Products, Services, and Brands

Strategy
(Chapter 8)

Ch 8 -1 Copyright © 2011 Pearson Education

 Introduction: Step 3 of the marketing
process
The marketing
process:

Implementing the marketing

strategy through the marketing-mix
(= the "4P"):
- Product and branding strategy
- Pricing strategy
- Communication strategy
(Promotion)
- Distribution strategy (Place)
1. What is a product?

• A product is anything that can be offered in a market for attention,

acquisition, use, or consumption that might satisfy a need or want.

Broadly defined, products also include:

- Services–e.g., banking
- Events–e.g., Mother of Nation festival
- Persons–e.g., Presidential candidates
- Places–e.g., Abu Dhabi as a touristic location
- Organizations–e.g., political parties
- Ideas–e.g., recycling
- … or a mixture of these.
1. What is a product?

• Goods are tangible, physical products

• Services are products that consist of activities, benefits, or
satisfactions and that are essentially intangible and do not
result in the ownership of anything.

A company’s market offering may include…

pure tangible good goods-and-services combinations pure servi

Four Service Characteristics

Read Pages 258-260

2. The levels of product and services
2. The levels of product and services
2. The levels of product and services
2. The levels of product and services

• Core customer values:

Þ What is the customer really
buying?
• Not just lip color but:
- Self-esteem, confidence
- Social acceptance from peers
- Attention from others
- Sophistication, social status
2. The levels of product and services

• Actual product
Þ What make the product?
• Brand name:
What is the difference between Chanel,
Maybelline, and MAC?
• Design:
Opening mechanism, easyness of application
• Packaging:
Is there even a packaging?
• Feature:
Composition, shade, hydratation, texture
• Quality level:
How long does it last
2. The levels of product and services

• Augmented product:
Þ What gravitate around the product?
• Delivery:

Can be purchased online and

delivered to the customer or
selective retailer (Sephora)
• Product support: Generic and
customized advice
http://www.chanel.com/en_US/fragrance-beauty/
makeup-lipstick-rouge-coco-139031

• After-sales service: recommendations

on compatible products (nail color…),
targeted news on latest trends…
3. Decisions in the development and marketing
of products and services
3. Decisions in the development and marketing
of products and services

Communicating and delivering benefits by

product and service attributes.
• Quality: Performance vs conformance quality
(P. 249)
Five guys vs. Burger King
• Features: the basic model is the starting point

• Style and design

3. Decisions in the development and marketing
of products and services

Brand is the name, term, sign, or design

or a combination of these, that identifies
the maker or seller of a product or service.
- Helps consumers in identifying products
- Reflects product quality level and consistency
- Helps the sellers segment the market
 The benefits of branding?

A brand helps differentiate your products from the competition

A brand helps consumers identify the products visually
A brand increases repeat customers & referrals
A brand make customer to accept premium price.
Improve the customers response to the marketing activates.

16 © Pearson Education 2011

3. Decisions in the development and marketing
of products and services

• Opportunity to protect the product

• Reduce costs of shipping and storing
• Reduce theft, spoiling, etc.
• Opportunity to promote the product
• At the point of purchase
• At the point of consumption
• Opportunity to improve the product
• Easier to use, more convenient
• Appeal to new target markets
3. Decisions in the development and marketing
of products and services

Labels identify the product or brand, describe

attributes, and provide promotion. They range
from simple tags attached to products to
complex graphics that are part of the packaging
Using labels to reduce perceived risk for high-
involvement product categories
3. Decisions in the development and marketing
of products and services

Product support services augment actual

products. Support services are an important
part of the customer’s overall experience.
Objective: Preventing cognitive dissonance
from occurring

Include warranties and after-sales services

(e.g., paying repairs)
4. Product and Service Decisions
4.1. 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.

Ch 8 -20 Copyright © 2011 Pearson Education

Product Line
Product and Service Decisions
Product Line Decisions
• Product line filling occurs when companies add more
items within the present range of the line to satisfy more
dealers or utilize excess capacity.

• Be aware of cannibalization: the reduction of the

sales of a company's own products as a consequence
of its introduction of another similar product. e.g. the
launch of new versions of the tablet has resulted in
sales cannibalization

Ch 8 -22 Copyright © 2011 Pearson Education

Product and Service Decisions
Product Line Decisions
Product line stretching is when a company lengthens its product line beyond its current
range.
•Downward product line stretching is used by companies at the upper end of the
market to plug a market hole or respond to a competitor’s attack.
•Upward product line stretching is by companies at the lower end of the market to add
prestige to their current products.
•Combination line stretching is used by companies in the middle range of the market to
achieve both goals of upward and downward line stretching.
•Product line filling occurs when companies add more items within the present range of
the line.

