A Global Perspective 8 Philip Kotler Gary Armstrong
A Global Perspective 8 Philip Kotler Gary Armstrong Swee Hoon Ang Siew Meng Leong Chin Tiong Tan Oliver Yau Hon-Ming Product, Services, and Branding Strategy 1
Learning Objectives After studying this chapter, you should be able to: 1. Define product and the major classifications of products and services 2. Describe the decisions companies make regarding their individual products and services, product lines, and product mixes 3. Discuss branding strategy—the decisions companies make in building and managing their brands 4. Identify the four characteristics that affect the marketing of a service and the additional marketing considerations that services require 2
Chapter Outline 1. What Is a Product? 2. Product and Service Decisions 3. Branding Strategy: Building Strong Brands 4. Services Marketing 3
What Is a Product? Products, Services, and Experiences • A product is anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want. • E. g. soap, toothpaste © Bradley Johnson 4
What Is a Product? Products, Services, and Experiences • 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. • E. g. , Doctor’s exam, legal advice 5
What Is a Product? Products, Services, and Experiences represent what buying the product or service will do for the customer. • E. g. , Disney, Lego, Toys “R” Us © Audry Drapier • © Bradley Johnson 6
What Is a Product? Levels of Products and Services • Core benefits • Actual product • Augmented product 7
What Is a Product? Levels of Product and Services • Core benefits represent what the buyer is really buying. • Actual product represents the design, brand name, and packaging that delivers the core benefit to the customer. • Augmented product represents additional services or benefits of the actual product. 8
What Is a Product? Discussion Question: Describe the core, actual, and augmented levels of Microsoft’s Windows XP Professional operating software: Core – A software application that enables a PC to function Actual – A well-designed, high-quality, branded, and packaged computer operating system that provides a variety of features that are important to the user Augmented – An operating system software application that offers a series of channel and consumer services. The channel member can obtain favorable pricing and credit terms, training, engineering support, etc. The consumer can get online support, version updates, access to forums and communities, etc. 9
What Is a Product? Product and Service Classifications • Consumer products • Industrial products 10
What Is a Product? Product and Service Classifications • Consumer products are products and services bought by final consumers for personal consumption. • Classified by how consumers buy them • Convenience products • Shopping products • Specialty products • Unsought products 11
What Is a Product? Product and Service Classifications • Convenience products are consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort. • Newspapers • Candy • Fast food 12
What Is a Product? Product and Service Classifications • Shopping products are consumer products and services that the customer compares carefully on suitability, quality, price, and style. • Furniture • Cars • Appliances 13
What Is a Product? Product and Service Classifications • 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. • Designer watches • Branded fashion wear • High-end electronics 14
What Is a Product? Product and Service Classifications • Unsought products are 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 15
What Is a Product? Discussion Question: Classify the following consumer products • A laptop computer • A surgeon • Automobile tires 16
What Is a Product? • A laptop computer – shopping good: most people purchase a laptop infrequently, and when they purchase it, they usually conduct extensive research and comparison of brands and features • A surgeon – Specialty good: There is usually little comparison between doctors as most patients collect only a few names • Automobile tires – it depends on the individual and the situation. If a consumer has a luxury brand of car and will consider only “designer” tires, this is a specialty good; for most consumers, tires are a shopping good, and they will be heavily influenced by price and brand name; in some situations, the tires could be an unsought good. If one was traveling and had a flat tire in an unknown area he would probably be towed to a local station and with little product knowledge, agree to a tire carried by the local station 17
What Is a Product? Product and Service Classifications • Industrial products are products purchased for further processing or for use in conducting a business. • Classified by the purpose for which the product is purchased • Materials and parts • Capital items • Supplies and services 18
What Is a Product? Product and Service Classifications • Materials and parts include raw materials and manufactured materials and parts usually sold directly to industrial users. • Wheat • Lumber • Iron • Cement 19
What Is a Product? Product and Service Classifications • Capital items are industrial products that aid in the buyer’s production or operations. • Buildings • Elevators • Computers 20
What Is a Product? Product and Service Classifications • Supplies and Services include operating supplies, and repair and maintenance items, as well as maintenance and repair services and business advisory services. • Copy papers • Stationary • Training service • Market research/Advertising service 21
