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RSM100Y1 (431)
Chapter 16

CHAPTER 16-Developing and Promoting Goods and Services

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University of Toronto St. George
Rotman Commerce
Michael Szlachta

CHAPTER16: DEVELOPING AND PROMOTING GOODS AND SERVICES - cannot focus on one element of the marketing mix without having to deal with the other marketing variables What is a product? Ideas, goods, services. - marketers must consider what consumers reallybuy when they purchase products - Strategy begins with an understanding of product features and benefits - Thenyou need to classify products as consumer goods or industrial goods - The most important component in the offerings of anybusiness is its product mix The value package - customers get value from the benefits, features and intangible rewards associated with a product - features are the qualities, both tangible and intangible, that a company builds into its products - To attract buyers, features alsomust provide benefits - A product as a bundle of attributes is called the value package. The value package is marketed as a bundle of value adding attributes, including a reasonable cost - Buyers expect to receive products with greater value - more benefits at reasonable costs - Most items in thevalue package are services or intangibles that collectively add value by providing benefits that increase the customers satisfaction - Products are more than visible features and benefits - When buying a product, consumers alsobuy an image and a reputation - the brands commitment that its product with be satisfactory - Advertising tends to focus on the customer oriented benefits - The additionof a new service often pleases customers far beyond the cost of providing it Classifying goods and services - one way to classify a product is according to expected buyers - there are buyers of consumer products and buyers of industrial products - Since the consumer and industrial buying processes differ,so do the marketing strategies Classifying consumer products - 3 categories that reflect -:078 behaviour: 1) Convenience Goods and Services: goodsservices that are consumedrapidly and regularly. They are relatively inexpensive and are purchased frequently without investing much time and effort into the process (so they dont compare their relative prices) 2) Shopping goods and services: more expensive and purchased less frequently (so consumers willspend time comparing prices amongst competitors). Consumers willcompare brands, evaluate alternatives in terms of style, performance, colour, price and more 3) Speciality Goods and services: extremely important and expensive purchases. Consumers willspend a lot of time and money finding the product they want and wont accept substitutes Classifying Industrial products - 2 categories depending on how much they cost and how they will be used 1) Expense items: materials and services that are consumed rapidly and regularly (usuallywithin a year) 2) Capital items: permanent, expensive and long lasting goods and services that are used in producing other goods. Forexample, a building. Capital services are those for which long term commitments are made. They are expensive and purchased infrequently so they often involve decisions by high level managers The product mix - the group of products that a company has available for sale PRODUCT LINES: this is a group of similar products that are closely related because they functionin a similar manner or are sold to the samecustomer group who willuse the products in a similar way. - companies often start out by introducing one product and then the company tends to realize that the one product does not cater to everyones needs so then they begin to branch out. This is known as extending their horizons and identifying opportunities outsideexisting product lines www.notesolution.com
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