Product and Service Classification Quiz

What is Product?

• A product is anything offered to a market that can be acquired, consumed or used to satisfy a want or need
• A service is an intangible product that consists of activities, benefits and satisfies offered for a fee, does not result in ownership of anything
• Companies create and manage customer experiences with their brands and products
• Companies differentiate their offerings from their competitors

Three Levels of Product

• Core product: Satisfies the customer's fundamental needs, the core benefit the customer is seeking
• Actual product: Physical attributes & features, packaging, styling, quality, features, brand name.
• Augmented product: Additional services, such as delivery, installation, financing, warranties and customer service.

Product and Service Classifications

• Consumer products are bought by final consumers for personal consumption
• Industrial products are bought by individuals and organizations for further processing or for use in conducting a business

Consumer Products

• Convenience products: Products that are purchased frequently, conveniently and with minimal effort
• Shopping products: Consumers invest significant time and effort in researching and comparing alternatives, such as clothing, furniture and appliances.
• Specialty products: Products with unique characteristics or brand identification for which buyers are willing to make a special purchasing effort, such as specific cars, designer clothes, or gourmet foods.
• Unsought products: Products that consumers do not know about or don't normally think of buying, such as life insurance, funeral services, and blood donations.

Individual Product and Service Decisions

• The product and service attributes are the key elements that determine their appeal to customers.
• Quality is a measure of how well a product performs its intended function, it's linked to customer value and satisfaction, and requires a whole company involvement (TQM - Total Quality Management)
• Features are a competitive tool for differentiating a product and should be valued by the customer as determined through market research.
• Style and Design contribute to the product's usefulness and aesthetics.

Branding

• A brand is a name, term, sign, symbol, or design that identifies the product
• Branding can add value to a product
• Branding helps buyers identify products and determine quality
• Branding helps sellers convey product quality, provide legal protection and segment markets.

Packaging

• Packaging frequently includes primary, secondary, and shipping packages
• Packaging functions include holding, protecting, promoting, and differentiating the product.

Labeling

• Packaging serves to identify, describe, and promote the product
• Labeling must be careful not to mislead customers, fail to describe ingredients, and include safety warnings.

Product Support Services

• Companies should survey customers regularly to assess current customer service
• Companies use a mix of phone, email, fax, internet, and interactive voice and data technologies to provide customer support.

Product Line Decisions

• Product line: A group of products that are closely related in function, targeted at the same customer groups, market through the same channels, and fall into similar price ranges.
• Product Line Length: Number of products in the line
• Line stretching: Adding higher or lower priced products to the existing line
• Line filling: Adding more items within the present price range

Product Mix Decisions

• Product Mix (Product Portfolio): All product lines and items a particular seller offers for sale
• Width: Number of product lines
• Length: Number of products in each line
• Depth: Number of versions of each product carried
• Consistency: How closely related the product lines are.

Services Marketing

• Services account for a significant portion of GDP, employment, and job creation
• Service industries include business organizations, government, and private non-profit organizations

Four Service Characteristics

• Intangibility: Services cannot be seen, tasted, felt, heard, or smelled before purchase
• Variability: Quality depends on who provides them, when, where, and how
• Inseparability: Services are produced and consumed simultaneously
• Perishability: Services cannot be stored for later sale or use

Service-Profit Chain

• Satisfied and productive employees lead to greater service quality
• Greater service quality leads to satisfied and loyal customers
• Satisfied and loyal customers lead to profits and growth

Marketing Tasks for Service Companies

• Managing service differentiation: Developing a differentiated offer, delivery, and image
• Managing service quality: Delivering consistently higher quality than the competitors
• Managing service productivity: Training current employees or hiring new ones; increasing the quantity of service by giving up some quality; Harnessing the power of technology

Branding Strategy

• Brand Equity: Positive differential effect that knowing the brand name has on customer response to the product or service
• Brand Value: The total financial value of a brand
• Customer Equity: The value of customer relationships that the brand creates
• Brands with strong equity have competitive advantages including high consumer awareness, strong brand loyalty, helping with the introduction of new products, and less susceptibility to price competition.

Building Strong Brands

• Three levels of brand positioning:
  • Attributes: Least effective
  • Benefits: Taps into emotions
  • Beliefs and values: Highest level

Good Brand Names

• Suggest something about the product or its benefits
• Easy to pronounce, recognize, and remember
• Distinctive
• Extendible
• Translate well into other languages
• Legally registered and protected

Brand Positioning

• Manufacturer brands: Costly to establish and promote, Higher profit margins
• Private (store) brands:
• Licensed brands: Name and character licensing has grown
• Co-branding: Advantages and disadvantages

Brand Development

• Line extensions: Minor changes to existing products or services to reach new customer segments.
• Brand extensions: Successful brand names help introduce new products in new categories.
• Multibrands: Multiple product entries in a product category, allows for greater market coverage and segment targeting.
• New brands: New product category, entering a new market or addressing a new customer need.

Managing Brands

• Communicate the brand's positioning
• Manage all brand touch points
• Train employees to be customer-centered
• Audit the brand's strengths and weaknesses

Starbucks: Brewing a Worldwide Experience, What is the Core Customer Value?

• Core customer value: A sense of community, a feeling of comfort and belonging, a "third place" outside of home and work where people can connect and socialize.
• Actual product: High-quality coffee and other beverages, pastries, snacks, and merchandise.
• Augmented product: A welcoming and comfortable atmosphere with a unique ambiance, Wi-Fi access, and friendly service.