Kotler POM13e Student Chapter 08-Product

Chapter Eight
Product, Services, and Brands:

Building Customer Value
Copyright 2009 Pearson Education, Inc.
Publishing as Prentice Hall
Chapter 8 - slide 1
Product, Services, and Branding

Strategy
Topic Outline
What Is a Product?
Product and
Services Decisions
Branding Strategy:
Building Strong
Brands
Services Marketing
Adapted by Giang Nguyen
Chapter 8 - slide 2
What Is a Product?
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
Products include more than just tangible
objects. Broadly defined, products also
include services, events, persons, places,
ideas or mixes of these.
A companys market offering often includes

both tangible goods and services.
Pure tangible goods
Pure services
Goods-and-services combinations

Service is any activity or

benefit that one party offers to
another that is essentially
intangible and does not result
in the ownership of anything.
Chapter 8 - slide 3
What Is a Product?
As products and services become

more commoditized, companies
are moving to a new level in
creating value for customers. To
differentiate their offers, firms
create and manage customer
experiences.
Experiences represent what the product or service will

do for the customer (rather than represent the
product/services features).
For example: what are the experiences that banks provide to its
customers?
Safety, Success. What else?

Chapter 8 - slide 4
What Is a Product?
Experience
Example:
http://www.youtube.com/watch?v=ewzYvXJAsU : Singapore airlines commercial
http://www.youtube.com/watch?v=lflsrPBIqW4
: Thai Airways commercial
http://www.youtube.com/watch?
v=BGtAx9ogPDY : Vietnam airlines TVC

Chapter 8 - slide 5
What Is a Product?
Product planners need to

think about products/services
on 3 levels, each level adds
more customer value.
Core customer value: what is
the buyer really buying? Core
benefits customers seek.
Actual product:
product/service features,
design, quality, brand name,
packaging.
Augmented product:
additional consumer services
and benefits.
Guarantee,
installation
services
LG brand
name, LG
fridge, LG
design
Storing
foods to
keep them
fresh and
nutritious
Chapter 8 - slide 6
What Is a Product?
Product and Service Classifications
Convenience
products
Shopping products
Specialty products
Unsought product
Materials and parts

Capital items
Supplies and
services

Chapter 8 - slide 7
What Is a Product?
Consumer products are products and

services for personal consumption
Classified by how consumers buy them:
Convenience products
Shopping products
Specialty products
Unsought products
These products differ in the way consumers buy them and in
how they are marketed!
Chapter 8 - slide 8
What Is a Product?
Convenience products are consumer products and

services that the customer usually buys frequently,
immediately, and with a minimum comparison and
buying effort
Newspapers
Candy
Fast food
Laundry detergent
Location: marketers place them in many locations to
make them readily available when customers need.
Chapter 8 - slide 9
What Is a Product?
Shopping products are less frequently purchased consumer

products and services that the customer compares
carefully on suitability, quality, price, and style
Furniture
Used cars
Appliances
Airline services
Clothing
Location: marketers distribute them through fewer outlets but
provide deeper sales support.

Chapter 8 - slide 10
What Is a Product?
Specialty products are 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
Cars
Designer clothes
High-end electronics (e.g. highpriced photographic equipment)
What Is a Product?
Unsought products are consumer products that the consumer

does not know about or knows about but does not normally think
of buying
Life insurance
Funeral services http://www.youtube.com/watch?v=T6IhXj7Bn_I
Blood donations
Unsought products require a lot of advertising, personal selling and

other marketing efforts

Marketing considerations for Consumer products

Marketing
consideration
Types of consumer product

Convenience
Shopping
Specialty
Unsought
Customer buying
behaviour
Frequent
purchase, little
planning, little
comparison or
shopping effort,
low customer
involvement
Less frequent
purchase, much
planning and
shopping effort,
comparison of
brands on price,
quality, style
Strong brand
preference and
loyalty, special
purchase effort,
little comparison of
brands, low price
sensitivity
Little product
awareness,
knowledge (or, if
aware, little or
even negative
interest)
Price
Low price
Higher price
High price
Varies
Distribution
Widespread
distribution,
convenient
locations
Selective
distribution in
fewer outlets
Exclusive
distribution in only
few outlets per
market area
Varies
Promotion
Mass promotion
by the producer
Advertising and
personal selling by
both producer and
retailer
More carefully
targeted
promotion by both
producer &
resellers
Aggressive
advertising and
personal selling by
producer &
resellers
Examples
Toothpaste,
Major appliances,
Luxury goods
Life insurance,
magazines,
tv, furniture,
(Rolex watches)
Red Cross
laundry
clothing
donation
Copyright 2010 Pearson
Education,
Inc.
detergent
What Is a Product?
Industrial products are 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 items
Supplies and services
What Is a Product?
Materials and parts include raw materials

