Lecture Notes for Marketing

Management module
By Ms. Noor Jayousi
Primary Reference: Principles of
Marketing, sixteenth edition, Philip
Kotler, Gary Armstrong, PEARSON
CHAPTER 8

Products, Services, and Brands

Building Customer Value
Chapter Outline:
Define product and describe the major
classifications of products and services.

Describe the decisions companies make

regarding their individual products and
services, product lines, and product mixes.
 What is a Product?
Product is anything that can be offered in a market for
attention, acquisition, use, or consumption that might
satisfy a need or want.

Products include more than just tangible objects, products also

include services, persons, places, organizations, ideas.

Service is a product that consists of activities, benefits,

or satisfactions and that is essentially intangible and
does not result in the ownership of anything.
E.g. hotel services, airline travel
 What is a Product?
A company’s market offering often includes:

Pure tangible good: no services accompany the product. e.g. soap

Pure service: market offer consists primarily of a service. e.g.
financial services.

Between these two extremes, however, many goods-and-services

combinations are possible.

All kinds of firms are recreating their traditional goods to

create experiences.
What is a Product?
Levels of Products and Services:

Product planners need to think about products and services on

three levels (Figure 8.1):

1. Core customer value

2. Actual product
3. Augmented product
 What is a Product?
Levels of Products and Services: Product planners need to think about products
and services on three levels; each level adds more value.

1. The Core Customer Value: this is the most basic level

- The question to answer at this level is what is the buyer really buying?
- Product’s Core Benefit is defined
- The Product Core Benefit is the Problem Solving Benefit that consumers
seek

2. The Actual Product Level: this is the second level

- At this level the core benefit must be turned into a real product
- product features, design, quality, packaging and brand name are
developed

3. Augmented Product Level: third and final level

- This level is built around the core benefit and actual product
- Offering additional consumer services and benefits,
- In order to provide superior value proposition e.g. warranty, repair services
Product and Service Classifications

Consumer products

Industrial products
Product and Service Classifications

Consumer products are products and services

bought by final consumers for personal
consumption.

• Convenience products
• Shopping products
• Specialty products
• Unsought products
Product and Service Classifications
Convenience products: consumer products and services
that the customer buys frequently, immediately, and with a
minimum comparison and buying effort.
Price: Low price. Distribution: widespread
E.g. fast food, candy

Shopping products: consumer products and services that

the consumer buys less frequently, compares carefully on
suitability, quality, price, and style.
Price: high price. Distribution: fewer outlets
E.g. furniture, cars
Product and Service Classifications
Specialty products: consumer products and services with
unique characteristics for which a significant group of
buyers is willing to make a special purchase effort.
E.g. medical services, designer clothes, lamborghini cars

Unsought products: consumer products that the consumer

does not know about or knows about but does not
normally think of buying. E.g. life insurance, blood
donations
Product and Service Classifications
Product and Service Classifications
Industrial products: products bought by individuals or
organizations for further processing or for use in
conducting a business.

• Materials and parts

• Capital items
• Supplies and services
Product and Service Classifications
1. Materials and parts:
Raw materials: farm products and natural products
Manufactured materials & parts: component materials
(cement) and component parts (tires)

2. Capital items: industrial products that aid in the buyer’s

production or operations.
Installations: buildings and fixed equipment
Accessory equipment: factory equipment and office
equipment - shorter lives than installations.
Product and Service Classifications
3. Supplies and services :
Operating supplies: paper, pencil
Repair and maintenance items: paint
Business services: maintenance, business advisory services

Note: Supplies are the convenience products of the

industrial field because they are usually purchased with a
minimum of effort or comparison.
 Product and Service Classifications
Marketers have broadened the concept of a product to
include:

• Organization marketing
• Person marketing
• Place marketing
• Social marketing
Product and Service Classifications
Organization marketing: activities undertaken to create,
maintain, or change the behavior of target consumers
toward an organization.

Person marketing: activities undertaken to create,

maintain, or change the behavior of target consumers
toward particular people.

