Products and Services

• A product can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need.
• A service is any activity, benefit, or satisfaction offered for sale that is intangible and doesn't result in ownership.

Levels of Product and Services

• Each level adds more customer value, starting with the core benefit, basic product, expected product, augmented product, and potential product.

Product and Service Classification

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

Types of Consumer Products

• Convenience products are frequent purchases with little planning or comparison, and are low-priced, available in widespread distribution. Examples include toothpaste and magazines.
• Shopping products are purchased less frequently with much planning and comparison, are higher-priced, and have selective distribution. Examples include major appliances.
• Specialty products have strong brand preference and loyalty, require special purchase effort, involve little comparison, and are high-priced with exclusive distribution. Examples include luxury goods.
• Unsought products have little product awareness or interest, require aggressive advertising and personal selling, and vary in price and distribution. Examples include life insurance and blood donations.

Other Market Offerings

• Organization marketing involves activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward an organization.
• Person marketing involves activities undertaken to create, maintain, or change attitudes or behavior toward particular people.
• Place marketing involves activities undertaken to create, maintain, or change attitudes or behavior toward particular places.
• Idea marketing focuses on marketing social ideas to change attitudes or behavior.

Product and Service Decisions

• Individual product decisions involve attributes, branding, packaging, and labeling.
• Product line decisions involve a group of closely related products with similar functions, customer groups, and price ranges, sold through similar outlets.
• Product mix decisions involve width (number of product lines), length (total number of items in product lines), depth (number of versions for each product), and consistency.

Services Characteristics

• Intangibility means services cannot be seen, tasted, felt, heard, or smelled before purchase.
• Inseparability means services are produced and consumed simultaneously.
• Variability means the quality of services depends on who provides them and when, where, and how.
• Perishability means services cannot be stored for later sale or use.

The Service Profit Chain

• The chain links service firm profits with employee and customer satisfaction.
• It includes internal service quality, satisfied and productive service employees, greater service value, satisfied and loyal customers, and healthy service profits and growth.

Three Types of Services Marketing

• Internal marketing focuses on training and motivating customer-contact employees and supporting service employees.
• External marketing involves setting reasonable customer expectations and delivering on those promises.
• Interactive marketing trains employees in the fine art of interacting with customers to satisfy their needs.

Styles, Fashions, and Fads

• A style is a basic and distinctive mode of expression.
• A fashion is currently accepted or popular style in a given field.
• A fad is temporary period of unusually high sales driven by immediate product or brand popularity such as Beanie Babies.

New Product Development Strategy

• Firms introduce new products through acquisition (buying a company, patent, or license) or new product development.

Major Stages in New Product Development

• Idea generation is the systematic search for new product ideas, using internal and external sources
• Idea screening involves screening new ideas to spot the good ones and drop the poor ones, using methods like a new idea write-up reviewed by a committee.
• Concept development and testing involves developing a detailed version of the new product idea stated in meaningful consumer terms, and testing these concepts with groups of target consumers.

Marketing Strategy Development

• Involves creating an initial marketing strategy for a new product, describing the target market, planned value proposition, sales, market share, and profit goals.
• It determines the product's planned price, distribution, and marketing budget.
• It develops long-run sales, profit goals, and marketing mix strategy.

Business Analysis

• Analyzing sales, costs, and profit projections for a new product to see if these factors satisfy the company's objectives.

Product Development

• Developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering.

Test Marketing

• Introducing the product and its proposed marketing program into realistic market settings to test the marketing program before full introduction.

Commercialization

• Introducing a new product into the market involves decisions about timing (when to launch) and location (where to launch: single location, market, or international).

Product Life-Cycle Strategies

• The introduction stage involves creating product awareness and trial.
• The growth stage focuses on maximizing market share.
• The maturity stage aims to maximize profit while defending market share and maintaining brand interest.
• The decline stage involves reducing expenditure and milking the brand, possibly phasing out weak items.

Characteristics of Each Stage

• Introduction stage has low sales, negative profits, and innovators as customers.
• Growth stage has rapidly rising sales, rising profits, early adopters as customers.
• Maturity stage has peak sales, high profits, and middle majority.
• Decline stage has declining sales, declining profits, and Laggards as customers.

Demand Curve Discussion

• As price increases, demand decreases, but some products, like luxury goods, defy this expectation.

Price Elasticity of Demand

• It measures the sensitivity of demand to change in price.
• Inelastic demand means demand hardly changes. Example: Insulin.
• Elastic demand means demand changes greatly Ex: certain brands where customers switch from when the price goes up.

The Economy

• Factors impacting pricing strategies include booms/recessions, inflation, and interest rates.
• Responses to consumer frugality involve cutting prices, offering discounts, developing affordable items, and redefining value propositions.

Other External Factors

• Resellers, government, and social concerns influence pricing strategies.

