TOPIC 5

CHAPTER 7
Products, Services, and Brands:
Building Customer Value

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 Learning Outcomes
1. Explain the marketing concepts, theories and
strategies in making effective and efficient
marketing decisions.
2. Apply marketing strategies in relation to
consumer needs and the marketplace.
3. Analyse marketing mix elements strategies to
produce the desired response in a given target
market.

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 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
 Learning Objective 1

Define product and the major

classifications of products and services

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 Product-Service

Sugar Restaurant Education

Pure Tangible Pure

Good Service

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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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 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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 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
local reseller
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 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) (II) (III) (IV)

Convenience Shopping Specialty Unsought
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
company’s product value.
(a) Quality level from competitors’
(Performance quality): products.
the ability of a product • Style describes the
to perform its functions. • Feature’s value to appearance of a
consumer Versus product.
(b) Quality cost to company
consistency • Design contributes to
(Conformance • If highly valued in a product’s usefulness
quality): the freedom relation to cost as well as to its looks.
from defects, and feature should be
consistency in added to product.
delivering a targeted • E.g.: User friendly
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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 (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.

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 Brand Elements
 Brand name: Can be spoken. E.g.: Levi’s, 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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 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 equity—the 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
36 universal emotions.
 (II) Brand Name Selection

 Desirable qualities for a brand name include:

(select & protect)
 It should suggest product’s 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
37 selling a body treatments products.
 (III) Brand Sponsorship
 Manufacturer’s brands/National
Brands
 A brand created, used and owned by the
manufacturer.
 Sell their output under their own manufacturer’s
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 Tesco’s in-house brand with
38 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.
 Company’s 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
39 processors also partnering together.
 Co-branding Advantages &
Disadvantages
Disadvantages/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-Clark’s 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
43 luxury 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?

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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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 STRUCTURED QUESTION
Q1. Ms Sahana is the owner of the “Best
Chocolate Company” in Perak which
introduced a new chocolate called the “Fruit
Chocolate”. As a marketing consultant, you
have been given the task to look into the
packaging of this new chocolate.
Recommend any THREE (3) relevant
factors that you would consider in
developing a good packaging for this new
product. (6 marks)
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 YouTube

 Products and services

https://study.com/academy/lesson/services-
marketing-the-difference-between-services-and-
goods.html

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 Chapter7
The End

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