Chapter 9 Product Services and Branding Strategies Copyright

Learning Goals 1. 2. 3. 4. 5. Define product and the major classifications of products and services Describe the decisions companies make regarding their individual products and services, product lines, and product mixes Discuss branding strategy-the decisions companies make in building and managing their brands Identify the four characteristics that affect the marketing of a service and the additional marketing considerations that services require Discuss two additional product issues: socially responsible product decisions and international product and services marketing Copyright © 2008 Pearson Education Canada 2 Principles of Marketing, Seventh Canadian Edition

Case Study lululemon athletica • Founded in 1998, in Kitsilano, Vancouver, in response to the growing number of females taking up sports, specially yoga. • Started as a design studio surrounded by a retail store providing yoga-inspired clothing to females in Canada and around the globe. • To lululemon customers, the gear isn’t just clothing. It is a way of life. An experience. A statement • Thus, lululemon does much more than just sell athletic apparel. It creates an unparalleled experience. Copyright © 2008 Pearson Education Canada • Originally design for athletes, the lululemon clothing can be used by almost anyone for any activity • Although women were the original target, lululemon currently has a line of men’s clothing. • The brand is defined through the store experience, superior-quality garnments, and etincing retail stores. • The lululemon gear is not cheap. And, yet, people flock to its stores. • Customers are pasionate about the brand, and they share this passion with others. 3 Principles of Marketing, Seventh Canadian Edition

Learning Goals 1. 2. 3. 4. 5. Define product and the major classifications of products and services Describe the decisions companies make regarding their individual products and services, product lines, and product mixes Discuss branding strategy-the decisions companies make in building and managing their brands Identify the four characteristics that affect the marketing of a service and the additional marketing considerations that services require Discuss two additional product issues: socially responsible product decisions and international product and services marketing Copyright © 2008 Pearson Education Canada 4 Principles of Marketing, Seventh Canadian Edition

What Is a Product? • A product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want. • A 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 the ownership of anything. Copyright © 2008 Pearson Education Canada 5 Principles of Marketing, Seventh Canadian Edition

What Is a Product? • Products, Services, and Experiences – Market offerings may consist of a combination of goods and services – Experiences are used to differentiate offerings – Core benefit, actual and augmented product Copyright © 2008 Pearson Education Canada 6 Principles of Marketing, Seventh Canadian Edition

What Is a Product? • Three levels of product – Augmented product – Actual

Discussion Question ? • Consider Starbucks – What goods and services do they offer? – How do they differentiate through experience? – What is their core, actual and augmented product offering? Copyright © 2008 Pearson Education Canada 8 Principles of Marketing, Seventh Canadian Edition

What Is a Product? • Types of Consumer Products – – • Frequent purchases bought with minimal buying effort and little comparison shopping • Low price • Widespread distribution • Mass promotion by producer Convenience Shopping Specialty Unsought – Snack foods, toiletries, food products Copyright © 2008 Pearson Education Canada 9 Principles of Marketing, Seventh Canadian Edition

What Is a Product? • Types of Consumer Products – – • Less frequent purchases • More shopping effort for comparisons • Higher than convenience good pricing • Selective distribution in fewer outlets • Advertising and personal selling Convenience Shopping Specialty Unsought Copyright © 2008 Pearson Education Canada 10 Principles of Marketing, Seventh Canadian Edition

What Is a Product? • Types of Consumer Products – – • Strong brand preference and loyalty, requires special purchase effort, little brand comparisons, and low price sensitivity • High price • Exclusive distribution • Carefully targeted promotions Convenience Shopping Specialty Unsought Copyright © 2008 Pearson Education Canada 11 Principles of Marketing, Seventh Canadian Edition

What Is a Product? • Types of Consumer Products – – • Little product awareness and knowledge (or if aware, sometimes negative interest) • Pricing varies • Distribution varies • Aggressive advertising and personal selling by producers and resellers Convenience Shopping Specialty Unsought Copyright © 2008 Pearson Education Canada 12 Principles of Marketing, Seventh Canadian Edition

