Product Strategies

A Global
Perspective
Philip Kotler
Gary Armstrong
Swee Hoon Ang
8 Siew Meng Leong
Chin Tiong Tan
Oliver Yau Hon-
Product, Services, Ming
and Branding
Strategy
8-1
Learning Objectives
After studying this chapter, you should be able to:
1. Define product and the major classifications of products
and services
2. Describe the decisions companies make regarding their
individual products and services, product lines, and
product mixes
3. Discuss branding strategythe decisions companies
make in building and managing their brands
4. Identify the four characteristics that affect the marketing
of a service and the additional marketing
considerations that services require
8-2
Chapter Outline
1. What Is a Product?
2. Product and Service Decisions
3. Branding Strategy: Building Strong
Brands
4. Services Marketing
8-3
What Is a Product?
Products, Services, and Experiences
A product is anything that can be offered in a
market for attention, acquisition, use, or
consumption that might satisfy a need or want.
E.g. soap, toothpaste
Bradley Johnson
8-4
What Is a Product?
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.
E.g., Doctors exam, legal advice
8-5
What Is a Product?
Experiences represent what buying the
product or service will do for the customer.
E.g., Disney, Lego, Toys R Us
Audry Drapier
Bradley Johnson
8-6
What Is a Product?
Levels of Products
and Services
Core benefits
Actual product
Augmented
product
8-7
What Is a Product?
Levels of Product and Services
Core benefits represent what the buyer is
really buying.
Actual product represents the design, brand
name, and packaging that delivers the core
benefit to the customer.
Augmented product represents additional
services or benefits of the actual product.
8-8
What Is a Product?
Discussion Question: Describe the core, actual, and
augmented levels of Microsofts Windows XP
Professional operating software:
Core A software application that enables a PC to function
Actual A well-designed, high-quality, branded, and packaged
computer operating system that provides a variety of features that
are important to the user
Augmented An operating system software application that offers a
series of channel and consumer services. The channel member
can obtain favorable pricing and credit terms, training, engineering
support, etc. The consumer can get online support, version
updates, access to forums and communities, etc.
8-9
What Is a Product?
Product and Service Classifications
Consumer products
Industrial products
8-10
What Is a Product?
Consumer products are products and
services bought by final consumers for
personal consumption.
Classified by how consumers buy them
Convenience products
Shopping products
Specialty products
Unsought products
8-11
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
8-12
What Is a Product?
Shopping products are consumer products
and services that the customer compares
carefully on suitability, quality, price, and style.
Furniture
Cars
Appliances
8-13
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.
Designer watches
Branded fashion wear
High-end electronics
8-14
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
Blood donations
8-15
What Is a Product?
Discussion Question: Classify the following consumer
products
A laptop computer
A surgeon
Automobile tires
8-16
What Is a Product?
A laptop computer shopping good: most people purchase a
laptop infrequently, and when they purchase it, they usually
conduct extensive research and comparison of brands and
features
A surgeon Specialty good: There is usually little comparison
between doctors as most patients collect only a few names
Automobile tires it depends on the individual and the situation.
If a consumer has a luxury brand of car and will consider only
designer tires, this is a specialty good; for most consumers, tires
are a shopping good, and they will be heavily influenced by price
and brand name; in some situations, the tires could be an
unsought good.
If one was traveling and had a flat tire in an unknown area he
would probably be towed to a local station and with little product
knowledge, agree to a tire carried by the local station
8-17
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
8-18
What Is a Product?
Materials and parts include raw materials and
manufactured materials and parts usually sold
directly to industrial users.
Wheat
Lumber
Iron
Cement
8-19
What Is a Product?
Capital items are industrial products that aid in
the buyers production or operations.
Buildings
Elevators
Computers
8-20
What Is a Product?
Supplies and Services include operating
supplies, and repair and maintenance items, as
well as maintenance and repair services and
business advisory services.
Copy papers
Stationary
Training service
Market research/Advertising service
8-21
What Is a Product?
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.
8-22
What Is a Product?
Person marketing consists of activities
toward particular people.
Andy Lau
Stephanie Sun
Siti Nuraliza
8-23
What Is a Product?
Organizations, Persons, Places, and Ideas Jeff Christiansen
Place marketing consists of activities

