Transcript 23932950-Marketing-Chapter

A Global Perspective
8
Product, Services, and
Branding Strategy
Philip Kotler
Gary Armstrong
Swee Hoon Ang
Siew Meng Leong
Chin Tiong Tan
Oliver Yau Hon-Ming
PowerPoint slides adapted by
Peggy Su
8-1
Learning Objectives
After studying this chapter, you should be able to:
1. Define product and the major classifications of products
and services.
2. Describe the decisions companies make regarding
their individual products and services, product lines,
and product mixes.
3. Discuss branding strategy—the decisions companies
make in building and managing their brands.
4. Identify the four characteristics that affect the marketing
of a service and the additional marketing
considerations that services require.
8-2
Chapter Outline
1. What is a Product?
2. Product and Service Decisions
3. Branding Strategy: Building Strong
Brands
4. Services Marketing
8-3
What is a Product?
Products, Services, and Experiences
•
A product is anything that can be offered in a
market for attention, acquisition, use, or
consumption that might satisfy a need or want.
• E.g. soap, toothpaste
© Bradley Johnson
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-4
What is a Product?
Products, Services, and Experiences
•
Service is a form of product that consists of
activities, benefits, or satisfactions offered for
sale that are essentially intangible and do not
result in ownership.
• E.g., Doctor’s exam, legal advice
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-5
What Is a Product?
Products, Services, and Experiences
•
Experiences represent what buying the
product or service will do for the customer.
© Audry Drapier
• E.g., Disney, Lego, Toys “R” Us
© Bradley Johnson
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-6
What is a Product?
Levels of Products
and Services
•
Core benefits
•
Actual product
•
Augmented
product
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-7
What is a Product?
Levels of Product and Services
•
Core benefits represent what the buyer is
really buying.
•
Actual product represents the design, brand
name, and packaging that delivers the core
benefit to the customer.
•
Augmented product represents additional
services or benefits of the actual product.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-8
What is a Product?
Product and Service Classifications
•
Consumer products
•
Industrial products
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-9
What Is a Product?
Product and Service Classifications
•
Consumer products are products
services for personal consumption.
•
Classified by how consumers buy them
•
Convenience product
•
Shopping products
•
Specialty products
•
Unsought products
Copyright © 2009 Pearson Education South Asia Pte Ltd
and
8-10
What Is a Product?
Product and Service Classifications
•
Convenience
products
are
consumer
products and services that the customer
usually buys frequently, immediately, and with
a minimum comparison and buying effort.
• Newspapers
• Candy
• Fast food
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-11
What Is a Product?
Product and Service Classifications
•
Shopping products are consumer products
and services that the customer compares
carefully on suitability, quality, price, and style.
• Furniture
• Cars
• Appliances
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-12
What Is a Product?
Product and Service Classifications
•
Specialty products are consumer products
and services with unique characteristics or
brand identification for which a significant group
of buyers is willing to make a special purchase
effort.
• Designer watches
• Branded fashion wear
• High-end electronics
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-13
What Is a Product?
Product and Service Classifications
•
Unsought products are consumer products
that the consumer does not know about or
knows about but does not normally think of
buying.
• Life insurance
• Funeral services
• Blood donations
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-14
What Is a Product?
Product and Service Classifications
•
Industrial products are products purchased
for further processing or for use in conducting a
business.
•
Classified by the purpose for which the product
is purchased
• Materials and parts
• Capital items
• Raw materials
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-15
What Is a Product?
Product and Service Classifications
•
Materials and parts include raw materials and
manufactured materials and parts usually sold
directly to industrial users.
• Wheat
• Wood
• Iron
• Cement
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-16
What Is a Product?
Product and Service Classifications
•
Capital items are industrial products that aid in
the buyer’s production or operations.
• Buildings
• Elevators
• Computers
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-17
What Is a Product?
Organizations, Persons, Places, and Ideas
•
Organization marketing consists of activities
undertaken to create, maintain, or change
attitudes and behavior of target consumers
toward an organization.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-18
What Is a Product?
Organizations, Persons, Places, and Ideas
•
Person marketing consists of activities
undertaken to create, maintain, or change
attitudes and behavior of target consumers
toward particular people.
• Andy Lau
• Stephanie Sun
• Siti Nuraliza
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-19
What Is a Product?
