Chapter 7: Products, Services, and Brands- Building Customer Value


Product

  • Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need

Service

  • An activity, benefit, or satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything

What Is a Product?

  • Tangible objects, services, events, persons, organizations, places, ideas, or a mixture of these

  • Services are a form of product 

    • Activities, benefits, or satisfactions offered for sale 

    • Essentially intangible 

    • Do not result in the ownership of anything

Products, Services and Experiences

  • Market offerings often include both tangible goods and services

    • Pure tangible good

    • Pure service

  • Many companies now marketing experiences

Olive Garden sells more than just Italian food—it serves up an idealized Italian family meal experience

Note to Instructor: A company’s market offering often includes both tangible goods and services. At one extreme, the market offer may consist of a pure tangible good, such as soap, toothpaste, or salt; no services accompany the product. At the other extreme are pure services, for which the market offer consists primarily of a service. Examples include a doctor’s exam or financial services. Between these two extremes, however, many goods-and-services combinations are possible. Today, as products and services become more commoditized, many companies are moving to a new level in creating value for their customers. To differentiate their offers, beyond simply making products and delivering services, they are creating and managing customer experiences with their brands or company.








Figure 7.1 - Three Levels of Products


Note to Instructor: Product planners need to think about products and services on three levels. When designing products, marketers must first define the core, problem-solving benefits or services that consumers seek. At the second level, product planners must turn the core benefit into an actual product. They need to develop product and service features, a design, a quality level, a brand name, and packaging. Finally, product planners must build an augmented product around the core benefit and actual product by offering additional consumer services and benefits. At the most basic level, the company asks, “What is the customer really buying?” For example, people who buy a BlackBerry are buying more than a wireless communications device. They are buying freedom and on-the-go connectivity. Each additional product level helps to build this core value.


Consumer Products

  • A product bought by final consumers for personal consumption

  • Classified by how consumers buy them

    • Convenience products

    • Shopping products

    • Specialty products

    • Unsought products

Convenience Products

  • Consumer products that customers usually buy frequently, immediately, and with minimal comparison and buying effort

    • Low priced

    • Placed in many locations to make them readily available

    • E.g. Laundry detergent, candy, magazines, and fast food

Shopping products

  • Consumer products that the customer, in the process of selecting and purchasing, usually compare on such attributes as suitability, quality, price, and style

    • Less frequently purchased

    • Distributed through fewer outlets

    • Greater sales support

    • E.g. Furniture, clothing, used cars

Specialty products

  • Consumer products with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort

    • Different brands are not usually compared

    • E.g. Specific brands of cars, high-priced photographic equipment, designer clothes, and the services of medical or legal specialists


Unsought Products

  • Consumer products that the consumer either does not know about or knows about but does not normally consider buying

    • Require a lot of advertising, personal selling, and other marketing efforts

    • New innovations are generally unsought till advertised

    • Known but unsought products and services are life insurance, preplanned funeral services


Persons

  • Person marketing consists of activities undertaken to create, maintain, or change attitudes or behavior toward particular people

  • Organizations use well-known personalities to help sell their products or causes—celebrity endorsers. (Derek Jeter—Ford)

Note to Instructor: Person advertising is used for a variety of reasons: to establish a reputation, to redeem a tarnished reputation after a scandal. Discuss examples of such advertising.


Places and Ideas

  • Place marketing 

    • Involves activities undertaken to create, maintain, or change attitudes or behavior toward particular places

  • Idea marketing

    • Social marketing: The use of commercial marketing concepts and tools in programs designed to influence individuals’ behavior to improve their well-being and that of society

Note to Instructor: The recent recession forced many places to revamp their marketing efforts in order to attract tourists. Find some examples of this advertising and discuss the messages.


Various and Individual Product Decisions


Note to Instructor: The figure shows the important decisions in the development and marketing of individual products and services. The focus of all decisions is to create core customer value.


Branding

  • A name, term, sign, symbol, or design, or a combination of these, that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors

  • Customers attach meanings to brands and develop brand relationships

Note to Instructor: Consumers view a brand as an important part of a product, and branding can add value to a consumer’s purchase. Customers attach meanings to brands and develop brand relationships. As a result, brands have meaning well beyond a product’s physical attributes. Branding helps buyers in many ways. Brand names help consumers identify products that might benefit them. Brands also say something about product quality and consistency— buyers who always buy the same brand know that they will get the same features, benefits, and quality each time they buy. Branding also gives the seller several advantages. The seller’s brand name and trademark provide legal protection for unique product features that otherwise might be copied by competitors. Branding helps the seller to segment markets. For example, rather than offering just one general product to all consumers, Toyota can offer the different Lexus, Toyota, and Scion brands, each with numerous sub-brands—such as Camry, Corolla, Prius, Matrix, Yaris, Tundra, and Land Cruiser.


