Chapter Eight

Product, Services, and Brands:

Building Customer Value

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Product, Services, and
Branding Strategy
Topic Outline
• What Is a Product?
• Product and Services
Decisions
• Services Marketing
• Branding Strategy: Building
Strong Brands

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Products, Services, and Experiences

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 satisfaction that is
essentially intangible and does not result
in the ownership of anything

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 Products, Services, and Experiences

Experiences represent what buying the product or

service will do for the customer

BMW ad: “We realized a long time ago that what you make people
feel is just as important as what you make.”

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Levels of Product and Services

What is the buyer really

buying?

Revlon: “In the factory, we

make cosmetics; in the
store, we sell hope.”

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Product and Service Classifications

Consumer
products
Industrial
products

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 Product and Service Classifications
• Consumer products are products and
services for personal consumption
• Classified by how consumers buy them
– Convenience products (e.g. Newspapers)
– Shopping products (e.g. Furniture)
– Specialty products (e.g. Designer clothes)
– Unsought products (e.g. Life insurance)

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Product and Service Classifications
Convenience products
consumer products and services that the
customer usually buys frequently,
immediately, and with a minimum
comparison and buying effort
– Newspapers
– Candy
– Fast food

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Product and Service Classifications

Shopping products
consumer products and services that
the customer compares carefully on
suitability, quality, price, and style
– Furniture
– Cars
– Appliances

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 Product and Service Classifications
Specialty products
consumer products and services with unique
characteristics or brand identification for which a
significant group of buyers is willing to make a
special purchase effort
• Medical services
• Designer clothes
• High-end electronics

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 Product and Service Classifications

Unsought products
consumer products that the consumer does not
know about or knows about but does not
normally think of buying
• Life insurance
• Funeral services
• Blood donations

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 What Is a Product?
Product and Service Classifications
Industrial products
products purchased for further processing or for
use in conducting a business
• Classified by the purpose for which the product is
purchased
– Materials and parts
– Capital
– Supplies and services

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 Product and Service Classifications

Capital items are industrial products that aid

in the buyer’s production or operations
(buildings, factories, fixed equipment)
Materials and parts include raw materials and
manufactured materials and parts usually
sold directly to industrial users
Supplies and services include operating
supplies, repair and maintenance items,
and business services. Usually
convenience products.

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 Organizations, Persons, Places, and Ideas
Organization marketing consists of activities
undertaken to create, maintain, or change
attitudes and behavior of target consumers
toward an organization

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 Organizations, Persons, Places, and Ideas

Person marketing consists of

activities undertaken to
create, maintain, or change
attitudes and behavior of
target consumers toward
particular people
Person marketing: Food Network chefs like Rachael

Ray and Bobby Flay now approximate stars. Each

offers a slew of cook books, endorsed brands, and

signature lines of cookware and condiments.

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 Organizations, Persons, Places, and Ideas

Place marketing consists of activities undertaken to create,

maintain, or change attitudes and behavior of target
consumers toward particular places
Social marketing is the use of commercial marketing concepts
and tools in programs designed to influence individuals’
behavior to improve their well-being and that of society

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Decisions, Decisions, Decisions!
Individual Product and Service Decisions
(pp229-236)

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Product and Service Decisions

Individual Product and Service Decisions

STEP 1: Product or service attributes

communicate and deliver the benefits
• Quality
• Features
• Style and design

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 Individual Product and Service Quality

• Product quality: The characteristics of a product or

service that bear on its ability to satisfy stated or
implied customer needs.
– Product Quality Level is the level of quality that
supports the product’s positioning
– Product Conformance Quality is the product’s
freedom from defects and consistency in delivering
a targeted level of performance
• Total quality management (TQM)

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 Product and Service Decisions
Individual Product and Service Features

Product features
• are a competitive tool for differentiating a
product from competitors’ products
• are assessed based on the value to the customer
versus the cost to the company

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 Product and Service Decisions
Individual Product and Service Style and Design

Style describes the

appearance of the
product
Design contributes to a
product’s usefulness
as well as to its looks

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 Product and Service Decisions
Individual Product and Service Branding

STEP 2: Brand
A name, term, sign, symbol, design, or a
combination of these, that identifies the
products or services of one seller or group
of sellers and differentiates them from those
of competitors.

