1 Chapter 8 Product and Services Strategy. 2 What is a Product? Product A Product is anything that can be offered to a market for attention, acquisition,

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1 1 Chapter 8 Product and Services Strategy

2 2 What is a Product? 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: Physical Objects Services Events Persons Places Organizations Ideas Combinations of the above

3 3 What is a Service? 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: Banking Hotels Tax Preparation Home Repair Services

4 4 Products, Services, and Experiences Pure Tangible Good Pure Service Soap Tangible Good With Accompanying Services Auto With Accompanying Repair Services Hybrid Offer Restaurant Service With Accompanying Minor Goods Airline Trip With Accompanying Snacks Doctor’s Exam

5 5 Brand Name Quality Level Packaging Design Features Delivery & Credit Installation Warranty After- Sale Service Core Benefit or Service Core Benefit or Service Actual Product Core Product Augmented Product Levels of Product (Fig. 8.1)

6 6 Unsought Products  New innovations  Products consumers don’t want to think about these products  Require much advertising & personal selling i.e Life insurance, blood donation Product Classifications Consumer Products Specialty Products  Special purchase efforts  High price  Unique characteristics  Brand identification  Few purchase locations i.e Lamborghini, Rolex Shopping Products  Buy less frequently  Higher price  Fewer purchase locations  Comparison shop i.e Clothing, cars, appliances Convenience Products  Buy frequently & immediately  Low priced  Mass advertising  Many purchase locations i.e Candy, newspapers

7 7 Supplies and Services Supplies and Services Materials and Parts Materials and Parts Capital Items Capital Items Product Classifications Industrial Products

8 8 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

9 9 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 8-17

10 10 Product Classifications Other Marketable Entities Activities undertaken to create, maintain, or change the attitudes and behavior toward the following: Organizations - Profit (businesses) and nonprofit (schools and churches). Persons –Person marketing consists of activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward particular people such as politicians, entertainers, sports figures, doctors and lawyers. Places - Business sites and tourism. 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, environmental campaigns, and others such as family planning, or human rights.

11 11 Individual Product Decisions (Fig. 8.2) Product Attributes Branding Packaging Labeling Product Support Services

12 12 Product Quality Product Features Product Style & Design Product Style & Design Ability of a Product to Perform Its Functions; Includes Level & Consistency Help to Differentiate the Product from Those of the Competition Process of Designing a Product’s Style & Function Developing a Product or Service Involves Defining the Benefits that it Will Offer Such as: Product Attributes

13 13 Product and Service Decisions Individual Product and Service Decisions Quality in terms of the product or service; is the lack of defects Quality in terms of the customer; is the value and satisfaction provided by the product or service 8-24

14 14 Product and Service Decisions Individual Product and Service Decisions Product quality includes level and consistency 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 8-25

15 15 Product and Service Decisions Individual Product and Service Decisions Quality consistency is the freedom from defects and the delivering of a targeted level of performance 8-26

16 16 Product and Service Decisions 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 8-28 Individual Product and Service Decisions

17 17 Product and Service Decisions Individual Product and Service Decisions Product features are a competitive tool for differentiating a product from competitors’ products Product features are assessed based on the value to the customer versus the cost to the company 8-27

18 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 Consumer benefits Quality Consistency Seller benefits Segmentation Communicate product features 8-29

19 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 8-42

20 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 8-43

21 21 Advantages of Brand Names Brand Equity Advantages of Brand Names Brand Equity Strong Brand Association Strong Brand Association Attributes Quality & Value Consistency Identification Perceived Quality Name Awareness High Brand Loyalty High Brand Loyalty Branding

22 22 Brand valuation is the process of estimating the total financial value of the brand Top ten brand(2008)Millard Brown (billion dollars) 1. Google 86 2. General Electric 71,3 3. Microsoft 70,9 4. Coca-Cola 58,3 5. China Mobile 57,2 6. IBM 55,3 7. Apple 55,2 8. Mc Donalds 50 9. Nokia 44 10. Marlboro 37.3

