A Global

Philip Kotler
Perspective

8
Product, Services,
and Branding
Strategy

Gary Armstrong
Swee Hoon Ang
Siew Meng Leong
Chin Tiong Tan
Oliver Yau HonMing

8-1

Learning Objectives
After studying this chapter, you should be able to:
1.

Define product and 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.

Discuss branding strategythe decisions companies

make in building and managing their brands

4.

Identify the four characteristics that affect the marketing

of a service and the additional marketing
considerations that services require

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Chapter Outline
1. What Is a Product?
2. Product and Service Decisions
3. Branding Strategy: Building Strong

Brands
4. Services Marketing

8-3

What Is a Product?
Products, Services, and Experiences

A product is anything that can be offered in a

market for attention, acquisition, use, or
consumption that might satisfy a need or want.
E.g. soap, toothpaste

Bradley Johnson

8-4

What Is a Product?
Products, Services, and Experiences

Service is a form of product that consists of

activities, benefits, or satisfactions offered for
sale that are essentially intangible and do not
result in ownership.
E.g., Doctors exam, legal advice

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What Is a Product?
Products, Services, and Experiences
Experiences represent what buying the
product or service will do for the customer.
E.g., Disney, Lego, Toys R Us
Audry Drapier

Bradley Johnson

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What Is a Product?
Levels of Products
and Services

Core benefits

Actual product

Augmented
product

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What Is a Product?
Levels of Product and Services

Core benefits represent what the buyer is

really buying.

Actual product represents the design, brand

name, and packaging that delivers the core
benefit to the customer.

Augmented product represents additional

services or benefits of the actual product.

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What Is a Product?
Discussion Question: Describe the core, actual, and
augmented levels of Microsofts Windows XP
Professional operating software:
Core A software application that enables a PC to function
Actual A well-designed, high-quality, branded, and packaged
computer operating system that provides a variety of features that
are important to the user

Augmented An operating system software application that offers a

series of channel and consumer services. The channel member
can obtain favorable pricing and credit terms, training, engineering
support, etc. The consumer can get online support, version
updates, access to forums and communities, etc.

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What Is a Product?
Product and Service Classifications

Consumer products

Industrial products

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What Is a Product?
Product and Service Classifications

Consumer products are products and

services bought by final consumers for
personal consumption.

Classified by how consumers buy them

Convenience products

Shopping products

Specialty products

Unsought products
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What Is a Product?
Product and Service Classifications

Convenience products are consumer products

and services that the customer usually buys
frequently, immediately, and with a minimum
comparison and buying effort.
Newspapers
Candy
Fast food

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What Is a Product?
Product and Service Classifications

Shopping products are consumer products

and services that the customer compares
carefully on suitability, quality, price, and style.
Furniture
Cars
Appliances

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What Is a Product?
Product and Service Classifications

Specialty products are consumer products

and services with unique characteristics or
brand identification for which a significant group
of buyers is willing to make a special purchase
effort.
Designer watches
Branded fashion wear
High-end electronics

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What Is a Product?
Product and Service Classifications

Unsought products are consumer products

that the consumer does not know about or
knows about but does not normally think of
buying.
Life insurance
Funeral services
Blood donations

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What Is a Product?
Discussion Question: Classify the following consumer
products
A laptop computer
A surgeon
Automobile tires

8-16

What Is a Product?

A laptop computer shopping good: most people purchase a

laptop infrequently, and when they purchase it, they usually
conduct extensive research and comparison of brands and
features

A surgeon Specialty good: There is usually little comparison

between doctors as most patients collect only a few names

Automobile tires it depends on the individual and the situation.

If a consumer has a luxury brand of car and will consider only
designer tires, this is a specialty good; for most consumers, tires
are a shopping good, and they will be heavily influenced by price
and brand name; in some situations, the tires could be an
unsought good.
If one was traveling and had a flat tire in an unknown area he
would probably be towed to a local station and with little product
knowledge, agree to a tire carried by the local station
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What Is a Product?
Product and Service Classifications

Industrial products are products purchased

for further processing or for use in conducting a
business.

Classified by the purpose for which the product

is purchased
Materials and parts
Capital items
Supplies and services
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What Is a Product?
Product and Service Classifications

Materials and parts include raw materials and

manufactured materials and parts usually sold
directly to industrial users.
Wheat
Lumber
Iron
Cement

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What Is a Product?
Product and Service Classifications

Capital items are industrial products that aid in

the buyers production or operations.
Buildings
Elevators
Computers

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What Is a Product?
Product and Service Classifications

Supplies and Services include operating

supplies, and repair and maintenance items, as
well as maintenance and repair services and
business advisory services.
Copy papers
Stationary
Training service
Market research/Advertising service

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What Is a Product?
Organizations, Persons, Places, and Ideas

Organization marketing consists of activities

undertaken to create, maintain, or change
attitudes and behavior of target consumers
toward an organization.

