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MGT252H5 (9)
Chapter 9

MGT252 - Chapter 9 Notes.doc

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Matthew Osborne

Chapter 9 • 9.1 • Product • Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. • More than just tangible objects • E.g. Apple iPod, a trip to Banff, advice from one’s gardening centre. • Service • Any activity or benefit that one party can offer to another that is essentially tangible and does not result in the ownership of anything. • E.g. banking, hotel, airline, retail • Products, services, and experiences • Key element in market offering • Product a key element in the overall market offering • Includes both tangible g+s • May consist of: • Pure tangible good (no services attached) • E.g. soap, toothpaste salt. Pure services • • E.g. doctor’s exam, financial advice • Customer experiences • Customers are buying what those offers will do for them. E.g. Disney’s dreams and memories through its movies and theme parks, Nike, • Alberta Library • Levels of products and services • 3 levels CoreCustomerValue ActualProduct AugmentedProduct • What is the buyer really • Turning the core benefit to • Building around the core buying actual products benefit and actual product • E.g. • Develop: by offering additional • Revlon - In the factory, • g+s features, design, customer services and they make cosmetics. In quality level, brand benefits. the store, they sell name, packaging. • E.g. BB hope. • E.g. BB is an actual • Solution to mobile • BB - More than just a product. connectivity problems. cellphone, email device • Company and dealers or personal organizer. might give buyers a Also includes freedom warranty on parts and and on-the-go workmanship, connectivity to people instructions on how to and resources. use the device, quick repair services, and toll- free number and website to use. Product and service classification • • 2 classes: consumer and industrial products (include other marketable entities) 1. Consumer products • g+s bought by final consumers for personal consumption • Include convenience, shopping, specialty and unsought products Marketing Types Considerations Convenience Shopping Specialty Unsought Customer buying • Frequent • Less frequent • Strong brand • Little product behavior purchase purchase preference and awareness or • Little planning • Much planning loyalty knowledge • Little • Comparison of • Little • If aware, comparison brands on comparison of little/negative • Low shopping price, quality, brands interest effort style • Special • Low customer • High shopping purchase effort involvement effort • Low price sensitivity Price Low Higher High Varies Distribution • Widespread • Selective • Exclusive Varies • Convenient • Fewer outlets • 1 or few outlets locations per market area Promotion Mass promotion Advertising and More carefully Aggressive by producer personal selling targeted advertising and by producer and promotion by personal selling resellers both producer by producer and and reseller resellers Examples Toothpaste, Major Luxury goods Life insurance, magazines, appliances, TVs, blood donations laundry furniture, detergent clothing 2. Business products • Product bought by individuals and organizations for further processing or for use in conducting a business. • Difference btw consumer and business products: purpose for which the product is bought. • E.g. lawnmower • Consumer product: consumer uses it around his house • Business product: consumer uses it for landscaping business 3 groups • MaterialsandParts CapitalItems SuppliesandServices Raw materials •Products that aid in the Supplies • Farm products (wheat, buyer’s productions or • Operating supplies cotton, livestock, fruits, operations, including (lubricants, coal, paper, vegetables) and natural installations and accessory pencils) and repair and products (fish, lumber, equipment. maintenance items (paint, crude petroleum, iron ore). nails, brooms). Installations • Convenience products of Manufactured materials and •Major purchases such as the business field because parts buildings (factories, offices) they are usually purchased • Component materials (iron, and fixed equipment with a min. effort or cement, yarn, wires) and (generators, drill presses, comparison. component parts (small large computer systems, motors, tires, castings) elevators) Services • Sold directly to business • Maintenance and repair users Accessory equipment services (window cleaning, • Price and service are the •Portable factory equipment computer repair) and major marketing factors and tools (hand tools, lift business advisory services • Branding and advertising trucks) and office (legal, management are less important equipment (computers, fax consulting, advertising) machines, desks) • Supplied under contract. Have shorter life than • installations and imply aid in the production process. 3. Organizations, persons, places and ideas TypesofMarketing Org. Person Place Ideas Activities undertaken People as products Activities undertaken Social marketing to create, maintain, or Activities undertaken to create, maintain, or •The use of change the attitudes to create, maintain, or change attitudes or commercial and behavior of target change attitudes or behavior toward marketing concepts consumers toward an behavior toward particular places. and tools in organization. particular people. programs designed Cities, provinces, to influence Practiced by profit To create reputation regions and countries individuals’ behavior and not-for-profit Businesses, charities, compete to attract to improve their organizations and other org. use tourists, new well-being and that famous personalities residents, of society. Corporate image to help sell their conventions, and •More than just advertising products or causes company offices and advertising • Business firms factories. •E.g. public health sponsor public campaigns, relations or environmental corporate image campaigns advertising campaigns to market themselves and polish their images. • E.g. BASF A company • whose “invisible contributions” result in “visible success.” 9.2 • 1. Individual product and service decisions ProductandServiceAttributes Product Quality • The characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs. • Closely linked to customer value and satisfaction --> direct impact on g+s performance. • TQM (total quality management) • An approach that all company’s people are involved in constantly improving the quality of products, services and business processes. • For most top company, customer-driven quality has become a way of doing business • Most companies are taking a “return on quality” approach, viewing quality as an investment and holding quality efforts accountable for bottom-line results. • 2 dimensions: level and consistency 1. Marketer must first choose a quality level that will support the product’s positioning. • In this case, product quality = performance quality • The ability of a product to perform its functions • Companies rarely try to offer the highest possible performance quality level • Few customers want or can afford the high levels of quality offered. • Companies choose a quality level that matches target market needs and the quality levels of competing products. 2. High quality can also mean high levels of quality consistency • In this case, product quality = conformance quality • Freedom from defects and consistency in delivering targeted level of performance. Product Features • Competitive tool for differentiating the company’s product from competitors’ products. • Features that customers value highly in relation to costs should be added. Product Style and Design Style - The appearance of a product • • Does not necessarily make the product perform better • Design - More than skin deep, it goes to the very heart of a product • Good design contributes to a product’s usefulness as well as to its looks. • Begins with a deep understanding of customer needs. • Involves shaping the customer’s product-use experience. E.g. OXO kitchen tools ProductandServiceAttributes Branding • A name, term, sign, symbol, design, or
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