Chapter 8: Product, Services, and Branding Strategy

            Chapter Outline

 

•         Product and major classifications of product and services

•         Product and services decisions at different levels; individual product decisions,    product line decisions, and product mix decisions

•         Branding Strategy; building and managing brands

•         Services marketing

 

What is a product?

Product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need.

Products include physical objects, services, events, persons, places, organizations, ideas, or mixes of these entities.

 

Examples: an Apple ipod, a Toyota Camry, European vacation and advice from your family doctor, etc.

 

What are services?

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, home repair services, etc

 

Products, services and experiences

•         Marketing mix planning begins with formulating an offering that brings value to target customers. This offering becomes the basis upon which the company builds profitable relationships with customers. Product is a key element in the overall marketing offering.

•         A company’s marketing offering often includes both tangible goods and services. Each component can be a minor or a major part of the total offer.

•         Today as products and services become more commoditized, companies are differentiating their offers by creating and managing customer experiences with their products or company.

 

Levels of products and services

1. Core benefit is the problem solving benefit or service that consumers seek

 

2. Actual product is the product with service features, design, a quality level, a brand name, and packaging.

 

3. Augmented product is a product with increased or additional consumer services and benefits to provide the most satisfying customer experience.

 

 

Product and service classifications

•         Consumer products are products and services bought by final consumers for personal consumption.

•         Industrial products are those purchased for further processing or for use in conducting a business.

 

Thus the distinction between a consumer product & an industrial product is based on the purpose for which the product is bought.

 

Marketing considerations for consumer products

 

	Convenience	Shopping	specialty	unsought
Customer buying behavior	Frequent purchase,  little planning	Less frequent purchase, much planning	special purchase effort	Little awareness
price	Low	Higher	High	varies
distribution	Widespread, convenient locations	Selective, fewer outlets	Exclusive, one or a few outlets	varies
promotion	Mass promotion	Advertising, personal selling	Careful and targeted	Aggressive advertising
examples	Toothpaste, magazines	Television, furniture	Rolex watches, fine crystal	Life insurance

 

Classes of industrial products and services

•         Materials and parts

1. Raw materials

     Farm products (wheat, cotton, fruits, vegetables)

     Natural products (fish, lumber, crude petroleum) 

2. Manufactured materials and parts

     Component materials (iron, cement, wires, yarn)

     Component parts (small motors, tires, castings)

•         Capital items

1. Installations

     Major purchases (factories, offices)

     Fixed equipment (generators, drill presses, elevators)

                      

2. Accessory equipment

 Portable factory equipment and tools (hand tools, lift trucks)

 Office equipment (computers, fax machines, desks)

•         Supplies and services

       Supplies

1. Operating supplies (lubricants, coal, paper, pencils)

2. Repair and maintenance items (paint, nails, brooms) 

       Business services

1. Maintenance and repair services (window cleaning)

2. Business advisory services (legal, advertising)        

 

Organizations, persons, places, and ideas

•         Organization marketing consists of activities undertaken to create, maintain, or change the attitudes and behavior of target consumers toward an organization.

•         Person marketing consists of activities undertaken to create, maintain, or change attitudes or behavior toward particular people.

•         Place marketing consists of activities undertaken to create, maintain, or change attitudes or behavior toward particular places.

•         Ideas marketing can be the marketing of a general idea or a specific idea.

•         Social marketing is the marketing of social ideas by using commercial marketing concepts and tools in programs designed to influence individual’s behavior to improve their well-being and that of society.

 

Social marketing programs

•         Public health campaigns

•         Environmental campaigns

•         Family planning

•         human rights

•         Racial equality

 

Product and service decisions

      Individual product and service decisions

      Product line decisions

      Product mix decisions

 

Individual product and service decisions

•         Product and service attributes

1. Product quality (characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs.)

 

Siemens defines quality this way:

“Quality is when our customers come back and our products don’t.”

 

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.

 

Performance quality is the ability of a product to perform its functions.

 

Conformance quality is the freedom from defects and consistency in delivering a targeted level of performance.

 

2. Product features

The company can create higher level models by adding more features.

Features are a competitive tool for differentiating the company’s product from the competitor’s products.

 

 3. Product style and design

Style describes the appearance of a product. Styles can be eye catching or yawn producing.

