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Chapter 9

Chapter 9 - Week 6


Department
Management (MGM)
Course Code
MGMA01H3
Professor
Alison Jing Xu
Chapter
9

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1 | Page/ MGTB0 4 We e k 6
- Lululemon tries to create strong customer relationships and experiences by building and managing
products and brands that connect with customers
What Is A Product?
- A product is anything that can be offered to a market for attention, acquisition, use, or
consumption that might satisfy a want or need (can be tangible or intangible ± service)
- Services are a form of product that consists of activities, benefits, or satisfactions offered for sale
that are essentially intangible and do not result in the ownership of anything
Products, Services, and Experiences
- A market offering is a product that brings value to target customers and becomes the basis upon
which the company builds profitable customer relationships
- Often includes both tangible goods and services but at the extremes:
o Pure tangible good ± consists of only a tangible good (e.g. soap, salt)
o Pure services ± the offer consists primarily of a service (e.g. doctor exam)
- To differentiate their offers beyond simply making products and delivering services, companies
market experiences where they realize that customers are really buying much more than just
products and services (e.g. Disney advertises using dreams and memories)
Levels of Product and Services
- Product planners need to think about products and services on three levels where each level adds
more customer value:
o Core customer value
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The problem-solving benefits or services that consumers seek
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o Actual product
Turn core benefit into actual product
Develop product and service features, a design, a quality level, a brand name, and
packaging
o Augmented product
Offering additional consumer services and benefits around the core benefit and
actual product
E.g. warranty on parts, instructions on how to use the device
- Marketers first need to identify the core customer value that consumers seek from the product, they
then design the actual product and find ways to augment it to create customer value and the most
satisfying customer experience
Product and Service Classifications
- Products and services fall into two broad classes based on the types of consumers that use them ±
consumer products and industrial products
- Consumer Products
o Consumer products are products and services bought by final consumers for personal
consumption
o Marketers classify these products based on how consumer go about buying them
Convenience products
Chapter 9 ± Products, Services, and Brands: Building Customer Value
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x Buys frequently, immediately, minimum comparison and buying effort,
usually low priced and placed in many locations (eg. candy)
Shopping products
x Less frequently purchased, compare carefully on suitability, quality, price,
and style, provides deeper sales to help customers in their comparison efforts,
distributed in a few outlets (e.g. furniture)
Specialty products
x Has unique characteristics or brand identification where buyers normally do
not compare products and invest a great deal of time (e.g. designer clothes,
Lamborghini, high-end photographic equip)
Unsought products
x Products that consumers does not know about or knows about but does not
normally think of buying
x Due to their nature, requires a lot of advertising, personal selling, and other
marketing efforts
x E.g. Preplanned funeral services, blood donations, new innovations
- Business Products
o Business products are those purchased for further processing or for use in conducting a
business
o Distinction between consumer product and business product is the purpose for which the
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landscaping business)
o There are three groups of business products and services
Materials and parts
x Includes raw materials and manufactured materials and parts
x Raw materials:
o Farm products (wheat, cotton, livestock, fruits, vegetables)
o Natural products (fish, lumber, iron, oil)
x Manufactured materials and parts:
o Component materials (iron, yarn, cement, wires)
o Component parts (small motors, tires, castings)
x Price and service are the major marketing factors
Capital items
x Aid in the buyers production or operations
x Includes installations and accessory equipment
x Installation:
o Major purchases (building) and fixed equipment (elevators)
x Accessory equipment:
o Portable factory equipment (hand tools) & office equipment (desk)
o Shorter life than installations and aids in the production process
Supplies and services
x Supplies:
o Operating supplies (paper, pencils)
o Repair and maintenance items (paint, nails, brooms)
o Are convenience products (minimum effort or comparison)
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3 | Page/ MGTB0 4 We e k 6
x Services:
o Maintenance & repair services (window cleaning, computer repair)
o Business advisory services (legal, management consulting)
o Usually supplied under contract
- Organizations, Persons, Places, and Ideas
o Markers have broadened the concept of a product to include other market offerings
o Organization marketing
Consists of activities undertaken to create, maintain, or change the attitudes and
behaviour of target consumers toward an organization
o Persons marketing
Consists of activities undertaken to create, maintain, or change attitudes or behaviour
toward particular people (people can be thought of as products)
E.g. politicians, sports figures, entertainers (Rachel Ray, Oprah, Donald Trump)
o Place marketing
Involves activities undertaken to create, maintain, or change attitudes or behaviour
toward particular places (e.g. cities, provinces, regions, or countries)
o Ideas
Focus on social marketing where the use of commercial marketing concepts and
tools in programs desLJQHGWRLQIOXHQFHLQGLYLGXDOV¶EHKDYLRXUWRLPSURYHWKHLUZHOO-
being and that of society
E.g. public health campaigns to reduce smoking, promoting clean air
Involves more than just advertising, includes every other element to achieve its
social change objectives
Product and Service Decisions
- Marketers make product and service decisions at three levels: individual product decisions, product
line decisions, and product mix decisions
Individual Product and Service Decisions
- Focus on decisions about product attributes, branding, packaging, labelling, and product support
services
- Product and Service Attributes
o Product Quality
Product quality is the characteristics of a product or service that bear on its ability
to satisfy stated or implied customer needs
Total quality management (TQM) LVDQDSSURDFKLQZKLFKDOOWKHFRPSDQ\VSHRSOH
are involved in constantly improving the quality of products, services and business
processes
Product quality has two dimensions ± level and consistency
x Must choose quality level meaning performance quality (ability to perform
its functions) [e.g. Rolls-Royce provides higher quality than Chevrolet]
x Quality of consistency also means conformance quality meaning freedom
from defects and consistency in delivering a targeted level of performance
[e.g. Chevrolet can deliver consistently in quality as a Rolls-Royce]
o Product Features
Products can be offered with varying features (e.g. basic model without any extras)
Features are a competitive tool for differentiating a product against competitors
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