Chapter Five

PRODUCT, SERVICE AND BRAND DECISIONS

 Product Definition
2

Product can be defined as:

Anything that can be offered to a market for attention,

acquisition, use or consumption that might satisfy a -

want or need.
Products include more than just tangible goods. Broadly

defined, products include physical objects, services,

persons, places, organizations, ideas or mixes of these
entities.
 Product can be any of the following
3
Products Examples
 Physical goods  Automobile, chair…
 Services  Bank, Hotel, transport…
 Experiences  Advising, information…
 Events  Musical concert, sport…
 Persons  Football players….
 Places  Lalibela, Kumsa Morda…
 Properties  Building, Vehicles…
 Organizations  New Generation
 Information University collge,
 Economic information…
 Ideas
 Business plan,
consultation
 The Product Level
4

Customer value hierarchy

 Core benefit (What the customers are Fig. product level
really buying e.g. Beauty, purchase of rest)
 Basic product ( Actual product e.g. TV)
 Expected product (minimum expectation
from the product e.g. clean bedroom)
 Augmented product ( additional offerings
e.g. TV &/ gifts in a bedroom)
 Potential product (Potential offerings/
strategies which delight customer)

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Fig. product level

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 Product Classification
6

Products can be classified according to their

durability and tangibility:
 Non-durable products are goods that are normally
consumed quickly and used on one or a few usage
occasions, such as beer, soap and food products.
Durable products are products used over an
extended period of time and normally survive for
many years. Examples are refrigerators, cars and
furniture.

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 Cont…
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Services are activities, benefits and satisfactions

offered for sale which are essentially intangible and
do not result in the ownership of anything. Examples
include haircuts, holiday packages and banking
services.
Marketers have also divided products and services
into two broad classes based on the types of
customer that use them - consumer products and
industrial products.

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 Consumer Products
8

Consumer products are those bought by final

consumers for personal consumption.
Marketers usually classify these goods based on
consumer shopping habits.
Consumer products include convenience products,
shopping produces, specialty products and
unsought products.
These products differ in the way consumers buy
them, so they differ in how they are marketed.

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 Marketing considerations for consumers products
TYPE OF CONSUMER
9
PRODUCT
MARKETING CONVENIENCE SHOPPING SPECIALITY UNSOUGHT
CONSIDERATIO
NS
Customer Frequent purchase, little Less frequent purchase, Strong brand preference Little product
buying planning, little comparison much planning and and loyalty, special awareness,
Behavior Or shopping effort, low
customer involvement
shopping effort, purchase effort, little knowledge (or if
comparison of brands comparison of brands, aware, little or even
on price, quality, style low price sensitivity negative
interest)

Price Low price Higher price High price varies

Widespread Selective Exclusive distribution in
Distributio distribution, only one or a few outlets
Varies
distribution in
n Convenient locations
fewer outlets per
market area
Advertising and More carefully targeted Aggressive
Promotion Mass personal selling by both promotion by both advertising
promotion producer producer and personal selling
and resellers by
by the and resellers
producer and
producer resellers

Examples Toothpaste, Major Luxury goods, Life

magazines, appliances such as Rolex insurance,
Laundry
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Industrial-Goods Classification
 Materials and parts
 Farm products
 Natural products
 Manufactured
materials and parts
 Component materials
 Component parts
 Capital items
 Installations
 Equipment

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 Cont…
11

 Supplies and business services

 Maintenance and
repair items
 Operating supplies
 Maintenance and
repair services
 Business advisory
services

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 Product Decisions
12

Marketers make product and service decision at three

levels: Individual product decision, product line
decision and product mix decisions.
1. Individual Product Decisions
Let us now look at decisions relating to the development

and marketing of individual products. We will focus on

decisions about product attributes, branding,
packaging, labeling, and product-support services.

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 A. Product Attributes
13

Developing a product involves defining the benefits

that the product will offer.
These benefits are communicated and delivered by
tangible product attributes, such as quality, features
and design.
Decisions about these attributes are particularly
important as they greatly affect consumer reactions
to a product.

