Chapter 9 – Product and Service Strategies
The Marketing Mix
Blending of the four strategy elements —product, distribution, promotion, and price — to fit
the needs and preferences of a specific target market
Other variables: distribution channels, promotional plans, and pricing decisions must
accommodate the product strategy selected
Marketers develop strategies to promote tangible & intangible services.
strategy begins with investigation, analysis, and selection of a particular target market.
continues with the creation of a marketing mix designed to satisfy that segment.
Strategies to promote goods are often quite different from those designed to promote services
What is a Product?
Bundle of physical, service, and symbolic attributes designed to satisfy a customer’s wants and
People buy want satisfaction, not objects
What are Good and Services?
Services are intangible tasks—actually intangible products—that satisfy the needs of customers
and business users.
Most service providers can’t transport or store their products, but instead customers
simultaneously buy and consume them.
Goods are tangible products or items that customers can see, hear, smell, taste, or touch.
The Goods-Services Continuum
The two types can be distinguished through the goods-services continuum.
This spectrum helps marketers visualize the differences and similarities between goods
It also clarifies which purchases can be a mixture of both.
Services are intangible – customers are asked to buy a promise
Services are inseparable from the service providers – consumer perception of a service provider
becomes their perception of the service itself
Services are perishable – they’re created and consumed at the time of purchase, so providers
cannot maintain inventories
Companies cannot easily standardize services. – though this is changing as firms attempt to
promise certain qualities, amenities, or results
Buyers often play a role in the creation and distribution of services – interactions between buyer
& seller are often required at the production and distribution stages Service standards show wide variations – the quality and standards can vary greatly among
service providers in the same industry
Importance of the service sector
The service sector makes up more than 70 percent of the Canadian economy (production and
Shifting from a goods-oriented to a service-oriented economy
Growth in services
Consumer desire for speed and convenience
Technological advances that allow firms to fulfill this demand
Bigger consumer demand for certain services, including those involving wireless
communications, data backup and storage, financial consulting, insurance, even meal
Service firms emphasize marketing for two reasons
The growth potential of service transactions represents a vast marketing opportunity.
Increased competition is forcing traditional service industries to differentiate themselves, and
providing superior service is one way to develop long-term relationships.
Classifying Good and Services for Consumer and Business Markets
Choices for marketing depend on the offering and on the nature of the target market
Consumer (B2C) product — Product destined for use by ultimate consumers
Business (B2B) product — Product that contributes directly or indirectly to the output of other
products for resale
Type of Consumer Products
One distinction in classifying products focuses on the buyer’s perception of a need for the
product as well as his or her buying behaviour.
Three groups (based on customer’ behavior)
Products purchased only after the consumer compares competing offerings (price, quality, style,
differ from convenience products in several ways:
generally more expensive.
The purchaser lacks complete information prior to the buying trip, and gathers it in the
They often carry warranties and after-sale service terms.
A store’s name and reputation have considerable influence on consumer buying
The personal selling efforts of salespeople provide important promotional support.
Homogeneous shopping products
To consumers, one brand often seems much like another.
Marketers try to differentiate homogeneous products from competing products in terms
price and value, quality, appeal, or uniqueness.
Ex. airplane flights, computers Heterogeneous shopping products
To consumers, basic differences seem to stand out.
Differences in features separate competing heterogeneous shopping products in the
minds of consumers.
Perceptions of style, colour, and fit can all affect consumer choices.
Ex. child care, furniture, cruise, yoga instructor
Products that offer unique characteristics that cause buyers to prize those particular brands
Carry high prices and represent well-known brands
Includes specialty services
Purchasers know what they want -- and are willing to pay for it
Because purchaser are willing to exert the effort to buy specialty products, producers can
promote them through few retail locations
Some firms limit the range of retailer that will carry their product
Highly personalized service and image advertising help promote
Ex. lexus, infinit, luxury cars, botox injections, …
Products marketed to consumer who may not yet recognize any need for them
Few products in this category
Ex. pre-need funeral plans, long-term healthcare insurance …
Unmet or undiscovered needs steve jobs; ipad
Goods and services that consumers want to purchase frequently, immediately, and with minimal
Impulse products spur of the moment
Ex. magazines, snacks
Staples bought constantly to replenish and maintain a ready inventory (many
Ex. gas, milk
Emergency products bought in response to unexpected and urgent needs
Ex. vet visit, plumbing repair kit
Consumers devote little effort to these purchase decisions; marketers try to makes these
Store location can boost products visibility
Location within a store, and on a shelf makes a difference
Slotting fees charged to firms in exchange for a guaranteed display of their
merchandise in the most visible spot on shelf
Classifying Consumer Services
services are also classified based on convenience, shopping, and specialty categories.
But several factors are unique to classifying services, and service firms may sell to business
markets, consumer markets, or both.
Marketers can ask five questions to classify services:
What is the nature of the service?
What type of relationship does the firm have with its customers?
How much flexibility is there for customization and judgment on the part of the provider?
Do demand and supply for the service fluctuate? How is the service delivered?
Applying the Consumer Products Classification System
The three-way classification system (convenience, shopping or specialty) guides firms in
developing a marketing strategy.
Buying behaviour patterns and marketing mix choices differ for the three different product
Not all goods and services fit within one of the three categories; some share
characteristics of more than one category.
Products might be more accurately classified on a continuum, depending on effort spent
by consumers—at one end they casually pick up items, at the other end they search
extensively for specific products.
Consumers differ in their buying patterns, but goods and services are classified based on
purchase patterns of the majority of buyers
Marketing Impact of the Consumer Products Classification System
Types of Business Products
Categories emphasize product use rather than consumer buying behavior
Business buyers = professional customers
Their jobs require rational, cost-effective purchase decisions
B2B products will generally fall in one for the 6 categories for product uses:
o are the specialty products of the business market, this classification includes
major capital investments for machinery and telecommunications systems
ex. airplane, office tower
o capital items that cost less and last for shorter periods than installations.
Ex. smartphone, computers
Component parts and materials
o are finished business products of one producer that become part of the final
products of another producer. Ex. fabric, computer chips
o resemble component parts and materials in that they become part of the buyers’
Ex. sugar, milk, iron ore
Supplies are regular expenses that a firm incurs in its daily operations, and are not part of
a final product.
Supplies are called MRO items
o fall into three categories: maintenance items, repair items, operating supplies
ex. staples, tape
o Include intangible products that firms buy to facilitate their production and
Ex. railroad, oil rig services, trucking
Marketing Impact of the Business Products Classification System
Quality as a Product Strategy
Quality is the key component to a firms’ success
Poor quality discovered in a newly purchased item can leave an impression that will lead
customer to make different decision in future (same with poor service quality)