Chapter Eight

Product, Services,
and Brands:
Building Customer
Value
Copyright ©2014 by Pearson Education
Product, Services, and Branding
Strategy
Topic Outline
• Product, Services, and
Experiences
• Product and Services Decisions
• Services Marketing
• Branding Strategy: Building
Strong Brands
 What Is a Product?
Products, Services, and Experiences
Product is anything that can be offered
in a market for attention, acquisition,
use, or consumption that might satisfy
a need or want
Service is a product that consists of
activities, benefits or satisfaction that
is essentially intangible and does not
result in the ownership of anything
Experiences represent what buying the product or service will do for the customer
• Product is a key element in the overall
market offerings. This offering becomes the
basis upon which the company builds
profitable customer relationships.
• A company’s market offering often
includes both tangible goods and services.
• At one extreme, the offer may consist of a
pure tangible good, such as soap or
toothpaste.
• At the other extreme are pure services, for
which the offer consists primarily of a
service
• To differentiate their offers, marketers are
creating and managing customer
experiences with their brands or company.
• Experiences represent what buying the
product or service will do for the customer
Levels of Product and Services
 Levels of Product and Services
• 1- Core customer value:
• Product planners need to think about
products and services on three levels. Each
level adds more customer value. The most
basic level is the core customer value, which
addresses the question: What is the buyer
really buying? When designing products,
marketers must first define the core,
problem-solving benefits or services that
consumers seek.
2- Actual product:
• At the second level, product planners must
turn the core benefit into an actual product.
They need to develop product and service
features, a design, a quality level, a brand
name, and packaging. For example, the I Pad
is an actual product. Its name, parts, styling,
features, packaging, and other attributes
have all been carefully combined to deliver
the core customer value of staying
connected.
3- Augmented product:
• Finally, product planners must build an
augmented product around the core benefit
and actual product by offering additional
consumer services and benefits. The IPad is
more than just a digital device.
Product and Service
Classifications

Consumer
products
Industrial
products
Product and Service Classifications
Consumer products are products and
services for personal consumption
• Classified by how consumers buy
them
– Convenience products
– Shopping products
– Specialty products
– Unsought products
1. Convenience products
consumer products and services
that the customer usually buys
frequently, immediately, and with a
minimum comparison and buying
effort
– Newspapers
– Candy
– Fast food
2. Shopping products
consumer products and services
that the customer compares
carefully on suitability, quality, price,
and style
– Furniture
– Cars
– Appliances
3. Specialty products
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
•Medical services
•Designer clothes
•High-end electronics
4. Unsought products
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
 Type of Consumer Product
Marketing Convenience Shopping Specialty Unsought
Considerations

Customer buying Frequent purchase; Less frequent Strong brand Little product

behavior little planning, little purchase; much preference and awareness or

comparison or planning and loyalty; special knowledge (or, if
shopping effort; low shopping effort; purchase effort; aware, little or even
customer comparison of little comparison of negative interest).
involvement brands on price, brands; low price
quality, and style sensitivity

Price Low price Higher price High price Varies

Distribution Widespread Selective Exclusive Varies

distribution; distribution in fewer distribution in only
convenient locations outlets one or a few outlets
per market area
 Marketing Convenience Shopping Specialty Unsought
Considerations

Promotion Mass Advertising and More carefully Aggressive

promotion by personal selling targeted advertising and
the producer by both the promotion by personal selling
producer and both the by the producer
resellers producer and and resellers.
resellers

Examples Toothpaste, Major Luxury goods, Life insurance

magazines, and appliances, such as rolex and Red Cross
laundry televisions, watches or fine blood
detergent furniture, and crystal donations.
clothing.
Industrial products
products purchased for further
processing or for use in conducting a
business
• Classified by the purpose for which the
product is purchased
–Capital items
–Materials and parts
–Supplies and services
Capital items are industrial products
that aid in the buyer’s production or
operations
Materials and parts include raw
materials and manufactured
materials and parts usually sold
directly to industrial users
Supplies and services include operating
supplies, repair and maintenance
items, and business services
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

Person marketing consists of activities

undertaken to create, maintain, or change
attitudes and behavior of target consumers
toward particular people
Place marketing consists of activities
undertaken to create, maintain, or change
attitudes and behavior of target
consumers toward particular places

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
 Product and Service
Decisions

1. Individual Product and Service

Decisions

2.Product Line Decisions

3.Product Mix Decisions

1.Individual Product and
Service Decisions
Individual Product and Service Decisions
1. Product or service attributes
Communicate and deliver the benefits
Developing a product or service involves
defining the benefits that it will offer. These
benefits are communicated and delivered by
product attributes such as quality, features, and
style and design.
• Quality
• Features
• Style and design
A. Product Quality
• Quality affects product or service performance;
thus, it is closely linked to customer value and
satisfaction. Quality can be defined as "freedom
from defects". But most marketers go beyond this
narrow definition. Instead, they define quality in
terms of creating customer value and
satisfaction.
• Product Quality Level is the level of quality
that supports the product’s positioning
• Product Conformance Quality is the product’s
freedom from defects and consistency in
delivering a targeted level of performance
B. Product features
• A competitive tool for differentiating a product
from competitors’ products
• Assessed based on the value to the customer
versus the cost to the company

The company should periodically survey

buyers who have used the product and ask
these questions: How do you like the
product? Which specific features of the
product do you like most? Which features
could we add to improve the product?
C. Product Style & Design
Design is more than skin deep it goes to the very
heart of a product. Good design contributes to a
product's usefulness as well as to its look.