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 Product Quality
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The. ability of a product to perform its functions; it
includes the product's overall durability, reliability,
precision, ease of operation and repair, and other valued
attributes.
Quality is one of the marketer's major positioning
tools.
Quality has two dimensions - level and consistency. In
developing a product, the marketer must first choose a
quality level that will support the product's position in
the target market.
Beyond quality level, high quality can also mean
consistently delivering the targeted level of quality to
consumers. In this sense, quality means 'absence of
defects or variation'.
 Product Features
15

Features are a competitive tool for differentiating the

company's product from competitors' products.
A 'stripped-down' model, one without any extras, is
the starting point.
The company should periodically survey buyers who
have used the product and ask these questions:
 How do you like the product?
 Which specific features of the product do you like most?
 Which features could we add to improve the product?
 How much would you pay for each feature?
 Product Design
16

Design is more than skin deep - it goes to

the very heart of a product.
Design is a broader concept than style.
Style simply describes the appearance of a
product. A sensational style may grab
attention, but it does not necessarily make
the product perform better.
Good design contributes to a product's
usefulness as well as to its looks.
 B. Branding
17

Branding has become a central issue in product strategy.

A brand is a name, term, sign, symbol, design or a
combination of these, which is used to identify the goods
or services of one seller or group of sellers and to
differentiate them from those of competitors.
A brand conveys a specific set of features, benefits and
services to buyers. It is a mark, a tangible emblem, which
says something about the product. The best brands, for
example, often convey a warranty of quality.
 A brand can deliver up to four levels of meaning:

18
Attributes: A brand first brings to mind certain product
attributes.
Benefits: Customers do not buy attributes, they buy
benefits. Therefore, attributes must be translated into
functional and emotional benefits.
Values: A brand also says something about the buyers'
values.
Personality: A brand also projects a personality.
Brand Equity
The value of a brand, based on the extent to which it has
high brand loyalty, name awareness, perceived quality,
strong brand associations, and other assets such as
patents, trademarks and channel relationships.
 Brand Name Selection
19

Selecting the right name is a crucial part of the

marketing process. Desirable qualities for a brand
name include the following:
It should suggest something about the product's
benefits and qualities.
It should be easy to pronounce, recognize and
remember.
The brand name should be distinctive.
The name should be translate easily (and
meaningfully) into foreign languages
 Cont…
20

It should be capable of registration and

legal protection, A brand name cannot be
registered if it infringes on existing brand
names.

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 C. Packaging Decisions
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Packaging includes the activities of designing and

producing the container or wrapper for a product.
Packaging is done at three levels
- primary
- secondary
- shipping
 For example old Spice aftershave lotion is in a bottle (primary
package) that is in a cardboard box (secondary package) that is
in a corrugated box (shipping package) containing six dozen
boxes of Old Spice.
 Functions of Packaging
22

Although the primary function of the package was to

contain and protect the product, in recent times,
many factors have made packaging an important
marketing tool.
packages must now perform many sales tasks - from
attracting attention, to describing the product, to
making the sale. That is the package performs three
tasks.
 Protective function
 Promotional function
 Informational function
 D. Labeling Decisions
23

Labeling- is describe several things about the

product
Who made it
Where it was made.
When it was made
How it is to be used.
Labels may range from simple tags attached
to products to complex graphics that are part
of the package.
E. Product-Support Services Decisions
24

product-support services are Services that augment

actual products.
A company's offer to the marketplace usually includes
some services, which can be a minor or a major part of
the total offer.
Good customer service makes sound business sense.
It costs less to keep the goodwill of existing customers
than it does to attract new customers or who back lost
customers.
 Cont…
25

 Firms that provide high-quality service usually outperform

their less service-oriented competitors.

 Customers vary in the value they assign to different services.