and manufactured materials and parts
usually sold directly to industrial users.
Example - Raw material products: farm products,
natural products (fish, fruits, iron ore).
Manufactured products: component materials
(iron, cement) & component parts (motors)
Capital items are industrial products that aid

in the buyers production or operations,
including installation and accessory
equipment. E.G Installations are major
purchase (buildings, factories, fixed equipment).
Accessory equipment are factory equipment (lift
trucks) and office equipment (computers, fax
machies).

What Is a Product?
Materials and parts

Capital items
Supplies and services include operating supplies (paper,
pencils, coal), repair and maintenance items (paint, nails), and
business & repair services (windown cleaning, computer repair)
and business advisory services (legal, management or
advertising consultance). Supplies are the convenience product of
the industrial field. They are usually purchased with minimum effort.

What Is a Product?
Organizations, Persons, Places, and Ideas
In addition to tangible products & services, marketers also broadens

the concept of a product to include other marketing offerings
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. Sell the organization itself. Corporate
image advertising campaign. Video of IU
Person marketing consists of activities undertaken to create, maintain

or change attitudes toward particular people. People ranges from
presidents, entertainers, etc. Many big-name companies use Tiger
Woods to link themselves with, including Nike, American Express,
Gillette.
Place marketing: activities to create, maintain or change attitudes

toward particular places. Such as Discover China now or Malaysia
Truly Asia or Vietnam the hidden Charm.
http://www.youtube.com/watch?v=OLHcgJEyl2I
http://www.youtube.com/watch?v=BkuvCpCg8o8

What Is a Product?
Organizations, Persons, Places, and Ideas
Organization marketing
Person marketing
Place marketing
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.
Remember anti-smoking ads?
Or traffic accident
warning outdoor boards?
Product and Services Decisions

Marketers make product and service decisions at three levels: individual
product decisions, product line decision and product mix decision
1. Individual Product and Service Decisions

Product
attributes
Branding
Packaging
Labelling
Product
support
services
Product attributes are the benefits of the product or service. They are:
Quality has 2 dimensions: level and consistency. Performance quality (level): the
ability of a product to perform its functions, this supports the positioning. For example a
Mercedes has higher performance quality than a Chevrolet: smoother ride and better
shock-resistant. Conformance quality (consistency): free from defects and consistent in
delivering a level of performance. E.g: Fuel consumption of the car must be consistent
.Apple vs Samsung while Samsung screen is not consistent in quality.
Features: dimensions, source ingredients, services, structures, aesthetic characteristics,

performance, components, materials. Features are competitive tool for differentiating.
Style and design: style is the appearance of a product, design is more than just
appearance, its include architecture and building of product. It contributes to the
usefulness as well as the look. E.g: the new design of chilly sauce bottle helps to squeeze
the bottle to final drops


Brand is the name, term, sign, or
designor a combination of
thesethat identifies the maker
or seller of a product or service.
Brand equity is the differential
effect that the brand name has
on customer response to the Branding helps sellers in some ways:
product and its marketing.
It is the basis on which a whole
Branding helps buyer in:
story can be built about a products
special qualities.
Identifying products that might
It protects and distinguish the
benefit them
sellers from their competitors.
Distinguish product quality and
Brands also help seller to segment
consistency
markets. E.g: Toyotas Lexus,

Prius, Land Cruiser, etc.

