Marketers make product and service decisions at three levels: individual product decisions, product line decisions and product mix decisions. We discuss each in turn.
Individual product and service decisions
Figure 7.2 shows the important decisions in the development and marketing of individual products and services. We will focus on decisions about product attributes, branding, pack- aging, labelling and product support services.
FIGURE 7.2 Individual product decisions
Product and service attributes
Developing a product or service involves defining the benefits that it will offer. These ben- efits are communicated and delivered by product attributes such as quality, features and style and design.
Product quality
Product quality is one of the marketer’s major positioning tools. Quality has a direct impact on product or service performance; thus, it is closely linked to customer value and satisfac- tion. In the narrowest sense, quality can be defined as ‘freedom from defects’. But most customer-centred companies go beyond this narrow definition. Instead, they define quality in terms of creating customer value and satisfaction. For example, Siemens defines quality this way: ‘Quality is when our customers come back and our products don’t.’6 We empha- sised above that a product may be either a tangible good or an intangible service, and in a service business quality has been defined as ‘the extent to which the service delivered meets the customer’s expectations’.7
Total quality management (TQM) is an approach in which all the company’s people are involved in constantly improving the quality of products, services and business processes.
Companies large and small have credited TQM with greatly improving their market shares and profits. Over the years, however, many companies have encountered problems in imple- menting TQM. Some companies viewed TQM as a magic cure-all and created token total quality programmes that applied quality principles only superficially. Still others became obsessed with narrowly defined TQM principles and lost sight of broader concerns for cus- tomer value and satisfaction. As a result, many such programmes failed, causing a backlash against TQM.
When applied in the context of creating customer satisfaction, however, total quality principles remain a requirement for success. Although many firms no longer use the TQM label, for most top companies customer-driven quality has become a way of doing business.
Today, companies are taking a ‘return on quality’ approach, viewing quality as an investment and holding quality efforts accountable for bottom-line results.8
Product quality has two dimensions – level and consistency. In developing a product, the marketer must first choose a quality level that will support the product’s positioning. Here, product quality means performance quality – the ability of a product to perform its functions.
For example, a BMW provides higher performance quality than a Fiat: it is better engineered and lasts longer. Companies rarely try to offer the highest possible performance quality level – few customers want or can afford the high levels of quality offered in products such as a Rolls-Royce car, a €1,500 Louis Vuitton handbag or a Rolex watch. Instead, companies choose a quality level that matches target market needs and the quality levels of competing products.
Beyond quality level, high quality can mean high levels of consistency. Here, product quality means conformance quality – freedom from defects and consistency in delivering a targeted level of performance. All companies should strive for high levels of conformance quality. In this sense, a Ford can have just as much quality as a Rolls-Royce. Although a Ford does not have all the same features as a Rolls-Royce, it can as consistently deliver the quality that customers pay for and expect.
Many companies today have turned customer-driven quality into a potent strategic weapon. They have created customer satisfaction and value by consistently and profitably meeting customers’ needs and preferences for quality.
Product features
A product can be offered with varying features. A stripped-down model, one without any extras, is the starting point. The company can create higher level models by adding more features. Features are a competitive tool for differentiating the company’s product from competitors’ products. Being the first producer to introduce a needed and valued new feature is one of the most effective ways to compete.
How can a company identify new features and decide which ones to add to its product?
The company should periodically survey buyers who have used the product and ask these questions: How do you like the product? Which specific features of the product do you like most? Which features could we add to improve the product? The answers provide the com- pany with a rich list of feature ideas. The company can then assess each feature’s value to cus- tomers versus its cost to the company. Features that customers value little in relation to costs should be dropped; those that customers value highly in relation to costs should be added.
Product style and design
Another way to add customer value is through distinctive product style and design. Design is a larger concept than style. Style simply describes the appearance of a product. Styles can be eye catching or yawn producing. A sensational style may grab attention and produce pleasing aesthetics, but it does not necessarily make the product perform better. Unlike style, design is more than skin deep – it goes to the very heart of a product. Good design contributes to a product’s usefulness as well as to its looks.
Good design begins with a deep understanding of customer needs. More than simply creating product or service attributes, it involves shaping the customer’s product-use experi- ence. Consider the design process behind Invotek’s Strawboard.
Invotek Solutions began life as Poole Partitionings in 1973, a specialist manufacturer of simple aluminium frames:
Like most companies in the partitioning business, Invotek’s traditional material of choice has always been plasterboard. It’s cheap, fireproof and relatively soundproof.
But there’s a problem. Not only is the material not biodegradable, but gypsum-based products such as plasterboard can also be hazardous if combined with other unstable prod- ucts in landfill. New regulations tackling this issue led Invotek to seek a better, more sustain- able alternative.
For Simon Coleman, Commercial Director at Invotek, the change in regulations represented more of an opportunity than a threat to his business: ‘It gave us the chance to explore a poten- tially radical solution,’ he explains. ‘We could have chosen a mainstream alternative, such as chipboard, ply or MDF, but since they all have environmentally unsound production processes, we didn’t feel we’d be making a significant impact to our own environmental footprint.’
