CHAPTER 7- Create the Product
1) Articulate the value proposition:
- The value proposition is the consumer’s perception of the benefits they will
receive if they buy a good or service
- Marketers tasks: 1-creates a better value than what’s out there already 2-
convince customers that this is true.
-Good: a tangible product that we can see touch, smell, hear or taste
-Intangibles: experience-based products.
- Product is as a bundle of attributes: include features, functions, benefits, and
uses of a product. Marketers view products as a bundle of attributes that includes
the packaging, brand name, benefits, and supporting features in addition to a
2)Layers of the Product
Three distinct layers of the product( see figure 7.1 pg.223)
1. The core product: All the benefits the product will provide for consumers or
- Marketing is about supplying benefits not attributes
2. The actual product: The physical good or the delivered service that supplies
the desired benefit
3. The augmented product: the actual product plus other supporting features
such as a warranty, credit, delivery, installation, and repair service after the
sale 3) Describe how marketers classify product
Marketers classify products into categories, bcuz they represent differences in
how consumers and business customers fell about products and how the
purchase different products.
How long products do lasts?
- Durable goods : Consumer products that provide benefits over a long
period of time , such as cars, furniture, and appliances.
- Nondurable goods: Consumer products that provide benefits for a short
time because they are consumed (such as food) or are no longer
useful(such as newspaper)
How do consumers buy products? See figure 7.2 pg 226
- Convenience product: A consumer good or service that is usually low
priced, widely available, and purchased frequently with a minimum of
comparison and effort.* nondurable
- Several types of convenience products:
Staples: Basic or necessary items that are available almost
everywhere.*make sure it is available and price is comparable
to competition’s prices.
Impulse products: A product people often buy on the
spur of the moment.* should be highly visible and
package design that entice people.
Emergency products: Products we purchase when we’re in dire
Shopping products: Goods or services for which consumers
spend considerable time and effort gathering info and
comparing alternatives before making a purchase.
- Intelligent Agent or shopbots: computer programs that find sites selling
a particular product.
- Specialty products: Goods or services that have unique characteristics
and are important to the buyer and for which she will devote significant
effort to acquire.* a lot of effort to choose - Unsought products: Goods or services for which a consumer has little
awareness or interest until the product or a need for the product is
brought to her attention.
How Do Businesses Buy Products? Again See figure 7.2 pg 226
- Marketers classify business-to-business products based on how
organizations customers use them.
- Five different types of business-to-business products:
Equipment: Expensive goods, which last for a long time, that an
organization uses in its daily operations.
a. Heavy, installation and capital equipment: last longer
b. Light or accessory equipment : shorter life and cost less
Maintenance, repair, and operating (MRO) products: goods that a
business customer consumes in a relatively short time.
Raw material: Products of the fishing, lumber, agricultural and
mining industries that organizational customers purchase to use
in their finished products.
Processed materials: Products created when firms transform raw
materials from their original state
Component parts: Manufactured goods or subassemblies of
finished items that organizations need to complete their own
4) Understand the importance of services as products
- consider some of the challenges and opportunities that face marketers whose
primary offerings are intangible
- discuss services, a type of intangible that also happens to be the fastest-growth
sector in our economy
What is a Service?
Are acts , efforts, or performances exchanged from producer to user
without ownership rights. It satisfies needs when it provides pleasures, info or convenience. It has grown rapidly bcuz more cost effective to hire
outside firm that specialize in service than workforce to handle the task.
Characteristics of services
- All services share four characteristics:
Intangibility : The characteristic of a service that means customers
can’t see, touch or smell good service
o Overcome the problem of intangibility by providing physical
cues to reassure the buyer. Like the look of facility, logo.
Perishability : The characteristic of a service that makes it
impossible to store for later sale or consumption
o Capacity management: the process by which organization
adjust their offerings in an attempt to match
demand.*reduce price to increase demand for otherwise
Variability: The characteristic of a service that means that even
the same service performed by the same individual for the same
customer can vary.
Inseparatability: The characteristic of a service that means that it
is impossible to separate the production of a service from the
consumption of that service.
o Service encounter : The actual interaction between the
customer and the service provider
o Disintermediation: a service that requires the customer to
obtain an outcome without the intervention of a human
provider.* to minimize the potentially negative effects of bad
service and save on labor cost
The Service Encounter
Occurs when the customer comes into contact with the organization
- Service encounter dimensions:
Social contract dimension is one person interacting with another
person. “ the moment of truth” it is the employee who of the determines if customer will come away positive or negative
impression on service.
The customer also plays a part in the type of experience that
results from a service encounter.
How We Classify Services
- See figure 7.1 pg 233 for classification of services by inputs and
- See figure 7..4 pg 234 for the service continuum, which is tangible and
which is not.
- Goods-Dominated Products* provide supports
- Equipments or Facilitate-based services. *Like restaurant (preparation of
food and delivery of food) rely on expensive equipments and facilities.
Operational Factors: clear signs and other guidelines must show
customers how to use the service
Locational factors: services make sure their service sites are
convenient to prospective customers
Environmental Factors: create attractive environment to lure
- People-based services.*hire people to do our work
Core and Augmented Services
- Core service: The basic benefit of having a service performed
- Augmented services: the core service plus additional services provided
to enhance value
Physical Elements of the service Encounter: Servicescapes and other
- Servicescape :The actual physical facility where the service is performed
, delivered, and consumed.* Physical evidence
- Search Engine Optimization (SEO) : A systematic process of ensuring that
your firm comes up at or near the top of lists of typical search phrases
related to you business.
How We Provide Quality Service
Ensure that customers are satisfied with what they have pa