Products: Goods, Services and Experiences

Chapter Objectives (1)

1. Describe the nature of product in marketing management.

2. Explain the concept of the goods–services continuum.

3. Define the term product, including the core, actual and augmented product.

4. Explain product classifications, and contrast the differing types of consumer products and business-to-business products.

5. Explain services classifications and discuss the marketing of services.

Chapter Objectives (2)

6. Discuss an extended notion of product that includes marketing persons, experiencing events, places, political ideas, causes, non-profit services, and fundraising endeavours.

7. Outline the range of individual product decisions marketers make, discussing the product attributes of quality, features and design.

8. Discuss branding, and contrast the differences among line extensions, brand extensions, multibrands and new brands.

Chapter Objectives (3)

9. Illustrate product line and product mix decisions, describing stretching and filling the product line length, line modernisation, line featuring and line width.

10.List some of the considerations marketers face in making international product decisions, including whether or not to standardise or adapt product and packaging.

What is a Product?

• A product is anything that can be offered to a market with the objective of satisfying a consumer need or want.

• It can include physical goods; services; people; places; organisations and ideas.

• It is everything, both favourable and unfavourable, that the consumer receives in an exchange with the seller

Can be viewed on 3 levels

The most basic level is the core product, which addresses the question:

- what is the buyer really buying?

The actual product may have as many as five elements: the quality level; the features; the styling; a brand name, and the packaging.

The augmented product - the additional consumer services and benefits that are built around the core and actual products

Descriptions of a product's quality, features, style, brand name, and packaging identify the:

A. core product

B. actual product

C. augmented product

D. tangible product

E. intangible product

The three Levels of Product

An example of each level

Product Classifications

Consumer Products are those bought by final consumers for personal consumption. Four types:

• Convenience Products– Consumer goods and services that the customer

usually buys frequently, immediately, and with the minimum of comparison and buying effort.

• Shopping Products– Consumer goods and services that the customer, in

the process of selection and purchase, compares on the basis of suitability; quality; price; and style.

Cont’d

• Speciality Products– Consumer goods and services with unique

characteristics or brand identification, for which a significant group of buyers is willing to make a special purchase effort.

• Unsought Products– Consumer goods and services that the

consumer either doesn’t know about, or knows about but doesn’t normally think of buying.

Table 8.2 Marketing Considerations for Consumer Products

Business-to-Business Products

• Business-to-business (B2B) products are bought by organisations or individuals for further processing; for use in running a business; or to on-sell to others.

• The three groups of business products:– Materials and parts - industrial goods that enter the

manufacturer’s product completely, including raw materials and manufactured materials and parts.

– Capital items - industrial goods and services that enter the finished product partly, including installations and accessory equipment.

– Supplies and services - industrial goods and services that don’t enter the finished product at all.

Figure 8.4 Classification of Business Products

Business / Industrial product

The purpose is to:

• Manufacture other products;

• Assist in running a firm’s business; or• Simply on-sell to consumers and end-users

A product is categorised as a ‘Consumer’ product or as a ‘Business’ product, based on the purpose for which it is purchased - the intended use

Services products

• Services products deliver something that is intangible: the buyer receives value from the purchase, but it does not result in the consumer owning anything that endures.

• Continuing significant growth in the number and value of Services products, particularly in the ‘developed’ nations.

Characteristics of Services

The key characteristics that differentiate Services products from physical goods:

• Intangibility

• Inseparability/ High personal involvement

• Variability

• Synchronous delivery/ consumption

• Perishability

Cont’d

• Intangibility– Difficult to assess the suitability of the product in

advance– Because of this, the physical elements become

extra important

• Inseparability– Purchase takes on extra significance– Buyer involvement contributes to the outcome

Cont’d

• Variability– Different level of quality in production– Standardisation, and use of technology can help to

minimise the variation

• Synchronous– Increased importance of ‘people’– Product is often ‘sold’ before it is produced

• Perishability– Product is not produced in advance– Need for firm to link supply with demand

Service Quality Measures

• There is usually a much higher level of people involvement (both buyer and seller) with Services products than with goods.

• Services purchases usually involve people in ‘service encounters’; Services are experiential in nature, and often require special measures, such as ‘mystery shoppers’, to assess the quality of the product.

