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A Global

Perspective
Philip Kotler
Gary Armstrong
Swee Hoon Ang
8 Siew Meng Leong
Chin Tiong Tan
Oliver Yau Hon-
Product, Services, Ming

and Branding
Strategy

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Learning Objectives
After studying this chapter, you should be able to:
1. Define product and the major classifications of products
and services
2. Describe the decisions companies make regarding their
individual products and services, product lines, and
product mixes
3. Discuss branding strategy—the decisions companies
make in building and managing their brands
4. Identify the four characteristics that affect the marketing
of a service and the additional marketing
considerations that services require

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Chapter Outline
1. What Is a Product?
2. Product and Service Decisions
3. Branding Strategy: Building Strong
Brands
4. Services Marketing

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What Is a Product? Products. and Experiences • A product is anything that can be offered in a market for attention. • E. Services. acquisition.g. or consumption that might satisfy a need or want. soap. toothpaste © Bradley Johnson 8-4 . use.

or satisfactions offered for sale that are essentially intangible and do not result in ownership. and Experiences • Service is a form of product that consists of activities.. • E. legal advice 8-5 . Services. Doctor’s exam. benefits.What Is a Product? Products.g.

. Toys “R” Us © Audry Drapier © Bradley Johnson 8-6 . • E. and Experiences • Experiences represent what buying the product or service will do for the customer.g. Disney. Lego. Services.What Is a Product? Products.

What Is a Product? Levels of Products and Services • Core benefits • Actual product • Augmented product 8-7 .

brand name. • Actual product represents the design. • Augmented product represents additional services or benefits of the actual product.What Is a Product? Levels of Product and Services • Core benefits represent what the buyer is really buying. 8-8 . and packaging that delivers the core benefit to the customer.

branded. 8-9 . training. and packaged computer operating system that provides a variety of features that are important to the user Augmented – An operating system software application that offers a series of channel and consumer services. actual. and augmented levels of Microsoft’s Windows XP Professional operating software: Core – A software application that enables a PC to function Actual – A well-designed. access to forums and communities. version updates.What Is a Product? Discussion Question: Describe the core. etc. etc. The consumer can get online support. engineering support. high-quality. The channel member can obtain favorable pricing and credit terms.

What Is a Product? Product and Service Classifications • Consumer products • Industrial products 8-10 .

What Is a Product? Product and Service Classifications • Consumer products are products and services bought by final consumers for personal consumption. • Classified by how consumers buy them • Convenience products • Shopping products • Specialty products • Unsought products 8-11 .

• Newspapers • Candy • Fast food 8-12 . immediately. and with a minimum comparison and buying effort.What Is a Product? Product and Service Classifications • Convenience products are consumer products and services that the customer usually buys frequently.

and style.What Is a Product? Product and Service Classifications • Shopping products are consumer products and services that the customer compares carefully on suitability. quality. • Furniture • Cars • Appliances 8-13 . price.

What Is a Product? Product and Service Classifications • Specialty products are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. • Designer watches • Branded fashion wear • High-end electronics 8-14 .

• Life insurance • Funeral services • Blood donations 8-15 .What Is a Product? Product and Service Classifications • Unsought products are consumer products that the consumer does not know about or knows about but does not normally think of buying.

What Is a Product? Discussion Question: Classify the following consumer products • A laptop computer • A surgeon • Automobile tires 8-16 .

tires are a shopping good. in some situations. and they will be heavily influenced by price and brand name. If one was traveling and had a flat tire in an unknown area he would probably be towed to a local station and with little product knowledge.What Is a Product? • A laptop computer – shopping good: most people purchase a laptop infrequently. for most consumers. this is a specialty good. and when they purchase it. If a consumer has a luxury brand of car and will consider only “designer” tires. they usually conduct extensive research and comparison of brands and features • A surgeon – Specialty good: There is usually little comparison between doctors as most patients collect only a few names • Automobile tires – it depends on the individual and the situation. the tires could be an unsought good. agree to a tire carried by the local station 8-17 .

• Classified by the purpose for which the product is purchased • Materials and parts • Capital items • Supplies and services 8-18 .What Is a Product? Product and Service Classifications • Industrial products are products purchased for further processing or for use in conducting a business.

• Wheat • Lumber • Iron • Cement 8-19 .What Is a Product? Product and Service Classifications • Materials and parts include raw materials and manufactured materials and parts usually sold directly to industrial users.

• Buildings • Elevators • Computers 8-20 .What Is a Product? Product and Service Classifications • Capital items are industrial products that aid in the buyer’s production or operations.

and repair and maintenance items.What Is a Product? Product and Service Classifications • Supplies and Services include operating supplies. as well as maintenance and repair services and business advisory services. • Copy papers • Stationary • Training service • Market research/Advertising service 8-21 .

What Is a Product? Organizations. or change attitudes and behavior of target consumers toward an organization. and Ideas • Organization marketing consists of activities undertaken to create. Places. Persons. maintain. 8-22 .