Entertainers, sports figures, professionals such as doctors,

lawyers, and architects use person marketing to build their
reputations.
 Product and Service Classifications
Place marketing: activities undertaken to create, maintain,
or change the behavior toward particular places. i.e. cities
compete to attract tourists

Idea marketing: marketing is the marketing of an idea. This

area has been called social marketing,

Social marketing: the use of marketing concepts to improve

individual and society well-being.
 Product and Service Decisions
Marketers make product and service decisions at
three levels:

 Individual Product and Service Decisions

 Product Line Decisions
 Product Mix Decisions
Product and Service Decisions
1. Individual Product and Service Decisions:
 Product and Service Decisions
1. Product and Service Attributes: communicate and
deliver benefits

1. Quality
2. Features
3. Style and design
Product and Service Decisions
1. Product quality: characteristics of a product that support
its ability to satisfy customer needs.

Total quality management (TQM): is an approach in which

all of the company's people are involved in improving the
quality of products and business processes

Today, companies are taking a return-on-quality approach:

holding quality efforts responsible for final results
 Product and Service Decisions
Product quality has two dimensions:

1. Quality level (performance quality): the product’s ability

to perform its functions. E.g. Rolls-Royce, Rolex

2. Quality consistency (conformance quality): freedom

from defects and consistency in delivering a level of
performance. E.g. Chevrolet
 Product and Service Decisions
2. Product Features are a competitive tool for differentiating
the company's product form competition

How can a company identify new features and decide which

ones to add to the product?

Survey buyers and ask them: what do you like most?

what should we improve?

The company can assess the the value of each feature against
the cost.
Product and Service Decisions
3. Product Style and Design:

Design is a larger concept than style.

Style: describes the appearance of the product

Design: contributes to a product’s usefulness as well as to

its looks.

Good design begins with observing customers,

understanding their needs, and shaping their product
experience.
Product and Service Decisions
2. Brand: a name, term, sign, symbol, design, or a
combination of these, that identifies the maker or seller of
a product or service.

Advantages of branding for buyers:

1. Identify products that might benefit them
2. Says something about product quality and consistency

Advantages of branding for sellers:

1. Legal protection for features that might be copied by
competitors
2. Helps the seller to segment markets (Toyota brands:
Lexus, Corolla)
Product and Service Decisions
3. Packaging: the activity for designing and producing the
the container or wrapper for a product

Advantages of good packaging:

1. create customer recognition of a brand
2. seller’s last chance to influence buyers

Concerns of poorly designed packages:

1. Hard to open packages can cause wounds
2. Overpackaging: creates big amount of waste
3. Product safety: product tampering scares. Food makers put
their products in tamper-resistant packaging.
Product and Service Decisions
4. Labeling:
Labels range from simple tags attached to products to complex
graphics that are part of the packaging.

Labels perform several functions:

1. Identifies the product or brand
2. describes several things about the product
3. promote the brand

Labeling has been affected in recent times by:

Unit pricing: stating the price per unit as a standard measure,
Open dating: stating the expected shelf life of the product,
Nutritional labeling: stating nutritional values in product
Product and Service Decisions
5. Product Support Services:

Support services: after sale services

Designing support services:

Asses the value of current services, obtain ideas new ones
and add services that will delight the customer

Many companies use phone, email, and social media

technologies to provide online support services
Product and Service Decisions
2. Product Line Decisions:

Product line: a group of products items 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.

The major product line decision is product line length:

number of items in the product line.
 Product and Service Decisions
A company can expand its product line in two ways:

1. Product line filling: adding items within the present range of

the line - extra profits, satisfy dealers

2. Product line stretching: lengthens its product line beyond its

current range. The company can stretch its line upward &
downward:

Downward stretch: company moves from the higher end of the

market to lower end (competition, growth of low-end products)

Upward stretch: company moves from the lower end of the

market to higher end (prestige, growth at the higher-end)
 Product and Service Decisions
3. Product Mix Decisions:

Product mix (product portfolio): the set of all product lines and items that a
particular seller offers for sale.

A company’s product mix has four important dimensions:

Product mix width: the number of different product lines the company carries.

Product mix length: the total number of items a company carries within its
product lines

Product mix depth: the number of versions offered for each product in the line

The consistency of the product mix: how closely related the various product
lines are in production and distribution channels.
Product and Service Decisions