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What Is a Product?
Organizations, Persons, Places, and Ideas
Person marketing consists of activities

undertaken to create, maintain, or change

attitudes and behavior of target consumers
toward particular people.
Andy Lau
Stephanie Sun
Siti Nuraliza

8-23

What Is a Product?
Organizations, Persons,
Places, and Ideas

Jeff Christiansen

Place marketing consists of

activities undertaken to
create, maintain, or change
attitudes and behavior of
target consumers toward
particular places.
Tourism, e.g. the Great Wall

of China, Walt Disney World.

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What Is a Product?
Organizations, Persons, Places, and Ideas

Social marketing is the use of commercial

marketing concepts and tools in programs
designed to influence individuals behavior to
improve their well-being and that of society.
Public health campaigns

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Product and Service Decisions

Individual Product & Service Decisions A
single product

Product Line Decisions - A group of related

products

Product Mix Decisions The set of product lines

and items offered to customers by a particular
seller

These tools helps the planner to properly view the

product so it can achieve competitive
superiority and better product strategy.
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Product and Service Decisions

Individual Product and Service Decisions

Product attributes

Branding

Packaging

Labeling

Product support services

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Product and Service Decisions

Individual Product and Service Decisions

Product attributes are the benefits of the

product or service
Quality
Features
Style and design

8-28

Product and Service Decisions

Individual Product and Service Decisions

Define Quality in terms of the lack of defects or

creating customer value and satisfaction

Quality level is the level of quality that supports

the products positioning.
Performance quality is the ability of a product to

perform its functions.

Conformance consistency is freedom of defects

and consistency in delivering a targeted level of

performance.

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Product and Service Decisions

Individual Product and Service Decisions

Product features are a competitive tool for

differentiating a product from competitors products
Assessed based on the value to the customer versus the cost to
the company.

Product style and design add value to customer

value.
Style describes the appearance of the product.
Design contributes to a products usefulness as well as to its

looks.

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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.

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Product and Service Decisions

Individual Product and Service Decisions

Branding help buyers identify benefits

Quality
Consistency

Branding provide legal protection for sellers

can aid in
Segmentation
Communicate product features

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Product and Service Decisions

Individual Product and Service Decisions

Packaging involves designing and producing the

container or wrapper for a product.

Label identifies the product or brand, describes

attributes, and provides promotion.

Product support services augment actual products.

Companies must continually:
Assess the value of current services to obtain ideas for new

ones
Assess the costs of providing these services
Develop a package of services to satisfy customers and provide

profit to the company

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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.

8-34

Product and Service Decisions

Product Line Decisions

Product line length is the number of items in

the product line.

Product line can be lengthened in two ways:

Line stretching (lengthen beyond its current
range)
Line filling (adding more items within the present
range of the line)

8-35

Product and Service Decisions

Product Line Decisions

Product line stretching is when a company

lengthens its product line beyond its current
range.
Downward
Upward
Combination of both

8-36

Product and Service Decisions

Product Line Decisions
Line stretching

Downward product line stretching is used by

companies at the upper end of the market to plug a
market hole or respond to a competitors attack.

Upward product line stretching is by companies at

the lower end of the market to add prestige to their
current products.

Combination line stretching is used by companies in

the middle range of the market to achieve both goals of
upward and downward line stretching.
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Product and Service Decisions

Product Line Decisions

Product line filling occurs when companies

add more items within the present range of the
line.
More profits
Satisfying dealers
Excess capacity
Plugging holes to fend off competitors

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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

8-39

Product and Service Decisions

Product Mix Decisions

Product mix width is the number of different

product lines the company carries.

Product mix length is the total number of

items the company carries within its product
lines.

8-40

Product and Service Decisions

Product Line Decisions

Product mix depth is the number of versions

offered of each product in the line.

Consistency is how closely the various

product lines are in end use, production
requirements, or distribution channels.

8-41

Branding Strategy:
Building Strong Brands

Brand represents the consumers perceptions

and feelings about a product and its
performance. It is the companys promise to
deliver a specific set of features, benefits,
services, and experiences consistently to the
buyers.

8-42

Branding Strategy:
Building Strong Brands

Brand equity is the positive differential effect

that knowing the brand name has on customer

response to the product or service. The extent
to which customers are willing to pay more for the
brand

Customer equity is the value of the customer

relationships that the brand creates. A powerful

brand forms a basis for building strong and profitable
customer relationships

Brand valuation is the process of estimating

the total financial value of the brand.