Some consumers want credit and financing services, fast and

reliable delivery, or quick installation. Others put more weight
on technical information and advice, raining in product use,
or after-sale service and repair.
 Cont…
26

Thus the first step in deciding which product-support

services to offer is to determine both the services that

target consumer value and the relative importance of
these services.
Delivering Product-Support Services: Finally,
companies must decide how they want to deliver
product-support services to customers.
 2. Product Line Decisions
27

A 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 outlet, or fall within given price
ranges. For example,
Volvo produces several lines of cars,
Philips produces several lines of hi-fi systems and
Nike produces several lines of athletic shoes. In
formulating product line strategies, marketers face a
number of tough decisions.
 Cont…
28

It can systematically increase the length of its product

line in two ways: by stretching its line and by filling its
line.
product line stretching: Increasing the product line by
lengthening it beyond its current range.
the
company can stretch its line downwards, upwards or
both ways.
product line filling: Increasing the product line by
adding more items within the present range of the line.
For example Sony filled its line by adding solar-powered
and waterproof walkmans.

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Cont…
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 3. Product-Mix Decisions
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product mix (product assortment) The set of all

product line and items that a particular seller offers
for sale or buyers.
A company's product mix has four important
dimensions: width, length, depth and consistency.
The width of the product mix refers to the number
of different product lines the company carries.
The length of product mix refers to the total
number of items the company carries.
The depth or number of versions offered of each
brand or product in the line.

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 Cont…
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The consistency of the product mix refers to how

closely related the various product lines are in
end use.
 New product development (NPD)
32

The need for new products

Organisations need a flow of new products to keep
their:
• Portfolio/collection fresh.
• Customers interested.
• Sales growth
• Maximize Market share
Steps in new product development
33
1. New Product development strategy
34

Successful innovative companies are placing more

emphasis upon the use of definitive strategy

statements or a product innovation charter (PIC).
The PIC draws managers' attention to the reasons or

rationale behind the firm's search for innovation

opportunities, the product/market and technology
to focus on.
 2. Idea Generation
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Idea generation: The systematic search for

new-product ideas.
To obtain a flow of new-product ideas, the company
can tap many sources.
Chief sources of new-product ideas include
 Internal sources,
 customers,
 competitors,
 distributors and
 suppliers.

Marketing Power Point

 2. Idea Screening
36

The purpose of screening is to spot good ideas and

drop poor ones as soon as possible.
3. Concept Development and Testing
A. Concept Development
A product concept is a detailed version of the idea
stated in meaningful consumer terms.
B. Concept Testing
concept testing: Testing new product concepts with
a group of target consumers to find out if the
concepts have strong consumer appeal.

Marketing Power Point

 4. Marketing Strategy Development
37

Marketing strategy statement: A statement of the

planned strategy for a new product that outlines the
intended target market, the planned product
positioning, and the safes, market share and profit
goals for the first few years.
5. Business Analysis
Business analysis involves a review of the sales,
costs and profit projections for a new product to
find out whether they satisfy the company's
objectives.
Marketing Power Point
 6. Product Development
38

product development: Developing the product

concept into a physical product in order to ensure
that the product idea can be turned into a workable
product.
When the prototypes are ready, they must be tested.
Functional tests are then conducted under
laboratory and field conditions to make sure that the
product performs safely and effectively.
If the product passes functional and consumer tests,
the next step is test marketing.

Marketing Power Point

 7. Test Marketing
39

the stage at which the product and marketing

program are introduced and tested into more
realistic market settings.
Test marketing gives the marketer experience with
marketing the product before going to the
great expense of full introduction.
It lets the company test the product and its entire
marketing program - positioning strategy,
advertising, distribution, pricing, branding and
packaging, and budget levels - in real market
situations.
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 8. Commercialization
40

Commercialization is, introducing the new product

into the market.
It is the last step where the company enters into full-
scale production.

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 The Product Lifecycle (PLC)
41

product life cycle (PLC): The course of a

product's sales and profits over its lifetime.
 It involves five distinct stages: product
development, introduction, growth, maturity and
decline.
 product development, where sales are zero and the company's
investment costs mount.
 Introduction is a period of slow sales growth as the product is
being introduced in the market, Profits are non-existent in this
stage because of the heavy expenses of product introduction.
 Growth is a period of rapid market acceptance and increasing
profits.

