Principles of Marketing PDF - Chapter 8

Principles of Marketing Nineteenth Edition, Global Edition Chapter 8 Products, Services, and Brands: Building Customer Value Copyright © 2024 Pearso...

Principles of Marketing Nineteenth Edition, Global Edition Chapter 8 Products, Services, and Brands: Building Customer Value Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Learning Objectives 8.1 Define product and describe the major classifications of products and services. 8.2 Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. 8.3 Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. 8.4 Discuss branding strategy—the decisions companies make in building and managing their brands. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. FILLI CAFÉ: A Tea Revolution The FiLLi brand is about a lot more than just making good tea. At its core, FiLLi offers an ambient atmosphere where patrons can unwind with friends and aromatic cups of tea. More than just tea, FiLLi Café in the UAE sells a “Tea n’ Talk” experience of enjoying an aromatic Rawpixel.com/Shutterstock cup of saffron tea while lounging with friends or family. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Learning Objective 1 Define product and describe the major classifications of products and services. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (1 of 18) Product is anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want. Services are a form of product that consists of activities, benefits, or satisfactions and that is essentially intangible and does not result in the ownership of anything. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (2 of 18) Products, Services, and Experiences Products and services are becoming more commoditized. Companies are now creating and managing customer experiences with their brands or company. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (3 of 18) Products, Services, and Experiences Creating customer experiences: Airbnb’s “Night At” program transforms iconic locations into unforgettable one-night experiences, everything from an underwater night’s sleep with the sharks at a Paris Chesnot/Getty Images aquarium (above) to a sleepover at Dracula’s castle in Transylvania for Halloween. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (4 of 18) Figure 8.1 Three Levels of Product Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Discussion Question (1 of 2) Customer experiences have always been an important part of marketing for some companies. Explain this statement. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (5 of 18) Product and Service Classifications Consumer products Industrial products Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (6 of 18) Table 8.1 Marketing Considerations for Consumer Products Type of Consumer Product Marketing Convenience Shopping Specialty Unsought Considerations Customer buying Frequent Less frequent purchase; Strong brand Little product behavior purchase; little much planning and preference and awareness or planning, little shopping effort; loyalty; special knowledge (or, if comparison or comparison of brands on purchase effort; little aware, little or even shopping effort; price, quality, and style comparison of negative interest) low customer brands; low price involvement sensitivity Price Low price Higher price Highest price Varies Distribution Widespread Selective distribution in Exclusive distribution Varies distribution fewer outlets in only one or a few convenient outlets per market locations area Promotion Mass promotion Advertising and personal More carefully Aggressive advertising by the selling by both the producer targeted promotion by and personal selling by producer and resellers both the producer and the producer and resellers resellers Examples Toothpaste and Major appliances, Luxury goods, such Life insurance and Red laundry televisions, furniture, and as Rolex watches or Cross blood donations detergent clothing fine crystal Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (7 of 18) Product and Service Classifications Consumer products are products and services bought by final consumers for personal consumption. Convenience products Shopping products Specialty products Unsought products Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (8 of 18) Product and Service Classifications Convenience products are consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort. Newspapers Candy Fast food Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (9 of 18) Product and Service Classifications Shopping products are less frequently purchased consumer products and services that the customer compares carefully on suitability, quality, price, and style. Furniture Cars Appliances Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (10 of 18) Product and Service Classifications 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. Medical services Designer clothes High-end electronics Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (11 of 18) Product and Service Classifications Unsought products are consumer products that the consumer does not know about or knows about but does not normally think of buying. Life insurance Funeral services Blood donations Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (12 of 18) Product and Service Classifications Industrial products are those products purchased for further processing or for use in conducting a business. Materials and parts Capital items Supplies and services Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (13 of 18) Product and Service Classifications Materials and parts include raw materials and manufactured materials and parts. Capital items are industrial products that aid in the buyer’s production or operations. Supplies and services include operating supplies, repair and maintenance items, and business services. