Products, Services, and Brands

Building Customer Value

Chapter 7
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Rest Stop: Previewing the Concepts

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

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Rest Stop: Previewing the Concepts

Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require Discuss branding strategythe decisions companies make in building and managing their brands

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First Stop: Nike: Building a Deep-Down Brand-Customer Relationship!

Sales dip indicates Nikes loss of connection with customers Nike renews focus on customer relationships Uses community-oriented, digitally led, social networking tools Result - Market share growth in the U.S.

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Product
Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need

Service
An activity, benefit, or satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything
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What Is a Product?
Tangible objects, services, events, persons, organizations, places, ideas, or a mixture of these Services are a form of product
Activities, benefits, or satisfactions offered for sale Essentially intangible Do not result in the ownership of anything

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Products, Services and Experiences

Market offerings often include both tangible goods and services
Pure tangible good Pure service

Many companies now marketing experiences

Olive Garden sells more than just Italian foodit serves up an idealized Italian family meal experience

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Figure 7.1 - Three Levels of Products

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Levels of Products and Services

Core customer value
What the consumer is really buying

Actual product
Brand name, service features, design, packaging, and quality level

Augmented product
Additional services and benefits such as delivery and credit, instructions, installation, warranty, and service
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Consumer Products
A product bought by final consumers for personal consumption Classified by how consumers buy them
Convenience products Specialty products Shopping products Unsought products

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Convenience Products
Consumer products that customers usually buy frequently, immediately, and with minimal comparison and buying effort
Low priced Placed in many locations to make them readily available E.g. Laundry detergent, candy, magazines, and fast food

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Shopping products
Consumer products that the customer, in the process of selecting and purchasing, usually compare on such attributes as suitability, quality, price, and style
Less frequently purchased Distributed through fewer outlets Greater sales support E.g. Furniture, clothing, used cars

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Specialty products
Consumer products with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort
Different brands are not usually compared E.g. Specific brands of cars, high-priced photographic equipment, designer clothes, and the services of medical or legal specialists

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Unsought Products
Consumer products that the consumer either does not know about or knows about but does not normally consider buying
Require a lot of advertising, personal selling, and other marketing efforts New innovations are generally unsought till advertised Known but unsought products and services are life insurance, preplanned funeral services
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Industrial Products
Products bought by individuals and organizations for further processing or for use in conducting a business
Materials and Parts Capital items Supplies and services

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Organizations
Organization marketing consists of activities undertaken to create, maintain, or change the attitudes and behavior of target consumers toward an organization Business firms sponsor public relations or corporate image marketing campaigns to market themselves and polish their images

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Organization Marketing
IBMs Smarter Planet campaign markets IBM as a company that helps improve the worlds IQ

This ad tells how IBM technologies are helping to create safer food supply chains
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Persons
Person marketing consists of activities undertaken to create, maintain, or change attitudes or behavior toward particular people Organizations use well-known personalities to help sell their products or causes

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Places and Ideas

Place marketing
Involves activities undertaken to create, maintain, or change attitudes or behavior toward particular places

Idea marketing
Social marketing: The use of commercial marketing concepts and tools in programs designed to influence individuals behavior to improve their well-being and that of society
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Figure 7.2 - Individual Product Decisions

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Product and Service Attributes

Product quality: The characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs Product features
Differentiate the companys product from competitors products

Product style and design

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Branding
A name, term, sign, symbol, or design, or a combination of these, that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors Customers attach meanings to brands and develop brand relationships

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Packaging and Labeling

Packaging: Designing and producing the container or wrapper for a product
Protects the product Attracts customers and closes the sale

Labels
Identify the product Describe the product Promote the brand
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Product Support Services

An important part of the customers overall brand experience Firms must survey customers to assess the value of current services and obtain ideas for new ones

Nordstrom thrives on stories about its after-sale service. It wants to Take care of customers, no matter what it takes, before, during, and after the sale
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Product line
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

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Product Line Decisions

Line filling Adding more items within the present range of the line

Reaching for extra profits Satisfying dealers Using excess capacity Keeping out competitors

