Chapter 8: Product and Services Strategies

1
Chapter 8Product and Services Strategies

• June 12, 2001

2
The Marketing Mix

• Once a firm has decided on an appropriate
  strategy, has done research on consumer
  behaviour, and has segmented the market, it is
  time to target selected segments and position
  products and brands.
• This is done by manipulating the marking mix (the
  4 Ps) Beginning with the Product(s)

3
What is a product?

• Product
• A cluster of benefits that can be offered to a
  market for attention, acquisition, use or
  consumption that might satisfy a want or need

4
Hierarchy of Terms
Company
Brand
Product Lines
Products
5
Levels of Product
Installation
Augmented product
Packaging
Actual product
Brand name
Core benefit or service
Features
Delivery and credit
Core product
After- Sale service
Quality level
Design
Warranty
6
Classes of Products

• Consumer Products
• Convenience Products, Shopping Products,
  Specialty Products, Unsought Products
• Industrial Products
• Materials and Parts, Capital items, Supplies and
  Business services
• Marketable Entities
• Organizations, People, Places and Ideas

7
Types of Consumer Products (see. Table 8-1)

• Convenience products
• Regular purchases, immediate with little
  comparison, low-priced and readily available
• Staples, impulse buys, emergency items
• Shopping products
• Less frequent purchases, info. Seeking brand
  comparison shopping, less available, mid-priced
• E.g. small appliances, furniture, clothing
• Specialty products
• Brand loyalty, specific locations only, high
  priced, luxury goods (e.g. Rolex Watches)
• Unsought products
• Customer doesnt know or think about product

8
Industrial Products

• Capital items
• installations - fixed capital (e.g. buildings,
  fixed equipment)
• Accessory equipment - retail purchased (e.g.
  tools, desks, phones)
• Materials and parts
• raw materials (e.g. lumber. cotton)
• manufactured parts (e.g. tires)
• Supplies and Business Services
• minor commodities (e.g. paper clips)
• contracted services (e.g consultants)

9
Marketable Entities
Marketing to promote or change attitudes/behaviour
toward

• Organizations (e.g. Firestone)
• Persons (e.g. SHAQ!)
• Places (e.g. Ontario)
• Ideas (e.g. Anti-Smoking)
• Social Marketing

10
Product Marketing Decisions
3. Packaging
4. Labeling
1. Product attributes
5. Product Support services
2. Branding
11
1. Product Attributes

• Quality - The ability of a product to perform its
  functions at high levels and consistently
• Features as a tool for differentiation
• Value of features versus cost to company
• Design as a competitive weapon
• Form and function integrated via design vs.
  style, which is based solely on visual impact

12
2. Branding

• A name, term, sign, symbol or design or a
  combination of these, intended to identify goods
  or services of a seller or group to differentiate
  them from those of competitors
• A unique identifier of a family of products

13
Branding
Buyers viewpoint
Sellers viewpoint

• Basis of product story
• Gives legal protection
• Helps in segmenting markets
• Symbol of ongoing promise

• Gives personality
• Helps find products with desired benefits
• Aids repeat purchase
• Suggests quality of product

14
Brand Equity

• The value of a brand to the firm
• based on
• Consumer brand awareness
• Brand loyalty
• Leverage bargaining with resellers
• Aids launch of line and brand extensions
• Defense against price competition

15
Brand Name Selectiondesirable qualities

• Suggest benefits and qualities of products
• Easy to pronounce recognize remember
• Distinctive
• Translates easily
• Capable of registration legal protection

16
Brand Sponsorship

• Manufacturers (National) brand
• brand created owned by manufacturer
• Private (Store) brand
• brand owned by reseller, not manufacturer
• Licensed brand
• purchased rights to use a brand name for a period
  of time
• Co-branding
• Agreement between firms to use two brands
  together on a new product

17
Major Branding Decisions
To brand or not to brand

• Brand
• No brand

Brand name selection

• Selection
• Protection

Brand sponsor

• Manufacturers brand
• Private brand
• Licensed brand
• Co-branding

Brand strategy

• New brands
• Line extensions
• Brand extensions
• Multibrands

Brand repositioning

• Brand repositioning
• No brand repositioning

18
Four Brand Strategies
Product Line
Existing
New
Line extension
Brand extension
Existing
Brand Name
New brands
Multi-brands
New
19
3. Packaging developing a good package

• Needs to attract attention and stimulate senses
• Important for commodities - shelf space
• Elements to support position strategy
• Environmental issues

20
4. Labeling

• Key functions
• Identify product or brand
• Describe product characteristics
• Provide promotional and design elements
• Legal and ethical issues
• Avoid misleading or dangerous practices
• Consumer packaging and labeling act
• Weights and measures act

21
5. Product Support Services

• Major source of competitive advantage
• Design for target customer needs and profit
• Survey needs wants to Delight customers

22
Product Line Decisionsstretching downward
Present products
High
Price
New products
Quality
Low
High
Low
23
Product Line Decisionsstretching upward
New products
High
Price
Present products
Quality
Low
High
Low
24
Product Line Decisionsstretching both ways
New Products
High
Present products
Price
New products
Quality
Low
High
Low
25
Product Line Decisions
Selected Proctor Gamble Products
Product Mix Width
Detergents Toothpaste Bar Soap Deodorants Ivory
Snow Gleem Ivory Secret Dreft Crest Camay Sur
e Tide Complete Lava Joy Denquel Kirks Cheer
Zest Oxydol Safeguard Dash Coast
Product Line Length
26
What is a Service?

• Service
• Any activity or benefit one party can offer
  another
• Specific type of product that is essentially
  intangible and does not result in ownership of a
  tangible item
• Often accompanies a tangible product (e.g.
  customer support, repair, warranty, sales
  service)

27
Four Service Characteristics
Intangibility
Inseparability
From the provider
Cannot be seen tasted, felt or smelled
before purchasing
Services
Perishability
Variability
Depends on who provides and under what conditions
Cannot be stored for resale or later use
28
What is a Product?The product-service continuum
Service Dominated offerings
Pure tangible good
29
Services Marketingservice sector organizations

• Governments
• Private non-profits
• Service businesses

30
The Service Profit Chain

• Internal service quality (selection training)
  leads to...
• Satisfied and productive service employees, which
  leads to...
• Greater service value, which leads to ...
• Focus on both customers and employees
• Satisfied and loyal customers, which leads to ...
• Healthy service profits and growth

31
Three Types of Marketingin Service Businesses
Company
Internal marketing
External marketing
Interactive marketing
Employees
Customers
32
Service Marketing Tasks

• Service Differentiation
• what is offered, how it is offered, when it is
  offered and by whom
• Service Quality
• Exceeding customer expectations, especially when
  they need it the most - service recovery (e.g.
  ECM corp.)
• Balancing Quality and Efficiency
• Empowering employees vs. standardized service
  delivery

33
International Product and Services Marketing

• Which countries to enter?
• Which products to introduce?
• How much to standardize or adapt?
• Suitable packaging approach?
• Follow clients overseas?
• Non-tariff barriers to services?