Product and Service Classifications • Consumer Products • Business Products – Materials and parts – Capital items – Supplies and services Copyright © 2008 Pearson Education Canada 13 Principles of Marketing, Seventh Canadian Edition

Product and Service Classifications • 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 promotes ideas Copyright © 2008 Pearson Education Canada 14 Principles of Marketing, Seventh Canadian Edition

Learning Goals 1. 2. 3. 4. 5. Define product and the major classifications of products and services Describe the decisions companies make regarding their individual products and services, product lines, and product mixes Discuss branding strategy-the decisions companies make in building and managing their brands Identify the four characteristics that affect the marketing of a service and the additional marketing considerations that services require Discuss two additional product issues: socially responsible product decisions and international product and services marketing Copyright © 2008 Pearson Education Canada 15 Principles of Marketing, Seventh Canadian Edition

Individual Product and Service Decisions • Product and Service Attributes – Quality • Lined to customer value and satisfaction – The whole company needs to be involved (TQM) – Features • Competitive tool for differentiating product • Should be valued by the customer as determined through market research – Style and Design • Good design contributes to product’s usefulness as well as looks Copyright © 2008 Pearson Education Canada 16 Principles of Marketing, Seventh Canadian Edition

Individual Product and Service Decisions • Branding – Brand: a name, term, sign, symbol, or design that identifies the product – Branding can add value to a product – Branding helps buyers • Identify products • Determine quality – Branding helps sellers • Convey product quality • Provide legal protection • Segment markets Copyright © 2008 Pearson Education Canada 17 Principles of Marketing, Seventh Canadian Edition

Individual Product and Service Decisions • Packaging – Often includes primary, secondary and shipping packages – Functions of packaging • Contain and protect • Promote the product • Differentiate the product Copyright © 2008 Pearson Education Canada 18 Principles of Marketing, Seventh Canadian Edition

Individual Product and Service Decisions • Labelling serves to identify the product • Describes the product • Promotes the product • Must be careful not to: – Mislead customers – Fail to describe ingredients – Fail to include safety warnings Copyright © 2008 Pearson Education Canada 19 Principles of Marketing, Seventh Canadian Edition

Individual Product and Service Decisions • Product support services – Survey customers regularly to assess current customer service – Companies use a mix of phone, email, fax, Internet and interactive voice and data technologies Copyright © 2008 Pearson Education Canada 20 Principles of Marketing, Seventh Canadian Edition

Product Line Decisions • Product line – A group of products that are closely related because they may… • • function in a similar manner are sold to the same customer groups Market through the same types of outlets fall within given price ranges • 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 Copyright © 2008 Pearson Education Canada 21 Principles of Marketing, Seventh Canadian Edition

Product Mix Decisions • Product Mix – Also known as product assortment – Consists of all the product lines and items that a particular seller offers for sale • Width: # of product lines • Length: # of products in lines • Depth: # of versions of each product carried • Consistency: how closely related the product lines are Copyright © 2008 Pearson Education Canada 22 Principles of Marketing, Seventh Canadian Edition

Learning Goals 1. 2. 3. 4. 5. Define product and the major classifications of products and services Describe the decisions companies make regarding their individual products and services, product lines, and product mixes Discuss branding strategy-the decisions companies make in building and managing their brands Identify the four characteristics that affect the marketing of a service and the additional marketing considerations that services require Discuss two additional product issues: socially responsible product decisions and international product and services marketing Copyright © 2008 Pearson Education Canada 23 Principles of Marketing, Seventh Canadian Edition

Branding Strategy • Brand equity is the positive differential effect that knowing the brand name has on customer response to the product or service • One measure of equity is the extent to which customers are willing to pay more for the brand • Brand valuation is the process of estimating the total financial value of a brand Copyright © 2008 Pearson Education Canada 24 Principles of Marketing, Seventh Canadian Edition

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 Copyright © 2008 Pearson Education Canada 25 Principles of Marketing, Seventh Canadian Edition

