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  1. 1. Topic 5: Product, Services, and Branding Strategy 8
  2. 2. Learning Objectives <ul><li>After studying this chapter, you should be able to: </li></ul><ul><li>Define product and the major classifications of products and services </li></ul><ul><li>Describe the decisions companies make regarding their individual products and services, product lines, and product mixes </li></ul><ul><li>Discuss branding strategy—the decisions companies make in building and managing their brands </li></ul><ul><li>Identify the four characteristics that affect the marketing of a service and the additional marketing considerations that services require </li></ul>8-2
  3. 3. Chapter Outline – cont’d <ul><li>1.What Is a Product? </li></ul><ul><li>2. Product classifications </li></ul><ul><li>3. Individual Product Decisions </li></ul><ul><li>4. Product Line Decisions </li></ul><ul><li>5. Product Mix Decisions </li></ul><ul><li>6. Product and Service Decisions </li></ul><ul><li>Marketing </li></ul>8-3
  4. 4. Chapter Outline –cont’d <ul><li>7. Branding Strategy: Building Strong Brands </li></ul><ul><li>8. International product and Services </li></ul>
  5. 5. Part 1 - What Is a Product? <ul><li>1.1 The product- Service Continuum </li></ul><ul><li>Products, Services, and Experiences </li></ul><ul><li>Product is anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want </li></ul><ul><li>It can consist of pure tangible goods e.g. </li></ul><ul><li>Soap, toothpaste, food, etc. </li></ul><ul><li>A hybrid offer consists of equal parts of goods and services. </li></ul>8-4
  6. 6. What Is a Product? <ul><li>Products, Services, and Experiences </li></ul><ul><li>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 </li></ul><ul><li>The other extremes are pure services which are non-tangible e.g. </li></ul><ul><li>banking, medical, insurance, telephone </li></ul><ul><li>Doctor’s exam </li></ul><ul><li>Legal advice and etc. </li></ul>8-5
  7. 7. What Is a Product? <ul><li>Experiences represent what buying the product or service will do for the customer </li></ul><ul><li>Disneyland </li></ul><ul><li>American Girl </li></ul><ul><li>Toys “R” Us </li></ul><ul><li>A Fiji unique experience </li></ul>8-6 Products, Services, and Experiences
  8. 8. What Is a Product? <ul><li>Three levels of Product </li></ul><ul><li>Core benefits – stands at the center of the total product –represents what the is actually buying? </li></ul><ul><li>Actual product – build around the core product: as many as five characteristics.e.g quality level, features, design, brand name, packaging, that delivers the core benefit to the customer. </li></ul><ul><li>Augmented product – build around the core and actual products by offering additional consumer services and benefits. </li></ul>8-7 1.2 Levels of Product and Services
  9. 9. Levels of Product and Services – cont’d Core benefit Or Service Packaging Features Design Brand Name Quality level Installation After-sale service warranty Delivery and Credit Augmented product Actual Product Core Product
  10. 10. PART 2-PRODUCT CLASSIFICATIONS <ul><li>2.0 Product Classification </li></ul><ul><li>Products and services falls into two broad classes based on the types of consumers that use them : </li></ul><ul><li>- consumer products and industrial products. </li></ul>8-9
  11. 11. <ul><li>Product Classifications </li></ul><ul><li>2.1 Consumer products - are products and services for personal consumption </li></ul><ul><li>Classified by how consumers buy them : </li></ul><ul><li>Convenience products are consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort e.g newspapers, candy,fast food etc. </li></ul><ul><li>Shopping products are consumer products and services that the customer compares carefully on suitability, quality, price, and style e.g furniture, cars, appliances etc. </li></ul>8-10 PART 2- PRODUCT CLASSIFICATIONS –CONT’D
  12. 12. <ul><li>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 eg. </li></ul><ul><li>- Specific brands ,types of car, medical services, designer clothes, high-end electronics etc. </li></ul><ul><li>Unsought products are consumer products that the consumer does not know about or knows about but does not normally think of buying – until consumers know of them through advertising, personal selling and other marketing efforts.e.g </li></ul><ul><li>- Life insurance </li></ul><ul><li>- Funeral services </li></ul><ul><li>- Blood donations </li></ul>8-12 PART 2- PRODUCT CLASSIFICATIONS –CONT’D
  13. 13. <ul><li>2.2 Industrial products - are products purchased for further processing or for use in conducting a business. </li></ul><ul><li>It is classified by the purpose for which the product is purchased e.g. if a company buys a lawn mower for use around home, the lawn mower is a consumer product. </li></ul><ul><li>if the same consumer buys the same lawn more for use in a landscaping business , the lawn more is an industrial product. e.g </li></ul><ul><li>There are three groups of industrial products : </li></ul><ul><li>Materials and Parts, Capital items, Supplies and services </li></ul>8-15 PART 2- PRODUCT CLASSIFICATIONS –CONT’D
