Strategic Marketing

MKTG8011
Creating Values: Products
Session-5

Artha Sejati Ananda

artha.ananda@binus.edu
 Agenda
• Setting product strategy
• Managing service
 Session Learning Outcomes

Upon completion of this session, students are expected to be able to:

LO-2: Assess the marketing management principles to local and global
corporate performance
LO-4: Assess recommendations on a comprehensive marketing
management approach to address local and global business problems
 Chapter
13
Setting
Product Strategy
 Learning Objectives
1. What are the characteristics of products, and how do
marketers classify product?
2. How can companies differentiate products?
3. Why is product design important, and what are the
different approaches taken?
4. How can marketers best manage luxury brands?
5. What environmental issues must marketers consider in
their product strategies?
6. How can a company build and manage its product mix and
product lines?
 Learning Objectives
7. How can companies combine products to create
strong co-brands or ingredient brands?
8. How can companies use packaging, labeling,
warranties, and guarantees as marketing tools?
 Product Characteristics
and Classifications
• Product
• Anything that can be offered to
a market to satisfy a want or
need, including physical
goods, services, experiences,
events, persons, places,
properties, organizations,
information, and ideas
 Figure 13.1
Components Of The Market Offering
 Product Levels: The Customer-Value Hierarchy
• Figure 13.2: Five Product Levels
Product Classifications

Durability

Tangibility

Use
Durability and Tangibility

Nondurable goods

Durable goods

Services
Consumer-Goods Classification

Convenience

Shopping

Specialty

Unsought
Industrial-Goods Classification

Materials and parts

Capital items

Supplies and business

services
 Product Differentiation
• Form • Reliability
• Features • Reparability
• Performance quality • Style
• Conformance quality • Customization
• Durability
 Services Differentiation

✓ Ordering ease
✓ Delivery
✓ Installation
✓ Customer training
✓ Customer consulting
✓ Maintenance and repair
✓ Returns
 Design
• Design
• The totality of features
that affect the way a
product looks, feels,
and functions to a
consumer
 Design

✓ Is emotionally powerful
✓ Transmits brand meaning/positioning
✓ Is important with durable goods
✓ Makes brand experiences rewarding
✓ Can transform an entire enterprise
✓ Facilitates manufacturing/distribution
✓ Can take on various approaches
 Luxury brands
• Quality
• Uniqueness
• Craftsmanship
• Heritage
• Authenticity
• History
Marketing Luxury Brands
 Environmental Issues
• Environmental issues are also
playing an increasingly
important role in product
design and manufacturing
 The Product Hierarchy
6. Item

5. Product
type
4. Product
line
3. Product
class
2. Product
family
1. Need
family
 Product Systems
and Mixes
• Product system
• Product mix/assortment
• Width
• Length
• Depth
• Consistency
 Product Line Analysis
• Sales and profits
 Product Line Analysis
• Market profile and image
 Product line length
• Line stretching
• Down-market stretch
• Up-market stretch
• Two-way stretch
• Line filling
• Line modernization
• Line featuring
• Line pruning
 Product Mix Pricing
• The firm searches for a set of prices that maximizes
profits on the total mix

Optional-
Product line
feature
pricing
pricing

Product- Captive-
bundling product
pricing pricing

By-product Two-part
pricing pricing
 Co-Branding
• Two or more well-known brands are combined into a
joint product or marketed together in some fashion

✓ Same-company
✓ Joint-venture
✓ Multiple-sponsor
✓ Retail
 Ingredient Branding
• Co-branding that creates brand equity for parts that
are necessarily contained within other branded
products
 Packaging
• All the activities of designing and producing the
container for a product
 Packaging
Used as a marketing tool Packaging objectives
• Self-service • Identify the brand
• Consumer affluence • Convey descriptive and
• Company and brand image persuasive information
• Innovation opportunity • Facilitate product
transportation and
protection
• Assist at-home storage
• Aid product consumption
Packaging
 Labeling, Warranties, and Guarantees
• Labeling
• Identifies, grades, describes, and promotes the product
• Warranties
• Formal statements of expected product performance by the
manufacturer
• Guarantees
• Promise of general or complete satisfaction
 Chapter
14
Designing and
Managing Services
 Learning Objectives

1. How can services be defined and classified, and how

do they differ from goods?
2. What are the new services realities?
3. How can companies achieve excellence in services
marketing?
4. How can companies improve service quality?
5. How can goods marketers improve customer-
support services?
 The Nature of Services
• Service
• Any act or performance one party can offer to another
that is essentially intangible and does not result in the
ownership of anything
 Categories of
Service Mix
• A pure tangible good
• A tangible good with
accompanying services
• A hybrid
• A major service with
accompanying minor
goods/services
• A pure service
 Service distinctions

✓ Equipment- or people-based
✓ Different processes of delivery
✓ Some need client’s presence
✓ Meets personal or business need
✓ Differs in objectives and ownership
 Figure 14.1
Evaluation Continuum for Product Types
Characteristics
of Services
Intangibility

Inseparability

Variability

Perishability
 Intangibility
• Services cannot be seen, tasted, felt, heard, or
smelled

Physical evidence and presentation tools:

✓ Place
✓ People
✓ Equipment
✓ Communication material
✓ Symbols
✓ Price
Intangibility
 Inseparability
• Services are typically produced and consumed simultaneously
 Variability
• The quality of services
depends on who
provides them, when
and where, and to
whom
• As such, services are
highly variable
 Perishability
• Services cannot be stored
• Strategies to match demand & supply

On demand side On supply side

• Differential pricing
• Nonpeak demand
• Complementary services
• Reservation services
• Part-time employees
• Peak-time efficiency routines
• Increased consumer
participation
• Shared services
• Facilities for future expansion
 Figure 14.2
Blueprint for Overnight Hotel Stay
 New Services Realities
• A shifting customer
relationship
• Customer empowerment &
coproduction
• Satisfying employees as
well as customers
 Achieving Excellence
In Services Marketing
• Marketing excellence
 Achieving Excellence
In Services Marketing
• Technology and service delivery
• The Internet allows for true
interactivity, customer-specific
and situational personalization,
and real-time adjustments of the
firm’s offerings
Best Practices of Top Service Companies
Top-
Strategic
management
concept
commitment

Satisfying High
customer standards
complaints

Monitoring
Profit tiers
systems
 Figure 14.4
Importance-Performance Analysis
 Differentiating Services
• Primary and secondary
service options
• Innovation with services
 Managing Service Quality
• Customer switching behavior factors

✓ Pricing
✓ Inconvenience
✓ Core service failure
✓ Service encounter failures
✓ Response to service failure
✓ Competition
✓ Ethical problems
✓ Involuntary switching
 Figure 14.5
service-quality model
 Improving
Service Quality
• Listening • Surprising customers
• Reliability • Fair play
• Basic service • Teamwork
• Service design • Employee research
• Recovery • Servant leadership
SERVQUAL scale
 Extending the Service-Quality Model
• Dynamic process model of improved service quality perceptions
• Increasing customer expectations of what the firm will deliver
• Decreasing customer expectations of what the firm should deliver
 Incorporating Self-Service
Technologies
• SSTs can:
• Make transactions more
accurate
• Make transactions more
convenient
• Make transactions faster
• Reduce costs
 Managing Product-Support Services
• Three types of customer worries

Failure frequency

Downtime

Out-of-pocket costs
 Postsale Service Strategy
• Customer-service evolution
• The customer-service imperative
Copyright © 2016 Pearson
Education Ltd.
1-60
 Main References
• Kotler, P., & Keller, K. L. (2016). Marketing Management (15th ed.).
Harlow, England: Pearson Education.