Organizations, Persons, Places, and Ideas
Place marketing consists of activities
undertaken to create, maintain, or change
attitudes and behavior of target
consumers toward particular places.
Tourism, e.g. the Great Wall of China, Walt Disney World.
8-20
What Is a Product?
Organizations, Persons, Places, and Ideas
•
Social marketing is the use of commercial
marketing concepts and tools in programs
designed to influence individuals’ behavior to
improve their well-being and that of society.
• Public health campaigns
• Tourism
8-21
Product and Service Decisions
Individual Product and Service Decisions
•
Product attributes
•
Branding
•
Packaging
•
Labeling
•
Product support services
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-22
Product and Service Decisions
Individual Product and Service Decisions
•
Product attributes are the benefits of the
product or service.
• Quality
• Features
• Style and design
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-23
Product and Service Decisions
Individual Product and Service Decisions
•
Quality in terms of
• The product or service is the lack of defects.
• The customer is the value and satisfaction
provided by the product or service.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-24
Product and Service Decisions
Individual Product and Service Decisions
•
Product quality includes level and consistency.
• Quality level is the level of quality that supports
the product’s positioning.
• Performance quality is the ability of a product to
perform its functions.
• Quality consistency is the freedom from defects
and the delivering of a targeted level of
performance.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-25
Product and Service Decisions
Individual Product and Service Decisions
•
Product features are a competitive tool for
differentiating a product from competitors’
products.
• Assessed based on the value to the customer
versus the cost to the company.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-26
Product and Service Decisions
Individual Product and Service Decisions
•
Product style and design add value to
customer value.
• Style describes
product.
the appearance of the
• Design contributes to a product’s usefulness
as well as to its looks.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-27
Product and Service Decisions
Individual Product and Service Decisions
•
Brand is the name, term, sign, or design, or
a combination of these, that identifies the
maker or seller of a product or service.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-28
Product and Service Decisions
Individual Product and Service Decisions
•
Packaging involves designing and producing
the container or cover for a product.
•
Label identifies the product or brand, describes
attributes, and provides promotion.
8-29
Product and Service Decisions
•
Product support
products.
•
Companies must continually:
services
augment
actual
• Assess the value of current services to obtain
ideas for new ones.
• Assess the costs of providing these services.
• Develop a package of services to satisfy customers
and provide profit to the company.
8-30
Product and Service Decisions
Product Line Decisions
•
Product line is a group of products that are
closely related because they function in a similar
manner, are sold to the same customer groups,
are marketed through the same types of outlets,
or fall within given price ranges.
8-31
Product and Service Decisions
Product Line Decisions
•
Product line length is the number of items in
the product line.
• Line stretching
• Line filling
8-32
Product and Service Decisions
Product Line Decisions
•
Product line stretching is when a company
lengthens its product line beyond its current
range.
• Downward
• Upward
• Combination of both
8-33
Product and Service Decisions
Product Line Decisions
•
Downward product line stretching is used by
companies at the upper end of the market to
plug a market hole or respond to a competitor’s
attack.
•
Upward product line stretching is by
companies at the lower end of the market to
add prestige to their current products.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-34
Product and Service Decisions
Product Line Decisions
•
Combination line stretching is used by
companies in the middle range of the market to
achieve both goals of upward and downward
line stretching.
8-35
Product and Service Decisions
Product Line Decisions
•
Product line filling occurs when companies
add more items within the present range of the
line.
• More profits
• Satisfying dealers
• Excess capacity
• Plugging holes to fend off competitors
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-36
Product and Service Decisions
Product Mix Decisions
•
Product mix consists of all the products and
items that a particular seller offers for sale.
• Width
• Length
• Depth
• Consistency
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-37
Product and Service Decisions
Product Mix Decisions
•
Product mix width is the number of different
product lines the company carries.
•
Product mix length is the total number of
items the company carries within its product
lines.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-38
Product and Service Decisions
Product Line Decisions
•
Product line depth is the number of versions
offered of each product in the line.
•
Consistency is how closely the various
product lines are in end use, production
requirements, or distribution channels.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-39
Branding Strategy:
Building Strong Brands
•
Brand represents the consumer’s perceptions
and feelings about a product and its
performance.
•
It is the company’s promise to deliver a specific
set of features, benefits, services, and
experiences consistently to the buyers.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-40
Branding Strategy:
Building Strong Brands
•
Brand equity is the positive differential effect
that knowing the brand name has on customer
response to the product or service.
