Marketing Ch. 8
What is a brand?
A name, term, sign, symbol, or 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.
How do companies develop and manage products and brands?
A product is more than a simple set of tangible features. Service: An activity, benefit, or satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything. Each product or service offered to customers can be viewed on three levels: 1. The core customer value consists of the core problem-solving benefits that consumers seek when they buy a product. 2. The actual product exists around the core and includes the quality level, features, design, brand name and packaging. 3. The augmented product is the actual product plus the various services and benefits offered with it, such as a warranty, free delivery, installation, and maintenance.
1. Define product and the major classifications of products and services.
Broadly defined, a product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. Products include physical objects but also services, events, persons, places, organizations, ideas, or mixtures of these entities. Services are products that consist of activities, benefits, or satisfactions offered for sale that are essentially intangible, such as banking, hotel, tax preparation, and home-repair services. Thus, an Apple iPhone, a Toyota Camry, and a Caffe Mocha at Starbucks are products. But so are a trip to Las Vegas, Schwab online investment services, your Facebook page, and advice from your family doctor. Because of their importance in the world economy we give special attention to services. Product planners need to think about products and services on 3 levels. 1. What is the buyer really buying? - core customer value 2. Actual product - product and service features, a design, a quality level, a brand name, packaging. 3. augmented product - additional consumer services and benefits. Products and services fall into two broad classes based on the types of consumers that use them. 1. Consumer products - those bought by final consumers - are usually classified according to consumer shopping habits (convenience products, shopping products, specialty products, and unsought products). 1a. Convenience product: A consumer product that customers usually buy frequently, immediately, and with minimal comparison and buying effort. 1b. Shopping product: A consumer product that the customer, in the process of selecting and purchasing, usually compares on such attributes as suitability, quality, price and style 1c. Speciality product:; A consumer product with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort. 1d. Unsought product: A consumer product that the consumer either does not know about or knows about but does not normally consider buying. 2. Industrial products - A product bought by individuals and organizations for further processing or for use in conducting a business - include: 1. materials and parts - include raw materials as well as manufactured materials and parts. Raw materials consist of farm products and natural products (fish, lumber, oil). Manufactured materials and parts consist of component materials (cement, wires) and component parts (small motors, tires). Most manufactured materials and parts are sold directly to industrial users. Price and service are the major marketing factors; branding and advertising tend to be less important. 2. capital items - industrial products that aid in the buyer's production or operations, including installations and accessory equipment. Installations consist of major purchase such as buildings and fixed equipment (generators). Accessory equipment include portable factory equipment and tools (lift trucks) and office equipment (desks). They have a shorter life than installations and simply aid in the production process. 3. supplies and services - include operating supplies (paper) and repair and maintenance items (paint). Supplies are the convenience products of the industrial field because they are usually purchased with a minimum of effort or comparison Business services include maintenance and repair services (window cleaning) and business advisory services (advertising). Such services are usually supplied under contract. Other marketable entities as products: 1. organizations - activities undertaken to create, maintain, or change the attitudes and behavior of target consumers toward an organization. Business firms sponsor public relations or corporate image marketing campaigns to market themselves and polish their images. 2. persons - activities undertaken to create, maintain, or change attitudes or behavior toward particular people. The skillful use of marketing can turn a person's name into a powerhouse brand. 3. places - activities undertaken to create, maintain, or change attitudes or behavior toward particular places. 4. ideas . This area has been called social marketing - the use of commercial marketing concepts and tools in programs designed to influence individuals' behavior to improve their well-being and that of society.
3. Identify the four characteristics that affect the marketing of services and the additional marketing considerations that services require.
