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Chapter 9

Chapter 9 Notes

Management (MGM)
Course Code
Alison Jing Xu

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Chapter 9 Products, Services, and Brands Building Customer Value Notes
What is a Product?
product anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy want or need
services activity or benefit that one party offers to another that is intangible and does not result in ownership of anything
Products, Services, and Experiences
marketing-mix planning begins with building an offer that brings value to target customers
this offering becomes the basis upon which the company builds profitable customer relationships
a company’s market offering ranges from a pure tangible good to pure services
to differentiate their offers beyond simply making products and delivering services, companies are creating and managing
customer experiences with their brands or company
Levels of Products and Services
the most basic level is the core customer value, which is the core, problem-solving benefits or services that consumers seek
at the second level, product planners must turn the core benefit into an actual product
they need to develop product and service features, a design, a quality level, a brand name, and packaging
finally, product planners must build an augmented product around the core benefit and actual product by offering additional
consumer services and benefits, such as installation, warranty, and delivery and credit
consumers seek products as complex bundles of benefits that satisfy their needs when developing products, marketers first
must identify the core customer value that consumers seek from the product; they must then design the actual product and find
ways to augment it to create this customer value and the most satisfying customer experience
Product and Service Classifications
Consumer Products
consumer product a product bought by final consumers for personal consumption; consumer products include convenience
products, shopping products, speciality products, and unsought products
Type of Consumer Product
Convenience Shopping Speciality Unsought
Customer buying
Frequent purchase, little
planning, little shopping
effort or comparison,
low customer
Less frequent purchase,
much planning and
shopping effort,
comparison of brands
on price, quality, style
Strong brand preference
and loyalty, special
purchase effort, little
comparison f brands,
low price sensitivity
Little product awareness
or knowledge (or, if
aware, little or even
negative interest)
Price Low price Higher price High price Varies
Distribution Widespread, convenient
Selective in fewer
Exclusive in 1 or a few
outlets per market area Varies
Promotion Mass promotion by the
Advertising and
personal selling by both
producer and resellers
More carefully targeted
promotion by both
producer and resellers
Aggressive advertising
and personal selling by
producer and resellers
Examples Toothpaste, magazines,
laundry detergent
Major appliances, TVs,
furniture, clothing
Luxury goods, such as
Rolex or fine crystal
Life insurance, blood
Business Products
business product a product bought by individuals and organizations for further processing or for use in conducting a business
the three groups of business products and services include materials and parts, capital items, and supplies and services
materials and parts include raw materials (farm products and natural products) and manufactured materials and parts
price and service are the major marketing factors; branding and advertising tend to be less important
capital items are business products that aid in the buyer’s production or operations, including installations (major purchases, such
as buildings and fixed equipment) and accessory equipment (portable factory equipment and tools, and office equipment)
supplies include operating supplies and repair and maintenance items; services are the convenience products of the business field
because they are usually purchased with a minimum effort or comparison
Organizations, Persons, Places, and Ideas
organization marketing consists of activities undertaken to create, maintain, or change the attitudes and behaviour of target
consumers toward an organization; both profit and not-for-profit organizations use it
business firms sponsor public relations or corporate image advertising campaigns to market themselves and polish their images
person marketing consists of activities undertaken to create, maintain, or change attitudes or behaviour toward particular people
place marketing involves activities undertaken to create, maintain, or change attitudes or behaviour toward particular places
social marketing the use of commercial marketing concepts and tools in programs designed to influence individuals’
behaviour to improve their well-being and that of society
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Product and Service Decisions
Individual Product and Service Decisions
product and service attributes branding packaging labelling product support services
Product and Service Attributes
benefits are communicated and delivered by product attributes such as quality, features, and style and design
product quality the characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs
total quality management (TQM) is an approach in which all the company’s people are involved in constantly improving the
quality of products, services, and business processes
product quality has two dimensions—level and consistency—performance quality is the ability of a product to perform its
functions; and conformance quality means freedom from defects and consistency in delivering a targeted level of performance
brand a 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 them from those of competitors
consumers view a brand as a an important part of a product and branding can add value to a product
consumers attach meanings to brands and develop brand relationships
packaging the activities of designing and producing the container or wrapper for a product
increased competition and clutter on retail store shelves means that packages must now perform many sales tasks—from
attracting attention, to describing the product, to making the sale
companies are realizing the power of good packaging to create immediate consumer recognition of a brand
innovative packaging can give a company an advantage over competitors and boost sales
labels range from simple tags attached to products to complex graphics that are part of the package
they perform several functions—at the very least, the label identifies the product or brand; the label might also describe several
things about the product (who made it, where it was made, when it was made, its contents, how it is to be used, and how to use it
safely); finally, the label might help to promote the brand, support its positioning, and connect with customers
labelling has been affected in recent times by unit pricing, open dating, and nutritional labelling
Product Support Services
the first step is to survey customers periodically to assess the value of current services and to obtain ideas for new ones
once the company has assessed the quality of various support services to customers it can take steps to fix problems and add new
services that will both delight customers and yield profits to the company
Product Line Decisions
product line a 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
the major product line decision involves product line length—the number of items in the product line
product line length is influenced by company objectives and resources, such as upselling, cross-selling, or economic swings
a company can expand its product line in two ways: by line filling or by line stretching
product line filling involves adding more items within the present range of the line
product line stretching occurs when a company lengthens its product line beyond its current range
Product Mix Decisions
product mix (product portfolio) the set of all product lines and items that a particular seller offers for sale
a company’s product mix has four important dimensions: width, length, depth, and consistency
product mix width refers to the number of different product lines the company carries
product mix length refers to the total number of items the company carries within its product lines
product mix depth refers to the number of versions offered of each product in the line
finally, the consistency of the product mix refers to how closely related the various product lines are in end use, in production
requirements, in distribution channels, or in some other way
Branding Strategy: Building Strong Brands
Brand Equity
brand equity the differential effect that knowing the brand name has on customer response to the product or its marketing
brand has positive brand equity when consumers react more favourably to it than to generic or unbranded version of product
it has negative brand equity if consumers react less favourably than to an unbranded version
brand strength can be measured along 4 consumer perception dimensions: differentiation (what makes the brand stand out),
relevance (how consumers feel it meets their needs), knowledge (how much consumers know about the brand), and esteem (how
highly consumers regard and respect the brand)
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