Extending the Classification of Goods and Services

• Event marketing– Combines the marketing of Services elements with the

marketing of goods, particularly the experiential aspects of sporting, entertainment and other staged events.

• Person marketing– People such as athletes/ sports stars need to be marketed

as a ‘personality’ before being used for endorsements.Politicians can be marketed in a similar manner.

• Political marketing– Politicians market themselves, their political ideologies,

and their political party in an attempt to gain voter support.

Cont’d

• Cause marketing– Marketing an idea or social cause such as nuclear-free

living or catching public transport to and from work.In cause-related marketing, a firm might position its brand on the basis that it will donate part of the value of its sales to a particular cause.

• Not-for-profit marketing– Conducted by organisations who are not motivated by

profit. The aim is to make a sufficient trading surplus to enable the operation to continue.

• Experiences marketing– Promoting the added-value elements available through

customer participation and connection with the product, and managing all related aspects of the relationship.

The Firm’s Product Decisions

1. Product Attributes

• Product Quality

– Is the ability of a product to perform its functions.

– Includes the product’s durability; reliability; precision; ease of use; and repairability.

Quality should not be viewed as a problem to be solved; it is a competitive opportunity.

Cont’d

• Product Features – May include several models of a product (e.g. cars)

offering varying features. Helps to differentiate from competitors. Must relate cost of features to value.

• Product Design – Process of designing a product’s style and function.

Creating a product that is attractive; easy, safe and inexpensive to use and service; simple and economical to produce and distribute.

2. Branding

• Branding is a major strategic decision that can add value to a product.

• Viewed by consumers as an important part of the product.

• Powerful brands will gain strong recognition and attract significant consumer loyalty, and can usually command a higher price

• Brands with strong consumer loyalty are better protected against the strategies of competitors. This is high brand equity.

Cont’d

• The brand is the combination of functional and emotional benefits delivered by a product.

• Consumers are looking for something they can associate with - a means of linking with a particular product that delivers ‘value’.

• Consumers are attracted to a product that:

Is dependable; has high quality; is consistent over a period of time; offers ‘value-for-money’; and can deliver a positive experience each time (satisfaction).

Cont’d

A brand can be:

A name; term; sign; symbol; or design (or a combination of these) intended to identify a firm’s product, and to help differentiate it from competing products

The most enduring meanings of a brand are its:

A. attributes and benefits

B. values, benefits, attributes, and personality

C. personality, attributes, and benefits

D. values, culture, and personality

E. attributes, benefits, and values

To Brand or Not to Brand

• Branding can deliver significant benefit, so it is a major part of product marketing.

• Some products are classified as ‘generic’. These are plainly packaged, and are less expensive versions of everyday products.

• In Australia, the market share for generics tends to fluctuate, but major supermarkets are developing their own generic labels.

• Manufacturers’ brand– Created and owned by the producer of the product.

• Private brand– Created and owned by a reseller of the product.

• Licensing– Some companies are licensed to use brand names or

symbols previously created by other manufacturers.

• Co-branding– The practice of using the established brand names of two

different companies to promote the same product.

Brand Sponsor Decision

Co-branded product

Arnott's biscuits with M&M candies in them would be an example of the use of a __________

strategy.

A. line extension

B. co-branding

C. repositioning

D. brand extension

E. line filling

Brand repositioning

• It may be necessary for a firm to reposition its product, due to:– a competitor launching a new brand that

cuts into the firm’s market share.– a shift in consumer wants

Repositioning could be an easier, more beneficial option than introducing a completely new brand.

The firm might need to change both the product and the product image to better satisfy any new customer expectations.

Packaging/ Labelling

• Packaging can:– Promote the product– Protect the product– Enable easy storage– Encourage recycling

• Labelling will:– Help consumes with selection– Provide information, e.g. how-to-use instructions– Highlight product features and benefits

Product Line Decisions

• A 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.

• Product line length– Stretching downward

– Stretching upward

– Stretching both ways

Figure 8.8 Product Line Stretching Decisions

Product Mix Decisions

• A product mix is the set of all product lines and items that a particular seller offers for sale.

• The product mix can be described as having: breadth; length; depth; and consistency.

– Breadth is the number of different product lines.

– Length is the total number of items the company offers.

– Depth is the number of versions of each product in the line.

– Consistency is how closely the various product lines are in terms of consumer usage; production requirements; and methods of distribution.