Transcript Product

Copyright © 2005 Pearson Education Canada Inc.
Product, Service, and Branding Strategies
•Chapter 10
•Powerpoint slides
•Extendit! version
•Instructor name
•Course name
•School name
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Principles of Marketing: 6th Canadian Edition
Learning Objectives
10.2
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• After studying this chapter, you should be able to:
– Define product and the major classifications of products and
services
– Describe the decisions companies make regarding their individual
products and services, product lines, and product mixes
– Discuss branding strategy-the decisions companies make in
building and managing their brands
– Identify the four characteristics that
affect the marketing of a service and
the additional marketing
considerations that services require
– Discuss two additional product
issues: socially responsible product
decisions and international product
and services marketing
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Opening Vignette: Cosmetics Industry
10.3
• The cosmetics industry sells billions of dollars worth of products
• This industry illustrates the concept of product as being more than just
a physical set of ingredients
• Consumers buy the product and its promise of something more
• Growth in services dedicated to
pampering or changing the individual;
spas, treatments, plastic surgery
• Health, wellness, and beauty industry
has crossed gender lines and boomed
due to age structure of the population
and our media culture focused on
looking young
• Consumers have voted with their
wallets: they want brands that deliver
desired benefits as perceived by them
Principles of Marketing: 6th Canadian Edition
What is a Product?
10.4
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• Product:
– Anything that can be offered for attention, acquisition, use, or
consumption to satisfy a need or want
– Physical object, services, persons, organizations, ideas, or
experiences
• Service:
– Any activity or benefit that can be
offered that is intangible and does
not result in the ownership of
anything
• Experiences:
– Exist in the mind of the consumer
– Are memorable
Principles of Marketing: 6th Canadian Edition
Three Levels of Product
10.5
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• Core product:
– Problem solving services or benefits that
consumers purchase the product for
– We want holes, but we buy drills and bits
Figure 10.1
• Actual product:
– A product’s parts, quality,
features, design, brand name and
other attributes received
• Augmented product:
– Additional consumer services
and benefits built around the core
and actual product
– Add value and differentiate the
product from its competition
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Summary of Product Classifications
• Consumer goods:
– Convenience goods
– Shopping goods
– Specialty goods
– Unsought goods
10.6
• Industrial goods:
– Materials and parts
– Capital items
– Supplies and services
• Marketable offerings:
– Organizations
– Person marketing
– Place marketing
– Social (ideas) marketing
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Consumer Goods Classifications
10.7
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• Convenience product:
– Purchased often, immediately, and with a minimum of
comparison and buying effort
– Snack foods, toiletries, food products
• Shopping product:
– Purchased less frequently, the
consumer compares suitability,
quality, price, and design; more
time and effort
– Furniture, clothing, vehicles,
hotels, major appliances
Principles of Marketing: 6th Canadian Edition
Consumer Goods Classifications (continued)
10.8
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• Specialty product:
– Purchased infrequently, products with unique characteristics or
brand identification; buyers are willing to make a special
purchasing effort
– Luxury goods, designer clothes,
electronic equipment
• Unsought products:
– Products that consumers do not know
about or would not normally think
about buying; usually require personal
selling effort
– Life insurance, funeral arrangements,
blood donations, encyclopedias
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Marketing Considerations
10.9
Principles of Marketing: 6th Canadian Edition
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Industrial Goods Classifications
10.10
• Industrial product: Products bought for further
processing or for use in conducting a business
• Materials and parts: raw
materials and components;
sold directly to manufacturers
• Capital items: facilities,
equipment, installations, and
accessories, used in the
buyer’s operations
• Supplies and services:
operating supplies, repair and
maintenance items, and
business services
Principles of Marketing: 6th Canadian Edition
Organizations, Persons, Places, and Ideas
10.11
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• Organization marketing: create, maintain, or change the
attitudes and behaviour of target consumers toward an organization;
use corporate image advertising and public relations
• Person marketing: create, maintain, or
change the attitudes and behaviour toward a
person; used in politics, entertainment, and
professions
• Place marketing: create, maintain, or
change the attitudes and behaviour toward a
place; used in tourism and economic
development
• Social marketing: programs to increase
the acceptability of a social idea, cause, or
practice within target groups
Principles of Marketing: 6th Canadian Edition
10.12
Product and Service Attributes
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• Product quality: the ability of a product to perform its functions;
durability, reliability, precision, ease of operation and repair, and other
valued attributes
– Level: performance quality – it has a cost (Reader’s Digest)
– Consistency: conformance quality (meeting expectations –
crucial)
• Product features: aspects of the product, used to differentiate the
product from its competition, and add value
– Must compare the cost of providing features to the perceived
value held by consumers
Figure 10.2
Principles of Marketing: 6th Canadian Edition
Product and Service Attributes (continued)
10.13
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• Product style: the appearance of the product; may be used to attract
•
attention, but may not contribute to better performance (Kleenex boxes)
Product design: the characteristics of a product that determine its usefulness
– Includes appearance, but also features, construction, and materials (the
design of a shampoo is not the box but what the liquid is made of)
• Branding: a name, term, sign, or symbol used to identify the goods of a
seller, and to differentiate them from its competition; branding is used to
convey product attributes, segment markets, and provide legal protection for
its manufacturers or retailers
Figure 10.2
Principles of Marketing: 6th Canadian Edition
Product and Service Attributes (continued)
