© 2002 pearson education canada inc. 8-1 principles of marketing chapter 8 products and services...

© 2002 Pearson Education Canada Inc.

8-1

principles of MARKETING

Chapter 8Chapter 8

Products and Services Strategies


8-2

Chapter Objectives

• Define product and its classifications• Describe the roles of product/service branding,

packaging, labelling, and product support services

• Explain product line/mix development decisions

• Identify characteristics that affect services• Discuss additional considerations for services


8-3

??Product and Services Strategies:

What is a Product?A cluster of benefits that can be offered to a

market for attention, acquisition, use, or consumption that might satisfy a want or a need.

It includes physical objects, services, persons, places, organizations, and ideas.


8-4

Product and Services Strategies:What is a 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 tangible.


8-5

What is a Product?The Product-Service Continuum

Hybridoffer

Pure tangiblegood

ServiceDominated offerings


8-6

Levels of Product

Corebenefit

orservice

Augmented productAugmented productInstallation

After- Sale

service

Deliveryand

credit

Warranty

Brandname

Quality level Design

Features

Packaging

Core productCore product

Actual productActual product


8-7

Product Classifications:Consumer Products

Types ofConsumerProducts

Convenienceproducts

Shoppingproducts

Specialtyproducts

Unsoughtproducts


8-8

Product Classifications:Industrial Products

• Capital items– Installations– Accessory equipment

• Materials and parts– Raw materials– Manufactured materials

and parts

• Supplies and services– Business services


8-9

Product Classifications:Marketable Entities

• Organizations– Image advertising

• Persons• Places

– Business site marketing

– Tourism marketing

• Ideas– Social marketing


8-10

Individual Product Decisions

Branding

Productattributes

Packaging

ProductSupportServices

Labelling


8-11

Product Attributes:Quality

• The ability of a product to perform its functions including:– overall durability

– reliability

– precision

– ease of operation/repair

– other valued attributes


8-12

Product Attributes:Quality

• Performance quality• Conformance quality• Total quality

management• Return on quality• Improve customer

value


8-13

Product Attributes:Features and Design

• Features as a tool for differentiation • Value of features versus cost to company• Style based solely on visual impact

– Does not make product perform better

• Design contributes to usefulness• Two together = attention, improved

performance, cut costs, competitive advantage


8-14

Branding

• Name, term, sign, symbol or design or a combination intended to identify goods or services of a seller or group to differentiate them from competitors

• “Battle of the brands”


8-15

Branding

• Gives personality• Helps find products

with desired benefits• Aids repeat purchase• Suggests quality of

product

• Basis of product story• Gives legal protection• Helps in segmenting

markets• Symbol of ongoing

promise

Buyer’s viewpoint Seller’s viewpoint


8-16

Branding

• Four levels of meaning– Attributes

– Benefits

– Values

– Personality


8-17

Brand Equity

• High consumer brand awareness

• Brand loyalty• Leverage bargaining

with resellers• Aids launch of line

and brand extensions• Defence against fierce

price competition

• THE major enduring asset

• Set of loyal customers• Customer equity• Customer lifetime

value


8-18

Major Branding Decisions

To brand ornot to brandTo brand ornot to brand • Brand

• No brand• Brand• No brand

Brand nameselection

Brand nameselection

Brand sponsorBrand sponsor

Brand strategyBrand strategy

Brandrepositioning

Brandrepositioning

• Selection• Protection• Selection• Protection

• Manufacturer’s brand• Private brand• Licensed brand• Co-branding

• Manufacturer’s brand• Private brand• Licensed brand• Co-branding

• New brands• Line extensions• Brand extensions• Multibrands

• New brands• Line extensions• Brand extensions• Multibrands

• Brand repositioning• No brand repositioning• Brand repositioning• No brand repositioning


8-19

Brand Name Selection:Desirable Qualities

• Suggest benefits and qualities

• Easy to pronounce, recognize, and remember

• Distinctive• Translate easily• Capable of registration

and legal protection

Craftsman


8-20

Brand Sponsor:Manufacturer vs. Private

• Manufacturer’s brands vs. private brands– Private often hard to establish– Private may yield higher profit margins– Private offers exclusivity

• Slotting fees• Private brands gaining quality and increasing

sales• Personal brands


8-21

Brand Sponsor:Licensing and Co-Branding

• Licensing– Provides instant and proven brand name– Royalties paid

• Co-branding– Two established brand names of different companies

on the same product– Broad consumer appeal and minimal risk and

investment– Legal contracts, coordination, and trust


8-22

Four Brand Strategies

Lineextension

New brandsNew brands

Brandextension

Brandextension

MultibrandsMultibrands

Existing

New

Existing New

Product CategoryProduct Category

Bra

nd

Nam

e


8-23

Packaging:Developing a Good Package

• “The 5th P”• Primary container• Secondary package• Shipping package• Labelling• Contains and protects

product• As a marketing tool

• Reinforce positioning• Competitive advantage• Packaging concept• Product safety• “Green” packaging


8-24

Labelling: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 Labelling Act– Weights and Measures Act


8-25

Product Support Services

• Major tool for competitive advantage

• Design for target customer needs and profit

• Survey needs and wants• Assess costs versus

benefits• Internet


8-26

Product Decisions and Social Responsibility

• Competition Act• Legal obligations to

stakeholders• Patent laws• Hazardous Products

Act• Food and Drug Act• Product liability


8-27

Product Line Decisions:Stretching Downward

High

HighLow

Low

New products

Present products

Price

Quality


8-28

Product Line Decisions:Stretching Upward

High

HighLow

Low

Present products

New products

Price

Quality


8-29

Product Line Decisions:Stretching Both Ways

High

HighLow

Low

New products

Present productsPrice

Quality

New Products


8-30

Product Line Decisions

ProductLine

Length

Selected Proctor and Gamble Products

Fabric Care Household Personal DeodorantsCare Cleaning

Ivory Snow Ivory Ivory Secret

Dryel Comet Camay Sure

Tide Mr. Clean Olay Old Spice

Joy Swiffer Coast

Cheer Zest

Oxydol Safeguard

Product Mix Width


8-31

Services Marketing:Service Sector Organizations

• Governments• Private non-profits• Service businesses


8-32

Four Service Characteristics

ServicesServices

VariabilityVariability

Depends on whoprovides and under

what conditions

IntangibilityIntangibility

Cannot be seentasted, felt or

smelled beforepurchasing

InseparabilityInseparability

From theprovider

PerishabilityPerishability

Cannot be storedfor resale

or later use


8-33

The Service Profit Chain

• Focus on both customer and employee satisfaction– Healthy service profits and growth– Satisfied and loyal customers– Greater service value– Satisfied and productive service employees– Internal service quality


8-34

Three Types of MarketingIn Service Industries

Company

Internalmarketing

Externalmarketing

Employees CustomersInteractivemarketing


8-35

The Service-Profit Chain

• Managing Service Differentiation

• Managing Service Quality– Exceed expectations

– Perceived must exceed expected

– Credibility and reliability

– Responsiveness

– Tangible cues

– Innovative features

– Service delivery

– Service image

– Empowerment

– Customer obsessed

– Top management commitment to quality

– Watch performance closely


8-36

The Service-Profit Chain

• Managing Productivity– Train employees better

– Hire better staff

– Trade off with quality

– Harness technology


8-37

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?


8-38

Chapter Review

• What is a product and its major classifications?

• What are the important elements affecting “product”?

• How do you develop a product line/mix?• What affects the marketing of a service?• What additional considerations affect

services?

© 2002 pearson education canada inc. 8-1 principles of marketing chapter 8 products and services...

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