Principles of Marketing Product, Services, and Brand: Building Customer Value Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Content Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product? Marketing-mix planning begins with formulating an offering that brings value to target customers Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco 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 •?Soap •? Toothpaste Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product? Products, Services, and Experiences Service is a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in ownership •? Doctor’s exam •? Legal advice Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product? Products, Services, and Experiences Experiences represent what buying the product or service will do for the customer •? Disney •? Toys “R” UsCommercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product? Products, Services, and Experiences Today it’s all about the experience you live with a brand! Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product? Levels of Product and Services Augmented product Delivery and credit Each level adds more customer value Actual product Installation Brand name Quality Post-sale service Core Benefit Design Warranty Features Packaging Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product?Product and Service Classifications •? Consumer products are products and services for personal consumption Industrial products are products purchased for further processing or for use in conducting a business •? Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product? Product and Service Classifications Consumer products classified by how consumers buy them •? •? •? •? Convenience products Shopping products Specialty products Unsought products Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product?Product and Service Classifications Convenience products: customer usually buys frequently, immediately, and with a minimum comparison and buying effort •? Newspapers •? Candy •? Fast food Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product? Product and Service Classifications Shopping products: customer compares carefully on suitability, quality, price, and style •? Furniture •? Home Appliances •? Hotel •? Clothes Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product? Product and Service ClassificationsSpecialty products: with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort •? Non-std.
cars •? Medical services •? Designer clothes •? High-end electronics Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product? Product and Service Classifications Unsought products: consumer does not know about or knows about but does not normally think of buying •? Life insurance •? Funeral services •? Blood donations Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product?Product and Service Classifications Different marketing considerations for each type of consumer product… •? •? •? •? Convenience products Shopping products Specialty products Unsought products Price? Distribution? Promotion? Table 8. 1 / Kotler: Marketing considerations Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product? Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product? Product and Service Classifications Industrial products classified by the purpose for which the product is purchased •? Materials and parts •? Capital •? Supplies and servicesCommercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product? Product and Service Classifications Materials and parts include raw materials and manufactured materials and parts usually sold directly to industrial users •? Wheat •? Iron •? Cement Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product? Product and Service Classifications Capital items are industrial products that aid in the buyer’s production or operations •? Buildings •? Elevators •? Computers Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product?Product and Service Classifications Supplies and services are the convenience products of the industrial field and the services usually supplied under contract •? Operating supplies •? Repair and maintenance items •? Maintenance and repair services •? Business advisory services Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product? Organizations, Persons, Places, and Ideas Why have marketers in recent years broadened the concept of a product to include other marketing offerings such as…? Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product?Organizations, Persons, Places, and Ideas Organization marketing: activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward an organization Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product? Organizations, Persons, Places, and Ideas Person marketing: activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward particular people Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Personal Branding Commercial and Marketing Management II © 2013 Jane Rodriguez del TroncoWhat Is a Product? Organizations, Persons, Places, and Ideas 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 •? Public health campaign Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco What Is a Product? Organizations, Persons, Places, and Ideas Place marketing: activities undertaken to create, maintain, or change attitudes and behavior of target consumers toward particular places •? Tourism Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Nation BrandingCommercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Decisions at three levels !? !? !? Individual product and service Product line Product mix Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Decisions at three levels !? Individual product and service Product attributes Branding Packaging Labeling Product support services Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Individual Product and Service Decisions Product attributes Benefits of the product or service: •?Quality •? Features •? Style and design Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Individual Product and Service Decisions Product attributes Benefits of the product or service: •? Quality Quality in terms of the product or service is the lack of defects !? Quality in terms of the customer is the value and satisfaction provided by the product or service !? “Quality is when our customers come back and our products don’t” Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Individual Product and Service DecisionsProduct attributes Benefits of the product or service: •? Quality Quality level is the level of quality that supports the product’s positioning !? !? Performance quality or ability to perform its functions Target needs! Quality consistency is the freedom from defects and the delivering of a targeted level of performance !? Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Individual Product and Service Decisions Product attributes Benefits of the product or service: •? Features A competitive tool for differentiating a product from competitors’ products !?Product features are assessed based on the value to the customer versus the cost to the company !? Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Individual Product and Service Decisions Product attributes Benefits of the product or service: •? Style and design Product style and design add value to customer “? Style describes the appearance of the product “? Design contributes to a product’s usefulness as well as to its looks Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Individual Product and Service DecisionsProduct attributes Benefits of the product or service: •? Style and design “Good design begins with a deep understanding of customer needs” “it works even better than it looks” Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Individual Product and Service Decisions Branding name, term, sign, symbol or design, or a combination of these, that identifies the maker or seller of a product or service Consumer benefits •? Quality •? Consistency Seller benefits •? Segmentation •? Communicate product features Commercial and Marketing Management II © 2013 Jane Rodriguez del TroncoProduct and Service Decisions Individual Product and Service Decisions Branding Basis to build a whole story! Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Individual Product and Service Decisions Packaging involves designing and producing the container or wrapper for a product Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Individual Product and Service Decisions Labeling identifies the product or brand, describes it, and provides promotion Commercial and Marketing Management II 2013 Jane Rodriguez del Tronco Product and Service Decisions Individual Product and Service Decisions Product support services augment actual products Again it’s key to ask consumers!!! … and to balance with company costs / profits! Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Product Line Decisions 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 Commercial and Marketing Management II 2013 Jane Rodriguez del Tronco Product and Service Decisions Product Line Decisions Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Product Line Decisions Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Product Line Decisions Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Product Line Decisions Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Product Line Decisions Commercial and Marketing Management II 2013 Jane Rodriguez del Tronco Product and Service Decisions Product Line Decisions Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Product Line Decisions Product line length is the number of items in the product line Periodic product line analysis SALES PROFITS Commercial and Marketing Management II © 2013 Jane Rodriguez del TroncoProduct and Service Decisions Product Line Decisions Product line length is influenced by the company objectives and resources Up-selling 207 Cross-selling 307 407 Economic protection 607 Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Product Line Decisions Product line length in 2 ways: stretching or filling Product line stretching is when a company lengthens its product line beyond its current range !? •? •? •? Downward Upward Combination of both 207 307 Which one was the first? 407 607 Commercial and Marketing Management II © 2013 Jane Rodriguez del TroncoProduct and Service Decisions Product Line Decisions Product line length in 2 ways: stretching or filling Product line filling occurs when companies add more items within the present range of the line !? •? •? •? •? More profits Satisfying dealers Excess capacity Plugging holes to keep out competitors Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Product Line Decisions Linea de detergentes Ariel (Procter & Gamble) Sensaciones, con suavizante Efervescente, bicarbonato Frescor de los Alpes Regular, efecto luminoso Basico Commercial and Marketing Management II 2013 Jane Rodriguez del Tronco Product and Service Decisions Product Mix Decisions or PRODUCT PORTFOLIO Consists of all the product lines and items that a particular seller offers for sale Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Product Mix Decisions It has 4 important dimensions: Width !? Length !? Depth !? Consistency !? Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Product Mix Decisions Product mix width is the number of different product lines the company carries Pasta FrescaMantequilla Pasta Prensada Importados One marketing manager per line Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Product Mix Decisions Product mix length is the total number of items the company carries within its product lines Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Product Mix Decisions Product mix depth is the number of versions offered of each product in the line Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service DecisionsProduct Mix Decisions Consistency is how closely the various product lines are in end use, production requirements, or distribution channels X Commercial and Marketing Management II X © 2013 Jane Rodriguez del Tronco Product and Service Decisions Cuestiones que afectan al Plan de Marketing •? ?Cual de los productos de la cartera generan mas beneficios? ?Cuales tienen mejores perspectivas de futuro? ?Que productos estan en decadencia? •? ?Que productos requieren mayor inversion y recursos de Marketing? •? ?Donde estan las oportunidades para lanzamiento de nuevos productos o variedades? •? Que productos sirven de apoyo para el lanzamiento de otros nuevos? ?Que productos existentes se verian perjudicados por el lanzamiento de uno nuevo? •? ?Lanzar con la misma marca existente? ?Crear una nueva marca? Matriz del Boston Consulting Group (BCG) Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions BCG Approach Growth share matrix is a portfolio planning method that evaluates a company’s strategic business units in terms of their market growth rate and relative share Require a lot of money to grow May generate enough cash to maintain but… for how long?Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Product Line / Portfolio Decisions Periodic analysis SALES PROFITS Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Branding Strategy: Building Strong Brands Brand represents the consumer’s perceptions and feelings about a product and its performance.
