Chapter 8: Products, Services and Brands: Building

Customer Value

What is a Product?
Anything that can be offered to a market for attention,
acquisition, use, or consumption that might satisfy a
want or need.
Includes:
-Goods
- Services
- Persons
- Places
- Organizations
- Ideas

Three Levels Of Product

1.Core benefit level; the

customers
purchase
a
product because of the
functional
benefit
the
product offers.
2. Actual Product level; they
take into account how the
products
attributes,
features, quality, styling,
packaging.
3. Augmented Product level;
customers consider the
value they receive from a
vendor after sales support,
warranty, promise of free
delivery or installation.

Product as a Good
Goodsare items that
can

be

seen

and

touched,

such

as

books,

shoes,

cars,

and drills.

Goods

result

in

Product as a Service
Although services are products in a generalsense, they
have special characteristics and marketing needs. The
biggest differences come from the fact that they are
created through direct interaction with customers.

A SERVICE DOES NOT RESULT IN OWNERSHIP.

The Nature and Characteristics of a Service

A company must consider four special service
characteristics
programs:
1) Intangibility
2) Inseparability
3) Variability
4) Perishability

when

designing

marketing

The Nature & Characteristics of a Service

1) Service intangibility means that services cannot
be seen, tasted, felt, heard, or smelled before they
are bought.
For example, people undergoing cosmetic surgery cannot
see the result before the purchase. Airline passengers
have nothing but a ticket and a promise that they and
their luggage will arrive safely at the intended
destination, hopefully at the same time. To reduce
uncertainty, buyers look for signals of service quality.
They draw conclusions about quality from the place,
people, price, equipment, and communications that they
can see.
Therefore, the service providers task is to make the
service tangible in one or more ways and send the right

Evidence Management at Atlantis Hotel- Dubai

The Nature & Characteristics of a Service

2)

Service

inseparability

means

that

services

cannot be separated from their providers, whether

the providers are people or machines. If a service
employee provides the service, then the employee
becomes a part of the service. Because the customer is
also present as the service is produced,

provider-

customer interaction is a special feature of services

marketing. Both the provider and the customer affect the

Service Inseparability

The Nature & Characteristics of a Service

3) Service variability means that the quality of
services depends on who provides them as well as
when, where, and how they are provided.
For

example,

some

hotelssay,

Marriotthave

reputations for providing better service than others. Still,

within a given Marriott hotel, one registration-counter
employee may be cheerful and efficient, whereas another
standing just a few feet away may be unpleasant and
slow. Even the quality of a single Marriott employees
service varies according to his or her energy and frame of
mind at the time of each customer encounter.

Service Variability

The Nature & Characteristics of a Service

4) Service perishability means that services cannot
be stored for later sale or use.
The perishability of services is not a problem when demand
is steady. However, when demand fluctuates, service firms
often have difficult problems. For example, because of rushhour demand, public transportation companies have to own
much more equipment than they would if demand were
even throughout the day. Thus, service firms often design
strategies for producing a better match between demand
and supply. Hotels and resorts charge lower prices in the offseason to attract more guests. And restaurants hire part-

Service Perishability

Ty p e s o f P r o d u c t s
The classification of products is essential to
business because it provides one of the factors
for determining the strategies needed to move
them through the marketing system. The two
major classes are (I) consumer products and (II)
business products.

I. Consumer Products
Consumer

products

are

products

purchased

for

personal, family, or household use. They are often

grouped into four subcategories on the basis of
consumer buying habits:
1) Convenience products
2) Shopping products
3) Specialty products
4) Unsought products

Consumer Products

II. Business / Industrial Products

Business products are products that companies
purchase to produce their own products or to
operate their business. Unlike consumer
products, business products are classified on
the basis of their use rather than customer
buying habits. These products are divided into
six subcategories:
1) Installations
2) Accessory Equipment
3) Raw Materials
4) Component Parts and Processed Materials
5) Maintenance, Repair, and Operating Supplies
6) Business Services

1) Installations
Installations are major capital items
that are typically used directly in
the production process of products.
Some

installations,

conveyor

such

systems,

as

robotics

equipment, and machine tools, are

designed and built for specialized
situations. Other installations, such
as

stamping

machines,

commercial

ovens,

computerized
scan

large

axial

machines,

are

standard

design

modified

to

requirements.

tomography
built

but

meet

and
to

can

a
be

individual

2) Accessory Equipment

Products that fall into the subcategory

of accessory equipment are less
expensive and have shorter lives
than

installations.

include

hand

desk

tools,

calculators,

Examples
computers,

and

forklifts.

While some types of accessory

equipment, such as hand tools, are
involved directly in the production
process, most are only indirectly
involved.

