Principles of Marketing Global Edition PDF

Principles of Marketing Global Edition Kotler and Armstrong Chapter 8: Products, Services, and Brands Building Customer Value Copyright © Pearson Education, Inc. 8-1  What...

Principles of Marketing Global Edition Kotler and Armstrong Chapter 8: Products, Services, and Brands Building Customer Value Copyright © Pearson Education, Inc. 8-1  What Is a Product? Products, Services, and Experiences Product is anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want. Soap Toothpaste Copyright © Pearson Education, Inc. 8-6  What Is a Product? Products, Services, and Experiences Service is a product that consists of activities, benefits, or satisfactions and that is essentially intangible and does not result in the ownership of anything. Doctor’s exam Legal advice Copyright © Pearson Education, Inc.  What Is a Product? Products, Services, and Experiences Experiences represent what buying the product or service will do for the customer  Companies that market experiences realize that customers are really buying much more than just products and services. Copyright © Pearson Education, Inc.  What Is a Product? Products, Services, and Experiences Products and services are becoming more commoditized. Companies are now creating and managing customer experiences with their brands or company. Market offerings are some combination of products, services, information, or experiences offered to a market to satisfy a need or want. Copyright © Pearson Education, Inc. 8-7  What Is a Product? Levels of Product and Services FIGURE | 8.1 Three Levels of Product Copyright © Pearson Education, Inc. 8-8  What Is a Product? Levels of Product and Services Core benefits represent what the buyer is really buying. Actual product represents the design, brand name, and packaging that delivers the core benefit to the customer Augmented product represents additional services or benefits of the actual product Copyright © Pearson Education, Inc.  What Is a Product? Product and Service Classifications Consumer products Industrial products Copyright © Pearson Education, Inc. 8-9  What Is a Product? 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 © Pearson Education, Inc. 8-10  What Is a Product? 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 © Pearson Education, Inc. 8-11  What Is a Product? 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 © Pearson Education, Inc. 8-12  What Is a Product? 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 © Pearson Education, Inc. 8-13  What Is a Product? 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 © Pearson Education, Inc. 8-14 Copyright © Pearson Education, Inc.  What Is a Product? 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 © Pearson Education, Inc. 8-15  What Is a Product? Product and Service Classifications Materials and parts include raw materials and manufactured materials and parts usually sold directly to industrial users 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 © Pearson Education, Inc. 8-16  What Is a Product? Product and Service Classifications Organizations, Persons, Places, and Ideas Organization marketing Person marketing Place marketing Social marketing Copyright © Pearson Education, Inc. 8-17  What Is a Product? Product and Service Classifications Organization marketing consists of activities undertaken to create, maintain, or change the attitudes and behavior of target consumers toward an organization. Copyright © Pearson Education, Inc. 8-18  What Is a Product? 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. Presidential elections. Copyright © Pearson Education, Inc. 8-19  What Is a Product? Product and Service Classifications Place marketing consists of activities undertaken to create, maintain, or change attitudes and behavior toward particular places. Tourism Copyright © Pearson Education, Inc. 8-20  What Is a Product? Product and Service Classifications Social marketing uses commercial marketing concepts to influence individuals’ behavior to improve their well-being and that of society. Public health campaigns. Copyright © Pearson Education, Inc.  Product and Service Decisions Individual Product and Service Decisions FIGURE | 8.2 Individual Product Decisions Copyright © Pearson Education, Inc. 8-23  Product and Service Decisions Individual Product and Service Decisions Communicate and deliver benefits by product and service attributes. So the Product attributes are the benefits of the product or service Quality Features Style and design Copyright © Pearson Education, Inc. 8-24  Product and Service Decisions Individual Product and Service Decisions Product quality refers to the characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs. Total quality management Return-on-quality Quality level Performance quality Conformance quality Copyright © Pearson Education, Inc. 8-25  Product and Service Decisions Individual Product and Service Decisions Product quality includes level and consistency Quality level is the level of quality that supports the product’s positioning Performance quality is the ability of a product to perform its functions Quality consistency is the freedom from defects and the consistency in delivering of a targeted level of performance Copyright © Pearson Education, Inc.  Product and Service Decisions 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 © Pearson Education, Inc. 8-26  Product and Service Decisions 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 © Pearson Education, Inc. 8-27  Product and Service Decisions 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. Copyright © Pearson Education, Inc. 8-28  Product and Service Decisions Individual Product and Service Decisions Consumer benefits from branding Quality Consistency Seller benefits from branding Segmentation Communicate product features provide legal protection Copyright © Pearson Education, Inc. Copyright © Pearson Education, Inc.  Product and Service Decisions 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. Copyright © Pearson Education, Inc. 8-29  Product and Service Decisions Individual Product and Service Decisions Product support services augment actual products. Copyright © Pearson Education, Inc. 8-32  Product and Service Decisions 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 © Pearson Education, Inc. 8-331  Product and Service Decisions Product Line Decisions Product line length is the number of items in the product line. Line stretching Line filling Copyright © Pearson Education, Inc. 8-32  Product and Service Decisions Product Line Decisions Product line stretching is when a company lengthens its product line beyond its current range Downward Upward Combination of both Copyright © Pearson Education, Inc.  