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FHBM1124 Marketing Chapter 7-Product and Service Decision
FHBM1124 Marketing Chapter 7-Product and Service Decision
1
Learning Outcomes
1. Demonstrate an understanding of marketing
strategies in relation to consumer needs and the
marketplace.
2. Relate the core concepts of marketing such as
positioning, targeting, and similar strategies in
making decisions.
3. Apply marketing mix elements to produce the
desired response in a given target market.
2
Learning Objectives
Define product and the major classifications
of products and services
Describe the decisions companies make
regarding their individual products and
services.
Discuss branding strategy the decisions
companies make in building and managing
their brands
Identify the four characteristics that affect
the marketing of a service and the
additional marketing considerations that
3 services require
Introduction of Chapter 7
1. The Product-Service Continuum
2. 3 Levels of Product
3. Product & Service Classification
Industrial Products
4
Introduction of Chapter 7
4. Product & service Decisions
i. Product Attributes
ii. Branding
iii. Packaging
iv. Labeling
v. Product Support Services
5
Introduction of Chapter 7
6. Building Strong Brands
i. Brand Positioning
ii. Brand name Selection
iii. Brand Sponsorship
iv. Brand Development
7
Product-Service Continuum
Pure Pure
Tangible Service
Good
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What is Product?
9
What is Service?
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Product, Service and Experiences
A companys market offering often includes
both tangible goods and services.
At one extreme, the offer may consist of a pure
tangible good, such as soap or toothpaste.
At the other extreme are pure services, for
which the offer consists primarily of a service.
To differentiate their offers, marketers are
creating and managing customer experiences
with their brands or company.
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Levels of product and services
Product planners (or creator of the product) need to
think about products and services on three levels.
Three levels:
Core customer value, which addresses the question,
What is the buyer really buying?
Actual product, the design, functions, brand name
and etc.
Augmented product, which is created around the core
benefit and actual product by offering additional
consumer services and benefits.
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When developing products, marketers first must identify the
core customer value that consumers seeks from the product.
They must then design the actual product and find ways to
augment it in order to create this customer value and the
most satisfying customer experience.
1
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Three Levels of Product
1. Core Benefits:
Problem solving benefits or service that customer seek for.
2. Actual product:
Need to develop a products and services base on features,
design, a quality level, a brand name and packaging.
3. Augmented Product:
Build an augmented product around the core benefits and
actual product by offering additional customer services and
benefits.
Delivery & Credit, After sales services, Warranty and
Installation.
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Example : Apple iPad
Core Benefits:
Entertainment, self-expression,
productivity and connectivity
Actual Product:
Brand Name : Apple iPad
Features : 9.7inch screen, ipad pencil,
multi-touch display, high fidelity
speakers
Augmented Products :
Product Support : customer enquiry
1800-My Apple
Warranty : issued by Apple store or
15 local reseller
Mini Case
The Philips GC1421 Steam Iron is a uniquely designed
iron that makes household chores simple, fast and
effective. It comes with cutting edge features such as its
non-stick soleplate and specially designed steam holes
to enable easy gliding on all fabrics, self-clean to prevent
scale build up and continuous steam flow up to 17g/min
for better crease removal. The Philips Customer Care
team is ever ready to provide online support via
www.philips.com.my. It also comes with an extended
local warranty of 24 months.
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PRODUCT
&
SERVICE CLASSIFICATION
(A) CONSUMER PRODUCTS
(I)
(I) (II)
(II) (III)
(III) (IV)
(IV)
Convenience
Convenience Shopping
Shopping Specialty
Specialty Unsought
Unsought
Products
Products Products
Products Products
Products Products
Products
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(I) Convenience Products
Convenience Products:
Bought frequently and
immediately
Low priced (inexpensive)
Mass advertising
Many purchase locations :
7-eleven
Examples: candy, newspapers,
stationary, soap, cooking oil,
plasters, umbrella and etc.
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(II) Shopping Products
Shopping Products:
Bought less frequently
Higher price compare to
convenience products
Consumer plan & compare
(suitability, quality, price and style)
Fewer purchase locations: IKEA,
Harvey Norman, KLCC, Mid
Valley, AEON
Spend time & effort (gather info &
compare)
Examples: furniture, appliances,
clothing
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(III) Specialty Products
Specialty Products:
Special purchase efforts (plan the
purchase, know what they want & will
accept no substitutes)
Do not compare the brands
High price
Unique characteristics& Brand
identification
Few purchase locations : Starhill KL,
Pavillion
Example: Rolex watches, Ferrari car,
High-end electronics & Harley
Davidson bikes
7-22
(IV) Unsought Products
Unsought Products:
Are often products consumers do
not want to think about
New innovations are unsought until
consumer aware (advertising)
Require a lot of persuasive
advertising and aggressive personal
selling
Location : Hospital, clinic & etc.
