Introduction to Product Decisions

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Preview• Product and the major classifications of products

and services• Decisions companies make about each product

and service, product lines, and product mixes• Branding strategy–the decisions firms make in

building and managing their brands• Four characteristics that affect the marketing of a

service and the additional marketing considerations that services require

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What is a Product?

Anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need

• Includes physical objects, services, events, persons, places, organizations, ideas, or some combination thereof

• Tangible goods and services are products

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What is a Service?

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

• Examples include banking, hotels, airlines, tax preparation, home repair service

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Market Offerings

• Continuum ranges from pure tangible goods (with no services) to pure services (with no good component) with many combinations in between

• Pure good: Camay soap• Pure service: Legal representation• Combination: Restaurant meal

• Creating and managing customer experiences differentiates offerings

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Levels of a Product

• Core benefit• What the consumer is really buying

• Actual product• Includes the brand name, features, design,

packaging, quality level• Augmented product

• Additional services and benefits such as delivery and credit, instructions, installation, warranty, service

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Consumer Products

• Products and services bought by final consumers for personal consumption

• Classified by how consumers buy them• Convenience• Shopping• Specialty• Unsought

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Convenience Product

• Purchased frequently and immediately when needed

• Low priced• Mass produced and advertised• Many purchase locations

• Examples include candy, soda, sports newspapers and magazines

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Shopping Product

• Bought less frequently• Higher price• Fewer purchase locations• Comparison shopping advisable given range of

consumer needs and wants• Examples include furniture, clothing, cars,

appliances, sports and exercise equipment

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Specialty Product

• Special purchase efforts• High price• Unique characteristics• Brand identification• Few purchase locations

• Example include Rolex watch, Ping golf clubs, Izod sport shirt, Nike Air Jordan, Titleist Pro v1

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Unsought Product

• New innovations• PC when first introduced

• Products consumers do not want to think about• Examples include life insurance and cemetery plots

• Require much advertising and personal selling

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Product Decisions

• Product attributes• Branding• Packaging• Labeling• Product support services

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Product Attributes

• Product quality• Performance quality—ability to perform functions• Conformance quality—freedom from defects and

consistency• Features

• Mix depends on value to consumer and cost to company

• Style and design• Influences experience (e.g., ergonomics)

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Branding

• Brand is a name, term, sign, symbol, or design, or a combination of these, that identifies the maker or seller of a product or service

• Ries and Trout (in Positioning: The Battle for Your Mind) argue that information overload means consumers can only remember first brand in a market position

• e.g., Miller Lite first beer positioned as light

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Branding (cont.)• Advantages to buyers

• Identifies product with known features and quality• Even commodities branded

• e.g., Dole, Chiquita• Advantages to sellers

• Basis for product’s quality story• Brand X golf balls—long distance and great feel

• Provides legal protection for unique features• Helps segment markets

• e.g., Toyota vs. Lexus

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Packaging

• Designing and producing the container or wrapper for a product

• e.g., golf ball sleeve, tennis ball can• Developing a good package

• Reinforce brand message (marketing)• Protect contents (consistency)• Ensure product safety (leakage, spoilage)• Address environmental concerns (disposal)

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Labeling

• Printed information appearing on or with the package

• Performs several functions• Identifies product or brand• Describes several things about the product• Promotes the product through attractive graphics

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Product Support Services

• Assess the value of current services and obtain ideas for new services

• Assess the cost of providing the services• Put together a package of services that delights

the customers and yields profits for the company

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Product Line Decisions

• Product line length• Number of items in a product line

• Adjust line length by• Stretching

• Downward• Upward• Both directions

• Filling

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Product Mix Decisions

• Product mix • All product lines and items that a seller offers for sale

• Product mix dimensions include• Length: number of items in a line• Width: number of different product lines the company

carries• Depth: number of versions offered of each product in the

line• Consistency: closeness of various lines

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Brand Equity

• Positive differential effect that knowing the brand name has on customer response to the product or service

• Provides• More brand awareness and loyalty• Basis for strong, profitable customer relationships

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Major Brand Strategy DecisionsBrands are assets that must be carefully developed and managed via

• Brand positioning• Brand name selections• Brand sponsorship• Brand development

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Brand Positioning

Can position brands at any of three levels• Product attributes (lowest)• Product benefits• Beliefs and values (highest)

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Desirable Qualities for a Brand Name

• Should suggest product’s benefits and qualities• Should be easy to pronounce, recognize, and

remember• Should be distinctive• Should be extendable• Should translate easily into foreign languages• Should be capable of registration and legal

protection

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Brand Sponsorship

• Manufacturer’s brands• Also called national brands

• Private brands• Also called store or distributor brands

• Licensed brands• Co-branding

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Brand 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).

• Brand extension • Using a successful brand name to launch a new or

modified product in a new category

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Brand Development

• Multibranding • Offers way to establish different features and appeal

to different buying motives• New brands

• Developed based on belief that the power of its existing brand is waning and a new brand name is needed

• Also used for products in new product category

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Nature and Characteristics

of a Service• Intangibility

• Services cannot be seen, tasted, felt, heard, or smelled before purchase

• Inseparability• Services cannot be separated from their providers

• Variability• Quality of services depends on who provides them and when,

where, and how they are delivered• Perishability

• Services cannot be stored for later sale or use

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Major Service Marketing Tasks

• Managing service differentiation• Develop a differentiated offer, delivery, and image

• Managing service quality• Be customer obsessed, set high service quality standards,

have good service recovery, empower front-line employees

• Managing service productivity• Train current employees or hire new ones, increase

quantity and sacrifice quality, harness technology

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Recap—What was Covered?• Product and the major classifications of products

and services• Decisions companies make about each product

and service, product lines, and product mixes• Branding strategy–the decisions firms make in

building and managing their brands• Four characteristics that affect the marketing of a

service and the additional marketing considerations that services require