ST.

JOHN’S
UNIVERSITY

W1B

Chapter 13
Setting Product Strategy

Instructor
Dr. Nicos Antoniades

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First, it is good to go back to the 4Ps of
Marketing Video (Product, Price, Place, and
Promotion). It will help you understand better
what will follow:

Product is the first and most important element

of the marketing mix.

Product strategy calls for making coordinated

decisions on product mixes, product lines,
brands, and packaging and labeling.

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Product Classifications
Durability and Tangibility
Nondurable goods are tangible goods normally
consumed for one or a few uses, such as beer
and shampoo.
Because these goods are purchased frequently,
the appropriate strategy is to make them
available in many locations, charge only a small
markup, and advertise heavily to induce trial and
build preference.

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Durable goods are tangible goods that normally
survive many uses: refrigerators, machine tools,
and clothing.
They require more personal selling and service.

Services are intangible, inseparable, variable,

and perishable products that normally require
more quality control, supplier credibility, and
adaptability.
Examples include haircuts, legal advice, and
appliance repairs.

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Differentiation
To be branded, products must be differentiated.

Product Differentiation
Many products can be differentiated in:

Form
The size/shape/physical structure of a product.

Features
A company can identify and select appropriate new
features.

Product Quality
Most products occupy one of four performance levels:
low, average, high, or superior; it is the level at which
the product’s primary characteristics operate.

Conformance Quality
Buyers expect a high conformance quality that meets
promised specifications.

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Durability
It is a measure of the product’s expected operating
life under natural or stressful conditions (i.e.,
vehicles, kitchen appliances, etc.).
Reliability is a measure that a product will not
malfunction within a specified time period.
Repairability
Repairability measures how easily a product can be
fixed.
Style
Style describes the product’s look and feel to the
buyer and creates distinctiveness that is hard to
copy, i.e., car buyers pay a premium for Jaguars
because of their extraordinary looks.
Customization
It allows firms to differentiate by finding out exactly
what a person wants; NikeiD allows customers to
personalize and design their own shoes and clothing
either online or in-store at NikeiD Studios; now
generates hundreds of millions of dollars in revenue.

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Approaches to Design
“Design is more than just creativity, or a phase
in creating a product, service, or application”.
It’s a way of thinking that can transform an
entire enterprise.
Design should penetrate all aspects of the
marketing program so all design aspects work
together.

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The Product Hierarchy
The product hierarchy stretches from basic
needs to items that satisfy those needs.
We can identify six levels of the product
hierarchy, using life insurance as an example:

Need family
The core need that underlies the existence of a
product family. Example: security.
Product family
Any products that can satisfy a core need with
reasonable effectiveness. Example: savings and
income.
Product class
A group of products within the product family
recognized as having a certain functional
coherence, also known as a product category.
Example: financial instruments.

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Product line
A group of products within a product class that
are closely related because they perform a
similar function and are sold to the same
customer groups. Example: life insurance.
Product type
A group of items within a product line that share
one of several possible forms of the product.
Example: term life insurance.
Item
A distinct unit within a brand or product line
distinguishable by size, price, appearance, or
some other attribute. Example: Prudential
renewable term life insurance.

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Packaging, Labeling, Warranties, and
Guarantees
Some product packages such as the Coke bottle
and Red Bull can - are world-famous.

Many marketers have called packaging a fifth P,

along with price, product, place, and promotion.
Most, however, treat packaging and labeling as
an element of product strategy.
Warranties and guarantees can also be an
important part of the product strategy and often
appear on the package.

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Packaging
Packaging includes all the activities of designing
and producing the container for a product.
Packaging must achieve a number of objectives:

l. Identify the brand.

2. Convey descriptive and persuasive

information.

3. Facilitate product transportation and

protection.

4. Assist at-home storage.

5. Aid product consumption.

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Labeling
The label can be a simple attached tag or an
elaborately designed graphic that is part of the
package.

Warranties and Guarantees

Warranties are formal statements of expected
product performance by the manufacturer.
Products under warranty can be returned to the
manufacturer or designated repair center for
repair, replacement, or refund.

