Transcript Chapter 1

Chapter 8
Product and Services Strategy
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What is a Product?
A Product is anything that can be offered to a
market for attention, acquisition, use, or
consumption and that might satisfy a want or need.
Includes:
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Physical Objects
Services
Events
Persons
Places
Organizations
Ideas
Combinations of the above
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What is a Service?
A Service is a form of product that consist of
activities, benefits, or satisfactions offered for sale
that are essentially intangible and do not result in
the ownership of anything.
Examples include:
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Banking
Hotels
Tax Preparation
Home Repair Services
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Products, Services, and
Experiences
Tangible Good
Pure
With
Tangible Accompanying
Good
Services
Soap
Hybrid
Offer
Service
With
Accompanying
Minor Goods
Pure
Service
Auto With
Airline Trip
Accompanying Restaurant
With
Doctor’s
Repair
Accompanying Exam
Services
Snacks
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Levels of Product (Fig. 8.1)
Augmented Product
Installation
Packaging
Delivery
& Credit
Brand
Name
Quality
Level
Core
Benefit or
Service
Features
Design
AfterSale
Service
Warranty
Actual Product
Core Product
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Product Classifications
Consumer Products
Convenience Products
 Buy frequently & immediately
 Low priced
 Mass advertising
 Many purchase locations
i.e Candy, newspapers
Shopping Products
 Buy less frequently
 Higher price
 Fewer purchase locations
 Comparison shop
i.e Clothing, cars, appliances
Specialty Products
Unsought Products
 Special purchase efforts
 New innovations
 High price
 Unique characteristics
 Brand identification
 Few purchase locations
i.e Porsche, Rolex
 Products consumers don’t
want to think about these products
 Require much advertising &
personal selling
i.e Life insurance, blood donation
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Product Classifications
Other Marketable Entities
Activities undertaken to create, maintain, or
change the attitudes and behavior toward the
following:
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Organizations - Profit (businesses) and nonprofit
(schools and churches).
Persons – Politicians, entertainers, sports figures,
doctors and lawyers.
Places - Business sites and tourism.
Ideas (social ideas marketing) – public health
campaigns, environmental campaigns, and others
such as family planning, or human rights.
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Place
Marketing:
Vacation spots
are the subject of
most place marketing
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Click orp ress space bar to re tu rn.
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Individual Product Decisions
(Fig. 8.2)
Product Attributes
Branding
Labeling
Packaging
Product Support Services
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Product Attributes
Developing a Product or Service Involves Defining
the Benefits that it Will Offer Such as:
Product Quality
Ability of a Product to Perform
Its Functions; Includes Level &
Consistency
Product Features
Help to Differentiate the Product
from Those of the Competition
Product Style
& Design
Process of Designing a Product’s
Style & Function
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This Land-O-Lakes ad shows the depth of the brand.
Branding
Consistency
Quality & Value
Attributes
Advantages
of
Brand Names
Identification
High Brand
Loyalty
Brand
Equity
Strong Brand
Association
Name Awareness
Perceived Quality
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Major Branding Decisions
(Fig. 8.3)
Brand Name Selection
Selection
Protection
Brand Sponsor
Manufacturer’s Brand
Private Brand
Licensed Brand
Co-branding
Brand Strategy
Line Extensions
Brand Extensions
Multibrands
New Brands
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Four Brand Strategies
(Fig. 8.4)
Product Category
Existing
Brand Name
Existing
New
New
Line Extension
Brand Extension
Multibrands
New Brands
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Brand Strategy
Line Extension
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Existing brand names extended to new forms, sizes,
and flavors of an existing product category.
Brand Extension
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Existing brand names extended to new or modified
product categories.
Multibrands
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New brand names introduced in the same product
category.
New Brands
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New brand names in new product categories.
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This business-to-business ad offers to provide
ecologically sound packaging.
Besides its impact on the
environment, what aspects
of packaging can
help/hinder product sales?
How have these products
become known by their
packaging:
•Cracker Jacks?
•Capri Sun?
Packaging
Activity of designing and
producing the container or
wrapper for a product.
Packaging used to just contain
and protect the product.
Packing now has promotional
value and marketers should:
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Establish a packaging concept,
Develop specific elements of the
package,
Tie together elements to support
the positioning and marketing
strategy.
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A classic labeling example .
Labeling
What about thi s l abe l he lps to se ll the pr oduc t?
Click or pres s s pacebar to r et urn.
Printed information
appearing on or with the
package.
Performs several functions:
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Identifies product or brand
Describes several things
about the product
Promotes the product
through attractive graphics.
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Product - Support Services
Companies should design its support services to
profitably meet the needs of target customers and
gain competitive advantage.
How?
Step 1. Survey customers to assess the value of
current services and to obtain ideas for new
services.
Step 2. Assess costs of providing desired services.
Step 3. Develop a package of services to delight
customers and yield profits to the company.
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Product Mix Decisions
Consistency
Width - number of
different product
lines
Length - total
number of items
in product lines
Product Mix all the product
lines & items
offered
Depth - number of
versions of each
product
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Discussion Connections
Using P&G’s Web site (www.pg.com) , its
annual report, or other sources, develop a
list of all the company’s product lines and
individual products. What surprises you
about this list of products?
Is P&G’s product mix consistent?
What overall strategy or logic appears to
have guided the development of this
product mix?
