Chapter 7

Products, Services, and Brands:

Building Customer Value

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 Learning Outcomes
1. Demonstrate an understanding of marketing
strategies in relation to consumer needs and the
marketplace.
2. Relate the core concepts of marketing such as
positioning, targeting, and similar strategies in
making decisions.
3. Apply marketing mix elements to produce the
desired response in a given target market.

2
 Learning Objectives
Define product and the major classifications
of products and services
Describe the decisions companies make
regarding their individual products and
services.
Discuss branding strategy the decisions
companies make in building and managing
their brands
Identify the four characteristics that affect
the marketing of a service and the
additional marketing considerations that
3 services require
 Introduction of Chapter 7
1. The Product-Service Continuum
2. 3 Levels of Product
3. Product & Service Classification

Consumer Products Other Market Offerings

Industrial Products

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 Introduction of Chapter 7
4. Product & service Decisions
i. Product Attributes
ii. Branding
iii. Packaging
iv. Labeling
v. Product Support Services

5. Branding strategy: Building Strong Brands

Brand Equity

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 Introduction of Chapter 7
6. Building Strong Brands
i. Brand Positioning
ii. Brand name Selection
iii. Brand Sponsorship
iv. Brand Development

7. Managing Brands Service Marketing

Nature & Characteristic of a service
Marketing Strategies for Service Firm
(Internal, External & Interactive Marketing)
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Major marketing task in service firms
 Learning Objective 1

Define product and the major

classifications of products and services

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 Product-Service Continuum

Sugar Restaurant Education

Pure Pure
Tangible Service
Good

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 What is Product?

A product is anything that can be offered to a

market for attention, acquisition, use, or
consumption that might satisfy a want or
need.
Broadly defined, products also include
services, events, persons, places,
organizations, ideas, or mixes of these.

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 What is Service?

Services are a form of product that consists

of activities, benefits, or satisfactions offered
for sale that are essentially intangible and do
not result in the ownership of anything.
Examples: banking, hotel, airline, retail, tax
preparation, home repairs.

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 Product, Service and Experiences
A companys market offering often includes
both tangible goods and services.
At one extreme, the offer may consist of a pure
tangible good, such as soap or toothpaste.
At the other extreme are pure services, for
which the offer consists primarily of a service.
To differentiate their offers, marketers are
creating and managing customer experiences
with their brands or company.

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 Levels of product and services
Product planners (or creator of the product) need to
think about products and services on three levels.
Three levels:
Core customer value, which addresses the question,
What is the buyer really buying?
Actual product, the design, functions, brand name
and etc.
Augmented product, which is created around the core
benefit and actual product by offering additional
consumer services and benefits.

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 When developing products, marketers first must identify the
core customer value that consumers seeks from the product.
They must then design the actual product and find ways to
augment it in order to create this customer value and the
most satisfying customer experience.

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 Three Levels of Product

1. Core Benefits:
Problem solving benefits or service that customer seek for.

2. Actual product:
Need to develop a products and services base on features,
design, a quality level, a brand name and packaging.

3. Augmented Product:
Build an augmented product around the core benefits and
actual product by offering additional customer services and
benefits.
Delivery & Credit, After sales services, Warranty and
Installation.
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 Example : Apple iPad
Core Benefits:
Entertainment, self-expression,
productivity and connectivity

Actual Product:
Brand Name : Apple iPad
Features : 9.7inch screen, ipad pencil,
multi-touch display, high fidelity
speakers

Augmented Products :
Product Support : customer enquiry
1800-My Apple
Warranty : issued by Apple store or
15 local reseller
 Mini Case
The Philips GC1421 Steam Iron is a uniquely designed
iron that makes household chores simple, fast and
effective. It comes with cutting edge features such as its
non-stick soleplate and specially designed steam holes
to enable easy gliding on all fabrics, self-clean to prevent
scale build up and continuous steam flow up to 17g/min
for better crease removal. The Philips Customer Care
team is ever ready to provide online support via
www.philips.com.my. It also comes with an extended
local warranty of 24 months.

Explain the THREE (3) levels of The Philips Steam Iron

product. Provide ONE (1) relevant example for each
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product level based on the text above.
 Learning Objective 2

Describe the decisions companies make

regarding their individual products and
services.

