CHAPTER 8:

PRODUCTS, SERVICES, AND BRANDS:

BUILDING CUSTOMER VALUE
 LEARNING OBJECTIVES

• What Is a Product?
• Product and Services Decisions
• Branding Strategy: Building Strong Brands
• Services Marketing
 WHAT IS A PRODUCT?

Products, Services, and Experiences

Product is anything that can be offered in a market for
attention, acquisition, use, or consumption that might
satisfy a need or want.
Service is a form of product that consists of activities,
benefits, or satisfaction offered for sale and are essentially
intangible and don’t result in the ownership of anything.
Experiences represent what buying the product or service
will do for the customer.
Product is a key element in the overall market offering. Marketing
mix planning begins with formulating the offering that brings value
to target customers. This offering becomes the basis upon which the
company builds profitable relationship with customers.
A company’s market offering often includes both tangible goods and
services. The offer may consist of a pure tangible good, at the other
extreme are pure service. Between these 2 extremes, many goods
and services combinations are possible.
Consumers see products as complex bundles of benefits that satisfy
their needs.
HIERARCHY. THE FUNDAMENTAL LEVEL IS
THE CORE BENEFIT: THE SERVICE OR
BENEFIT THE CUSTOMER IS REALLY
BUYING. A HOTEL GUEST IS BUYING “REST
AND SLEEP”; THE PURCHASER OF A DRILL
IS BUYING “HOLES.” .
AT THE SECOND LEVEL, THE MARKETER
MUST TURN THE CORE BENEFIT INTO A
BASIC PRODUCT. THUS, A HOTEL ROOM
INCLUDES A BED, BATHROOM, TOWELS,
AND CLOSET. .
AT THE THIRD LEVEL, THE MARKETER
PREPARES AN EXPECTED PRODUCT, A SET
OF ATTRIBUTES AND CONDITIONS BUYERS
NORMALLY EXPECT WHEN THEY PURCHASE
THIS PRODUCT. HOTEL GUESTS EXPECT A
CLEAN BED, FRESH TOWELS, AND SO ON.
.
AT THE FOURTH LEVEL, THE MARKETER
PREPARES AN AUGMENTED PRODUCT THAT
EXCEEDS CUSTOMER EXPECTATIONS. A
 FIGURE 12.2 FIVE PRODUCT
LEVELS

12-6
 WHAT IS A PRODUCT?
Levels of Product and Services
At the fifth level stands the potential product, which encompasses all
the possible augmentations and transformations the product or
offering might undergo in the future. Here, a company searches for
entirely new ways to satisfy its customers and distinguish its offer.
 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
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
Shopping products are consumer products and services that the
customer compares carefully on suitability, quality, price, and style
• Furniture
• Cars
• Appliances
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
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
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
• Raw materials
Capital items are industrial products that aid in the buyer’s
production or operations
Materials and parts include raw materials and manufactured
materials and parts usually sold directly to industrial
users
Supplies and services include operating supplies, repair and
maintenance items, and business services
 WHAT IS A PRODUCT?
Organizations, Persons, Places, and Ideas

• In addition to tangible products and services, marketers

have broadened the concept of a product to include other
market offerings; 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. Business firms
sponsor public relations or corporate image advertizing
campaigns to polish their images and market themselves.
• Person marketing consists of activities undertaken to create,
maintain, or change attitudes and behavior of target
consumers toward particular people sometimes used to build
reputation.
Place marketing consists of activities undertaken to create,
maintain, or change attitudes and behavior of target
consumers toward particular places or destinations.
Ideas can also be marketed.
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
Social marketing goes well beyond the promotional P of the
marketing mix to include every other element to achieve its
social change objectives.
Product attributes are the benefits of the product or service
• Quality
• Features
• Style and design
Product quality is one of the marketer’s major positioning
tools, it includes level and consistency.
• Quality level is the level of quality that supports the
product’s positioning (TQM)
• Conformance quality is the product’s freedom from
defects and consistency in delivering a targeted level of
performance
Product features are a competitive tool for differentiating a
product from competitors’ products. .