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 Chapter 14
Designing and Managing Services

A service is any act or performance that one party can

offer to another that is essentially intangible and does
not result in the ownership of anything.
Marketing Excellence
Marketing excellence in services requires excellence
in three broad areas: (1) external, (2) internal, and (3)
interactive marketing (Figure 1):

Figure 1

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 (1) External marketing describes the normal
work of preparing, pricing, distributing,
and promoting the service to customers.
(2) Internal marketing describes training and
motivating employees to serve customers
well.
(3) Interactive marketing describes the
employees’ skill in serving the client.

Clients judge service not only by its technical

quality:
For example:

Was the surgery successful?

Did the surgeon show concern and inspire

confidence?

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Best Practices of Top Service Companies

Strategic Concept
Target customers and satisfying their needs are the
basis for a distinctive strategy. Example: At the Four
Seasons luxury hotel chain, employees must pass four
interviews before being hired.
Top-Management Commitment
Companies such as Marriott and Disney have a
thorough commitment to service quality; not only they
look at financial performance but also at service
performance.
High Standards
Example: Citibank aims to answer customer phone
calls within 10 seconds and letters within two days.

Satisfying Customer Complaints

On average, 40 % of customers who suffer through a
bad service experience stop doing business with the
company.

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But if those customers are willing to complain
first, they actually offer the company a gift if the
complaint is handled well!

Companies that encourage disappointed

customers to complain - and also empower
employees to remedy the situation on the spot -
have been shown to achieve higher revenues
and greater profits than companies without a
systematic approach to addressing service
failures.

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Exercise/RESEARCH (IMPORTANT for your Final
Team Project)
Let’s do some research!
We need to evaluate major factors regarding SJU’s
main cafeteria. Each one of you must answer the
questions below and (each one of you) must ask 8-9
classmates/friends to answer this questionnaire
(Minimum 50 responses for each team).
Step 1: Rate what best applies to you (and your
classmates/friends) regarding SJU’s cafeteria (where
10=Extremely Satisfied and 1=Not Satisfied at All):

1) _ Variety of Food
1 2 3 4 5 6 7 8 9 10

2) Prices
1 2 3 4 5 6 7 8 9 10

3) Speed
1 2 3 4 5 6 7 8 9 10

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Step 2 : When you complete the questionnaires,
each team needs to find the average of each
question:
Example
(e.g., Team 1 - Evaluating SJU’s cafeteria Prices):

Student 1 (gives a value of 7/10)

Student 2 (8/10)
Student 3 (10/10)
Student 4 (7/10)
Student 5 (4/10)
Student 6 (10/10)
Etc.
Equation: 7+8+10+7+4+10=46

46 divided by 6 students = 7.6 (Average)

7.6 = 76% Moderate High*

*Please see Figure/Rating Score Below.

Do the same for all the questions (Variety of
Food, Prices, Speed).

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 Rating Score

Keep your notes safe!

These values will become THE BASIS of your
Team Project

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After you ALL connect with your teammates and complete the
exercise (research) above, please go to Canvas (Discussions)
and CONFIRM (at the latest by October 22nd, at 11.59 pm):

“Yes, I connected with my teammates on [state the day/time you

have met and worked together] on the survey results. I saved the
survey results and will use them for my Final Teamwork
Project”. My team’s average for “price” is [state the “SJU
Prices Satisfaction” average you found with your teammates]
(please see the outline above).

Note: You do NOT need to comment on your classmates’ posts

for this week. This Discussion (Confirmation) will close on
Sunday, 22 October 2023, at 11.59 p.m.
REMEMBER: Every time you participate in the weekly
Discussions (Canvas), you earn two points on your overall grade
(Syllabus).
IMPORTANT: NO EXTENSION CAN BE GIVEN FOR THIS
DISCUSSION!

NOTE:
Before you ask me “Professor, I have never visited our
cafeteria”, please ask yourself whether Coca-Cola’s CEO (or any
other CEO) visited all Coca-Cola’s customers! This is what
Research (and Marketing) is all about! First, we IDENTIFY
customer needs and then we build Value-Driven Marketing
Strategies! ☺
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