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 PRODUCT
&
SERVICE CLASSIFICATION
(A) CONSUMER PRODUCTS

(B) INDUSTRIAL PRODUCTS

(C) OTHER MARKET OFFERINGS

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 (A) Consumer Products
Consumer products are products and
services bought by final consumers for
personal consumption (own usage).
Classified by how consumers buy the
products:

(I)
(I) (II)
(II) (III)
(III) (IV)
(IV)
Convenience
Convenience Shopping
Shopping Specialty
Specialty Unsought
Unsought
Products
Products Products
Products Products
Products Products
Products

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 (I) Convenience Products
Convenience Products:
Bought frequently and
immediately
Low priced (inexpensive)
Mass advertising
Many purchase locations :
7-eleven
Examples: candy, newspapers,
stationary, soap, cooking oil,
plasters, umbrella and etc.

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 (II) Shopping Products
Shopping Products:
Bought less frequently
Higher price compare to
convenience products
Consumer plan & compare
(suitability, quality, price and style)
Fewer purchase locations: IKEA,
Harvey Norman, KLCC, Mid
Valley, AEON
Spend time & effort (gather info &
compare)
Examples: furniture, appliances,
clothing
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 (III) Specialty Products
Specialty Products:
Special purchase efforts (plan the
purchase, know what they want & will
accept no substitutes)
Do not compare the brands
High price
Unique characteristics& Brand
identification
Few purchase locations : Starhill KL,
Pavillion
Example: Rolex watches, Ferrari car,
High-end electronics & Harley
Davidson bikes

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 (IV) Unsought Products

Unsought Products:
Are often products consumers do
not want to think about
New innovations are unsought until
consumer aware (advertising)
Require a lot of persuasive
advertising and aggressive personal
selling
Location : Hospital, clinic & etc.
Examples: blood donations, life
insurance, investment, fitted kitchen
& encyclopedia
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Copyright 2007, Prentice-Hall Inc.
 (B) Industrial Products

Those purchased for further processing or for

use in conducting business.
Includes materials and parts (steels, alloys,
cement), capital items (office, warehouse, computer
system), supplies (stationary) and services
(cleaning services).
Distinction between consumer and industrial
products is based on the purpose for which an
item is bought.

Nuts & Bolts Machines

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 (C) OTHER MARKET OFFERINGS
In addition to the two tangible products (consumer & industrial),
marketers have broaden the concept of product that includes
other market offerings.

Organizations: Profit (businesses) and nonprofit

(schools and churches).
Persons: Politicians, entertainers, sports figures,
doctors, and lawyers.
Places: Create, maintain, or change attitudes or
behavior toward particular places (e.g., tourism).
Ideas (social marketing): Public health campaigns,
environmental campaigns, etc.
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 PRODUCT & SERVICE DECISIONS

Individual Product and Service

Decisions

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 (I) Product & Service Attributes
Developing a product or service involves
defining the benefits that it will offer.
These benefits are communicated and
delivered by product attributes such as
quality, features, and style and design.

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 Product Quality Product Features Product Design
Product quality is Product features are Product Style and
creating customer a competitive tool Design is another way
value and satisfaction. for differentiating the to add customer
companys product value.
(a) Quality level from competitors
(Performance quality): products.
the ability of a product Style describes the
to perform its functions. Features value to appearance of a
consumer Versus product.
(b) Quality cost to company
consistency Design contributes to
(Conformance If highly valued in a products usefulness
quality): the freedom relation to cost as well as to its looks.
from defects, and feature should be
consistency in delivering added to product. E.g.: User friendly
a targeted level of
performance. product (easy to hold,
safe and easy to
E.g.: Rolls-Royce keep)
provide higher
performance quality but
Chevrolet gives similar
conformance quality.

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 Applying the concept!!!
Over the last several
years, cell phones have
evolved from being quite
large and clunky to being
extremely small. Discuss
how these style and
design changes have
benefited consumers. Do
you think the penetration
of this kind of technology
was accelerated because
of these changes?
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 (II)Branding

A brand is a name, term, sign, symbol, or design,

or a combination of these, that identifies the
maker or seller of a product or service.
Branding is an important aspect of the tangible
product especially in consumer markets to
distinguish from those competition.

