Lecture 6

Product, Service, and Brands:

Building Customer Value
 Learning Objectives

1 Define product and describe the major classifications of

products and services.
2 Describe the decisions companies make regarding their
individual products and services, product lines, and product
mixes.
3 Describe the stages of the product life cycle and how
marketing strategies change during a product’s life cycle.
4 Discuss two additional product issues: socially responsible
product decisions and international product and services
marketing.
 STARBUCKS: Delivering the
“Starbucks Experience”
• The iconic Starbucks More than just coffee, Starbucks sells the
“Starbucks Experience,” one that
brand is about a lot enriches people’s lives one moment, one
more than just making human being, one extraordinary cup of
coffee at a time.
good coffee. At its
core, Starbucks
doesn’t sell just
coffee. It sells the
Starbucks Experience.
“Life happens over
coffee.”
 Learning Objective 1

Define product and describe the major

classifications of products and services.
 What is a Product?

Product is anything that can be offered in a market for

attention, acquisition, use, or consumption that might satisfy a
need or want.
Services are a form of product that consists of activities,
benefits, or satisfactions and that is essentially intangible and
does not result in the ownership of anything.
 What is a Product?

Products, Services, and Experiences

Products and services are becoming more commoditized.

Companies are now creating and managing customer
experiences with their brands or company.
 What is a Product?
Figure 8.1 Three Levels of Product
 What is a Product?

Products, Services, and Experiences

Creating customer
experiences: Your local
Buffalo Wild Wings
restaurant doesn’t just
serve up wings and beer; it
gives customers the
ultimate “Wings. Beer.
Sports.” fan experience.
 What is a Product?

Product and Service Classifications

• Consumer products
• Industrial products
 What is a Product?
Type of Consumer Product
Marketing Convenience Shopping Specialty Unsought
Considerations
Customer Frequent purchase; Less frequent purchase; Strong brand Little product awareness
buying little planning, little much planning and shopping preference or knowledge (or, if
behavior comparison or effort; and loyalty; special aware, little or even
shopping effort; low comparison of brands on purchase effort; little negative interest)
customer price, quality, and style comparison of brands;
involvement low price sensitivity
Price Low price Higher price Highest price Varies
Distribution Widespread Selective distribution in fewer Exclusive distribution Varies
distribution; outlets in only one or a few
convenient locations outlets per market area
Promotion Mass promotion by Advertising and personal More carefully targeted Aggressive advertising
the selling by both the producer promotion by both the and personal selling
producer and resellers producer and resellers by the producer and
resellers
Examples Toothpaste, Major appliances, televisions, Luxury goods, such as Life insurance and Red
magazines, furniture, and clothing Rolex watches or fine Cross blood donations
Table 8.1 Marketing Considerations for Consumer Products
and laundry detergent crystal
 What is a Product?

Product and Service Classifications

Industrial products are those products purchased for
further processing or for use in conducting a business.
• Materials and parts
• Capital items
• Supplies and services
 Learning Objective 2

Describe the decisions companies make regarding

their individual products and services, product lines,
and product mixes.
 Product and Service Decisions

Figure 8.2 Individual Product Decisions

 Product and Service Decisions

Individual Product and Service Decisions

Communicate and deliver benefits by product and service
attributes.
• Quality
• Features
• Style and design
 Product and Service Decisions

Individual Product and Service By consistently exceeding

Decisions customers’ quality expectations,
Product quality refers to the Chick-fil-A has won a trophy case
full of awards for top food and
characteristics of a product or service
service quality and an avidly
that bear on its ability to satisfy stated loyal customer following.
or implied customer needs.
• Performance quality
• Conformance quality
 Product and Service Decisions

Individual Product and Service Decisions

Product Features
• Competitive tool for differentiating a product from competitors’
products
• Assessed based on the value to the customer versus its cost to
the company
 Product and Service Decisions

Individual Product and Service Decisions

Style describes the appearance of the product.
Design contributes to a product’s usefulness as well as to its looks.
 Product and Service Decisions
Individual Product and Service Decisions
Brand is the name, term, sign, or design or a combination of these, that identifies
the maker or seller of a product or service.

A classic stunt by former bargain footwear retailer Payless dramatically illustrated the
power of brands in shaping perceptions. Fashion influencers paid as much as $645 for
“Palessi” shoes that normally sell for less than $40.
 Product and Service Decisions

Individual Product and Service Decisions

Packaging involves designing and producing the container or wrapper
for a product.
Labels identify the product or brand, describe attributes, and provide
promotion.
 Product and Service Decisions

Individual Product and Service Decisions

Product support services augment actual products.

Customer service: From the start, under the Lexus

Covenant, Lexus’s high-quality support services create an
unmatched car ownership experience and some of the
world’s most satisfied car owners.

Toyota Motor Sales, U S A, Inc.

 Product and Service Decisions
Product Line Decisions
Product line is a 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 and Service Decisions

Product Line Decisions

Product line length is the number of items in the product line.
• Line stretching
• Line filling

Product line stretching and filling: Through skillful line stretching and filling,
B M W now has brands and lines that successfully appeal to the rich, the super-
rich, and the hope-to-be-rich.
 Product and Service Decisions
Product Mix Decisions

Product mix consists of all the product lines and items that a particular
seller offers for sale.
• Width
• Length
• Depth
• Consistency

The product mix: Colgate-Palmolive’s nicely consistent

product mix contains many brands that constitute the
“Colgate World of Care”— products that “every day, people
like you trust to care for themselves and the ones they
love.”
 Learning Objective 3

Describe the stages of the product life cycle and how marketing strategies
change during a product’s life cycle.
 Product Life-Cycle Strategies

Figure 9.2 Sales and Profits over the Product’s Life from Inception to Decline
 Product Life-Cycle Strategies

Table 9.2 Summary of Product Life-Cycle Characteristics, Objectives, and Strategies

 Product Life-Cycle Strategies

Table 9.2 Summary of Product Life-Cycle Characteristics, Objectives, and Strategies

 Learning Objective 4

Discuss two additional product issues: socially responsible product

decisions and international product and services marketing.
 Additional Product and Service
Considerations
Product Decisions and Social Responsibility

Public policy and regulations regarding developing and

dropping products, patents, quality, safety, and product
warranties should be considered carefully.
 Additional Product and Service
Considerations
International Product and Service
Marketing Global product adaptation: By
adapting its menu and operations to
• Determining what products and the needs and preferences of French
services to introduce in which consumers and their culture,
McDonald’s has turned France into its
countries second-most-profitable world market.
• Standardization versus
customization
• Packaging and labeling
• Customs, values, laws
References

KOTLER, P. and ARMSTRONG, G. (2018) Principles of Marketing, 17th edition. London:

Prentice Hall.