Product and Service Management

Management of Products, Services and Brands

• Marketing is developing products/services to meet buyer needs.
• A product can be a good, service, or idea.
• It includes tangible and intangible attributes satisfying needs.
• In return, companies typically receives either money or something of similar value.

Attributes of Goods

• Goods have tangible attributes perceived by the five senses.
• Intangible attributes include warranties or abstract concepts.

Good Classifications

• Nondurable goods are consumed in few uses like food.
• Durable goods last over many uses, e.g., cars.
• This method guides marketing strategies.

Attributes of a Service

• Services are offerings that represent intangible activities or benefits.
• Designed to satisfy consumer needs.
• In return, organizations expects to receive money or similar value.

Classifying Products

• Consumer products are bought by the end user.
• Business products (B2B or industrial) aid in providing other products for resale.
• Some items fit both categories, influencing sales methods.

Consumer Products

• Types differ by consumer effort, attributes, and purchase frequency.

Convenience Products

• Purchased frequently with minimal effort.

Shopping Products

• Alternatives are compared on price, quality, style.

Specialty Products

• Consumers make a special effort to seek them out.

Unsought Products

• Consumer is unaware or doesn't initially want them.

Business Products

• Also known as B2B or industrial products.
• Organizations buy these to help in providing other products for resale.
• Sales are often due to derived demand.

Classifying Services

• Services are classified by delivery method
• These can include people, equipment, business firms, nonprofits, or government.

Product Item

• A specific product has a unique brand, size, price.

Product Line

• Related items satisfy needs, are used together, sold to same group, through same outlets, or within a price range.

Product Mix

• Consists of all product lines offered by a company.

New Products

• They are vital for company growth, but carry financial risks.
• "Newness" is defined from various perspectives.

Newness Compared with Existing Products

• A product is new if functionally different or has added features.
• Appeals to more customers.

Newness from the Consumer's Perspective

• Categorization based on how they affect consumption.

Continuous Innovation

• Consumers do not need to learn new behaviors.
• Added features on familiar products do not require behavioral change.

Dynamically Continuous Innovation

• Only minor behavior changes needed.

Discontinuous Innovation

• Requires entirely new consumption patterns.

Factors in New Product Failures

• Insignificant point of difference.
• Incomplete market and product analysis.
• Failure to meet customer needs.
• Poor timing
• Lack of access to buyers
• Marketing mix execution is poor
• Market attractiveness is too low
• Quality of the product is sub par

New Product Development Process

• It consists of seven stages.
• An organization can identify opportunities and convert them into salable products or services

Product Life Cycle

• Stages: introduction, growth, maturity, and decline.

Introduction Stage

• Product launch to target market happens at this stage
• Sales grow slowly, profits are minimal.
• Objective: create consumer awareness and encourage trial.

Growth Stage

• Rapid sales increase happens at this stage
• Competitors emerge at this stage
• Sales increase due to new adopters and repeat purchases.
• Product changes are made to differentiate from other competitors
• It can be important to broaden distribution

Maturity Stage

• Total industry sales slow down at this stage
• Most buyers are repeat purchasers.
• Sales increase at a slower rate as new buyers decrease.
• Profit declines due to high competition.
• The cost of gaining new buyers rises at this stage
• Marketing focuses on maintaining market share.
• Attempts are made to differentiate and find new uses and buyers.

Decline Stage

• This is when sales decrease
• Often cause is environmental changes, not company strategy.
• Strategy: deletion (dropping the product) or harvesting (reducing costs).

Product Life-Cycle Curves

• Not all shapes are the same.
• Different life-cycle types suggest different marketing strategies.

High-Learning Product

• Significant customer education is needed.
• Introductory period of the product is extended.

Low-Learning Product

• Little learning is required.
• Benefits are easily understood.
• Strategy: broaden distribution to meet demand.

Fashion Products

• Introduced, decline, and return.

Fad Products

• Have rapid sales followed by rapid decline.

Managing the Product Life Cycle

• Product managers are important to manage products successfully here
• This can be done by: modifying product, modifying market, and repositioning the product.

Modifying the Product

• Altering characteristics to increase its value and sales.
• Product bundling is a common approach here
• Selling separate products together in one package also works

Modifying the Market

• Finding new customers so a company can increase a product's use

Repositioning the Product

• Altering its place in a consumer's mind.
• done by changing marketing mix elements.

Reacting to a Competitor's Position

• Corrective action when a competitor affects sales and market share.

