Lecture 6.pdf

# Understanding products and services This topic explores the fundamental definitions, classifications, and hierarchical levels of products and services, distinguishing between consumer and industrial offerings [4](#page=4). ### 1.1 Definitions A **product** is defined as anything that can be offered in a market for attention, acquisition, use, or consumption, with the potential to satisfy a need or want. A **service**, conversely, is any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything [4](#page=4). ### 1.2 Levels of product and services Products and services can be understood at different levels, providing a more nuanced view of their value proposition. The example of an Opel car illustrates these levels, although the specific details of the levels themselves are not provided in the document content for this section [5](#page=5) [6](#page=6). ### 1.3 Product and service classification Products and services are broadly classified into two main categories: consumer products and industrial products [7](#page=7). #### 1.3.1 Consumer products **Consumer products** are those or services purchased by households for personal consumption. These are further categorized based on consumer buying behavior [7](#page=7): * **Convenience products:** These are consumer products and services that customers usually buy frequently, immediately, and with minimal comparison and buying effort [9](#page=9). * **Examples:** Newspapers, candy, fast food [9](#page=9). * **Shopping products:** These are consumer products and services that customers compare carefully on suitability, quality, price, and style [10](#page=10). * **Examples:** Furniture, cars, appliances [10](#page=10). * **Specialty products:** These 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 [11](#page=11). * **Examples:** Medical services, designer clothes, crystal [11](#page=11). * **Unsought products:** These are consumer products that the consumer does not know about or knows about but does not normally think of buying [12](#page=12). * **Examples:** Life insurance, funeral services, blood donations [12](#page=12). #### 1.3.2 Industrial products **Industrial products** are products purchased for further processing or for use in conducting a business. These can be further broken down into [14](#page=14): * Materials and parts [14](#page=14). * Capital [14](#page=14). * Supplies and services [14](#page=14). --- # Product and service decisions This section explores the strategic choices companies make regarding the products and services they offer, encompassing both individual product attributes and the overall product portfolio [15](#page=15). ### 2.1 Individual product and service decisions These decisions concern the specific attributes and elements that define a product or service and how they communicate benefits to customers [17](#page=17). #### 2.1.1 Product attributes Benefits of products are conveyed through attributes such as features, quality, and style & design [17](#page=17). * **Features:** Product features serve as a competitive tool to differentiate a product from those of competitors. Marketing research is crucial in understanding customer reasons for purchasing specific features [18](#page=18). * **Quality:** This refers to the characteristics of a product or service that enable it to satisfy stated or implied customer needs [19](#page=19). * **Performance quality:** The ability of a product to perform its intended functions [19](#page=19). * **Conformance quality:** A product's freedom from defects and its consistency in delivering a targeted level of performance. Total Quality Management (TQM) is a concept related to ensuring high quality [19](#page=19). * **Style and design:** * **Style:** Describes the appearance of a product. While it can attract attention and create a pleasing look, it doesn't necessarily enhance performance [20](#page=20). * **Design:** Contributes to both a product's usefulness and its aesthetic appeal [20](#page=20). #### 2.1.2 Branding A brand is a name, term, sign, design, or a combination of these, that identifies the maker or seller of a product or service [22](#page=22). > **Tip:** Strong branding is essential for creating customer recognition and loyalty. #### 2.1.3 Packaging Packaging involves the design and production of the container or wrapper for a product. Effective packaging can address issues like confusion, embarrassment, and perceived sacrifice, while promoting enjoyment, pride, and health benefits through thoughtful design and messaging [24](#page=24) [25](#page=25) [26](#page=26). > **Example:** A beverage company might redesign its packaging to highlight flavor more prominently and use premium design elements to convey a sense of health and well-being, moving away from confusing or embarrassing messaging [27](#page=27). #### 2.1.4 Labels Labels identify the product or brand, describe its attributes, and serve promotional purposes [28](#page=28). #### 2.1.5 Product support services These are services that augment actual products and can constitute a minor or major part of the total offering [29](#page=29). ### 2.2 Product mix decisions The product mix, also known as the product portfolio, encompasses all the products and items a particular seller offers for sale. It is characterized by four key dimensions [30](#page=30) [31](#page=31): * **Width:** The number of different product lines the company carries [31](#page=31). > **Example:** Nestle has a wide product mix, including pet care, coffee, and water products [34](#page=34). * **Length:** The total number of items a company carries within its product lines [31](#page=31). > **Example:** Within its coffee product line, Nestle offers a variety of coffee products, contributing to its overall length [35](#page=35). * **Depth:** The number of versions offered for each product within a product line [31](#page=31). > **Example:** For a specific coffee product, Nestle might offer different sizes, roasts, or flavor variations, increasing the depth of that product line [36](#page=36) [37](#page=37). * **Consistency:** How closely related the various product lines are in end use, production and distribution requirements, or some other way [30](#page=30). --- # Branding strategies and brand equity This topic explores the foundational elements of constructing robust brands, focusing on brand equity, positioning, naming, sponsorship, and development [38](#page=38) [48](#page=48). ### 3.1 Brand equity and brand value Brand equity is defined as the distinct impact that a brand name has on a customer's reaction to a product or its marketing efforts. In essence, it represents the added value a brand name provides. Brand value, on the other hand, refers to the total financial worth of a brand. Strong brand equity can lead to higher sales volume, premium pricing, and greater customer loyalty [38](#page=38) [41](#page=41) [43](#page=43) [45](#page=45) [47](#page=47). ### 3.2 Brand positioning strategies Marketers can position brands at three distinct levels to connect with consumers [49](#page=49): * **Attributes:** This involves highlighting the product's features or characteristics. * **Example:** For Pampers diapers, attributes could include fluid absorption and disposability [50](#page=50). * **Benefits:** This focuses on the advantages consumers gain from using the product. * **Example:** Pampers can emphasize skin health benefits derived from their diapers [50](#page=50). * **Beliefs and values:** This level connects the brand to deeper consumer sentiments and ideals. * **Example:** Pampers can associate their brand with happy babies and strong parent-child relationships [50](#page=50). ### 3.3 Criteria for brand name selection A well-chosen brand name is critical for a brand's success. Key criteria include: * **Suggests benefits and qualities:** The name should hint at what the product offers [51](#page=51) [53](#page=53). * **Easy to pronounce, recognize, and remember:** A memorable and accessible name enhances recall [51](#page=51) [54](#page=54). * **Distinctive:** It should stand out from competitors [51](#page=51). * **Extendable:** The name should allow for future product line extensions [51](#page=51) [55](#page=55). * **Translatable for the global economy:** It should work across different languages and cultures [51](#page=51). * **Capable of registration and legal protection:** The name must be legally viable [51](#page=51). ### 3.4 Brand sponsorship types There are several ways a brand can be sponsored: * **Manufacturer’s brand:** Products are sold under the name of the company that manufactured them [56](#page=56) [57](#page=57). * **Private brand:** These brands are created and owned by a reseller (e.g., a retailer) of a product or service [56](#page=56) [58](#page=58). * **Licensed brand:** Companies license existing brand names, symbols, or characters (e.g., from movies or books) to use on their products [56](#page=56) [59](#page=59). * **Co-brand:** This involves using the established brand names of two different companies on the same product, leveraging the equity of both [56](#page=56) [60](#page=60). ### 3.5 Brand development Brand development encompasses the strategies and processes involved in creating and evolving a brand's identity and market presence. This includes decisions related to brand positioning, naming, sponsorship, and ultimately, building strong brand equity over time [61](#page=61) [62](#page=62). --- # Service characteristics and exam preparation This section outlines the key characteristics of services and provides guidance on preparing for an exam, including sample questions on segmentation, targeting, and positioning strategies. ### 4.1 Service characteristics The document focuses on exam preparation and sample questions rather than detailing the intrinsic characteristics of services themselves. However, the context implies that services possess distinct attributes that differentiate them from tangible products, influencing marketing strategies. ### 4.2 Exam preparation guidance The midterm exam covers lectures 1-5. The exam format includes Multiple Choice Questions (MCQ), True/False questions (with corrections), problem-solving questions, and short case studies. Effective study involves reviewing lecture slides and reading book sections that align with lecture content. A crucial aspect of preparation is mastering the key terms [64](#page=64). > **Tip:** Ensure you thoroughly understand all definitions and concepts presented in lectures, as knowing the terms is explicitly stated as a requirement. ### 4.3 Sample exam questions and analysis The provided document includes sample questions that test understanding of marketing strategies, specifically segmentation, targeting, and positioning. #### 4.3.1 Segmentation, targeting, and positioning **Sample Question 1: Targeting