Chapter 7 - Textbook Notes PDF

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Chapter 7: Product Mix -

Marketers must build and manage products and brands that connect with customers.

What is a 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. Products do not just include tangible objects, but services, events, persons, places, organizations, and ideas (or a mixture of these) as well. 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.

Products, Services, and Experiences -

Products are a key element in the overall market offering. Marketing mix planning begins with building an offering that brings value to target customers. On top of making their products, many companies strive to create and manage customers experiences with their brands.

Levels of Product and Services -

Most basic level is the core customer value (“What is the buyer really buying?”) When designing products, marketers must first define the core, problem solving benefits, services, or experiences that the consumer seeks. The second level, product planners must turn the core benefit into an actual product. They need to develop product and service features, a design, a quality level, a brand name, and packaging. Lastly, product planners must build an augmented product around the core benefit and actual product by offering additional consumer services and benefits. Consumers see products as complex bundles of benefits that satisfy their needs. When developing products markers must first identify the core customer value that customers seek from the product. Then they must then design the actual product and find ways to augment it to create customer value and a full and satisfying brand experience.

Product and Service Classifications -

Products and services fall into 2 broad classes based on the types of consumers who use them: o Consumer Products  Consumer products are products and services brought bought by final consumers for personal consumption.  Consumer products include:

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Industrial products include material and parts, capital items, and supplies and services (or any product that is in use for conducting a business)

Organizations, Persons, Places, and Ideas -

Organization marketing consists of activities undertaken to create, maintain, or change the attitudes and behavior of target consumers toward an organization. Person marketing consists of activities undertaken to create, maintain, or change attitudes or behavior toward particular people. (Endorsements, etc.) Place marketing involves activities undertaken to create, maintain, or change attitudes or behavior toward particular places.

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Social marketing consists of using traditional business marketing concepts and tools to encourage behaviors that will create individual and societal well being. (Support ideas that they believe in)

Product and Service Decisions -

Marketers make product and service decisions at three levels: individual product decisions, product line decisions, and product mix decisions.

Individual Product and Service Decisions

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Product and Service Attributes o Product Quality  Quality affects product or service performance and is closely linked to customer value and satisfaction.  Companies choose a quality level that matches target market needs and quality levels of competing products. (ex. Not many people can afford the quality of a Roll’s Royce) o Product Features  Features are a competitive tool for differentiating the company's product from the competitors products. o Product Style and Design  Style simply describes the appearance of product.  Design contributes to a product's usefulness as well as to its looks. Branding o A brand is a name, term, sign, symbol, or design in a combination of these that identifies the maker or seller of a product or service. o Brand says something about product quality and consistency; buyers who always buy the same brand know that they will get the same features, benefits, and quality each time they buy. Packaging o Packaging involves designing and producing the container or wrapper for product. o Packaging is an extremely important promotional medium. Labelling and Logos o The label identifies the product or brand. The label might also describe several things about the product. o Labels and brand logos can support the brands positioning and add personality to the brand. o Customers often form strong connections with the visual representations of their brands and may react strongly to changes. Product Support Services o Keeping customers happy after the sale is key to building lasting relationships. o Once the company has assessed the quality of very support services to customers, it can take steps to fix problems that add new services that will both delight customers and yield profits to the company.

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Product Line Decisions o A product line is a group of products that are closely related because they function as similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges. o Product Line Length  The line is too short if the manager can increase profits by adding items , and the line is too long if the manager can increase profits by dropping items. o A company can expand its product line in two ways:  Line Filling  Product line filling involves adding more items within the present range of the line.  Line Stretching:  Product line stretching occurs when a company lengthens its product line beyond its current range. (ex. High end company can stretch their line downwards to target new people with lower incomes) Product Mix Decisions o A product mix consists of all the product lines and items that a particular seller offers for sale. o A product mix has four important dimensions:  Product mix width refers to the number of different product lines the company carries.  Product mix length refers to the total number of items a company carries within its product lines.  Product line depth refers to the number of versions offered of each product in the line.  The consistency of the product mix refers to how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. o A company can increase its business in four ways. It can add new product lines, widening its product mix. A company can lengthen its existing product lines to become a more full-line company. It can add more versions of each product and thus deepen its product mix. Finally, a company can pursue more product line consistency , depending on whether it wants to have a strong reputation in a single field or several fields.

Services Marketing

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Service intangibility means that service cannot be seen, tasted, felt, heard, or smelled before they are bought. Service inseparability means that services cannot be separated from their providers, whether the providers are people or machines. Service variability means that the quality of services depend on who provides them as well as when, where, and how they are provided. Service perishability means that the services cannot be stored for later sale or use.

The Service Profit Chain o The service profit chain links service firm profits with employee and customer satisfaction. This chain consists of five links:  Internal service quality (Superior employee selection and training, equality work environment, and a strong support for those dealing with customers, which results in…)  Satisfied and productive service employees (more satisfied, loyal, and hardworking employees, which results in…)  Greater service value (More effective and efficient customer value creation, engagement, and service delivery, which results in...)  Satisfied and loyal customers (satisfied customers who remain loyal, make repeat purchases, and refer other customers, which results in...)  Healthy surface profits and growth (superior service firm performance) o Services marketing also requires internal and interactive marketing.  Internal marketing means that the service firm must orient and motivate its customercontact employees and supporting service people to work as a team to provide customer satisfaction.  Interactive marketing means that the service quality depends heavily on the quality of the buyer seller interaction during the service encounter.

Branding Strategy -

Brand equity is the positive differential effect that knowing the brand name has costumer response to the product or the service. In building brands, companies need to make decisions about brand positioning, brand name selection, brand sponsorship, and brand development. o The most powerful brand positioning builds around strong consumer beliefs and values. o Brand name selection involves finding the best brand name based on a careful review of product benefits, the target market, and proposed marketing strategies. o A manufacturer has 4 brand sponsorship options:  It can launch a national brand, sell to resellers that use a private brand, market licensed brands, or join forces with another company to co-brand a product. o A company also has four choices when it comes to developing brands:  It can introduce line extensions, brand extensions, multi brands, or new brands....