Marketing: Products, Services, and Experiences

Principles of Marketing - Quarter 4 Module 1

• This module defines, and shows how to differentiate Products, Services, and Experiences in business

Key Concepts

• Products, services, and experiences help consumers value items and make purchases based on how well they meet needs and wants.
• Learning about product levels and classifications assists consumers and marketers alike in making decisions and creating strategies.
• Product experience grows businesses, builds consumer trust and ensures sustainability.

What Organizations Market

• Commonly goods and services, experiences, ideas, advocacies, and personalities also constitute marketing

What is a product?

• It's anything offered in a market for attention, acquisition, use, or consumption that satisfies a need or want.
• Included can be physical objects, services, events, persons, places, organizations, and ideas.
• Kotler's definition says a product can meet a need or want, including retail stores or customer service representatives.
• Products, or goods, are physical and tangible which allows inspection before purchase.
• Customers choose products based on perceived value and are only satisfied if the value meets or exceeds expectations.

Five Product Levels (Kotler)

• Core benefit entails the the fundamental need or want a customer satisfies buying the product
• Generic product entails basic version with necessary features for function.
• Expected product entails features the customer anticipates upon purchase
• Augmented product entails variations, features, or services differentiating it from competitors.
• Potential product entails augmentations and transformations it may undergo, so the product augments as an ongoing "surprise"

Product Classification

• A product can satisfy a want or need on both sides of an exchange classified by customer characteristics like use, differentiation, type, and durability.
• Products are generally classified according to use, differentiation, type, and durability.

Classification of Products by Use

• Consumer goods are for personal or household consumption
  • Examples: noodles, biscuits, detergent, shampoo
• Industrial goods are used to make other goods, like raw materials
  • Examples: Aluminum (for kitchen equipment), electronic cables (for appliances)
• A product is not always one or the other with consumer goods used industrially, and vice versa.
  • Like sugar which is a consumer good when sweetening coffee but an industrial good when added to brownies for sale.
• Determine whether a product is a consumer or industrial good by how it is ultimately used, not physical characteristics alone.

Classification of Products by Differentiation

• Undifferentiated goods display identical physical characteristics between vendors and usually sourced from nature
  • Example: Salt being near identical across vendors
• Differentiated goods are varied in characteristics and features which distinguishes them from one another
  • Example: Cars with varying appearances and models due to successful branding to stand out from competitors

Classification of Products by Durability

• Durability reflects how long a product provides benefits to the consumer after purchase.
• Consumables are products that provide benefit for a brief period of time
  • Examples: Food, drinks
• Semi-durables provide benefits for a longer duration, usually spanning several months, for long-term consumer use
  • Examples: Clothes, shoes, belts, and jackets
• Durables are products made to long lasting, beneficial use and are usually more expensive - augmented product needed
  • Examples: Automobiles, houses, home appliances, consumer electronics, furniture, sports equipment, and toys.

Classification of Products by Type

• Convenience goods get purchased frequently at a low cost, with little to no effort required
  • Examples: newspapers, gum, and candy
• Convenience goods availability matters, and catering to customer needs when and where they arise.
• Shopping goods are purchased less frequently than convenience goods can be expensive and require research for evaluation prior to purchase
  • Consumers consider features, attributes, and prices when buying
  • Examples: Shoes, clothes, handbags
• Marketing shopping goods can be achieved through intensive advertising, well-trained salespeople, and superior positioning relative to competitors
• Specialty goods require significant effort on behalf of the consumer
  • Consumers are willing to travel great distances to where these are located
    • Example: Branded luxury merchandise, works of art, automobiles, and homes
• Successful marketing of specialty goods entails brand image and identities
• Unsought goods: Items not looked for by consumers and are purchased for extraordinary reasons
  • Examples: Investments, memorial plans, and life insurance
• Advertising, aggressive selling, and highly trained salespeople are usually used to market unsought goods

What is Service?

• It's a product form consisting of activities, benefits, or satisfaction offered for sale, that are intangible that do not result in the ownership of anything
• Services are generally considered more difficult to market due to its four major attributes:

Intangibility

• Physical products are tangible, allow consumer inspection before purchase while services are intangible
  • it's impossible to "sample" a lawyer's skills or a doctor's surgical ability before one decides to hire.
• Marketers make services more tangible to address intangibility
  • Lawyers and doctors maintain luxurious offices retail large manned by smartly dressed staff.
  • Display diplomas, certifications, and other documentation of training and expertise as well as professionally prepared business cards with Latin titles.
  • A professional attire and conduct.

Variability

• Because services can be performed by human beings, no service provider can render the same service in exactly the same way every single time
  • A college professor cannot use the exact same words and gestures when giving the same lecture in two separate sessions.
• Service variability problems can best be addressed by developing and implementing standard operating procedures (SOPs)
  • A fast-food counter clerk follows a script in greeting, order-taking, and payment to reduce variability