C H A P T E R 8 Product and Service Concepts McGraw Hill Irwin 2007 The McGraw Hill Companies Inc All rights reserved Learning Objectives After studying this chapter you should be able to Understand the differences between goods and services Differentiate between consumer and business products and discuss the different types of each Recognize that marketers need to appreciate the perspective of the consumer Define and discuss the importance of product quality product design branding packaging and customer service Explain how the different product components need to be integrated to meet the needs of customers Bearden Marketing 5th Ed 8 2 2007 The McGraw Hill Companies Inc All rights reserved Frito Lay Frito Lay is noted for the quality of products it provides to consumers and the exceptional service it gives to retail customers The company s basic business philosophy is Make the best product possible sell it at a fair profit and make service a fundamental part of doing business Bearden Marketing 5th Ed 8 3 2007 The McGraw Hill Companies Inc All rights reserved What is a Product The term product is defined as an idea a physical entity a good a service or any combination of the three that is an element of exchange to satisfy individual or business objectives From a marketing viewpoint the key element of this definition is to satisfy individual or business objectives Bearden Marketing 5th Ed 8 4 2007 The McGraw Hill Companies Inc All rights reserved Types of Products Goods are usually defined as physical products such as cars golf clubs soft drinks or other concrete entities Services in contrast are normally defined as nonphysical products such as a haircut a football game or a doctor s diagnosis Exhibit 8 1 Bearden Marketing 5th Ed 8 5 2007 The McGraw Hill Companies Inc All rights reserved Characteristics of Services Tangibility Perishability An interesting difference between goods and services relates to tangibility Because goods are tangible marketing strategies typically emphasize the intangible benefits derived from consuming the product Perishability also has an important effect on the marketing of services Services cannot normally be stored so marketers of services use different strategies to manage demand more Bearden Marketing 5th Ed 8 6 2007 The McGraw Hill Companies Inc All rights reserved Characteristics of Services con t Separability Variability Bearden Marketing 5th Ed Goods like tennis racquets tuxedos or tomatoes can be produced stored and then sold to customers Services on the other hand are typically produced and consumed simultaneously The difficulty of standardizing services especially when they are delivered by people has important implications for marketers Even well trained and professional service providers have bad days Therefore there will always be some variability in service quality 8 7 2007 The McGraw Hill Companies Inc All rights reserved Consumer and Business Products An important distinction is between consumer and business products This categorization is based on the way a product is used and not on the specific characteristics of the product Consumer Products Business Products Bearden Marketing 5th Ed Consumer products are those purchased by consumers for their own personal use Business products are those purchased by a firm or organization for its own use 8 8 2007 The McGraw Hill Companies Inc All rights reserved Consumer and Business Products Exhibit 8 3 Bearden Marketing 5th Ed 8 9 2007 The McGraw Hill Companies Inc All rights reserved Product Components To provide the benefits consumers want marketers need to integrate the components that make up a product effectively These consist of the product and customer service features illustrated below Exhibit 8 5 Bearden Marketing 5th Ed 8 10 2007 The McGraw Hill Companies Inc All rights reserved Branding Brand A name term sign symbol design or combination that a firm uses to identify its products and differentiate them from those of competitors Brand Name The element of a brand that can be vocalized such as IBM Tide Snickers or Diet Coke Brand Mark The element of a brand that cannot be vocalized such as the MGM lion the Buick symbol or the Nike Swoosh Trademark A brand or part of a brand that is registered with the U S Patent and Trademark Office Bearden Marketing 5th Ed 8 11 2007 The McGraw Hill Companies Inc All rights reserved Building Brands Many firms focus considerable effort on building brands However sometimes too much attention is paid to the brand and not enough to the customers of the brand A basic brand building process is presented below Exhibit 8 6 Bearden Marketing 5th Ed 8 12 2007 The McGraw Hill Companies Inc All rights reserved The World s Most Valuable Brands Bearden Marketing 5th Ed 8 13 2007 The McGraw Hill Companies Inc All rights reserved Types of Brands Generics Brands Manufacturer Brands Distributor Brands Bearden Marketing 5th Ed 8 14 2007 The McGraw Hill Companies Inc All rights reserved Choosing a Brand Name Choosing an effective brand name is an important decision for both manufacturer and distributor brands The brand name communicates a great deal which can facilitate brand awareness and brand image An effective brand name suggests something about the product s benefits is easy to pronounce recognize and remember is distinctive in some way can be translated into other languages Ideally a brand name should help to communicate to consumers the major benefits of the firm s product Bearden Marketing 5th Ed 8 15 2007 The McGraw Hill Companies Inc All rights reserved Branding Alternatives Co branding combines two brand names on the same product Many companies like to be associated with a brand like Titleist Licensing typically consists of the right to use a trademark in exchange for paying royalties on the sales of the licensed product Bearden Marketing 5th Ed 8 16 2007 The McGraw Hill Companies Inc All rights reserved Packaging Packaging is an important component for many products A package is the container or wrapper for a product It typically includes a label a printed description of the product on the package Bearden Marketing 5th Ed 8 17 2007 The McGraw Hill Companies Inc All rights reserved Packaging A product s package might perform a number of different functions including Protecting the product until consumed Storing the product until consumed Facilitating consumption of the product Promoting the product Facilitating disposal of the product Bearden Marketing 5th Ed 8