toward particular places.
Tourism, e.g. the Great Wall of China, Walt
Disney World.
8-24
What Is a Product?
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 campaigns
8-25
Product and Service Decisions
Individual Product & Service Decisions A
single product
Product Line Decisions - A group of related
products
Product Mix Decisions The set of product lines
and items offered to customers by a particular
seller
These tools helps the planner to properly view the
product so it can achieve competitive
superiority and better product strategy.
8-26
Individual Product and Service Decisions
Product attributes
Branding
Packaging
Labeling
Product support services
8-27
Product attributes are the benefits of the
product or service
Quality
Features
Style and design
8-28
Define Quality in terms of the lack of defects or
creating customer value and satisfaction
Quality level is the level of quality that supports
the products positioning.
Performance quality is the ability of a product to
perform its functions.
Conformance consistency is freedom of defects
and consistency in delivering a targeted level of
performance.
8-29
Product features are a competitive tool for
differentiating a product from competitors products
Assessed based on the value to the customer versus the cost to
the company.
Product style and design add value to customer
value.
Style describes the appearance of the product.
Design contributes to a products usefulness as well as to its
looks.
8-30
Brand is the name, term, sign, or design, or
a combination of these, that identifies the
maker or seller of a product or service.
8-31
Branding help buyers identify benefits
Quality
Consistency
Branding provide legal protection for sellers
can aid in
Segmentation
Communicate product features
8-32
Packaging involves designing and producing the
container or wrapper for a product.
Label identifies the product or brand, describes
attributes, and provides promotion.
Product support services augment actual products.
Companies must continually:
Assess the value of current services to obtain ideas for new ones
Assess the costs of providing these services
Develop a package of services to satisfy customers and provide
profit to the company
8-33
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.
8-34
Product line length is the number of items in
the product line.
Product line can be lengthened in two ways:
Line stretching (lengthen beyond its current
range)
Line filling (adding more items within the present
range of the line)
8-35
Product line stretching is when a company
lengthens its product line beyond its current
range.
Downward
Upward
Combination of both
8-36
Line stretching
Downward product line stretching is used by
companies at the upper end of the market to plug a
market hole or respond to a competitors attack.
Upward product line stretching is by companies at
the lower end of the market to add prestige to their
current products.
Combination line stretching is used by companies in
the middle range of the market to achieve both goals of
upward and downward line stretching.
8-37
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 fend off competitors
8-38
Product Mix Decisions
Product mix consists of all the product lines
and items that a particular seller offers for sale.
Width
Length
Depth
Consistency
8-39
Product Mix Decisions
Product mix width is the number of different
product lines the company carries.
Product mix length is the total number of

items the company carries within its product
lines.
8-40
Product mix depth is the number of versions
offered of each product in the line.
Consistency is how closely the various

product lines are in end use, production
requirements, or distribution channels.
8-41
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.
8-42
Branding Strategy:
Brand equity is the positive differential effect

that knowing the brand name has on customer
response to the product or service. The extent
to which customers are willing to pay more for the
brand
Customer equity is the value of the customer
relationships that the brand creates. A powerful
brand forms a basis for building strong and profitable
customer relationships
Brand valuation is the process of estimating
the total financial value of the brand.
8-43
Branding Strategy:
Brand strategy decisions include:
Brand positioning
Brand name selection
Brand sponsorship
Brand development
8-44
Branding Strategy:
Brand Positioning
Position brands at any of three levels:
Product attributes (Giordano is positioned by each seasons
assortment of styles, colors and low price)
Product benefits (Giordano save your money through its great price
and time through its assortment of products for the whole family)
Product beliefs and values (Giordano also positions itself as fun. Its
ads are somewhat silly at times and always show the models having a
lot of fun wearing Giordano clothes. This is different from other retailers
who advertise using model with intense, serious, and seductive facial
expressions)
http://www.youtube.com/watch?v=67DhFt2NM8Y
http://www.youtube.com/watch?v=dXEtFDVBSVQ
8-45
Branding Strategy:
Brand Name Selection

Desirable qualities
Suggests benefits and qualities
Easy to pronounce, recognize, and remember
Distinctive
Extendable
Translatable for the global economy
Capable of registration and legal protection
8-46
Branding Strategy:
Brand Sponsorship
Manufacturers brand
Private brand
Licensed brand
Co-brand
8-47
Co-Branded Differentiator
WestinWORKOUT powered by Reebok

8-48
Branding Strategy:
Brand Sponsorship
Private brands provide retailers with advantages.
Product mix control
Slotting fees for manufacturers brands
Higher margins
Exclusivity
8-49
Branding Strategy:
Brand Development
In terms of Brand name & Product category
Line extensions
Brand extensions
Multibrands
New brands
8-50
Branding Strategy:
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.
8-51
Branding Strategy:
Brand Development
Brand extensions extend a brand name to a
new or modified product in a new category.
8-52
Branding Strategy:
Brand Development
Multibrands are additional brands in the same
category.
8-53
Branding Strategy:
Brand Development
New brands are used when existing brands
are inappropriate for new products in new
product categories or markets.
Ged Carroll
Nate Grigg
1970s-1990s 2000 and beyond

Sony's Trinitron Color TV Sonys BRAVIA widescreen LCD TV
8-54
Branding Strategy:
Managing Brands
Requires:
Continuous brand communication
Customer-centered training
Brand audits
8-55
Services Marketing
Types of Service Industries
Service industries vary greatly:
Government courts, employment services,
hospitals, military services, police and fire department,
postal services, and schools
Private not-for-profit organizations Museums,
charities, churches, colleges, foundations, and
hospitals
Business services
8-56
Services Marketing
Nature and Characteristics of a Service
Intangibility
Inseparability
Variability
Perishability
8-57
Services 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.
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 use.
8-58
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
8-59
Services Marketing
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
8-60
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.
8-61
Services Marketing
Interactive marketing means that service
quality depends heavily on the quality of the
buyer-seller interaction during the service
encounter.
Three major marketing tasks
Service differentiation
Service quality
Service productivity
8-62
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.
8-63
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.
The first step is to empower employees
Responsibility, Authority and Incentives they need
to recognize, care about, and tend to customer needs
8-64
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
8-65

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Product Strategies

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A Global

Place marketing consists of activities

Product mix length is the total number of

Consistency is how closely the various

Brand equity is the positive differential effect

Brand Name Selection

WestinWORKOUT powered by Reebok

1970s-1990s 2000 and beyond

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