Kotler_pom_15e_inppt_08_GEmarketing.pptx
- 1. Chapter Eight Product, Services, and Brands: Building Customer Value Copyright ©2014 by Pearson Education
- 2. Product, Services, and Branding Strategy • Product, Services, and Experiences • Product and Services Decisions • Services Marketing • Branding Strategy: Building Strong Brands Topic Outline
- 3. What Is a Product? 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 Products, Services, and Experiences Experiences represent what buying the product or service will do for the customer
- 4. • 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.
- 5. • 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
- 6. Levels of Product and Services
- 7. • 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. Levels of Product and Services
- 8. 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.
- 9. 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.
- 11. Consumer products are products and services for personal consumption • Classified by how consumers buy them –Convenience products –Shopping products –Specialty products –Unsought products Product and Service Classifications
- 12. 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
- 13. 2. Shopping products consumer products and services that the customer compares carefully on suitability, quality, price, and style –Furniture –Cars –Appliances
- 14. 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
- 15. 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
- 16. Marketing Considerations Convenience Shopping Specialty Unsought Customer buying behavior Frequent purchase; little planning, little comparison or shopping effort; low customer involvement Less frequent purchase; much planning and shopping effort; comparison of brands on price, quality, and style Strong brand preference and loyalty; special purchase effort; little comparison of brands; low price sensitivity Little product awareness or knowledge (or, if aware, little or even negative interest). Price Low price Higher price High price Varies Distribution Widespread distribution; convenient locations Selective distribution in fewer outlets Exclusive distribution in only one or a few outlets per market area Varies Type of Consumer Product
- 17. Marketing Considerations Convenience Shopping Specialty Unsought Promotion Mass promotion by the producer Advertising and personal selling by both the producer and resellers More carefully targeted promotion by both the producer and resellers Aggressive advertising and personal selling by the producer and resellers. Examples Toothpaste, magazines, and laundry detergent Major appliances, televisions, furniture, and clothing. Luxury goods, such as rolex watches or fine crystal Life insurance and Red Cross blood donations.
- 18. 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
- 19. 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
- 20. Organization marketing consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward an organization Organizations, Persons, Places, and Ideas Person marketing consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward particular people
- 21. 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
- 22. Product and Service Decisions . 1 Individual Product and Service Decisions . 2 Product Line Decisions . 3 Product Mix Decisions
- 23. . 1 Individual Product and Service Decisions
- 24. 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 Individual Product and Service Decisions
- 25. 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
- 26. 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?
- 27. C. Product Style & Design 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 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.
- 28. 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.
- 29. 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.
- 30. 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.
- 31. 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.
- 32. 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 . 2 Product Line Decisions Product line length is the number of items in the product line Line stretching Line filling
- 33. 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
- 34. 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.
- 35. • 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.
- 36. Product mix consists of all the products and items that a particular seller offers for sale » Width » Length » Depth » Consistency . 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.
- 37. • 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.
- 38. 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.
- 39. Nature and Characteristics of a Service
- 40. 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. `
- 41. 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.
- 42. 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.
- 43. 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.
- 44. In addition to traditional marketing strategies, service firms often require additional strategies • Service-profit chain • Internal marketing • Interactive marketing Marketing Strategies for Service Firms
- 45. 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 Marketing Strategies for Service Firms
- 46. 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
- 47. 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
- 48. . 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
- 49. . 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
- 50. 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 powerful assets that must be carefully developed and managed, we examine the key strategies for building and managing product and service brands. .
- 51. 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.
- 52. 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.
- 53. Brand strategy decisions include: . 1 Product attributes . 2 Product benefits . 3 Product beliefs and values . 1 Brand Positioning Marketers need to position their brands clearly in target customers minds. They can position brands at any of three levels.
- 54. 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 Brand Positioning
- 55. 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 . 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.
- 56. Manufacturer’s brand Private brand Licensed brand Co-brand . 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.
- 57. . 4 Brand Development Strategies
- 58. 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. Brand Development Strategies
- 59. 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.
- 60. New-Product Development Process Major Stages in New-Product Development
- 61. Product Life-Cycle Strategies Product Life Cycle
- 62. • 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
- 64. • 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. 1. Introduction Stage
- 65. 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.
- 66. • Slowdown in sales • Many suppliers • Substitute products • Overcapacity leads to competition • Increased promotion and R&D to support sales and profits 3. Maturity Stage Maturity Stage Modifying Strategies Market modifying Product modifying Marketing mix modifying
- 67. • 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.
- 68. • 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. 4. Decline Stage