Products, Services & Brands:

Building Customer Value (Chapter 8)

Lecture #8
Lecturer: Donna-Kay Smith
Date: June 15, 2016
 What is a Product?

 Product and Service Decisions

 Services Marketing

 Branding Strategy: Building Strong Brands

 Product – Anything that can be offered in a
market for attention, acquisition, use, or
consumption that might satisfy a need or want.
 Broadly defined, products also include services,
events, persons, places, organizations and ideas,
or a mixture of these.
 Service – A form of product that consists of
activities, benefits or satisfaction that is
essentially intangible and does not result in the
ownership of anything.
 Products are a key element in the overall market
offering.
 A company’s market offering includes both
tangible goods and services – This may range
from pure tangible goods to pure services.
 Today, companies are creating and managing
customer experiences with their
brands/companies in order to differentiate their
offers and create a new level of value for
customers.
 Experiences represent what buying the
product or service will do for the customer
level of value for customers.

 E.g. Nike – “Its not so much the shoes but

where they take you”.
 Product planners and marketers must think
about products and services at three (3)
levels.
 To consumers, products are complex bundles of
benefits that satisfy their needs.

 When developing products, marketers must take

into consideration:
 Core customer value – That customers seek from the
product.
 Actual product – The tangible, physical product that
will be used by the consumer.
 Augmented product – Creates customer value and
provides satisfying brand experience.
 Products and services fall into two (2) broad
classes:

Consumer Industrial
products products
  Consumer Products – A product bought by
final consumers for personal consumption.

 These can be classified based on how

consumers go about buying them:

Convenience Shopping Specialty Unsought

Product Product Product Product
 Convenience Product – A consumer product that
customers usually buy frequently, immediately, and with a
minimum comparison and buying effort.
 Shopping Product – A consumer product that the
customer, in the process of selecting and purchasing,
usually compare on attributes such as suitability, quality,
price, and style.
 Specialty Product – A consumer product with unique
characteristics or brand identification for which a
significant group of buyers is willing to make a special
purchase effort.
 Unsought Product – A consumer product that the
consumer does not know about or knows about but does
not normally consider buying.
 Industrial Products – A product bought by individuals
and organizations for further processing or for use in
conducting a business.

 The difference between Industrial and Consumer

products is the purpose for which the product is
purchased.

 Three (3) groups of industrial products and services:

 Materials and parts
 Capital items
 Supplies and services
 Materials and parts include raw materials and
manufactured materials and parts usually sold directly
to industrial users.
 Normally sold directly to industrial users.
 Price and service are the major marketing factors,
branding and advertising tend to be less important.

 Capital items are industrial products that aid in the

buyer’s production or operations, including
installations and accessory equipment.
 Supplies and services include operating supplies,
repair and maintenance items, and business services.
 These are usually supplied under contract.
 Organization marketing - Consists of activities undertaken
to create, maintain, or change attitudes and behavior of
target consumers toward an organization.
 Person marketing - Consists of activities undertaken to
create, maintain, or change attitudes and behavior of
target consumers toward particular people
 Place marketing - Consists of activities undertaken to
create, maintain, or change attitudes and behavior of
target consumers toward particular places.
 Social marketing - The use of commercial marketing
concepts and tools in programs designed to influence
individuals’ behavior to improve their well-being and that
of society.
 Product and service decisions are made at
three (3) levels:

Individual Product Decisions

Product Line Decisions

Product Mix Decisions

 In developing and marketing individual
products and services, decisions must be
made about:
 Product and Service Attributes – communicate and deliver the
benefits
 Product Quality – The characteristics of a product/service that
bear on its ability to satisfy stated or implied customer needs.
 TQM – constantly improving the quality of products, services and
business processes
 Return on Quality Approach – Viewing quality as an investment and
holding quality efforts accountable for bottom-line results.

 Marketers must first choose a quality level that will supports the
product’s positioning.
 Product quality has two (2) dimensions:
 Performance Quality – the product’s ability to perform its functions
 Conformance – Freedom from defects and consistency delivering a
targeted level of performance
 Product Features – A competitive tool for
differentiating the the company’s products
from competitor’s products.

 In determining which features to add to a

product, Marketers should:
 Periodically survey buyers to determine what is
required and most important to the customer.
 Assess each feature’s value to customers vs. its
cost to the company.
 Style & Design:
 Style – Describes the appearance of a product.
However, it does not necessarily make the
product perform better.

 Design – Contributes to a product’s usefulness as

well as aesthetics.
 Branding – A name, term, sign, symbol or design, or a
combination of these that identifies the product or
service of one seller or group of sellers and
differentiates them from those of competitors.
 Customers attach meanings to brands and develop
brand relationships
 Some benefits of branding includes:
 Helps consumers identify products that might benefit them
 Represents product quality and consistency
 Provide legal protection for unique product features that
may otherwise be copied by competitors.
 Packaging – The activities of designing and
producing the container or wrapper for a
product.

