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Chapter 8

Product and Service Concepts

1-2 McGraw-Hill/Irwin
Copyright 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

After studying this chapter you should be able to:

Understand the differences between goods and services.

Differentiate between consumer and business products, and discuss the different types of each.

Recognize that marketers need to appreciate the perspective of the consumer.

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After studying this chapter you should be able to:

Define and discuss the importance of product quality, product design, branding, packaging, and customer service.
Explain how the different product components need to be integrated to meet the needs of customers.

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What Is a Product?

Product:

An idea, a physical entity (a good), a service, or any combination of the three that is an element of exchange to satisfy individual or business objectives .

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Types of Products
Goods: Physical products with form and substance
Consumer Products: Those used by consumers for their own use and satisfaction.

Services: Non-physical products usually involving performance

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Business Products: Those used in the running of a business or in the manufacture of products for resale.

The Goods/Services Continuum

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Product Differentiation

Product Differentiation:

Exists when a firms offerings differ or are perceived to differ from those of competing firms on any attribute, including price.

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Goods and Services

Goods:

Physical products.

Services:

Nonphysical products.

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Characteristics and Strategies for Services

Service Characteristic
Intangible Perishable

Service Strategy
Associate service with something tangible Manage demand to utilize supply

Inseparable
Variable

Capitalize advantages of person providing service

Standardize service delivery as much as possible

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Consumer and Business Products

Consumer Products:

Products that are purchased by consumers for their own personal use.

Business Products:

Products purchased by a firm or organization for its own use.

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Consumer and Business Products

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Types of Consumer Products

Convenience Products

Shopping Products
Specialty Products

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Types of Business Products

Capital Products

Production Products Operational Products

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Product Components
Product Components

Product Features Quality Design Branding

Service Features Purchase services Usage services

Packaging
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Branding

Brand:

A name, term, sign, symbol, design, or combination that a uses to identify its products and differentiate them from those of competitors.

Brand Name:

The element of a brand that can be vocalized:

IBM Tide Snickers Diet Coke

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Branding

Brand Mark:

The element of a brand that cannot be vocalized:

MGM Lion The Buick symbol The Nike Swoosh

Trademark:

A brand or part of a brand that is registered with the U.S. Patent and Trademark Office.

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Building Brands

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Types of Brands
Generics
(Products typically not branded)

Manufacturer Brand
(National brand or regional brand)

Distributor Brand
(Store brand, private brand, or private label)
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The Worlds 10 Most Valuable Brands

Rank Brand 2002 Brand Value ($billions) 69.6 64.1 51.2 41.3 30.9 30.0 29.3 26.4 24.2 21.0

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2 3 4 5 6 7 8 9 10
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Coca-Cola Microsoft IBM GE Intel Nokia Disney McDonalds Marlboro Mercedes

Keys to Choosing A Brand Name

Is easy to pronounce, recognize, and remember.

Is distinctive in some way.

Can be translated into other languages.

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Packaging
Label: A printed description of the product on the package.

Package: The container or wrapper for a product.

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Functions of Packaging

Protecting the product until consumed. Storing the product until consumed.

Facilitating consumption of the product.

Promoting the product.

Facilitating disposal of the product.

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Customer Service

Customer Service:

Describes the assistance provided to help a customer with the purchase or use of a product.

Important Elements of Customer Service:

Providing information about product alternatives. Training in product use. Credit and financing services.

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