What Is a Product? Organizations. maintain. or change attitudes and behavior of target consumers toward particular people. Persons. • Andy Lau • Stephanie Sun • Siti Nuraliza 8-23 . and Ideas • Person marketing consists of activities undertaken to create. Places.

maintain. Places. the Great Wall of China. e. 8-24 .What Is a Product? Organizations. Persons. or change attitudes and behavior of target consumers toward particular places.g. Walt Disney World. • Tourism. and Ideas © Jeff Christiansen • Place marketing consists of activities undertaken to create.

and Ideas • Social marketing is the use of commercial marketing concepts and tools in programs designed to influence individuals’ behavior to improve their well-being and that of society. Places. Persons.What Is a Product? Organizations. • Public health campaigns 8-25 .

Product and Service Decisions Individual Product & Service Decisions – A single product Product Line Decisions . 8-26 .A group of related products Product Mix Decisions – The set of product lines and items offered to customers by a particular seller These tools helps the planner to properly view the product so it can achieve competitive superiority and better product strategy.

Product and Service Decisions Individual Product and Service Decisions • Product attributes • Branding • Packaging • Labeling • Product support services 8-27 .

Product and Service Decisions Individual Product and Service Decisions • Product attributes are the benefits of the product or service • Quality • Features • Style and design 8-28 .

Product and Service Decisions Individual Product and Service Decisions • Define “Quality” in terms of the lack of defects or creating customer value and satisfaction • Quality level is the level of quality that supports the product’s positioning. – Conformance consistency is freedom of defects and consistency in delivering a targeted level of performance. – Performance quality is the ability of a product to perform its functions. 8-29 .

Product and Service Decisions Individual Product and Service Decisions • Product features are a competitive tool for differentiating a product from competitors’ products Assessed based on the value to the customer versus the cost to the company. 8-30 . – Design contributes to a product’s usefulness as well as to its looks. • Product style and design add value to customer value. – Style describes the appearance of the product.

8-31 .Product and Service Decisions Individual Product and Service Decisions • Brand is the name. sign. or design. term. that identifies the maker or seller of a product or service. or a combination of these.

Product and Service Decisions Individual Product and Service Decisions • Branding help buyers identify benefits – Quality – Consistency • Branding provide legal protection for sellers can aid in – Segmentation – Communicate product features 8-32 .

Product and Service Decisions Individual Product and Service Decisions • Packaging involves designing and producing the container or wrapper for a product. • Label identifies the product or brand. Companies must continually: – Assess the value of current services to obtain ideas for new ones – Assess the costs of providing these services – Develop a package of services to satisfy customers and provide profit to the company 8-33 . and provides promotion. describes attributes. • Product support services augment actual products.

or fall within given price ranges. are marketed through the same types of outlets.Product and Service Decisions Product Line Decisions • Product line is a group of products that are closely related because they function in a similar manner. are sold to the same customer groups. 8-34 .

• Product line can be lengthened in two ways: – Line stretching (lengthen beyond its current range) – Line filling (adding more items within the present range of the line) 8-35 .Product and Service Decisions Product Line Decisions • Product line length is the number of items in the product line.

Product and Service Decisions Product Line Decisions • Product line stretching is when a company lengthens its product line beyond its current range. • Downward • Upward • Combination of both 8-36 .

Product and Service Decisions Product Line Decisions Line stretching • Downward product line stretching is used by companies at the upper end of the market to plug a market hole or respond to a competitor’s attack. • Upward product line stretching is by companies at the lower end of the market to add prestige to their current products. 8-37 . • Combination line stretching is used by companies in the middle range of the market to achieve both goals of upward and downward line stretching.

Product and Service Decisions Product Line Decisions • Product line filling occurs when companies add more items within the present range of the line. • More profits • Satisfying dealers • Excess capacity • Plugging holes to fend off competitors 8-38 .

Product and Service Decisions Product Mix Decisions • Product mix consists of all the product lines and items that a particular seller offers for sale. • Width • Length • Depth • Consistency 8-39 .

8-40 .Product and Service Decisions Product Mix Decisions • Product mix width is the number of different product lines the company carries. • Product mix length is the total number of items the company carries within its product lines.

8-41 . or distribution channels. production requirements. • Consistency is how closely the various product lines are in end use.Product and Service Decisions Product Line Decisions • Product mix depth is the number of versions offered of each product in the line.

Branding Strategy: Building Strong Brands • Brand represents the consumer’s perceptions and feelings about a product and its performance. and experiences consistently to the buyers. services. 8-42 . benefits. It is the company’s promise to deliver a specific set of features.

– The extent to which customers are willing to pay more for the brand • Customer equity is the value of the customer relationships that the brand creates. – A powerful brand forms a basis for building strong and profitable customer relationships • Brand valuation is the process of estimating the total financial value of the brand.Branding Strategy: Building Strong Brands • Brand equity is the positive differential effect that knowing the brand name has on customer response to the product or service. 8-43 .