Instead, after some intensive desk research, Coleman came across the possibility of using a by-product of wheat straw.
Coleman approached Compak UK, an agrifibre engineering business which manufactures solid compressed sheets from straw waste. The two companies began collaborating on the development of an entirely new partitioning solution.
Invotek’s five-strong team of designers was central to the development of the new solu- tion, from the production process and manufacturing specifications to the appearance of the finished product. As with any groundbreaking innovation, there were a number of chal- lenges to be overcome, but nothing the team couldn’t handle. ‘Over the years we have developed a culture of innovation and design,’ says Coleman. ‘It means we can respond better to customers’ needs, and we are agile enough to adapt our solutions and solve any problems as they arise.’
The resulting product – Strawboard – is biodegradable, easily recycled, produced from a sustainable source, structurally sound, easy to fit and secure, resistant to fire and high impacts and performs well in acoustic testing.
‘It wasn’t enough just to be environmentally friendly, Strawboard has to perform both practically and financially,’ says Coleman. ‘We have to be able to demonstrate to environ- mentally considerate architects and interior designers that Strawboard not only complies with long-term waste acceptance criteria, but provides a very adaptable alternative for plas- ter surfaces and partitioning.’
The first project using the new material went ahead in July 2006 with the refurbishment of school classrooms at Winton Primary School in Bournemouth. Shortly after, Invotek
was short-listed for Most Innovative Product at the 100% Detail/RIBA Journal Innovations Awards.
Since then, it’s not just the company name that has changed. Constant design innovation, driven by customer demand, new materials and cutting-edge techniques, has transformed the business. Invotek now boasts an extensive product range, employs 40 people and turned over an impressive £5.5 million in 2004.
Simon Coleman says the company has experienced a ‘natural evolution’ from its engi- neering roots and has become an increasingly design-led business. ‘The only way to gain competitive advantage in this sector is to offer something unique,’ he says. ‘And to do that you have to design something.’
Design is central to Invotek’s product development, and it’s the customers and users who drive the innovation process. ‘We listen to what customers say and value their input,’ says Coleman. ‘In a competitive industry like partitioning you have to be one step ahead.’ Listen- ing to the feedback of its customer base – largely architects and designers – Invotek is able to anticipate new trends and capitalise on opportunities. ‘Customers are our eyes and ears,’ says Coleman. ‘They drive our appetite for design and innovation. If enough people are asking for a particular type of product or service then we try to find out how we can give it to them.’
As a result, Invotek has continued to refine its product range. Even though the original Invotek 75 range, developed in 1975, still accounts for approximately 50 per cent of total sales, the past 30 years have seen the range expanded to include a number of other prod- ucts including glass partitions and movable wall systems. ‘Flexibility is an important factor for our customers and we have sought to respond to their needs by adapting what we do best,’ says Coleman.
And the Strawboard launch was similarly a response to customer demand for a sustain- able alternative to plasterboard. ‘It’s not just the regulators that are driving the need for more sustainable solutions; our customers want them too,’ Coleman explains. ‘Our first project with Strawboard was in a school, and it was important for them to be able to source building materials manufactured with the environment in mind.’
He, and the rest of the company, are determined to keep innovating. ‘Innovative products such as Strawboard are the result of our continual investment in design, research and devel- opment,’ says Coleman, ‘and those disciplines have been the cornerstones of our consistent growth over the years.’9
Thus, product designers should think less about product attributes and technical specifi- cations and more about how customers will use and benefit from the product.
Invotek developed Strawboard as a cost-effective, biodegradable, environmentally- friendly new product for use in its partitioning products
Source: http://www.invotekltd.
co.uk/new_developments/
strawboard_paneling.html.
Courtesy of Invotek Systems.
Branding
Perhaps the most distinctive skill of professional marketers is their ability to build and man- age brands. A brand is a name, term, sign, symbol or design, or a combination of these, that identifies the maker or seller of a product or service. Consumers view a brand as an important part of a product, and branding can add value to a product. For example, most consumers would perceive a bottle of Chanel perfume as a high-quality, expensive product.
But the same perfume in an unmarked bottle would probably be viewed as lower in quality, even if the fragrance was identical.
Branding has become so strong that today hardly anything goes unbranded. Salt is pack- aged in branded containers, common screws and staples are packaged with a distributor’s label, and car parts – spark plugs, tyres, filters – bear brand names that differ from those of the car makers.
Branding helps buyers in many ways. Brand names help consumers identify products that might benefit them. Brands also say something about product quality and consistency – buy- ers who always buy the same brand know that they will get the same features, benefits and quality each time they buy. Branding also gives the seller several advantages. The brand name becomes the basis on which a whole story can be built about a product’s special qualities.
The seller’s brand name and trademark provide legal protection for unique product features that otherwise might be copied by competitors. And branding helps the seller to segment markets. For example, Nestlé can offer Cheerios, Shredded Wheat, Shreddies, Fitnesse and many other cereal brands, not just one general product for all consumers.
