Slide 1ProductsWhat is a Product?ServicesThree Levels of ProductLevels of Product and ServicesProduct and Service ClassificationProduct and Service ClassificationTypes of Consumer GoodsTypes of Consumer GoodsTypes of Consumer GoodsTypes of Consumer GoodsTypes of Industrial GoodsOther Market OfferingsOther Market OfferingsIndividual Product DecisionsProduct DesignProduct LineProduct Line DecisionsBrandsBrandingBrand EquityMajor Brand Strategy DecisionsBrand SponsorshipBrand SponsorshipBrand Development DecisionsBrand DevelopmentBrand DevelopmentBrand DevelopmentServicesWhat is a Service?Four Service CharacteristicsProducts, Services, and Brands: Building Customer ValueChapter 77-2ProductsAnything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need.What is a Product?Products include physical objects, services, events, persons, places, organizations, ideas, or some combination thereof.It’s important to NOT limit your thinking about products to be only physical objects!7-4ServicesAny activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything.7-5Three Levels of ProductLevels of Product and ServicesCore customer value:What the consumer is really buying. Remember! Customers buy benefits!Actual product:Includes the brand name, features, design, packaging, and quality level.Augmented product:Additional services and benefits such as delivery and credit, instructions, installation, warranty, and service.Product and Service ClassificationIndustrial Products:Those purchased for further processing or for use in conducting business.Distinction between consumer and industrial products is based on the purpose for which an item is bought.Product and Service ClassificationConsumer Products:Products and services bought by final consumers for personal consumption.Also included are other marketable entities.Classified by how consumers buy them.Types of Consumer Goods Convenience goods:Purchased frequently and immediately with little comparison shopping effort. low customer involvementLow priced. mass advertising and promotionWidespread distribution with many convenient locations. e.g. candy, soda, newspapers (ex. Lays chips)Types of Consumer Goods Shopping products:Bought less frequently, more planning and effort, brand comparisons on basis of price, quality, style higher price selective distribution in fewer purchase locationsAdvertising and personal selling is undertaken by both producer and reseller e.g. furniture, cars, appliancesTypes of Consumer GoodsSpecialty products:Strong brand preference and loyalty, special purchasing effort, little comparison shopping high priceExclusive distribution in only one or a few outlets per market area carefully targeted promotion by both producer and reseller e.g. Lamborghini, RolexTypes of Consumer GoodsUnsought products:Little product awareness or knowledge of the brand, sometimes negative interestPricing strategies varyDistribution strategies vary requires aggressive advertising and personal selling by both producer and resellers e.g. life insurance, cemetery plots, blood donationTypes of Industrial GoodsMaterials and parts:Raw materials, manufactured materials, parts Capital items: products that aid in buyer’s production or operationsSupplies and services: operating supplies, maintenance, repair itemsOther Market OfferingsOrganization: Profit (businesses) and nonprofit (schools and churches)Person: Politicians, entertainers, sports figures, real estate agents, doctors, and lawyersOther Market OfferingsPlace: Create, maintain, or change attitudes or behavior toward particular placesIdeas (social marketing): Public health campaigns, environmental campaigns, family planning, or human rights7-16Individual Product Decisions7-17Product DesignGood product design begins with an understanding of consumer needs. Oxo successfully redesigns common kitchen tools by focusing on the end user experience desired by buyers7-1818Product LineA 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.Product Line DecisionsProduct line length:The number of items in a product lineAdjust line length by:FillingStretchingDownward, upward or in both directionsBrandsA brand is a name, term, sign, symbol, or design, or a combination of these, that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors.Branding involves building and managing brands.BrandingAdvantages to buyers: helps identify productsCue to product quality and consistencyAdvantages to sellers:Basis for product’s quality story provides legal protection Helps to segment marketsBrand EquityBrand equity:Measures the brand’s ability to capture consumer preference and loyalty.Is a valuable asset that offers many competitive advantages.Builds strong and profitable customer relationships that result in loyal customers.Major Brand Strategy DecisionsBrand SponsorshipBrand sponsorship options include:Manufacturer’s brandsAlso called national brandswhirpoolStore brandsAlso called private brandsKenmoreBrand SponsorshipBrand sponsorship options include:Licensed brandsPower T logo is licensed on clothing, UT makes money each time it is purchasedCo-brandingCallaway has paired with Boeing to add some of their brand equity to Callaway’s product Taco bell’s Dorito taco shells7-26Brand Development DecisionsBrand DevelopmentLine extension: Introduction of additional items in a given product category under the same brand name (e.g., new flavors, forms, colors, ingredients, or package sizes). Common, not riskyex. Disney princess toothpaste Brand extension: Using a successful brand name to launch a new or modified product in a new category.Ex. V8 tomato herd soupBrand DevelopmentMultibranding: Offers a way to establish different features and appeal to different buying motives.Ex. Toyota added scion, lexusBrand DevelopmentNew brands: Developed based on belief that the power of its existing brand