Branding Strategy: Building Strong Brands • Brand strategy decisions include: • Brand positioning • Brand name selection • Brand sponsorship • Brand development 8-44 .

com/watch?v=dXEtFDVBSVQ 8-45 . and seductive facial expressions) http://www. Its ads are somewhat silly at times and always show the models having a lot of fun wearing Giordano clothes. colors and low price) – Product benefits (Giordano save your money through its great price and time through its assortment of products for the whole family) – Product beliefs and values (Giordano also positions itself as fun.youtube. serious.youtube.Branding Strategy: Building Strong Brands Brand Positioning • Position brands at any of three levels: – Product attributes (Giordano is positioned by each season’s assortment of styles.com/watch?v=67DhFt2NM8Y http://www. This is different from other retailers who advertise using model with intense.

recognize.Branding Strategy: Building Strong Brands Brand Name Selection • Desirable qualities • Suggests benefits and qualities • Easy to pronounce. and remember • Distinctive • Extendable • Translatable for the global economy • Capable of registration and legal protection 8-46 .

Branding Strategy: Building Strong Brands Brand Sponsorship • Manufacturer’s brand • Private brand • Licensed brand • Co-brand 8-47 .

Co-Branded Differentiator WestinWORKOUT powered by Reebok 8-48 .

Branding Strategy: Building Strong Brands Brand Sponsorship Private brands provide retailers with advantages. • Product mix control • Slotting fees for manufacturers’ brands • Higher margins • Exclusivity 8-49 .

Branding Strategy:
Building Strong Brands

Brand Development
In terms of Brand name & Product category
• Line extensions
• Brand extensions
• Multibrands
• New brands

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Branding Strategy:
Building Strong Brands

Brand Development
• Line extensions occur when a company
extends existing brand names to new forms,
colors, sizes, ingredients, or flavors of an
existing product category.

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Branding Strategy:
Building Strong Brands

Brand Development
• Brand extensions extend a brand name to a
new or modified product in a new category.

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8-53 .Branding Strategy: Building Strong Brands Brand Development • Multibrands are additional brands in the same category.

Branding Strategy: Building Strong Brands Brand Development • New brands are used when existing brands are inappropriate for new products in new product categories or markets. © Ged Carroll © Nate Grigg 1970s-1990s 2000 and beyond Sony's Trinitron Color TV Sony’s BRAVIA widescreen LCD TV 8-54 .

Branding Strategy: Building Strong Brands Managing Brands • Requires: • Continuous brand communication • Customer-centered training • Brand audits 8-55 .

colleges. foundations. military services. hospitals. charities. and hospitals • Business services 8-56 . employment services. police and fire department.Services Marketing Types of Service Industries Service industries vary greatly: • Government – courts. postal services. and schools • Private not-for-profit organizations – Museums. churches.

Services Marketing Nature and Characteristics of a Service • Intangibility • Inseparability • Variability • Perishability 8-57 .

• Perishability refers to the fact that services cannot be stored for later sale or use. and how it is provided. where. • Inseparability refers to the fact that services cannot be separated from their providers. felt.Services Marketing Nature and Characteristics of a Service • Intangibility refers to the fact that services cannot be seen. or smelled before they are purchased. heard. • Variability refers to the fact that service quality depends on who provides it as well as when. 8-58 . tasted.

Services Marketing Marketing Strategies for Service Firms • In addition to traditional marketing strategies. service firms often require additional strategies: • Service-profit chain • Internal marketing • Interactive marketing 8-59 .

• Internal service quality • Satisfied and productive service employees • Greater service value • Satisfied and loyal customers • Healthy service profits and growth 8-60 .Services Marketing Marketing Strategies for Service Firms • Service-profit chain links service firm profits with employee and customer satisfaction.

8-61 . • Internal marketing must precede external marketing.Services Marketing Marketing Strategies for Service Firms • Internal marketing means that the service firm must orient and motivate its customer contact employees and supporting service people to work as a team to provide customer satisfaction.

Services Marketing Marketing Strategies for Service Firms • Interactive marketing means that service quality depends heavily on the quality of the buyer-seller interaction during the service encounter. • Three major marketing tasks • Service differentiation • Service quality • Service productivity 8-62 .

• Offer can include distinctive features. or process. delivery. environment. 8-63 . • Image can include symbols and branding. • Delivery can include more able and reliable customer contact people. and image of the service.Services Marketing Marketing Strategies for Service Firms • Managing service differentiation creates a competitive advantage from the offer.

Authority and Incentives they need to recognize. • Service quality always varies depending on interactions between employees and customers. The first step is to empower employees Responsibility.Services Marketing Marketing Strategies for Service Firms • Managing service quality provides a competitive advantage by delivering consistently higher quality than its competitors. care about. and tend to customer needs 8-64 .

• Employee recruiting.Services Marketing Marketing Strategies for Service Firms • Managing service productivity refers to the cost side of marketing strategies for service firms. hiring. and training strategies • Service quantity and quality strategies 8-65 .