Product features are assessed based on the value to the

customer versus the cost to the company.
Style describes the appearance of the product.
Design contributes to a product’s usefulness as well as to its
looks .Good design begins with a deep understanding of
customer needs. Designers should concentrate on how
customers will use and benefit from the product.
Brand is the name, term, sign, or design—or a combination of these
—that identifies the maker or seller of a product or service
Brand equity is the differential effect that the brand name has on
customer response to the product and its marketing.
Brand equity is a set of brand assets and liability linked to a brand, its
name, and symbol, that add to or subtract from the value provided
by a product or service to a firm and/or to that firm‘s customers.
Brand equity is the added value endowed on products and services,
which may be reflected in the way consumers, think, feel, and act
with respect to the brand.
• Branding help Buyers in many ways: managers to be clear about
what role brands play for the company in creating customer value
and share-holder value. For buyers, brands can:
• Identify products that might benefit them.
• Brands say something about product quality and consistency
• reduce customer search costs by identifying products quickly and
accurately,
• • reduce the buyer‘s perceived risk by providing an assurance of
quality and consistency (which may then be transferred to new
products),
• • reduce the social and psychological risks associated with owning
and using the ―wrong‖ product by providing psychological
rewards for purchasing brands that symbolize status and prestige.
• Branding help sellers in many ways:
• Legal protection for unique product features.
• Basis upon which the product’s special qualities are built .
• Help in segmenting markets.
Building and managing brands are one of the most important tasks
of a marketer.
• • repeat purchases that enhance the company‘s financial
performance because the brand enables the customer to identify and
re-identify the product compared to alternatives,
• • the introduction of new products, because the customer is familiar
with the brand from previous buying experience,
• • promotional effectiveness by providing a point of focus,
• • premium pricing by creating a basic level of differentiation
compared to competitors,
• • market segmentation by communicating a coherent message to the
target audience, telling them for whom the brand is intended and for
whom it is not
• • brand loyalty, of particular importance in product categories
where loyal buying is an important feature of buying behavior.
Build Strong Brands
Fig.8.3 shows that the major brand strategy decisions involve brand
positioning, brand name selection, brand sponsorship, and brand
development.
Brand positioning: Marketer need to position their brands clearly in
target customers’ minds. Positioning refers to the act of designing
the company’s offering and image in such a way that it occupies a
distinctive place in the minds of the target customers.
Brand name selection: A good name can add greatly to a product’s
success. However, finding the best brand name is a difficult task. It
begins with a careful review of the product and its benefits, the
target market, and proposed marketing strategies.
Brand sponsorship: A manufacturer has four sponsorship options.
The product may be lunched as a national brand or manufacturer
brand, private brand or store brand or distributor brand, licensed
brand and co-brand.
• Co-Branding: Co-branding (dual branding) involves two or more
established brands making a joint offer of their product brands. The
participant‘s brand names are identified on the good or service. Several
different forms are: Component co-branding(Volvo and Michelin),
same company co-branding, Alliance co-branding(Delta and American
Express), Ingredient co-branding.
• Licensing: Another popular method of using brand name is licensing.
The sale of a firm‘s brand name to another company for use on a non-
competing product in a major business activity. The firm granting the
license obtains additional revenue with only limited costs.
. Private branding: Retailers with establish brand names such as Wal-
Mart, Target etc. contract with producers to manufacture and place the
retailer‘s brand name on the product sold by the retailer. Called private
branding , the major advantage to the producer is eliminating the costs
of marketing to end-users, although a private-level arrangement may
make the manufacturer dependent on the firm using the private brand.
• Brand Development
• A company has four choices when it comes to developing brands
(Fig.8.4). It can introduce line extensions, brand extensions, multiband
or new brands.
• Line Extension: Minor variants of a single product are marketed
under the same brand name. Extension may include flavors, colors,
packages and sizes. The primary danger is overextending the line and
weakening the brand equity. Many new products are line extensions.
• Brand Extension: It includes extensions of the brand name to other
product categories. The other product may be similar or dissimilar to
the brand which is extended.
• Multi Brands: Companies often introduce additional brands in the
same category. It offers a way to establish different features and appeal
to different buying motives.
• New brands: A company might believe that the power of its existing
brand name is waning/decline and a new brand name is needed.
 FIG. 8.4: BRAND DEVELOPMENT STRATEGY
PRODUCT CATEGORY
EXISTING NEW