GDP - Gross Domestic Product. By 2014, it is estimated that more than 4 out of 5 jobs in the USA will be in service industries. Services are growing even faster in the world economy, making up 64% of the gross world product. Governments offer services through courts, employment services, hospitals, military services, police and fire departments, the postal service, and schools. Private not for profit organizations - museums, charities, churches, colleges, foundations, and hospitals business organizations - airlines, banks, hotels, insurance companies, consulting firms, medical and legal practices, entertainment and telecommunications companies, real estate firms, retailers and others. Services are characterized by 4 key characteristics: they are 1. intangible: Services cannot be seen, tasted, felt, heard, or smelled before they are bought. 2. inseparable: Services are produced and consumed at the same time and cannot be separated from their providers. 3. variable: The quality of services may vary greatly depending on who provides them and when, where, and how they are provided. 4. perishable: Services cannot be stored for later sale or use. Each characteristic poses problems and marketing requirements. Marketers work to find ways to make the service more tangible, increase the productivity of providers who are inseparable from their products, standardize quality in the face of variability, and improve demand movements and supply capacities in the face of service perishability. Good service companies focus attention on both customers and employees. They understand the service-profit chain, which links service firm profits with employee and customer satisfaction in 5 links: 1. Internal service quality - superior employee selection and training, a quality work environment, and strong support for those dealing with customers 2. Satisfied and productive service employees 3. Greater service value - more effective and efficient customer value creation and service delivery. 4. Satisfied and loyal customers 5. Healthy service profits and growth "Happy team members result in happy customers. Happy customers do more business with you. They become advocates for your enterprise, which results in happy investors." "Deliver WOW through service." Zappos found that when the product includes a personal video explanation, purchases rise and returns decrease. The moral: Just as the service profit chain suggests, taking good care of customers begins with taking good care of those who take care of customers. Services marketing strategy calls not only for external marketing but also for: 1. internal marketing - Orienting and motivating customer contact employees and supporting service employees to work as a team to provide customer satisfaction. 2. Interactive marketing - service quality depends heavily on the quality of the buyer-seller interaction during the service encounter. To motivate employees and interactive marketing to create service delivery skills among service providers. To succeed, service marketers must: 1. create competitive differentiation - offer - innovative features that set one company's offer apart from competitors' offers - delivery - more able and reliable customer contact people, developing a superior physical environment in which the service product is delivered, or designing a superior delivery process. - image - through symbols and branding 2. offer high service quality - customer retention is perhaps the best measure of quality. Good recovery can win more customer purchasing and loyalty than if things had gone well in the first place. Surveys show that when Southwest handles a delay situation well, customers score it 14 to 16 points higher than on regular on-time fights. 3. find ways to increase service productivity. - in attempting to improve service productivity, companies must be mindful of how they create and deliver customer value.
2. Describe the decisions companies make regarding their individual products and services, product lines, and product mixes.
Marketers make product and service decisions at 3 levels: 1. individual product decisions 2. product line decisions 3. product mix decisions Individual product decisions involve 1. product attributes 2. branding 3. packaging: The activities of designing and producing the container or wrapper for a product. 4. labeling 5. product support services. Product attribute decisions involve 1. product quality: The characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs. In its narrowest sense it can be defined as 'freedom from defects.' Total Quality Management (TQM) is an approach in which all of the company's people are involved in constantly improving the quality of products, services, and business processes. Product quality has 2 dimensions: - level - consistency. performance quality - the products' ability to perform its functions. conformance quality - freedom from defects and consistency in delivery a targeted level of performance. 2. features - a competitive tool for differentiating the company's product from competitors' products. Being the first producer to introduce a valued new feature is one of the most effective ways to compete. It should periodically survey buyers who have used the product and ask, How do you like the product? 3. style - appearance of a product 4. design - unlike style, it goes to the very heart of a product Good design doesn't start with brainstorming new ideas and making prototypes. Design begins with observing customers, deeply understanding their needs, and shaping their product use experience. Perhaps the most distinctive skill of professional marketers is their ability to build and manage brands. Branding decisions include 1. selecting a brand name 2. developing a brand strategy. Packaging involves 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 buyers, to communicating brand positioning, to closing the sale. Packaging provides many key benefits, such as protection, economy, convenience, and promotion. Package decisions often include designing labels, which identify, describe, and possibly promote the product. A typical shopper makes 70% of all purchase decisions in stores and passes by some 300 items per minute. Labels range from simple tags attached to products to complex graphics that are part of the packaging. At the very least, the label identifies the product or brand, such as the name Sunkist stamped on oranges. 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. The Federal Trade Commission Act of 1914 held that false, misleading or deceptive labels or packages constitute unfair competition. The most prominent is the Fair Packaging and Labeling Act of 1966 which set mandatory labeling requirements, encouraged voluntary industry packaging standards, and allowed federal agencies to set packaging regulations in specific industries. Labeling has been affected in recent times by: 1. unit pricing (stating the price per unit of a standard measure) 2. open dating (stating the expected shelf life of the product) 3. nutritional labeling (stating the nutritional values in the product). Companies also develop product support services that enhance customer service and satisfaction and safeguard against competitors. Keeping customers happy after the sale is the key to building lasting relationships. "Take care of customers, no matter what it takes," before, during and after the sale. The first step in designing support services is to survey customers periodically to assess the value of current services and obtain ideas for new ones. Most companies produce a product line rather than a single product. A product line is a group of products that are related in function, customer-purchase needs, or distribution channels. All product lines and items offered to customers by a particular seller make up the product mix - The set of all product lines and items that a particular seller offers for sale. The mix can be described by four dimensions: 1. width - the number of different product lines the company carries. 2. length - the number of items in the product line. The line is too short if the manager can increase profits by adding items; the line is too long if the manager can increase profits by dropping items. 3. depth - the number of versions offered for each product in the line. 4. consistency. - how closely related the various product lines are in end use, production requirements, distribution channels, or some other way. These product mix dimensions provide the handles for defining the company's product strategy. The company can increase its business in 4 ways. 1. add new product lines, widening its product mix 2. lengthen its existing product lines to become a more full line company 3. Add more versions of each product and thus deepen its product mix 4. pursue more product line consistency - or less - depending on whether it want to have a strong reputation in a single field or in several fields. A company can expand ts product line int 2 ways: 1. line filling - adding more items within the present range of the line, to reach extra profits, satisfy dealers, use excess capacity, be the leading full-line company, plugging holes to keep out competitors. The company should ensure that new items are noticeably different from existing ones. 2. line stretching - company lengthens its product line beyond its current range. The company can stretch its line downward, upward, or both ways. These dimensions are the tools for developing the company's product strategy.
