Chapter 7 - 8 - Products, Services - NPD - PLC

7 MARKETING AN INTRODUCTION
Armstrong/Kotler
Copyright © 2015 Pearson Education, Inc. Publishing as Prentice Hall

Chapter Outline
A. What is a Product?
B. Product and Service Decisions
C. Branding Strategy: Building Strong Brands
D. New-Product Development
E. E. Product Life-Cycle Strategies
Copyright 2022 Pearson Education, Ltd 7-2

(Armstrong, Kotler & Opresnik)
A.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.
Products also include services, events, persons,
places, organizations, ideas or a mixture of
these.

Products, Services and Experiences
Services are a form of product that consist

of activities, benefits or satisfactions
offered for sale that are essentially
intangible and do not result in the
ownership of anything.
To differentiate their offers, beyond simply

making products and delivering services,
they are creating and managing customer
experiences with their brands or company.
Product and Service Classifications
Consumer Products
Consumer products are products and services
bought by final consumers for personal
consumption. They include:
Convenience products – are consumer products
and services that customers usually buy
frequently, immediately and with minimal
comparison and buying effort.

Shopping products – are less frequently

purchased consumer products and services that
customers compare carefully on suitability,
quality, price and style.
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Copyright 2022 Pearson Education, Ltd (Armstrong, Kotler & Opresnik)
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.

Unsought products – are consumer products that

the consumer either does not know about or
knows about but does not normally consider
buying.

Industrial Products
Industrial products are those products purchased for
further processing or for use in conducting a business.
The distinction between a consumer product and an

industrial is based on the purpose for which the product
is purchased.
3 groups of industrial products:

Materials and parts – include raw materials as well as
manufactured materials and parts.

Industrial Products
Capital items – are industrial products that aid in

the buyer’s production or operations, including
installations and accessory equipment.
Supplies and services – Supplies include

operating supplies and repair and maintenance
items.
Copyright 2022 Pearson Education, Ltd 7 - 10

B. Product and Service Decisions
Individual Product and Service Decisions

• Product and Service Attributes
- Product quality
- Product features
- Product style and design
• Branding
• Packaging
• Labeling
• Product support services

Product and Service Attributes
Product Quality refers to the characteristics of a

product or service that bear on its ability to
satisfy stated or implied customer needs.
• Product quality has two dimensions: level and
consistency.
Product Style and Design

• Style describes the appearance of a product.
• Design contributes to a product’s usefulness as
well as to its looks. Copyright 2022 Pearson Education, Ltd 7 - 12
Product and Service Attributes
Product Features
• Competitive tool for differentiating a product
from competitors’ products
• Assessed based on the value to the customer
versus its cost to the company

Branding
A brand is a name, term,
sign, symbol, or design,
or a combination of
these, that
identifies the maker or
seller of a product or
service.

Branding
Branding helps buyers in the following ways:
- Brand names help consumers identify
products that might benefit them.
-Brands also say something about product quality and
consistency.
Branding gives the seller several advantages:

- The seller’s name and trademark provide legal
protection for unique product features that otherwise
might be copied by competitors.
Copyright 2022 Pearson Education, Ltd
7 - 15

Packaging
Packaging involves designing

and producing the container
or wrapper for a product.
Companies are realizing the

power of good packaging to
create immediate consumer
recognition of a brand.
Labeling
Labels range from simple tags attached to

products to complex graphics that are
part
of the packaging.
Labels perform several functions:
- The label identifies the product or
brand.
- The label describes several things
about the product.
Labeling
- The label might help to promote the

brand, support its positioning and
connect with customers.
Labeling has been affected in recent times
by unit pricing (stating the price per unit
of a standard measure), open dating
(stating the expected shelf life of the
product) and nutritional labeling (stating
the nutritional values of the product).
Product Support Services
Customer service is an important element of

product strategy. Keeping customers happy
after the sale is the key to building lasting
relationships.

