Product, Services, and Brands:

Building Customer Value

Product, Services, and Branding Strategy

Topic Outline

• What Is a Product?
• Product and Services
Decisions
• Services Marketing
• Branding Strategy: Building
Strong Brands
 What Is a Product?
Products, Services, and Experiences

Product is anything that can be offered in a market

for attention, acquisition, use, or consumption that
might satisfy a need or want
Service is a product that consists of activities, benefits
or satisfaction that is essentially intangible and
does not result in the ownership of anything
What Is a Product?
Levels of Product and Services
What Is a Product?
Product and Service Classifications

Consumer
products
Industrial
products
 What Is a Product?
Product and Service Classifications

• Consumer products are products and

services for personal consumption
• Classified by how consumers buy them
– Convenience products
– Shopping products
– Specialty products
– Unsought products
 What Is a Product?
Product and Service Classifications

Convenience products
consumer products and services that the
customer usually buys frequently,
immediately, and with a minimum
comparison and buying effort
– Newspapers
– Candy
– Fast food
 What Is a Product?
Product and Service Classifications

Shopping products
consumer products and services that
the customer compares carefully on
suitability, quality, price, and style
– Furniture
– Cars
– Appliances
 What Is a Product?
Product and Service Classifications

Specialty products
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
• Medical services
• Designer clothes
• High-end electronics
 What Is a Product?
Product and Service Classifications

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

Industrial products
products purchased for further processing or for
use in conducting a business
• Classified by the purpose for which the product is
purchased
– Materials and parts
– Capital
– Raw materials
 What Is a Product?
Productand Service Classifications

Capital items are industrial products that aid

in the buyer’s production or operations
Materials and parts include raw materials and
manufactured materials and parts usually
sold directly to industrial users
Supplies and services include operating
supplies, repair and maintenance items,
and business services
Product and Service Decisions
Individual Product and Service Decisions
 Product and Service Decisions

Individual Product and Service Decisions

Product or service attributes

communicate and deliver the benefits
• Quality
• Features
• Style and design
 Product and Service Decisions
Individual Product and Service Decisions

Style describes the

appearance of the product
Design contributes to a
product’s usefulness as
well as to its looks
 Product and Service Decisions
Individual Product and Service Decisions

Brand is the name, term, sign, or design—or a

combination of these—that identifies the maker
or seller of
 Product and Service Decisions

Individual Product and Service Decisions

Packaging involves designing and producing the

container or wrapper for a product
Labels identify the product or brand, describe
attributes, and provide promotion
 Product and Service Decisions
Product Mix Decisions

Product mix consists of all the products and items

that a particular seller offers for sale
» Width
» Length
» Depth
» Consistency
Services Marketing
Nature and Characteristics of a Service
 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
 Services Marketing
Marketing Strategies for Service Firms

Service-profit chain links service firm profits

with employee and customer satisfaction
• Internal service quality
• Satisfied and productive service
employees
• Greater service value
• Satisfied and loyal customers
• Healthy service profits and growth
 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

Internal marketing must precede external marketing

 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
• Service differentiation
• Service quality
• Service productivity
Branding Strategy: Building Strong Brands
 Marketing Debate
Are Brand Extensions Good or Bad?

Some critics vigorously denounce the practice of brand

extensions, because they feel that too often companies
lose focus and consumers become confused. Other experts
maintain that brand extensions are a critical growth
strategy and source of revenue for the firm.

