Chapter 5 Meeting 1 Product and Service Decisions

MEETING 1 CHAPTER 5-PRODUCT AND SERVICE DECISIONS Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Learning Objectives 1.Def ine product and describe the major classif ications of products and services. 2. Explain how companies find and develop new product ideas. 3. Lis...

MEETING 1 CHAPTER 5-PRODUCT AND SERVICE DECISIONS Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Learning Objectives 1.Def ine product and describe the major classif ications of products and services. 2. Explain how companies find and develop new product ideas. 3. List and def ine the steps in the new product development process and the major considerations in managing this process. 4. Describe the stages of the product life cycle and how marketing strategies change during a product’s life cycle. 5. Discuss two additional product issues: socially responsible product decisions and international product and services marketing. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. What is a Product? Product is anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want. Service is a product that consists of activities, benef its, or satisfactions and that is essentially intangible and does not result in the ownership of anything. Copyright © 2018 Pearson Education Ltd. All Rights Reserved.  Products 4 ✘ As mentioned above, a product is anything that can be offered to a market, to satisfy a want and need. Products that are marketed include: 1. Physical goods; Services; 2. Experiences; INFO 3. Event; Ideas (intellectual property) are any creation of the 4. Persons; intellect that has commercial value, but is sold or 5. Places; traded only as an idea, and not as a resulting service or 6. Properties; good. This includes copyrighted property such as 7. Organization; literary or artistic works, and ideational property, such as patents, appellations of origin, business methods, 8. Information; and industrial processes. 9. Ideas; DIFFERENCES BETWEEN PRODUCTS(goods) AND SERVICES  6 Summary of Key Differences Between Services and Products Products(physical) are tangible – they are physical in nature such that they can be touched, smelled, felt and even seen. Services are intangible and they can only be felt not seen. Need vs. Relationship – a product is specifically designed to satisfy the needs and wants of the customers and can be carried away. However, with a service, satisfaction is obtained but nothing is carried away. Essentially, marketing of a service is primarily concerned with creation of customer relationship.  7 Summary of Key Differences Between Services and Products Perishability - services cannot be stored for later use or sale since they can only be used during that particular time when they are offered. On the other hand, it can be seen that products are perishable. For example, fresh farm and other food products are perishable and these can also be stored for later use or sale. Quantity - products can be numerically quantified and they come in different forms, shapes and sizes. However, services cannot be numerically quantified. Whilst you can choose different service providers, the concept remains the same.  8 Summary of Key Differences Between Services and Products Inseparability - services cannot be separated from their providers since they can be consumed at the same time they are offered. On the other hand, a product can be separated from the owner once the purchase has been completed. Quality - quality of products can be compared since these are physical features that can be held. However, it may be difficult to compare the quality of the services rendered by different service providers.  9 Summary of Key Differences Between Services and Products Returnability - it is easier to return a product to the seller if the customer is not satisfied about it. In turn, the customer will get a replacement of the returned product. However, a service cannot be returned to the service provider since it is something that is intangible. Value perspective - the value of a service is offered by the service provider while the value of the product is derived from using it by the customer. Value of a service cannot be separated from the provider while the value of a product can be taken or created by the final user of the product offered on the market.  10 Summary of Key Differences Between Services and Products Shelf line - a service has a shorter shelf line compared to a product. A product can be sold at a later date if it fails to sell on a given period. This is different with regard to a service that has a short shelve line and should be sold earlier.  11 ✘ LEVELS OF PRODUCT “A product has many dimensions beside its physical appearance. In fact, a product is like an ‘onion’ with several layers and each layer contributes to the total product image. According to Philip Kotler, “The consumers will favour those products that offer most quality, performance and features.”. Philip Kotler has described the five levels of products.” What Is a Product? Copyright © 2018 Pearson Education Ltd. All Rights Reserved. ✘ Core Customer Value / Benefit 13 This is the basic level that represents the heart of the product. Here, the focus is on the purpose for which the product is intended. It answers the question ‘What is the buyer really buying? For instance, a woman doesn’t purchase a washing machine merely because of it machinery but for her comfort and praise from her family. Likewise, a customer is buying an MPV from Toyota; he is not only buying the MPV, he is buying a transport that help to move from one place and taking to another, for his family ✘ Actual/Generic Product(physical form of product) 14 The second level of the product, the tangible product (also called the actual, physical or formal product) is the physical product or service offered to consumers. This represents all the characteristics of the product like quality, features, design, brand name, packaging, etc. These are the product characteristic which give the product a tangible identity. It is the product that is actually offered to the market. For example, we buy a warm coat which has a good quality material, rain repellent ability, fit and high-quality fasteners, etc. For example, the physical features and characteristics of Toyota’s MPV include high quality make, modern design, durable, spacious and well known brand name ✘ Augmented Product 15  Refers to the inclusion of additional features, benefits, attributes or related services that serve to differentiate the product.  The augmented product refers to the additional services provided by the manufacturer/seller which come along with the product.  In other words, it exceeds customer expectations.  