New Product Pricing Strategies

• Market-skimming involves setting a high price to skim maximum revenues from segments willing to pay.
• Market-penetration involves selling a low price to attract a large number of buyers and a large market share.
• Apple uses price skimming, while Amazon used penetration pricing for Amazon Prime Video.

Product Mix Pricing Strategies

• Product line pricing sets prices across an entire product line.
• Optional-product pricing prices optional or accessory products sold with the main product.
• Captive-product pricing prices products that must be used with the main product.
• By-product pricing prices low-value by-products to get rid of them or make money.
• Product bundle pricing bundles products sold together.

Considerations in Setting Price

• Value-based pricing is based on buyers' perceptions of value, while cost-based pricing is based on the costs of producing and selling the product plus a fair rate of return.

Types of Cost-Based Pricing

• Cost-plus pricing adds a standard markup to the cost of the product.
• Break-even pricing sets the price to break even on the costs, determining target return price and break-even volume with a break-even chart.

Competition-Based Pricing

• Companies assess competitors' pricing strategies by comparing their market offering in terms of customer value and understanding their current pricing strategies.

Overall Marketing Strategy, Objectives, and Mix

• Positioning may be based on price, and target costing starts with an ideal selling price to ensure the price is met.

Organizational Considerations

• Management decides who should set prices, varying by company size and industry type

The Market and Demand

• Pricing varies depending on the type of market: pure competition, monopolistic competition, oligopolistic competition, and pure monopoly.
• Pure competition consists of many buyers & sellers trading in a uniform commodity like wheat, copper, or financial securities.
• Monopolistic competition consists of many buyers & sellers trading over a range of prices rather than a single market price.
• Oligopolistic competition consists of only a few sellers, due to the difficulty to enter.
• Pure monopoly consists of a single seller, whether it's a government one, private regulated one, or private unregulated one.

Supply Chains and the Value Delivery Network

• A value delivery network includes the company, suppliers, distributors, and customers partnering to improve the entire system's performance.
• Marketing intermediaries transform the assortments of products made by producers into the assortments wanted by consumers.

How Channel Members Add Value

• Intermediaries create greater efficiency in making goods available to target markets by bridging gaps.

Key functions of intermediaries

• Information: Gathering and distributing marketing research and intelligence information about the marketing environment.
• Promotion: Developing and spreading persuasive communications about an offer.
• Contact: Finding an engaging prospective customers.
• Matching: Shaping & fitting the offer to buyers needs, including activities such as manufacturing, grading, assembling & packaging.
• Negotiation: Reaching agreeing of price & other terms so that ownership or possession can be transferred.
• Physical Distribution: Transporting & storing goods.
• Financing: Acquiring & using funds to cover the costs of the channel work.
• Risk Taking: Assuming the risks of carrying out the channel work.

Number of Channel Levels

• A channel level is a layer of intermediaries that performs work in bringing the product and its ownership closer to the final buyer.
• Direct marketing channel is a channel with no intermediary levels. Example: A company sells directly to their customer via their own store.
• Indirect marketing channel is a channel with more intermeditary levels. Example: A company selling to a customer via a store owned by another company.

Channel Behavior

• Channel conflict is disagreements among marketing channel members on goals, roles, and rewards.
• Horizontal conflict occurs among firms at the same level of the channel.
• Vertical conflict occurs between different levels of the same channel.

Vertical Marketing Systems

• A vertical marketing system (VMS) consists of producers, wholesalers, and retailers acting as a unified system that can be Corporate, Contractual, or Administered.

Horizontal Marketing Systems

• Two or more companies at one level join together to follow a new marketing opportunity.

Multichannel Distribution Systems

• A single firm sets up two or more marketing channels to reach different customer segments, expanding sales and marketing coverage.

Changing Channel Organization

• Disintermediation occurs when product or service producers cut out marketing channel intermediaries or when radically new types of channel intermediaries displace traditional ones.

Channel Design Decisions

• Marketing channel design involves analyzing customer needs and setting channel objectives.
• Number of intermediaries and selecting the types of intermediaries depends on product type: intensive, exclusive, or selective distribution.
• The company must evaluate the alternatives

Designing International Distribution Channels

• Channel strategies should be adapted to the existing structures within each country, considering differences in distribution systems, customs, and government regulations.

Channel Management Decisions

• Selecting, managing, and motivating channel members, as well as evaluating their performance.

Public Policy and Distribution Decisions

• Exclusive distribution and dealing as long as the participants enter do not lessen competition or create a monopoly.

Branding

• Product quality and features are key positioning tools.
• Branding is a major positioning tool.

Building Strong Brands

• Brand equity: The differential effect that knowing the brand name has on customer repose to the product or its marketing.
• Brand value is the total financial value of a brand.
• Customer equity: The value of the customer relationships that the brand creates.

Major Brand Strategy Decisions

• Brand Sponsorship: Marketing brands under the manufacturer's own name (National Brands) or creating brands owned by a reseller (Store Brands).
• Companies can also use licensing of symbols created by other companies or co-branding by use established brand names of two different companies on the same product.