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (14 of 18) Product and Service Classifications Organizations, Persons, Places, and Ideas Organization marketing Person marketing Place marketing Social marketing Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (15 of 18) Product and Service Decisions Organization marketing consists of activities undertaken to create, maintain, or change the attitudes and behaviors of target consumers toward an organization. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (16 of 18) Product and Service Classifications Person marketing consists of activities undertaken to create, maintain, or change the attitudes or behavior of target consumers toward particular people. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (17 of 18) Product and Service Classifications Place marketing consists of activities undertaken to create, maintain, or change attitudes and behavior toward particular places. Social marketing uses commercial marketing concepts to influence individuals’ behavior to improve their well-being and that of society. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. What Is a Product? (18 of 18) Master Group Pakistan, a leading provider of mattresses and foam furniture, is a strong believer in the concept of giving back to society. Their brand, Master MoltyFoam, launched an initiative for installing so-called “billbeds” or billboards—of which there is an abundance in urban Pakistan—that advertise MoltyFoam during the day and can be flipped over and be converted into a foam bed at night by any of the half a million homeless people sleeping on the streets in major cities. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Learning Objective 2 Describe the decisions companies make regarding their individual products and services, product lines, and product mixes. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Product and Service Decisions (1 of 11) Figure 8.2 Individual Product Decisions Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Product and Service Decisions (2 of 11) Individual Product and Service Decisions Communicate and deliver benefits by product and service attributes. Quality Features Style and design Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Product and Service Decisions (3 of 11) Individual Product and Service Conformance quality: By consistently Decisions meeting and exceeding customer Product quality refers to the quality expectations, B&B Hotels characteristics of a product or service earned the German Customer Award that bear on its ability to satisfy stated for highest customer satisfaction among or implied customer needs. the nation’s economy hotels. Total quality management Return-on-quality Quality level Performance quality Conformance quality Peter Titmuss/Alamy Stock Photo Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Product and Service Decisions (4 of 11) Individual Product and Service Decisions Product Features Competitive tool for differentiating a product from competitors’ products Assessed based on the value to the customer versus its cost to the company Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Product and Service Decisions (5 of 11) Individual Product and Service Decisions Style describes the appearance of the product. Design contributes to a product’s usefulness as well as to its looks. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Product and Service Decisions (6 of 11) Individual Product and Service Decisions Brand is the name, term, sign, or design or a combination of these, that identifies the maker or seller of a product or service. A classic stunt by former bargain footwear retailer Payless dramatically illustrated the power of brands in shaping perceptions. Fashion influencers paid as much as $645 for “Palessi” shoes that normally sold for less than $40. Collective Brands Inc. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Product and Service Decisions (7 of 11) Individual Product and Service Decisions Packaging involves designing and producing the container or wrapper for a product. Labels identify the product or brand, describe attributes, and provide promotion. Smart packaging: British dairy brand Yeo Valley Organic uses “always on” connected packaging across its full range of 90 organic products. Courtesy of Sharp End Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Product and Service Decisions (8 of 11) Individual Product and Service Decisions Product support services augment actual products. Brand logo makeovers: Many companies are redesigning their logos to keep them in sync with the rapidly evolving digital times. rvlsoft/Shutterstock, General Motors, International House of Pancakes, LLC, and Audi of America Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Product and Service Decisions (9 of 11) Product Line Decisions Product line is a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Product and Service Decisions (10 of 11) Product Line Decisions Product line length is the number of items in the product line. Line stretching Line filling Product line stretching and filling: Through skillful line stretching and filling, Google Nest is positioning Google Nest is a trademark of Google LLC itself to more fully serve the smart homes of the future. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Product and Service Decisions (11 of 11) Product Mix Decisions Product mix consists of all the product lines and items that a particular seller offers for sale. Width Length Depth Consistency The product mix: Colgate-Palmolive’s consistent product mix contains dozens of brands that constitute the “Colgate World of Care”—products that “every day, people like you trust to care for themselves and the ones they love.” Used with permission of Colgate-Palmolive Company Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Learning Objective 3 Explore the four characteristics that affect the marketing of services and the additional marketing considerations that services require. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Services Marketing (1 of 10) Types of Service Industries Government Private not-for-profit organizations Business organizations Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Services Marketing (2 of 10) Figure 8.3 Four Service Characteristics Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Services Marketing (3 of 10) Marketing Strategies for Service Firms In addition to traditional marketing strategies, service firms often require additional strategies. Service-profit chain Internal marketing Interactive marketing Using tangibles to enhance the service experience: Oberoi Hotels and Resorts carefully integrates tangible elements across the entire service journey. The Oberoi Udaivilas Resort in Udaipur, India, epitomizes this approach. Martin Harvey/Alamy Stock Photo Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Services Marketing (4 of 10) Marketing Strategies for Service Firms Service-profit chain links service firm profits with employee and customer satisfaction. Internal service quality Satisfied and productive service employees Greater service value Satisfied and loyal customers Healthy service profits and growth Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Services Marketing (5 of 10) Figure 8.4 Three Types of Services Marketing Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Services Marketing (6 of 10) Marketing Strategies for Service Firms 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. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Services Marketing (7 of 10) Marketing Strategies for Service Firms Interactive marketing means that service quality depends heavily on the quality of the buyer-seller interaction during the service encounter. Service differentiation Service quality Service productivity Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Services Marketing (8 of 10) Marketing Strategies for Service Firms Managing service differentiation creates a competitive advantage. Offer Delivery Image Service differentiation: In the blistering summer of Dubai, when the schools are out and soaring temperatures move everything indoors, the smiling face of Modhesh turns up on billboards, signs, and malls. Modhesh is the Dubai tourism authority’s summer mascot announcing the summer deals that attract tourism to the city’s seasonal shopping extravaganza. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Services Marketing (9 of 10) Marketing Strategies for Service Firms Managing service quality enables a service firm to differentiate itself by delivering consistently higher quality than its competitors provide. Customer service quality: The social media provide opportunities to root out and remedy customer dissatisfaction with service. Southwest Airlines employs a team of “social care” Courtesy of Southwest Airlines specialists who respond very quickly to customer comments and concerns. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Services Marketing (10 of 10) Marketing Strategies for Service Firms Managing service productivity refers to the cost side of marketing strategies for service firms. Employee hiring and training Service quantity and quality Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Learning Objective 4 Discuss branding strategy—the decisions companies make in building and managing their brands. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Brand Strategy: Building Strong Brands (1 of 6) Brand Equity and Brand Value Brand equity is the differential effect that knowing the brand name has on customer response to the product or its marketing. Brand value is the total financial value of a brand. Consumers’ relationships with brands: To devoted Instagram users, the brand stands for much more than just a photo sharing service. It means growing closer to friends and family through shared experiences in the moment. Lorenzo Di Cola/NurPhoto/Getty Images Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Brand Strategy: Building Strong Brands (2 of 6) Figure 8.5 Major Brand Strategy Decisions Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Brand Strategy: Building Strong Brands (3 of 6) Building Strong Brands Brand Positioning Marketers can position brands at any of three levels. Attributes Benefits Beliefs and values Brand positioning: Brands like Disney form strong emotional Art of Drawing/Alamy Stock Photo connections with customers. Says one Disney World Resort regular: “I have a deep love and bond to all things Disney.” Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Brand Strategy: Building Strong Brands (4 of 6) Building Strong Brands Brand Name Selection Suggests benefits and qualities Easy to pronounce, recognize, and remember Distinctive Extendable Translatable for the global economy Capable of registration and legal protection Store brand quality: ALDI offers a “no risk, all reward” Twice As Nice Guarantee on its Keri Miksza store brands. “We’ve designed and tested our brands to meet or exceed the national brands in taste and quality." Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Brand Strategy: Building Strong Brands (5 of 6) Brand Sponsorship Manufacturer’s brand Private brand Licensed brand Co-brand Protecting the brand name: This ad asks advertisers and others to always add the registered trademark symbol and the words “Brand Tissue” to the Kleenex name, helping to keep from “erasing our coveted brand name that we’ve worked so hard for all these ©Kimberly-Clark Worldwide, Inc. Reprinted with years.” permission. Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Brand Strategy: Building Strong Brands (6 of 6) Figure 8.6 Brand Development Strategies Copyright © 2024 Pearson Education Ltd. All Rights Reserved. Discussion Question (2 of 2) Some analysts see brands as the major enduring asset of a company. Do you agree or disagree? Explain your answer. Copyright © 2024 Pearson Education Ltd. All Rights Reserved.