What Is a Product? 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. 22
What Is a Product? 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. • Andy Lau • Stephanie Sun • Siti Nuraliza 23
What Is a Product? Organizations, Persons, Places, and Ideas • © Jeff Christiansen Place marketing consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward particular places. • Tourism, e. g. the Great Wall of China, Walt Disney World. 24
What Is a Product? Organizations, Persons, Places, and Ideas • 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. • Public health campaigns 25
Product and Service Decisions Individual Product & Service Decisions – A single product Product Line Decisions - A group of related products Product Mix Decisions – The set of product lines and items offered to customers by a particular seller These tools helps the planner to properly view the product so it can achieve competitive superiority and better product strategy. 26
Product and Service Decisions Individual Product and Service Decisions • Product attributes • Branding • Packaging • Labeling • Product support services 27
Product and Service Decisions Individual Product and Service Decisions • Product attributes are the benefits of the product or service • Quality • Features • Style and design 28
Product and Service Decisions Individual Product and Service Decisions • Define “Quality” in terms of the lack of defects or creating customer value and satisfaction • Quality level is the level of quality that supports the product’s positioning. – Performance quality is the ability of a product to perform its functions. – Conformance consistency is freedom of defects and consistency in delivering a targeted level of performance. 29
Product and Service Decisions Individual Product and Service Decisions • Product features are a competitive tool for differentiating a product from competitors’ products Assessed based on the value to the customer versus the cost to the company. • Product style and design add value to customer value. – Style describes the appearance of the product. – Design contributes to a product’s usefulness as well as to its looks. 30
Product and Service Decisions Individual Product and Service Decisions • Brand is the name, term, sign, or design, or a combination of these, that identifies the maker or seller of a product or service. 31
Product and Service Decisions Individual Product and Service Decisions • Branding help buyers identify benefits – Quality – Consistency • Branding provide legal protection for sellers can aid in – Segmentation – Communicate product features 32
Product and Service Decisions Individual Product and Service Decisions • Packaging involves designing and producing the container or wrapper for a product. • Label identifies the product or brand, describes attributes, and provides promotion. • Product support services augment actual products. Companies must continually: – Assess the value of current services to obtain ideas for new ones – Assess the costs of providing these services – Develop a package of services to satisfy customers and provide profit to the company 33
Product and Service Decisions 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. 34
Product and Service Decisions Product Line Decisions • Product line length is the number of items in the product line. • Product line can be lengthened in two ways: – Line stretching (lengthen beyond its current range) – Line filling (adding more items within the present range of the line) 35
Product and Service Decisions Product Line Decisions • Product line stretching is when a company lengthens its product line beyond its current range. • Downward • Upward • Combination of both 36
Product and Service Decisions Product Line Decisions Line stretching • Downward product line stretching is used by companies at the upper end of the market to plug a market hole or respond to a competitor’s attack. • Upward product line stretching is by companies at the lower end of the market to add prestige to their current products. • Combination line stretching is used by companies in the middle range of the market to achieve both goals of upward and downward line stretching. 37
Product and Service Decisions Product Line Decisions • Product line filling occurs when companies add more items within the present range of the line. • More profits • Satisfying dealers • Excess capacity • Plugging holes to fend off competitors 38
Product and Service Decisions Product Mix Decisions • Product mix consists of all the product lines and items that a particular seller offers for sale. • Width • Length • Depth • Consistency 39
Product and Service Decisions Product Mix Decisions • Product mix width is the number of different product lines the company carries. • Product mix length is the total number of items the company carries within its product lines. 40
Product and Service Decisions Product Line Decisions • Product mix depth is the number of versions offered of each product in the line. • Consistency is how closely the various product lines are in end use, production requirements, or distribution channels. 41
Branding Strategy: Building Strong Brands • Brand represents the consumer’s perceptions and feelings about a product and its performance. It is the company’s promise to deliver a specific set of features, benefits, services, and experiences consistently to the buyers. 42