It is the company’s promise to deliver a specific set of features, benefits, services, and experiences consistently to the buyers Brands in Minds Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Brands in MindsWhat’s a brand? Good Morning, Marketers! Brands in Second Life Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Product and Service Decisions Category first, Brand second Al and Laura Ries Targeting Segmentation Positioning Commercial and Marketing Management II Marketing Strategy © 2013 Jane Rodriguez del Tronco Branding Strategy: Building Strong Brands Brand represents the consumer’s perceptions and feelings about a product and its performance. It’s all about generating EMOTIONS, EMOTIONAL LINKS, LOVE!!! Commercial and Marketing Management II © 2013 Jane Rodriguez del TroncoBranding Strategy: Building Strong Brands Brand represents the consumer’s perceptions and feelings about a product and its performance. It’s all about CONNECTING WITH CUSTOMERS!!! Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Branding Strategy: Building Strong Brands Brand equity is the positive differential effect that knowing the brand name has on customer response to the product or service !? Brand valuation process to estimate its total financial value © 2013 Jane Rodriguez del Tronco Commercial and Marketing Management II Branding Strategy: Building Strong Brands Commercial and Marketing Management II 2013 Jane Rodriguez del Tronco Branding Strategy: Building Strong Brands Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Branding Strategy: Building Strong Brands Brand equity provides competitive advantage •? High consumer awareness and loyalty •? Credibility / power with retailers •? Great basis for new products launching To which extent customers will pay more for our brand? Building strong and profitable customer relationships! “Companies need to be thought of as portfolios of customers and not portfolios of products” Commercial and Marketing Management II © 2013 Jane Rodriguez del TroncoBranding Strategy: Building Strong Brands “Brands are assets that must be carefully developed and managed” “Brand equity” managers in Marketing departments! -? Coca-Cola -? McDonald’s -? Disney -? Movistar -? Orange Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Branding Strategy: Building Strong Brands Brand strategy decisions include: •? •? •? •? Brand Brand Brand Brand positioning name selection sponsorship development Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Branding Strategy: Building Strong Brands Brand Positioning !? !? !? What attributes to stand for? What benefits to offer?What beliefs and values to transmit? Low High Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Branding Strategy: Building Strong Brands Brand Name Selection Desirable qualities: •? •? •? •? •? Suggests benefits and qualities Easy to pronounce, recognize, and remember Distinctive Extendable Translatable for the global economy Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Branding Strategy: Building Strong Brands Brand Name Selection Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Branding Strategy: Building Strong Brands Brand Sponsorship •? •? •? •?Manufacturer’s brand Private brand Licensed brand Co-brand Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Branding Strategy: Building Strong Brands Brand Sponsorship Private brands provide retailers with advantages •? Product mix control •? Slotting fees for manufacturers’ brands •? Higher margins •? Exclusivity Battle of brands is served!!! Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Branding Strategy: Building Strong Brands Brand Development Product category Existing Existing Brand name New Line extension Brand extension New Multibrands New brands Commercial and Marketing Management II 2013 Jane Rodriguez del Tronco Branding Strategy: Building Strong Brands Brand Development Line extensions occur when a company extends existing brand names to new forms, colors, sizes, ingredients, or flavors of an existing product category Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Branding Strategy: Building Strong Brands Brand Development Brand extensions extend an existing brand name to a new or modified product in a new category Instant recognition and faster acceptance, but..
. to what extent? Any risk? Commercial and Marketing Management II © 2013 Jane Rodriguez del TroncoBranding Strategy: Building Strong Brands Brand Development Multibrands are additional brands in the same category Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Branding Strategy: Building Strong Brands Brand Development New brands are used when existing brands are inappropriate for new products in new product categories or markets Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Branding Strategy: Building Strong Brands Managing Brands !? Continuous brand communication •? •? •? brand recognition / awareness brand knowledge brand preference !? Work on brand experience •? ustomers •? employees •? wholesalers / retailers Periodic brand audits © 2013 Jane Rodriguez del Tronco “? Commercial and Marketing Management II Branding Strategy: Building Strong Brands Managing Brands !? Periodic brand audits Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Video: Swiss Army Brands 1.? How might brand extensions affect Swiss Army Brand, in both positive and negative ways? 2.? Why did Swiss Army Brands open retail stores? How do these stores help the company build its brand? 3.? Do you think Swiss Army Brands could extend its brand to any type of product?What additional products and lines might Swiss Army Brands consider? Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Services Marketing Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Services Marketing Types of Service Industries •? •? •? Government Private not-for-profit organizations Business services Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Services Marketing Nature and Characteristics of a Service •? •? •? •? Intangibility Inseparability Variability Perishability Commercial and Marketing Management II © 2013 Jane Rodriguez del TroncoServices Marketing Nature and Characteristics of a Service Intangibility refers to the fact that services cannot be seen, tasted, felt, heard, or smelled before they are purchased Inseparability refers to the fact that services cannot be separated from their providers Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Services Marketing Nature and Characteristics of a Service Variability refers to the fact that service quality depends on who provides it as well as when, where, and how it is provided Perishability refers to the fact that services cannot be stored for later sale or useCommercial and Marketing Management II © 2013 Jane Rodriguez del Tronco 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 Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco 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 Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco 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 Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Services MarketingMarketing 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 Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco 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 Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Services MarketingMarketing Strategies for Service Firms Service quality harder to define and judge vs product quality Service recovery can turn disappointed customers into loyal customers •? Empower employees •? •? •? Responsibility Authority Incentive Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco Services Marketing Marketing Strategies for Service Firms Service productivity refers to the cost side of marketing strategies for service firms •? •? Employee recruiting, hiring, and training strategies Service quantity and quality strategies Commercial and Marketing Management II © 2013 Jane Rodriguez del Tronco