  14. 14. <ul><li>Materials and parts include raw materials and manufactured materials and parts usually sold directly to industrial users includes: </li></ul><ul><li>- Farm products: wheat, cotton, livestock, </li></ul><ul><li>fruits,vegegetable etc. </li></ul><ul><li>- Natural products:lumber,fish,iron, </li></ul><ul><li>- Manufactured material tires,iron,cement,wires, </li></ul>8-16 PART 2- PRODUCT CLASSIFICATIONS –CONT’D
  15. 15. <ul><li>Capital items - are industrial products that aid in the buyer’s production or operations including: </li></ul><ul><li>- installations : such as buildings, factories, offices, fixed equipment, drill presses, large computer systems, elevators etc. </li></ul><ul><li>Suppliers and Services : supplies include :operating supplies: lubricants, coal, paper, pencil and repair and maintenance items :paint, nails, broom etc. </li></ul><ul><li>Business services include: maintenance, and repair services and business advisory services: legal, management consulting, advertising etc . </li></ul>8-17 PART 2- PRODUCT CLASSIFICATIONS –CONT’D
  16. 16. <ul><li>In recent years marketers have broadened the concept of a product beyond tangible products and services, to include other marketable entities: organizations, Persons, Places and ideas . </li></ul><ul><li>- Organization marketing - organization often carries out activities to ‘sell’ the organization itself. </li></ul><ul><li>It consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward an organization </li></ul>8-18 2.3 Organizations, Persons, Places, and Ideas PART 2- PRODUCT CLASSIFICATIONS –CONT’D
  17. 17. <ul><li>Person marketing - consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward particular people e.g. </li></ul><ul><li>-President Bush, Obama skillfully marketed themselves </li></ul><ul><li>- Michael Jordan & Tiger Woods –use marketing to promote career to improve career & income. </li></ul><ul><li>- Professionals such as: doctors, lawyers, accountants, architects </li></ul><ul><li>Place Marketing –involves activities undertaken to create, maintain, or change attitudes or behavior toward particular places. e.g </li></ul><ul><li>Almost every country, city and state, markets its tourist attractions. </li></ul><ul><li>Business site: involves factories, stores, offices, warehouses,etc. </li></ul>8-19 PART 2- PRODUCT CLASSIFICATIONS –CONT’D
  18. 18. <ul><li>Organizations, Persons, Places, and Ideas </li></ul>8-21 <ul><li>Idea marketing – all marketing is a marketing of an idea, whether it be general idea or specific idea. </li></ul><ul><li>Similar to social-marketing , it includes the creation and implementation of program designed to influence individuals’ behavior to improve their well-being and that of society such as; family planning, human rights and racial equality and etc. </li></ul>PART 2- PRODUCT CLASSIFICATIONS –CONT’D
  19. 19. <ul><li>Product attributes -are the benefits of the product or service: quality, features, style and design. </li></ul><ul><li>3.1 Product Quality - Quality in terms of the product or service is the freedom from defects and the delivering of a targeted level of performance </li></ul><ul><li>Quality in terms of the customer is the value and satisfaction provided by the product or service </li></ul><ul><li>Product quality includes level and consistency: </li></ul><ul><li>Quality level is the level of quality that supports the product’s positioning </li></ul><ul><li>Performance quality is the ability of a product to perform its functions </li></ul>8-22 PART 3 : Individual Product and Service Decisions
  20. 20. PART 3 : Individual Product Decisions -Cont’d <ul><li>Individual Product and Service Decisions </li></ul><ul><li>3.2 Product features - are a competitive tool for differentiating a product from competitors’ products. </li></ul><ul><li>Product features are assessed based on the value to the customer versus the cost to the company </li></ul><ul><li>3.3 Product Design and style – Style describes the appearance of the product </li></ul><ul><li>Design contributes to a product’s usefulness as well as to its looks, can be eye catching or yawn inspiring. </li></ul><ul><li>A sensational type may grab attention. </li></ul><ul><li>- Unlike Style – design is more than skin deep- it goes to the very heart of a product. </li></ul><ul><li>- Good design can attract attention, improve product performance,, cut production costs, and give the product a strong competitive advantage in the target market. e.g electric razors, hair dryer etc. </li></ul>8-27
