Principles of Marketing

Session #16&17
• Chapter 8
Product and Service Decisions
Marketers make product and service decisions at three
levels:
1. Individual product decisions
2. Product line decisions
3. Product mix decisions

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 Product and Service Decisions

Figure 8.2 Individual Product Decisions

Augmente
Core Product Actual Product
d
Product

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Individual Product and Service Decisions
Product Attributes
Communicate and deliver benefits by product and service
attributes.
• Quality
• Features
• Style and design

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 Individual Product and Service Decisions
Product Attributes
Product quality refers to the characteristics of a product or service that
bear on its ability to satisfy stated or implied customer needs.
• Total quality management (TQM) Approach
• Return-on-quality (ROQ) Approach

• Quality Level
– Performance quality - the product’s ability to perform its functions
• Quality Consistency
– Conformance quality - freedom from defects and consistency in
delivering a targeted level of performance

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 Individual Product and Service Decisions
Product Attributes
Product Features
• Any product can have the most basic to highly advanced versions
depending on how many features are added.
• Features are a competitive tool for differentiating a product from competito
rs’ products - Being the first producer to introduce a valued new feature is
one of the most effective ways to compete.
• Any addition of new features is assessed based on the value to the
customer versus its cost to the company

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 Individual Product and Service Decisions
Product Attributes
Style describes the appearance of the product.
Design contributes to a product’s usefulness as well as to its looks.
This is the user experience that determines how a product is to be used or
experienced by the consumer and how a business can make it PERFORM
better.
It begins with observing and understanding the customers' needs.

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 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 a product or service.
Consumers attach meanings to brands and develop brand
relationships. Brands help with:
Identification, communicating quality & consistency, legal
protection against competitors, segmenting markets and story
building.

A classic stunt by former bargain footwear

retailer Payless dramatically illustrated the
power of brands in shaping perceptions.
Fashion influencers paid as much as $645 for
“Palessi” shoes that normally sell for less
than $40.
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 Individual Product and Service Decisions
Packaging involves designing and producing the container
or wrapper for a product.

Attracts buyers, communciates positioning, closing sales

Labels & Logos identify the product or brand, describe

attributes, and provide promotion.
•
Redesigned from time to time to stay relevant

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Individual Product and Service Decisions
Product support services augment actual products.
Support services are an important part of a customer's brand
experience. Keeping customers happy after the sale is the key to
building lasting relationships.
To design support services, companies survey customers to assess
value of current services and get ideas for new ones.
Then companies fix the problems with the current services and add new
to delight customers.

Customer service: From the start, under the

Lexus Covenant, Lexus’s high-quality
support services create an unmatched car
ownership experience and some of the
world’s most satisfied car owners.

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Toyota Motor Sales, U S A, Inc.
 Product Line Decisions
Product line: a group of products closely related functioning in a similar
manner, sold to the same customer groups, marketed through the same
types of outlets, or falling within given price ranges.
Product line length: the number of items in the product line. Expanding
the line can be done in 2 ways:
• Line stretching: lengthening the product line beyond its current range. The
company can stretch its line downward, upward, or both ways.
• Line filling: adding more items within the present range of the line. Beware
cannibalization.
 Product Mix Decisions
Product mix (or product portfolio) consists of all the product lines and items
that a particular seller offers for sale. An organization with several product
lines has a product mix.
Product mix dimensions:
• Width: the number of different product lines the company carries.
• Length: the total number of items a company carries within its product
lines.
• Depth: the number of versions offered of each product in the line.
• Consistency: how closely related the various product lines are in end use,
production requirements, distribution channels, or some other way.

• Product Mix Example: Nike

• Footwear – Boots for strikers, Midfielders, Defenders, Sneakers
• Apparels – Headwear, Tops/Polos, Jersey, Jackets, Shorts, Shocks
• Equipment – Ball, Bags, Watches
– Product Depth – 4 in Footwear, 6 in Apparels and 4 in Equipment
– Product Length – 14
– Product Width – 3
– Product Consistency – High consistency Nike focus on health-conscious
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people.
Product Mix Decisions
These product mix dimensions help in defining the company’s product
strategy.
A company can increase its business in four ways:
1. It can add new product lines, widening its product mix. In this way, its
new lines build on the company’s reputation in its other lines.
2. A company can lengthen its existing product lines to become a more
full-line company.
3. It can add more versions of each product and thus deepen its product
mix.
4. Finally, a company can pursue more product line consistency—or less
— depending on whether it wants to have a strong reputation in a
single field or in several fields.

From time to time, a company may also have to streamline its product mix
to pare out marginally performing lines and to better align with its markets.

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Services Marketing
Types of Service Industries
• Government: courts, employment services, hospitals,
military services, police and fire departments, the postal
service, and schools.
• Private not-for-profit organizations: museums, charities,
churches, colleges, foundations, and hospitals.
• Business organizations: airlines, banks, hotels,
insurance companies, consulting firms, real estate firms,
retailers, medical and legal practices, entertainment and
telecommunications companies, digital and social media
platforms, and others.

