Goods, Services and Consumer Products

Goods and Services

• Goods are tangible products that customers can see, hear, smell, taste and/or touch
• Examples of goods include televisions, shovels, and cereal.
• Services are intangible products
• Examples of services include haircuts, car repairs, and dental work
• Services are distinguishable from goods because they are intangible, lack physical features prior to purchase, are inseparable from the service providers, are perishable and cannot have inventories.
• Standardizing services is difficult as exemplified by a hair coloring from a salon stylist being slightly different for each customer.
• Exhibit 11.1 shows a goods-services continuum as a tool that marketers use distinctions between services and goods.

Types of Consumer Products

• Not all consumer products can be marketed the same way.
• Consumer products are classified into three groups: convenience, shopping, or specialty.
• Convenience Products are goods and services consumers want to purchase frequently, immediately, and with minimal effort
• Advertising is the most effective promotion form because these items are generally low cost.
• Impulse goods and services are purchased on the spur of the moment such as a pack of gum from the checkout line
• Staples are convenience products that consumers frequently purchase to maintain a ready inventory such as gasoline, shampoo, or milk
• Shopping products are more expensive than convenience items and the shopper lacks complete information prior to the buying process.
• Although advertising can be used to raise brand awareness, personal selling is often involved during the purchase process of these items like cars, furniture, and services such as child care and insurance
• Specialty products are higher-end products offering unique characteristics that compel buyers to purchase particular brands such as Hermès scarves, Tiffany jewelry
• Marketers can promote these items through personalized service by sales associates and image advertising
• Services are also classified based on convenience, shopping, and specialty products categories.
• Service firms may cater to consumer markets, business markets, or both such as an architectural firm that designs residential or commercial buildings
• Services can be classified as equipment-based or people-based such as a car wash
• This system helps guide marketers in developing a successful marketing strategy, even though classifying every product can be difficult
• Buyer behave differently for the three purchase types

Types of Business Products

• The classification system for business products emphasizes product uses, not customer buying behavior.
• Six categories for product uses within the business market: installations, accessory equipment, component parts and materials, raw materials, supplies, and business services
• Installations are major capital investments in the B2B Market such as new factories, heavy machinery, customized software, and telecommunication systems
• Price doesn't typically dominate purchase decisions for installations.
• Accessory equipment are products that cost less and last for shorter periods than installations like power tools, computers, and office furniture
• Price is the biggest driver of purchasing decisions for accessory equipment
• Marketing requires continuous marketing and dealing with widespread geographic distribution of purchasers.
• Component parts and materials are finished business products of one producer that become part of the final products of another producer such as processing chips for Iphones
• Purchasers need regular, continuous supplies of standardized products and satisfied customers often become regular buyers.
• Raw materials are natural resources that become part of a final product such as coal, copper, lumber, farm products, beef, eggs, and soybeans
• These represent an underlying natural resource that requires minimal processing and packaging such as corn, flour, and food starch for finished goods.
• Supplies are the regular products a firm uses in daily operations such as paper or pens
• A purchasing manager typically buys supplies as part of their routine job duty.
• High price competition keeps costs under control for supplies.
• Business services are intangible products firms buy to facilitate their production and operations such as financial services, insurance, and legal advice
• Service providers sell the same services to both consumers and organizational buyers like telephone, gas and electricity

Managing Brands for Competitive Advantage

• A brand is a name, term, sign, symbol, design, or some combination that identifies the products of one firm while differentiating these products from competitors.
• Marketers can work to create strong product identities to protect them through branding the process.
• Brand recognition indicates consumer awareness and identification of a brand and is often a company's first marketing objective for newly introduced products
• An effective way to increase consumer awareness of a brand is through advertising.
• Brand preference indicates when buyers choose a product over a competitor based on experience
• Brand insistence indicates when consumers refuse alternatives and search extensively for the desired product; few firms achieve this goal
• Brand equity is the added value the brand gives to a product in the marketplace.
• Brands with high brand equity often command comparatively large market shares and higher prices.
• Young & Rubicam, a global ad agency, says a firm builds brand equity on four dimensions: differentiation, relevance, esteem and knowledge

Protecting Brand Identity

• Organizations identify their products in the marketplace in a variety of ways, for example, Sunkist Growers stamps its oranges with the name Sunkist
• Another important step for a firm is to decide identification methods in the marketplace
• A brand name is the part of a brand that can be spoken and distinguishes a firm's offerings from those of its competitors
• Effective brand names convey a brand image and are easy to pronounce, recognize and remember.
• A brand mark is a symbol or pictorial design that distinguishes a product such as the Jolly Green Giant for Green Giant vegetables
• A trademark is a brand for which the owner claims exclusive legal protection
• To receive trademark protection, companies file an application with the U.S. Patent and Trademarking Office.
• A trademark is not confused with a trade name, which identifies a company; the Coca-Cola Company has Coke as a trademark
• A trade dress is a visual cue used in branding that creates an overall look differentiating a brand or product from competitors such as color, size, package shapes, graphics, and similar design factors
• Often trade dress involves the visual cues creating a “total image” that makes up it up, for example, in the look and feel of a Chipotle restaurant or a McDonalds Happy Meal box.

Brand Strategies

• Generic products are products sold without any efforts at branding with plain labels, no advertising and no brand names
• These market shares increase during economic downturns.
• Manufacturer brands are brand names owned by a manufacturer or other producer; also called national brands such as Kellogg's, Sony, and Chevrolet
• Private brands are brands offered by wholesalers and retailers; also called private labels, growth has increased over the years such as Kroger's Simple Truth products.
• Line extension is the development and implementation of new sizes, styles, or related product offerings like different flavors of Cheerios in the cereal isle
• Brand extension implies attaching a popular brand name to a new product in an unrelated product category and marketers hope to gain new customers and markets by building on existing brands.
• An example of brand extension is a brand of Cheerios bread or cake mix.

Organizing Brands and Products

• A brand manager/product manager is the marketer responsible for a single brand or product
• Responsible for supporting marketing strategies, setting prices, developing advertising, sales promotions and working with sales reps.
• Apple likely has three brand managers: one for iPhone, one for iPad, and one for Macbooks
• Category management is a product management system in which a manager oversees several product lines and brands within a single category; for example, P&G can have one category manager who oversees dental care for Walmart
• Most companies assigns product-innovation functions to new product committees, new product departments, and product managers.
• New product committees typically bring together experts in marketing, finance, and research.
• New product departments are responsible for development phases within a firms, screening and coordinating testing
• This can include creation of ideas, and recommendation for improvements

Three Major Objectives of Packaging

• A package serves three major objectives:
  • Protection against damage, spoilage, and pilferage of merchandise.
  • Assistance in marketing the product and evoking its value.
  • Cost-effectiveness for the environment.
• A label is a branding component that includes the brand name or symbol, name and address of the manufacturer or distributor, product's composition, size, and uses.
• Key legislation regulates labeling such as The Fair Packaging and Labeling Act of 1966, The Nutrition Labeling and Education Act of 1990, The Food Allergen Labeling and Consumer Protection Act of 2004.
• The FDA mandates standards for nutritional labels.

Explore the differences between tangible goods and intangible services, including examples like televisions, haircuts and car repairs. Learn about the unique characteristics of services and the types of consumer products.