For example, when we purchase a freeze, we not only see its style, trendy colour and fashion brand but also its service, warranty and safe-home delivery, etc.  Thus, we can say, this dimension of product is very important for a firm operating in a competitive market. Product and Service Classifications Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Product and Service Classifications Consumer products Industrial products Copyright © 2018 Pearson Education Ltd. All Rights Reserved. What is a Product? Copyright © 2018 Pearson Education Ltd. All Rights Reserved. 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 © 2018 Pearson Education Ltd. All Rights Reserved. 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 © 2018 Pearson Education Ltd. All Rights Reserved. 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 © 2018 Pearson Education Ltd. All Rights Reserved. Specialty products are consumer products and services with unique characteristics or brand identif ication for which a signif icant group of buyers is willing to make a special purchase effort. Medical services Designer clothes High-end electronics Copyright © 2018 Pearson Education Ltd. All Rights Reserved. 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 © 2018 Pearson Education Ltd. All Rights Reserved. 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 © 2018 Pearson Education Ltd. All Rights Reserved. What Is a Product? 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 © 2018 Pearson Education Ltd. All Rights Reserved. Organizations, Persons, Places, and Ideas In addition to tangible products and services, marketers have broadened the concept of a product to include other market offerings: Organization marketing Person marketing Place marketing Social marketing Copyright © 2018 Pearson Education Ltd. All Rights Reserved.  Organization marketing consists of activities undertaken to create, maintain, or change the attitudes and behavior of target consumers toward an organization. Person marketing consists of activities undertaken to create, maintain, or change the attitudes or behavior of target consumers toward particular people. 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 © 2018 Pearson Education Ltd. All Rights Reserved. END OF SESSION THANK YOU Copyright © 2018 Pearson Education Ltd. All Rights Reserved. MEETING 2 CHAPTER 5-PRODUCT & SERVICE DECISIONS Copyright © 2018 Pearson Education Ltd. All Rights Reserved. PRODUCT & SERVICE DECISIONS Marketers make product and service decisions at three levels: individual product decisions, product line decisions, and product mix decisions. Individual Product and Service Decisions Figure above shows the important decisions in the development and marketing of individual products and services. We will focus on decisions about product attributes, branding, packaging, labeling and logos, and product support services. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Individual Product and Service Decisions Product and Service Attributes Developing a product or service involves def ining the benef its that it will offer. These benef its are communicated and delivered by product attributes such as: 1. Quality, 2. Features, and 3. Style and design. Copyright © 2018 Pearson Education Ltd. All Rights Reserved.  Product and Service Attributes Individual Product and Service Decisions Product quality is one of the marketer’s major positioning tools. Quality affects product or service performance; thus, it is closely linked to customer value and satisfaction. Product quality refers to the characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Approach to determining product quality Total quality management - is an approach in which all of the company’s people are involved in constantly improving the quality of products, services, and business processes. Return-on-quality - viewing quality as an investment and holding quality efforts accountable for bottom-line results. Product quality has two dimensions: level and consistency. In developing a product, the marketer must first choose a quality level that will support the product’s positioning. Here, product quality means performance quality—the product’s ability to perform its functions. Beyond quality level, high quality also can mean high levels of quality consistency. Here, product quality means conformance quality—freedom from defects and consistency in delivering a targeted level of performance. All companies should strive for high levels of conformance quality. Individual Product and Service Decisions Product Features A product can be offered with varying features. A stripped-down model, one without any extras, is the starting point. The company can then create higher level models by adding more features. Features are a competitive tool for differentiating the company’s product from competitors’ products. Being the f irst producer to introduce a valued new feature is one of the most effective ways to compete. Assessed based on the value to the customer versus its cost to the company Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Individual Product and Service Decisions Product Style and Design. Another way to add customer value is through distinctive product style and design. Design is a larger concept than style. Style simply describes the appearance of a product. Styles can be eye catching or yawn producing. A sensational style may grab attention and produce pleasing aesthetics, but it does not necessarily make the product perform better. Design is more than skin deep—it goes to the very heart of a product. Good design contributes to a product’s usefulness as well as to its looks. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Individual Product and Service Decisions Brand A brand is a name, term, sign, symbol, or design or a combination of these that identif ies the maker or seller of a product or service. Consumers view a brand as an important part of a product, and branding can add value to a consumer’s purchase. Customers attach meanings to brands and develop brand relationships. As a result, brands have meaning well beyond a product’s physical attributes. Brand names help consumers identify products that might benefit them. Brands also say something about product quality and consistency—buyers who always buy the same brand know that they will get the same features, benefits, and quality each time they buy. Branding also gives the seller several advantages. The seller’s brand name and trademark provide legal protection for unique product features that otherwise might be copied by competitors. Branding helps the seller to segment markets. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. List of Brand Personality & Traits  Individual Product and Service Decisions Packaging involves designing and producing the container or wrapper for a product. Traditionally, the primary function of the package was to hold and protect the product. In recent times, however, packaging has become an important marketing tool as well. Copyright © 2018 Pearson Education Ltd. All Rights Reserved.  