Packaging involves designing and

producing the container or wrapper for
a product.
Traditionally, main function of the package
is to hold and protect the product. How
about now?
Packaging helps to promote the product on
shelves. It also gives a company advantage
over competitors and boost sales.
Packaging helps to attract customers attention,
and describe the product .
Example: Heinzs ketchup bottle: quickly squeeze
and better fit with the fridges door.
Video of Innovative Packaging (NPP)
Coca cola special packaging:


Labeling
Labels identify the product or brand,
describe attributes, and provide
promotion. Labels range from
simple tags to products to complex
graphics that are part of the
package.
The label describes some things about the
product: who made it, where it was
made, when it was made, its contents,
how it is to be used, etc.
Labels also help to identify products or
brands and to promote the brand,
support its positioning and connect with
customers.
However, there are some

issues with labels: labels can
mislead customers, fail to
describe important
ingredients, fail to include
needed safety warnings.

Product support services: a companys offer

usually includes some support services.
For example: after-sale service of many products,
including mobile phones, cars, printers, laptops, etc.


2. 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
Example: Classic Coke, Rasberry Diet
Coke, Lemon Diet Coke, Lime Diet
Coke, Black Cherry + Vanilla Coke

Product Line Decisions
Product line length is the number of items in the product line.

The line is too short when the manager can increase profits by adding items. The line
is too long when the manager can increase profits by dropping items.
The firm can expand its product line in two ways:
Line filling: adding more items within the present range of the
line. E.g: Cokes various flavor products.
Line stretching: lengthen a firms product beyond its current
range, by downward, upward or both ways.
E.g: Toyota launched Lexus as upward while launched its Yaris

(with the price of $14,115) as downward.
Upward

Downward

Product Mix Decisions
Product mix (or product portfolio) consists of all the products and
items that a particular seller offers for sale. For example: Sonys
diverse portfolio of 4 primary product businesses: Sony Computer
Entertainment (games), Sony Pictures Entertainment (movies, TV
shows, music, DVD), Sony Electronics, Sony Financial services (life
insurance, banking), etc.
Four important dimensions for a companys product mix are:
Width: refers to the number of different product lines the company carries.
Sonys wide range of consumer & industrial products.
Length: total number of items the company carries within its product lines.
Sony carries many products within each line.
Depth: the number of versions offered of each product in the line. E.g:
Sony has a very deep product mix, it can offer any kind of TV: tube, flat,
HD, LCD, etc.
Consistency: refers to how closely related the various product lines are
in end use, production requirements, distribution channels.

Branding Strategy: Building Strong Brands

Brand represents the
consumers perceptions
and feelings about a
product and its
performance. It is the
companys promise to
deliver a specific set of
features, benefits,
services, and experiences
consistently to the buyers

Brand equity: the differential effect that knowing the brand
name has on customer response to the product or its
marketing. Its a measure of the brands ability to
capture consumer preference and loyalty.
A brand with high brand equity is a very valuable asset.
Brands such as Coca-Cola, Nike, Disney, McDonalds
become larger-than-life icons that maintain their power
in the market for years. Brands such as Google,
YouTube, Apple create fresh consumer excitement.

Brand equity
Marketers can measure brand strength along 4 consumer
perception dimensions:
Differentiation: what makes the brand stand out
Relevance: how consumers feel it meets their needs
Knowledge: how much consumers know about the brand
Esteem: how highly consumers regard and respect the brand.
Brands with strong brand equity rate high on all of these
dimensions.
When company have a high brand equity, it will achieve:
Brand Awareness, Brand Associations, Brand Loyalty and
Perceived quality.

Branding Strategy: Building Strong

Brands
Major Brand Strategy Decisions
Brand positioning
Attributes
Benefits
Beliefs and values
Brand name
selection
Selection
Protection

Brand sponsorship
Brand development
Manufacturers brand
Private brand
Licensing
Co-branding
Line extensions
Brand extensions
Multibrands
New brands

Brands
Brand Positioning
Marketers can position their brands at three levels
described below.
Brand strategy decisions include:
Product attributes: position the brand on product attribute. This

shouldnt be used much because competitors can easily copy
attributes. E.g: using DHA in advertising milk power products: Nestle, Dielac
Alpha, EnphaGrow.
Product benefits: A brand can be better positioned by associating its

name with a desirable benefit. E.g: Nike on performance, Lexus on quality,
FedEx on guaranteed on time delivery, Apple on user-friendliness.
Product beliefs and values: the strongest brand goes beyond

attribute or benefit positioning. They are positioned on strong beliefs
and values. Successful brands engage customers on a deep,
emotional level. E.g: insurance brands, Canon Delighting you always,

