8th Ed Textbook Notes 2nd half.docx

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Department
Management (MGM)
Course
MGMA01H3
Professor
Pankaj Aggarwal
Semester
Summer

Description
Chapter 9: Products, Services, and Brands: Building Customer Value What is a Product? product: anything that can offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need also include services, events, persons, places, organizations, ideas, or a mix of these service: any activity or benefit that one party can offer to another that is essentially intangible and does not result in the ownership of anything Products, Services, and Experiences product is the key element in the overall market offering where the organizations build profitable customer relationships on, bringing value to target customers companies market experiences rather than just the product and services, customers are buying what the offers will do for them Levels of Product and Services three levels each level adds more customer value most basic level core customer value: what is the buyer really buying - first define the core, problem-solving benefits or services that consumers seek second level turn core benefit into the actual product: develop product/services features, design, quality level, brand name and packaging third level augmented product: build around the core benefit and actual product by offering additional consumer service and benefits Product and Service Classifications Consumer Products consumer product: bought by final consumers for personal consumption convenience product: buy frequently, immediately, and with a minimum of comparison and buying effort - usually low priced and marketers place them In many locations to make them readily available - ex. laundry detergent, candy, magazine, fast food shopping product: in the process of selection and purchase, usually compares on such bases as suitability, quality, price, and style - less frequently purchased, usually distribute through fewer outlets but provide deeper sales support to help customers in their comparison efforts - ex. furniture, clothing, used cars, major appliances, hotel, airline services specialty product: unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort - normally do not compare, only invest time needed to reach dealers carrying the product - ex. specific brands of cars, high-priced photographic equipment, designer clothes, financial/legal specialist services unsought product: consumer either does not know about or knows about but does not normally think of buying - new innovations are unsought until consumers becomes aware of them through advertising - require a lot of advertising, personal selling and other marketing efforts - ex. life insurance, pre-planned funeral services, blood donations Business Products business product: bought by individuals and organizations for further processing or for use in conducting business materials and parts: raw materials and manufactured materials and parts raw materials: farm products manufactured materials and parts: component materials like iron, yarn, and component parts like tires, small motors sold directly to business users, price/service are major marketing factors unlike advertising capital items: aid in the buyers production or operations, installations and accessory equipment installations major purchases like buildings and fixed equipment (generators, elevators) accessory equipment: portable factory equipment and tools (hand tools, life trucks) and office equipment (computers, desks) shorter life than installations and aid the production process supplies and services operating supplies: lubricants, coal, paper, pencils repair maintenance items: paint, nails, brooms convenience products of businesses maintenance, repair and business advisory services are usually supplied under contract Organizations, Persons, Places, and Ideas organization marketing activities to create, maintain, change the attitudes and behaviour of target consumers toward an organization - business firms sponsor public relations or corporate image advertising campaigns to market themselves and polish their images person marketing create, maintain, change attitudes or behaviours towards particular people place marketing create, maintain, change attitudes or behaviour toward particular places social marketing: use of commercial marketing concepts and tools in programs designed to influence individuals behaviour to improve their wellbeing and that of society (social ideas) - ex. public health campaigns to reduce smoking, alcoholism, drug abuse, obesity - ex. environmental campaigns to promote wilderness protection, clean air, conservation Product and Service Decisions Individual Product and Service Decisions Product and Service Attributes Product Quality: one of the marketers major positioning tools characteristics of a product/service that bear on its ability to satisfy customer needs create customer value and satisfaction is quality total quality management: companys people are constantly improving quality of products, services and business processes product quality has two dimensions: level and consistency - find a quality level that supports the products positioning - quality meaning product performance: ability of a product to perform its functions - high quality = high levels of quality consistency meaning conformance quality: freedom from defects and consistency in delivering a targeted level of performance Product Features: features are a competitive tool for differentiating products surveys can provide feature ideas and company can assess each features value to customers and its cost to the company Product Style and Design: add customer value through distinctive product style and design design is a larger concept than style style: appearance of a product design: skin deep goes to the heart of the product, contributes to a products usefulness as well as look - begins with deep understanding of consumers needs, shaping customers product-use experience product designers should think less about product attributes and technical specifications and more about how customers will use and benefit from the product Branding brand: name, term, sign, symbol, design or a combination of these that identifies the products or services of one seller or group of sellers and differentiates from those of competitors customers attach meanings to brands and develop brand relationships provide legal protection and helps seller segment markets Packaging activities of designing and producing the container or wrapper for the product innovative packaging is an advantage along with product safety and being environmentally friendly Labelling simple tags and complex graphics that are part of the package identifies the product/brand, describe several things, help promote the brand, support its position and connect with customers unit pricing (stating price), open dating (stating expected shelf life), nutritional labelling Product Support Services survey customers periodically to assess the value of current services and obtain ideas for new ones then take steps to fix problems and add new services Product Line Decisions product line: 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: number of items in the product line - influenced by companys objectives and resources: up-selling or cross-selling expand product line through line filling or line stretching product line filling: adding more items within the present range of the line - reach extra profits, satisfying dealers, using excess capacity, being the leading full-line company, plugging holes to keep out competitors - too much can lead to cannibalization and confusion, new items must be noticeably different from existing ones product line stretching: lengthens its product line beyond its current range; down/up or both ways - companies at the upper end can stretch downwards to plug market hole that otherwise would attract new competitors or to respond a competitors attack on the upper end or take place in the low-end segments - companies at the lower end can stretch upwards to add prestige to current products or attracted to a growth rate or higher profit margins at the upper end - companies in the middle can stretch both ways Product Mix Decisions product mix (product portfolio): set of all product lines and items that a particular seller offers deals with width, length, depth and consistency width: number of different product lines the company carries length: total number of items the company carries within its product lines depth: number of versions offered of each product in the line consistency: how closely related the various product lines are in end use, in production requirements, in distribution channels, or some other way increase business by widening product mix, lengthen existing product lines, deepen its product mix or pursue more product consistency Branding Strategy: Building Strong Brands Brand Equity brand represents customers perceptions and feelings about a product and its
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