Marketing Chapter 9 & 10 (Product Concepts and Service Marketing)

Products

something customers “hires” to fulfill job to be done

Types of Products

Business Products → manufacture, facilitate operation, resell

Consumer Products → to satisfy individual’s personal wants and needs

Types of Consumer Products

1. Convenience (inexpensive, little shopping effort)

2. Shopping (requires comparison shopping, costs more)

3. Specialty (unique characteristics, unwilling to accept substitutes)

4. Unsought (unknown to buyer, not actively sought)

Examples of Consumer Products

Convenience (personal hygiene, snack items, chocolate)

Shopping (price, style, practicality, lifestyle - clothing, furniture)

Specialty (homes, automobiles, engagement rings)

Unsought (insurance, burial plots, prescription cream)

Value of Proposition

manifestation of promise a company makes to its customers in exchange for the price to receive it (see, feel, touch, taste, experience)

Five Levels of Products

Product Items, Lines, Mixes

Product Mix

Produce Line Length

• diversify against risk, spread risk across other products than 1 or 2

• generate sales/profits

Example of Lululemon Product Lines and Product Mix

Adjustment by Modification

Product Modification — changing one or more of product’s characteristics

e.g. Kleenex may introduce four-ply tissues (new colours, moisturizing tissue)

Quality → Functional → Style

Planned Obsolesce

modifying products so those sold become obsolete before needing replacement

• can be wasteful/unethical | some favour latest features/functions)

e.g. Apple with a new iPhone every year

Repositioning, Product Line Extension & Contraction,

Repositioning → changing consumer's’ perception

e.g. Old Spice, from after shave product to hygienic products

Extension → adding products to existing product line to offer more options

e.g. Old Spice, from deodorant to body wash, shampoos

Contraction → reducing products in existing product line

Universal Product Codes (UPCs)

series of thick or thin vertical lines (bar codes)

• readable by computerized optical scanners

• match codes to brand names, package sizes, prices

Packaging

Labelling

Persuasive (focus on promotional theme or logo, consumer info secondary)

e.g. Mars, not chocolate bar but candy bar (chocolate amount low)

Informational (help to make proper selections, lower cognitive dissonance)

• Consumer Packaging and Labelling Act

Design Thinking as a Process

Product Life Cycle (PLC)

1. intro → full launch of product in market

2. growth → sales growing, competitors enter

3. maturity → period sales (+) at a (-) rate, signals decline

4. decline → drop in sales

New Product Categories

New Product Development

Idea Generation —> customers, vendors, competitors, employees

Idea Screening → eliminate inconsistent ideas, have clear objective

Business Analysis → demand, costs, sales, profit

Development → prototype, market, manufacture, tests

Test Marketing → limited intro, determine reaction (high costs, alternatives)

Commercialization → decision to market product (time)

Keys to Success

Failure caused by

Services

products that are intangible (lacks physical form, packaging)

e.g. massage, real estate, memorable experiences (dinner or concert)

how services differ from goods

Intangibility → not able to touch, see, taste, hear or possess

Inseparability → production and consumption cannot be separate

• haircuts, root canal surgery, massages, waxing

Inconsistency & Inventory

Heterogeneity (depends on service deliver)

• training, uniforms, procedures, manual

e.g. Baskin Robins, new flavours often (manageable)

e.g. Crumbl with weekly flavours (inventory can be wasted, not enough)

Perishability (cannot be stored, inventoried)

• surge pricing (to balance supply and demand, price goes up)

e.g. airplane tickets, uber, concert tickets

Quality of Services

Search - easily assessed before purchase (colour of car)

Experience - assessed only after use (massage)

Inexperience - difficulty assessing after use, lack of knowledge

Photo of Key Service Qualities

Service Gaps, how to close them

The 8 Ps of Service Marketing

1. Produce (make intangible tangible | customization, standardization)

2. Price (focus on maximizing income)

3. Place (convenience, direct vs indirect, location)

4. Promotion (brand ambassadors, strong image, postpurchase comms)

5. People (manage gaps and employees)

6. Process (people, possession, mental stimulus, info)

7. Productivity (supply down, quality up)

8. Physical Environment (visual cues to communicate message)

• design, exterior appearance, urban design, social interactions

Customer Relationship Management (CRM)

Goal → attract, develop, retain = foster loyalty