Branding Strategy: Building Strong Brands • Brand equity is the positive differential effect that knowing the brand name has on customer response to the product or service. – The extent to which customers are willing to pay more for the brand • Customer equity is the value of the customer relationships that the brand creates. – A powerful brand forms a basis for building strong and profitable customer relationships • Brand valuation is the process of estimating the total financial value of the brand. 43
Branding Strategy: Building Strong Brands • Brand strategy decisions include: • Brand positioning • Brand name selection • Brand sponsorship • Brand development 44
Branding Strategy: Building Strong Brands Brand Positioning • Position brands at any of three levels: – Product attributes (Giordano is positioned by each season’s assortment of styles, colors and low price) – Product benefits (Giordano save your money through its great price and time through its assortment of products for the whole family) – Product beliefs and values (Giordano also positions itself as fun. Its ads are somewhat silly at times and always show the models having a lot of fun wearing Giordano clothes. This is different from other retailers who advertise using model with intense, serious, and seductive facial expressions) http: //www. youtube. com/watch? v=67 Dh. Ft 2 NM 8 Y http: //www. youtube. com/watch? v=d. XEt. FDVBSVQ 45
Branding Strategy: Building Strong Brands Brand Name Selection • Desirable qualities • Suggests benefits and qualities • Easy to pronounce, recognize, and remember • Distinctive • Extendable • Translatable for the global economy • Capable of registration and legal protection 46
Branding Strategy: Building Strong Brands Brand Sponsorship • Manufacturer’s brand • Private brand • Licensed brand • Co-brand 47
Co-Branded Differentiator Westin. WORKOUT powered by Reebok 48
Branding Strategy: Building Strong Brands Brand Sponsorship Private brands provide retailers with advantages. • Product mix control • Slotting fees for manufacturers’ brands • Higher margins • Exclusivity 49
Branding Strategy: Building Strong Brands Brand Development In terms of Brand name & Product category • Line extensions • Brand extensions • Multibrands • New brands 50
Branding Strategy: Building Strong Brands Brand Development • Line extensions occur when a company extends existing brand names to new forms, colors, sizes, ingredients, or flavors of an existing product category. 51
Branding Strategy: Building Strong Brands Brand Development • Brand extensions extend a brand name to a new or modified product in a new category. 52
Branding Strategy: Building Strong Brands Brand Development • Multibrands are additional brands in the same category. 53
Branding Strategy: Building Strong Brands Brand Development New brands are used when existing brands are inappropriate for new products in new product categories or markets. © Nate Grigg © Ged Carroll • 1970 s-1990 s Sony's Trinitron Color TV 2000 and beyond Sony’s BRAVIA widescreen LCD TV 54
Branding Strategy: Building Strong Brands Managing Brands • Requires: • Continuous brand communication • Customer-centered training • Brand audits 55
Services Marketing Types of Service Industries Service industries vary greatly: • Government – courts, employment services, hospitals, military services, police and fire department, postal services, and schools • Private not-for-profit organizations – Museums, charities, churches, colleges, foundations, and hospitals • Business services 56
Services Marketing Nature and Characteristics of a Service • Intangibility • Inseparability • Variability • Perishability 57
Services Marketing Nature and Characteristics of a Service • Intangibility refers to the fact that services cannot be seen, tasted, felt, heard, or smelled before they are purchased. • Inseparability refers to the fact that services cannot be separated from their providers. • Variability refers to the fact that service quality depends on who provides it as well as when, where, and how it is provided. • Perishability refers to the fact that services cannot be stored for later sale or use. 58
Services Marketing Strategies for Service Firms • In addition to traditional marketing strategies, service firms often require additional strategies: • Service-profit chain • Internal marketing • Interactive marketing 59
Services 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 60
Services Marketing Strategies for Service Firms • 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. 61
Services Marketing Strategies for Service Firms • Interactive marketing means that service quality depends heavily on the quality of the buyer-seller interaction during the service encounter. • Three major marketing tasks • Service differentiation • Service quality • Service productivity 62
Services Marketing Strategies for Service Firms • 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. 63
Services Marketing Strategies for Service Firms • 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. The first step is to empower employees Responsibility, Authority and Incentives they need to recognize, care about, and tend to customer needs 64
Services Marketing Strategies for Service Firms • 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 65
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