  21. 21. <ul><li>3.4 Brand is the name, term, sign, or design, or a combination of these, that identifies the maker or seller of a product or service </li></ul><ul><li>Perhaps the most distinctive skill of professional marketers is their ability to create , maintain, protect, and enhance brands of its production and services. </li></ul>8-29 PART 3 : Individual Product Decisions -Cont’d
  22. 22. <ul><li>Branding Strategy: Building Strong Brands </li></ul><ul><li>Brand represents the consumer’s perceptions and feelings about a product and its performance. </li></ul><ul><li>It is the company’s promise to deliver a specific set of features, benefits, services, and experiences consistently to the buyers </li></ul><ul><li>Brand vary in the amount of power and value they have in the market place. A powerful brand has high brand equity. </li></ul><ul><li>3.4.1.Brand equity - is the positive differential effect that knowing the brand name has on customer response to the product or service </li></ul><ul><li>Brand equity provides competitive advantage: </li></ul><ul><li>Consumer awareness and loyalty </li></ul><ul><li>Benefits –identify products that benefit them. </li></ul><ul><li>Beliefs and value –the brand becomes the basis on which a whole story can be built on the product quality. </li></ul><ul><li>World top brands include superpowers like: Coca Cola, Campbell’s, Disney, Kodak, Sony, Mercedes- Benz, McDonald’s </li></ul>8-42 PART 3 : Individual Product Decisions -Cont’d
  23. 23. PART 3 : Individual Product Decisions -Cont’d <ul><li>3.4.2.Brand valuation is the process of estimating the total financial value of the brand </li></ul><ul><li>3.4.3 Brand strategy decisions include: </li></ul><ul><li>Brand positioning </li></ul><ul><li>Brand name selection </li></ul><ul><li>Brand sponsorship </li></ul><ul><li>Brand development </li></ul><ul><li>Brand Positioning -decisions include: </li></ul><ul><li>Product attributes </li></ul><ul><li>Product benefits </li></ul><ul><li>Product beliefs and values – how brand is positioned on consumers mind </li></ul><ul><li>Brand Name Selection </li></ul><ul><li>Suggests benefits and qualities – a good name can add greatly to a product’s success. </li></ul><ul><li>Easy to pronounce, recognize, and remember </li></ul><ul><li>Distinctive – brand name suggest about the product’s benefits and qualities. </li></ul><ul><li>Extendable – brand name should translate easily into foreign languages. </li></ul><ul><li>Translatable for the global economy </li></ul>8-45
  24. 24. PART 3 : Individual Product Decisions -Cont’d <ul><li>3.4.4 Brand Sponsorship </li></ul><ul><li>Manufacturer’s brand – have long dominated the retail scene. In recent times an increasing number of retailers and wholesalers have created their own private brands. </li></ul><ul><li>Private brand – where wholesalers created their own private brands </li></ul><ul><li>Licensed brand – Most manufacturers take years and spend millions to create their own brand names. </li></ul><ul><li>Some companies license names or symbols using names of well known celebrities, characters from popular movies and books e.g Bill Blass, Calvin Klein, Pierre Gardin etc. </li></ul><ul><li>Name and character licensing has become a big business in recent years. </li></ul><ul><li>Co-brand – The practice of using the established brand names of two different companies on the same product e.g </li></ul><ul><li>- Pillsbury joined Nabisco to create Oreo bars. </li></ul><ul><li>- Ford and Eddie Bauer co-branded a sport utility vehicle – Ford Explorer </li></ul><ul><li>Co-branding offers many advantages- because its brand dominates in a different category. The combination of brands create broader consumer appeal and greater brand equity. </li></ul>8-49
  25. 25. PART 3 : Individual Product Decisions -Cont’d <ul><li>Brand strategy – cont’d </li></ul><ul><li>3.4.5.Brand Development </li></ul><ul><li>Line extensions -occur when a company extends existing brand names to new forms, colors, sizes, ingredients, or flavors of an existing product category e.g. </li></ul><ul><li>- Dannon introduced lately several line extensions, include seven new yogurt flavors, a fat-free yogurt and a large-economy size yogurt. </li></ul><ul><li>Brand extensions extend a brand name to a new or modified product in a new category e.g </li></ul><ul><li>- Honda -allows Honda to advertise that it can ‘fit’ six Honda’s in a two car garage. </li></ul><ul><li>- Brand extensions give the new product an instant recognition and faster acceptance. </li></ul>8-52
  26. 26. <ul><li>3.4.6. Brand Development </li></ul><ul><li>Multibrands- are additional brands in the same category e.g Procter & Gamble markets many different brands in each of its product categories. </li></ul><ul><li>- Multibrands offer different features and appeal to different buying motives. </li></ul><ul><li>New brands – a company may create a new brand name when it enters a new product category for which none of the company’s current brand names are appropriate . </li></ul><ul><li>That is - are used when existing brands are inappropriate for new products in new product categories or markets </li></ul>8-53 PART 3 : Individual Product Decisions -Cont’d