Take a position:

Brand extensions can endanger brands Vs Brand

extensions are an important brand-growth strategy.
Branding Strategy: Building Strong Brands

Brand Positioning

Brand strategy decisions

include:
• Product attributes
• Product benefits
• Product beliefs and values

Case Study:
Marketing Excellence
Procter & Gamble
Kotler & Keller(2012), page 269
Branding Strategy: Building Strong Brands
Brand Name Selection
Desirable qualities
1. Suggest benefits and qualities
2. Easy to pronounce, recognize, and
remember
3. Distinctive
4. Extendable
5. Translatable for the global economy
6. Capable of registration and legal
protection
Communicating Customer Value:
Integrated Marketing
Communications Strategy
 Communicating Customer Value: Integrated
Marketing Communications Strategy
Topic Outline
• The Promotion Mix
• Integrated Marketing Communications
• A View of the Communications Process
• Steps in Developing Effective Marketing
Communication
• Setting the Total Promotion Budget and Mix
• Socially Responsible Marketing Communication
 The Promotion Mix
• The promotion mix is the specific blend of
advertising, public relations, personal selling,
and direct-marketing tools that the company
uses to persuasively communicate customer
value and build customer relationships
 The Promotion Mix
The Promotion Mix

Advertising is any paid form of non-personal

presentation and promotion of ideas,
goods, or services by an identified sponsor
• Broadcast
• Print
• Internet
• Outdoor
 The Promotion Mix
The Promotion Mix

Sales promotion is the short-term incentive to

encourage the purchase or sale of a product
or service
• Discounts
• Coupons
• Displays
• Demonstrations
 The Promotion Mix
The Promotion Mix

Public relations involves building good relations

with the company’s various publics by
obtaining favorable publicity, building up a
good corporate image, and handling or heading
off unfavorable rumors, stories, and events
• Press releases
• Sponsorships
• Special events
• Web pages
 The Promotion Mix
The Promotion Mix

Personal selling is the personal

presentation by the firm’s sales force
for the purpose of making sales and
building customer relationships
• Sales presentations
• Trade shows
• Incentive programs
 The Promotion Mix
The Promotion Mix

Direct marketing involves making direct

connections with carefully targeted
individual consumers to both obtain an
immediate response and cultivate lasting
customer relationships—through the use of
direct mail, telephone, direct-response
television, e-mail, and the Internet to
communicate directly with specific
consumers
• Catalog
• Telemarketing
• Kiosks
Integrated Marketing Communications
The New Marketing Communications Model

• Consumers are better

informed
• More communication
• Less mass marketing
• Changing
communications
technology
 Integrated Marketing Communications
The Need for Integrated Marketing Communications

Integrated marketing communications is the

integration by the company of its communication
channels to deliver a clear, consistent, and
compelling message about the organization and its
brands
Integrated Marketing Communications
Strategy
 Steps in Developing Effective Marketing
Communication

Identify the target audience

Determine the communication objectives

Design the message

Choose the media

Select the message source

 Steps in Developing Effective
Communication

Identifying the Target market

What will How it will

be said be said

When it Where it
will be said will be said

Who will
say it
Steps in Developing Effective Marketing
Communication
Designing a Message

AIDA Model
• Get Attention
• Hold Interest
• Arouse Desire
• Obtain Action
Steps in Developing Effective Marketing
Communication
Designing a Message

Message content is an
appeal or theme that
will produce the
desired response
• Rational appeal
• Emotional appeal
• Moral appeal
 Steps in Developing Effective Marketing
Communication
Designing a Message

Rational appeal relates to the audience’s self-

interest
Emotional appeal is an attempt to stir up
positive or negative emotions to motivate a
purchase
 Steps in Developing Effective Marketing
Communication
Designing a Message

Moral appeal is
directed at the
audience’s sense
of right and
proper
 Steps in Developing Effective Marketing
Communication
Choosing Media

Personal communication involves two or more

people communicating directly with each
other
• Face to face
• Phone
• Mail
• E-mail
• Internet chat
Steps in Developing Effective Marketing
Communication
Choosing Media

Personal communication is effective because

it allows personal addressing and
feedback
Control of personal communication
• Company
• Independent experts
• Word of mouth
 Steps in Developing Effective Marketing
Communication
Choosing Media
Personal Communication