Line stretching

Lengthening the product line beyond the current range

Downward, to cater to lower-end segments Upward, to add prestige to existing products

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Product mix
The set of all product lines and items that a particular seller offers for sale

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Product Mix Decisions

Width The number of different product lines the company carries The number of items within a product line The number of versions offered of each product in the line

Length
Depth

Consistency How closely related various lines are in end use

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The Product Mix

Campbells product mix consists of three major product lines. Each product line consists of several sublines. Each line and subline has many individual items
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Figure 7.3 - Four Service Characteristics

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The Nature and Characteristics of a Service

The service providers task is to make the service tangible in one or more ways and send the right signals about quality

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The Service-Profit Chain

The chain that links service firm profits with employee and customer satisfaction The five links
Internal service quality Satisfied and productive service employees Greater service value Satisfied and loyal customers Healthy service profits and growth
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Figure 7.4 - Three Types of Service Marketing

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Services Marketing
External marketing
Internal marketing

Traditional marketing via the 4 Ps

Orienting and motivating customer-contact employees and the supporting service people to work as a team to provide customer satisfaction

Interactive marketing Training service employees in the fine art of

interacting with customers to satisfy their needs

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Marketing at Work
Web retailer Zappos prioritizes excellent customer service Zappos knows that happy customers begin with happy, dedicated, and energetic employees

Enthusiastic employees make outstanding brand ambassadors for Zappos

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Managing Service Differentiation

Developing a differentiated offer, delivery, and image
The offer can include features that set one companys offer apart from competitors offers Service delivery can be differentiated with better customer-contact people or a superior delivery process Images can be differentiated through symbols and branding
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Managing Service Quality and Productivity

Managing service quality
Identify what customers expect Set high quality standards Emphasize service recovery in case of a mistake

Managing service productivity

Train current employees better or hire new ones Increase quantity by reducing quality Use technology
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Building Strong Brands

Brand equity: The differential effect that knowing the brand name has on customer response to the product or its marketing

Consumers sometimes bond very closely with specific brands. To this customer, this isnt just a cup of coffee, its a deeply satisfying Dunkin Donuts brand experience
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Figure 7.5 Major Brand Strategy Decisions

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Brand Positioning
Marketers can position brands clearly in customers minds at any of three levels
Product attributes Product benefits Beliefs and values
Successful brands engage customers on an emotional level, as does this ad, which suggests the connection that hardcore users have with the WD-40 brand
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Brand Name Selection

A brand name should:
Suggest the products benefits and qualities Be easy to pronounce, recognize, and remember Be distinctive Be extendable Translate easily into foreign languages Be capable of registration and legal protection

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Brand Sponsorship
National brands
Products are marketed under the manufacturers own name

Store brands Brands created and owned by a reseller of a

product or service

Licensing

For a fee, companies use names and symbols created by other companies

Co-branding Occurs when two established brand names of

different companies are used on the same product

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Brand Sponsorship
Sellers of childrens products attach an almost endless list of character names to clothing, toys, school supplies, linens, dolls, lunch boxes, cereals, and other items

SpongeBob alone has generated more than $8 billion in sales and licensing fees over the past decade

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Marketing At Work
Consumer frugality results in increased sales of store brands Store brands now offer much greater selection, and are rapidly achieving name-brand quality

Walmarts store brands account for a whopping 40 percent of its sales, and its Great Value brand is the nations largest single food brand
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Brand Development
Line extension Brand extension Extending an existing brand name to new forms, colors, sizes, ingredients, or flavors within a product category Extending an existing brand name to new product categories

Multibrands Marketing many different brands in a given product category

Created for new product category, or New brands when interest in existing brands decreases
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Figure 7.6 - Brand Development Strategies

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Managing Brands
Communicate the brands positioning Manage all brand touch points Train employees to live the brand Audit the brands strengths and weaknesses

Brands are not maintained by advertising but by customers brand experiences

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Rest Stop: Reviewing the Concepts

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

7 - 48

Rest Stop: Reviewing the Concepts

Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require Discuss branding strategythe decisions companies make in building and managing their brands

7 - 49

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Copyright 2013 Pearson Education, Inc. Publishing as Prentice Hall

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