Transcript Product Strategy Chapter 11

CHAPTER 11 Product and Service Strategies
Product Strategy
Chapter 6 & 7
• Skill soft: en_US_42402_ng: Principles of Marketing - Product Strategy
• Skill Soft: MKT0212: Building Brand Equity
• WGU Library E-Reserves
• Table 11.1 Marketing Impact of the Product Classification System
(Contemporary Marketing pg. 352)
• The Marketing Mix
(http://www.proprofs.com/flashcards/tableview.php?title=mkc1-examcontemporary-marketing-chapter-11-13-15-19)
• Skill soft: MKT0242: Developing a New-Product Strategy
• The Marketing Mix
(http://www.proprofs.com/flashcards/tableview.php?title=mkc1-examcontemporary-marketing-chapter-11-13-15-19)
CHAPTER 11 Product and Service Strategies
• Marketing mix Blending of the four strategy elements
—product, distribution, promotion, and price—to fit the
needs and preferences of a specific target market.
• Marketers develop strategies to sell both tangible
goods and intangible services.
CHAPTER 11 Product and Service Strategies
WHAT IS A PRODUCT?
• People buy want satisfaction, not objects.
• Example: Consumers buy televisions because they want
entertainment, not because they want a box with a screen.
• Product Bundle of physical, service, and symbolic attributes designed to
satisfy a customer’s wants and needs.
WHAT ARE GOODS AND SERVICES?
• Services Intangible tasks that satisfy the needs of consumer and business
users.
• Goods Tangible products that customers can see, hear, smell, taste, or
touch.
CHAPTER 11 Product and Service Strategies
THE GOODS SERVICES CONTINUUM
CHAPTER 11 Product and Service Strategies
• Services distinguishable from goods in several ways:
• Services are intangible.
• Services are inseparable from the service providers.
• Services are perishable.
• Companies cannot easily standardize services.
• Buyers often play important roles in the creation and distribution
of services.
• Service standards show wide variations.
• Products often blur the distinction between goods and services.
• Example: U-Haul is a service that rents trucks and moving vans,
which are goods.
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CLASSIFYING GOODS AND SERVICES FOR
CONSUMER AND BUSINESS MARKETS
• Consumer (B2C) products Product destined for use by ultimate
consumers.
• Business (B2B) products. Product that contributes directly or indirectly to
the out- put of other products for resale; also called industrial or
organizational product.
• Some products fall into both categories.
• Example: Prescription drugs, which are marketed to doctors and
to end users.
CHAPTER 11 Product and Service Strategies
TYPES OF CONSUMER PRODUCTS
CHAPTER 11 Product and Service Strategies
CLASSIFYING CONSUMER SERVICES
• Marketers rely on five questions to classify services:
• What is the nature of the service?
• What type of relationship does the service organization have with its
customers?
• How much flexibility is there for customization and judgment on the
part of the service provider?
• Do demand and supply for the service fluctuate?
• How is the service delivered?
APPLYING THE CONSUMER PRODUCTS
CLASSIFICATION SYSTEM
• Buying behavior and marketing mix choices patterns differ for different
product types.
CHAPTER 11 Product and Service Strategies
CHAPTER 11 Product and Service Strategies
WORLDWIDE QUALITY PROGRAMS
• Leadership of several large U.S. corporations led to
quality revolution of the 1980s.
• Goal was to better compete with Japanese
manufacturers, who were perceived as achieving
very high quality.
• U.S. Congress established the Malcolm Baldrige
National Quality Award to recognize excellence in
quality management.
• ISO 9002 standards implemented by the European Union define
international criteria for quality management and assurance.
• U.S. member body of ISO is National Institute of Standards and
Technology.
CHAPTER 11 Product and Service Strategies
QUALITY OF SERVICES
• Service encounter—point at which customer and
service provider interact, which usually determines
the customer’s perception of the quality of service.
• Service quality—expected and perceived quality of
a service offering.
• Determined by five variables:
• Tangibles, or physical evidence.
• Reliability, or consistency of performance and dependability.
• Responsiveness, or the willingness and readiness of employees to
provide service.
• Assurances, or the confidence communicated by the service
provider.
• Empathy, or the service provider’s efforts to understand the
customer’s needs and then individualize the service.
CHAPTER 11 Product and Service Strategies
DEVELOPMENT OF PRODUCT LINES
• Product line Series of related products offered by one company.
• Marketing entire product lines can help company grow, economize
company resources, and exploit product life cycles.
DESIRE TO GROW
• Growth potential limited if company focuses on a single product.
• Example: L. L. Bean began selling a single style of boots but has
grown by selling a variety of products.
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THE PRODUCT MIX
• Assortment of product lines and individual product offerings that the
company sells.
PRODUCT MIX WIDTH
• Number of product lines a firm offers.
PRODUCT MIX LENGTH
• Number of different products a firm sells.
PRODUCT MIX DEPTH
• Variations in each product that the firm markets in its mix.
CHAPTER 11 Product and Service Strategies
PRODUCT MIX DECISIONS
• Firms evaluate the effectiveness of the width,
length, and depth to make decisions about adding
or eliminating products from their offerings.
• Firms may decide to add to their mixes by purchasing
product lines from other companies.
• Line extension—adding individual offerings that
appeal to different market segments while remaining
closely related to the existing product line.
• Marketing environment also plays an important role
in evaluating the firm’s product mix.
CHAPTER 11 Product and Service Strategies
THE PRODUCT LIFE CYCLE
• Product life cycle Progression of a product through introduction, growth,
maturity, and decline stages.
Stages in the Product Lifecycle
CHAPTER 11 Product and Service Strategies
EXTENDING THE PRODUCT LIFE CYCLE
• Product life cycles can be extended indefinitely as a result of marketers’
decisions.
INCREASING FREQUENCY OF USE
• Convincing current customers to buy a product more frequently boosts
total sales even if no new buyers enter the market.
• Example: Hershey now offers its famous Hershey’s Kisses with
personalized messages such as “Congratulations,” “It’s a Boy,” and
“Happy Birthday”.
INCREASING THE NUMBER OF USERS
• Attracting new customers who have not previously used the product.
• Example: NBC Universal recently announced plans to start a 24hour local news channel in New York.
CHAPTER 11 Product and Service Strategies
FINDING NEW USES
• New applications extend a product’s life cycle.
• Arm & Hammer cites a variety of alternative uses throughout the
house for its baking soda.
CHANGING PACKAGE SIZES, LABELS, OR PRODUCT
QUALITY
• Example: Procter & Gamble rejuvenated its Herbal Essences shampoo line
by aiming at a younger generation of consumers with new packaging and
language.
• Example: Intelligentsia Coffee has stopped selling its espresso and coffee
in 20-ounce sizes, opting instead for the 12-ounce cup.
CHAPTER 11 Product and Service Strategies
VIDEO
Watch Gillette Video
Watch Schick Video
• Positioning and repositioning are important product
concepts. Schick’s new four-blade Quattro razor has met the
marketing challenge posed by Gillette’s Mach 3 three-bladed
razor. Compare the ads for each razor. What can you deduce
about the positioning of each razor from differences in
presentation and language?
CHAPTER 11 Product and Service Strategies
VIDEO
Watch Florida Orange Juice Video
• Repositioning is an important concept. How does Florida
Orange Juice reposition its product in this ad? Compare this
ad with the repositioning ads for Schick and Gillette.