Product and Services Strategy
8-1
8-1
PRINCIPLES OF MARKETING
Chapter
Chapter 88
Product and Services
Strategy
What
What is
is aa Product?
Product?
8-2
8-2
•• Anything
Anything that
that can
can be
be offered
offered to
to aa market
market
for
for attention,
attention, acquisition,
acquisition, use
use or
or
consumption.
consumption.
•• Satisfies
Satisfies aa want
want or
or aa need.
need.
•• Includes:
Includes:
––Physical
Physical Products
Products
––Services
Services
––Persons
Persons
––Places
Places
––Organizations
Organizations
––Ideas
Ideas
––Combinations
Combinations of
of the
the above
above
Core
Core
Product
Product
Actual
Actual
Product
Product
Warranty
Design
AfterSale
Service
Features
Core
Core
Benefit
Benefit
or
or
Service
Service
Quality
Level
Delivery
& Credit
Brand
Name
Packaging
Installation
Augmented
Augmented
Product
Product
Levels
Levels of
of Product
Product
8-3
8-3
Product
Product Classifications
Classifications
Consumer
Consumer Products
Products
Convenience Products
>
>
>
>
Buy frequently & immediately
Low priced
Many purchase locations
Includes:
• Staple goods
• Impulse goods
• Emergency goods
Specialty Products
>
>
>
>
Special purchase efforts
Unique characteristics
Brand identification
Few purchase locations
Shopping Products
> Buy less frequently
> Gather product
information
> Fewer purchase locations
> Compare for:
• Suitability & Quality
• Price & Style
Unsought Products
> New innovations
> Products consumers don’t
want to think about
> Require much advertising &
personal selling
8-4
8-4
Product
Product Classifications
Classifications
Industrial
Industrial Products
Products
8-5
8-5
Materials
Materials
and
and
Parts
Parts
Capital
Capital
Items
Items
Supplies
Supplies
and
and
Services
Services
Product
Product Classifications
Classifications
Other
Other Marketable
Marketable Entities
Entities
•• Marketed
Marketed to
to create,
create, maintain,
maintain, or
or change
change the
the
attitudes
attitudes or
or behavior
behavior toward
toward the
the following:
following:
•• Organizations
Organizations -- Profit
Profit (businesses)
(businesses) and
and
nonprofit
nonprofit (schools
(schools and
and
churches).
churches).
•• Person
Person -- Political
Political and
and sports
sports figures,
figures,
entertainers,
entertainers, doctors
doctors and
and lawyers.
lawyers.
•• Place
Place -- Business
Business sites
sites and
and tourism.
tourism.
•• Social
Social -- Reduce
Reduce smoking,
smoking, clean
clean air,
air,
conservation.
conservation.
8-6
8-6
Product
Product Support
Support Services
Services
Labeling
Labeling
Packaging
Packaging
Branding
Branding
Product
Product Attributes
Attributes
Individual
Individual Product
Product Decisions
Decisions
8-7
8-7
Product
Product Attribute
Attribute
Decisions
Decisions
Quality
Quality
Design
Design
8-8
8-8
Features
Features
Awareness
Awareness
Credibility
Credibility
Attributes
Attributes
Advantages
of
Brand Names
Identification
Identification
Association
Association
Brand
Equity
Loyalty
Loyalty
Quality
Quality &
& Value
Value
Consistency
Consistency
Brands
Brands
8-9
8-9
Line
Line Extensions
Extensions
Brand
Brand Extensions
Extensions
Multibrands
Multibrands
New
Brands
Brand
New Strategy
Brands
Brand
Strategy
Manufacturer’s
Manufacturer’s Brand
Brand
Private
Private Brand
Brand
Licensed
Licensed Brand
Brand
Co-branding
Brand
Sponsor
Co-branding
Brand
Sponsor
Selection
Selection
Brand
Name
Protection
Brand Protection
Name Selection
Selection
Major
Major Brand
Brand Decisions
Decisions
8-10
8-10
Brand
Brand Strategy
Strategy
8-11
8-11
Multibrands
New
Brands
New
New
Line
Extension
Existing
Existing
Brand
Extension
Brand Name
Product Category
Brand
Brand Strategy
Strategy
•• Line
Line Extension
Extension
––Existing
Existing brand
brand names
names extended
extended to
to new
new
forms,
forms, sizes,
sizes, and
and flavors
flavors of
of an
an existing
existing
product
product category.
category.
