8 PRODUCT, SERVICES AND BRANDING STRATEGY

PRODUCT, SERVICES AND BRANDING STRATEGY COLLEGE OF BUSINESS ADMINISTRATION CHUNGANG UNIVERSITY PROF HYUNSUK SUH PRODUCT, SERVICES AND BRANDING STRATEGY COLLEGE OF BUSINESS ADMINISTRATION CHUNGANG UNIVERSITY PROF HYUNSUK SUH PRODUCT, SERVICES AND BRANDING STRATEGY COLLEGE OF BUSINESS ADMINISTRATION CHUNGANG UNIVERSITY PROF HYUNSUK SUH

8 PRODUCT, SERVICES AND BRANDING STRATEGY

What is the definition of “Product and Service? ”

Product and Service

 Product : Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need Products include more than tangible goods It includes physical objects, services, events, persons, places, organizations, ideas, or mixes of these entities.

 Service : It is a form of product that consist of activities, benefits, or

satisfactions offered for sale that are essentially intangible and do not

result in the ownership of anything.

Kotler and Armstrong, 2008, 2013

What is the definition of “Product and Service? ”

Definition: Product and Service

Good Service Idea

The objectives of the current chapter are described below.

Product planners need to think about products and services on three(3) levels which each level adds more customer value.

Three(3) Levels of Product  Core Product ( 핵핵핵핵 )

The core benefit customers want from the product

e.g.) convenience( 편편편편편편편편편편편편편편편 편편

편편편편편편편편편 편편편편편편

automobile – safety, convenience

 Actual Product ( 핵핵핵핵 ) The tangible product that can actualize core benefit

e.g.) package( 편편편편 design편 편편편편편편편편

automobile- 편편편편편편편 engine편편 편편편편편편편편편 편편편편편 power handle편편편 편편편편편편편편편 편편편편편편편편편편편편편편편편편편편편편

 Augmented Product ( 핵핵핵핵 ) Additional service or product that assists

to purchase and use the product e.g.) 편편편편편 warranty편편편 편편

편 exchange편편 편편편편편편편편편편 편편편편편편편편편편편편편편편편편편편편 편편

편편편편편편편편편편편 편편편편편편편편편편편편

Operational Supported Adviser Channel

Core Product

Actual Product Augmented Product

Brand Name

Quality Level

After-Exchange or Refund

1 Product Definition

Consider Starbucks,

1 What is the core product that Starbucks offer? Actual and Augmented levels?

Consider following Starbucks example.

Starbucks

1 Product Definition

In Class Exercise

Classification: Consumer Products

Consumer products are products and services bought by final consumers for personal consumption.

Customer buy frequently, immediately, and with minimum of comparison and buying effort: Low priced, and place them in many locations for ready availability (e.g soap, candy, newspaper, shampoo, fast food, etc.)

(e.g high-priced photographic equipment, special design clothes, Lamborghini, etc.)

Specialty

Goods

Products that the customer either does not know about, or know about but does not normally think of buying: Most major new innovations until customer becomes aware They require lot of advertising and personal selling

(e.g life insurance, cemetery plots, blood donations, etc.)

Unsought

Goods

1 Product Definition

Convenience Shopping Specialty Unsought

clothing, computers, appliances, furniture, etc.

luxury items: Rolex, Jaguar, etc. medical trauma services

PLACE

PRICE

PROMOTION

Let’s apply the classification of products to marketing mix considerations below.

Classification and Marketing Mix Consideration for Consumer Products

Low involvement, minimize time and effort

Moderate to high involvement, balance between image and feature

Very high involvement, image

is more important than features

Unaware, possibly avoiding learning about category

Wide spread, convenient locations

Large number of selective outlets Limited and exclusive few

outlets

More selective outlets from few to many - Varies Low price Moderate price High price Varies

Focus on price, availability, and awareness

Focus on features, and differentiation Focus on brand, and status Focus on awareness

1 Product Definition

Product Attributes

Developing a product or service involves delivering the benefits of product attributes: quality, features, and style & design.

Major positioning tool Direct impact on P/S performance

1 Level: performance quality – ability of a product to perform its functions Companies choose a quality level that matches with target market needs and competing products

2 Consistency: conformance quality –freedom from defects and consistency

in quality delivery to target markets QUALITY

Style : simply describes the appearance (look and feel to the buyer) Design : more than skin deep It contributes to products usefulness as well as to its looks (e.g men’s wet shaving world)

STYLE &

DESIGN

2 Product Attribute

Product Line Decisions

Beyond decisions about the individual products and services, product strategy also calls for building a product line.

A group of products that are closely related because they may…

-function in a similar manner -are sold to the same customer groups -market through the same types of outlets -fall within given price range

Product line length is influenced by company objectives and resources

PRODUCT

LINE

The following examples show product width and length for Proctor & Gamble

products.

Product Width and Length

Product MIX WIDTH

Tide Cheer Oxydol Dash Bold Gain Era

Toothpaste

Gleem

Crest

Disposable Bar Soap

Ivory Kirk’s Lava Camay Zest Safeguard Coast Oil of Olay

Diapers

Pampers Luvs

Paper Tissue

Charmin Puffs Banner Summit

DEPTH Crest has 3 sizes and 2

Crest

2 Product Attribute

Example

&

VALUES

3 Brand

Companies are realizing the power of good packaging to create instant customer

recognition of the company or brand.

• The power of good packaging create instant customer recognition of the company or brand

• Innovative packaging can give a company an advantage over competitors

• Packaging decision includes size, shape, materials, color, text, and brand mark

• Recent years the “product safety” become a major package concern (e.g childproof drugs)

• Go Green! - environmentally responsible packaging materials

4 Packaging

Labeling - printed information appearing on or with the package - is also part of the package.

GOODS Objects, Devices, or things

SERVICES Deeds, efforts, or performances

PRODUCTS

Scale of Market Entities: The Scale that displays a range of products along a continuum based on their tangibility

The following “Molecular Model” further expand our understanding of the basic

differences between goods and services.

The Molecular Model

6 Service

The four characteristics of service is described below.

Four(4) Service Characteristics

Intangibility:

Services can not be seen, tasted, felt, heard,

or smelled before they are bought

Variability:

Quality of service depends on who provides them as well as when, where, and how they are provided

Intangibility is a distinguishing characteristic of services that makes them unable to be touched or sensed in the same manner as physical goods.

Intangibility

6 Service

Lack of service inventories Use of tangible clues

Difficulty in displaying or

communicating services Creation of a strong organizational image

Difficulty in pricing strategies

Service providers are often in constant contact with their customers and must

construct their service operations with the customer’s physical presence in mind This interaction represent greatest opportunity for both gains and losses in regard to

customer satisfaction and retention.

Inseparability

6 Service

Physical connection of the service

provider to the service Selecting and training public contact personnel

Involvement of the customer in the

Involvement of other customers in the

Variability or heterogeneity is the variation in consistency from one service transaction

to the next If something goes wrong or come up during the service process, it is too late to institute quality control measures before the service reaches the customer.

Variability (Heterogeneity)

6 Service

Difficult to standardize service and

Higher demand than maximum

available supply Demand strategy: Creative pricing Reservation systems

Higher demand than optimal supply

Lower demand than optimal supply