Chapter7: Products, Services, And Brands: Building Customer Value

Question 1

Product vs service

Answer 1

Product: anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need.
Service: an activity, benefit, or satisfaction offered for sale; it is intangible and does not result in ownership of anything.

Question 2

Products, services, and experiences

Answer 2

Market offerings include both tangible goods and services.

Companies create and manage customer experiences with their brands or companies (to differentiate their offers from that of the competitors).

Question 3

Three levels of product

Answer 3

1st level: Core customer value deals with what is bought by the customer.
2nd level: core benefit must be turned into an actual product (features, design, packaging, quality level, brand name).
3rd level: augmented product (after-sale service, warranty, product support, delivery and credit).

Question 4

Product and service classifications

Answer 4

Consumer products are bought by final consumers for personal consumption.

Industrial products are bought by individuals and organizations for further processing or for use in conducting a business (materials and parts, capital items, and supplies and services).

Question 5

Consumer products

Answer 5

Marketers usually classify these products and services based on how consumers go about buying them.
They include:
- convenience
- shopping
- specialty
- unsought
Products.

Question 6

Marketing considerations for convenience products

Answer 6

Marketing considerations —> convenience

Customer buying behaviour —> frequent purchase; little planning, little comparison or shopping effort; low customer involvement.
Price —> low price
Distribution —> widespread distribution; convenient locations
Promotion —> mass promotion by the producer
Examples —> toothpaste, magazines, and laundry detergent

Question 7

Marketing considerations for shopping products

Answer 7

Marketing considerations —> shopping

Customer buying behaviour —> less frequent purchase; much planning and shopping effort; comparison of brands on price, quality, and style.
Price —> higher price
Distribution —> selective distribution in fewer outlets
Promotion —> advertising and personal selling by both the producer and resellers
Examples —> major appliances, televisions, furniture, and clothing

Question 8

Marketing considerations for specialty products

Answer 8

Marketing considerations —> specialty products

Customer buying behaviour —> strong brand preference and loyalty; special purchase effort; little comparison of brands; low price sensitivity
Price —> highest price
Distribution —> exclusive distribution in only one or a few outlets per market area
Promotion —> more carefully targeted promotion by both the producer and resellers
Examples —> luxury goods, such as Rolex watches or fine crystal

Question 9

Marketing considerations for unsought products

Answer 9

Marketing considerations —> unsought

Customer buying behaviour —> little product awareness or knowledge (or, if aware, little or even negative interest)
Price —> varies
Distribution —> varies
Promotion —> aggressive advertising and personal selling by the producer and resellers
Examples —> life insurance and funeral services.

Question 10

Other market offerings

Answer 10

Organizations, persons, places, ideas

Question 11

Individual product decisions

Answer 11

The focus of all of these decisions is to create core customer value.
Product attributes —> branding —> packaging —> labelling and logos —> product support services

Question 12

Product and service attributes

Answer 12

Product quality is one of the marketer’s major positioning tools.

A product can be offered with varying features.

Another way to add customer value is trough distinctive product style (appearance of the product) and design (contributes to a product’s usefulness as well as to its looks).

Question 13

Branding

Answer 13

Consumers view a brand ad an important part of a product, and branding can add value to a consumer’s purchase.

Question 14

Product support services

Answer 14

Customer service is another element of product strategy. A company’s offer usually includes some support services, which can be a minor part of a major part of the total offering.

Question 15

Product mix (or product portfolio)

Answer 15

The set of all product lines and items offered for sale.

Question 16

Product line decisions

Answer 16

A product line is closely related products that:
- have similar functions and customer groups
- are sold through similar outlets or fall within given price ranges

Product line length is the number of items in the product line.
1. Product line filling: adding more items within the present range of the line.
2. Product line stretching: occurs when a company lengthens its product line beyond its current range.

Question 17

Product mix decisions

Answer 17

Width: number of different product lines the company carries.
Length: total number of items a company carries within its product lines.
Depth: number of versions offered for each product in the line.
Consistency: relativity of the various product lines in end use, production requirements, distribution channels, or some other aspect.

Question 18

Four service characteristics

Answer 18

1. Intangibility: services cannot be seen, tasted, felt, heard, or smelled before purchase.
2. Inseparability: services cannot be separated from their providers.
3. Variability: quality of services depends on who provided them and when, where, and how.
4. Perishability: services cannot be store for later sale or use.

Question 19

Service profit chain

Answer 19

Successful service companies focus their attention on both their customers and their employees. They understand the service profit chain.

This links service firm profits with employee and customer satisfaction.

The chain consists of five links:
- internal service quality
- satisfied and productive service employees
- greater service value
- satisfied and loyal customers
- healthy service profits and growth

Question 20

Three types of services marketinf

Answer 20

Company <—> employees: internal marketing.
Company <—> customers: external marketing.
Customers <—> employees: interactive marketing.

Question 21

Marketing tasks for service companies

Answer 21

Managing service differentiation: developing a differentiated offers delivery, and image.

Managing service quality: delivering consistently higher quality than the competitors.

Managing service productivity:
- training current employees or hiring new ones.
- increasing the quantity of service by giving up some quality.
- harnessing the power of technology.

Question 22

Brands

Answer 22

Brands are a key element in a company’s relationships with consumers. Brands represent consumers’ perceptions and feelings about a product and its performance.

Brand equity: the differential effect that knowing the brand name had on customer response to the product or its marketing.

With positive brand equity, consumers react more favourably to the brand than to an unbranded version of the same product.

Brand value: the total financial value of a brand.

Question 23

Major brand strategy decisions

Answer 23

Brand positioning (attributes, benefits, beliefs and values) —> brand name selection (selection, protection) —> brand sponsorship (manufacturer’s brand, private brand, licensing, co-branding) —> brand development (line extensions, brand extensions, multi brands, new brands).

Question 24

Brand positioning and brand name selection

Answer 24

Marketers should establish a mission and vision for the brand when positioning it.

Three levels:
1. By product attributes
2. By desired benefits
3. By beliefs and values

Desirable qualities for a brand name should be:
- based on the product’s benefits and qualities.
- easy to pronouns, recognize, and remember.
- distinctive and extendable
- easily translated into foreign languages
- capable of registration and legal protection

Question 25

Brand sponsorship

Answer 25

National brands: are marketed under the manufacturer’s own name.
Store brands (private brands): created and owned by a reseller of a product or service.
Licensing: use names and symbols created by other companies or well-known movie characters or celebrities for a fee.
Co-branding: use the established brand names of two different companies on the same product.

Question 26

Brand development strategies

Answer 26

Multibrands: new brand name, existing product category. Offers a way to establish different features that appeal to different customer segments, lock up more reseller shelf space, and capture a larger market share. Multiple brands in the same category.

New brands: new brand name, new product category. Used when the power of the old brand is waning or to create a brand when entering a new category.

Line extension: existing brand name, existing product category. Occur when a company extends existing brand names to new forms, colors, sizes, ingredients, or flavours of an existing product category.

Brand extension: existing brand name, new product category. Extends an existing brand name to new or modified products in a new category. It gives a new product instant recognition and faster acceptance.