•
Provides competitive advantage:
• Consumer awareness and loyalty
• Benefits
• Beliefs and value
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-41
Branding Strategy:
Building Strong Brands
• Customer equity is the value of the
customer relationships that the brand
creates.
• Brand valuation is the process of
estimating the total financial value of the
brand.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-42
Branding Strategy:
Building Strong Brands
• Brand strategy decisions include:
• Brand positioning
• Brand name selection
• Brand sponsorship
• Brand development
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-43
Branding Strategy:
Building Strong Brands
Brand Positioning
•
Brand strategy decisions include:
• Product attributes
• Product benefits
• Product beliefs and values
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-44
Branding Strategy:
Building Strong Brands
Brand Name Selection
•
Desirable qualities
• Suggests benefits and qualities
• Easy to pronounce, recognize, and remember
• Distinctive
• Extendable
• Translatable for the global economy
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-45
Branding Strategy:
Building Strong Brands
Brand Sponsorship
•
Manufacturer’s brand
•
Private brand
•
Licensed brand
•
Co-brand
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-46
Branding Strategy:
Building Strong Brands
Brand Sponsorship
Private brands provide retailers with advantages.
•
Product mix control
•
Slotting fees for manufacturers’ brands
•
Higher margins
•
Exclusivity
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-47
Branding Strategy:
Building Strong Brands
Brand Development
•
Line extensions
•
Brand extensions
•
Multibrands
•
New brands
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-48
Branding Strategy:
Building Strong Brands
Brand Development
•
Line extensions occur when a company
extends existing brand names to new forms,
colors, sizes, ingredients, or flavors of an
existing product category.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-49
Branding Strategy:
Building Strong Brands
Brand Development
•
Brand extensions extend a brand name to a
new or modified product in a new category.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-50
Branding Strategy:
Building Strong Brands
Brand Development
•
Multibrands are additional brands in the same
category.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-51
Branding Strategy:
Building Strong Brands
Brand Development
New brands are used when existing brands
are inappropriate for new products in new
product categories or markets.
© Nate Grigg
© Ged Carroll
•
1970s-1990s
Sony's Trinitron Color TV
Copyright © 2009 Pearson Education South Asia Pte Ltd
2000 and beyond
Sony’s BRAVIA widescreen LCD TV
8-52
Branding Strategy:
Building Strong Brands
Managing Brands
•
Requires:
• Continuous brand communication
• Customer-centered training
• Brand checks
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-53
Companies must manage their brands carefully. First,
the brand’s positioning must be continuously
communicated to consumers. Major brand marketers
often spend huge amounts on advertising to create
brand awareness and build preference and loyalty. For
example, Verizon spends more than $3.7 billion
annually to promote its brand. McDonald’s spends
more than $1.2 billion.
Such advertising campaigns can help create name
recognition, brand knowledge, and perhaps even
some brand preference. However, the fact is that
brands are not maintained by advertising but by
customers’ brand experiences.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-54
Today, customers come to know a brand through a
wide range of contacts and touch points. These
include advertising but also personal experience with
the brand, word of mouth, company Web pages, and
many others.
The company must put as much care into managing
these touch points as it does into producing its ads.
“Managing each customer’s experience is perhaps the
most important ingredient in building loyalty.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-55
Services have grown dramatically in recent years. Services now
account for close to 80 percent of the U.S. gross domestic
product (GDP). And the service industry is growing.
By 2014, it is estimated that nearly four out of five jobs in the
United States will be in service industries.
Services are growing even faster in the world economy, making
up 64 percent of the gross world product.
8-56
Services Marketing
Types of Service Industries
•
Government
•
Private not-for-profit organizations
•
Business services.
Service industries vary greatly.
 Governments offer services through courts, employment services,
hospitals, military services, police and fire departments, the postal
service, and schools.
 Private not-for-profit organizations offer services through museums,
charities, churches, colleges, foundations, and hospitals.
 A large number of business organizations offer services— airlines,
banks, hotels, insurance companies, consulting firms, medical and
legal practices, entertainment and telecommunications companies,
real-estate firms, retailers, and others
8-57
Services Marketing
Nature and Characteristics of a Service
•
Intangibility
•
Inseparability
•
Variability
•
Perishability
8-58
Services Marketing
Nature and Characteristics of a Service
•
Intangibility refers to the fact that services
cannot be seen, tasted, felt, heard, or smelled
before they are purchased.