23 Top brands 2012 Milward Brown 23

24 24 Top ten brand(2008) according to Interbrand

25 25 Brands in Turkey (capital dergisi and Brandfinance) 1. Turkcell 1.984 2. Ford Otomotiv 1.772 3. Petrol Ofisi 1.562 4. Arçelik 1.410 5. Anadolu Efes 1.162 6. Enka İnşaat 974 7. Türk Şişecam 803 8. Migros 735 9. Tüpraş 688 10. Akbank 631 11. Aygaz 616 12. Unilever 588 13. Doğan Yayın Holding 582 14. BİM 582 15. Ereğli Demir Çelik 560 16. İş Bankası 557 ( Million dollars)

26 26 Brand Strategy Line Extensions Brand Extensions Multibrands New Brands Brand Strategy Line Extensions Brand Extensions Multibrands New Brands Brand Sponsor Manufacturer’s Brand Private Brand Licensed Brand Co-branding Brand Sponsor Manufacturer’s Brand Private Brand Licensed Brand Co-branding Brand positioning Brand Name Selection Protection (Türk Patent Enstitüsü Brand positioning Brand Name Selection Protection (Türk Patent Enstitüsü Major Branding Decisions (Fig. 8.3)

27 Brand Positioning levels: Brands can be positioned on product attributes: Brands can be positioned on product benefit: Brands can be positioned on product beliefs and values: 27

28 Brand positioning of TATA from India Tata introduced the Nano, in 2009, as an entry-level car for people transitioning from two-wheel to four- wheel vehicles. Positioning emphasized relative safety and affordability. When sales flattened after an initial surge, Tata realized that customers liked the car but not its association with their limited financial circumstances. Adding some amenities, Tata made the car more aspirational. Customers, it seems, wanted a symbol of new possibilities not a rearview reminder of their recent and limited past. 28

29 Branding Strategy: Building Strong Brands Brand Name Selection Desirable qualities Suggests benefits and qualities: Duracell Easy to pronounce, recognize, and remember:OMO Distinctive:Apple Extendable:Amazon.com Translatable for the global economy:BEKO 8-48

30 Private label Migros, Bütçem, M selection, M life BİM: Blume, Kaanbey,Dost, Centro Praktiker: Sigma, Budget, Varesa Turkey: around % 8 Europe: % 23 England : % 47 USA: 1 out of 5 products 30

31 31 Line Extension Dannon Yogurt Flavors Multibrands Seiko Lasalle & Pulsar Brand Extension Barbie Electronics New Brands Windex (by acquisition) Brand Name ExistingNew Product Category Existing New Four Brand Strategies (Fig. 8.4)

32 32 Brand Strategy Line Extension Existing brand names extended to new forms, sizes, and flavors of an existing product category. Brand Extension Existing brand names extended to new or modified product categories. Multibrands New brand names introduced in the same product category. New Brands New brand names in new product categories.

33 33 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: Establish a packaging concept, Develop specific elements of the package, Tie together elements to support the positioning and marketing strategy.

34 34 New uses (decorating, dressing), easy use, reinforce positioning) Increases shelf life(more than doubled the shelf life by keeping out air and moisture)

35 35 Labeling Printed information appearing on or with the package. Performs several functions: Identifies product or brand Describes several things about the product Promotes the product through attractive graphics.

36 36 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.

37 37 Stretching Lengthen beyond current range Product Line Length Number of Items in the Product Line Product Line Length Number of Items in the Product Line Two-Way Downward Upward Filling Lengthen within current range Product Line Decisions

38 38 Width Width - number of different product lines Length Length - total number of items in product lines Length Length - total number of items in product lines Depth Depth - number of versions of each product Product Mix - all the product lines & items offered Product Mix - all the product lines & items offered Consistency Product Mix Decisions

39 39 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. Nature and Characteristic of a Service

40 40 Satisfied and Loyal Customers Satisfied and Loyal Customers Greater Service Value Greater Service Value Healthy Service Profits and Growth Healthy Service Profits and Growth Satisfied and Productive Service Employees Satisfied and Productive Service Employees Internal Service Quality Internal Service Quality The Service-Profit Chain

41 41 Marketing Strategies for Service Firms Managing Service Differentiation Develop differentiated offer, delivery and image. Managing Service Quality Empower front-line employees, Become “Customer obsessed”, Develop high service quality standards, Watch service performance closely. Managing Service Productivity Train current or new employees better, Work on quality as well as quantity, Utilize technology.

42 42 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 International Product and Services Marketing