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8-1

PRINCIPLES OF MARKETING
Eighth Edition
Philip Kotler and Gary Armstrong
Chapter
Chapter
88
Product and Services
Strategy

 Copyright 1999 Prentice Hall

What
What is
is aa Product?
Product?
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• Anything that can be offered to a market for

attention, acquisition, use or consumption.
• Satisfies a want or a need.
• Includes:
– Physical Products
– Services
– Persons
– Places
– Organizations
– Ideas
– Combinations of the above

 Copyright 1999 Prentice Hall

Levels
Levels of
of Product
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Product
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Augmented
Augmented
Product
Product

Installation

Packaging

Brand Features
Name Core
Core
Benefit After-
Delivery Benefit
Sale
& Credit or
or Service
Quality Service
Service Design
Level

Warranty

Actual
Actual Core
Core
Product
Product Product
Product
 Copyright 1999 Prentice Hall
Product
Product Classifications
Classifications
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Consumer
Consumer Products
Products
Convenience Products Shopping Products
> Buy frequently & immediately > Buy less frequently
> Low priced > Gather product information
> Many purchase locations > Fewer purchase locations
> Includes: > Compare for:
• Staple goods • Suitability & Quality
• Impulse goods • Price & Style
• Emergency goods

Specialty Products Unsought Products

> Special purchase efforts > New innovations
> Unique characteristics > Products consumers don’t
> Brand identification want to think about
> Few purchase locations > Require much advertising &
personal selling

 Copyright 1999 Prentice Hall

Product
Product Classifications
Classifications
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Industrial
Industrial Products
Products

Materials
Materials
and
and
Parts
Parts

Capital
Capital
Items
Items

Supplies
Supplies
and
and
Services
Services
 Copyright 1999 Prentice Hall
Product
Product Classifications
Classifications
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Other
Other Marketable
Marketable Entities
Entities
• Marketed to create, maintain, or change the
attitudes or behavior toward the following:

• Organizations - Profit (businesses) and

nonprofit (schools and churches).
• Person - Political and sports figures,
entertainers, doctors and lawyers.
• Place - Business sites and tourism.
• Social - Reduce smoking, clean air,
conservation.

 Copyright 1999 Prentice Hall

Individual
Individual Product
Product Decisions
Decisions
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Product
Product Attributes
Attributes

Branding
Branding

Packaging
Packaging

Labeling
Labeling

Product
Product Support
Support Services
Services
 Copyright 1999 Prentice Hall
Product
Product Attribute
Attribute
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8-8

Decisions
Decisions

Quality
Quality Features
Features

Design
Design

 Copyright 1999 Prentice Hall

Brands
Brands
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Consistency
Consistency Quality
Quality &
& Value
Value

Attributes
Attributes Advantages Identification
Identification
of
Brand Names

Brand
Association
Association Loyalty
Loyalty
Equity

Credibility
Credibility Awareness
Awareness

 Copyright 1999 Prentice Hall

Major
Major Brand
Brand Decisions
Decisions
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Brand
Brand Name
Name Selection
Selection
Selection
Selection
Protection
Protection

Brand
Brand Sponsor
Sponsor
Manufacturer’s
Manufacturer’s Brand
Brand
Private
Private Brand
Brand
Licensed
Licensed Brand
Brand
Co-branding
Co-branding

Brand
Brand Strategy
Strategy
Line
Line Extensions
Extensions
Brand
Brand Extensions
Extensions
Multibrands
Multibrands
New
New Brands
Brands
 Copyright 1999 Prentice Hall
 Brand
Brand Strategy
Strategy
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Product Category
Existing New
Brand Name

Existing Line Brand

Extension Extension

New
New Multibrands
Brands

 Copyright 1999 Prentice Hall

Brand
Brand Strategy
Strategy
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• Line Extension
– Existing brand names extended to new forms,
sizes, and flavors of an existing product category.
• Brand Extension
– Existing brand names extended to new product
categories.
• Multibrands
– New brand names introduced in the same product
category.
• New Brands
– New brand names in new product categories.

 Copyright 1999 Prentice Hall

Packaging
Packaging
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Competitive
Sales Advantages Product
Tasks Safety
Packaging
Packaging

Labeling
Labeling
Identifies Promotes
Describes

 Copyright 1999 Prentice Hall

Product
Product -- Support
Support Services
Services
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Companies should design its support services to

profitably meet the needs of target customers.
How?

• Step 1. Survey customers to determine satisfaction

with current services and any desired new services.

• Step 2. Assess costs of providing desired services.

• Step 3. Develop a package of services to delight

customers and yield profits.

 Copyright 1999 Prentice Hall

Product
Product Line
Line Decisions
Decisions
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Product
Product Line
Line Length
Length
Number
Number of
of Items
Items in
in the
the Product
Product Line
Line

Stretching Filling
Lengthen beyond Lengthen within
current range current range

Downward

Upward

 Copyright 1999 Prentice Hall

Product
Product Mix
Mix Decisions
Decisions
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Width
Width -- number
number of
of
different
different product
product
lines
lines
Consistency

Length
Length -- total
total Product
Product MixMix --
number
number of of items
items all
all the
the product
product
within
within the
the lines
lines lines
lines offered
offered

Depth
Depth -- number
number
of
of versions
versions of
of
each
each product
product

 Copyright 1999 Prentice Hall

Characteristics
Characteristics of
of Services
Services
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Can’t be seen, tasted, felt, heard,

Intangibility
Intangibility or smelled before purchase.

Inseparability
Inseparability Can’t be separated from service
providers.
Variability
Variability Quality depends on who provides
them and when, where and how.
Perishability
Perishability Can’t be stored for later sale or use.

 Copyright 1999 Prentice Hall

The
The Service-Quality
Service-Quality Chain
Chain
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Internal
Internal Service
Service Quality
Quality

Satisfied
Satisfied and
and
Health
HealthService
Service Productive
ProductiveService
Service
Profits
Profitsand
and Growth
Growth Employees
Employees

Satisfied
Satisfied and
andLoyal
Loyal Greater
Greater Service
Service
Customers
Customers Value
Value

 Copyright 1999 Prentice Hall

Marketing
Marketing Strategies
Strategies for
for Service
Service
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Firms
Firms
• Managing Service Differentiation
– Develop offer, delivery and image with competitive
advantages.
• Managing Service Quality
– Empower employees
– Become “Customer obsessed”
– Develop high service quality standards
– Watch service performance closely
• Managing Service Productivity
– Train current or new employees
– Increase quantity by decreasing quality
– Utilize technology

 Copyright 1999 Prentice Hall