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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Chapter 6: Developing and Promoting Goods and Services WHAT IS A PRODUCT? -markets must consider what consumers really buy when they purchase products -this way, they can plan their strategies effectively The Value Package -customers get value from benefits, features, and even intangible rewards associated with the products -features: the qualities, both tangible and intangible, that a company builds into its products -to attract buyers, features must provide benefits -value package: product markets as a bundle of value-adding attributes, including reasonable costs -buyers expect to receive products with a greater valuewith more benefits at reasonable costs -most items in the value package are services or intangibles -services and intangibles add value by providing benefits that increase the customers satisfaction -products are just more than just visible features and benefits -consumers are also buying an image and a reputation -brand name, packaging, labelling, and after-the-purchase service are also essential parts of the marketers products -ads do not usually emphasize the technical features of its products, not even the criteria that companies -ads usually focus on the customer-oriented benefits -benefits are being marketed as part of a complete value package -a new service often pleases customers more than the cost of providing it -making the purchase transaction more convenient, adds value by reducing long waits for customers Classifying Goods and Services -one way to classify a product is according to expected buyers -buyers fall into two groups: buyers of consumer products, and buyers of industrial products Classifying Consumer Products -consumer products are divided into three categories that reflect buyers behaviour: convenience, shopping, and specialty products Convenience goods and convenience services are consumed rapidly and regularly. They are inexpensive, purchased frequently, with little expenditure of time and effort. Example, milk, eggs, fast-food restaurants Shopping goods and shopping services are more expensive and purchased less frequently. Consumers compare brands, and evaluate alternatives in terms of style, colour, price, and other criteria. Example, stereos, tires, insurance, pension Speciality goods and speciality services are extremely important and expensive. Consumers usually decide on what they want without substitutes. Consumers will spend a lot of money and time to get a specific product. Example, wedding gown, catering services for wedding receptions Classifying Industrial Products -depends on how much they cost and how they will be used -divided into two categories: expense items and capital items Expense items are relatively inexpensive industrial goods that are consumed rapidly and regularly. Example, bulk loads of tea processed into tea bags Capital items are expensive, long-lasting industrial goods that are used in producing other goods or services and have a long life. Example, buildings and water towers. Capital services are those for which long-term commitments are made. Example, purchases for employee food services and legal services. Capital items involve decisions by high level managers The Product Mix -product mix: the group of products a company has available for sale Product Lines -product lines: a group of similar products intended for a similar group of buyers who will use them in similar fashion -begin with a single product, and as time progresses the initial product fails to suit every consumer shopping for the product type -to meet market demand, marketers introduce similar products -companies may extend their horizons and identify opportunities outside existing product lines -this results in multiple (or diversified) product lines -for example, a business or industry services are added -multiple product lines allow a company to grow rapidly -they also help to offset the consequences of slow sales in any one product line
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