2001 SouthWestern College Publishing

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CHAPTER EIGHT
PRODUCT and SERVICES CONCEPTS
Prepared by Jack Gifford Miami University (Ohio)
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WHAT IS A PRODUCT?

• The product offering, the heart of an
  organizations marketing program, is usually the
  starting point in creating a marketing mix.
• A marketing manager cannot determine a price,
  design a promotion strategy, or create a
  distribution channel until the firm has a product
  to sell.

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WHAT IS A PRODUCT?

• A product is anything that can be offered to a
  market for attention, acquisition, use, or
  consumption that might satisfy a want or need.
• A product may be defined as everything, both
  favorable or unfavorable, that a person or
  organization receives in an exchange.

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WHAT IS A PRODUCT ?

• Physical objects
• Services
• Peoples expertise
• Places
• Membership in an organization
• Ideas

Baseball Bat
Barbershop
Political Beliefs
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IMPORTANCE OF SERVICES

• A service is the result of applying human or
  mechanical efforts to people or objects
• Services involve a deed, a performance, or an
  effort that cannot be physically possessed

HOSPITALS
BANKS
THEATRES
AIRLINES
BARBER SHOPS
CRUISES
UNIVERSITIES
DRY CLEANERS
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IMPORTANCE OF SERVICES
SERVICE WORKERS
More than 8 of 10 workers currently labor to
produce services
The service sector accounts for 74 of the U.S.
Gross Domestic Product
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HOW SERVICES DIFFER FROM GOODS

• They cannot be touched, seen, tasted, heard, or
  felt or stored.
• Few search qualities (characteristics that can be
  easily assessed before purchase)
• More experience quality (can be assessed only
  after use)
• Credence quality (difficult to assess even after
  purchase i.e. medical services)

• Intangibility
• Inseparability
• Heterogeneity
• Perishability

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HOW SERVICES DIFFER FROM GOODS

• Production and consumption activities inseparable
  
• Airline and flight from A to B
• Services cannot normally be produced in a
  centralized location and consumed in
  decentralized locations
• Your hotel room and you must be in the same
  physical location
• Service quality is dependent upon the quality of
  employees

• Intangibility
• Inseparability
• Heterogeneity
• Perishability

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HOW SERVICES DIFFER FROM GOODS

• Services tend to be less standardized and uniform
  than products because they depend upon
  performance of employees and individuals
• Consistency is gained through training, standard
  operating procedures, and mechanization of
  support areas
• Automatic coin receptacles on toll roads

• Intangibility
• Inseparability
• Heterogeneity
• Perishability

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HOW SERVICES DIFFER FROM GOODS

• Intangibility
• Inseparability
• Heterogeneity
• Perishability

• Services cannot be stored, warehoused or
  inventoried
• An empty seat in a theatre cannot produce revenue
  later
• A car not rented results in no revenue for that
  day
• This condition of perishability results in
  discount pricing of services at almost any price
  greater than their variable cost.

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MARKETERS SHOULD NEVER SELL PRODUCTS TO CONSUMERS

• People buy holes, not drills!
• People buy fashion, status, reference groups
  approval, and warmth, but not coats!

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TYPES OF CONSUMER PRODUCTS

• Is relatively inexpensive and merits little
  shopping effort (combs, aspirin, tissues)
• Is more expensive and found in fewer stores
  invest some shopping effort compare several
  brands
• Homogeneous
• Heterogeneous
• Expensive compare many brands reluctant to
  accept substitutes
• New goods

• Convenience
• Shopping
• Specialty
• Unsought

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PRODUCT ITEMS, LINES AND MIXES

• A product item is a specific version of a product
• A product line is a group of closely related
  product items
• A product mix includes all the products a company
  sells
• Mix width (breadth) number of product lines
  offered
• Mix depth number of items in a product line

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PRODUCT MIX

• Depth
• Width
• Consistency/Variety

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PRODUCT ITEMS, LINES AND MIXES

• Organizations derive several benefits from
  organizing related items into product lines,
  including the following
• Advertising economies
• Package uniformity
• Standardized components
• Efficient sales and distribution
• Equivalent quality

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ADJUSTMENTS TO PRODUCT ITEMS, LINES AND MIXES

• Product modifications
• Quality or durability modifications
• Functional modifications
• Style modifications
• Repositioning
• Changing consumer perceptions of a brand
• May require physical changes in the product
• Changing target customers
• Product line extensions
• Add products to an existing product line
• Product line contraction

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BRANDING
Smuckers

• A BRAND is a name, term, symbol, design or
  combination that identifies a sellers products
  and differentiates them from competitors
  products.
• A BRAND NAME is that part of a brand that can be
  spoken, including letters, words and numbers. If
  it cannot be spoken, it is called a BRAND MARK

GM
WD-40
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BRANDING DEFINITIONS

• Logo a brand name or company name written in a
  distinctive way
• Trademark A legally protected brand name or
  brand mark. A registered trademark gives a
  marketer proprietary rights to a symbol or name.
• Service mark provides the same identifying
  function for services that a trademark provides
  for goods. It can also be legally protected by
  registration
• Generic Name describes a product or an item that
  is, or has become part of our standard vocabulary
  (scotch tape, kerosene, linoleum)

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BENEFITS OF BRANDING

• The economic value of company and brand names
  because of their positive image in the minds of
  their consumers (MICROSOFT)
• Top-of-mind brand for consumers when they think
  of a category of products (NIKE for shoes)

• The creation of BRAND EQUITY
• The development of a MASTER BRAND

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SELECTING A BRAND NAME

• Easy to remember and pronounce
• Short and distinctive
• Invokes a positive connotation
• Suggests product function
• Suggests an image
• Communicates attributes and benefits
• Communicates something about the users
• Avoids linguistic traps
• Translates globally well

Jiffy Cake Mix Passion Cologne Dust Buster Soft n
Silky
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GENERIC PRODUCTS versus BRANDED PRODUCTS

• A generic product is typically a no-frills,
  no-brand-name, low-cost product that is simply
  identified by its product category

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TYPES OF BRANDS

• MAUFACTURERS BRANDS Name is owned and
  advertised by the manufacturer or under their
  guidelines
• DISTRIBUTORS OR PRIVATE BRANDS Name is owned
  and controlled by a wholesaler or retailer

Sears
COST CUTTERS
Black Decker
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BREADTH OF BRAND NAMES

• FAMILY a single brand name for a product line
  (Campbells Soups)
• INDIVIDUAL separate brand names for items
  within a line (Snickers, Milky Way, Three
  Musketeers)
• COMBINATION OF ABOVE (Kelloggs Rice Krispies)
• WORLD ( Levis, Marlboro, Coca-Cola )
• Concept of Co-branding

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PACKAGING AND LABELING

• Functions
• Containment
• Protection
• Promotion aesthetics
• Facilitate storage, use and convenience
• Recycling and reduce environmental damage

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PACKAGING AND LABELING

• Functions
• Persuasive
• Informational
• Universal product codes
• Legal requirements
• Warranties
• Express
• Implied

Warranty
...