CHAPTER NINE

Elements of Product
Planning for Goods
and Services

For use only with

Perreault and McCarthy
texts.
© 2005 McGraw-Hill
Companies, Inc.
McGraw-Hill/Irwin
When we finish this lecture you should

1. Understand what “Product” really means.

2. Know the key differences between goods and
services.
3. Know the differences among the various
consumer and business product classes.
4. Understand how the product classes can help a
marketing manager plan marketing strategies.
5. Understand what branding is and how to use it
in strategy planning.

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

When we finish this lecture you should

6. Understand the importance of packaging in

strategy planning.
7. Understand the role of warranties in strategy
planning.

© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Exhibit 9-1
The Product Area Involves Many Strategy Decisions
PRODUCT

• The need-satisfying offering of a firm

• The customer’s entire experience with the
product meets the customer’s need
• Quality: a product’s ability to satisfy a
customer’s needs or requirements
 Goods - Service
 Product Quality and Customer Needs

Is Volvo a quality truck if a consumer doesn’t really care about

high performance or fuel efficiency?
 Relative Quality

When marketers compare

their products to competitive
products,
why is it helpful to rely on
relative quality ratings from
an independent agency, such
as the Insurance Institute for
Highway Safety?
Relative Quality
Goods and/or Services Are the Products
Tangibility Spectrum
Differences in Goods and Services

• How tangible is the product?

• Is the product produced before it’s sold?

• How perishable is it?

• Does the service require customer presence?

Differences in Goods and Services
Implications of Intangibility

• Services cannot be inventoried

• Services cannot be easily patented

• Services cannot be readily displayed or

communicated

• Pricing is difficult

1-13
Implications of Heterogeneity

• Service delivery and customer satisfaction depend

on employee and customer actions

• Service quality depends on many uncontrollable

factors

• There is no sure knowledge that the service

delivered matches what was planned and
promoted

1-14
Implications of Simultaneous Production &
Consumption

• Customers participate in and affect the transaction

• Customers affect each other

• Employees affect the service outcome

• Decentralization may be essential

• Mass production is difficult

1-15
Implications of Perishability

• It is difficult to synchronize supply and demand

with services

• Services cannot be returned or resold

1-16
Continuum of Evaluation for different types of Products
Expanded Marketing Mix for Services
Interactive Exercise: Attribute Ratings
Whole Product Lines Must Be Developed Too

+
Product Assortment, Product
Line or Individual Product?

• Product assortment: set of all product lines &

individual products that a firm sells
• Product line: set of individual products that are
closely related
• Individual product: particular product within a
product line
BRANDING IS A STRATEGY DECISION
BRANDING

• The use of name, term, symbol or design –

or a combination of these – to identify a
product
Brand names
Trademarks
Other means of product identification

How Branding helps consumers & marketers?

BRANDING

Well-recognized brands
- Make shopping easier
- Reduce marketer’s selling time & effort
- Improve the company image
Conditions Favorable to Branding

Best Value for

the Price
Easy to Dependable,
Easy to
Label and Widespread
Identify
Identify Availability
Key
Issues
Favorable Market Price
Shelf or Can Be High
Display Space Enough
Economies of
Scale
 Brand Familiarity

• How well customers recognize and accept a

company’s brand
 Affect the planning of marketing mix (where the
product should be offered; what promotion is
needed)

What other aspects of the marketing tools, other than

advertising, might be useful in generating brand recognition,
preference, or insistence?
Achieving Brand Familiarity Is Not Easy

Brand
Insistence

Brand
Preference

Brand
Recognition

Brand Non-
Recognition

Brand Rejection
The Right Brand Name Can Help

Short & Simple

Easy to Spell & Read
Easy to Recognize & Remember
Easy to Pronounce
Can Pronounce in Only One Way
Can Pronounce in All Languages
Suggests Product Benefits
Meets Packaging/Labeling Needs
No Undesirable Imagery
Always Timely
Adapts to Any Advertising Medium
Legally Available for Use
Brand Name
Branding
Branding
Protecting Brand Names & Trademarks

Lanham Act

You Must Protect

Your Own

Counterfeiting Is Accepted
In Some Cultures
What Kind of Brand to Use?

Licensed
Family Brand
Brand

Brand
Choices

Generic Individual
“Brand” Brand
What Kind of Brand to Use?

Family brand: the same brand name for several

products
Licensed brand: a well-known brand that sellers
pay a fee to use
Individual brand: separate brand names for each
product
Generic “brand”: generic products – products that
have no brand
Who Should Do the Branding?

Manufacturer
Dealer Brands
Brands
• Also called • Also called
national brands private brands
Battle or store brands
• Created/owned of the
by producers Brands • Created/owned
by middlemen
• Develop demand
across many • Create higher
markets margins for
dealers
The Strategic Importance of Packaging

Packaging Can
Packaging Sends
Enhance the
a Message
Product

Packaging Can
UPC Codes
Lower
Speed Handling
Distribution Costs
What Is Socially Responsible Packaging?

Laws Reduce Confusion & Clutter

Ethical Issues Remain

Unit Pricing May Help

Warranty Policies Are a Part of Strategy Planning

Promises in Magnuson-
Writing Moss Act

Support May May Improve

Be Costly Marketing Mix

Service
Guarantees
Product Classes Help Plan Marketing Strategy

Consumer Products Business Products

Products meant for Products meant for

the final consumer use in producing
other products
Consumer Product Classes

Staples

Convenience Products Impulse Products

Emergency Products

Homogeneous
Shopping Products
Shopping Products
Heterogeneous
Shopping Products
Specialty Products
New Unsought
Products
Unsought Products
Regular Unsought
Products
One Product May Be Seen Several Ways
Business Products Are Different

Derived Demand

Inelastic Industry Demand

Tax Treatments Differ

Business Product Classes – How They Are Defined

Accessories

Raw
Installations
Materials
Business
Product
Classes Component
Professional
Services Parts &
Materials

MRO Supplies
Interactive Exercise: Business Product Classes
Key Terms

• Product • Emergency products

• Quality • Shopping products
• Service • Homogeneous shopping
• Product assortment products
• Product line • Heterogeneous shopping
products
• Individual product • Specialty products
• Consumer products • Unsought products
• Business products • New unsought products
• Convenience products • Regularly unsought
• Staples products
• Impulse products • Derived demand
Key Terms

• Expense item • Brand name

• Capital item • Trademark
• Installations • Service mark
• Accessories • Brand familiarity
• Raw materials • Brand rejection
• Farm products • Brand nonrecognition
• Natural products • Brand recognition
• Components • Brand preference
• Supplies • Brand insistence
• Professional services • Brand equity
• Branding • Lanham Act
Key Terms

• Family brand • Federal Fair Packaging

• Licensed brand and Labeling Act
• Individual brands • Unit-pricing
• Generic products • Warranty
• Manufacturer brands • Magnuson-Moss Act
• Dealer brands
• Private brands
• Battle of the brands
• Packaging
• Universal Product Code
(UPC)