Lecture 6 - Product I PDF

COMM223 Marketing Management Lecture 6 – Product I  Agenda Product – product – Three levels of product – Types of consumer product Product and service decisions – Individual product decisions – Product line decisions – Product mix decisions Ser...

COMM223 Marketing Management Lecture 6 – Product I  Agenda Product – product – Three levels of product – Types of consumer product Product and service decisions – Individual product decisions – Product line decisions – Product mix decisions Service marketing Branding strategy – Brand equity and brand value – Building strong brands  Where are we now … Company Company Analysis Competitor Analysis Consumer Analysis Marketing Management Competitor Consumer Product Promotion Price Distribution Product - Market  What Is a Product? A product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want. A service is a form of product that consists of activities, benefits or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. Companies create and manage customer experiences with their brands or companies. – To differentiate their offers from that of the competitors Three Levels of Product  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. – Materials and parts, capital items, and supplies and services Consumer Products Consumer Products  Product and Service Decisions Individual product and service decisions Product line decisions Product mix decisions Product and Service Decisions Individual Product and Service Decisions  Product and Service Decisions Individual Product and Service Decisions Product and Service Attributes – Quality Lined to customer value and satisfaction – The whole company needs to be involved (TQM) – Features Competitive tool for differentiating product Should be valued by the customer as determined through market research – Style and Design Good design contributes to product’s usefulness as well as looks  Product and Service Decisions Individual Product and Service Decisions Branding – Brand: a name, term, sign, symbol, or design that identifies the product – Branding can add value to a product – Branding helps buyers Identify products Determine quality – Branding helps sellers Convey product quality Provide legal protection Segment markets  Product and Service Decisions Individual Product and Service Decisions Packaging – Often includes primary, secondary and shipping packages – Functions of packaging Hold and protect Promote the product Differentiate the product  Product and Service Decisions Individual Product and Service Decisions Labelling serves to identify the product Describes the product Promotes the product Must be careful not to: – Mislead customers – Fail to describe ingredients – Fail to include safety warnings  Product and Service Decisions Individual Product and Service Decisions Product support services – Survey customers regularly to assess current customer service – Companies use a mix of phone, email, fax, Internet and interactive voice and data technologies  Product and Service Decisions Product Line Decisions Product line – 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 fall within given price ranges Product line length – Line stretching: adding products that are higher or lower priced than the existing line – Line filling: adding more items within the present price range  Product Line Decisions Stretching Downward High Present products (high-end) Price New products (low-end) Facing a slow-growth and/or high competition on its high-end positioning e.g., DaimlerChrysler: Quality Mercedes C-Class ($40,000) Low vs. other Mercedes ($130,000) High Rolex: Rolex Tudor ($1,750) vs. Low Rolex Submariner ($5,000)  Product Line Decisions Stretching Upward High New products (high-end) Price Present products (low-end) To add prestige to their current product or be attracted by a Quality faster growth rate or higher Low margins at the higher end e.g., Toyota – Lexus; Nissan – Low High Infiniti, Honda - Acura  Product Line Decisions Stretching Both Ways High New Products (high-end) Price Present products New products (low-end) e.g., Marriott: Renaissance Quality Hotels (higher) and TownePlace Low Suites (lower) Low High  Product and Service Decisions Product Mix Decisions Product Mix – Also known as product portfolio – Consists of all the product lines and items that a particular seller offers for sale Width: # of product lines Length: # of products in lines Depth: # of versions of each product carried Consistency: how closely related the product lines are  Graphically… Product Line Entire Product Assortment Product Product Product Product Category A Category B Category C Category D Brand A 6oz 8oz 16oz Brand B Red Blue Brand C Brand D Regular Large Product Line Depth Product line Width Product Line Length  Services Marketing Services – Account for 70% of Canada’s GDP, almost 75% of employment, and nearly 90% of new job creation. – Service industries include business organizations, government, and private not- for-profit organizations Four Service Characteristics  Service-Profit Chain Satisfied & Healthy Internal Greater Satisfied & Productive Service Service Service Loyal Service Profits & Quality Value Customers Employees Growth Company Internal External marketing marketing Employees Interactive Customers marketing  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 is the positive differential effect that knowing the brand name has on customer response to the product or service One measure of equity is the extent to which customers are willing to pay more for the brand With positive brand equity, consumers react more favourably to the brand than to an unbranded version of the same product.  Branding Strategy Brand value is the total financial value of a brand. Customer equity is the value of customer relationships that the brand creates.  Branding Strategy Brands with strong equity have many competitive advantages: – High consumer awareness – Strong brand loyalty – Helps when introducing new products – Less susceptible to price competition  Branding Strategy: Major Branding Decisions Attributes Attributes Brand Brandpositioning positioning Benefits Benefits Beliefs Beliefsand andvalues values Brand Selection Brandname name Selection Protection selection selection Protection Manufacturer’s Manufacturer’sbrand brand Brand Private brand Private brand Brand sponsorship Licensed Licensed brand brand sponsorship Co-branding Co-branding New New brands brands Brand Brand Line extensions Development Line extensions Brand Development Brandextensions extensions Multibrands Multibrands  Building Strong Strategy ThreePositioning Brand levels of positioning: Brand Nameattributes – Product Selection Brand Sponsorship Least effective Brand Development – Benefits – Beliefs and values Taps into emotions  Building Strong Strategy Good BrandBrand Positioning Names: – Suggest something about the product or its benefits Brand Name Selection – Are easy to pronounce, recognize and remember Brand Sponsorship – Are distinctive Brand Development – Are extendable – Translate well into other languages – Can be registered and legally protected  Building Strong Strategy Brand Positioning Manufacturer brands Brand Name Selection Private (store) brands – Costly to establish and Brand Sponsorship promote Brand Development – Higher profit margins Licensed brands – Name and character licensing has grown Co-branding – Advantages/ disadvantages  Building Strong Strategy Line Brand Positioning extensions – Minor changes to existing products Brand Name Selection Brand extensions Brand Sponsorship – Successful brand names help introduce new products Brand Development Multibrands – Multiple product entries in a product category New brands – New product category  Brand Development Product Category Existing New Brand Name Existing Line Brand Brand extension extension extension New Multibrands Multibrands New New brands brands  Brand Development Line Brandextension: extension: Advantages: Disadvantages:  Brand Development Multibrands New brands Advantages: Disadvantages:  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 that Starbucks offers? What are the actual and augmented level of that product? Core customer value:  Starbucks Actual product: Augmented product:  Starbucks How would you classify Starbucks product using the marketing considerations for a consumer product outlined in the chapter? What individual product decisions has Starbucks made?  Starbucks Individual product decisions: Product quality: Product features: Product style and design: Packaging:  Starbucks Is Starbucks’ a product or a service? How are the concepts of service marketing important to Starbucks?  Read Chapters 8 & 9