Marketing Management II

Pilar Díaz-Usechi

CHAPTER 8: Products, Services & Brands. Building Customer Value

1. What is a product?
Product: Anything that can be offered to a market for attention, acquisition, use, or consumption that
might satisfy a want or need.

Service: A form of product that consists of an activity, benefit, or satisfaction offered for sale that is
essentially intangible and does not result in the ownership of anything.

Market offering: Brings value to customers and creates a good customer experience by differentiating
themselves (creating an experience) in order to gain loyalty.

-Tangible goods and services (intangible)

-Pure tangible goods: soap, toothpaste, salt…

-Pure service: doctor’s exam, financial services…

Niche market: Target specific segment (innovators, followers & laggers)

Levels of product and services: Layers

Extra service and benefit (installation,

warranty)

Once you have a brand, packaging,

ingredients (Asturiana)

Satisfy basic need (milk)

Example of Apple:

Core level- What is the buyer really buying? Entertainment, self-expression, productivity…

Actual product- iPad

Augmented product- warranty on parts, repair services, websites for customer support…

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 Marketing Management II
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 Product and service classifications:

B2C consumer (C2B Bolsabooks)

B2B industrial (C2C Uber)

o Consumer products: Products and services bought by final consumers for personal
consumption.
 Convenience products: Customers buy frequently, immediately, and with
minimal comparison and buying effort (toilet paper, laundry detergent, candy).
 Shopping products: The customer, in the process of selecting and purchasing,
usually compares on such attributes as suitability, quality, price, and style
(furniture, clothes).
 Specialty products: Unique characteristics or brand identification for which a
significant group of buyers is willing to make a special purchase effort
(Lamborghini, GoPro, gourmet food).
 Unsought products: Consumer does not know about or knows about but doesn’t
normally consider buying (wedding dress, casket).
o Industrial products: Products bought by individuals and organizations for further
processing or for use in conducting a business.
 Raw materials/parts: Farm products (wheat, cotton, livestock, fruits, vegetables)
and natural products (fish, lumber, crude petroleum, iron ore); component
materials (iron, yarn, cement) and component parts (small motors, tires).
 Capital items: Industrial products that aid in the buyer’s production or
operations (facility, equipment, tools).
 Supplies/services: Operating supplies (paper, pencils, coal), and repair and
maintenance items (paint, nails, broom); maintenance and repair services
(window cleaning, computer repair), and business advisory services (legal,
advertising).

In addition to tangible products and services:

Organization marketing: Activities to “sell” their image.

Person marketing: Activities to create, maintain, or change attitudes toward particular people
(Presidential campaign). Also, using well-known personalities to help sell their products (George Clooney
selling Nespresso).

Place marketing: Activities to create, maintain, or change attitudes or behavior toward particular places
(Disney World, Las Vegas).

Social (idea) marketing: The use of traditional business marketing concepts and tools to encourage
behaviors that will create individual and societal well-being (social causes like cancer).

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2. Product and Service Decisions

 Individual Product and Service Decisions:

Product and service attributes: Used to communicate benefits.

 Product quality: The characteristics of a product or service that bear on its ability to satisfy
stated or implied customer needs. This affects customer value, satisfaction and consistency.
 Product features: Used to differentiate (logo).
 Product style and design: Good design contributes to a product’s usefulness as well as to its
looks.

Branding: A brand is a name, term, sign, symbol, or design that identifies the products or services of one
seller or group of sellers and differentiates them from those of competitors.

Packaging: The activities of designing and producing the container or wrapper for a product (perfumes,
Amazon arrow logo is distinctive on the box, Coca Cola changes cans every couple of years).

Labeling and logos: Identifies the product or brand, describes (nutritional value), and promotes and
engages customers (Starbucks logo, Apple logo).

Support services: Customer support services to ensure that even after the customer buys the product,
they are still satisfied (HP, Apple).

 Product Line Decisions: 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 (Nike offering athletic shoes and apparel, or Danone).
o Product line length: The number of items in the product line.
o Product line filling: Adding more items within the present range of the line.
o Product line stretching: Lengthening the product line beyond its current range (adding
generic products “marca blanca”).