EXISTING LINE EXTENSION BRAND EXTENSION

New Multibrand • New brands

Packaging involves designing and producing the container or
wrapper for a product.
Packages nowadays attract attention, describe the product and
make the sale.
Labels identify the product or brand, describe attributes, and
provide promotion.
Labels have been affected by unit pricing, open dating and
nutritional labeling.
Product support services augment actual products
• Survey customers periodically
• Assess costs
• Develop a package of services that will delight customers
and yield profit.
• Sophisticated mix of interactive technologies to provide
support services.
 PRODUCT AND SERVICE DECISIONS

Marketers make product and service decisions at three levels:

• Individual product decisions
• Product line decisions
• product Mix decisions
I-Individual Product and Service Decisions
Product line decisions:
A 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 fail
within given price ranges. For example: Nike produces several lines
of athletic shoes and apparel, and Marriott offers several lines of
hotels.
The major product line decision involves product line length- the
number of items in the product line. It is influenced by company
objectives and resources.
A company can expand its product line in two ways: by line filling or
by line stretching. Product line filling involves adding more items
within the present range of the line. There are several reasons for
product line filling: reaching for extra profits, satisfying dealers,
using excess capacity, being the leading full –line company, and
plugging holes to keep out competitors.
• Company objectives influence product-line length. One objective is
to create a product line to induce up-selling. A different objective is
to create a product line that facilitates cross-selling. Every
company’s product line covers a certain part of the total possible
range.
• Line stretching occurs when a company lengthens its product
line beyond its current range, whether down-market, up-
market, or both ways.
• 01.With a down market stretch, a firm introduces a lower price
line. However, moving down market can be risky, as Kodak found
out.
• 02.With an up market stretch, a company enters the high end of
the market for more growth, higher margins, or to position itself as
a full-line manufacturer.
• 03.Companies that serve the middle market can stretch their product
lines in both directions, as the Marriott Hotel group did
 LINE STRETCHING/ENLARGE
Down-Market Stretch

Up-Market Stretch

Two-Way Stretch
• Product Mix Decisions:
• A product mix (also called product assortment) is the set of all
products and items that a particular marketer offers for sale. At
Kodak, the product mix consists of two strong product lines:
information products and image products. At NEC (Japan), the
product mix consists of communication products and computer
products.
• The product mix of an individual company can be described in
terms of width, length, depth, and consistency.
• The width refers to how many different product lines the company
carries.
• The length refers to the total number of items in the mix.
• The depth of a product mix refers to how many variants of each
product are offered.
• The consistency of the product mix refers to how closely related the
various product lines are in end use, production requirements,
 SERVICES MARKETING
• A service is the action of doing something for someone or
something. It is largely intangible (i.e. not material). You cannot
touch it. You cannot see it. You cannot taste it. You cannot hear it.
You cannot feel it. So a service context creates its own series of
challenges for the marketing manager since he or she must
communicate the benefits of a service by drawing parallels with
imagery and ideas that are more tangible.
• There are five characteristics to a service which will be discussed
below.
• 1. Lack of ownership.
• You cannot own and store a service like you can a product. Services
are used or hired for a period of time. For example when buying a
ticket to the USA the service lasts maybe 9 hours each way , but
consumers want and expect excellent service for that time. Because
you can measure the duration of the service consumers become
more demanding of it.
• 2. Intangibility
• You cannot hold or touch a service unlike a product. In saying that
although services are intangible the experience consumers obtain
from the service has an impact on how they will perceive it. What
do consumers perceive from customer service? the location, and the
inner presentation of where they are purchasing the service?.
• 3. Inseparability: Services cannot be separated from the service
providers. A product when produced can be taken away from the producer.
However a service is produced at or near the point of purchase. Take
visiting a restaurant, you order your meal, the waiting and delivery of the
meal, the service provided by the waiter /server is all apart of the service
production process and is inseparable, the staff in a restaurant are as apart
of the process as well as the quality of food provided.
• 4. Perishibility: Services last a specific time and cannot be stored like a
product for later use. If travelling by train, coach or air the service will
only last the duration of the journey. The service is developed and used
almost simultaneously. Again because of this time constraint consumers
demand more.
• 5. Heterogeneity: It is very difficult to make each service experience
identical. If travelling by plane the service quality may differ from the
first time you travelled by that airline to the second, because the airhostess
is more or less experienced. A concert performed by a group on two nights
may differ in slight ways because it is very difficult to standardize every
dance move.