10.14
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• Packaging: the activities of designing and producing the container
or wrapper for a product; the package:
– Holds the contents, protects the product, (ensure compatibility
with the product and use of the consumer)
– Store, identify, and ship the product; provide a place for labelling
– Can be used as a promotional tool (Viagra)
• Labelling: tags or graphics that are used to:
– Identify the product, indicate the product’s weight or measure,
– Provide a description and/or instructions for use,
– Ingredients, nutritional information, and warnings (beware of
legal issues – food, pharmaceutical)
Figure 10.2
Principles of Marketing: 6th Canadian Edition
Product Line Decisions
10.15
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• Product line:
– Group of closely related products due to function, similar
target markets, outlets sold in, or similar pricing
• Length: number of
items in the line
• Line stretching:
adding items to either end
of the line, can be
upwards, downwards, or
both
• Line filling: adding
items within the product
line (vertical)
• Product mix: set of all
product lines
• Width: # of product lines
• Length: # of products in
lines
• Depth: # of versions of each
product carried
• Consistency: how closely
related the product lines are
Principles of Marketing: 6th Canadian Edition
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Product Line Decisions
10.16
• Line length
• Product mix
• Width
• Length
• Depth
• Consistency
Principles of Marketing: 6th Canadian Edition
10.17
Major Brand Strategy Decisions
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• Brand equity:
– Positive differential effect that knowing the brand name has on
customer response to the product or service
– Value of the brand based on awareness, recognition, loyalty
– Major enduring asset of a company; outlasts products, facilities
– Used for line and brand extension strategies
– The value comes from the benefit guarantee to the customer
• Brand positioning:
– Levels: product attributes, desirable benefits (the consequence of
the use), beliefs and values (Botox – me, me, me)
Figure 10.3
Principles of Marketing: 6th Canadian Edition
Major Brand Strategy Decisions (continued)
10.18
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• Brand name selection: a brand name should:
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Suggest something about the product’s benefits and qualities
Be easy to pronounce, recognize, and remember
Be distinctive
Be extendable to allow expansion to other product categories
Have the ability to be translated into other languages
Be capable of being registered and legally protected
Be protected from becoming known as the generic for its product
category (Nylon)
Figure 10.3
Principles of Marketing: 6th Canadian Edition
Major Brand Strategy Decisions (continued)
10.19
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• Brand sponsorship: four options:
– Manufacturer’s (national) brands, private (store) brand (president’s
choice), licensed brand (Pocahonta, Louis St-Laurent), or cobranding
– Dominance of manufacturer’s brands have been challenged by
private label branding used by retailers (products are often made
by the same manufacturer)
– Issues: slotting fees charged, increased profitability of private label
for retailers, and control of shelf space
Figure 10.3
Principles of Marketing: 6th Canadian Edition
10.20
Brand Development Strategies
• Line extension: introducing additional items under the same brand
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name; new flavours, forms, colours, added ingredients, package sizes
• Brand extension: using a successful brand name to launch a new
or modified product in a new category (Virgin)
• Multibrands: introducing
additional brands within the
same product category (Procter
and Gamble, GM)
Figure 10.4
• New brands:
creating a new brand
name when entering
a new product
category
Principles of Marketing: 6th Canadian Edition
10.21
Four Service Characteristics
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• Service: any activity or benefit that one party can offer to another
that is essentially intangible and does not result in the ownership of
anything
Figure 10.5
Principles of Marketing: 6th Canadian Edition
10.22
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The Service Profit Chain
• The chain that links service
firm profits with employee
and customer satisfaction
• Question: if this is the
case, then why do most
service employees struggle
to earn more than
minimum wage and parttime hours?
Internal service quality
(Selection, environment support)
Satisfied and productive
Service employees
(loyal, hard-working)
Greater service value
(enable value creation –
work with customer)
Satisfied and loyal customers
(retain, refer)
Healthy service profits
and growth
(efficient delivery of service,
grow with customer)
Principles of Marketing: 6th Canadian Edition
10.23
Marketing in Service Industries
• Internal marketing: marketing by a service firm to train and
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motivate customer contract employees to provide customer satisfaction
• Interactive marketing:
– marketing by a service
firm that recognizes
that perceived service
quality depends on the
quality of the buyerseller interaction
Figure 10.6
Principles of Marketing: 6th Canadian Edition
Managing Service Differentiation
•
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•
•
10.24
To avoid having to compete on the basis of price: - customers perceive service providers
having the same competence therefore go for better price – losing proposition
Service marketers want to differentiate their offer by:
– Innovative features, service delivery, images or symbols, service quality (do it right
the first time) or recovery efforts (accept and correct your mistakes, but also ensure
that the customer is not at fault)
– Empowering front line employees is helpful (make them understand that they are a
key player in the delivery of the service, get them to use their judgement)
A focus on service productivity is necessary for profitability but not at the expense
of quality (Air Canada and boarding passes – never forget that customers need and enjoy
the interactivity with a human – they must know that it has a cost)
Principles of Marketing: 6th Canadian Edition
Additional Product Considerations
10.25
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• Product decisions and social responsibility
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Government regulation
Food and product safety
Pricing and advertising
Labelling, weights, and measures
– Hazardous products
– Product liability
• International product and service marketing
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Standardization versus local adaptation
Electrical standards, packaging
Cultural differences in meaning
Barriers to trade
Principles of Marketing: 6th Canadian Edition