Objectives • Be able to define product and know the major classifications of products and services. • Understand the decisions companies make regarding their individual products and services, product lines, and product mixes. • Understand how firms build and manage their brands.
Objectives • Know the four characteristics of services and the additional marketing considerations that services require. • Review additional product issues related to social responsibility and international marketing.
Cosmetics companies sell billions of dollars worth of products Consumers buy more than just a particular smell The “promise”, image, company, name, package, and ingredients are all part of the product, as are the stores where it is sold. c Cosmetics Industry
Definition • Product • Anything offered to a market for attention, acquisition, consumption or use that might satisfy a need or want.
Definition • 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.
What is a Product? • Products, Services, & Experiences • Market offerings, pure tangible goods, pure services, experiences Experiences include zoos and aquariums
Figure 9-1: Three Levels of Product
Discussion Question Describe the core benefit, actual product, and augmented product aspects of an automobile purchase.
What is a Product? • Product and service classifications fall into two broad classes based on the types of buyers who use them: • Consumer products • Industrial products
Convenience Shopping Specialty Unsought Frequent purchases bought with minimal buying effort and little comparison shopping Low price Widespread distribution Mass promotion by producer What is a Product? Types of Consumer Products
Convenience Shopping Specialty Unsought Less frequent purchases requiring more shopping effort and price, quality, and style comparisons. Higher priced than convenience goods Selective distribution in fewer outlets Advertising and personal selling by producer and reseller What is a Product? Types of Consumer Products
Convenience Shopping Specialty Unsought Strong brand preference and loyalty, requires special purchase effort, little brand comparisons, and low price sensitivity High price Exclusive distribution Carefully targeted promotion by producers and resellers What is a Product? Types of Consumer Products
Discussion Question How can tropical fish be a convenience good, specialty good, or shopping good to different consumers? Provide examples.
Convenience Shopping Specialty Unsought Little product awareness and knowledge (or if aware, sometimes negative interest) Pricing varies Distribution varies Aggressive advertising and personal selling by producers and resellers What is a Product? Types of Consumer Products
The Goal:Sell plots to baby boomers prior to an actual death in the family – “preneed policies”. Special Challenges: Emotional – marketing done at the wrong time could boomerang. Pay Now . . . Die LaterSelling Cemetery Plots • Opportunities:Many states treat preneed policies as tax exempt, and now allow cemeteries to have funeral homes. On-site funeral homes provide greater convenience.
Unusual Promotions: Buy one plot get a second for a penny “Heaven Can Wait” cemetery run Boy Scout campouts at cemeteries Other Advertising: Freestanding inserts “Penny pincher” bags Pay Now . . . Die LaterSelling Cemetery Plots • Lakeview Cemetery: • Brochure direct mail with map and open plots designated • Stresses need to preplan as a method of sparing loved ones • Other Sales Methods: • Grief information • Via clergy members
What is a Product? • Product and Service Classifications • Industrial products are those purchased for use in conducting a business or those purchased as ingredients or components to be used in manufacturing. • Materials and parts • Capital items • Supplies and services
Industrial products also include business services, such as landscaping, technology, food services, or custodial.
What is a Product? • Product and Service Classifications • “Products” also include organizations, persons, places, and ideas • Organizational marketing makes use of corporate image advertising • Person marketing applies to political candidates, entertainment sports figures, and professionals • Place marketing relates to tourism • Social marketing campaigns promote ideas
Social marketing promotes ideas or causes for the purpose of improving an individual’s well-being or the well-being of society.
Individual Product Product Line Product Mix Product attributes Quality, features, style and design Branding Packaging Labeling Product support services Product & Service Decisions Key Decisions
Figure 9-2: Individual Product and Service Decisions
Product & Service Decisions • Innovative product design can help revitalize a company, such as with the Apple iMac.
Product & Service Decisions • Brand: • A name, term, sign, symbol, design, or a combination of these, that identifies the maker or sellers of a product or service.
Product & Service Decisions • Packaging involves designing a container or wrapper for a product
Product & Service Decisions • Many aspects of a food product’s label are dictated by law
Product & Service Decisions Support services via the web include FAQ files, email queries, live chat with customer service personnel, and software updates 1-800 Flowers
Individual Product Product Line Product Mix Product line length Line stretching: adding products that are higher or lower priced than the existing line Line filling: adding more items within the present price range Product & Service Decisions Key Decisions
Discussion Question Would you classify Tide’s product line as an example of line stretching or line filling? Why?
Individual Product Product Line Product Mix Product line width: Number of different product lines carried by company Product line depth: Number of different versions of each product in the line Product line consistency Product & Service Decisions Key Decisions
Branding Strategy • Brands are powerful assets that must be carefully developed and managed. • Both Tiger Woods and Nike can be considered brands
Branding Strategy • Brands with strong equity have many competitive advantages: • High consumer awareness • Strong brand loyalty • Helps when introducing new products • Less susceptible to price competition
Figure 9-3: Major Brand Strategy Decisions
Brand Positioning Brand Name Selection Brand Sponsorship Brand Development Three levels of positioning: Product attributes Least effective Benefits Beliefs and values Taps into emotions Brand Strategy Key Decisions
Brand Positioning Brand Name Selection Brand Sponsorship Brand Development Good Brand Names: Suggest something about the product or its benefits Are easy to say, recognize and remember Are distinctive Are extendable Translate well into other languages Can be registered and legally protected Brand Strategy Key Decisions
Discussion Question Evaluate the brand name for the product at left according to the criteria previously listed. Would you have chosen this name for this product?
Brand Positioning Brand Name Selection Brand Sponsorship Brand Development Manufacturer brands Brand Strategy Key Decisions
Brand Positioning Brand Name Selection Brand Sponsorship Brand Development Private (store) brands Costly to establish and promote Higher profit margins Brand Strategy Key Decisions
Brand Positioning Brand Name Selection Brand Sponsorship Brand Development Licensed brands Name and character licensing has grown Brand Strategy Key Decisions
Brand Positioning Brand Name Selection Brand Sponsorship Brand Development Co-branding Advantages Broader consumer appeal Greater brand equity Efficient means of expansion into new product categories Limitations Complex legal contracts Requires careful coordination of IMC Requires that partners trust one another Brand Strategy Key Decisions
Brand Positioning Brand Name Selection Brand Sponsorship Brand Development Line extensions Minor changes to existing products Brand extensions Successful brand names help introduce new products Multibrands Multiple product entries in a product category New brands New product category Brand Strategy Key Decisions
Figure 9-4: Brand DevelopmentStrategies
Flavors Colors Brand Strategy Line Extensions May Feature Different Things • Forms • Ingredients • Package Sizes
Services Marketing • Services • Account for 74% of U.S. gross domestic product. • Service industries include business organizations, government, and private not-for-profit organizations.
Figure 9-5: Four Services Characteristics
BusinessNow Site59 Video Clip The perishability of services such as airline seats creates special challenges for marketers Click the picture above to play video
Figure 9-6: Three Types of Marketing in Services Industries
Services Marketing • Service Firm Marketing Strategies • The Service-Profit Chain • Internal Marketing: service firms train and effectively motivate their employees to work as a team to satisfy the customer • Interactive Marketing: recognizes that service quality depends heavily on the quality of buyer-seller interaction
Services Marketing • Service Firm Marketing Strategies • Managing Service Differentiation British Airways differentiates its service by offering first-class world travelers private “demi-cabins”