CHP 13 14 PDF

Marketing Management
Fifteenth Edition
Chapter 13 &
14
Setting Product
Strategy
Designing and
managing
services
Copyright © 2016, 2012, 2009 Pearson Education, Inc. All Rights Reserved
Learning Objectives (1 of 2)
13.1 What are the characteristics of products,
and how do marketers classify product?
13.2 How can companies differentiate
products?
13.3 Why is product design important, and
what are the different approaches taken?
13.4 How can marketers best manage luxury
brands
13.5 What environmental issues must
marketers consider in their product
strategies?
13.6 How can a company build and manage
its product mix and product lines?
Learning Objectives (2 of 2)
13.7 How can companies combine products
to create strong co-brands or ingredient
brands?
13.8 How can companies use packaging,
labeling, warranties, and guarantees as
marketing tools?
Product Characteristics and
Classifications
• Product
– Anything that can be offered to a market to satisfy a want
or need, including physical goods, services, experiences,
events, persons, places, properties, organizations,
information, and ideas
Product Levels: The Customer-Value
Hierarchy
Figure 13.2 Five Product Levels
Product Classifications
• Durability
• Tangibility
Durability and Tangibility
• Nondurable goods (Fruits, vegetables)
• Durable goods (Home appliances, laptops)
• Services (Intangible)
Consumer-Goods Classification
• Convenience (everyday goods, groceries, tea, coffee)
• Shopping (Furnitures, cloths, electronics)
• Specialty (Branded goods, cars, etc)
• Unsought (Insurance, vaccines, funeral products,
lexicons (dictionaries)
• For unsought product marketer should create
awareness by aggressive (push) and informative
promotion.
Industrial-Goods Classification
• Materials and parts (raw-materials, machinery parts)
[price, brand name, and credit facility are important]
• Capital items (building, larger machineries, facilities)
[Brand name and quality are important]
• Supplies and business services (stationeries, and
other service goods) [price plays a significant role].
Product Differentiation
• Form (medicines) • Reliability (Toyota)
• Features (cell phone) • Repairability (Electronics
goods)
• Performance quality
(Sony) • Style (Hatil)
• Conformance quality • Customization
(consistency) (Toyota) (colorbank, berger paint)
• Durability
(Duracell)
Services Differentiation
• Ordering ease (Secure online sites/apps)
• Delivery (Quick response systems/QRS)
• Installation (Large machinery)
• Customer training (McDonald’s Hamburger University
in Oak Brook, Illinois)
• Customer consulting (IBM, Microsoft)
• Maintenance and repair (Rahimafrooz, Kent)
• Returns [Controllable (by careful physical handling)
/Uncontrollable (customer mind change)]
Design (1 of 2)
• Design
– The totality of features
that affect the way a
product looks, feels,
and functions to a
consumer
Design (2 of 2)
• Is emotionally powerful
• Transmits brand meaning/positioning
• Is important with durable goods
• Makes brand experiences rewarding
• Can transform an entire enterprise
• Facilitates manufacturing/distribution
• Provides greater profit opportunity
Luxury brands
• Quality
• Uniqueness
• Craftsmanship
• Heritage
• Authenticity
• History
• Inner value
Marketing Luxury Brands
Table 13.1 Guidelines for Marketing Luxury Brands
1 Maintaining a premium image for luxury brands is crucial; controlling that image is thus a priority.
2 Luxury branding typically includes the creation of many intangible brand associations and an
aspirational image.
3 All aspects of the marketing program for luxury brands must be aligned to ensure high-quality products
and services and pleasurable purchase and consumption experiences.
4 Besides brand names, other brand elements—logos, symbols, packaging, signage—can be important
drivers of brand equity for luxury products.
5 Secondary associations from linked personalities, events, countries, and other entities can boost
luxury-brand equity as well.
6 Luxury brands must carefully control distribution via a selective channel strategy.
7 Luxury brands must employ a premium pricing strategy, with strong quality cues and few discounts
and markdowns.
8 Brand architecture for luxury brands must be managed carefully.
9 Competition for luxury brands must be defined broadly because it often comes from other categories.
10 Luxury brands must legally protect all trademarks and aggressively combat counterfeits.
Environmental Issues
• Environmental issues are also
playing an increasingly
important role in product
design and manufacturing
(resource shortage, demand
for safe product/packaging)
• Biodegradable issues
• Compliance issues
The Product Hierarchy
1. Need family (Security)
2. Product family (Savings and income)
3. Product class (Financial instruments)
4. Product line (Life insurance)
5. Product type (Term life insurance)
6. Item (Metlife insurance)
The whole process follows a funnel approach.
Product Systems and Mixes
• Product system
• Product mix/assortment [all
the products carried by a
company]
– Width [Bashundhara]
– Length [facial tissue, toilet
tissue, kitchen tissue]
– Depth [white tissue, colored
tissue, perfumed,
non-perfumed tissue]
– Consistency/diversified
(conglomerate)
Product Line Length
• Line stretching
– Down-market stretch
– Up-market stretch
– Two-way stretch
• Line filling [Toyota
Aqua]
Product Mix Pricing
• The firm searches for a set of prices that maximizes
profits on the total mix
– Product line pricing (Infinity, Lubnan, Richman,
Oxygen)
– Optional-feature pricing (phone case)
– Product-bundling pricing (pure bundling, mixed
bundling)
– Captive-product pricing (Printer and ink)
– By-product pricing (Glycerin is a by product while
manufacturing soap)
– Two-part pricing (Mobile phone connection fee + usage
rate)
Co-Branding
• Two or more well-known brands are combined into a
joint product or marketed together in some fashion
‒ Same-company
‒ Joint-venture (Maruti-Suzuki)
‒ Multiple-sponsor (Desi dos)
‒ Retail (McDonald’s and Coca Cola, Pepsi and Burger
King)
Ingredient Branding
• Co-branding that creates brand equity for parts that
are necessarily contained within other branded
products (Processor of computers/laptops; Intel
inside)
Packaging (1 of 3)
• All the activities of designing and producing the
container for a product (Primary, secondary, and
shipping)
Packaging (2 of 3)
Used as a marketing tool Packaging objectives
• Self-service • Identify the brand
• Consumer affluence • Convey descriptive and
persuasive information
• Company and brand
image (perfume) • Facilitate product
transportation and
• Innovation opportunity
protection
(Recyclable packaging)
• Assist at-home storage
• Aid product consumption
Labeling, Warranties, and Guarantees
• Labeling
– Identifies, grades, describes, and promotes the product
• Warranties
– Formal statements of expected product performance
by the manufacturer
• Guarantees
– Promise of general or complete satisfaction
The Nature of Services
• Service
– Any act or performance one party can offer to another
that is essentially intangible and does not result in the
ownership of anything
Categories of Service Mix
• A pure tangible good
(toothpaste)
• A tangible good with
accompanying services
(car, computer) [70/30]
• A hybrid (restaurants)
[50/50]
• A major service with
accompanying minor
goods (airplane) [70/30]
• A pure service
(massage) Copyright © 2016, 2012, 2009 Pearson Education, Inc. All Rights Reserved
Service Distinctions
• Equipment- or people-based (car wash, Laundry)
• Different processes of delivery (fast food, buffet)
• Some need client’s presence (beauty salon)
• Meets personal or business need
• Differs in objectives and ownership (private hospitals,
private universities)
Figure 14.1 Evaluation Continuum for
Product/service Types
Characteristics of Services
• Intangibility
• Inseparability
• Variability
• Perishability
Intangibility (1 of 2)
• Services cannot be seen, tasted, felt, heard, or smelled
Physical evidence and presentation tools:
‒ Place
‒ People
‒ Equipment
‒ Communication material (brochures, text, photos)
‒ Symbols
‒ Price
Inseparability
• Services are typically produced and consumed
simultaneously
Variability
• The quality of services depends
on who provides them, when
and where, and to whom
– As such, services are highly
variable
– Invest in good hiring and
training procedure
– Standardize the service
performance process
– Monitor customer satisfaction
Perishability
• Services cannot be stored
• Strategies to match demand & supply
On demand side On supply side