Design goes to the very heart of the product. Good design contributes to a product’s usefulness as well as to its looks. It shapes the customer’s product-use experience.

 

·        Branding

Brand is a name, term, sign, symbol, or design, or a combination of these that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors.

Consumers view a brand as an important part of a product and branding can add value to a product.

 

Branding helps buyers in many ways

•         Help consumers identify products

•         Tell about product quality and consistency

 

Branding gives sellers several advantages

•         Helps seller to segment markets

•         Seller’s brand name and trademark provide legal protection for unique product features.

 

•         Packaging

Packaging involves designing and producing the container or wrapper for a product.

Packages perform many sales tasks

1. attract attention

2. describe product

3. make sales

 

•         Labeling

Labels range from simple tags attached to products to complex graphics that are part of the package.

Labels perform several functions

1. identifies the product or brand

2. Describes the product and provides details

3. Promote the product and support its positioning

 

•         Product support services

Many companies are now using a sophisticated mix of interactive technologies (phone, email, fax, and internet) to provide support services that were not possible before. The support services can be a major or a minor part of the total offering.

 

Product Line Decisions

Product line is 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 is the number of items in the product line.

A company can lengthen its product line in two ways:

1. Line stretching

2. Line filling

 

Product line stretching occurs when a company lengthens its product line beyond its current range. The company can stretch its lines

•         Downward (to plug a market hole that otherwise would attract a new competitor or to respond to a competitor’s attack)

•         Upward (in order to add prestige to their current products)

•         In both directions (to serve both the upper and lower ends of the market)

 

Product line filling is adding more items within the present range of the line.

Reasons for product line filling are:

1. Reaching for extra profits

2. Satisfying dealers

3. Using excess capacity

4. Being the leading full-line company

5. Plugging holes to keep out competitors

 

Product Mix Decisions

Product mix or product portfolio is the set of all product lines and items that a particular seller offers for sale.

A company’s product mix has four important dimensions

1. Width (the number of different product lines the company carries)

2. Length (the total number of items the company carries within its product lines)

3. Depth (the number of versions offered of each product in the line)

4. Consistency (how closely related the various product lines are in end use, production requirements, distribution channels, or some other way)

 

Branding Strategy: Building strong Brands

 

What is a brand?

It is the major enduring asset of the company, outlasting company’s specific products and facilities.

Brands are more then just names and symbols. They are key element in the company’s relationships with consumers.

It represents consumer’s perceptions about a product and its performance.

Deeper the connection with customers, successful is the brand.

 

Brand Equity, Brand valuation and Customer equity

•         Brand equity is the positive differential effect that knowing the brand name has on the customer response to the product or service. A powerful brand has higher brand equity.

•         Brand valuation is the process of estimating the total financial value of the brand.

•         Customer equity is the value of the customer relationships that the brand creates

 

Advantages of strong brand equity

•         It enjoys a high level of consumer brand awareness and loyalty.

•         Because consumers expect stores to carry the brand, the company has more leverage in bargaining with resellers.

•         Company can more easily launch line and brand extensions as brand name carries high credibility.

•         It offers some defense against fierce price competition.

 

Major Brand strategy decision

•         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, multibrands and new brands.

 

Brand Positioning

•         Marketers need to position their brands clearly in target customers’ minds.

•         Product attributes: The lowest level of positioning a brand as competitors can easily copy them. Customers are not interested in attributes but what attributes will do for them.

•         Benefit: A brand can be better positioned by associating it with a desirable benefit.

•         Beliefs and Values: It is the strongest way of positioning a brand. These brands pack an emotional wallop.

 

Brand Name selection

A good name can add greatly to a product’s success.

Desirable qualities of a brand name include:

•         It should suggest something about the product’s benefits and qualities.

•         It should be easy to pronounce, recognize and remember.

•         The brand name should be distinctive.

•         It should be extendable.

•         It should be capable of registration and legal protection.

 

Brand Sponsorship

A manufacturer has four sponsorship options:

•         Manufacturer’s brand

•         Private brand (store brand or distributor brand)

•         Licensed brand

•         Co-brand.

 

Manufacturer brand versus private brand

Nowadays, private brands are giving manufacturers’ brands a real run for the money.

A private brand has following advantages over manufactures:

•         They control what products they stock.

•          Where they go on the shelf.

•          What prices they charge,

•         Which one they will feature in local circulars.