7-30

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 Brand Elements
Brand name: Can be spoken. E.g.: Levis, Calvin
Klein, Hilton, & BMW
Brand mark: symbol. E.g.: Yahoo! Graphic, Disney
Mickey character, Nike swoosh logo

Trade name: legal trading name

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 Advantages branding to buyers & sellers
Buyers
Brand names help consumers
identify products that might
benefit them.
Brands say something about
product quality and consistency.
Loyal customer knows that they will
get the same features, benefits
and quality each time they buy.
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Sellers
The brand name becomes the basis
on which a whole story can be built
about a product. (Basis for
product quality)
The brand name and trademark
provide legal protection for unique
product features.
The brand name helps the seller to
segment markets.
 (III) Packaging
Packaging involves designing and producing
the container or wrapper for a product.
Developing a good packaging can:
Market the brand
Protect the elements
Ensure product safety
Address environmental concerns (recycle)

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 (IV) Labeling
Labeling refers to visual labels, symbolic or
textual information (containing pictures, letters
and numbers) about a product for product
identification and recognize.
Labels perform several functions (IDP).
The label identifies the product or brand. (Logo or
brand name)
The label describes several things about the
product. (Company details and ingredients)
The label promotes the brand. (Company logo,
pictures or graphics)

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Labeling has been affected in recent times by rules
and acts of a country:
unit pricing (stating the price per unit of standard
measure),
open dating (stating the expected shelf life of the
product), and
nutritional labeling (stating the nutritional values in
the product).

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 (V) Product Support Services

The first step is to survey customers periodically to

assess the value of current services and to obtain
ideas for new ones.
Next, the company can take steps to fix problems
and add new services that will both delight
customers and yield profits to the company.
This is to enhance customer service & satisfaction,
safeguard against competition.
E.g.: Free repairing service; home delivery; free
installation
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 Example.
Product support services: HP promises HP Total
Care expert help for every stage of your
computers life. From choosing it, to configuring it, to
protecting it, to tuning it up all the way to recycling
it.

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 Learning Objective 3

Discuss branding strategy the decisions

companies make in building and managing
their brands

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 Branding Strategy: Building Strong Brands
(Brand Equity)

Some marketing analysts see brands as the

major enduring asset of a company.
Brand Equity: Refers to the value of the brand or how much it is
worth. The positive differential effect that knowing the brand name
has on customer response to the product or service.

Brands strengths can be measured base on customer perceptions of:

differentiation (what makes the brand stand out),
relevance (how consumers feel it meets their needs),
knowledge (how much consumers know about the brand), and
esteem (how highly consumers regard and respect the brand).
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 Branding Strategy: Building Strong Brands
(Brand Equity)

Powerful brand has high brand equity.

High brand equity provides a company with many

competitive advantages :
High level of consumer brand awareness and loyalty.
More leverage in bargaining with resellers.
More easily launch line and brand extensions.
Defense against fierce price competition.
Forms the basis for building strong and profitable
customer relationships.

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 Example of Brand Equity: Coca-Cola, Disney,
Harley Davidson, Google, and Colgate.

The fundamental asset underlying brand equity is

customer equitythe value of the customer
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relationships that the brand creates.
 Branding Strategy: Building Strong Brands
(Brand Equity)

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 (I) Brand Positioning

Marketers can position brands at any of

three levels.
They can position the brand on product
attributes.
characteristics of a product that differentiate with
others such as size, color, function and etc.)
They can position the brand with a desirable
benefit.
Design, performance, cost effectiveness, image
that can satisfy customer needs and wants.
They can position the brand on beliefs and
values.
Hits consumers on a deeper level, touching
universal emotions.
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 (II) Brand Name Selection

Desirable qualities for a brand name include:

(select & protect)
It should suggest products benefits and
qualities.
It should be easy to pronounce, recognize,
and remember.
It should be distinctive/different.
It should be extendable.
It should translate easily into foreign
languages.
It should be capable of registration and
legal protection.
E.G.: BODY explained that the company
selling a body treatments products.
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 (III) Brand Sponsorship
Manufacturers brands/National
Brands
A brand created, used and owned by the
manufacturer.
Sell their output under their own manufacturers
brand names.
E.g.: Unilever produces toiletry products under
Unilever brand.