Product and Service Decisions Product Line Decisions Downward product line stretching is used by companies at the upper end of the market to plug a market hole or respond to a competitor’s attack. Upward product line stretching is by companies at the lower end of the market to add prestige to their current products. Combination line stretching is used by companies in the middle range of the market to achieve both goals of upward and downward line stretching. Copyright © Pearson Education, Inc.  Product and Service Decisions Product Line Decisions Product line filling occurs when companies add more items within the present range of the line More profits Satisfying dealers Excess capacity Plugging holes to fend off competitors Copyright © Pearson Education, Inc.  Product and Service Decisions Product Mix Decisions Product mix consists of all the product lines and items that a particular seller offers for sale. Width Length Depth Consistency Copyright © Pearson Education, Inc. 8-33  Product and Service Decisions Product Mix Decisions Product mix width is the number of different product lines the company carries Product mix length is the total number of items the company carries within its product lines Product line depth is the number of versions offered of each product in the line Consistency is how closely the various product lines are in end use, production requirements, or distribution channels Product and Service Decisions Product Mix Decisions  Services Marketing Types of Service Industries Government Private not-for-profit organizations Business organizations Copyright © Pearson Education, Inc. 8-416  Services Marketing Types of Service Industries Governments offer services through courts, employment services, hospitals, military services, police and fire departments, the postal service, and schools. Private not-for-profit organizations offer services through museums, charities, mosques, churches, colleges, and hospitals. Business organizations offer services such as airlines, banks, hotels, insurance companies, consulting firms, medical and legal practices, entertainment and telecommunications companies, real estate firms, and others. Copyright © Pearson Education, Inc.  Services Marketing Nature and Characteristics of a Service FIGURE | 8.3 Four Service Characteristics Copyright © Pearson Education, Inc. 8-437  Services Marketing Marketing Strategies for Service Firms In addition to traditional marketing strategies, service firms often require additional strategies. Service-profit chain Internal marketing Interactive marketing Copyright © Pearson Education, Inc. 8-448  Services Marketing 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 © Pearson Education, Inc. 8-459  Services Marketing Marketing Strategies for Service Firms Copyright © Pearson Education, Inc.  Services Marketing 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. Internal marketing must precede external marketing. Copyright © Pearson Education, Inc. 8-40  Services Marketing 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 © Pearson Education, Inc. 8-41  Services Marketing Marketing Strategies for Service Firms Managing service differentiation creates a competitive advantage. Offer can include distinctive features Delivery can include more able and reliable customer contact people, environment, or process Image can include symbols and branding Copyright © Pearson Education, Inc. 8-42  Services Marketing Marketing Strategies for Service Firms Managing service quality enables a service firm to differentiate itself by delivering consistently higher quality than its competitors. Service quality always varies depending on interactions between employees and customers Good Service recovery can turn disappointed customers into loyal customers Copyright © Pearson Education, Inc. 8-450  Services Marketing Marketing Strategies for Service Firms Managing service productivity refers to the cost side of marketing strategies for service firms. Employee recruiting, hiring and training strategies. Service quantity and quality strategies. Copyright © Pearson Education, Inc. 8-44 Branding Strategy: Building Strong Brands 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. Example: Copyright © Pearson Education, Inc. 8-47 Branding Strategy: Building Strong Brands Copyright © Pearson Education, Inc. 8-47 Branding Strategy: Building Strong Brands Building Strong Brands FIGURE | 8.5 Major Brand Strategy Decisions Copyright © Pearson Education, Inc. 8-48 Branding Strategy: Building Strong Brands Building Strong Brands Brand Positioning Marketers can position brands at any of three levels. Attributes Benefits Beliefs and values Copyright © Pearson Education, Inc. 8-49 Branding Strategy: Building Strong Brands Building Strong Brands Brand Name Selection 1. Suggests benefits and qualities. 2. Easy to pronounce, recognize, and remember. Example: Yves Saint Laurent. 3. Distinctive. 4. Extendable. 5. Translatable for the global economy. 6. Capable of registration and legal protection. Copyright © Pearson Education, Inc. 8-50  Branding Strategy: Building Strong Brands Building Strong Brands Brand Sponsorship Manufacturer’s brand Private brand (store brand) Licensed brand Co-brand Copyright © Pearson Education, Inc. 8-51 Branding Strategy: Building Strong Brands Building Strong Brands FIGURE | 8.6 Brand Development Strategies Copyright © Pearson Education, Inc. 8-52 Branding Strategy: Building Strong Brands Building Strong Brands Line extensions: occur when a company extends existing brand names to new forms, colors, sizes, ingredients, or flavors of an existing product category. Example: KFC. Brand extension: extends a current brand name to new or modified products in a new category. Example: Starbucks. Copyright © Pearson Education, Inc. Branding Strategy: Building Strong Brands Building Strong Brands Multi-brands: Companies often market many different brands in a given product category. Example: PepsiCo New brands: A company might believe that the power of its existing brand name is waning, so a new brand name is needed. Or it may create a new brand name when it enters a new product category for which none of its current brand names are appropriate. Example: Toyota Copyright © Pearson Education, Inc.