Marketing Mix: Product and Services Strategy

Study Notes

Products, Services, and Experiences

A product is anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want.
A service is a product that consists of activities, benefits, or satisfaction that is essentially intangible and does not result in the ownership of anything.

Classification of Consumer Products

Consumer products are classified into four categories: convenience, shopping, specialty, and unsought products.
Convenience products are consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort.
Examples of convenience products include newspapers, candy, and fast food.
Shopping products are consumer products and services that the customer compares carefully on suitability, quality, price, and style.
Examples of shopping products include furniture, cars, and appliances.
Specialty products are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort.
Examples of specialty products include medical services, designer clothes, and high-end electronics.
Unsought products are consumer products that the consumer does not know about or knows about but does not normally think of buying.
Examples of unsought products include life insurance, funeral services, and blood donations.

Individual Product and Service Decisions

Product or service attributes communicate and deliver the benefits.
Examples of product or service attributes include product quality, features, style, and design.
Brand is the name, term, sign, or design that identifies the maker or seller of a product or service.
Packaging involves designing and producing the container or wrapper for a product.
Labels identify the product or brand, describe attributes, and provide promotion.
Product support services include services offered after the sale of a product.

New-Product Development Process

The new-product development process consists of eight stages: idea generation, idea screening, concept development and testing, marketing strategy development, business analysis, product development, test marketing, and commercialization.
Idea generation is the systematic search for new-product ideas.
Sources of new-product ideas include internal and external sources.
Internal sources refer to the company's own formal research and development, management and staff, and intrapreneurial programs.
External sources refer to sources outside the company such as customers, competitors, distributors, suppliers, and outside design firms.
Idea screening involves identifying good ideas and dropping poor ideas.
R-W-W screening framework includes three questions: Is it real? Can we win? Is it worth doing?
Concept development and testing involves developing a detailed version of the idea stated in meaningful consumer terms.
Concept testing refers to testing new-product concepts with groups of target consumers.
Marketing strategy development refers to the initial marketing strategy for introducing the product to the market.
Business analysis involves a review of the sales, costs, and profit projections to find out whether they satisfy the company's objectives.
Product development involves the creation and testing of one or more physical versions by the R&D or engineering departments.
Test marketing involves introducing the product and marketing program into more realistic marketing settings.
Commercialization is the introduction of the new product into the market.

Product Life-Cycle Strategies

The product life cycle consists of four stages: introduction, growth, maturity, and decline.
Introduction stage involves slow sales growth, little or no profit, high distribution and promotion expense, and high investment costs.
Growth stage involves rapid market acceptance, increasing profits, and high promotion and R&D expense.
Maturity stage involves slowdown in sales growth, many suppliers, substitute products, overcapacity, and increased promotion and R&D expense.
Decline stage involves sales fall off, profits drop, and strategies to maintain, harvest, or drop the product.

Service Marketing

Service marketing involves marketing strategies for service firms.
Characteristics of a service include intangibility, inseparability, variability, and perishability.
Service-profit chain links service firm profits with employee and customer satisfaction.
Internal marketing 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 means that service quality depends heavily on the quality of the buyer-seller interaction during the service encounter.
Marketing strategies for service firms include managing service differentiation, service quality, and service productivity.