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Marketing:AnIntroductionFifteenthEditionChapter07Products,Services,andBrands:BuildingCustomerValueCopyright©2023,2020,2017PearsonEducation,Inc.AllRightsReservedObjectivesOutline(1of2)7.1Defineproductanddescribethemajorclassificationsofproductsandservices.7.2
Describethedecisionscompaniesmakeregardingtheirindividualproductsandservices,productlines,andproductmixes.ObjectivesOutline(2of2)7.3Identifythefourcharacteristicsthataffectthemarketingofservicesandtheadditionalmarketingconsiderationsthatservicesrequire.7.4Discussbrandingstrategy—thedecisionscompaniesmakeinbuildingandmanagingtheirbrands.FirstStop:Starbucks:Deliveringthe“StarbucksExperience”Morethanjustcoffee,Starbuckssellsthe“StarbucksExperience,”onethatenrichespeople’slivesonemoment,onehumanbeing,oneextraordinarycupofcoffeeatatime.ObjectiveOutline7.1Defineproductanddescribethemajorclassificationsofproductsandservices.WhatIsaProduct?Aproductisanythingthatcanbeofferedtoamarketforattention,acquisition,use,orconsumptionthatmightsatisfyawantorneed.Aserviceisanactivity,benefit,orsatisfactionofferedforsale;itisintangibleanddoesnotresultinownershipofanything.Products,Services,andExperiences(1of2)Marketofferingsincludebothtangiblegoodsandservices.Companiescreateandmanagecustomerexperienceswiththeirbrandsorcompanies.TodifferentiatetheiroffersfromthatofthecompetitorsProducts,Services,andExperiences(2of2)Creatingcustomerexperiences:YourlocalBuffaloWildWingsrestaurantdoesn’tjustserveupwingsandbeer;itgivescustomerstheultimate“Wings.Beer.Sports.”fanexperience.Figure7.1ThreeLevelsofProductProductandServiceClassificationsConsumerproductsareboughtbyfinalconsumersforpersonalconsumption.Industrialproductsareboughtbyindividualsandorganizationsforfurtherprocessingorforuseinconductingabusiness.Materialsandparts,capitalitems,andsuppliesandservicesTable7.1(1of2)MarketingConsiderationsforConvenienceandShoppingProductsMarketingConsiderationsConvenienceShoppingCustomerbuyingbehaviorFrequentpurchase;littleplanning,littlecomparisonorshoppingeffort;lowcustomerinvolvementLessfrequentpurchase;muchplanningandshoppingeffort;comparisonofbrandsonprice,quality,andstylePriceLowpriceHigherpriceDistributionWidespreaddistribution;convenientlocationsSelectivedistributioninfeweroutletsPromotionMasspromotionbytheproducerAdvertisingandpersonalsellingbyboththeproducerandresellersExamplesToothpaste,magazines,andlaundrydetergentMajorappliances,televisions,furniture,andclothingTable7.1(2of2)MarketingConsiderationsforSpecialtyandUnsoughtProductsMarketingConsiderationsSpecialtyUnsoughtCustomerbuyingbehaviorStrongbrandpreferenceandloyalty;specialpurchaseeffort;littlecomparisonofbrands;lowpricesensitivityLittleproductawarenessorknowledge(or,ifaware,littleorevennegativeinterest)PriceHighestpriceVariesDistributionExclusivedistributioninonlyoneorafewoutletspermarketareaVariesPromotionMorecarefullytargetedpromotionbyboththeproducerandresellersAggressiveadvertisingandpersonalsellingbytheproducerandresellersExamplesLuxurygoods,suchasRolexwatchesorfinecrystalLifeinsuranceandRedCrossblooddonationsOtherMarketOfferingsOrganizationsPersonsPlacesIdeasObjectiveOutline7.1SummaryWhatisaproduct?—physicalproducts,services,andexperiencesActualandaugmentedproduct—corecustomervalueConsumerproducts—convenience,shopping,specialty,andunsoughtIndustrialproducts—materialsandparts,capitalitems,andsuppliesandservicesOrganization,person,place,andideamarketingObjectiveOutline7.2Describethedecisionscompaniesmakeregardingtheirindividualproductsandservices,productlines,andproductmixes.ProductandServiceDecisionsIndividualProductDecisionsProductLineDecisionsProductMixDecisionsFigure7.2IndividualProductDecisionsProductandServiceAttributesProductqualityisoneofthemarketer’smajorpositioningtools.Aproductcanbeofferedwithvaryingfeatures.Anotherwaytoaddcustomervalueisthroughdistinctiveproductstyleanddesign.BrandingAclassicstuntbyformerbargainfootwearretailerPaylessdramaticallyillustratedthepowerofbrandsinshapingperceptions.Fashioninfluencerspaidasmuchas$645for“Palessi”shoesforthatnormallysoldforlessthan$40.PackagingSmartpackaging:BritishdairybrandYeoValleyOrganicuses“alwayson”connectedpackagingdevelopedbyconnectedexperienceagencySharpEndacrossitsfullrangeof90organicproducts.ProductLineDecisions(1of2)Aproductlineiscloselyrelatedproductsthat:HavesimilarfunctionsandcustomergroupsAresoldthroughsimilaroutletsorfallwithingivenpricerangesProductlinelengthisthenumberofitemsintheproductline.ProductlinefillingProductlinestretchingProductLineDecisions(2of2)Productlinestretchingandfilling:RidesharingserviceUbertradedupwithUberBLACK(“high-endrideswithprofessionaldrivers”),andcompetitorLyftaddedLyftLux(“addalittleluxurytoyourrideandarriveinstyle”).ProductMix(orProductPortfolio)“Theproductmix:Colgate-Palmolive’snicelyconsistentproductmixcontainsdozensofbrandsthatconstitutethe“ColgateWorldofCare”—productsthat“everyday,peoplelikeyoutrusttocareforthemselvesandtheonestheylove.”ProductMixDecisionsWidthNumberofdifferentproductlinesthecompanycarriesLengthTotalnumberofitemsacompanycarrieswithinitsproductlinesDepthNumberofversionsofferedforeachproductinthelineConsistencyRelativityofthevariousproductlinesinenduse,productionrequirements,distributionchannels,orsomeotheraspectObjectiveOutline7.2SummaryProductattributedecisions—quality,features,andstyleanddesignBranding,packaging,andlabelingdecisionsProductsupportservices—enhancecustomerserviceandsatisfactionProductlineandproductmixdecisionsObjectiveOutline7.3Identifythefourcharacteristicsthataffectthemarketingofservicesandtheadditionalmarketingconsiderationsthatservicesrequire.Figure7.3FourServiceCharacteristicsServiceProfitChain(1of2)LinksservicefirmprofitswithemployeeandcustomersatisfactionThechainconsistsoffivelinks:InternalservicequalitySatisfiedandproductiveserviceemployeesGreaterservicevalueSatisfiedandloyalcustomersHealthyserviceprofitsandgrowthFigure7.4ThreeTypesofServicesMarketingServiceProfitChain(2of2)Theserviceprofitchain:PerennialcustomerservicechampionWegmansknowsthat“Inordertobeagreatplacetoshop,wemustfirstbeagreatplacetowork.”MarketingTasksforServiceCompaniesManagingservicedifferentiationDevelopingadifferentiatedoffer,delivery,andimageManagingservicequalityDeliveringconsistentlyhigherqualitythanthecompetitorsManagingserviceproductivityTrainingcurrentemployeesorhiringnewonesIncreasingthequantityofservicebygivingupsomequalityHarnessingthepoweroftechnologyObjectiveOutline7.3SummaryServicescharacteristics:intangible,inseparable,variable,andperishableServiceprofitchain—internalandinteractivemarketingCompetitivedifferentiation,servicequality,andserviceproductivityObjectiveOutline7.4Discussbrandingstrategy—thedecisionscompaniesmakeinbuildingandmanagingtheirbrands.BrandEquity(1of2)ThedifferentialeffectthatknowingthebrandnamehasoncustomerresponsetotheproductoritsmarketingWithpositivebrandequity,consumersreactmorefavorablytothebrandthantoanunbrandedversionofthesameproduct.BrandEquity(2of2)Consumerperceptiondimensions:DifferentiationRelevanceKnowledgeEsteemBrandvalueisthetotalfinancialvalueofabrand.Customerequityisthevalueofcustomerrelationshipsthatthebrandcreates.Figure7.5MajorBrandStrategyDecisionsMajorBrandStrategyDecisionsThe“Whatwedeliverbydelivering”campaignbyFedExshowsthatthebrandisaboutmorethanjustefficientpackagedeliveries;it’saboutwhatthosepackagedeliveriesmeantothepeoplereceivingthem.BrandPositioningandBrandNameSelectionMarketersshouldestablishamissionandvisionforthebrandwhenpositioningit.DesirablequalitiesforabrandnameshouldbeBasedontheproduct’sbenefitsandqualitiesEasytopronounce,recognize,andrememberDistinctiveandextendableEasilytranslatedintoforeignlanguagesCapableofregistrationandlegalprotectionBrandSponsorshipNationalbrandsMarketedunderthemanufacturer’sownnameStorebrandsCreatedandownedbyaresellerofaproductorserviceLicensingUsenamesandsymbolscreatedbyothercompaniesorwell-knownmoviecharactersorcelebritiesforafeeCo-brandingUsetheestablishedbrandnamesoftwodifferentcompaniesonthesameproductFigure7.6BrandDevelopmentStrategiesManagingBrands(1of2)Companiesmustmanagetheirbrandscarefully.Thebrand’spositioningmustbecontinuouslycommunicated.Majorbrandmarketersspendhugeamountsonadvertisingtocreatebrandawarenessandbuildpreferenceandloyalty.ManagingBrands(2of2)Communicatethebrand’spositioningManageallbrandtouchpointsTrainemployeestobecustomercenteredAuditthebrand’sstrengthsandweaknessesObjectiveOutline7.4SummaryBrandequity’spositiveeffectBrandpositioningBrandnameselectionBrandsponsorshipoptions—national,private,licensed,andco-brandBranddevelopmentthroughlineandbrandextensions,multibrandsornewbrandsFinalThoughtsWhatarethefourcharacteristicsofaservice?Applythesetoadentist’soffice.Marketing:AnIntroductionFifteenthEditionChapter8DevelopingNewProductsandManagingtheProductLifeCycleCopyright©2023,2020,2017PearsonEducation,Inc.AllRightsReservedObjectivesOutline(1of2)8.1Explainhowcompaniesfindanddevelopnewproductideas.8.2Listanddefinethestepsinthenewproductdevelopmentprocessandthemajorconsiderationsinmanagingthisprocess.ObjectivesOutline(2of2)8.3Describethestagesoftheproductlifecycleandhowmarketingstrategieschangeduringaproduct’slifecycle.8.4Discusstwoadditionalproductissues:sociallyresponsibleproductdecisionsandinternationalproductandservicesmarketing.FirstStop:GoogleGoogleandparentcompanyAlphabetarewildlyinnovative.Thecompany’sinnovationmachineisrenownedforproducingnewproduct“moonshots,”futuristiclongshotsthat,ifsuccessful,willprofoundlychangehowpeoplelive.ObjectiveOutline8.1Explainhowcompaniesfindanddevelopnewproductideas.NewProductDevelopmentStrategyDevelopingnewproductsthroughthefirm’sownresearchanddevelopmenteffortsCreatingsuccessfulnewproductsrequiresUnderstandingconsumers,markets,andcompetitorsDevelopingproductsthatdeliversuperiorvaluetocustomersObjectiveOutline8.1SummaryNewproductideasfromthefirm’sownresearchanddevelopmenteffortsExternalsourcesincludecompetitor'sofferings,ideasfromdistributorsandsuppliers,aswellascustomersthemselvesCrowdsourcingoropen-innovationnewproductideaprogramsObjectiveOutline8.2Listanddefinethestepsinthenewproductdevelopmentprocessandthemajorconsiderationsinmanagingthisprocess.Figure8.1
MajorStagesinNewProductDevelopmentIdeaGeneration(1of2)SystematicsearchfornewproductideasInternalideasources:InternalsocialnetworksIntrapreneurialprogramsExternalideasources:DistributorsandsuppliersCompetitorsCustomersIdeaGeneration(2of2)Internalnewproductideas:Toencouragecontinuedinternalinnovation,GooglesetupArea120,anin-houseinnovationincubatorthatletsselectedemployeesdevotefulltimetotheirdreamprojects.IdeaScreeningScreeningnewproductideastospotgoodonesanddroppooronesassoonaspossibleWaysofscreeningnewideas:Newideawrite-upreviewedbyacommitteeR-W-Wframework—Real,win,worthdoingProductConceptAproductideaisanideaforapossibleproductthatthecompanycanseeitselfofferingtothemarket.Aproductconceptisadetailedversionofthenewproductideastatedinmeaningfulconsumerterms.Productimageisthewayconsumersperceiveanactualorpotentialproduct.ConceptDevelopment(1of2)Conceptdevelopmentandtesting:ThestrikingHondaJetElitehasarangeof1,653milesandamaximumspeedof486milesperhourandcanaccommodatesevenpeopleincludingthecrew.ConceptDevelopment(2of2)DevelopinganewproductintoalternativeproductconceptsFindouthowattractiveeachconceptistocustomersChoosethebestoneConceptTestingTestingnewproductconceptswithgroupsoftargetconsumersMethods:PresentingtheconceptstoconsumerssymbolicallyorphysicallyAskingcustomerstorespondbyansweringquestionsabouttheirreactionstotheconceptsMarketingStrategyDevelopmentInitialmarketingstrategyforanewproductThreepartsofthemarketingstrategystatement:Describesthetargetmarket,plannedvalueproposition,sales,market-share,andprofitgoalsDeterminesproduct’splannedprice,distribution,andmarketingbudgetDevelopslong-runsales,profitgoals,andmarketingmixstrategyBusinessAnalysisandProductDevelopmentBusinessanalysis:Areviewofthesales,costs,andprofitprojectionsforanewproductTofindoutwhetherthesefactorssatisfythecompany’sobjectivesProductdevelopment:DevelopingtheproductconceptintoaphysicalproductToensurethattheproductideacanbeturnedintoaworkablemarketofferingTestMarketing(1of3)IntroducestheproductanditsproposedmarketingprogramintorealisticmarketsettingsGivesthemarketeranexperiencewithmarketingaproductbeforefullintroductionTeststheproductanditsmarketingprogramTestingtakestime,andcostscanbehigh.TestMarketing(2of3)Companiessometimesshortenorskiptestmarketingtotakeadvantageoffast-changingmarketdevelopments,asStarbucksdidwithitshugelysuccessfulmobilepaymentsapp.TestMarketing(3of3)AlternativestostandardtestmarketsControlledtestmarketsSimulatedtestmarketsReasonsforusingalternativetestmarketsReducingthecostsSpeedinguptheprocessCommercializationIntroducinganewproductintothemarketConsiderationsforlaunchinganewproductWhentolaunchWheretolaunchSinglelocation,region,nationalmarket,orinternationalmarketManagingNewProductDevelopmentRequiresaholisticapproachCustomer-centerednewproductdevelopmentTeam-basednewproductdevelopmentSystematicnewproductdevelopmentCustomer-CenteredNewProductDevelopment(1of2)Customer-centerednewproductdevelopmentfocusesonfindingnewwaystosolvecustomerproblemsandcreatemorecustomer-satisfyingexperiences.Customer-CenteredNewProductDevelopment(2of2)Customer-centerednewproductdevelopment:Targetusedhugeamountsofconsumerinputindevelopingitshighlysuccessfulprivate-labelGood&Gatherall-naturalgroceryproductsline.Team-BasedandSystematicNewProductDevelopmentTeam-basednewproductdevelopmentVariouscompanydepartmentsworktogether,overlappingthestepsintheproductdevelopmentprocess.SystematicnewproductdevelopmentInnovationmanagementsystemscollect,review,evaluate,andmanagenewproductideas.ObjectiveOutline8.2SummaryNewproductdevelopmentprocessincludesIdeageneration,ideascreening,productconceptdevelopmentandtesting,andmarketingstrategydevelopmentBusinessanalysis,productdevelopment,testmarketing,andcommercializationNewproductdevelopmentrequiresacustomer-centered,team-based,systematiceffort.ObjectiveOutline8.3Describethestagesoftheproductlifecycleandhowmarketingstrategieschangeduringaproduct’slifecycle.Figure8.2
SalesandProfitsovertheProduct’sLifefromInceptiontoDeclineFigure8.3Styles,Fashions,andFadsTable8.2(1of3)SummaryofProductLife-CycleCharacteristics,Objectives,andStrategiesBlankIntroductionGrowthMaturityDeclineCharacteristicsBlankBlankBlankBlankSalesLowsalesRapidlyrisingsalesPeaksalesDecliningsalesCostsHighcostpercustomerAveragecostpercustomerLowcostpercustomerLowcostpercustomerProfitsNegativeRisingprofitsHighprofitsDecliningprofitsCustomersInnovatorsEarlyadoptersMiddlemajorityLaggardsCompetitorsFewGrowingnumberStablenumberbeginningtodeclineDecliningnumberMarketing
objectivesBlankBlankBlankBlankBlankCreateproductawarenessandtrialMaximizemarketshareMaximizeprofitwhiledefendingmarketshareReduceexpenditureandmilkthebrandTable8.2(2of3)SummaryofProductLife-CycleCharacteristics,Objectives,andStrategiesBlankIntroductionGrowthMaturityDeclineStrategiesBlankBlankBlankBlankProductOfferabasicproduct
Offerproductextensions,service,andwarrantyDiversifybrandandmodelsPhaseoutweakitemsPriceUsecost-plusPricetopenetratemarketPricetomatchorbeatcompetitorsCutpriceDistributionBuiltselectivedistributionBuildintensivedistributionBuildmoreintensivedistributionGoselective:phaseoutunprofitableoutletsProductLife-CycleStrategiesFads:Dubbedthe“hulahoopofGenZ,”fidgetspinnerstookthepreteenandteenmarketbystorm.However,likemostfads,salesquicklyfizzledasteensmovedontothenextnewthing.Table8.2(3of3)SummaryofProductLife-CycleCharacteristics,Objectives,andStrategiesBlankIntroductionGrowthMaturityDeclineStrategiesBlankBlankBlankBlankAd
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