Chapter 7: Products, Services, and Brands: Building Customer Value Flashcards
Marketing mix:
the tactical tools that marketers use to implement their strategies, engage customers, and deliver superior customer value.
Product
anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need.
include more than just tangible objects, such as cars, clothing, or mobile phones. Broadly defined, products also include services, events, persons, places, organizations, and ideas or a mixture of these.
Services
are 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
Examples: banking, hotel, airline travel, retail, wireless communication, and home-repair services.
pure tangible good
such as soap, toothpaste, or salt; no services accompany the product
pure services
the market offer consists primarily of a service. Examples include a doctor’s exam and financial services.
Product planners need to think about products and services on three levels
The most basic level is the core customer value
Second is the actual product
Third is the augmented product
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, services, or experiences that consumers seek
actual product
They need to develop product and service features, a design, a quality level, a brand name, and packaging
augmented product
product planners must build an augmented product around the core benefit and actual product by offering additional consumer services and benefits
Products and services fall into two broad classes based on the types of consumers who use them:
consumer products and industrial products
Broadly defined, products also include other marketable entities such as experiences, organizations, persons, places, and ideas.
Consumer products
Are products and services bought by final consumers for personal consumption
Consumer products include
convenience products, shopping products, specialty products, and unsought products.
Convenience products
are consumer products and services that customers usually buy frequently, immediately, and with minimal comparison and buying effort
Examples include laundry detergent, candy, magazines, and fast food
Shopping products
are less frequently purchased consumer products and services that customers compare carefully on suitability, quality, price, and style.
Examples include furniture, clothing, major appliances, and hotel services.
Specialty products
are consumer products and services with unique characteristics or brand identifications for which a significant group of buyers is willing to make a special purchase effort
Examples include specific brands of cars, high-priced photography equipment, designer clothes, gourmet foods, and the services of medical or legal specialists
Unsought products
are consumer products that a consumer either does not know about or knows about but does not normally consider buying.
Most major new innovations are unsought until consumers become aware of them through marketing
Industrial products
are those products purchased for further processing or for use in conducting a business
the distinction between a consumer product and an industrial product
is based on the purpose for which the product is purchased.
If a consumer buys a lawn mower for use around home, the lawn mower is a consumer product. If the same consumer buys the same lawn mower for use in a landscaping business, the lawn mower is an industrial product.
The three groups of industrial products and services are
1) materials and parts
2) Capital items
3) Supplies and services
Materials and parts
include raw materials as well as manufactured materials and parts.
Raw materials
consist of farm products (wheat, cotton, livestock, fruits, vegetables)
natural products
(fish, lumber, crude petroleum, iron ore)
Manufactured materials and parts
consist of component materials (iron, yarn, cement, wires)
component parts
(small motors, tires, castings)
Capital items
are industrial products that aid in the buyer’s production or operations, including installations and accessory equipment
Installations
consist of major purchases such as buildings (factories, offices) and fixed equipment (generators, drill presses, large computer systems, elevators).
Accessory equipment
includes portable factory equipment and tools (hand tools, lift trucks) and office equipment (computers, fax machines, desks).
Have shorter lives
supplies
include operating supplies (lubricants, coal, paper, pencils) and repair and maintenance items (paint, nails, brooms).
Supplies are the convenience products of the industrial field because they are usually purchased with a minimum of effort or comparison.
In addition to tangible products and services, marketers have broadened the concept of a product to include other market offerings:
organizations, persons, places, and ideas.
Organizations
often carry out activities to “sell” the organization itself.
Organization marketing
consists of activities undertaken to create, maintain, or change the attitudes and behaviour of target consumers toward an organization.
Both profit and not-for-profit organizations practise organization marketing.
Person marketing
consists of activities undertaken to create, maintain, or change attitudes or behaviour toward particular people
Place marketing
involves activities undertaken to create, maintain, or change attitudes or behaviour toward particular places
Social marketing
using traditional business marketing concepts and tools to encourage behaviours that will create individual and societal well-being.
Marketers make product and service decisions at three levels:
individual product decisions, product line decisions, and product mix decisions
Individual Product and Service Decisions
Product decisions
product and service attributes, branding, packaging, labelling and logos, and product support services.
Product and Service Attributes
benefits are communicated and delivered by product attributes such as quality, features, and style and design.
Product Quality
Quality affects product or service performance; thus, it is closely linked to customer value and satisfaction.
define quality
in terms of creating customer value and satisfaction
Total quality management (TQM)
is an approach in which all the company’s people are involved in constantly improving the quality of products, services, and business processes
Product quality has two dimensions:
level and consistency
Style
simply describes the appearance of a product
design
it goes to the very heart of a product. Good design contributes to a product’s usefulness as well as to its looks.
A brand
is a name, term, sign, symbol, or design or a combination of these that identifies the maker or seller of a product or service.
