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Fundamentals of MArketing Chap 3- 2013

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imed ben nasr

on 12 September 2016

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Transcript of Fundamentals of MArketing Chap 3- 2013

Chapter 3
Products, Services, and Brands
Building Customer Value
Define product and the major classifications of products and services
Describe the decisions companies make regarding their individual products and services, product lines, and product mixes
Rest Stop: Previewing the Concepts
Tangible objects, services, events, persons, organizations, places, ideas, or a mixture of these
Services are a form of product
Activities, benefits, or satisfactions offered for sale
Essentially intangible
Do not result in the ownership of anything
What Is a Product?
Olive Garden sells more than just Italian food—it serves up an idealized Italian family meal experience
Market offerings often include both tangible goods and services
Pure tangible good
Pure service
Many companies now marketing experiences
Products, Services and Experiences
Three Levels of Products
- Core customer value
What the consumer is really buying
- Actual product
Brand name, service features, design, packaging, and quality level.
- Augmented product
Additional services and benefits such as delivery and credit, instructions, installation, warranty, and service
Levels of Products and Services
A product bought by final consumers for personal consumption
Classified by how consumers buy them
Consumer Products
Consumer products that customers usually buy frequently, immediately, and with minimal comparison and buying effort
Low priced
Placed in many locations to make them readily available
E.g. Laundry detergent, candy, magazines, and fast food
Convenience Products
Consumer products that the customer, in the process of selecting and purchasing, usually compare on such attributes as suitability, quality, price, and style
Less frequently purchased
Distributed through fewer outlets
Greater sales support
E.g. Furniture, clothing, used cars
Shopping products
Consumer products with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort
Different brands are not usually compared
E.g. Specific brands of cars, high-priced photographic equipment, designer clothes, and the services of medical or legal specialists
Specialty products
Consumer products that the consumer either does not know about or knows about but does not normally consider buying
Require a lot of advertising, personal selling, and other marketing efforts
New innovations are generally unsought till advertised
Known but unsought products and services are life insurance, preplanned funeral services
Unsought Products
Products bought by individuals and organizations for further processing or for use in conducting a business
Industrial Products
Product Types
Building Strong Brands
Service Marketing
Individual Product Decisions
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
Customers attach meanings to brands and develop brand relationships
Branding
Product quality: The characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs
Product features
Differentiate the company’s product from competitors’ products
Product style and design
Product and Service Attributes
Packaging: Designing and producing the container or wrapper for a product
Protects the product
Attracts customers and closes the sale
Labels
Identify the product
Describe the product
Promote the brand
Packaging and Labeling
Nordstrom thrives on stories about its after-sale service. It wants to “Take care of customers, no matter what it takes,” before, during, and after the sale
An important part of the customer’s overall brand experience
Firms must survey customers to assess the value of current services and obtain ideas for new ones
Product Support Services
Product Line Decisions
Product Mix Decisions
Campbell’s product mix consists of three major product lines. Each product line consists of several sublines. Each line and subline has many individual items
The Product Mix
Four Service Characteristics
The service provider’s task is to make the service tangible in one or more ways and send the right signals about quality
The Nature and Characteristics of a Service
The chain that links service firm profits with employee and customer satisfaction
The five links
Internal service quality
Satisfied and productive service employees
Greater service value
Satisfied and loyal customers
Healthy service profits and growth
The Service-Profit Chain
Three Types of Service Marketing
Services Marketing types
Developing a differentiated offer, delivery, and image
The offer can include features that set one company’s offer apart from competitors’ offers
Service delivery can be differentiated with better customer-contact people or a superior delivery process
Images can be differentiated through symbols and branding
Managing Service Differentiation
Managing service quality
Identify what customers expect
Set high quality standards
Emphasize service recovery in case of a mistake
Managing service productivity
Train current employees better or hire new ones
Increase quantity by reducing quality
Use technology
Managing Service Quality and Productivity
Product Marketing
Consumers sometimes bond very closely with specific brands. To this customer, this isn’t just a cup of coffee, it’s a deeply satisfying
Dunkin’ Donuts brand experience
Brand equity: The differential effect that knowing the brand name has on customer response to the product or its marketing
Building Strong Brands
Major
Brand Strategy Decisions
Brand Positioning
A brand name should:
Suggest the product’s benefits and qualities
Be easy to pronounce, recognize, and remember
Be distinctive
Be extendable
Translate easily into foreign languages
Be capable of registration and legal protection
Brand Name Selection
Marketers can position brands clearly in customers’ minds at any of three levels
Product attributes
Product benefits
Beliefs and values
Successful brands engage customers on an emotional level, as does this ad, which suggests the connection that hardcore users have with the WD-40 brand
Brand Sponsorship
SpongeBob alone has generated more than $8 billion in sales and licensing fees over the past decade
Sellers of children’s products attach an almost endless list of character names to clothing, toys, school supplies, linens, dolls, lunch boxes, cereals, and other items
Brand Sponsorship
Brand Development
Brand Development Strategies
Communicate the brand’s positioning
Manage all brand touch points
Train employees to live the brand
Audit the brands’ strengths and weaknesses
Brands are not maintained by advertising but by customers’ brand experiences
Managing Brands
Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require
Discuss branding strategy—the decisions companies make in building and managing their brands
Exercise: Reviewing the Concepts
What's a product?
What's a service?