Packaging and Labeling

  • Packaging: Designing and producing the container or wrapper for a product

    • Protects the product

    • Attracts customers and closes the sale

  • Labels

    • Identify the product

    • Describe the product

    • Promote the brand

Note to Instructor: There has been a long history of legal concerns about packaging and labels. The Federal Trade Commission Act of 1914 held that false, misleading, or deceptive labels or packages constitute unfair competition. Labels can mislead customers, fail to describe important ingredients, or fail to include needed safety warnings. As a result, several federal and state laws regulate labeling. The most prominent is the Fair Packaging and Labeling Act of 1966, which set mandatory labeling requirements, encouraged voluntary industry packaging standards, and allowed federal agencies to set packaging regulations in specific industries. 


Product Support Services

  • An important part of the customer’s overall brand experience

  • Firms must survey customers to assess the value of current services and obtain ideas for new ones

Nordstrom thrives on stories about its after-sale service. It wants to “Take care of customers, no matter what it takes,” before, during, and after the sale


Product line

  • 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 mix

  • The set of all product lines and items that a particular seller offers for sale


The Product Mix

Campbell’s product mix consists of three major product lines. Each product line consists of several sublines. Each line and subline has many individual items


Figure 7.3 - Four Service Characteristics KNOW


Note to Instructor: Although services are “products” in a general sense, they have special characteristics and marketing needs. The biggest differences come from the fact that services are essentially intangible and that they are created through direct interactions with customers. Think about your experiences with an airline versus Nike or Apple. 


The Nature and Characteristics of a Service

  • The service provider’s task is to make the service tangible in one or more ways and send the right signals about quality


Marketing at Work

  • Web retailer Zappos prioritizes excellent customer service

  • Zappos knows that happy customers begin with happy, dedicated, and energetic employees

Enthusiastic employees make outstanding brand ambassadors for Zappos


Building Strong Brands

  • Brand equity: The differential effect that knowing the brand name has on customer response to the product or its marketing

Consumers sometimes bond very closely with specific brands. To this customer, this isn’t just a cup of coffee, it’s a deeply satisfying Dunkin’ Donuts brand experience

Note to Instructor: Brands are more than just names and symbols. They are a key element in the company’s relationships with consumers. Brands represent consumers’ perceptions and feelings about a product and its performance—everything that the product or the service means to consumers. In the final analysis, brands exist in the heads of consumers. As one well-respected marketer once said, “Products are created in the factory, but brands are created in the mind.”


Brand Name Selection

  • A brand name should:

    • Suggest the product’s benefits and qualities

    • Be easy to pronounce, recognize, and remember

    • Be distinctive

    • Be extendable

    • Translate easily into foreign languages

    • Be capable of registration and legal protection

Note to Instructor: After a decade of choosing quirky names (Yahoo!, Google) or trademark-proof made-up names (Novartis, Aventis, Accenture), today’s style is to build brands around names that have real meaning. For example, names like Silk (soy milk), Method (home products), Smartwater (beverages), and Blackboard (school software) are simple and make intuitive sense. Many firms try to build a brand name that will eventually become identified with the product category. Brand names such as Kleenex, Levi’s, JELL-O, BAND-AID, Scotch Tape, Formica, and Ziploc have succeeded in this way. However, their very success may threaten the company’s rights to the name. Many originally protected brand names—such as cellophane, aspirin, nylon, kerosene, linoleum, yo-yo, trampoline, escalator, thermos, and shredded wheat—are now generic names that any seller can use.


Brand Sponsorship

  • National brands

    • Products are marketed under the manufacturer’s own name

  • Store brands

    • Brands created and owned by a reseller of a product or service

  • Licensing

    • For a fee, companies use names and symbols created by other companies

  • Co-branding

    • Occurs when two established brand names of different companies are used on the same product


Brand Sponsorship

  • Sellers of children’s products attach an almost endless list of character names to clothing, toys, school supplies, linens, dolls, lunch boxes, cereals, and other items

SpongeBob alone has generated more than $8 billion in sales and licensing fees over the past decade


Marketing At Work

  • Consumer frugality results in increased sales of store brands

  • Store brands now offer much greater selection, and are rapidly achieving name-brand quality

Walmart’s store brands account for a whopping 40 percent of its sales, and its Great Value brand is the nation’s largest single food brand


Brand Development

  • Line extension 

    • Extending an existing brand name to new forms, colors, sizes, ingredients, or flavors within a product category

  • Brand extension

    • Extending an existing brand name to new product categories-Kellogg’s cookies

  • Multibrands

    • Marketing many different brands in a given product category—P&G

  • New brands

    • Created for new product category, or when interest in existing brands decreases..Apple’s Watch or TV venture

Note to Instructor: A company has four choices when it comes to developing brands. It can introduce line extensions, brand extensions, multibrands, or new brands. A company might introduce line extensions as a low-cost, low-risk way to introduce new products. Or it might want to meet consumer desires for variety, use excess capacity, or simply command more shelf space from resellers. A brand extension gives a new product instant recognition and faster acceptance. It also saves the high advertising costs usually required to build a new brand name. Multibranding offers a way to establish different features that appeal to different customers. A company might believe that the power of its existing brand name is waning, so a new brand name is needed. Or it may create a new brand name when it enters a new product category for which none of its current brand names are appropriate. 

Managing Brands

  • Communicate the brand’s positioning

  • Manage all brand touch points 

  • Train employees to live the brand

  • Audit the brands’ strengths and weaknesses

Brands are not maintained by advertising but by customers’ brand experiences