Style describes the appearance of the product

It can be eye-catching . A sensational style may
grab attention and produce pleasing aesthetics,
but it doesn’t necessarily make the product
perform better.
Design contributes to a product’s
usefulness as well as to its looks
Design is larger concept than style
2. Brand is the name, term, sign, or
design or a combination of these that
identifies the maker or seller of a
product or service
Branding helps buyers in many ways.
Brand names help consumers identify
products that might benefit them.
Brands say something about product
quality and consistency.
Branding gives the seller several
advantages.
• The brand name becomes the basis on
which a whole story can be built about
a product.
• The brand name and trademark
provide legal protection for unique
product features.
• The brand name helps the seller to
segment markets.
3. Packaging involves designing and
producing the container or wrapper for a
product
The primary function of the package was to
hold and protect the product. In recent
times, however, packaging has become an
important marketing tool as well. Increased
competition and clutter on retail store
shelves means that packages must now
perform many sales tasks from attracting
buyers, to communicating brand
positioning, to closing the sale.
4. Labels identify the product or brand,
describe attributes, and provide promotion
Labels range from simple tags attached to
products to complex graphics that are part of
the package. Labels perform several
functions.
The label identifies the product or brand.
The label describes several things about
the product.
The label promotes the brand.
 2.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
Product line length is the number of items in
the product line
Line stretching
Line filling
Product line length is the number of items in
the product line
Managers need to analyze their product lines
periodically to assess product item’s sales
and profits and to understand how each
item contributes to the line’s overall
performance.
• Line stretching
• Line filling
Product line filling involves adding more
items within the present range of the line.
There are several reasons 4 product line
filling:
 Extra profits
 Satisfying dealers
 Using excess capacity
 Plugging holes to keep out competitors.
• Product line stretching occurs when a company
lengthens its product line beyond its current
range.
• Companies located at the upper end of the
market can stretch their lines downward.
• Companies located at the lower end of the
market can stretch their product lines upward.
Add prestige to their current products)
• Companies located in the middle range of the
market can stretch their lines in both
directions.
 3.Product Mix Decisions
A product mix (or product portfolio) consists of all the product lines
and items that a particular seller offers for sale, Campbell Soup
Company's product mix consists of three major product lines.

Product mix consists of all

the products and items
that a particular seller
offers for sale
» Width
» Length
» Depth
» Consistency
• Product mix width refers to the number of
different product lines the company carries.
• Product mix length refers to the total number
of items the company carries within its
product lines.
• Product mix depth refers to the number of
versions offered of each product in the line.
• Product mix consistency refers to how closely
related the various product lines are in end
use, production requirements, distribution
channels, or some other way.
 Services Marketing
• Services have grown dramatically in recent
years. Services now account for close to 65
percent of the U.S. gross domestic product
(GDP). The service industry is growing. By
2014, it is estimated that more than 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.
Nature and Characteristics of
a Service
 Nature and Characteristics of a
Service
1. Service intangibility means that services cannot be
seen, tasted, felt, heard, or smelled before they are
bought. For example, people undergoing cosmetic
surgery cannot see the result before the purchase.
Airline passengers have nothing but a ticket and a
promise that they and their luggage will arrive safely
at the intended destination, hopefully at the same
time. To reduce uncertainty, buyers look for signals of
service quality. They draw conclusions about quality
from the place, people, price, equipment, and
communications that they can see. `
Nature and Characteristics of a Service
2. 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. And
customers don't just buy and use a service, they
play an active role in its delivery.
Both the provider and the customer affect the
service outcome.
Nature and Characteristics of a Service
3. Service variability means that the quality of
services depends on who provides them as well as
when, where, and how they are provided.
For example, some hotels say, Marriott have
reputations for providing better service than
others. Still, within a given Marriott hotel one
registration-counter employee may be cheerful
and efficient, whereas another standing just a few
feet away may be grumpy and slow.
Nature and Characteristics of a Service
4. Service perishability: means that services cannot
be stored for later sale or use. Some doctors
charge patients for missed appointments because
the service value existed only at that point and
disappeared when the patient did not show up.
The perishability of services is not a problem when
demand is steady. However, when demand
fluctuates, service firms often have difficult
problems.
Marketing Strategies for Service
Firms

In addition to traditional
marketing strategies,
service firms often require
additional strategies
• Service-profit chain
• Internal marketing
• Interactive marketing
 Marketing Strategies for
Service Firms
Service-profit chain links service firm
profits with employee and customer
satisfaction
• Internal service quality
• Satisfied and productive service employees
• Greater service value
• Satisfied and loyal customers
• Healthy service profits and growth
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
Interactive marketing means that
service quality depends heavily on the
quality of the buyer-seller interaction
during the service encounter