Building Strong Strategy • Brand Positioning • Brand Name Selection • Brand Sponsorship • Brand Development • Three levels of positioning: – Product attributes • Least effective – Benefits – Beliefs and values • Taps into emotions Copyright © 2008 Pearson Education Canada 26 Principles of Marketing, Seventh Canadian Edition

Building Strong Strategy • • • Good Brand Names: Brand Positioning Brand Name Selection Brand Sponsorship Brand Development Copyright © 2008 Pearson Education Canada – 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 27 Principles of Marketing, Seventh Canadian Edition

Building Strong Strategy • • • Manufacturer brands • Private (store) brands Brand Positioning Brand Name Selection Brand Sponsorship Brand Development – Costly to establish and promote – Higher profit margins • Licensed brands – Name and character licensing has grown • Co-branding – Advantages/ disadvantages Copyright © 2008 Pearson Education Canada 28 Principles of Marketing, Seventh Canadian Edition

Building Strong Strategy • • • Line extensions Brand Positioning Brand Name Selection Brand Sponsorship Brand Development – 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 Copyright © 2008 Pearson Education Canada 29 Principles of Marketing, Seventh Canadian Edition

Managing Brands • Brands are known through advertising, personal experience, word of mouth, the Internet • Everyone in the company represents the brand • Companies need to periodically run a brand audit Copyright © 2008 Pearson Education Canada 30 Principles of Marketing, Seventh Canadian Edition

Learning Goals 1. 2. 3. 4. 5. Define product and the major classifications of products and services Describe the decisions companies make regarding their individual products and services, product lines, and product mixes Discuss branding strategy-the decisions companies make in building and managing their brands Identify the four characteristics that affect the marketing of a service and the additional marketing considerations that services require Discuss two additional product issues: socially responsible product decisions and international product and services marketing Copyright © 2008 Pearson Education Canada 31 Principles of Marketing, Seventh Canadian Edition

Services Marketing • Services – Account for 68% of Canada’s GDP, almost 75% of employment, and nearly 90% of new job creation. – Service industries include business organizations, government, and private notfor-profit organizations Copyright © 2008 Pearson Education Canada 32 Principles of Marketing, Seventh Canadian Edition

Characteristics of Services • Intangibility • Inseparability • Variability • Perishability Copyright © 2008

Marketing Strategies for Service Firms • The Service-Profit Chain – Internal Marketing – External Marketing – Interactive Marketing Copyright © 2008 Pearson Education Canada 34 Principles of Marketing, Seventh Canadian Edition

Marketing Strategies for Service Firms • Managing Service Differentiation • Managing Service Quality • Managing Service Productivity Copyright © 2008 Pearson Education Canada 35 Principles of Marketing, Seventh Canadian Edition

Learning Goals 1. 2. 3. 4. 5. Define product and the major classifications of products and services Describe the decisions companies make regarding their individual products and services, product lines, and product mixes Discuss branding strategy-the decisions companies make in building and managing their brands Identify the four characteristics that affect the marketing of a service and the additional marketing considerations that services require Discuss two additional product issues: socially responsible product decisions and international product and services marketing Copyright © 2008 Pearson Education Canada 36 Principles of Marketing, Seventh Canadian Edition

Additional Product Considerations • Product Decisions and Social Responsibility • International Product and Services Marketing – – – Standardization versus local adaptation – Electrical standards, packaging – Cultural differences in meaning – Barriers to trade Government regulation Food and product safety Pricing and advertising Labelling, weights, and measures – Hazardous products – Product liability Copyright © 2008 Pearson Education Canada 37 Principles of Marketing, Seventh Canadian Edition

Learning Goals 1. 2. 3. 4. 5. Define product and the major classifications of products and services Describe the decisions companies make regarding their individual products and services, product lines, and product mixes Discuss branding strategy-the decisions companies make in building and managing their brands Identify the four characteristics that affect the marketing of a service and the additional marketing considerations that services require Discuss two additional product issues: socially responsible product decisions and international product and services marketing Copyright © 2008 Pearson Education Canada 38 Principles of Marketing, Seventh Canadian Edition