Private brands/distributor brands

(retailer & wholesalers brands)
A brand created, used, and owned by a reseller of
a product or service.
E.g.: Unilever distributes toothpaste to Tesco & the
company uses Tescos in-house brand with
45 permission from Unilever when labeling the product.
 (III) Brand Sponsorship
Licensed brands
The leasing/renting of a brand name to
a company other than the owner of that
particular brand in return for a royalty or a
fee.
Companys license name previously
created by other manufacturer.
E.g.: Walt Disney, Cartoon Network
Enterprises
Co-branding
Occurs when two established brand names
of different companies are used on the
same product.
E.g.: Disney & Crocs partnering designing
footwear for children. Dell & Intel
46 processors also partnering together.
 Co-branding Advantages &
Disadvantages
Disadvantaged/limitation
Advantages
s
Creates broader consumer
Involve complex legal contracts
appeal and greater brand equity
and license
for the co-branding partners
Allows the company to expand Co-branding partners must
its existing brand into a category carefully coordinate their
it might otherwise have difficulty advertising, sales promotion,
entering alone and other marketing efforts.
Each co-branding partner must
trust the other will take good
care of its brand.

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 (IV) Brand Development
A company has four choices when it comes to
developing brands.

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 (IV) Brand Development
Line extension:
Occur when a company extends existing brand
names to new forms, colors, sizes,
ingredients, or flavors of an existing product
category.
E.g.: Head & Shoulders shampoo with different
ingredients & benefits.

Brand extension:
Extend a current brand name to new or
modified products in a new category.
When a brand name is successful, marketers
normally use the brand to extend into new areas.
E.g.: Kimberly-Clarks Huggies brand was
extended to toddlers toiletries.
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 (IV) Brand Development

Multi branding:
Introduce more brands into an already
existing category.
Offers a way to establish different
features and appeal to different buying
motives.
E.g.: Unilever Multi brand company

New brands:
Decide to launch a new brand in market.
Something new & fresh to compete with
other brand.
Developed based on belief that the
power of its existing brand is declining
and a new brand name is needed.
E.g.: Toyota created Lexus under luxury
50 car category
 Discussion Question

Honda is a popular brand of automobile, also markets

several other products using the Honda brand name
such as motorcycles, generators, and lawn equipment.

Honda is using which brand development strategies in

order to build a strong brand and enjoy high brand
equity?

Answer: Brand Extension.

This is because Honda is using the same brand
51 name into a new category of product.
 Managing Brands
The brand experience is customers coming to
know a brand through a wide range of contacts
and touch-points.
Companies need to periodically audit their
brands strengths and weaknesses.
Services Marketing
Services account for close to 79 percent of U.S.
gross domestic product.
Services make up 64 percent of gross world
product.
Nature and Characteristics of a Service

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 Learning Objective 4

Identify the four characteristics that affect the

marketing of a service and the additional
marketing considerations that services require

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 Nature and Characteristics of a Service

A company must consider four service

characteristics when designing marketing
programs: intangibility, inseparability,
variability, and perishability

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 Discussion Question
Hotels and resorts charge lower prices in the off-
season to offset the ________ of service characteristic.

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 Marketing Strategies for Service
Firms
Service marketing requires external marketing, internal
marketing and interactive marketing

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 3 types of service marketing

1. External Marketing (Company & Customers)

Traditional marketing using the 4 Ps.

2. Internal Marketing (Company & Employees)

Orienting and motivating customer-contact employees
and supporting service people to work as a team to
provide customer satisfaction.
3. Interactive Marketing (Employees & Customers)
Training service employees during their interaction with
customers to satisfy their needs.

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 Learning Outcomes
1. Demonstrate an understanding of marketing
strategies in relation to consumer needs and the
marketplace.
2. Relate the core concepts of marketing such as
positioning, targeting, and similar strategies in
making decisions.
3. Apply marketing mix elements to produce the
desired response in a given target market.

58
 Chapter7
The End

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