Catching a Rising Trend

• Capitalizing on changing consumer preferences.

Branding

• Use of name, design, or symbols to identify and differentiate products.
• Brands represent consumer perceptions and feelings about a product.

Trademark

• Legally registered brand name ensures exclusive use.

Trade Name

• This is a commercial, legal name under which a business operates

Brand Personality and Brand Equity

• Brands offer product identification and differentiation.
• Successful brands take on a brand personality involving human characteristics.

Brand Value

• The total financial worth of a brand.

Brand Equity

• This is the added value that knowing a brand name can have on customers.
• Brand equity provides a competitive edge.
• Consumers often pay more to get this added equity

Creating Brand Equity

• Brand equity resides in what consumers have learned, felt, and seen about the brand.
• It arises from building activities consisting of four basic steps:
  • Developing brand awareness that is positive
  • Establish meaning that the brand represents for consumer
  • Create the proper response to get to the brand's meaning
  • Build loyalty to the brand with consumers

Picking a Good Brand Name

• Criteria: suggests benefits, memorable, fits image, no restrictions, simple, favorable associations.

Branding Strategies

• Multiproduct, multibranding, private branding and mixed branding are all different strategies

Multiproduct Branding

• One name is used for all products in a class.
• Also known as family or corporate branding.

Multibranding Strategy

• Involves giving each product a unique name.
• Each brand targets a different market segment.

Private Branding Strategy

• This is called private labeling / reseller branding
• This strategy involves manufacturers making and selling items but using a brand name of a wholesaler or retailer.

Mixed Branding Strategy

• Firms market products using their own name and that of a reseller.
• Appealing to different market segments.

Packaging and Labeling Products

• Packaging is the container for sale and label information.
• Labels identify product characteristics, usage, contents.
• Labelling an packaging are a expensive part of marketing.

Benefits of Packaging and Labeling

• Packaging involves designing the container
• Labels identify the product and provide promotions

Communication Benefits

• Packaging's major benefit is communicating label info.
• Used to satisfy legal requirements for product disclosure.

Functional Benefits

• Packaging provides storage, convenience, protection, and ensures product quality.

Perceptual Benefits

• Shape, color, and graphics distinguish brands.

Challenges for Designers of Packaging and Labels

• Companies try to connect with customers by regularly updating packages and labels
• Consider ecological challenges/concerns, and health, safety, and security risks, as well as seek to reduce costs

The Uniqueness of Services

• Services are intangible benefits.
• These satisfy needs in exchange for money or value.

U.S. GDP from Services

• Over 47% comes from services.
• Growth results from increased demand.

The Four I's of Services

• Intangibility, inconsistency, inseparability, and inventory.

Intangibility

• Can not be held, touched, seen before purchase. Trying to show the benefits can help

Inconsistency

• Quality varies, based on the people providing them.

Inseparability

• Delivery can not be separated from the service itself.

Inventory

• Carrying costs relate to idle production capacity.

The Service Continuum

• Ranges from product-dominant to service-dominant offerings.
• Service shows how offerings can vary in their balance of products and services.

Components for Today's Businesses

• Core offering (product or service).
• Supplementary services: adds value.

Categories of Supplementary Services

• Consultation, finance, shipping, installation, maintenance, upgrades.
• Innovation relies on creativity and the supplementary services work together

Marketing of Services

• Expanded marketing mix (7 Ps) adapted for services.

Product

• Design the product concept with features and benefits.
• Branding is especially important.

Price

• This is an Indicator of Quality
• Different names (charges, fees)

Place

• Distribution is a major factor.
• No intermediaries are typically involved.
• Value of convenient distribution now considered

Promotion

• It shows the benefits of the service to the consumer
• Another form of promotion to consider here is publicity

People

• People are essential for creating and delivering the customer experience. Therefore customers often judge the quality of service experience based on the performance of the people providing the service here
• Led to the concept of internal marketing, which helps value creation

Internal Marketing

• This involves focusing on employees (internal market) before customers.
• Key relationships: internal marketing, service quality, employee productivity, firm profitability. Known as the service-profit chain

Customer Experience Management (CEM)

• Managing the customer's entire experience.
• Integrating activities to connect with customers is essential
• Goal: customer loyalty to each contact point.

Physical Environment

• The environment influences perception of service.

Process

• Procedures, mechanisms, and activity flow.
• Customers form experience-based judgments.

Capacity Management

• Limited capacity due to inseparability and perishability.
• Adjusting prices can moderate demand.