  27. 27. Individual Product Decisions –cont’d <ul><li>3.5 Packaging – involves designing and producing the container or wrapper for a product. </li></ul><ul><li>Tradionally the primary function of the packaging is to contain and protect the product, now it has become an important marketing tool. </li></ul><ul><li>Now packaging has perform many tasks: </li></ul><ul><li>Attracting attention, describing the product, and even making the sale. </li></ul><ul><li>Companies has recognized the power of good packaging , to create instant consumer recognition of the company or brand. </li></ul>
  28. 28. Individual Product Decisions –cont’d <ul><li>3.6 Labeling – Labels may range from single tags attached to products to complex graphics that are part of the package. </li></ul><ul><li>Identify several functions: identify the product or brand, such as the name Sunkist stamped on oranges. </li></ul><ul><li>The label describes several things about the product: who made it, where it was made, when it was made, its contents, how it is to be used, and how to use it safely. </li></ul><ul><li>Labels promote product through attractive graphics and also can mislead customers by failing to: </li></ul><ul><li>- describe important ingredients </li></ul><ul><li>- include needed safety warnings. </li></ul>
  29. 29. Individual Product Decisions –cont’d <ul><li>3.7 Product Support Services – </li></ul><ul><li>Customer service is another element of product strategy </li></ul><ul><li>A company's offer of product to the marketplace includes some services, which can be a minor or a major part of the total offer. </li></ul><ul><li>A company should design its product and support services to profitably meets the needs of target customers. </li></ul><ul><li>More and more companies are using product support services to profitably meet the needs of target customers. </li></ul>
  30. 30. <ul><li>Product line - is a group of products that are closely related because they function in a similar manner and are: - are sold to the same customer groups </li></ul><ul><li>- are marketed through the same types of outlets </li></ul><ul><li>- or fall within given price ranges </li></ul><ul><li>We have looked at product strategy decisions such as branding , packaging, labeling, and support services for individual products </li></ul><ul><li>But product strategy also calls for building a product line. </li></ul>8-33 PART 4 : PRODUCT LINE DECISIONS
  31. 31. Product line Decisions – cont’d <ul><li>Product line filling occurs when companies add more items within the present range of the line for: </li></ul><ul><li>Create growth in sales and profits </li></ul><ul><li>Satisfying dealers </li></ul><ul><li>Excess capacity –adding more items within the present range </li></ul><ul><li>Plugging holes to fend off competitors </li></ul><ul><li>Product line depth - is the number of versions offered of each </li></ul><ul><li>product in the line </li></ul><ul><li>Consistency - is how closely the various product lines are in end use, production requirements, or distribution channels </li></ul>8-38
  32. 32. <ul><li>Product mix consists of all the products and items that a particular seller offers for sale </li></ul><ul><li>Width -refers to the number of product lines the company carriers e.g. Procter & Gamble markets have wide product mix consisting of many product lines : paper, food household cleaning, cosmetics, medicinal ,personal care products etc. </li></ul><ul><li>Length –refers to the total number of items the company carriers within its product line. e.g. Procter & Gamble sells 11 types of laundry detergents, 8 types of hand soaps, 6 types of shampoos, and four types of dishwashing detergents. </li></ul>8-39 PART 5: PRODUCT MIX DECISIONS
  33. 33. PART 5: PRODUCT MIX DECISIONS –con’td <ul><li>Depth - refers to the number of versions offered to each product in the line e.g Procter & gambles Crest toothpaste comes in three sizes and two formulations (paste & gel) </li></ul><ul><li>Consistency – of the product mix refers to how closely related the various product line are in: end use, production requirements, distribution channels and some other way. e.g Procter & Gamble are consistent insofar as they are consumer products that goes through the same distribution channels. Are inconsistent if they perform different functions for buyers. </li></ul>
  34. 34. PART 5: PRODUCT MIX DECISIONS –con’td <ul><li>A company can increase its business in four ways: </li></ul><ul><li>It can add new product lines, thus widening its product mix. In this way, its new lines build on the company’s reputation in its other lines. </li></ul><ul><li>The company can lengthen its existing product lines to become a more fulltime company. Or it can add more versions of each product and thus deepen its product mix. </li></ul><ul><li>Finally, the company can pursue more product line consistency –or-less depending on whether it wants to have a strong reputation in a single field or in several fields. </li></ul>