 Product Mix Decisions: The set (portfolio) of all product lines and items that a particular seller
offers for sale.
o Product mix width: The number of different product lines the company carries.
o Product mix length: The total number of items a company carries within its product lines
(wine has different types of grapes, quality).
o Product mix depth: The number of versions offered of each product in the line.

Product mix consistency: How closely related the various product lines are in end use, production
requirements, distribution channels.

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3. Services Marketing

 Service Characteristics:
o Intangibility: Services cannot be seen, tasted, felt, heard, or smelled before they are
bought.
o Inseparability: Services cannot be separated from their providers (bus driver).
o Variability: Quality of services depends on who provides them and when, where, and
how.
o Perishability: Services cannot be stored for later sale or use (once you use an airplane
ticket you cannot use it again).

 The Service Profit Chain: The chain that links service firm profits with employee and customer
satisfaction.
o Internal service quality: Superior employee selection and training, a quality work
environment.
o Productive employees: More satisfied, loyal, and hardworking employees.
o Greater service value: More effective and efficient customer value creation,
engagement, and service delivery.
o Satisfied loyal customers: Satisfied customers who remain loyal, make repeat purchases,
and refer other customers.
o Growth and profit: Superior service firm performance.

 Internal marketing: Orienting and motivating customer-contact employees and supporting

service employees to work as a team to provide customer satisfaction (team building through
sports competition, Google workplace).
 Interactive marketing: Training service employees in the fine art of interacting with customers to
satisfy their needs (online support chat).
 Service company marketing tasks:
o Differentiation: Develop a differentiated offer, delivery, and image (Apple in-store
service).
o Quality: Deliver consistently higher quality (Emirates).
o Productivity: Train employees or hire more skilled workers, increase the quantity of
their service by giving up some quality, or harness the power of technology (Airports
have self-check-in kiosks).

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Branding Strategy: Building Strong Brands

 Brand equity: The differential effect that knowing the brand name has on customer response to
the product or its marketing.
 Brand value: The total financial value of a brand.

Building Strong Brands:

 Brand positioning: Marketers need to position their brand clearly in target customers’ minds.
The brand strategy needs to make customers feel identified, create an experience, and have a
good perception.
o Attributes: Quality, selection, style, and innovative features.
o Benefits: Save money (Walmart), guaranteed on-time delivery (FedEx), capturing and
sharing moments (Instagram)
o Beliefs and values: Engaging customers on a deep, emotional level (Coca Cola “sells”
happiness).
 Brand name selection: A good name must:
o Suggest benefits and qualities (Snapchat)
o Easy to pronounce, spell, read, recognize, and remember (iPad, Jet Blue)
o Distinctive (Panera)
o Extendable: You can identify several products of the same brand (Amazon)
o Works worldwide: Can translate easily into foreign languages (Microsoft’s Bing search
engine is “bi ying” in Chinese.
o Can be legally protected and registered (Burger King is not because in Australia it had to
be named Hungry Jack’s).

Many firms try to build a brand name that will eventually become identified with the product category
(Kleenex, Jell-o, Band-aid, Scotch Tape, Post-it Notes, Ziploc).

 Brand sponsorship: The product may be launched as a national (manufacturer’s) brand

(Samsung Galaxy tablet) or store (private) brands (Hacendado or Kirkland). Some companies
license names or symbols created by other manufacturers for a fee (Kodak or Zara making a pen
under Bic). Co-branding occurs when two established brand names of different companies are
used on the same product (Nike and Apple created the Nike+iPod).

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 Brand development:

Line extensions: Brand extensions:

Extending an existing brand name to Extending an existing
Existing new forms, colors, sizes, ingredients, or brand name to new
flavors of an existing product category product categories
(Mango Men). (Leclerc gas station).
Brand
name Multibrands: New brands
Companies market many different (Uterqüe was created
New brands in a given product category as a new brand of
(PepsiCo markets Pepsi, Mountain Inditex).
Dew… all soft drinks).

Existing New
Product category