Individual Product and Service Decisions Labels and logos range from simple tags attached to products to complex graphics that are part of the packaging. They perform several functions. At the very least, the label identif ies the product or brand, such as the name Sunkist stamped on oranges. The label might also describe several things about the product—who made it, where it was made, when it was made, its contents, how it is to be used, and how to use it safely. Finally, the label might help to promote the brand and engage customers. For many companies, labels have become an important element in broader marketing campaigns. Labels and brand logos can support the brand’s positioning and add personality to the brand. In fact, they can become a crucial element in the brand-customer connection. Customers often become strongly attached to logos as symbols of the brands they represent. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Individual Product and Service Decisions Product Support Services Customer service is another element of product strategy. A company’s offer usually includes some support services, which can be a minor part or a major part of the total offering. Services - augment actual products. Suppor t services are an impor tant par t of the customer’s overall brand experience. Copyright © 2018 Pearson Education Ltd. All Rights Reserved.  Choosing the right product packaging What is your target audience? What is the product to be packaged: You must start by understanding the product, the type of packaging it requires, and how it benefits your customers. Additionally, analyze your customer’s preferences, their lifestyle, and buying behavior to align the brand packaging. Does the packaging reflect your brand identity? A brand is known by many things, however, the packaging says volume about its signature style. Many people associate a product packaging with the brand's values and personality. How do you want people to perceive your brand – luxurious, fun-friendly, eco-friendly, minimalist, or helpful? The choice of the packaging would depend on this question. Whatever packaging you choose, ensure it conveys your brand message properly. Does the packaging serve the purpose? The primary function of any packaging is to protect a product enveloped within. Check if the packaging is reliable, durable, easy to use, and serves the purpose of protects the product. For instance, if you are trying to invest in packaging for your electronic brand, ensure you invest in anti-static packaging. Do you want to follow industry regulations? This is an important consideration factor if you are working in the food and beverages processing industry. The packaging chosen must comply with FDA regulations. Does your packaging represent your brand in a good light? Distinctive packaging can make a difference in a competitive landscape. You can customize the packaging with your brand logo, name, and color scheme. Despite these, do people still feel disconnected with your brand? Generally, this happens when they find the packaging cheap or a misfit with their expectations. Is your packaging user-friendly and environment-friendly? A user-friendly packaging can be environmentally friendly and vice versa. A user-friendly packaging is one that most users can open easily. However, environment friendly packaging is the type of packaging made of sustainable materials, which helps users to reduce waste. If you are using quality packaging, many people may retain them and use them multiple times before discarding them. By doing so, they will remember your brand and minimize their waste. Product Line Decisions Beyond decisions about individual products and services, product strategy also calls for building a product line. 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. For example, Nike produces several lines of athletic shoes and apparel, and Marriott offers several lines of hotels. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Product lines can help businesses achieve several long-term goals, including: gaining more customers increasing customer retention increasing market footprint increasing profits gaining new income channels entering a new market segment increasing market share Product Line The major product line decision Product line length—the number of items in the product line. The line is too short if the manager can increase prof its by adding items; the line is too long if the manager can increase prof its by dropping items. Managers need to analyze their product lines periodically to assess each item’s sales and prof its and understand how each item contributes to the line’s overall performance. Copyright © 2018 Pearson Education Ltd. All Rights Reserved. Product Line Product Line Length Expanding product line Product line filling involves adding more items within the present range of the line. There are several reasons for product line filling: reaching for extra profits, satisfying dealers, using excess capacity, being the leading full-line company, and plugging holes to keep out competitors. Product line stretching occurs when a company lengthens its product line beyond its current range. The company can stretch its line downward, upward, or both ways. Companies located at the upper end of the market can stretch their lines downward. For example, Mercedes has stretched downward with the CLA line to draw in younger, first time buyers. Product Line 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 © 2018 Pearson Education Ltd. All Rights Reserved.  Product Mix product mix is defined as the sum of all products and variants offered by an organization. A company like “Unilever” has numerous product lines like Shampoos, detergents, Soaps etc. The combination of all these product lines is the product mix.  Product Mix Management  On the other hand, product mix in can be managed in various ways: 1. Product mix width – refers to how many different product lines the company carry. 2. Product mix depth – refers to how many variants are offered of each product in the lines. 3. Product mix length – refers to the total number of items in the mix. The average length of a line can be obtained by dividing the total length by the number of lines. 4. Product mix consistency – refers to how closely related the various product lines are in end use, production requirements, distribution channels or some other way.  Product Mix Apple Mac iPad iPhone MacBook MacBook iPhone iMac iPad Mini iPad Pro iPhone 8 iPhone X Air Pro 11 Product Line END OF SESSION THANK YOU Copyright © 2018 Pearson Education Ltd. All Rights Reserved.