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 42

 Maturity is a period of slowdown in sales growth because the

product has achieved acceptance by most potential buyers. Profits
level off or decline because of increased marketing outlays to
defend the product against competition.
 Decline is the period when sales fall off and profits drop.
 Product Life-Cycle Strategies
43

Marketing Power Point

Characteristics Introduction Growth Maturity Decline

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Sales Low sales Rapidly Rising sales Peak sales Declining sales
Profits Negative Rising profit High profit Declining profit
High cost per Average cost per Low cost/customer Low cost/customer
Costs
customer customer Middle majority Laggards
Customers Innovators Early adaptors Stable numbers Declining number
Competitions Few Growing number beginning to
Declining
Marketing Reduce market
objectives Create product Maximize market Maximize profit while expenditure & milk the
awareness and trial share defending market brand
Strategic focus Market penetration share
Phase out weak items
Product
Offer a basic product Offer product
extension, service, Diversify brand & Cut price
Price warranty models
Use cost plus Go selective phase
Distribution Price to penetrate Price to match/ beat out unprofitable out
Build selective market competitors lets
distribution Build intensive Build more intensive
Advertising distribution distribution Reduce to level
Build product needed to retain hard
awareness among Build awareness and Stress brand core loyal
Sales promotion early adopters and interest in the mass difference & benefits
dealers market

Use heavily sales Reduce to take Increase to Reduce to minimal

promotion to entice advantage of heavy encourage brand level
trial consumer demand switching
 Marketing of Services
45

A service is any activity or benefit that one party can offer

to another which is essentially intangible and does
not result in the ownership of anything.
The tangible-intangible continuum for goods
and services
There is rarely such a thing as a pure service or pure good,
in trying to distinguish between goods and services, it may
be more appropriate to consider the notion of a goods-
services continuum, with offerings ranging from tangible-
dominant to intangible-dominant.

Marketing Power Point

 Cont…
46

Marketing Power Point

 Service Characteristics
47

 A company must consider five main service characteristics when designing

marketing programs: intangibility, inseparability, variability,

perishability and lack of ownership.
 Intangibility: services cannot be readily displayed, so they cannot be seen, tasted, felt,
heard or sine lied before they are bought.
 Inseparability: services cannot he separated from their providers, whether the providers
are people or machines.
 Variability: the quality of services depends on who provides them, as well as when, where
and how they are provided.
 Perishability: services cannot be stored for later sale or use.
 Lack of Ownership: The service consumer often has access to the service for a limited time.

Marketing Power Point

 Marketing Strategies for Service Firms
48

Furthermore, service businesses are more difficult to

manage when using only traditional marketing
approaches.
In a product business, mass-produced products are
fairly standardized and sit on shelves waiting for
customers.
But in a service business, the customer and frontline
service employee interact to create the service.
Effective interaction, in turn, depends on the skills of
frontline service staff, and on the service production
and support processes backing these employees.

Marketing Power Point

 Three types of marketing in service
industries
49

Marketing Power Point

 50
Internal marketing means that service firm must
invest heavily in employee quality and performance.
It must effectively train and motivate its customer-
contact employees and all the supporting service
people to work as a team to provide customer
satisfaction.
Interactive marketing means that perceived
service quality depends heavily on the quality of the
buyer-seller interaction.
In services marketing, especially in high-contact and
professional services, service quality depends on both
the service providers and the quality of the delivery.

Marketing Power Point

 Cont…
51

People: refers to all human actors who play a part in

service delivery and thus influence the buyer’s
perceptions; namely, the firm’s personnel, the customer,
other customers in the service environment.
Physical evidence and the service escape: the
environment in which the service is delivered and where
the firm and the customer interact, and any tangible
commodities that facilitate performance and or
communication of the service.
Process: the actual procedures, mechanisms, and the
flow of activities by which the service is delivered-the
service delivery and operating system.

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 THANKS FOR
YOUR
ATTENTION !
!!
Marketing Power Point 52