8-43

Branding Strategy:
Building Strong Brands

Brand strategy decisions include:

Brand positioning
Brand name selection
Brand sponsorship
Brand development

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Branding Strategy:
Building
Strong Brands
Brand Positioning

Position brands at any of three levels:

Product attributes (Giordano is positioned by each seasons

assortment of styles, colors and low price)

Product benefits (Giordano save your money through its great price

and time through its assortment of products for the whole family)
Product beliefs and values (Giordano also positions itself as fun. Its

ads are somewhat silly at times and always show the models having a
lot of fun wearing Giordano clothes. This is different from other retailers
who advertise using model with intense, serious, and seductive facial
expressions)
http://www.youtube.com/watch?v=67DhFt2NM8Y
http://www.youtube.com/watch?v=dXEtFDVBSVQ
8-45

Branding Strategy:
Building Strong Brands
Brand Name Selection

Desirable qualities
Suggests benefits and qualities
Easy to pronounce, recognize, and remember
Distinctive
Extendable
Translatable for the global economy
Capable of registration and legal protection
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Branding Strategy:
Building Strong Brands
Brand Sponsorship

Manufacturers brand

Private brand

Licensed brand

Co-brand

8-47

Co-Branded Differentiator

WestinWORKOUT powered by Reebok

8-48

Branding Strategy:
Building Strong Brands
Brand Sponsorship

Private brands provide retailers with advantages.

Product mix control

Slotting fees for manufacturers brands

Higher margins

Exclusivity

8-49

Branding Strategy:
Building Strong Brands
Brand Development

In terms of Brand name & Product category

Line extensions

Brand extensions

Multibrands

New brands

8-50

Branding Strategy:
Building Strong Brands
Brand Development

Line extensions occur when a company

extends existing brand names to new forms,
colors, sizes, ingredients, or flavors of an
existing product category.

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Branding Strategy:
Building Strong Brands
Brand Development

Brand extensions extend a brand name to a

new or modified product in a new category.

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Branding Strategy:
Building Strong Brands
Brand Development

Multibrands are additional brands in the same

category.

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Branding Strategy:
Building Strong Brands
Brand Development

New brands are used when existing brands

are inappropriate for new products in new
product categories or markets.

Nate Grigg

Ged Carroll

1970s-1990s
Sony's Trinitron Color TV

2000 and beyond

Sonys BRAVIA widescreen LCD TV

8-54

Branding Strategy:
Building Strong Brands
Managing Brands

Requires:
Continuous brand communication
Customer-centered training
Brand audits

8-55

Services Marketing
Types of Service Industries
Service industries vary greatly:

Government courts, employment services,

hospitals, military services, police and fire department,
postal services, and schools

Private not-for-profit organizations Museums,

charities, churches, colleges, foundations, and
hospitals

Business services

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Services Marketing
Nature and Characteristics of a Service

Intangibility

Inseparability

Variability

Perishability

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Services Marketing
Nature and Characteristics of a Service

Intangibility refers to the fact that services cannot be

seen, tasted, felt, heard, or smelled before they are
purchased.

Inseparability refers to the fact that services cannot be

separated from their providers.

Variability refers to the fact that service quality

depends on who provides it as well as when, where,
and how it is provided.

Perishability refers to the fact that services cannot be

stored for later sale or use.
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Services Marketing
Marketing Strategies for Service Firms

In addition to traditional marketing strategies,

service firms often require additional strategies:
Service-profit chain
Internal marketing
Interactive marketing

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Services Marketing
Marketing Strategies for Service Firms

Service-profit chain links service firm profits

with employee and customer satisfaction.
Internal service quality
Satisfied and productive service employees
Greater service value
Satisfied and loyal customers
Healthy service profits and growth

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Services Marketing
Marketing Strategies for Service Firms

Internal marketing means that the service firm

must orient and motivate its customer contact
employees and supporting service people to
work as a team to provide customer
satisfaction.

Internal marketing must precede external

marketing.

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Services Marketing
Marketing Strategies for Service Firms

Interactive marketing means that service

quality depends heavily on the quality of the
buyer-seller interaction during the service
encounter.

Three major marketing tasks

Service differentiation
Service quality
Service productivity

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Services Marketing
Marketing Strategies for Service Firms

Managing service differentiation creates a

competitive advantage from the offer, delivery,
and image of the service.
Offer can include distinctive features.
Delivery can include more able and reliable

customer contact people, environment, or process.

Image can include symbols and branding.

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Services Marketing
Marketing Strategies for Service Firms

Managing service quality provides a

competitive advantage by delivering
consistently higher quality than its competitors.

Service quality always varies depending on

interactions between employees and
customers.
The first step is to empower employees
Responsibility, Authority and Incentives they need
to recognize, care about, and tend to customer needs
8-64

Services Marketing
Marketing Strategies for Service Firms

Managing service productivity refers to the

cost side of marketing strategies for service
firms.
Employee recruiting, hiring, and training

strategies
Service quantity and quality strategies

8-65