• Inseparability refers to the fact Services are
produced and consumed at the same time and
cannot be separated from their providers.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-59
Physical goods are produced, then stored, later sold, and still later
consumed. In contrast, services are first sold and then produced
and consumed at the same time. In services marketing, the
service provider is the product.
Service inseparability means that services cannot be separated
from their providers, whether the providers are people or
machines. If a service employee provides the service, then the
employee becomes a part of the service. Because the customer is
also present as the service is produced, provider-customer
interaction is a special feature of services marketing. Both the
provider and the customer affect the service outcome.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-60
Services Marketing
Nature and Characteristics of a Service
•
Variability refers to the fact that service quality
depends on who provides it as well as when,
where, and how it is provided.
•
Perishability refers to the fact that services
cannot be stored for later sale or use.
Copyright © 2009 Pearson Education South Asia Pte Ltd
8-61
Services Marketing
Marketing Strategies for Service Firms
•
In addition to traditional marketing strategies,
service firms often require additional strategies:
• Service-profit chain
• Internal marketing
• Interactive marketing
8-62
Services Marketing
Marketing Strategies for Service Firms
• Service-profit chain:
In a service business, the customer and the front-line service
employee interact to create the service. Effective interaction, in
turn, depends on the skills of front-line service employees and
on the support processes backing these employees.
Thus, successful service companies focus their attention on
both their customers and their employees. They understand the
service profit chain, which links service firm profits with
employee and customer satisfaction.
8-63
This chain consists of five links:
Internal service quality: superior employee selection and
training, a quality work environment,
and strong support for those dealing with customers, which
results in ..
• Satisfied and productive service employees: more
satisfied, loyal, and hardworking employees,
which results in . . .
• Greater service value: more effective and efficient
customer value creation and service delivery,
which results in . . .
• Satisfied and loyal customers: satisfied customers who
remain loyal, repeat purchase, and
refer other customers, which results in . . .
• Healthy service profits and growth: superior service firm
performance.
8-64
Therefore, reaching service profits and growth goals begins
with taking care of those who take care of customers. Four
Seasons Hotels and Resorts, a chain legendary for its
outstanding customer service, is also legendary for its
motivated and satisfied employees.
Similarly, customer-service all-star Zappos.com, the online
shoe, clothing, and accessories retailer, knows that happy
customers begin with happy, dedicated, and energetic
employees
8-65
Services Marketing
Marketing Strategies for Service Firms
•
Internal marketing means that the service firm must
orient and motivate its customer contact employees and
supporting service people to work as a team to provide
customer satisfaction.
• Internal marketing must precede external marketing. For
example, Four Seasons Hotels and Resorts starts by hiring the
right people and carefully orienting and inspiring them to give
unparalleled customer service.
8-66
•
Interactive marketing means that service quality
depends heavily on the quality of the buyer-seller interaction
during the service encounter.
• In product marketing, product quality often depends little on how
the product is obtained. But in services marketing, service quality
depends on both the service deliverer and the quality of delivery.
• Service marketers, therefore, have to master interactive marketing
skills. Thus, Four Seasons selects only people with an innate
“passion to serve” and instructs them carefully in the fine art of
interacting with customers to satisfy their every need. All new
hires complete a three-month training schedule, including
improvisation exercises to help them improve their customer
interaction skills.
• Service differentiation
• Service quality
• Service productivity
8-67
Services Marketing
Marketing Strategies for Service Firms
•
Managing service differentiation creates a
competitive advantage from the offer, delivery,
and image of the service.
• Offer can include distinctive features.
• Delivery can include more able and reliable
customer contact people, environment, or process.
• Image can include symbols and branding.
8-68
Services Marketing
Marketing Strategies for Service Firms
•
Managing service quality provides a
competitive
advantage
by
delivering
consistently higher quality than its competitors.
•
Service quality always varies depending on
interactions
between
employees
and
customers.
8-69
Services Marketing
Marketing Strategies for Service Firms
•
Service recovery can turn
customers into loyal customers.
disappointed
• Empower employees
• Responsibility
• Authority
• Incentive
8-70
Services Marketing
Marketing Strategies for Service Firms
•
Managing service productivity refers to the
cost side of marketing strategies for service
firms.
• Employee
strategies
recruiting,
hiring,
and
training
• Service quantity and quality strategies
8-71