C. Brand Strategy: Building Strong
Brands

Building Strong Brands:
Brand Positioning
Attributes e.g. fluid absorption, fitting and
disposable diapers. (characteristic)
Benefits e.g. FedEx (guaranteed on-time

delivery), Nike (performance), Lexus (quality) and
Walmart (low prices).
Beliefs and Values engaging customers on a

deep, emotional level e.g. Pampers position as
“where we grow together”. Copyright 2022 Pearson Education, Ltd 7 - 21
Brand Name Selection
1. The name should suggest something about
the product’s benefits and qualities.
2. It should be easy to pronounce, recognize
and remember.
3. It should be distinctive.
4. It should be extendable.
5. It should translate easily into foreign
languages.
6. It should be capable of registration and legal
protection. Copyright 2022 Pearson Education, Ltd 7 - 22
Brand Sponsorship
National Brands versus Store Brands
National brands – Manufacturers’ brands.
Store brands – Retailers and wholesalers own brands or
private brands.
Licensing – Companies license names or symbols previously

created by other manufacturers, names of well-known
celebrities or characters of popular motives and books for a
fee
Co-branding – occurs when two established brand names of

different companies are used on the same product.

Brand Development

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

Brand Development
Brand Extensions – extends a current brand

name to new or modified products in a new
category. E.g. Kellogg’s extended its Special K
cereal brand into a full line of cereals plus lines
of crackers, fruit crisps, snack and nutrition bars,
breakfast shakes, protein waters and other
health and nutrition products.

Brand Development
Multibrands – Companies market many different

brands in a given product category.
E.g. PepsiCo: Soft drinks – Pepsi, Sierra Mist,
Slice, Mountain Dew and Mug root beer Sports
and energy drinks

Brand Development
New Brands – A company might believe that the

power of its existing brand name is waning. It
may create a new brand name when it enters a
new product category for which none of its
current brand names are appropriate.

New-Product Development Strategy
New-product development
The development of original products, product
improvements, product modifications and new
brands through the firm’s own product
development efforts.

B. The New-product Development Process

1. Idea Generation
Idea generation is the systematic search for

new-product ideas.
Internal idea sources – Through formal R&D or
companies can pick the brains of it employees
External idea sources – Through distributors

suppliers, competitors and customers.
8 - 31
Idea Generation
Crowdsourcing – Inviting broad communities of

people (customers, employees, independent
scientists and researchers and even the public at
large) into the new-product innovation process.

2. Idea screening
Screening new-product ideas in order to spot

good ideas and drop poor ones as soon as
possible.

3. Concept Development and Testing
 Product concept is a detailed version of the new-
product idea stated in meaningful consumer terms.
Concept development – The marketer’s task is to

develop the new product into alternative product
concepts, find out how attractive each concept is to
customers and choose the best one.
Concept testing – calls for testing new-product

concepts with groups of target consumers.

4. Marketing Strategy Development
Marketing strategy development is

designing
an initial marketing strategy for introducing
the product to the market.
The marketing strategy statement consists

of 3 parts:
1. The first part describes the target
market; the planned value proposition;
and the sales, market share and profit
Marketing Strategy Development
The 2 part outlines the product’s planned

price, distribution and marketing
budget for the first year.
The 3 part describes the planned long-run
sales, profit goals and marketing mix
strategy.

5. Business Analysis
Business analysis is a review of the sales, costs,

and profit projections for a new product to find
out whether
they satisfy the
company’s
objectives.

6. Product development
Product development is
developing the product
concept into a physical
product in order to ensure
that the product idea can be
turned into a workable
market offering, call of
Investment is required.

7. Test marketing
Test marketing is the stage of new-product

development in which the product
and marketing program are tested in realistic
market settings.
When the costs of developing and introducing the

product are low, or when management is already
confident about the new product, the company may
do little or no test marketing.