Opinion leaders are people within a reference

group who, because of their special skills,
knowledge, personality, or other
characteristics, exerts social influence on
others
Buzz marketing involves cultivating opinion leaders
and getting them to spread information about
a product or service to others in their
communities
Steps in Developing Effective
Marketing Communication
Non-Personal Communication Channels

Non-personal communication
is media that carry
messages without personal
contact or feedback,
including major media,
atmospheres, and events
that affect the buyer
directly
 Steps in Developing Effective Marketing
Communication
Non-Personal Communication Channels

Major media include print, broadcast, display,

and online media
Steps in Developing Effective Marketing
Communication
Nonpersonal Communication Channels

Events are staged occurrences that

communicate messages to target
audiences
• Press conferences
• Grand openings
• Exhibits
• Public tours
Steps in Developing Effective Marketing
Communication
Selecting the Message Source

The message’s impact on the target

audience is affected by how the
audience views the communicator
• Celebrities
– Athletes
– Entertainers
• Professionals
– Health care providers
 Steps in Developing Effective Marketing
Communication
Collecting Feedback

Involves the communicator understanding the

effect on the target audience by measuring
behavior resulting from the behavior
 Setting the Total Promotion
Budget and Mix
Setting the Total Promotion Budget

Affordable budget
method sets the
budget at an
affordable level
• Ignores the effects
of promotion on
sales
 Setting the Total Promotion
Budget and Mix
Setting the Total Promotion Budget

Percentage of salesmethod sets the budget at a

certain percentage of current or forecasted
sales or unit sales price
• Easy to use and helps management think
about the relationship between promotion,
selling price, and profit per unit
• Wrongly views sales as the cause rather than
the result of promotion
 Setting the Total Promotion
Budget and Mix
Setting the Total Promotion Budget

Competitive-parity method sets the budget to match

competitor outlays
• Represents industry standards
• Avoids promotion wars
 Setting the Total Promotion
Budget and Mix
Setting the Total Promotion Budget

Objective-and-task method sets the budget based on

what the firm wants to accomplish with promotion
and includes:
• Defining promotion objectives
• Determining tasks to achieve the objectives
• Estimating costs
Shaping the Overall Promotion
Mix

Promotion Mix Strategies

Marketing Channels: Delivering
Customer Value
 Marketing Channels: Delivering
Customer Value
Topic Outline
• Supply Chains and the Value Delivery Network
• The Nature and Importance of Marketing Channels
• Channel Behavior and Organization
• Channel Design Decisions
• Channel Management Decisions
• Marketing Logistics and Supply Chain Management
 Supply Chains and the
Value Delivery Network
Supply Chain Partners

Upstream partners include raw material

suppliers, components, parts, information,
finances, and expertise to create a product
or service

Downstream partners include the marketing

channels or distribution channels that look
toward the customer
 Supply Chains and the
Value Delivery Network
Supply Chain Views
Supply chain “make and sell” view includes the firm’s
raw materials, productive inputs, and factory
capacity

Demand chain “sense and respond” view suggests that

planning starts with the needs of the target
customer, and the firm responds to these needs by
organizing a chain of resources and activities with
the goal of creating customer value
 Supply Chains and the
Value Delivery Network
Value Delivery Network

Value delivery network is

the firm’s suppliers,
distributors, and
ultimately customers
who partner with each
other to improve the
performance of the
entire system
 The Nature and Importance of Marketing
Channels
How Channel Members Add Value

Intermediaries offer producers greater

efficiency in making goods available to
target markets. Through their contacts,
experience, specialization, and scale of
operations, intermediaries usually offer
the firm more than it can achieve on its
own.
 The Nature and Importance of Marketing
Channels
How Channel Members Add Value
• From an economic view, intermediaries
transform the assortment of products into
assortments wanted by consumers
• Channel members add value by bridging the
major time, place, and possession gaps that
separate goods and services from those who
would use them
The Nature and Importance of
Marketing Channels
How Channel Members Add Value
The Nature and Importance of Marketing
Channels
How Channel Members Add Value

