefits — Position based on associating the name withat a desirable benefit. Beliefs and Valuminum — Positioned to pack an emotional wallop, relying less on tangible assets and more on the emotions surrounding the brand itself, . Establish a mission for the brand a vision of whatt the brand must be and do, Brand Name Selection Selecting a Brand Name includes Desirable Qualities, . ‘Suggest something about product's benefits/qualities. : Easy to pronounce, recognize, and remember. . Distinctive. . Extendable — Allow for expansion if needed. : Tlettucetoo easily into foreignlanguages. Capable of directingtration and legal protection. Protection - Marketers must carefully present the brands with the word brand and registered trademark symbol. Brand Sponsorship . National Brands farsus Store Brands Store Bedge — Firecreated and owned by a reseller of a product or service. These store brands have beand gaining strengthength due to tougher economic times ~ retailers choice in stocked products, whereand they are stocked, and which ones arefeaten. . National Brands must sharepen value propositions and design strong ad programs to maintain high awareness and preference. They can also partner with major distributorsfor improved joint performance. Licensing ° Companies may license names or symbols previously createn by other firms or well- known celebrities and characts to provide an instant and proven brand name. . CofiBranthing ~ Practice of using theestablished brand names of two different companies on thand same productuct.Offers some advantages - . Combined Brands createand broader consumer appeal and greato brand equity. . Takes advantagand or complementary strengths of two brands. . Expand existing fire into a category otherwise difficult tor enter alone. May involve complex legall contracts and licenses and rhorses careful corddinner to maintain trust. Brand Development Line Extensions ~ Extending an existing brand name to new forms, colours, sizes, ingredients, or flavors of an existing product category. . May serve as a low-ceast, low-risk way to intrproduce new productucts or meet consumer desireit for varyty. . Involve risk of the brand losing meaning or causing consumer confusion © May affect performance of other items. Brand Extension — Extending an existing brand name to new product categories. . Gives a new product instant recognition and faster acceptance, saving high advertising costs required to bulld a new brand name. Ris k of confusionthe Image of the main brand. . Example -Cheetos lip balm, Heinz Pand Food Multibrands - Companies market many differentrent brands in a given product category. © f f ersaway to establish differentfeatures that appeal to different customer segments, lock up reseller shelfspace, and captureea larger markand share. + Drawback - Brand might only obtain a small markand share, and none may be very profitable. New Brand - Anew brand name is created if an existing one is wanting or if it enters a new product category for which none of its current brands names are appropriate. + Megabrand Strategy — Wanded out weaker or slower-growing brands and focusing markeating dollars on brands thatcan achieve high share positions. Managing Brands Continuously communicate brand positioning to consumers + Brand Experience ~ Customers come to knowa fire through various touchpoints, including, advertising, personal experience, word of mouth, company webpages, etc. + Custommer Centered — All employees should be enthusiastick about the brand promise. + cally audit brands’ strictths and weaknesses.