A product is a bundle of satisfaction that a customer buys.

It is a
set of attributes put together in some distinct form.
A product is anything that can be offered to market for
attention, acquisition use or consumption that satisfy a want or
need. It includes physical object (television), service (banking),
person (political person), place (holiday resort), organisation (red
cross) and idea (aids awareness).
Philip Kotler
Service is an act or performance that one party can offer to
another that is essentially intangible & does not result in the
ownership of anything. Its production may or may not be tied to
the physical product.
Philip Kotler

Step 1 - Consumer benefit

concept
Step 2 Service concept

Step 3 Service offer

Step 4 Service delivery

system

Concerned with what benefits

customer seeks
Concerned with what general
benefits the service organisation
will offer
Concerned with more detailed
shaping of the service concepttangible & intangible components
& the forms of service
Concerned with creation &
delivery of the service offer with
the help of people, process &
facilities

Potential
Level
Augmented
Level
Expected
Level

Core
Level

Core service(benefits) level

This level consists of the basic service product i.e. the
fundamental service or benefit that the customer is really buying
The expected service level
These service reflects the standards requires or expected by
customers to satisfy their needs.
It is minimum set of expectations a customer has about a
product or service.
The augmented level
This includes the fundamental services, benefits that distinguish
the companys offer from the competitors offer.
The augmented product is basically a formal product with some
ancillary benefits, extra features attached to it.
Potential level
While any level describes what is included in the product today,
the potential product focuses on the future. (free product in next
visit if bill exceeds to certain amount)

Due to the intangible characteristics of service, Lovelock

identifies 5 types of new services:Style Change: These do not change the fundamental features of
the product but alters only the tangible elements
Service Improvements: This involves changes in the features of
the service already being offered in the existing market, through
modification.
Service Line Extension: This represents augmentation of the
existing service line.
New Service: In this case, the service marketer attempts to offer
service to new market.
Major Innovation: These products are totally new to the world,
they are triggered off with technological inventions or R&D.

New service development process is a highly expensive, time

consuming &risk laden affair. Successful development of new
services is hindered by many factors:A high level executive may push a favourite idea, despite
negative marketing research findings
The idea may be good but the market size may be
overestimated
The service may not be positioned well in the market
The advertising may not be effective
The service may be over priced
The service process may not be designed well

Intangibi
lity

Inseparabi
lity
Heteroge
neity
Perishabil
ity

Risk of conducting the development

process too quickly
Easy to copy competitors product
Risk of confusing customers with
too many services
Difficulties in conducting market
research
Absence of physical prototype to
test market
Difficulties in measuring success
Effect of new product on corporate
image
Increased
importance of delivery
system
Higher levels of customer input

for inter
organisational
Need
Difficulties
in concept
testing
involvement
Quality control becomes an issue
Difficulties in demand/supply
management
Need for higher level integration
among departments

Idea generation Internal & external sources

Idea screening Against the firms mission & resources
Service concept development To describe the service idea
Business analysis Test for profitability & feasibility
Service development Business proposal converted to
actual service
Market testing In relation to marketing mix variable
Launch Commercialisation of service
Post introduction Feedback of introduction

Sales and
Profits

Sales

Profits

Product
Developme
nt

Introduction

Growth

Maturity

Time
Decline

Branding decision is important for tangible goods. But in the case

of service offering branding is still in its infancy, there importance
is expected to rise due to the following reasons:Sales and
Sales
Profits markets are getting more competitive & there
Service
is as

increasing proliferation of brands in the service sector.

Profits

It is five times cheaper to retain customers than to attract new

ones.
Time
Decline

Product
Introduction
Growth
Maturity
As
new
service
development
assumes
greater
importance, the
Development
risk of product launches is reduced in the context of umbrella
branding.

As service itself does not offer unique tangible benefits, brand

development tangibilises the service.

 The idea of positioning relates to the way the consumers

perceive & evaluate products & services.
The way in which the service provider differentiates their
offering, will have an impact on how customer will perceive the
service.
In developing service positioning organisations must deliberate
on two important issues:
What attributes of service are rated high by customers?
How do they rank competitors performance against these
attributes?
Considering the special features of service some service
positioning strategies are:
Intangibility
Heterogeneity
Simultaneity
On the basis of product features
On the basis of usage
On the basis of user category
Positioning against other products