Product Portfolio Decisions
Although services are “products” in a general sense, they have special characteristics and marketing needs. The biggest differences come from the fact that services are essentially intangible and that they are created through direct interactions with customers. Think about your experiences with an airline versus Nike or Apple.
The Service Characteristics
Developing products
Each product failure represents squandered dollars and hopes
Overestimation of market size
Design problems
Incorrect pricing or positioning
High development costs
Competitor reaction
New-Product Failures
Major Stages in
New-Product Development

Internal sources
The traditional R&D process
Intrapreneurs within the company
External sources
Distributors and suppliers
Competitors and their products
Trade magazines and shows
Customers
Crowdsourcing
Idea Generation
To harness customer new-product input, 3M has opened customer innovation centers, which generate customer-driven new-product ideas and help 3M establish long-term customer relationships
Analyze customer questions and complaints to find new products that better solve consumer problems
Invite customers to share suggestions and ideas
Idea Generation
When Netflix wanted ideas for improving the accuracy of its online recommendation system, it decided to “open it up to the world,” promising a $1 million prize for the best solution
Invites customers, employees, independent scientists and researchers, and even the public at large, into the new-product innovation process
Crowdsourcing
Product idea: An idea for a possible product that the company can see itself offering to the market
Product concept: A detailed version of the new-product idea stated in meaningful consumer terms
Product image: The way consumers perceive an actual or potential product
Concept Development and Testing
Tesla’s initial all-electric roadster, will be followed by more-affordable mass-market models
To develop a new product into alternative product concepts, find out how attractive each concept is to customers, and choose the best one
Concept Development
Testing new-product concepts with a group of target consumers to find out if the concepts have strong consumer appeal
Using a description, picture or model of the product
Asking consumers about their reactions
Concept Testing
Describes the target market, planned value proposition, sales, market share, and profit goals
Outlines the product’s planned price, distribution, and marketing budget
Describes the planned long-run sales and profit goals, marketing mix strategy
Marketing Strategy Statement
A review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the company’s objectives
Business Analysis
Developing the product concept into a physical product to ensure that the product idea can be turned into a workable market offering
Prototypes are made
Consumer tests are conducted
Product Development
Starbucks spent 20 years developing Starbucks VIA instant Coffee and several months testing the product in Starbucks shops in Chicago and Seattle before releasing the product nationally
Introducing the product and marketing program in realistic market settings
Test Marketing
Standard test markets are usually extensive and costly to use
Simulated test markets
Researchers measure consumer responses to in laboratory stores or simulated online shopping environments
Controlled test markets
New products and tactics are tested among controlled panels of shoppers and stores
Test Marketing
Introducing a new product into the market
Companies must decide:
When to introduce the product
Where to introduce the product
Single location, state, region, nationally, internationally
Commercialization
Product life-cycle Strategies
Companies must take a holistic approach to new product development
This requires:
Customer-centered new-product development
Team-based new-product development
Systematic new-product development
Managing New-Product Development
New-product development that focuses on finding new ways to solve customer problems and create more customer-satisfying experiences
Customers are urged to submit their own ideas for new products and services on P&G’s crowdsourcing site Connect + Develop
Customer-Centered New-Product
Development
Various company departments work closely together, overlapping the steps in the product development process to save time and increase effectiveness
Cross-functional teams lead to fast and flexible development
Causes more organizational tension and confusion than the sequential approach
Team-Based New-Product Development