• Differential pricing • Part-time employees
• Nonpeak demand • Peak-time efficiency routines
• Complementary services • Increased consumer
participation
• Reservation services
• Shared services
• Facilities for future expansion
Figure 14.2 Blueprint for Overnight
Hotel Stay
Achieving Excellence In Services
Marketing (1 of 2)
• Marketing excellence
Figure 14.3 Three Types of Marketing in Service Industries
Figure 14.5 Service-Quality Model
Servqual Scale
Table 14.4 Servqual Attributes
Reliability (Experience) Empathy (interaction)
• Providing service as promised • Giving customers individual attention
• Dependability in handing customers’ service • Employees who deal with customers in a fashion
problems • Having the customer’s best interests at heart
• Performing services at the promised time • Employees who understand the needs of their
• Maintaining error-free records customers
• Employees who have the knowledge to answer • Convenient business hours
customer questions
Responsiveness (How quick we are) Tangibles
• Keeping customer informed as to when service • Modern equipment
will be performed • Visually appealing facilities
• Prompt service to customers • Employees who have a neat, professional
• Willingness to help customers appearance
• Readiness to respond to customers’ requests • Visually appealing materials associated with the
service
Assurance (How much perfectly we are doing) blank
• Employees who instill confidence in customers
• Making customers feel safe in their transactions
• Employees who are consistently courteous
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Marketing Management

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