• Product line stretching

- Downward stretching: C- Class
- Upward stretching: Lexus
- Both directions: Marriot

Ch 8 -23 Copyright © 2011 Pearson Education

Product Line
Product Line
4. Product and Service Decisions
4.2. Product Mix Decisions
Product mix consists of all the products and items that a
particular seller offers for sale.
• Width
• Length
• Depth
• Consistency
• Product mix width is the number of different product lines the
company carries.
• Product mix length is the total number of items the company
carries within its product lines.
• Product mix depth is the number of versions offered of each
product in the line.
• Consistency is how closely the various product lines are in end use,
production requirements, or distribution channels.

Ch 8 -26 Copyright © 2011 Pearson Education

Product Mix
Product Mix
5. Branding strategy
5.1.Brand value and brand equity

• Products are created in the factory, but brands are created

in the mind

• Brand equity is the differential effect that knowing the

brand name has on customer response to the product or
its marketing.
5. Branding strategy
5.1. Brand value and brand equity

• Positive brand equity leads to higher brand value

• CEO of McDonald’s declared, “If every asset we own, every

building, and every piece of equipment were destroyed in a
terrible natural disaster, we would be able to borrow all the
money to replace it very quickly because of the value of
our brand. . . . The brand is more valuable than the totality
of all these assets.

• Brand value is the total financial value of a brand as a

trademarked name and logo.
5. Branding strategy
5.1. Brand value and brand equity

• Brand equity is the Starbucks

Generic coffee
house
differential effect that knowing
the brand name has on
customer response to the
product or its marketing.
Negative Positive Positive brand equity of Starbucks

Brand Generic sandwich

place
equity

Brand Brand Brand

awareness image loyalty
Negative brand equity of Subway
5. Branding strategy
5.1. Brand value and brand equity

• Brand awareness measures how well-known a brand is.

• Brand recall: Can people recall if they know a specific brand
name?
Þ “Do you recall the brand The Laughing Cow?”
• Brand recognition: Can people recognize the brand name
among others in its product category?
Þ “Among the brands of cheese below, which ones do you
know?”
Kiri |x|
Président | measure
To | response
quality
The Laughing Cow |x|
Fake brand name | |
5. Branding strategy
5.1. Brand value and brand equity

• Brand image refers to the mental links that consumers

make between a brand and its key product attributes
• The first branding decision is to select your position

Just do

Child
molester
5. Branding strategy
5.1. Brand value and brand equity

• Brand loyalty occurs when a consumer buys the same

brand’s product repeatedly rather than buying from multiple
suppliers.

• Therefore:
• Consumers are often less sensitive to price
• Marketing costs are much lower
• Firm insulated from the competition
5. Branding strategy
5.2. Brand name selection

• It should suggest some-thing about the product’s benefits

and qualities
• It should be easy to pronounce, recognize, and remember
• The brand name should be distinctive
• It should be extendable
• The name should translate easily
• Strong brand name may identify the product category
5. Branding strategy
5.3. Brand Development
5. Branding strategy
5.3. Brand Development
• Line Extension
• Extending an existing brand name to new forms, styles
and colors of an existing product category
• Chips, Cars

• Brand Extension
• Extending an existing brand name to new product
category
• Nestle into water
• Huggies to toiletries for tots

Ch 8 -38 Copyright © 2011 Pearson Education

5. Branding strategy
5.3. Brand Development
• Multibrands
• Additional brands in the same category
• P&G
• New brands
• Create new brand for new market
• Toyota Scion for youth

Ch 8 -39 Copyright © 2011 Pearson Education

5. Branding strategy
5.3. Branding Decision

• The first branding decision is to select your position

– Co-branding:
– Private label/ brand: Lulu & Carrefour
– National brand: marketed and distributed nationally. It is
also available all over the country, rather than just in one
area. (e.g. Nestle water, KitKat)

– Licensing:Offering an intangible asset (use the names or

symbols) to a foreign company for a fee.
• Read pages 267-270
Private Branding
Co-Branding
Licensing

• Licensing: Offering an intangible asset to a foreign company

for a fee
6. New-Product Development Strategy

New product development The development of

original products, product improvements, product
modifications, and new brands through the firm’s
own product development efforts.
6. New-Product Development Strategy
Reasons for new product failure

Overestimation of market size

Poor design
Incorrect positioning
Wrong timing
Priced too high
Ineffective promotion
Management influence
High development costs
Competition

Ch 9 -45 Copyright © 2011 Pearson Education

Product Life-Cycle Strategies

Ch 9 -46 Copyright © 2011 Pearson Education

Product Life-Cycle Strategies

•Product development
• Sales are zero and investment costs mount.
•Introduction

• Slow sales growth and profits are nonexistent.

•Growth

• Rapid market acceptance and increasing profits.

•Maturity

• Slowdown in sales growth and profits level off or decline.

•Decline

• Sales fall off and profits drop.

Ch 9 -47 Copyright © 2011 Pearson Education

 Other Examples of Product Life-Cycle

Ch 9 -48 Copyright © 2011 Pearson Education

 Other Examples of Product Life-Cycle

Ch 9 -49 Copyright © 2011 Pearson Education

 Summary of Product Life-Cycle Characteristics

Ch 9 -50 Copyright © 2011 Pearson Education

?
Thank You