•• Brand
Brand Extension
Extension
––Existing
Existing brand
brand names
names extended
extended to
to new
new
product
product categories.
categories.
•• Multibrands
Multibrands
––New
New brand
brand names
names introduced
introduced in
in the
the same
same
product
product category.
category.
•• New
New Brands
Brands
––New
New brand
brand names
names in
in new
new product
product categories.
categories.
8-12
8-12
Packaging
Packaging
Sales
Tasks
8-13
8-13
Competitive
Advantages
Packaging
Packaging
Product
Safety
Labeling
Labeling
Identifies
Promotes
Describes
Product
Product -- Support
Support Services
Services
8-14
8-14
Companies should design its support services to
profitably meet the needs of target customers.
How?
•• Step
Step 1.
1. Survey
Survey customers
customers to
to determine
determine
satisfaction
satisfaction with
with current
current services
services and
and any
any
desired
desired new
new services.
services.
•• Step
Step 2.
2. Assess
Assess costs
costs of
of providing
providing desired
desired
services.
services.
•• Step
Step 3.
3. Develop
Develop aa package
package of
of services
services to
to delight
delight
customers
customers and
and yield
yield profits.
profits.
Product
Product Line
Line Decisions
Decisions
8-15
8-15
Product
Product Line
Line Length
Length
Number
Number of
of Items
Items in
in the
the Product
Product Line
Line
Stretching
Filling
Lengthen beyond
current range
Lengthen within
current range
Downward
Upward
Depth
Depth -- number
number
of
of versions
versions of
of
each
each product
product
Length
Length -- total
total
number
number of
of items
items
within
within the
the lines
lines
Consistency
Product
Product Mix
Mix -all
all the
the product
product
lines
lines offered
offered
Width
Width -- number
number of
of
different
different product
product
lines
lines
Product
Product Mix
Mix Decisions
Decisions
8-16
8-16
Characteristics
Characteristics of
of Services
Services
8-17
8-17
Intangibility
Intangibility
Can’t be seen, tasted, felt, heard,
or smelled before purchase.
Inseparability
Inseparability
Can’t be separated from service
providers.
Quality depends on who provides
them and when, where and how.
Can’t be stored for later sale or use.
Variability
Variability
Perishability
Perishability
Greater
Greater Service
Service
Value
Value
Satisfied
Satisfied and
and
Productive
ProductiveService
Service
Employees
Employees
Satisfied
Satisfiedand
andLoyal
Loyal
Customers
Customers
Health
HealthService
Service
Profits
Profitsand
andGrowth
Growth
Internal
Internal Service
Service Quality
Quality
The
The Service-Quality
Service-Quality Chain
Chain
8-18
8-18
Marketing
Marketing Strategies
Strategies for
for Service
Service
Firms
Firms
•• Managing
Managing Service
Service Differentiation
Differentiation
––Develop
Developoffer,
offer,delivery
deliveryand
andimage
imagewith
withcompetitive
competitive
advantages.
advantages.
•• Managing
Managing Service
Service Quality
Quality
––Empower
Empoweremployees
employees
––Become
Become“Customer
“Customerobsessed”
obsessed”
––Develop
Develophigh
highservice
servicequality
qualitystandards
standards
––Watch
Watchservice
serviceperformance
performanceclosely
closely
•• Managing
Managing Service
Service Productivity
Productivity
––Train
Traincurrent
current or
or new
new employees
employees
––Increase
Increasequantity
quantityby
bydecreasing
decreasingquality
quality
––Utilize
Utilizetechnology
technology
8-19
8-19
8-1
PRINCIPLES OF MARKETING
Chapter
Chapter 88
Product and Services
Strategy
What
What is
is aa Product?