 It performs tasks such as:

 Attracting buyers
 Communicating brand positioning
 Closing the sale
 Create immediate consumer recognition of the
brand
 Labeling – Are part of the package and
provide several functions including:
 Identifies the product/brand
 Provides information and features about the
product – who made it, where it was made
 Promote the brand
 Support the brand’s positioning
 Connect with customers e.g. Using logos
 Add personality to the brand
 Product Support Services – Augment actual
products.

 This plays a major role in keeping customers

happy post-purchase, which is key to building
relationships.

 It involves surveying customers periodically to

assess customer satisfaction and take
remedial action
 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.

 Major decisions involve product line length –

the number of items in the product line.
 Companies can expand product line by:
 Product line filling – involves adding more items
within the present range of the line
 Product line stretching – Involves lengthening the
product line beyond its current range
▪ Stretching downwards – To ’plug’ market gaps that
otherwise would attract a new competitor or to respond
to a competitor’s attach.
▪ Stretching Upwards – Add prestige to current products.
 Product Mix/ Product Portfolio – Consists of all
the product lines and items that a particular
seller offers for sale.
 Width – The number of different product lines the
company carries
 Length – The total number of items a company
carries within its product lines
 Depth – The number of version offered for each
product in the line
 Consistency – How closely related the various
product lines are in end use, production requirements,
distribution channels or some other aspect.
 Services are offered by:
 Governments
▪ E.g.: Courts, employment services, hospitals, military
services, police, schools
 Private not-for-profit organizations
▪ Charities, churches, foundations, museums
 Business Organizations
▪ Airlines, hotels, insurance companies, consulting firms
 Services have four (4) characteristics:
 Given the fact services differ from tangible products,
they often require additional marketing approaches.

 The Service Profit Chain – The chain that links service

firm profits with employee and customer satisfaction.

 It consists of five (5) links:

 Internal service quality
 Satisfied and productive service employees
 Greater service value
 Satisfied and loyal customers
 Healthy service profits and growth
 In addition to the 4Ps, Service Marketing
requires internal marketing and interactive
marketing.
 Internal marketing - Orienting and motivating
customer-contact employees and supporting
service employees 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.
 Three types of Service Marketing
 Service companies face three (3) major
marketing tasks:
 Increasing Service differentiation
 Increasing Service quality
 Increasing Service productivity
 Managing Service differentiation – The
solution to price competition is to develop a
differentiated offer, delivery and image.
 Offer can include distinctive features
 Delivery can include more able and reliable
customer contact people, environment, or
process
 Image can include symbols and branding
 Managing Service Quality – A company can
differentiate itself by delivering consistently
higher quality than its competitors.
 The challenge is that service quality is harder to
define and judge than product quality.
 It varies depending on interactions between
employees and customers.
 Top companies set high service-quality
standards.
 Managing Service Productivity – Companies are under
greater pressure to increase service productivity.

 This can be done multiple ways:

 Train current employees better or hire new ones that are
more skillful
 Increase the quantity of service by giving up some quality
 Harness the power of technology

 The challenge is that companies must be careful not to

’take the service out of the service.’
 Brand equity – The differential effect that knowing
the brand name has on customer response to the
product or its marketing.
 A powerful brand has a high brand equity.
 It’s a measure of the brand’s ability to capture consumer
preference and loyalty.

 Brand strength can be measured along four (4)

consumer perception dimensions:
 Differentiation – What makes the brand stand out
 Relevance– How consumers feel it meets their needs
 Knowledge – How much consumers know about the brand
 Esteem – How highly consumers respect the brand
 Brand value – The total financial value of a brand.

 Measuring this can be very difficult

 Examples of Brand value:

 Apple – US $185B
 Google – US $113.6B
 IBM – US $112.5B
 McDonalds – US $90B
 Coca-Cola – US $78.4B
 Microsoft - US $70B
 The major brand strategy decisions involve:

 Brand Positioning – Marketers need to

position brands clearly in the target
customers’ minds.
 Brand Name Selection - A good name can
contribute to a product’s success.

 Brand names should:

1. Suggest benefits and qualities
2. Easy to pronounce, recognize, and remember
3. Distinctive
4. Extendable
5. Translatable for the global economy
6. Capable of registration and legal protection
 Brand Sponsorship – A manufacturer has
four (4) sponsorship options:
 Launch the product as a national brand (or
manufacturer’s brand)
 Sell to re-sellers who give the product a private
brand (or store brand)
 Use market licensed brands
 Join forces with another company and co-brand
 Brand Development – A company has four (4) choices:
 Line Extension – Extending an existing brand name to new
forms, colours, sizes, ingredients, or flavours of an existing
product category. E.g. KFC
 Brand Extension – Extending an existing brand name to a
new product category. E.g. Starbucks
 Multibrands – Companies market many different brands in
a given product category. E.g. PepsiCo
 New Brands – Creating a new brand name if its waning or
when entering new product category. E.g. Toyota Lexus &
Scion
 Fundamentals in managing brands:

 Brand positioning must be communicated to

consumers

 The company must ‘live’ the brand and train its staff
to be customer centered and understand the brand-
promise.

 Periodically audit brand’s strengths and weaknesses

 The End

Any questions?