The new-product development process should be holistic and systematic
Innovation management systems can help companies collect, review, evaluate, and manage new-product ideas
They help create an innovation-oriented company culture
They yield a larger number of new-product ideas
Systematic New-Product Development
Sales and Profits Over the Product’s Life From Inception to Decline
Some products die quickly, while others stay in the mature stage for a long, long time like TABASCO® sauce
All products do not follow all five stages of the PLC
Marketers can apply the PLC as a framework for describing how products and markets work
The Product Life Cycle
The PLC concept can describe a product class, a product form , or a brand
Product class has the longest life cycle
Product form tends to the standard PLC shape
PLCs for brands can change quickly because of changing competitive attacks and responses
The PLC concept also can be applied to what are known as styles, fashions, and fads
Applying the Product Life-Cycle Concept
Styles, Fashions, and Fads
Sales: Low
Costs: High cost per customer
Profits: Negative or low
Customers: Innovators
Competitors: Few
Marketing objective: Create product awareness and trial
Introduction Stage Characteristics
Product: Offer a basic product
Price: Use cost-plus pricing
Distribution: Build selective distribution
Advertising: Build product awareness among early adopters and dealers
Promotion: Use heavy promotion to entice product trial
Introduction Stage Strategies
Sales: Rapidly rising
Costs: Average cost per customer
Profits: Rising profits
Customers: Early adopters
Competitors: Growing number
Marketing objective: Maximize market share
Growth Stage Characteristics
Product: Offer product extensions, service, warranty
Price: Price to penetrate the market
Distribution: Build intensive distribution
Advertising: Build awareness and interest in the mass market
Promotion: Reduce to take advantage of heavy consumer demand
Growth Stage Strategies
Sales: Peak sales
Costs: Low cost per customer
Profits: High profits
Customers: Middle majority
Competitors: Stable number beginning to decline
Marketing objective: Maximize profits while defending market share
Maturity Stage Characteristics
Product: Diversify brand and models
Price: Match or beat competitors
Distribution: Build more intensive distribution
Advertising: Stress brand differences and benefits
Promotion: Increase to encourage brand switching
Maturity Stage Strategies
Modifying the market
Increase the consumption of the current product
How?
Look for new users and market segments
Reposition the brand to appeal to larger or faster-growing segment
Look for ways to increase usage among present customers
Maturity Stage Strategies
Modifying the marketing mix
Improving sales by changing one or more marketing mix elements
How?
Offer new or improved services
Cut prices
Launch a better ad campaign
Move into new market channels
Maturity Stage Strategies
Reinvigorating a mature brand: Kellogg kept its 55-year-old Special K brand growing by turning it into a healthful, slimming lifestyle brand
Maturity Stage Strategies
Sales: Declining sales
Costs: Low cost per customer
Profits: Declining profits
Customers: Laggards
Competition: Declining number
Marketing objective: Reduce expenditures and milk the brand
Decline Stage Characteristics
Product: Phase out weak items
Price: Cut price
Distribution: Go selective—phase out unprofitable outlets
Advertising: Reduce to level needed to retain hard-core loyals
Promotion: Reduce to minimal level
Decline Stage Strategies
Over its 79-year history, the Zippo brand has evolved to meet changing market needs
Broadened its focus from just selling lighters to selling “all things flame”

Marketing at Work
Explain how companies find and develop new-product ideas
List and define the steps in the new-product development process and the major considerations in managing this process
Describe the stages of the product life cycle and how marketing strategies change during the product’s life cycle

Rest Stop: Reviewing the Concepts
Discuss two additional product and services issues: socially responsible product decisions and international product and services marketing
Rest Stop: Reviewing the Concepts
Sales and Profits Over the Product’s Life From Inception to Decline
Modifying the product
Changing characteristics such as quality, features, style or packaging to attract new users and inspire more usage
How?
Improve durability, reliability, speed, taste
Improve styling and attractiveness
Add new features
Maturity Stage Strategies
Full transcript