Product?
8-2
8-2
•• Anything
Anything that
that can
can be
be offered
offered to
to aa market
market
for
for attention,
attention, acquisition,
acquisition, use
use or
or
consumption.
consumption.
•• Satisfies
Satisfies aa want
want or
or aa need.
need.
•• Includes:
Includes:
––Physical
Physical Products
Products
––Services
Services
––Persons
Persons
––Places
Places
––Organizations
Organizations
––Ideas
Ideas
––Combinations
Combinations of
of the
the above
above
Core
Core
Product
Product
Actual
Actual
Product
Product
Warranty
Design
AfterSale
Service
Features
Core
Core
Benefit
Benefit
or
or
Service
Service
Quality
Level
Delivery
& Credit
Brand
Name
Packaging
Installation
Augmented
Augmented
Product
Product
Levels
Levels of
of Product
Product
8-3
8-3
Product
Product Classifications
Classifications
Consumer
Consumer Products
Products
Convenience Products
>
>
>
>
Buy frequently & immediately
Low priced
Many purchase locations
Includes:
• Staple goods
• Impulse goods
• Emergency goods
Specialty Products
>
>
>
>
Special purchase efforts
Unique characteristics
Brand identification
Few purchase locations
Shopping Products
> Buy less frequently
> Gather product
information
> Fewer purchase locations
> Compare for:
• Suitability & Quality
• Price & Style
Unsought Products
> New innovations
> Products consumers don’t
want to think about
> Require much advertising &
personal selling
8-4
8-4
Product
Product Classifications
Classifications
Industrial
Industrial Products
Products
8-5
8-5
Materials
Materials
and
and
Parts
Parts
Capital
Capital
Items
Items
Supplies
Supplies
and
and
Services
Services
Product
Product Classifications
Classifications
Other
Other Marketable
Marketable Entities
Entities
•• Marketed
Marketed to
to create,
create, maintain,
maintain, or
or change
change the
the
attitudes
attitudes or
or behavior
behavior toward
toward the
the following:
following:
•• Organizations
Organizations -- Profit
Profit (businesses)
(businesses) and
and
nonprofit
nonprofit (schools
(schools and
and
churches).
churches).
•• Person
Person -- Political
Political and
and sports
sports figures,
figures,
entertainers,
entertainers, doctors
doctors and
and lawyers.
lawyers.
•• Place
Place -- Business
Business sites
sites and
and tourism.
tourism.
•• Social
Social -- Reduce
Reduce smoking,
smoking, clean
clean air,
air,
conservation.
conservation.
8-6
8-6
Product
Product Support
Support Services
Services
Labeling
Labeling
Packaging
Packaging
Branding
Branding
Product
Product Attributes
Attributes
Individual
Individual Product
Product Decisions
Decisions
8-7
8-7
Product
Product Attribute
Attribute
Decisions
Decisions
Quality
Quality
Design
Design
8-8
8-8
Features
Features
Awareness
Awareness
Credibility
Credibility
Attributes
Attributes
Advantages
of
Brand Names
Identification
Identification
Association
Association
Brand
Equity
Loyalty
Loyalty
Quality
Quality &
& Value
Value
Consistency
Consistency
Brands
Brands
8-9
8-9
Line
Line Extensions
Extensions
Brand
Brand Extensions
Extensions
Multibrands
Multibrands
New
Brands
Brand
New Strategy
Brands
Brand
Strategy
Manufacturer’s
Manufacturer’s Brand
Brand
Private
Private Brand
Brand
Licensed
Licensed Brand
Brand
Co-branding
Brand
Sponsor
Co-branding
Brand
Sponsor
Selection
Selection
Brand
Name
Protection
Brand Protection
Name Selection
Selection
Major
Major Brand
Brand Decisions
Decisions
8-10
8-10
Brand
Brand Strategy
Strategy
8-11
8-11
Multibrands
New
Brands
New
New
Line
Extension
Existing
Existing
Brand
Extension
Brand Name
Product Category
Brand
Brand Strategy
Strategy
•• Line
Line Extension
Extension
––Existing
Existing brand
brand names
names extended
extended to
to new
new
forms,
forms, sizes,
sizes, and
and flavors
flavors of
of an
an existing
existing
product
product category.
category.
