Principles of Marketing

Eighteenth Edition

Chapter 8
Products, Services, and Brands:
Building Customer Value

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Learning Objective 1
Define product and describe the major classifications of
products and services.

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What is a Product? (1 of 17)
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.

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What is a Product? (2 of 17)
Products, Services, and Experiences
Products and services are becoming more commoditized.
Companies are now creating and managing customer
•

experiences with their brands or company.

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What is a Product? (3 of 17)
• The core benefit level is the fundamental need or want that
consumers satisfy by consuming the product or service.
• The generic product level is a basic version of the product containing
only those attributes or characteristics absolutely necessary for its
functioning but with no distinguishing features. This is basically a
stripped-down, no-frills version of the product that adequately
performs the product function.
• The expected product level is a set of attributes or characteristics that
buyers normally expect and agree to when they purchase a product.
• The augmented product level includes additional product attributes,
benefits, or related services that distinguish the product from
competitors.
• The potential product level includes all the augmentations and
transformations that a product might ultimately undergo in the
future.

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What is a Product? (5 of 17)
Product and Service Classifications
• Consumer products
• Industrial products

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What is a Product? (7 of 17)
Product and Service Classifications
Consumer products are products and services bought by
final consumers for personal consumption.
• Convenience products
• Shopping products
• Specialty products
• Unsought products

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What is a Product? (8 of 17)
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? (9 of 17)
Product and Service Classifications
Shopping products are less frequently purchased
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? (10 of 17)
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.
• Medical services
• Designer clothes
• High-end electronics

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What is a Product? (11 of 17)
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? (6 of 17)
Table 8.1 Marketing Considerations for Consumer Products

Type of Consumer Product

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

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What is a Product? (12 of 17)
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

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What is a Product? (13 of 17)
Product and Service Classifications
Materials and parts include raw materials and
manufactured materials and parts.
Capital items are industrial products that aid in the buyer’s
production or operations.
Supplies and services include operating supplies, repair
and maintenance items, and business services.

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What is a Product? (14 of 17)
Product and Service Classifications
Organizations, Persons, Places, and Ideas
• Organization marketing
• Person marketing
• Place marketing
• Social marketing

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What is a Product? (15 of 17)
Product and Service Decisions
Organization marketing consists of activities undertaken to
create, maintain, or change the attitudes and behaviors of
target consumers toward an organization.

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What is a Product? (16 of 17)
Product and Service Classifications
Person marketing consists of activities undertaken to
create, maintain, or change the attitudes or behavior of
target consumers toward particular people.

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What is a Product? (17 of 17)
Product and Service Classifications
Place marketing consists of activities undertaken to create,
maintain, or change attitudes and behavior toward particular
places.
Social marketing uses commercial marketing concepts to
influence individuals’ behavior to improve their well-being
and that of society.

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Learning Objective 2
Describe the decisions companies make regarding their
individual products and services, product lines, and product
mixes.

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Product and Service Decisions (1 of 11)
Figure 8.2 Individual Product Decisions

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Product and Service Decisions (2 of 11)
Individual Product and Service Decisions
Communicate and deliver benefits by product and service
attributes.
• Quality
• Features
• Style and design

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Product and Service Decisions (3 of 11)
Individual Product and Service By consistently exceeding
Decisions customers’ quality expectations,
Chick-fil-A has won a trophy case
Product quality refers to the full of awards for top food and
characteristics of a product or service quality and an avidly loyal
service that bear on its ability to customer following.
satisfy stated or implied customer
needs.
• Total quality management
• Return-on-quality
• Quality level
• Performance quality

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Product and Service Decisions (4 of 11)
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

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Product and Service Decisions (5 of 11)
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.

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Product and Service Decisions (6 of 11)
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.

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Product and Service Decisions (7 of 11)
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.

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Product and Service Decisions (9 of 11)
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.

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Product and Service Decisions (11 of 11)
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.”

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Learning Objective 3
Identify the four characteristics that affect the marketing of
services and the additional marketing considerations that
services require.

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Services Marketing (2 of 10)
Figure 8.3 Four Service Characteristics

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Services Marketing (3 of 10)
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 (4 of 10)
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 (5 of 10)
Figure 8.4 Three Types of Services Marketing

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Services Marketing (6 of 10)
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.

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Services Marketing (7 of 10)
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.
• Service differentiation
• Service quality
• Service productivity

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Services Marketing (9 of 10)
Marketing Strategies for Service Firms
Managing service quality enables a service firm to
differentiate itself by delivering consistently higher quality
than its competitors provide.

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Services Marketing (10 of 10)
Marketing Strategies for Service Firms
Managing service productivity refers to the cost side of
marketing strategies for service firms.
• Employee hiring and training
• Service quantity and quality

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Learning Objective 4
Discuss branding strategy—the decisions companies make
in building and managing their brands.

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Brand Strategy: Building Strong Brands
(1 of 6)
Brand Equity and Brand Value
• Brand equity is the differential effect that knowing the
brand name has on customer response to the product or
its marketing.
• Brand value is the total financial value of a brand.

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Brand Strategy: Building Strong Brands
(6 of 6)
Figure 8.6 Brand Development Strategies

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