Information Promotion Contact

Physical
Matching Negotiation
distribution

Financing Risk taking

The Nature and Importance of Marketing
Channels
Number of Channel Levels
 The Nature and Importance of
Marketing Channels
Number of Channel Levels
Connected by types of flows:
• Physical flow of products
• Flow of ownership
• Payment flow
• Information flow
• Promotion flow
 Channel Behavior and Organization
Conventional Distributions Systems

Conventional distribution systems consist of

one or more independent producers,
wholesalers, and retailers. Each seeks to
maximize its own profits, and there is little
control over the other members and no
formal means for assigning roles and
resolving conflict.
 Channel Behavior and Organization
Vertical Marketing Systems

Vertical marketing systems (VMSs) provide channel

leadership and consist of producers, wholesalers,
and retailers acting as a unified system and consist
of:
• Corporate marketing systems
• Contractual marketing systems
• Administered marketing systems
 Channel Behavior and Organization
Vertical Marketing Systems

Corporate vertical
marketing system
integrates successive
stages of production
and distribution
under single
ownership
 Channel Behavior and Organization
Vertical Marketing Systems

Contractual vertical marketing system consists of

independent firms at different levels of production
and distribution who join together through
contracts to obtain more economies or sales impact
than each could achieve alone. The most common
form is the franchise organization.
 Channel Behavior and Organization
Vertical Marketing Systems

Franchise organization links several stages in the

production distribution process
– Manufacturer-sponsored retailer franchise system
– Manufacturer-sponsored wholesaler franchise system
– Service firm-sponsored retailer franchise system
 Channel Behavior and Organization
Vertical Marketing Systems

Administered vertical marketing system has a few

dominant channel members without common
ownership. Leadership comes from size and
power.
 Channel Behavior and Organization
Horizontal Marketing System

Horizontal marketing
systems are when two or
more companies at one
level join together to
follow a new marketing
opportunity. Companies
combine financial,
production, or marketing
resources to accomplish
more than any one
company could alone.
 Channel Behavior and Organization
Multichannel Distribution Systems
Hybrid Marketing Channels

Multichannel Distribution systems (Hybrid

marketing channels) are when a single firm
sets up two or more marketing channels to
reach one or more customer segments
Channel Behavior and
Organization
Multichannel Distribution System
Channel Behavior and Organization
Changing Channel Organization

Disintermediation occurs
when product or service
producers cut out
intermediaries and go
directly to final buyers, or
when radically new types
of channel intermediaries
displace traditional ones
Channel Design Decisions

Analyzing Setting
consumer channel
needs objectives

Identifying
major
channel Evaluation
alternative
s
 Channel Design Decisions
Setting Channel Objectives

• Targeted levels of customer service

• What segments to serve
• Best channels to use
• Minimizing the cost of meeting customer service
requirements
 Channel Design Decisions
Identifying Major Alternatives

• Types of intermediaries
• Number of marketing intermediaries
• Responsibilities of channel members
Channel Design Decisions
Identifying Major Alternatives

Intensive distribution
• Candy and toothpaste

Exclusive distribution
• Luxury automobiles and prestige clothing

Selective distribution
• Television and home appliance
 Channel Design Decisions
Evaluating the Major Alternatives

Each alternative should

be evaluated against:
– Economic criteria
– Control
– Adaptive criteria
 Channel Management Decisions

Selecting Managing Motivatin Evaluating

channel channel g channel channel
members members members members
Marketing Logistics and Supply
Chain Management
Nature and Importance of Marketing Logistics
 Marketing Logistics and
Supply Chain Management
Major Logistics Functions

Inventory
Warehousing
management

Logistics
Transportation information
management
Marketing Logistics and
Supply Chain Management
Integrated Logistics Management

Third-party logistics is
the outsourcing of
logistics functions to
third-party logistics
providers (3PLs)
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