3) Raw Materials

Raw materials are products that are

purchased in their raw state for
the purpose of processing them
into

consumer

or

business

products. Examples are iron ore,

crude

OIL,

diamonds,

copper,

timber, wheat, and leather. Some

(e.g., wheat) may be converted
directly into another consumer
product

(cereal).

Others

(e.g.,

timber) may be converted into an

intermediate product (lumber) to
be resold for use in another
industry (construction).

4) Component Parts and Processed Materials

Component parts are items that are

purchased to be placed in the final
product without further processing.
Processed materials, on the other
hand, require additional processing
before being placed in the end
product. Many industries, including
the auto industry, rely heavily on
component parts. Automakers use
such component parts as batteries,
sunroofs, windshields, and spark
plugs.

They

processed

also

use

materials,

several
including

steel and upholstery fabric.

5) Maintenance, Repair, and Operating Supplies

Maintenance, repair, and operating

(MRO) supplies are frequently
purchased expense items. They
contribute

indirectly

to

the

production of the end product or

to

the

operations

of

the

business. MRO supplies include

computer

paper,

light

bulbs,

lubrication oil, cleaning supplies,

and office supplies.

6) Business Services

Business services refer to the services

purchased by companies to assist
in the operation of the firm. They
include

financial,

marketing

research, promotional, legal, and

janitorial services. The decision to
hire an outside business to perform
needed services is often predicated
on how frequently the service is
needed, the specialized knowledge
required, and the relative costs of
providing

the

service

internally

versus contracting with an outside

firm.

Branding
A brand is 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.
A brand name carries many associations in
peoples minds that make up its image.

Packaging
Packaging refers to the activities of designing
and producing the container or wrapper for a
product. Traditionally, the primary function of the
package was to hold and protect the product. In
recent times, however, numerous factors have made
packaging an important marketing tool as well.
Increased competition and clutter on retail store
shelves means that packages must now perform
many sales tasksfrom attracting attention, to
describing the product, to making the sale.

Labeling
Labels range from simple tags attached to
products to complex graphics that are part
of

the

packaging.

They

perform

several

functions. At the very least, the label identifies

the product or brand. The label might also help
to promote the brand, support its positioning,
and

connect

with

customers.

For

many

companies, labels have become an important

element in broader marketing campaigns.

Product - Support Services

Companies should design its support services to profitably
meet the needs of target customers.
How?
Step 1. Survey customers to determine
satisfaction with current services and any
desired new services.
Step 2. Assess costs of providing desired
services.
Step 3. Develop a package of services to
delight customers and yield profits.

Brand Strategy
Line Extension
Existing brand names extended to new forms,
sizes, and flavors of an existing product
category.

Brand Extension
Existing brand names extended to new product
categories.

Multibrands
New brand names introduced in the same
product category.

New Brands
New brand names in new product categories.

Product
Product Line
Line Decisions
Decisions
Product
Product Line
Line Length
Length

Number
Numberof
ofItems
Itemsin
inthe
theProduct
ProductLine
Line

Stretching

Filling

Lengthen beyond
current range

Lengthen within
current range

Downward

Upward

Product Line Decisions

A company lengthens its product line in two ways: by line
stretching and line filling.
Line stretching occurs when a company lengthens its product line beyond its current
category:
a.Down-market Stretch: a company positioned in the middle market may want to introduce a
lower price line i.e. Mercedes successfully introduced its C-Class cars at $30.000 without injuring
its ability to sell other Mercedes cars for $100.000 and up.
b.Up-market Stretch: a company enters the high social class segment for more market growth,
higher margins, as full line manufacturers e.g. Toyota Lexus.
c.Two-way Stretch: a company serving the middle market might decide to stretch their line in
both lower and high social class i.e. Holiday Inn Worldwide performed five different segments
the upscale Crown Plaza, the traditional Holiday Inn, the budget Holiday Inn Express, and the
business-oriented Holiday Inn Select and Holiday Inn Suites
. Line filling occurs when a company adds more items within the present category. The
motives are to overcome the missing items in the line, reach the incremental profits, utilize
excess capacity, plug holes to keep out competitors.

Down-market Stretch:
Mercedes
S- Class

C - Class

Head & Shoulders Line Filling

Product Mix & Product Line

Product Mix: All the products a given
company produces form the product mix.
Product Line : A product line would be a
group of these products associated by
category (or function). A company could
have one line or several lines, but all the
products within this line or lines would
form the Product Mix.

Product Line Depth & Product Mix Width

Product Line Depth: the number of
products items in a specific product line.
Product Mix Width: The number of
product lines an organization offers.

Benefits of Increasing Product Line

Depth

Benefits of Increasing Product Mix Width