Building and managing brands is perhaps the marketer’s most important task. We will discuss branding strategy in more detail later in the chapter.
Packaging
Packaging involves designing and producing the container or wrapper for a product. The package includes a product’s primary container (the tube holding Colgate Total toothpaste).
It may also include a secondary package that is thrown away when the product is about to be used (the cardboard box containing the tube of Colgate). Finally, it can include a ship- ping package necessary to store, identify and ship the product (a corrugated box carrying six-dozen tubes of Colgate). Labelling – printed information appearing on or with the package – is also part of packaging.
Traditionally, the primary function of the package was to contain and protect the prod- uct. In recent times, however, numerous factors have made packaging an important mar- keting tool. Increased competition and clutter on retail store shelves mean that packages must now perform many sales tasks – from attracting attention, to describing the product, to making the sale.
Companies are realising the power of good packaging to create instant consumer rec- ognition of the company or brand. For example, in an average supermarket, which stocks 45,000 items, the typical shopper passes by some 300 items per minute, and more than 70 per cent of all purchases are decided on in the store. In this highly competitive environment, the package may be the seller’s last chance to influence buyers. So, for many companies, the packaging has become a key communications medium.10 Think of the Toblerone pyramid box and the curves of the classic Coke bottle.
Innovative packaging can give a company an advantage over competitors. Sometimes even seemingly small packaging improvements can make a big difference. For example, Heinz revolutionised the 170-year-old condiments industry by inverting the good old ketchup bot- tle, letting customers quickly squeeze out even the last bit of ketchup. At the same time, it adopted a ‘fridge-door-fit’ shape that not only slots into shelves more easily, but also has a cap that is simpler for children to open. In the four months following the introduction of the new package, sales jumped 12 per cent. What is more, the new package does double duty as a promotional tool. Says a packaging analyst, ‘When consumers see the Heinz logo on the fridge door every time they open it, it’s taking marketing inside homes.’11
In contrast, poorly designed packages can cause headaches for consumers and lost sales for the company. This has been an issue of significance for Amazon, which has a programme called Frustration Free Packaging that is meant to prevent what it has labelled ‘wrap-rage’ – the anxiety and stress and anger caused by packaging seemingly impenetrable to those with limited strength or dexterity, such as more elderly customers. In making packaging decisions, the company is one of a growing number also heeding environmental concerns and trying to increase the proportion of items using environmentally responsible packaging materials.
Labelling
Labels may range from simple tags attached to products to complex graphics that are part of the package. They perform several functions. At the very least, the label identifies the product or brand, such as the name Outspan stamped on oranges. The label might also describe several things about the product – 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. Finally, the label might help to promote the product and support its positioning.
For example, in the never-ending search for ways to stand out, the clothing industry seems to be rediscovering the promotional value of the product label:
Some clothing labels send strong messages. A ‘booklet tag’ hanging from a workout garment might reinforce the brand’s positioning, describing in detail how the garment is used by certain high-profile athletes or what types of special materials are used in its construction.
Other brasher statements include pocket flashers and ‘lenticular tags’, which generate 3-D or animation effects. At the other extreme, tagless heat-transfer labels are replacing sewn- in woven labels, promising ultimate comfort. Even low-key labels are using more brilliant colours or elaborate graphics, beautifying the product and reinforcing the brand message.
Rich treatments on labels add pizzazz to luxury items; futuristic tags support emerging tech- nical, man-made fabrications; tags adorned with playful characters evoke a sense of fun for kids’ garments. ‘The product label is a key cog in branding strategy,’ says a labelling expert.
‘The look, feel, or even smell of the label – if done creatively – can complement a brand.’12 Along with the positives, labelling also raises concerns. There has been a long history of legal concerns about packaging and labels. Labels can mislead customers, fail to describe important ingredients, or fail to include needed safety warnings. As a result, several Euro- pean laws regulate labelling, while individual countries have their own laws which often supplement EU legislation. Agreed EU-wide controls on food labelling were introduced with Directive 79/112 in 1979. Additional controls have been added and amendments introduced to produce a complex array of labelling requirements. In 2000, the original 1979 Directive and its amendments were consolidated into a single new Directive – 2000/13/EC.
Directive 2000/13/EC is concerned with the labelling of foodstuffs to be delivered to the final consumer, and those to be delivered to catering outlets such as restaurants and canteens. The basic principle is that the labelling must not mislead the purchaser about the product, for example with respect to the characteristics, quantity, properties or origins of the foodstuff. Article 3 of the Directive specifies a range of information that must be provided on all foodstuffs, including a list of ingredients, the shelf life, details of origin, the name and address of the manufacturer, and any special storage conditions or conditions of use. You are probably aware of the confusion that can be caused when some products are labelled as
‘sell by’ or ‘best before’ and others are labelled as ‘use by’. This has led to enormous waste of food as consumers play it safe by unnecessarily disposing of food that is still edible.
Product support services
Customer service is another element of product strategy. A company’s offer usually includes some support services, which can be a minor or a major part of the total offering. Later in the chapter we will discuss services as products in themselves. Here, we discuss services that augment actual products.