CHAPTER 5

PRODUCT STRATEGY

VU THN
ngocvth@uel.edu.
vn
 CONTENTS

01 PRODUCTS

02 PRODUCT DECISIONS

03 SERVICE MARKETING

04 BRAND STRATEGY: BUILDING

STRONG BRANDS

05 PRODUCT LIFE-CYCLE STRATEGIES

 1.1 WHAT IS A PRODUCT?

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 satisfactions and that is essentially
intangible and does not result in the ownership of
anything.
 1.1 WHAT IS A PRODUCT?

Products and services are becoming more commoditized.

Companies are now creating and managing customer

experiences with their brands or company.
 1.2 THREE LEVELS OF
PRODUCT

● The most basic level is the core

customer value, which addresses the
question: What is the buyer really
buying?
● Actual product: features, a design,
a quality level, a brand name, and
packaging.
● Augmented product: offering
additional consumer services and
3 Levels of Product and example
 1.2 THREE LEVELS OF PRODUCT

3 Levels of Product example

1.3 PRODUCT & SERVICE
CLASSIFICATIONS
1.3 PRODUCT & SERVICE
CLASSIFICATIONS

Consumer products Industrial products

Marketing Considerations for Consumer Products
1.3 PRODUCT & SERVICE
CLASSIFICATIONS
Consumer products are products and services bought by
final consumers for personal consumption.

Convenien Specialty
ce products
products Shopping Unsought
products products
 1.3 PRODUCT & SERVICE
CLASSIFICATIONS
Convenience products are consumer products
Convenien and services that the customer usually buys
ce frequently, immediately, and with a minimum
products comparison and buying effort.
1.3 PRODUCT & SERVICE
CLASSIFICATIONS

Shopping products are less frequently

purchased consumer products and services
Shopping that the customer compares carefully on
products suitability, quality, price, and style.
 1.3 PRODUCT & SERVICE
CLASSIFICATIONS
Specialty products are consumer products
Specialty and services with unique characteristics or
products brand identification for which a significant group
of buyers is willing to make a special purchase
effort.
 1.3 PRODUCT & SERVICE
CLASSIFICATIONS

Unsought products are consumer products

that the consumer does not know about or
Unsought knows about but does not normally think of
products buying.
 1.3 PRODUCT & SERVICE
CLASSIFICATIONS

Industrial products are those products purchased

for further processing or for use in conducting a
business.
• Materials and parts
• Capital items
• Supplies and services
 1.3 PRODUCT & SERVICE
CLASSIFICATIONS

• Materials and parts include raw materials and

manufactured materials and parts.
• Capital items are industrial products that aid in the
buyer’s production or operations.
• Supplies and services include operating supplies,

repair and maintenance items, and business services.

 1.3 PRODUCT & SERVICE
CLASSIFICATIONS
Organizations, Persons, Places, and Ideas

Organization Place
marketing marketing

Person Social
marketing marketing
 1.3 PRODUCT & SERVICE
CLASSIFICATIONS

Organization
marketing

Organization marketing consists of activities undertaken to

create, maintain, or change the attitudes and behavior of target
consumers toward an organization.
 1.3 PRODUCT & SERVICE
CLASSIFICATIONS

Person
marketing

Person marketing consists of activities undertaken to create,

maintain, or change the attitudes or behavior of target
consumers toward particular people.
 1.3 PRODUCT & SERVICE
CLASSIFICATIONS
Place
marketing

Place marketing consists of activities undertaken to create,

maintain, or change attitudes and behavior toward particular
places.
 1.3 PRODUCT & SERVICE
CLASSIFICATIONS

Social
marketing

Social marketing uses commercial marketing concepts to

influence individuals’ behavior to improve their well-being and
 2.1 INDIVIDUAL
PRODUCT DECISIONS

Product
Product Labelling
Branding Packaging support
attributes & logos
services
 2.1 INDIVIDUAL
PRODUCT DECISIONS

Product Communicate and deliver benefits by product &

attributes service attributes.
● Quality
● Features
● Style and design
 2.1 INDIVIDUAL
PRODUCT DECISIONS
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
● Return-on-quality
● Quality level
● Performance quality
 2.1 INDIVIDUAL
PRODUCT DECISIONS

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
 2.1 INDIVIDUAL
PRODUCT DECISIONS

Style describes the appearance of the

product.

Design contributes to a product’s

usefulness as well as to its looks.
 2.1 INDIVIDUAL
PRODUCT DECISIONS
Brand is the name, term, sign, or design or a
Branding combination of these, that identifies the maker or
seller of a product or service.

Packaging involves designing and producing the

Packaging
container or wrapper for a product.

Labelling Labels identify the product or brand, describe

& logos attributes, and provide promotion.
 2.1 INDIVIDUAL
PRODUCT DECISIONS

Product
support
services

Product support
services augment
actual products.
2.2 PRODUCT LINE DECISIONS

PRODUCT LINE

is a group of products that are closely related

because they function in a similar manner, are
sold to the same customer groups, are marketed
through the same types of outlets, or fall within
given price ranges.
 2.2 PRODUCT LINE DECISIONS

Product line length is the number of items in the

product line.
• Line stretching
• Line filling
 2.3 PRODUCT MIX DECISIONS

Product mix consists of all the

product lines and items that a
particular seller offers for sale.
• Width
• Length
• Depth
• Consistency
3.1 FOUR SERVICE
CHARACTERISTICS
3.2 TYPES OF
SERVICE INDUSTRIES