•         Private brands can be hard to establish and costly to stock and promote. However, they also yield higher profit margins for the reseller.

 

Licensing

•         Most manufacturers take years and spend millions to create their own brand names.

•         Some companies license names or symbols previously created by other manufacturers, names of well-known celebrities, or characters from books.

 

Co-Branding

In co-branding, one company licenses another company’s well-known brand to use in combination with its own.

Advantages of co-branding:

•         Because each brand dominates in different categories, the combined brands create broader consumer appeal and greater brand equity.

•         It also allows a company to expand its existing brand into category it might otherwise have difficulty entering alone.

Limitations of co-branding:

•         Such relationships involve complex legal contracts and licenses.

•         Co-branding partners must carefully coordinate their advertising, sales, promotion and other marketing efforts.

•         Each partner must trust the other will take good care of its brand.

 

Brand Development

•         Line extensions: They occur when a company extends existing brand names to new forms, colors, size, ingredients, or flavors of an existing product category. It is a low-cost, low-risk way to introduce new products. Or it might want to meet consumer desires for variety, to use excess capacity, or simply to command more shelf space from resellers. An over extended brand name might lose its specific meaning, or heavily extended brands can cost consumer confusion.

•         Brand extension: It extends a current brand name to new or modified products in a new category. A brand extension gives a new product instant recognition and faster acceptance. It also saves the high advertising costs. The extension may confuse the image of the main brand and if a brand extension fails it may harm consumer attitudes toward the other products carrying the same brand name.    

 

Brand Development

•         Multibranding: Companies often introduce additional brands in the same category. It offers a way to established different features and appeal to different buying motors. Its drawback is that each brand might obtain only a small market share and none may be very profitable.

•         New Brands: A company might believe that the power of its existing brand name is waning and a new brand name is needed. Or it may create a new brand name when it enters a new product category for which none of the companies’ current brand names are appropriate.

 

Managing Brands

Companies must manage their brands carefully.

•         First, the brand’s positioning must be continuously communicated to consumers. Major brand marketers often spend huge amounts on advertising to create brand and to build loyalty. Such campaigns can help to create name recognition, brand knowledge and brand preference. However, the brands are maintained by brand experience.

•         For successful brand positioning the company needs to train its people to the customer center.

 

Services Marketing

Types of services

•         Governments: Courts, employment services, hospitals and schools.

•         Not for Profit: Museums, charities, colleges and churches.

•         Business Organizations: Airlines, banks, insurance companies, entertainment companies and consulting firms.

 

Nature and Characteristics of a Service

•         Service Intangibility: It means that services cannot be seen, tasted, felt, heard or smelled before they are bought.

•         Service Inseparability: It means that services cannot be separated from their providers, whether the providers are people or machine.

•         Service Variability: It means that the quality of services depends on who provides them as well as when, where and how they are provided.

•         Service Perishability: It means that service cannot be stored for later sale or use.

 

Marketing Strategies for Service Firms

The Service-Profit Chain: It is the chain that links service firm profits with employ and customer satisfaction. This chain consists of five links:

•         Internal Service Quality.

•         Satisfied and Productive Service Employees.

•         Greater Service Value.

•         Satisfied and Loyal Customers.

•         Healthy Service Profit and Growth.

 

Internal Marketing and Interactive Marketing

Internal Marketing: It 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: Training service employees in the fine art of interacting with customers to satisfy their needs. 

 

Managing Service Differentiation

Offer, delivery and image differentiation is a solution to price competition.

•         The offer can include innovative features that set one company’s offer apart from competitor’s.

•         Service delivery can be differentiated by having more able customer-contact people, by developing a superior physical environment in which the service product is delivered.

•         Images can be differentiated through symbols and branding.

 

Managing Service Quality

A service firm can differentiate itself by delivering consistently higher quality. Service quality will always vary, depending on the interaction between employees and customers. Therefore, the first step is to empower front-line service employees-to give them the authority, responsibility, and incentives they need to recognize, care about, and tend to customer needs.

 

Managing Service Productivity

Companies can increase service productivity in several ways. They can train current employees better or hire new ones who will work harder or more skillfully. Or they can increase the quantity of their services by giving up some quality. However, company must avoid pushing productivity so hard that doing so reduces quality, as this may dissatisfy customers.

 

                                                            

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