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 variable : 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 needs
• 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
• 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 GoodsServices Continuum
• The two types can be distinguished through the goodsservices continuum.
− This spectrum helps marketers visualize the differences and similarities between goods and
− 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
• 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 jobs)
• Shifting from a goodsoriented to a serviceoriented 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 preparation
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 longterm 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, and
• 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 process.
− They often carry warranties and aftersale service terms.
− A store’s name and reputation have considerable influence on consumer buying behaviour.
− 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
− 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 wellknown 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. preneed funeral plans, longterm healthcare insurance …
• Unmet or undiscovered needs ▯steve jobs; ipad
• Goods and services that consumers want to purchase frequently, immediately, and with minimal effort
− Impulse products ▯spur of the moment
Ex. magazines, snacks
− Staples ▯bought constantly to replenish and maintain a ready inventory (many competitors)
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 exchanges
− 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 threeway classification system (convenience, shopping or specialty) guides firms in developing a
• Buying behaviour patterns and marketing mix choices differ for the three different product types.
− 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
− 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, costeffective 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
− Accessory equipment
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
Ex. fabric, computer chips
− Raw materials o resemble component parts and materials in that they become part of the buyers’ final
Ex. sugar, milk, iron ore
− Supplies are regular expenses that a firm incurs in its daily operations, and are not part of a
− Supplies are called MRO ite s
o fall into three categories: maintenance items, repair items, operating supplies
ex. staples, tape
− Business services
o Include intangible products that firms buy to facilitate their production and operating
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)
• Total q