Branding activity
Video of Air New Zealand s special


Brand Name Selection
Desirable qualities for a brand name include:
1. Suggest benefits and qualities: LandCruiser,
Vietnamworks, Hotjobs, Lean Cuisine, Lotte Xylitol,
etc.
2. Easy to pronounce, recognize, and remember:
iPod, JetStar, Nike, Amazon.com, Mekong, Sumo
BBQ, etc.
3. Distinctive: Lexus, Innova, Galaxy, etc.
4. Extendable (to other categories): IBM,
Amazon.com, Sony
5. Translatable for the global economy:
Remember Irish Mist (Mist means fertilizer in
German)? GMs Nova means Doesnt Go in
Spanish; Pizza Hut P'Zone: Pe Zon means
nipple in Spanish.
6. Capable of registration and legal protection: a
brand name cannot be protected if it reuses or is
similar to existing brand names.

Nike offended
Muslims in June,
1997 when the
"flaming air" logo for
its Nike Air sneakers
looked too similar to
the Arabic form of
God's name, "Allah".
Nike pulled more
than 38,000 pairs of
sneakers from the
market

Brands
Brand Sponsorship
Manufacturers brand (or national brand) versus Private brand (Store

brand)
National brands: manufacturers sell their output under their own brand
names: Sony Bravia HD TV or Samsung Galaxy, etc.
Store brands (private brands): retailers and wholesalers create their own
brands, such as Metro Cash & Carry has several brands of their own: Aro
(FMCG products: dishwashing liquid, laundry detergents, packaged foods),
Horeca (kitchen products, stock powders, plastic containers), Sigma
(stationeries). Saigon Coopmart has SGC brand name.
Store brands now offer much greater selection and higher quality. Retailers
have many advantages. They control what products to stock, where on the
shelves, what prices to charge.
How leading brand marketers do to compete with store brands?
Licensed brand
Co-brand


Brands
Brand Sponsorship
Manufacturers brand (or national brand) versus

Private brand
Licensed brand: some companies license names
or symbols previously created by other
manufacturers, names of well-known celebrities
or characters from popular movies & books.
For example: sellers of childrens products use famous

character names with their items, such as Winnie the
Pooh, Scooby Doo, Harry Porter, etc.
Co-brand: occurs when two established brand

names of different companies are used on the
same product.
E.g: Sony Ericsson, Nike+iPod Sport Kit,

Virgin Master Card, Fiat Mattel created Barbie car
What are disavantages and advantages of Co-branding?


Brands
Brand development
Line extensions: extends existing brand names to new forms, colors, sizes,
ingredients or flavors of existing product category. E.g: Ninh Thuan Sea salt,
Ninh Thuan chilly salt, Ninh Thuan pepper salt, Ninh Thuan five-spices salt.
Brand extensions: extends current brand name to new or modified
products in a new category. Kimberly Clark extended its Huggies brand from
diapers to a full line of toiletries for toddlers, including: shampoos, lotions,
etc.
Multibrands: additional brands in the same category. P&Gs laundry
detergents, remember? Or Unilevers soaps: Dove, Lifebuoy, Lux .
New brands: Pepsi introduced its new snacks Frito Lay.

Discussion
Think of any brand and analyze which
strategy in the brand development it
might be.

Services Marketing
Types of Service Industries
Service industry is growing very fast and vary greatly:

Government: offer service through courts,
employment services, hospitals, military services,
polic and fire departments, postal service and schools
Private not-for-profit organizations: museums,
charities, churches, colleges, foundations and
hospitals.
Business services: banks, airlines, hotels, insurance
companies, consulting firms, medical and legal
pratice, entertainment companies, real-estate firms,
retailers and others.
Services Marketing
Nature and Characteristics of a Service
A company must consider 4 special service characteristics when

designing marketing programs
Intangibility: services cannot be seen, tasted, felt, heard,
touched or smelled before the purchase.
Inseparability: services cannot be separated from the providers,
whether the providers are people or machines. Providercustomer interaction is a special feature of services marketing.
Variability: the quality of service depends on who provides them
as well as when, where and how they are provided, thus, it is
variable from situation to situation.
Perishability: services cannot be stored for later sale or use. In
foreign countries, if you missed a doctors appointment, you are
still charged for the fees because at your appointment time, the
doctor has to cancel other patients booking.
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