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Product and Service Decisions
Individual Product and Service
Packaging
STEP 3: Packaging involves designing and
producing the container or wrapper for a
product

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Product and Service Decisions
Individual Product and Service Labels

STEP 4: Labels identify the product or brand,

describe attributes, and provide
promotion

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 Product and Service Decisions
Individual Product and Service Product
Support Services

STEP 5: Product support

services augment
actual products

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 Product and Service Decisions
Product line is a group of products that are
• closely related
• function in a similar manner,
• sold to the same customer groups,
• marketed through the same types of outlets,
• fall within given price ranges

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Product and Service Decisions
Why have Product lines?
– one objective might be to allow for upselling.
• E.g. BMW wants to move customers up from its 1-
series models to 3-, 5-, 6-, and 7-series models.
– Another objective might be to allow cross-selling
• E.g. HP sells printers as well as cartridges.
– Still another objective might be to protect against
economic swings
• E.g. Gap runs several clothing-store chains (Gap,
Old Navy)

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Product and Service Decisions

Product Line Decisions

A company can expand its product line in two
ways: by line filling or line stretching.
Product line length is the number of items in the
product line
• Line stretching (beyond it’s current range)
– Upward, downward, or both
• Line filling (more of present range)

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 Product and Service Decisions
Product Mix Decisions

Product mix (or product portfolio) consists of

all the products and items that a particular
seller offers for sale.
e.g. Colgate’s product lines: oral care, personal care,
home care, and pet nutrition

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 Product and Service Decisions
Product Mix Dimension
Width (the number of different product lines
the company carries)
Length (the total number of items a company
carries within its product lines.)
Depth (versions of each product in a line)
Consistency (how closely related)

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 Why expand your product line?
• reaching for extra profits,
• satisfying dealers,
• using excess capacity,
• being the leading full-line company,
• plugging holes to keep out competitors
IF overdone it results in cannibalization
and customer confusion

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 Services Marketing
Types of Service Industries
• Government (courts, hospitals,
military)
• Private not-for-profit organizations
(museums, mosques, colleges)
• Business services (airlines, banks)

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 Services Marketing
Nature and Characteristics of a Service

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 Services Marketing

Marketing Strategies for Service Firms

In addition to traditional
marketing strategies, service
firms often require additional
strategies
• Service-profit chain
• Internal marketing
• Interactive marketing

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 Services Marketing
Marketing Strategies for Service Firms

Service-profit chain links service firm profits

with employee and customer satisfaction
• Internal service quality
• Satisfied and productive service
employees
• Greater service value
• Satisfied and loyal customers
• Healthy service profits and growth

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 Services Marketing
Marketing Strategies for Service Firms

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
Internal marketing must precede external marketing

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 Services Marketing
Marketing Strategies for Service Firms
Interactive marketing means that service quality depends
heavily on the quality of the buyer-seller interaction
during the service encounter
• Service differentiation
• Service quality
• Service productivity
Remember Zappos.com?

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Branding Strategy: Building Strong Brands
(pp 243–252)

Brand equity: The differential effect that

knowing the brand name has on customer
response to the product or its marketing.
• A measure of the brand’s ability to capture
consumer preference and loyalty.
Brand valuation is the process of estimating
the total financial value of a brand.
E.g. Brand value of Google is worth over $100
billion

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Branding Strategy: Building Strong Brands

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Branding Strategy: Building Strong
Brands
1. Brand Positioning

Brand strategy decisions

include:
• Product attributes
• Product benefits
• Product beliefs and values

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Branding Strategy: Building Strong Brands
2. Brand Name Selection
Desirable qualities
1. Suggest benefits and qualities
2. Easy to pronounce, recognize, and
remember
3. Distinctive
4. Extendable
5. Translatable for the global economy
6. Capable of registration and legal
protection
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Branding Strategy: Building Strong
Brands
3. Brand Sponsorship
Manufacturer’s brand
(or national brand) e.g Sony Bravia HDTV
Private brand: sell to resellers who give
the product a private brand (also called a
store brand)
• Price conscious
Licensed brand (Star Wars)
Co-brand (Nike +iPod Sport Kit)

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Branding Strategy: Building Strong Brands
4. Brand Development Strategies

e.g. MultiGrain Special K

P&G: Pantene, Head &

Toyota: Scion
Shoulders, Aussie,

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Line extensions occur when a company extends existing brand
names to new forms, colors, sizes, ingredients, or flavors of an
existing product category. Cheerios line of cereals includes Honey
Nut, Frosted, Yogurt Burst, MultiGrain, etc.

Brand Extensions. A brand extension extends a current brand

name to new or modified products in a new category. For example,
Kellogg’s has extended its Special K cereal brand now includes
crackers etc

Multibrands. Companies often market many different brands in a

given product category. For example, in the United States, P&G
sells six brands of laundry detergent (Tide, Cheer, Gain, Era, Dreft,
and Ivory)

New Brands. A company might believe that the power of its

existing brand name is waning, so a new brand name is needed.
Or it may create a new brand name when it enters a new product
category for which none of its current brand names are
appropriate. For example, Toyota created the separate Scion
brand, targeted toward millennial consumers.
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