8. Commercialization
Commercialization involves introducing a new

product into
the market.
Decisions must be made concerning:

• Timing
• Where to launch the new product
• Market rollouts

C. Product Life-cycle Strategies
8 - 41
Copyright 2022 Pearson Education, Ltd (Armstrong, Kotler & Opresnik)
Product Life-cycle Strategies
The PLC has 5 distinct stages:

1. Product development – begins when the
company finds and develops a new-product
idea. Sales are zero and the company’s
investment costs mount.
2. Introduction – is a period of slow sales
growth as the product is introduced in the
8 - 42
Product Life-cycle Strategies
3. Growth – is a period of rapid market

acceptance and increasing profits.
4. Maturity – is a period of slowdown in sales
growth because the product has achieved
acceptance by most potential buyers. Profits
level off or decline because of increased
marketing outlays to defend the product Copyright 2022 Pearson Education, Ltd 8 - 43
Looking Ahead to Chapter 9
Pricing
Understanding and Capturing Customer
Value
7 - 44

Chapter 7 - 8 - Products, Services - NPD - PLC

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7 MARKETING AN INTRODUCTION

Copyright © 2015 Pearson Education, Inc. Publishing as Prentice Hall

Copyright 2022 Pearson Education, Ltd 7-2

A product is anything that can be offered to a

Copyright 2022 Pearson Education, Ltd 7-3

Services are a form of product that consist

To differentiate their offers, beyond simply

Copyright 2022 Pearson Education, Ltd 7-5

Shopping products – are less frequently

Specialty products – are consumer products

Copyright 2022 Pearson Education, Ltd 7-7

Unsought products – are consumer products that

Copyright 2022 Pearson Education, Ltd 7-8

The distinction between a consumer product and an

3 groups of industrial products:

Copyright 2022 Pearson Education, Ltd 7-9

Capital items – are industrial products that aid in

Supplies and services – Supplies include

Copyright 2022 Pearson Education, Ltd 7 - 10

Individual Product and Service Decisions

Copyright 2022 Pearson Education, Ltd 7 - 11

Product Quality refers to the characteristics of a

Product Style and Design

Copyright 2022 Pearson Education, Ltd 7 - 13

Copyright 2022 Pearson Education, Ltd 7 - 14

Branding gives the seller several advantages:

Copyright © 2015 Pearson Education, Inc. Publishing as Prentice Hall

Packaging involves designing

Companies are realizing the

Labels range from simple tags attached to

- The label might help to promote the

Customer service is an important element of

Copyright 2022 Pearson Education, Ltd 7 - 19

Copyright 2022 Pearson Education, Ltd 7 - 20

Benefits e.g. FedEx (guaranteed on-time

Beliefs and Values engaging customers on a

Licensing – Companies license names or symbols previously

Co-branding – occurs when two established brand names of

Copyright 2022 Pearson Education, Ltd 7 - 23

Copyright 2022 Pearson Education, Ltd 7 - 24

Line Extensions – occur when a company extends

Copyright 2022 Pearson Education, Ltd 7 - 25

Brand Extensions – extends a current brand

Copyright 2022 Pearson Education, Ltd 7 - 26

Multibrands – Companies market many different

Copyright 2022 Pearson Education, Ltd 7 - 27

New Brands – A company might believe that the

Copyright 2022 Pearson Education, Ltd 7 - 28

Copyright 2022 Pearson Education, Ltd 8 - 29

Copyright 2022 Pearson Education, Ltd 8 - 30

Idea generation is the systematic search for

External idea sources – Through distributors

Crowdsourcing – Inviting broad communities of

Copyright 2022 Pearson Education, Ltd 8 - 32

Screening new-product ideas in order to spot

Copyright 2022 Pearson Education, Ltd 8 - 33

Concept development – The marketer’s task is to

Concept testing – calls for testing new-product

Copyright 2022 Pearson Education, Ltd 8 - 34

Marketing strategy development is

The marketing strategy statement consists

The 2 part outlines the product’s planned

Copyright 2022 Pearson Education, Ltd 8 - 36