Government

Private not-for-profit
organizations

Business organizations
 3.3 MARKETING STRATEGIES
FOR SERVICE FIRMS

In addition to
traditional Service-profit chain
marketing
strategies,
service Internal marketing
firms often
require Interactive
additional marketing
strategies.
 3.3 MARKETING STRATEGIES
FOR SERVICE FIRMS chain links service firm
Service-profit
profits with employee and customer
Service-profit chain satisfaction.
• Internal service quality
• Satisfied and productive service
employees
• Greater service value
• Satisfied and loyal customers
• Healthy service profits and growth
3.3 MARKETING STRATEGIES
FOR SERVICE FIRMS
3 types of service marketing
 3.3 MARKETING STRATEGIES
FOR SERVICE FIRMS

Internal marketing 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.
 3.3 MARKETING STRATEGIES
FOR SERVICE FIRMS
Interactive
Interactive marketing means that service
marketing
quality depends heavily
on the quality of the buyer-seller
interaction during the service
encounter.
• Service differentiation
• Service quality
• Service productivity
 3.3 MARKETING STRATEGIES
FOR SERVICE FIRMS
Interactive
Managing service differentiation creates
marketing
a competitive advantage.
• Offer
• Delivery
• Image
 3.3 MARKETING STRATEGIES
FOR SERVICE FIRMS
Interactive
Managing service quality enables a
marketing
service firm to differentiate itself by
delivering consistently higher quality than
its competitors provide.
 3.3 MARKETING STRATEGIES
FOR SERVICE FIRMS
Interactive
Managing service productivity refers to
marketing
the cost side of marketing strategies for
service firms.
• Employee hiring and training
• Service quantity and quality
 4.1 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.

Brand value is the total financial

value of a brand.
 4.2 MAJOR BRAND
STRATEGY DECISIONS

Brand Brand name Brand Brand

positioning selection sponsorship development
• Attributes • Selection • Manufacturer’ • Line
• Benefits • Protection s brand extensions
• Beliefs & • Private brand • Brand
values • Licensing extensions
• Co-branding • Multibrands
• New brands
 4.2 MAJOR BRAND
STRATEGY DECISIONS

Brand Brand Positioning: marketers can position brands

positioning
• Attributes
at any of three levels.
• Benefits • Attributes
• Beliefs &
values • Benefits
• Beliefs and values
 4.2 MAJOR BRAND
STRATEGY DECISIONS

Brand name Brand Name Selection

selection
• Selection
• Suggests benefits and qualities
• Protection • Easy to pronounce, recognize, and remember
• Distinctive
• Extendable
• Translatable for the global economy
• Capable of registration and legal protection
 4.2 MAJOR BRAND
STRATEGY DECISIONS

Brand Brand Sponsorship

sponsorship
• Manufacturer’
• Manufacturer’s brand
s brand • Private brand
• Private brand
• Licensing • Licensed brand
• Co-branding
• Co-brand
 4.2 MAJOR BRAND
STRATEGY DECISIONS

Brand
development
• Line
extensions
• Brand
extensions
• Multibrands
• New brands
5.1 PRODUCT LIFE-CYCLE
STRATEGIES
Sales &
Profits
over the
PLC from
Inception
to
Decline
 5.1 PRODUCT LIFE-CYCLE
STRATEGIES
Product Life-cycle (PLC) is the length of time that a
product exists in the market

● Product development: zero sales and increasing

investment costs
● Introduction: slow sales and nonexistent profits
● Growth: rapid market acceptance and increasing profits
● Maturity: slow sales growth and profits level off or decline
● Decline: sales fall off and profits drop
5.1 PRODUCT LIFE-CYCLE
STRATEGIES
Introduction Stage
• Slow sales growth
• Little or no profit

• High distribution and promotion expenses

5.1 PRODUCT LIFE-CYCLE
STRATEGIES
Growth Stage
• Sales increase

• New competitors enter the market

• Profits increase

• Economies of scale
• Consumer education

• Lowering prices to attract more buyers

5.1 PRODUCT LIFE-CYCLE
STRATEGIES
Maturity Stage
• Slowdown in sales

• Many suppliers

• Substitute products

• Overcapacity leads to competition

• Increased promotion and R&D to support sales and

profits
5.1 PRODUCT LIFE-CYCLE
STRATEGIES
Maturity Stage
Modification Strategies
• Modify the market

• Modify the product

• Modify the marketing mix

5.1 PRODUCT LIFE-CYCLE
STRATEGIES
Decline Stage
● Maintain the product
● Harvest the product
● Drop the product
 Summary of PLC Characteristics, Objectives, and strategies

INTRODUCTION GROWTH MATURITY DECLINE

Characteristics
Sales Low sales Rapidly rising sales Peak sales Declining sales

Costs High cost/ Average cost/ customer Low cost/ customer Low cost/ customer
customer
Profits Rising profits High profits Declining profits
Negative
Early adopters Mainstream adopters Lagging adopters
Customers
Innovators
Growing number Stable number beginning Declining number
Competitors Few to decline

Marketing objectives
Create product Maximize market share Maximize profit while Reduce expenditure
engagement & trial defending market share & milk the brand
Strategies

Product Offer a basic Offer product Diversity brand & Phase out weak
product extensions, service, and models items
warranty

Price Use cost-plus Price to penetrate market Price to match or Cut price
beat competitors

Distribution Build selective Build intensive Build more Go selective: phase

distribution distribution intensive out unprofitable
distribution outlets

Advertising Build product Build engagement & Stress brand Reduce to level
awareness among interest in the mass differences & needed to retain
early adopters & market benefits hard-core loyals
dealers

Sales Use heavy sales Reduce to take Increase to Reduce to minimal

promotion promotion to entice advantage of heavy encourage brand level
trial consumer demand switching