1-1

Chapter
8

Product and Service Concepts

1-2
McGraw-Hill/Irwin Copyright 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
 After
After studying
studying this
this chapter
chapter you
you
should
should be
be able
able to:
to:
Understand the differences between goods
and services.

Differentiate between consumer and

business products, and discuss the different
types of each.

Recognize that marketers need to

appreciate the perspective of the consumer.

1-3
 After
After studying
studying this
this chapter
chapter you
you
should
should be
be able
able to:
to:
Define and discuss the importance
of product quality, product design,
branding, packaging, and customer
service.

Explain how the different product

components need to be integrated
to meet the needs of customers.

1-4
 What Is a Product?

Product:
An idea, a physical entity (a good), a
service, or any combination of the three
that is an element of exchange to satisfy
individual or business objectives .

1-5
 Types of Products

Consumer Products:
Goods:
Those used by
Physical products
consumers for their
with form and
own use and
substance
satisfaction.

Business Products:
Services:
Those used in the
Non-physical products
running of a business
usually involving
or in the manufacture
performance
of products for resale.

1-6
 The Goods/Services Continuum

1-7
 Product Differentiation

Product

Product Differentiation:
Differentiation:
Exists when a firms
Exists when a firms
offerings
offeringsdiffer
differor
orare
are
perceived
perceivedto todiffer
differfrom
from
those
thoseofofcompeting
competing
firms
firmson
onany
anyattribute,
attribute,
including
includingprice.
price.

1-8
 Goods and Services

Goods:

Goods:
Physical
Physical Services:

Services:
products.
products. Nonphysical
Nonphysical
products.
products.

1-9
 Characteristics and Strategies for Services

Service Characteristic Service Strategy

Intangible Associate service with

something tangible
Perishable Manage demand to utilize
supply

Inseparable Capitalize advantages of

person providing service
Variable Standardize service delivery
as much as possible
1-10
 Consumer and Business Products
Consumer Products:
Products that are Business Products:
purchased by Products purchased by
consumers for their
a firm or organization
own personal use.
for its own use.

1-11
 Consumer and Business Products

1-12
 Types of Consumer Products

Convenience
Products
Shopping
Products
Specialty
Products

1-13
 Types of Business Products

Capital
Products

Production
Products

Operational
Products
1-14
 Product Components

Product
Components

Product Features Service Features

Quality Purchase services
Design Usage services
Branding
Packaging

1-15
 Branding
Brand:
A name, term, sign,
symbol, design, or
combination that a
Brand Name:
uses to identify its The element of a brand
products and that can be vocalized:
differentiate them IBM
from those of
competitors.
Tide
Snickers
Diet Coke

1-16
 Branding
Brand Mark:
The element of a brand
that cannot be
vocalized:
MGM Lion
The Buick symbol Trademark:
The Nike Swoosh A brand or part of a
brand that is
registered with the
U.S. Patent and
Trademark Office.

1-17
 Building Brands

1-18
 Types of Brands
Generics
(Products typically not branded)

Manufacturer Brand
(National brand or
regional brand)

Distributor Brand
(Store brand, private brand,
or private label)
1-19
 The Worlds 10 Most Valuable Brands
Rank Brand 2002 Brand Value ($billions)

1 Coca-Cola 69.6
2 Microsoft 64.1
3 IBM 51.2
4 GE 41.3
5 Intel 30.9
6 Nokia 30.0
7 Disney 29.3
8 McDonalds 26.4
9 Marlboro 24.2
10 Mercedes 21.0
1-20
 Keys to Choosing A Brand Name

Is easy to
pronounce, Is
recognize, distinctive Can be
and in some translated
remember. way. into other
languages.

1-21
 Packaging
Label:
A printed
description of the
product on the
package.

Package:
The container or
wrapper for a
product.
1-22
 Functions of Packaging

Protecting
Protectingthe
theproduct
productuntil
until
consumed.
consumed.

Storing
Storingthe
theproduct
productuntil
until
consumed.
consumed.

Facilitating
Facilitatingconsumption
consumptionof
ofthe
the
product.
product.

Promoting
Promotingthe
theproduct.
product.

Facilitating
Facilitatingdisposal
disposalof
ofthe
theproduct.
product.

1-23
 Customer Service
Customer
Service:
Describes the Important Elements of
assistance Customer Service:
provided to help a Providing information
customer with the about product
purchase or use alternatives.
of a product.
Training in product use.

Credit and financing

services.

1-24