1.Service differentiation
2.quality
3.Service productivity
1.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
2.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
3.Managing service productivity refers
to the cost side of marketing strategies for
service firms
Employee recruiting, hiring, and training
strategies
Service quantity and quality strategies
 Branding Strategy: Building
Strong Brands
Brands are powerful assets that must be carefully
developed and managed, we examine the key
strategies for building and managing product and
service brands.
. Brand equity
The differential effect that knowing the
brand name has on customer response to
the product or its marketing.
Branding Strategy: Building Strong Brands
Brands are more than just names and symbols.
They are a key element in the company's
relationships with consumers.
Brands represent consumer's perceptions and
feelings about a product and its performance
everything that the product or the service means
to consumers. In the final analysis, brands exist in
the heads of consumers. As one well - respected
marketer once said, "Products are created in the
factory, but brands are created in the mind.
 Building Strong Brands
Branding poses challenging decisions to the marketer.
Figure shows that the major brand strategy decisions
involve brand positioning, name selection,
sponsorship, and brand development.
 1. Brand Positioning
Marketers need to position their brands
clearly in target customers minds. They can
position brands at any of three levels.
Brand strategy decisions
include:
1.Product attributes
2.Product benefits
3.Product beliefs and values
Brand Positioning

Marketers can position

brands at any of three
levels.
1.Product
attributes(competitors can
easily copy contributes)
2.Product benefits(Nike
performance, FedEx
guaranteed on time delivery,
Volvo safety)
3.Product beliefs and values
 2.Brand Name Selection
A good name can add greatly to a product's success.
However, finding the best brand name is a difficult task. It
begins with a careful review of the product and its benefits,
the target market, and proposed marketing strategies.

Desirable qualities
1. Suggest benefits and qualities
2. Easy to pronounce, recognize, and remember
3. Distinctive
4. Extendable
5. Translatable for the global economy
6. Capable of registration and legal protection
 3. Brand Sponsorship
A manufacturer has four sponsorship options. The product
may be launched as a national brand (or manufacturer's
brand) Or the manufacturer may sell to resellers who give
the product a private brand (also called a store brand or
distributor brand). Other manufacturers market licensed
brands. Finally, two companies can join forces and co-
brand a product.

Manufacturer’s brand
Private brand
Licensed brand
Co-brand
4.Brand Development Strategies
 Brand Development
Strategies
1. Line Extensions occur when a
company extends existing brand names
to new forms, colors, sizes, ingredients,
or flavors of an existing product
category. (low cost, low risk way to
introduce new products)
2. Brand Extensions extend a current
brand name to new or modified products
in a new category.
3. Multibranding Companies often market
many different brands in a given product
category. Introduces additional brands in the
same category. (P&G)

4. New Brands A company might believe that

the power of its existing brand name is waning
and a new brand name is needed, or when it
enters anew product category for which none
of the company’s current brand names are
appropriate. Toyota created the separate Scion
brand targeted toward younger consumers.
 New-Product
Development Process
Major Stages in New-Product Development
Product Life-Cycle Strategies
Product Life Cycle
Product Life-Cycle Strategies

• Product development
– Sales are zero and investment costs mount
• Introduction
– Slow sales growth and profits are nonexistent
• Growth
– Rapid market acceptance and increasing profits.
• Maturity
– Slowdown in sales growth and profits level off or
decline
• Decline
– Sales fall off and profits drop
Product Life-Cycle Strategies
1. Introduction Stage
• Slow sales growth
• Little or no profit
• High distribution and promotion expense
The introduction stage starts when a new
product is first launched. Introduction
takes time, and sales growth is apt to be
slow. Well-known products such as frozen
foods and HDTVs lingered for many years
before they entered a stage of more rapid
growth.
2. Growth Stage
Sales increase
New competitors enter the market
Price stability or decline to increase volume
Consumer education
Profits increase
Promotion and manufacturing costs gain economies
of scale
Profits increase during the growth stage as
promotion costs are spread over a large volume and
as unit manufacturing costs decrease. The firm uses
several strategies to sustain rapid market growth as
long as possible. It improves product quality and
adds new product features and models.
3. Maturity Stage
• Slowdown in sales
• Many suppliers
• Substitute products
• Overcapacity leads to competition
• Increased promotion and R&D to
support sales and profits
Maturity Stage Modifying Strategies

Market modifying
Product modifying
Marketing mix modifying
• The company can try modifying the
marketing mix-improving sales by changing
one or more marketing mix elements.
• The company can offer new or improved
services to buyers. It can cut prices to
attract new users and competitors
customers. It can launch a better
advertising campaign or use aggressive
sales promotions – trade deals, cents-off,
premiums, and contests.
4. Decline Stage
• Maintain the product
• Harvest the product
• Drop the product
• The sales of most product forms and brands
eventually dip. The decline may be slow, as in
the cases of stamps and oatmeal cereal, or
rapid, as in the cases of VHS tapes. Sales may
plunge to zero or they may drop to a low level
where they continue for many years. This is the
decline stage.