•• Brand
Brand Extension
Extension
––Existing
Existing brand
brand names
names extended
extended to
to new
new
product
product categories.
categories.
•• Multibrands
Multibrands
––New
New brand
brand names
names introduced
introduced in
in the
the same
same
product
product category.
category.
•• New
New Brands
Brands
––New
New brand
brand names
names in
in new
new product
product categories.
categories.
8-12
8-12
Packaging
Packaging
Sales
Tasks
8-13
8-13
Competitive
Advantages
Packaging
Packaging
Product
Safety
Labeling
Labeling
Identifies
Promotes
Describes
Product
Product -- Support
Support Services
Services
8-14
8-14
Companies should design its support services to
profitably meet the needs of target customers.
How?
•• Step
Step 1.
1. Survey
Survey customers
customers to
to determine
determine
satisfaction
satisfaction with
with current
current services
services and
and any
any
desired
desired new
new services.
services.
•• Step
Step 2.
2. Assess
Assess costs
costs of
of providing
providing desired
desired
services.
services.
•• Step
Step 3.
3. Develop
Develop aa package
package of
of services
services to
to delight
delight
customers
customers and
and yield
yield profits.
profits.
Product
Product Line
Line Decisions
Decisions
8-15
8-15
Product
Product Line
Line Length
Length
Number
Number of
of Items
Items in
in the
the Product
Product Line
Line
Stretching
Filling
Lengthen beyond
current range
Lengthen within
current range
Downward
Upward
Depth
Depth -- number
number
of
of versions
versions of
of
each
each product
product
Length
Length -- total
total
number
number of
of items
items
within
within the
the lines
lines
Consistency
Product
Product Mix
Mix -all
all the
the product
product
lines
lines offered
offered
Width
Width -- number
number of
of
different
different product
product
lines
lines
Product
Product Mix
Mix Decisions
Decisions
8-16
8-16
Characteristics
Characteristics of
of Services
Services
8-17
8-17
Intangibility
Intangibility
Can’t be seen, tasted, felt, heard,
or smelled before purchase.
Inseparability
Inseparability
Can’t be separated from service
providers.
Quality depends on who provides
them and when, where and how.
Can’t be stored for later sale or use.
Variability
Variability
Perishability
Perishability
Greater
Greater Service
Service
Value
Value
Satisfied
Satisfied and
and
Productive
ProductiveService
Service
Employees
Employees
Satisfied
Satisfiedand
andLoyal
Loyal
Customers
Customers
Health
HealthService
Service
Profits
Profitsand
andGrowth
Growth
Internal
Internal Service
Service Quality
Quality
The
The Service-Quality
Service-Quality Chain
Chain
8-18
8-18
Marketing
Marketing Strategies
Strategies for
for Service
Service
Firms
Firms
•• Managing
Managing Service
Service Differentiation
Differentiation
––Develop
Developoffer,
offer,delivery
deliveryand
andimage
imagewith
withcompetitive
competitive
advantages.
advantages.
•• Managing
Managing Service
Service Quality
Quality
––Empower
Empoweremployees
employees
––Become
Become“Customer
“Customerobsessed”
obsessed”
––Develop
Develophigh
highservice
servicequality
qualitystandards
standards
––Watch
Watchservice
serviceperformance
performanceclosely
closely
•• Managing
Managing Service
Service Productivity
Productivity
––Train
Traincurrent
current or
or new
new employees
employees
––Increase
Increasequantity
quantityby
bydecreasing
decreasingquality
quality
––Utilize
Utilizetechnology
technology
8-19
8-19