Services Marketing
Service-profit chain links service firm profits with employee

and customer satisfaction. The chain consist 5 links:
Internal service quality: superior employee selection
and training, quality work environment
Satisfied and productive service employees: more
satisfied, loyal and hardworking employees
Greater service value: more effective and efficient
customer value creation and service delivery
Satisfied and loyal customers: satisfied customer who
remain more loyal, repeat purchase and refer other
customers.
Healthy service profits and growth: superior service
firm performance

Services Marketing
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

Services Marketing
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

Services Marketing
Managing service differentiation creates a

competitive advantage from the offer, delivery, and
image of the service
Offer can include distinctive features

Delivery can include more able and reliable
customer contact people, environment, or process
Image can include symbols and branding

Services Marketing
Managing service quality provides a

competitive advantage by delivering
consistently higher quality than its
competitors
Service quality always varies depending on
interactions between employees and
customers

Services Marketing
Managing service productivity refers to the

cost side of marketing strategies for service
firms
Employee recruiting, hiring, and training

strategies
Service quantity and quality strategies

Mid-term Exam tips

90 minutes
Read the multiple choice questions carefully. 30
questions for this part.
Spread out the time evenly for each part & each
question. Leave it there to continue to next part if
you are not so sure about the answer.
Complete all two essay questions, using
examples to illustrate your answers and opinions
Chapter 1, 3, 5, 6, 7
Good Luck to All!
All rights reserved. No part of this publication may be reproduced, stored in a

retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.


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Chapter Eight

Product, Services, and Brands:

Product, Services, and Branding

Adapted by Giang Nguyen

Product is anything that can be offered in

A companys market offering often includes

Copyright 2010 Pearson Education, Inc.

Service is any activity or

Adapted by Giang Nguyen

As products and services become

Experiences represent what the product or service will

Copyright 2010 Pearson Education, Inc.

Adapted by Giang Nguyen

Copyright 2010 Pearson Education, Inc.

Adapted by Giang Nguyen

Product planners need to

Adapted by Giang Nguyen

Materials and parts

Copyright 2010 Pearson Education, Inc.

Adapted by Giang Nguyen

Consumer products are products and

Adapted by Giang Nguyen

Convenience products are consumer products and

Adapted by Giang Nguyen

Shopping products are less frequently purchased consumer

Copyright 2010 Pearson Education, Inc.

Adapted by Giang Nguyen

Specialty products are consumer

Adapted by Giang Nguyen

Unsought products are consumer products that the consumer

Unsought products require a lot of advertising, personal selling and

Copyright 2010 Pearson Education, Inc.

Adapted by Giang Nguyen

Marketing considerations for Consumer products

Types of consumer product

Industrial products are products purchased for

Adapted by Giang Nguyen

Materials and parts include raw materials

Capital items are industrial products that aid

Copyright 2010 Pearson Education, Inc.

Adapted by Giang Nguyen

Materials and parts

Copyright 2010 Pearson Education, Inc.

Adapted by Giang Nguyen

In addition to tangible products & services, marketers also broadens

Organization marketing consists of activities undertaken to create,

Person marketing consists of activities undertaken to create, maintain

Place marketing: activities to create, maintain or change attitudes

Adapted by Giang Nguyen

Copyright 2010 Pearson Education, Inc.

Adapted by Giang Nguyen

Social marketing is the use of

Adapted by Giang Nguyen

Product and Services Decisions

1. Individual Product and Service Decisions

Features: dimensions, source ingredients, services, structures, aesthetic characteristics,

Copyright 2010 Pearson Education, Inc.

Adapted by Giang Nguyen

Product and Services Decisions

markets. E.g: Toyotas Lexus,

Adapted by Giang Nguyen

Product and Services Decisions

Packaging involves designing and

Adapted by Giang Nguyen