Setting Product Strategy

1. Setting Product Strategy

2. At the heart of a great brand is a great product

3. Product Anything that can be offered to a market to satisfy a want or need.

4. Five Hotel (Product) Levels • Core benefits—rest and sleep • Basic product—bed, bathroom, towels, desk, dresser, and closet • Expected product—clean bed, fresh towels, working lamps, relative degree of quiet • Augmented product—cable TV • Potential product—high speed internet connection

5. Consumer Goods Classification Convenience Shopping Specialty Unsought Emergency

6. Industrial Goods Classification Materials and parts Capital items Supplies/ business services

7. Product form Features Performance Conformance Durability Reliability Reparability Style Design Ordering ease Delivery Installation Customer training Customer consulting Maintenance Product Differentiation

8. Product Line Analysis Core product Basic computers Staples Faster CPUs Specialties Digital moviemaking Convenience Items Monitors, Printers

9. Line Stretching Down-Market Stretch Up-Market Stretch Two-Way Stretch

10. Line Filling

11. Product-Mix Pricing • Product-line pricing (pricing points) • Optional-feature pricing (electric window controls) • Captive-product pricing (razor and the razor blades) • Two-part pricing (fixed free plus a variable cost—telephone minimum plus long distance) • By-product pricing (after mass of product produced) • Product-bundling pricing (group of products at a reduced price of products sold separately)

12. Product Line Pricing

13. Two-Part Pricing

14. Co-branding

15. Ingredient Branding

16. Packaging: The 5th P All the activities of designing and producing the container for a product.

17. Packaging has been influenced by… Self-service (supermarkets) Consumer affluence (willing to pay for convenience) Company/brand image (recognition of company or brand) Innovation opportunity

18. Innovations in Packaging

19. Functions of Labels Identifies Grades Describes Promotes

20. Warranties and Guarantees

21. Designing and Managing Services

22. IBM has moved from a goods business to a service business

23. Service Any act of performance that one party can offer another that is essentially intangible and does not result in the ownership of anything; its production may or may not be tied to a physical product.

24. Service Sectors Government (courts, hospitals, etc.) Private Nonprofit (museums, churches, etc.) Business (airlines, banks, etc.) Retail (cashiers, clerks, etc) Manufacturing (accountants, legal staff, etc.)

25. General Motors’ OnStar Service

26. Categories of Service Mix Pure tangible good—soap, salt Good w/ accompanying services—cars and computers Hybrid--restaurants Service w/ accompanying goods—airlines serve food and drinks Pure service—baby sitting

27. Service Distinctions • Equipment-based (vending machines) or people-based (window washing) • Service processes (fast-food, buffet) • Client’s presence required (Brain surgery) or not (car repair) • Personal needs (personal needs) or business needs (business service) • Objectives (profit or non-profit) and ownership (private or public)

28. Continuum of Evaluation for Different Types of Products

29. Distinctive Characteristics of Services Intangibility Inseparability Variability Perishability

30. Mayo Clinic’s Tangible Cues

31. Blue Man Group includes 33 different performers

32. How to Increase Quality Control Invest in good hiring and training procedures Standardize the service-performance process Monitor customer satisfaction

33. Demand side Differential pricing Shift demand from peak to off-peak Nonpeak demand cultivate Complementary services Cocktail lounges Reservation systems Manage demand levels Supply side Part-time employees Hired to serve peak demand Peak-time efficiency Perform only essential tasks during peak periods Increased consumer participation Consumer fill out their own medical records Shared services Several hospitals can share medical-equipment purchases Facilities for future expansion Buy surrounding land for later development Matching Demand and Supply

34. Consumer-Friendly Services

35. Factors Leading to Customer Switching Behavior • Pricing—high, increases, unfair, deceptive • Inconvenience—locations/hours • Core Service Failure—billing errors • Service Encounter Failures--unresponsive • Response to Service Failure—negative • Competition—found better service • Ethical Problems—cheat, unsafe • Involuntary Switching—provider closed

36. Gaps that Cause Unsuccessful Service Delivery • Gap between consumer expectation and management perception • Gap between management perception and service-quality specifications • Gap between service-quality specifications and service delivery • Gap between service delivery and external communications • Gap between perceived service and expected service

37. Determinants of Service Quality Reliability-dependably and accurately Responsiveness-prompt service Assurance-trust and confidence Empathy-caring Tangibles-appearance

38. Best Practices • Strategic Concept—customer obsessed • Top-Management Commitment—service quality • High Standards-reliable • Self-Service Technologies • Monitoring Systems • Satisfying Customer Complaints • Satisfying Employees

39. Customer Importance and Performance Ratings for an Auto Dealership

40. Developing Brand Strategies for Services Choosing Brand Elements—logos, symbols Establishing Image Dimensions--associations Devising Branding Strategy—price and quality

41. Customer Worries Failure frequency (reliability) Downtime (dependability) Out-of-pocket costs (maintenance and repair)

42. Marketing Discussion • Colleges and universities can be classified as service organizations. How can you apply the marketing principles developed in this chapter to your school? Do you have any advice as to how it could become a better service marketer?