What is marketing about?
Marketing is all about creating brands that connect with customers, and few marketers have done that as well as Nike. "Nike is blurring the line between brand and experience." Says Nike CEO Mark Parker, "Connecting used to be, 'Here's some product, and here's some advertising. We hope you like it.' Connecting today is a dialogue."
4. Discuss branding strategy - the decisions companies make in building and managing their brands.
Some analysts see brands as the major enduring asset of a company. Brands are more than just names and symbols; they embody everything that the product or the service means to consumers. Brand equity is the positive differential effect that knowing the brand name has on customer response to the product or service. A brand with strong brand equity is a very valuable asset. "Products are created in the factory, but brands are created in the mind." "A brand is what people say about you when you're not in the room." A powerful brand has high brand equity. A brand has positive brand equity when consumers react more favorably to it than to a generic or unbranded version of the same product. It has negative brand equity if consumers react less favorably than to unbranded version. Ad agency Young & Rubicam's BrandAsset Valuator measures brand strength along 4 consumer perception dimensions: 1. Differentiation - what makes the brand stand out 2. Relevance - how consumers feel it meets their needs 3. Knowledge - how much consumers know about the brand 4. Esteem - how highly consumers regard and respect the brand. In building brands, companies need to make decisions about: 1. brand positioning - Can position brands at any of 3 levels - the lowest level on product attributes. Attributes are the least desirable level for brand position. Competitors can easily copy attributes. More importantly, customers are not interested in attributes as such - they are interested in what the attributes will do for them. - A brand can be better positioned by associating its name with a desirable benefit - The strongest brands go beyond attribute or benefit positioning. They are positioned on strong beliefs and values, engaging customers on a deep, emotional level. 2. brand name selection: involves finding the best brand name based on a careful review of product benefits, the target market, and proposed marketing strategies. It should a. suggest something about the product's benefits and qualities b. be easy to pronounce, recognize, and remember c. be distinctive d. be extendable e. translate easily into foreign languages. f. be capable of registration and legal protection. A brand name cannot be registered if it infringes on existing brand names. Once chosen, the brand name must be protected. Many firms try to build a brand name that will eventually become identified with the product category. Brand names such as Kleenex. The protect their brands, marketers present them carefully using the world brand and the registered trademark symbol. 3. brand sponsorship 4. brand development. The most powerful brand positioning builds around strong consumer beliefs and values. A manufacturer has 4 brand sponsorship options: 1. it can launch a national brand (or manufacturer's brand) 2. sell to resellers who use a private brand: A brand created and owned by a reseller of a product or service. 3. market licensed brands 4. join forces with another company to co-brand a product: The practice of using the established brand names of two different companies on the same product. A company also has 4 choices when it comes to developing brands. It can introduce - 1. line extensions - Extending an existing brand name to new forms, colors, sizes, ingredients, or flavors of an existing product category. 2. brand extension - Extending an existing brand name to new product categories. 3. multibrands 4. new brands. Companies must build and manage their brands carefully. The brand's positioning must be continuously communicated to consumers. Advertising can help. However, brands are not maintained by advertising but by customers' brand experiences. Customers come to know a brand through a wide range of contacts and interactions. The company must put as much care into managing these touchpoints as it does into producing its ads. Companies must periodically audit their brands' strengths and weaknesses.
What is a market offering?
Some combination of products, services, information, or experiences offered to a market to satisfy a need or want.
What is interactive marketing?
Training service employees in the fine art of interacting with customers to satisfy their needs.