Examples: blood donations, life
insurance, investment, fitted kitchen
& encyclopedia
23
Copyright 2007, Prentice-Hall Inc.
(B) Industrial Products
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(I) Product & Service Attributes
Developing a product or service involves
defining the benefits that it will offer.
These benefits are communicated and
delivered by product attributes such as
quality, features, and style and design.
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Product Quality Product Features Product Design
Product quality is Product features are Product Style and
creating customer a competitive tool Design is another way
value and satisfaction. for differentiating the to add customer
companys product value.
(a) Quality level from competitors
(Performance quality): products.
the ability of a product Style describes the
to perform its functions. Features value to appearance of a
consumer Versus product.
(b) Quality cost to company
consistency Design contributes to
(Conformance If highly valued in a products usefulness
quality): the freedom relation to cost as well as to its looks.
from defects, and feature should be
consistency in delivering added to product. E.g.: User friendly
a targeted level of
performance. product (easy to hold,
safe and easy to
E.g.: Rolls-Royce keep)
provide higher
performance quality but
Chevrolet gives similar
conformance quality.
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Applying the concept!!!
Over the last several
years, cell phones have
evolved from being quite
large and clunky to being
extremely small. Discuss
how these style and
design changes have
benefited consumers. Do
you think the penetration
of this kind of technology
was accelerated because
of these changes?
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(II)Branding
7-30
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Brand Elements
Brand name: Can be spoken. E.g.: Levis, Calvin
Klein, Hilton, & BMW
Brand mark: symbol. E.g.: Yahoo! Graphic, Disney
Mickey character, Nike swoosh logo
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Advantages branding to buyers & sellers
Buyers Sellers
Brand names help consumers The brand name becomes the basis
identify products that might on which a whole story can be built
benefit them. about a product. (Basis for
product quality)
Brands say something about
product quality and consistency. The brand name and trademark
provide legal protection for unique
Loyal customer knows that they will product features.
get the same features, benefits
and quality each time they buy. The brand name helps the seller to
segment markets.
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(III) Packaging
Packaging involves designing and producing
the container or wrapper for a product.
Developing a good packaging can:
Market the brand
Protect the elements
Ensure product safety
Address environmental concerns (recycle)
33
(IV) Labeling
Labeling refers to visual labels, symbolic or
textual information (containing pictures, letters
and numbers) about a product for product
identification and recognize.
Labels perform several functions (IDP).
The label identifies the product or brand. (Logo or
brand name)
The label describes several things about the
product. (Company details and ingredients)
The label promotes the brand. (Company logo,
pictures or graphics)
34
Labeling has been affected in recent times by rules
and acts of a country:
unit pricing (stating the price per unit of standard
measure),
open dating (stating the expected shelf life of the
product), and
nutritional labeling (stating the nutritional values in
the product).
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(V) Product Support Services
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Learning Objective 3
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Branding Strategy: Building Strong Brands
(Brand Equity)
40
Example of Brand Equity: Coca-Cola, Disney,
Harley Davidson, Google, and Colgate.
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(I) Brand Positioning
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(IV) Brand Development
A company has four choices when it comes to
developing brands.
48
(IV) Brand Development
Line extension:
Occur when a company extends existing brand
names to new forms, colors, sizes,
ingredients, or flavors of an existing product
category.
E.g.: Head & Shoulders shampoo with different
ingredients & benefits.
Brand extension:
Extend a current brand name to new or
modified products in a new category.
When a brand name is successful, marketers
normally use the brand to extend into new areas.
E.g.: Kimberly-Clarks Huggies brand was
extended to toddlers toiletries.
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(IV) Brand Development
Multi branding:
Introduce more brands into an already
existing category.
Offers a way to establish different
features and appeal to different buying
motives.
E.g.: Unilever Multi brand company
New brands:
Decide to launch a new brand in market.
Something new & fresh to compete with
other brand.
Developed based on belief that the
power of its existing brand is declining
and a new brand name is needed.
E.g.: Toyota created Lexus under luxury
50 car category
Discussion Question
52
Learning Objective 4
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Nature and Characteristics of a Service
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Discussion Question
Hotels and resorts charge lower prices in the off-
season to offset the ________ of service characteristic.
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Marketing Strategies for Service
Firms
Service marketing requires external marketing, internal
marketing and interactive marketing
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3 types of service marketing
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Learning Outcomes
1. Demonstrate an understanding of marketing
strategies in relation to consumer needs and the
marketplace.
2. Relate the core concepts of marketing such as
positioning, targeting, and similar strategies in
making decisions.
3. Apply marketing mix elements to produce the
desired response in a given target market.
58
Chapter7
The End
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