Strategy** * **Statement:** "The mass marketing targeting strategy focuses on providing different marketing offers to different market segments." [65](#page=65). * **Answer:** False [65](#page=65). * **Correction:** Differentiated targeting [65](#page=65). **Analysis:** This question assesses the understanding of fundamental targeting approaches. Mass marketing aims for a single, broad market, while differentiated targeting involves distinct offers for different segments. #### 4.3.2 Case Study: NikeiD A case study on NikeiD is provided to illustrate the application of segmentation, targeting, and positioning. * **Case Description:** NikeiD allows customers to customize shoes online or in physical stores, appealing to a young, active, higher-income demographic that values personal appearance and fitness. Nike leverages its reputation for design and technology to justify premium pricing for these customized products [66](#page=66). * **Question 1: Segmentation Bases** * **Reference:** The case [66](#page=66). * **Answer:** Geographic (different countries), Demographic (age and income; young, higher income), and Psychographic (lifestyles; exercising, active, care about physical appearance) [67](#page=67). > **Tip:** When analyzing segmentation, consider various bases: geographic (location), demographic (age, income, gender, etc.), psychographic (lifestyle, values, personality), and behavioral (purchase behavior, usage rate). * **Question 2: Targeting Strategy** * **Reference:** The case [66](#page=66). * **Answer:** Micromarketing, specifically Individual marketing, due to the ability for consumers to customize and personalize the product to their preferences [67](#page=67). > **Tip:** Micromarketing targets very small groups or even individual customers. Individual marketing is the most granular form, tailoring offers to each person's unique needs and preferences. * **Question 3: Value Proposition (Positioning) Strategy** * **Reference:** The case [66](#page=66). * **Answer:** More for More [67](#page=67). **Analysis:** The "More for More" positioning strategy suggests offering a premium product or service with superior benefits at a higher price, justifying the perceived value. NikeiD's customization and brand prestige align with this approach. --- ## Common mistakes to avoid - Review all topics thoroughly before exams - Pay attention to formulas and key definitions - Practice with examples provided in each section - Don't memorize without understanding the underlying concepts

| Term | Definition | |------|------------| | Product | Anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want. | | Service | Any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything. | | Consumer Products | Products or services purchased by households for personal consumption. | | Industrial Products | Products purchased for further processing or for use in conducting a business. | | Convenience Products | Consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort. | | Shopping Products | Consumer products and services that the customer compares carefully on suitability, quality, price, and style. | | Specialty Products | 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. | | Unsought Products | Consumer products that the consumer does not know about or knows about but does not normally think of buying. | | Product Attributes | Characteristics of a product or service, such as features, quality, style, and design, that communicate and deliver its benefits. | | Product Quality | The characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs. | | Performance Quality | The ability of a product to perform its functions effectively. | | Conformance Quality | A product’s freedom from defects and consistency in delivering a targeted level of performance. | | Style | The appearance of a product, which can grab attention and be pleasing but does not necessarily improve performance. | | Design | Contributes to a product’s usefulness as well as its aesthetic appeal. | | Brand | A name, term, sign, or design—or a combination of these—that identifies the maker or seller of a product or service. | | Packaging | The process of designing and producing the container or wrapper for a product. | | Labels | Identify the product or brand, describe attributes, and serve promotional purposes. | | Product Support Services | Services that augment actual products and can be a minor or major part of the total offering. | | Product Mix (Product Portfolio) | All the products and items that a particular seller offers for sale. | | Brand Equity | The differential effect that knowing the brand name has on customer response to the product or its marketing. | | Brand Value | The total financial value of a brand. | | Brand Positioning | The way marketers position brands at three levels: attributes, benefits, and beliefs and values. | | Manufacturer's Brand | A product sold under the manufacturer’s own brand name. | | Private Brand | A brand created and owned by a reseller of a product or service. | | Licensed Brand | A brand where companies license names or symbols created by other manufacturers or from popular culture. | | Co-branding | The practice of using the established brand names of two different companies on the same product. | | Characteristics of Services | Key attributes that distinguish services from tangible products, such as intangibility, variability, inseparability, and perishability. |