Packaging
involves designing and producing the container or wrapper for a product
Labelling and Logos
range from simple tags attached to products to complex graphics that are part of the packaging.
At the very least, the label identifies the product or brand, such as the name Sunkist stamped on oranges. The label might also describe several things about the product—who made it, where it was made, when it was made, its contents, how it is to be used, and how to use it safely. Finally, the label might help to promote the brand and engage customers.
A product line
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
the number of items in the product line. The line is too short if the manager can increase profits by adding items; the line is too long if the manager can increase profits by dropping items
A company can expand its product line in two ways:
by line filling or line stretching.
Product line filling
involves adding more items within the present range of the line
There are several reasons for product line filling:
reaching for extra profits, satisfying dealers, using excess capacity, being the leading full-line company, and plugging holes to keep out competitors.
Product line stretching
occurs when a company lengthens its product line beyond its current range. The company can stretch its line downward, upward, or both ways.
product mix (or product portfolio)
consists of all the product lines and items that a particular seller offers for sale
A company’s product mix has four important dimensions:
width, length, depth, and 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 a company carries within its product lines.
Product line depth
refers to the number of versions offered of each product in the line.
the consistency of the product mix
refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way
Governments
offer services through courts, employment services, hospitals, military services, police and fire departments, the postal service, and schools
Private not-for-profit organizations
offer services through museums, charities, churches, colleges, foundations, and hospitals
A company must consider four special service characteristics when designing marketing programs:
intangibility, inseparability, variability, and perishability
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
Service inseparability
means that services cannot be separated from their providers, whether the providers are people or machines
Service variability
means that the quality of services depends on who provides them as well as when, where, and how they are provided.
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 Service Profit Chain
which links service firm profits with employee and customer satisfaction
The Service Profit Chain consists of five links:
1) INTERNAL SERVICE QUALITY
2) SATISFIED AND PRODUCTIVE SERVICE EMPLOYEES
3) GREATER SERVICE VALUE
4) SATISFIED AND LOYAL CUSTOMERS
5) HEALTHY SERVICE PROFITS AND GROWTH
1) INTERNAL SERVICE QUALITY
Superior employee selection and training, a quality work environment, and strong support for those dealing with customers, which results in…
2) SATISFIED AND PRODUCTIVE SERVICE EMPLOYEES
More satisfied, loyal, and hardworking employees, which results in…
3) GREATER SERVICE VALUE
More effective and efficient customer value creation, engagement, and service delivery, which results in . . .
4) SATISFIED AND LOYAL CUSTOMERS
Satisfied customers who remain loyal, make repeat purchases, and refer other customers, which results in . . .
5) HEALTHY SERVICE PROFITS AND GROWTH
Superior service firm performance.
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.
Interactive marketing
means that service quality depends heavily on the quality of the buyer–seller interaction during the service encounter.
Customer retention is perhaps the best measure of quality
a service firm’s ability to hang onto its customers depends on how consistently it delivers value to them.
Brand equity
is the differential effect that knowing the brand name has on customer response to the product and its marketing.
Brand value
is the total financial value of a brand.
customer equity
the value of customer relationships that the brand creates
major brand strategy decisions involve
brand positioning, brand name selection, brand sponsorship, and brand development.
Brand Positioning
Marketers need to position their brands clearly in target customers’ minds.
They can position brands at any of three levels
1) At the lowest level, they can position the brand on product attributes
2) A brand can be better positioned by associating its name with a desirable benefit
3) They are positioned on strong beliefs and values, engaging customers on a deep, emotional level.
Desirable qualities for a brand name include the following:
(1) It should suggest something about the product’s benefits and qualities: Beautyrest, Slimfast, Facebook, Airbnb.
(2) It should be easy to pronounce, recognize, and remember: iPad, Tide, Jelly Belly, Twitter, JetBlue.
(3) The brand name should be distinctive: Panera, Swiffer, Zappos, Nest.
(4) It should be extendable—Amazon.com began as an online bookseller but chose a name that would allow expansion into other categories.
(5) The name should translate easily into foreign languages: Coca-Cola translates in Chinese to “Ke Kou Ke Le,” which means “tasty fun.”
(6) It should be capable of registration and legal protection.
A manufacturer has four sponsorship options.
1) national brand (or manufacturer’s brand),
2) private brand (also called a store brand).
3) licensed brands
4) two companies can join forces and co-brand a product
store brands (or private brands
Brand created and owned by a reseller of a product / service
Co-branding
occurs when two established brand names of different companies are used on the same product
A company has four choices when it comes to developing brands
It can introduce line extensions, brand extensions, multibrands, or new brands.
Line extensions
occur when a company extends existing brand names to new forms, colours, sizes, ingredients, or flavours of an existing product category.
A brand extension
extends a current brand name to new or modified products in a new category