  35. 35. PART 6 : Services Marketing <ul><li>One of the major world trends in the recent years has been the dramatic growth of services . </li></ul><ul><li>USA has become the world’s first service economy. Service now generate 74% of US GPA (Gross Domestic Product) </li></ul><ul><li>Services industries includes: banking, insurance, communications, travel, entertainment, and service now accounts for almost 60% in economy in develop countries around the world. </li></ul><ul><li>Service industries vary greatly : Government, private organizations , and business organizations. </li></ul>
  36. 36. PART 6 : Services Marketing –cont’d <ul><li>Nature and Characteristics of Service </li></ul><ul><li>Activities involved includes: renting a room, depositing money in the bank, travelling on an airplane, getting a haircut, having a car repaired, watching a professional sport, seeing a movies, and getting advice from a lawyer, all involve buying a service. </li></ul><ul><li>A company must consider four special service characteristics when designing marketing programs: intangibility, inseparability, variability, and perishability. </li></ul>
  37. 37. Services Marketing – cont’d <ul><li>6.0 Nature and Characteristics of a Service </li></ul><ul><li>Intangibility refers to the fact that services cannot be seen, tasted, felt, heard, or smelled before they are purchased. e.g </li></ul><ul><li>- people undergoing cosmetic surgery </li></ul><ul><li>- purchasing of an airline ticket – have nothing a ticket and promise of safe delivery to destinations. </li></ul><ul><li>- ( People have top draw conclusions about quality, safety of service purchased ) </li></ul><ul><li>Inseparability refers to the fact that services cannot be separated from their providers, whether involving people or machines e.g. It is a provider- customer interaction, both the provider and the customer affect the service outcome. </li></ul><ul><li>Variability refers to the fact that service quality depends on who provides it as well as when, where, and how it is provided e.g. </li></ul><ul><li>- Marriott have reputations for providing better services. </li></ul><ul><li>- At a reception desk , the employee may be cheerful and efficient whereas another standing just a few feet away, my be unpleasant and slow. </li></ul><ul><li>Perishability refers to the fact that services cannot be stored for later sale or use </li></ul>8-57
  38. 38. Services Marketing – cont’d <ul><li>Marketing Strategies for Service Firm </li></ul><ul><li>Just like manufacturing business, good service firms use marketing to position themselves strongly in chosen target markets. </li></ul><ul><li>Because services differ from tangible products, they often require additional marketing approaches </li></ul><ul><li>In product business, product are fairly standardized and sit on shelves waiting for customers. </li></ul><ul><li>But in service business, the customer and frontline service employee interact to create the service. </li></ul><ul><li>Effective interaction, depends on the skills of frontline service employees and on the service production and support processes backing these employees. </li></ul>
  39. 39. Services Marketing –cont’d <ul><li>Marketing Strategies for Service Firms </li></ul><ul><li>In addition to traditional marketing strategies, service firms often require additional strategies: </li></ul><ul><li>Service-profit chain – chain that links service firm profits with employee and customer satisfaction includes: superior employee selection & training, quality work environment,etc. </li></ul><ul><li>Internal marketing -train and effectively motivate its customer contact employees, teamwork etc </li></ul><ul><li>Interactive marketing - to emphasize on the quality and importance of buyer-seller interaction. </li></ul>8-59
  40. 40. Services Marketing -cont’d <ul><li>Marketing Strategies for Service Firms </li></ul><ul><li>Managing service differentiation creates a competitive advantage from the offer, delivery, and image of the service </li></ul><ul><li>Offer – the solution to price competition is to develop a differentiated offer , delivery and image. </li></ul><ul><li>Offer can include innovative features, different from competitors e.g. airline industry. </li></ul><ul><li>Delivery -can include more able and reliable customer contact people, environment, or desi8gning a superior delivery process e.g ATM in banking </li></ul><ul><li>Image : differentiate through symbols and branding e. Harris bank of Chicago adopted the lion as its symbol – confers an mage of strength on the bank. </li></ul>8-63
  41. 41. TOPIC 7 – THE END