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Nature and Characteristic of a
Service
Intangibility
Inseparability
Variability
Perishability
Can’t be seen, tasted, felt, heard,
or smelled before purchase.
Can’t be separated from service
providers.
Quality depends on who provides
them and when, where and how.
Can’t be stored for later sale or
use.
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Marketing Strategies for
Service Firms
Managing Service Differentiation
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Develop differentiated offer, delivery and image.
Managing Service Quality
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Empower front-line employees,
Become “Customer obsessed”,
Develop high service quality standards,
Watch service performance closely.
Managing Service Productivity
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Train current or new employees better,
Work on quality as well as quantity,
Utilize technology.
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International Product and
Services Marketing
Decide Which Products & Services to Introduce
Decide How Much to Standardize or Adapt
Packaging Presents New Challenges
Service Marketers Face Special Challenges
Trend Toward Global Service Companies Will Continue
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Review of Concept
Connections
Define product and the major classifications of
products and services.
Describe the roles of product and service
branding, packaging, labeling, and product
support services.
Explain the decisions companies make when
developing product lines and mixes.
Identify the four characteristics that affect the
marketing of a service.
Discuss the additional marketing considerations
for services.
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Chapter 9
New-Product Development and
Product Life-Cycle Strategies
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New-Product Development
Strategies
Strategies for Obtaining New Product Ideas
Acquired
Companies
Original
Products
Acquired
Patents
Product
Improvements
Acquired
Licenses
Product
Modifications
New
Brands
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Causes of New Product
Failures
One study estimated that as many as 80% of new
consumer packaged products failed.
Only about 40% of new consumer products are
around 5 years after introduction.
Why?
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Overestimation of market size,
Product design problems,
Product incorrectly positioned, priced or advertised,
Product may have been pushed despite poor marketing
research findings,
Costs of product development, or
Competitive actions
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Improving New-Product
Success
New product success depends on having a:
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Unique superior product (one with higher quality,
features, and value in use), &
Well-defined product concept (a defined target market,
product requirements, and benefits).
To create successful new products, the company
must:
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understand its customers, markets and competitors, &
develop products that deliver superior value to
customers.
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Sources of New product Ideas
Idea Generation is the Systematic Search for New
Product Ideas Obtained Internally From Employees
and Also From:
Customers
Competitors
Distributors
Suppliers
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Product Life Cycle (Fig. 9.2)
Sales and
Profits ($)
Sales
Profits
Time
Product
Development
Introduction
Growth
Maturity
Decline
Losses/
Investments ($)
Sales and Profits Over the Product’s Life From Inception to
Demise
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Applications of the Product
Life Cycle
The PLC concept can describe a:
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Product class which has the longest life cycles (i.e.
gas-powered cars),
Product form which tend to have the standard PLC
shape (i.e. minivans),
Brand which can change quickly because of changing
competitive attaches and responses (i.e. Ford
Taurus),
Style which is a basic and distinctive mode of
expression,
Fashion which is a popular style in a given field,
Fad which is a fashion that enters quickly, is adopted
quickly and declines fast.
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Problems Using the PLC
The PLC Concept Can
Help in Developing Good
Marketing Strategies for
Different Stages of the
Product Life-Cycle,
However Some
Problems Can Arise:
Trouble identifying
Which Stage of the
PLC the Product Is
In
Difficult to Forecast
the Sales Level, the
Length of Each Stage,
and Shape of the PLC
Strategy is Both a
Cause and a Result
of the Product’s Life
Cycle
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Egg Beaters had to first convince people that they needed an egg
substitute (overcoming a strong negative response to “fake eggs”)
then demonstrate that their product was a perfect solution.
Introduction Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Low sales
Costs
High cost per customer
Profits
Negative or low
Marketing Objectives
Create product awareness and trial
Product
Offer a basic product
Price
Usually is high; use cost-plus formula
Distribution
High distribution expenses
Build product awareness among early
adopters and dealers
Advertising
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Growth Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Rapidly rising sales
Costs
Average cost per customer
Profits
Rising profits
Marketing Objectives
Maximize market share
Offer new product features, extensions,
service, and warranty
Price to penetrate market
Product
Price
Distribution
Advertising
Increase number of distribution outlets
Build awareness and interest in the
mass market
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Maturity Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Peak sales
Costs
Low cost per customer
Profits
High profits, then lower profits
Product
Maximize profits while defending
market share
Diversify brand and models
Price
Price to match or best competitors
Distribution
Build more intensive distribution
Advertising
Stress brand differences and benefits
Marketing Objectives
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Maturity Stage of the PLC
Company tries to increase consumption of
the current product.
Changing characteristics such as quality,
features, or styles to attract new users.
Company tries to improve sales by changing
one or more marketing mix elements.
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Decline Stage of the PLC
Summary of Characteristics, Objectives, & Strategies
Sales
Declining sales
Costs
Low cost per customer
Profits
Declining profits
Reduce expenditure and maintain,
reposition, harvest or drop the product
Phase out weak items
Marketing Objectives
Product
Price
Distribution
Advertising
Cut price
Go selective: phase out unprofitable
outlets
Reduce to level needed to retain
hard-core loyal customers
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Review of Concept
Connections
Explain how companies find and develop
new-product ideas.
Describe the stages of the product lifecycle.
Describe how marketing strategies change
during the product’s life-cycle.
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