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Services Marketing
Figure 8.3 Four Service Characteristics

Make the service tangible enough to reduce uncertainty of buyers.

Customer coproduction makes provider–customer interaction a special feature of
services marketing. Both the provider and the customer affect the service
outcome.
When demand fluctuates, service firms often have difficult problems.

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 Marketing Strategies for Service Firms
With traditional marketing strategies, service firms require
additional strategies.
• Service-profit chain: links service firm profits with employee and customer
satisfaction.
– Internal service quality. Superior employee selection and training, a
quality work environment, and strong 24 support for those dealing with
customers, which results in …
– Satisfied and productive service employees. More satisfied, loyal,
and hardworking employees, which results in …
– Greater service value. More effective and efficient customer value
creation, engagement, and service delivery, which results in …
– Satisfied and loyal customers. Satisfied customers who remain
loyal, make repeat purchases, and refer other customers, which
results in …
– Healthy service profits and growth. Superior service firm
performance.

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Services Marketing
Figure 8.4 Three Types of Services Marketing

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

Managing service differentiation creates a competitive advantage.

• Offer
• Delivery
• Image

Service differentiation: Emirates offers first-class suites in its Boeing 777

airplanes featuring door-to-ceiling sliding doors, closets for hanging clothes,
wireless tablets with 2,500 channels, 32-inch TV screens, personal minibars, and
“inspiration kits” containing moisturizing pajamas and skin care kits.

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Services Marketing
Marketing Strategies for Service Firms
Managing service quality enables a service firm to
differentiate itself by delivering consistently higher quality
than its competitors provide. Concept of service recovery to
counter poor service quality.
Managing service productivity refers to the cost side
of marketing strategies for service firms.
• Employee hiring and training
• Service quantity and quality

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Brand Strategy: Building Strong Brands
Brand Equity and Brand Value
• Brand equity is the differential effect that knowing the brand name
has on customer response to the product or its marketing.
Young & Rubicam’s BrandAsset Valuator measures brand strength
along four consumer perception dimensions. Brands with strong brand
equity rate high on all four dimensions.
– differentiation (what makes the brand stand out)
– relevance (how consumers feel it meets their needs)
– knowledge (how much consumers know about the brand)
– esteem (how highly consumers regard and respect the brand).
• Brand value is the total financial value of a brand.

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Brand Strategy: Building Strong Brands
Figure 8.5 Major Brand Strategy Decisions

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Brand Strategy: Building Strong Brands
Building Strong Brands
Brand Positioning
Marketers can position brands at any of three levels.
• Attributes: features but easy to copy
• Benefits: can build positive associations
• Beliefs and values: engages customers on a deep emotional level

Brand positioning: Brands like Disney form strong emotional connections with
customers. Says one Disney World Resort regular: ““I have a deep love and bond
to all things Disney.”

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Brand Strategy: Building Strong Brands

Building Strong Brands

Brand Name Selection
1. Suggests 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

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Brand Strategy: Building Strong
Brands
Brand Sponsorship
How a brand is built, backed and supported
• Manufacturer’s brand: as when Samsung and Kellogg sell
their output under their own brand names
• Private brand: the manufacturer may sell to resellers who
give the product a private brand (also called a store brand)
• Licensed brand: some companies license names or symbols
previously created by other manufacturers for a fee, for an
instant and proven brand name
• Co-brand: two companies can join forces and co-brand a
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Brand Strategy: Building Strong Brands
Figure 8.6 Brand Development Strategies

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 Brand Strategy: Brand Development Strategies
• Line extensions: when a company extends existing brand names to new
forms, colors, sizes, ingredients, or flavors of an existing product category.
KFC has extended its chicken lineup beyond bone-in Kentucky fried
chicken to nuggets etc.
• Brand extension: extends a current brand name to new or modified
products in a new category. Most consumers know Birkenstock for its
classic premium sandals and other footwear. Now Birkenstock has added
other apparel and accessories items to its lines, such as legwear, belts.
• Multibrand: Companies often market many different brands in a given
product category. PepsiCo markets at least 10 brands of carbonated soft
drinks, 2 brands of energy drinks, 6 brands of ready to drink teas and
coffees, 7 brands of bottled waters, and 9 brands of juices and juice drinks.
• New Brands: A company might believe that the power of its existing brand
name is waning so a new brand name is needed. Or it may create a new
brand name when it enters a new product category for which none of its
current brand names is appropriate. Toyota created the separate Lexus
brand aimed at luxury car consumers. Copyright © 2021 Pearson Education Ltd.
Brand Strategy: Building Strong
Brands
Managing Brands
• Communicate the brand positioning
• Engage customers with brand experiences
• Train employees to be customer centered
• Audit the brand strengths and weaknesses

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Session Close