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 Learning Objectives

 What is product ?
 Decisions regarding products and services
 The nature and characteristics of services
 Discuss branding strategy

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 First Stop : IKEA
Building a Cult Brand

IKEA stores are

designed for the
customer to
experience the whole
store and be drawn by
a wide variety of items
along the way.

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 What Is a Product?

 A product is anything that can be offered to a

market for attention, acquisition, use, or
consumption that might satisfy a want or need.
 Broadly defined, “products” also include
services, events, persons, places, organizations,
ideas, or mixes of these.

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 8.1 What is a Product?

• Product

Tangible Intangible

GOODS
GOODS SERVICES
SERVICES

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Three Levels of Product

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 Types of Products

Industrial products
are those purchased for
further processing or
for use in conducting a
business.

Consumer products are

products and services
bought by final consumers
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for personal consumption. Perspective
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 Types of consumer product
Marketing Convenience Shopping product
Considerations product
Customer buying Frequent purchase; little Less frequent purchase; much
planning and shopping effort;
behavior planning, little comparison
comparison of brands on
or shopping effort; low
price, quality, and style
customer involvement
Price Low price Higher price
Distribution Widespread distribution; Selective distribution in
convenient locations fewer outlets
Promotion Mass promotion by the Advertising and personal
producer selling by both the
producer and resellers
Examples Toothpaste, magazines, Major appliances, televisions,
furniture, and clothing
and laundry detergent

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 Types of consumer product
Marketing Specialty product Unsought product
Considerations
Customer buying Strong brand preference and loyalty; Little product awareness or
behavior special purchase effort; little knowledge (or, if aware, little
comparison of brands; low price or even negative interest)
sensitivity

Price High price Varies

Distribution Exclusive distribution in only one or Varies
a few outlets per market area

Promotion More carefully targeted promotion Aggressive advertising and

by both the producer and resellers personal selling by the
producer and resellers

Examples Luxury goods, such as Rolex watches Life insurance and Red
or fine crystal Cross blood donations

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Product and Service Decisions

Product and Service

Decisions Individual Product

Product Line

Product Mix

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 Individual
Product and Service Decisions

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 Product Line Decisions

 A product line is closely related products that:

• Have similar functions and customer groups
• Are sold through similar outlets or fall within given price
ranges
 Product line length is the number of items in the
product line.
• Product line stretching
• Product line filling

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 Product Line Decisions
Product Line Stretching: Company introduce new product into a
product line, means that company lengthen its Product Line
beyond current range

Marriot offers a full line

of hotel brands, each
aimed at a different
target market.
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 Product Line Decisions
Product Line filling: occurs when companies add
more items within the present range of the line.

Many tastes of Omachi

instant noodles.

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 Product Mix (or Product Portfolio)

The Clorox Company has

a nicely contained
product mix consistent
with its mission to “make
everyday life better,
every day.”

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 Product Mix Decisions
Width
• Number of different product lines the company carries
Length
• Total number of items a company carries within its
product lines
Depth
• Number of versions offered for each product in the
line
Consistency
• Relativity of the various product lines in end use,
production requirements, distribution channels, or
some other aspect
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Product Mix Decisions

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 Four
Service Characteristics

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 Services Marketing
 Links service firm profits with employee
and customer satisfaction
 The chain consist of five links:
• Internal service quality
• Satisfied and productive service employees
• Greater service value
• Satisfied and loyal customers
• Healthy service profits and growth
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 Services Marketing
• Service-Profit Chain GROWTH AND
PROFIT

SATISFIED LOYAL
CUSTOMERS

GREATER SERVICE
VALUE

PRODUCTIVE
EMPLOYEES

INTERNAL SERVICE
QUALITY
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Three Types of Services Marketing

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 Brand Equity

• Brands are more than just names and symbols. They are a
key element in the company’s relationships with
consumers.
• Brands represent consumers’ perceptions and feelings
about a product and its performance—everything that the
product or service means to consumers.
• The real value of a strong brand is its power to capture
consumer preference and loyalty.

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 Brand Equity

 Brand value is the total financial value of

a brand.
 Customer equity is the value of customer
relationships that the brand creates.

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Major Brand Strategy Decisions

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 Major Brand Strategy Decisions

Brand Positioning
Brand positioning includes:
 Product attributes
 Product benefits
 Product beliefs and
values

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 Major Brand Strategy Decisions

 Brand Name Selection Desirable qualities for

a brand name should be
• Based on the product’s benefits and qualities
• Easy to pronounce, recognize, and remember
• Distinctive and extendable
• Easily translated into foreign languages
• Capable of registration and legal protection

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 Major Brand Strategy Decisions
Brand Sponsorship
National brands
• Marketed under the manufacturer’s own name

Store brands
• Created and owned by a reseller of a product or service

Licensing
• Use names and symbols created by other companies or well-
known movie characters or celebrities for a fee

Co-branding
• Use the established brand names of two different companies on
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 Major Brand Strategy Decisions
Brand Development Strategies

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 Major Brand Strategy Decisions

Brand Development Strategies

 Line extensions occur when a company extends existing
brand names to new forms, colors, sizes, ingredients, or
flavors of an existing product category.
 Brand extensions extend a current brand name to new
or modified products in a new category.
 Multi-branding introduces additional brands in the same
product category.
 New brands

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 Major Brand Strategy Decisions

• Line Extension Strategy

There are many different types of

Coca-Cola available. Visit
www.virtualvender.coca-cola.com to
find out which types are being sold in
various regions around the world.

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 Major Brand Strategy Decisions

• Brand Extension Strategy

Giorgio Armani has

extended its brand to
bookshops carrying
children’s books, like
this one located in
Hong Kong.

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 Major Brand Strategy Decisions

• Multi-brands

• Companies often introduce additional brands

in the same category. Thus, Procter & Gamble
markets many different brands in each of its
product categories. Multibranding offers a way
to establish different features and appeal to
different buying motives. It also allows a
company to lock up more reseller shelf space.
L’Oréal markets at least 14 different brands in
China, grouping them in various pricing bands.

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All rights reserved. No part of this publication may be reproduced, stored in a
retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.

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