MKTG 101 Week 7

MKTG101 Marketing Fundamentals Week 7 The Nature of Products and Services 1 MKTG101 2005 Week 7 1 Product Product: Anything that can be offered to customers for the satisfaction of their needs and indeed their wants • Customers often desire A bundle of benefits and benefits are what customers ‘see’ in total offerings of GorS. GorS include: tangible products and intangibles (services). MKTG101 2005 Week 7 2 Attributes of GorS’s • These are those characteristic qualities that are designed into the GorS to make them appear beneficial to intending purchasers. • The IMC mix will highlight the GorS attributes, because these are often the very things that DIFFERENTIATE GorS’s between competitors. MKTG101 2005 Week 7 3 GorS attributes Some Objective (tangible) attributes: – Design eg shape, style, contours – Performance eg safety, speed, longevity – Packaging eg colour, material, labels Some Subjective (intangible) attributes: – Image eg vanity – Value eg status – Associations eg belongingness MKTG101 2005 Week 7 4 Product levels Augmented Product Installation Packaging Brand Name Delivery & Credit Quality Core Benefit or Service Features AfterSale Service Styling Warranty Actual Product MKTG101 2005 Week 7 Core Product 5 Product levels Core product: the central benefit the customers are seeking when buying the GorS. These may involve a mix UTILITY and PREFERENCE eg iPod – on-line personal music MKTG101 2005 Week 7 6 Product levels • Actual product: the attributes, including quality, features, styling, brand and packaging that deliver the core product tangible - design, performance, packaging intangible – status, belongingness MKTG101 2005 Week 7 7 Product levels Augmented product: additional attributes added to the actual product for the iPod it may include service levels, warranties, high quality speakers, Blue tooth, IR pod-loading etc… MKTG101 2005 Week 7 8 Consumer Product Classifications • 2x2 grid Shopping Convenience Specialty Unsought MKTG101 2005 Week 7 9 Convenience products Buying behaviour: Frequent purchase cycles, little problem solving involved, mainly low involvement-informational Key strategies used by marketers: – Price: usually Low to combat competition – Distribution: mainly Intensive – broadly based – Promotion: IMC mix points to Mass promotion – probably common mktg mix MKTG101 2005 Week 7 10 Shopping products Buying behaviour: Less frequent purchase cycles, more problem solving by consumer, higher involvementinformational • Key strategies used by marketers: – Price: higher than convenience products – Distribution: selective through select channels – Promotion: mainly advertising and personal selling MKTG101 2005 Week 7 11 Specialty products Buying behaviour: Indicates a degree of Brand loyalty and Brand preference, low price elasticity of demand = price inelasticity Key strategies: – Price: High – differentiation strategy – Distribution: Exclusive dealers – Promotion: Carefully targeted to selected segment, micro marketing mix strategies MKTG101 2005 Week 7 12 Unsought products Buying behaviour: Usually Low consumer awareness of the GorS, mainly reactive buying behaviour by consumers Key strategies: – Price: Varies, depending on mix strategy – Distribution: Various outlets – Promotion: mix is mainly Advertising, personal selling and point-of-sale (POS) MKTG101 2005 Week 7 13 Industrial Product Classifications Materials and Parts Capital Items Types of Industrial Products Supplies and Services MKTG101 2005 Week 7 14 B2B products Materials and parts: these are manufactured products and/or components that are completely transformed by a business into the final product they offer for sale to customers. Eg fan motor used in electric floor heater MKTG101 2005 Week 7 15 B2B products • Capital items: installations and accessory equipment necessary for the production of the final product. Not sold in the normal course of business. Eg big metal press used to make parts for motor vehicle body panels MKTG101 2005 Week 7 16 B2B products Supplies and services: products and services that do not form part of the final product but support the production of Goods/Products. Eg cleaning of factory, storage, stationery, accounting and legal services. MKTG101 2005 Week 7 17 Services • These are called Intangible ‘products’ • A service is an activity purchased from the supplier by the customer that usually does not result in the ownership of a physical asset changing hands during the exchange process. MKTG101 2005 Week 7 18 Service types Instrumental service: work performed by the supplier to achieve a customer goal without the direct participation of the customer – it may include installation of the product like a washing machine. Consumatory service: the consumer is directly involved in the activity – like when you attend a dental surgery for a teeth cleaning service. MKTG101 2005 Week 7 19 Products and Services Continuum (fig 8.1) MKTG101 2005 Week 7 20 Characteristics of Services Services present additional problems for the marketer because they are usually described as being: – Intangible – non-corporeal – Inseparable – cannot be differentiated from service provider – Variable – often unable to define in specific terms MKTG101 2005 Week 7 21 Intangibility There is no lasting physical evidence of the exchange when a service is purchased by the customer – Invisible ‘products’ may include advice in the form of legal advice • Because the advice is ‘invisible’, it makes comparison between services difficult or impossible MKTG101 2005 Week 7 22 Inseparability It is usually impossible to separate the product from the person and the situation. This occurs especially with consumatory services. • Because interpersonal relationships between seller and buyer are very subjective, this makes objective assessment of a service difficult. MKTG101 2005 Week 7 23 Variability Service transactions are usually based on human interaction. Since human interactions and human performance (provision of the service to the customer) cannot really be standardised due to many intervening variables, control of the actual service/product delivered is difficult. MKTG101 2005 Week 7 24 Perishability A service transaction usually involves simultaneous production and consumption like when you take a computer assisted exam and are given the results instantaneously. • Necessitates accurate forecasting of the production-consumption process. MKTG101 2005 Week 7 25 Individual Product Decisions of consumers Perceived Product Attributes Brand choice/awareness Packaging Labelling & instructions Product Support Services MKTG101 2005 Week 7 26 Plasma television – ranking example • • • • Perceived attributes -> Brand awareness/choice -> Packaging and labelling -> Product support & services -> MKTG101 2005 Week 7 27 Product Attribute Decisions Quality Features Design MKTG101 2005 Week 7 28 Quality Quality: The extent to which the product meets the customer’s needs and wants • Satisfaction: The customer’s perception of the benefits received compared with the benefits they expected MKTG101 2005 Week 7 29 Features Features: The attributes of the product directly determined by the supplier/manufacturer Usually incorporated in the actual product and are objectively verifiable MKTG101 2005 Week 7 30 Design Design: The style of the product as well as the ease with which it can be made and consumed eg fashion watches The design of a product is the translation of the core product benefit into an actual product that the marketer can supply to a customer MKTG101 2005 Week 7 31 Brands Brand: A promise of consistent quality – The brand is a symbol for the characteristics of the product as perceived by the market. – Brands can be a name, term, sign, symbol or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of other competitors. MKTG101 2005 Week 7 32 Brand equity Equity: The value of a brand to the owner/company. Strong brands have the following characteristics: – High brand awareness – High level of brand loyalty – Positive brand attitudes/associations – Involves significant trademark protection – Develops strong customer relationships MKTG101 2005 Week 7 33 Major Brand Decisions To Brand or Not to Brand Brand No Brand Brand Name Selection Selection Protection Brand Sponsor Manufacturer’s Brand Private Brand Licensed Brand Brand Strategy New Brands Line/Brand Extensions Multibrands Brand Repositioning Brand Repositioning MKTG101 2005 Week 7 No Brand Repositioning 34 Brand or No brand Good marketers always brand: If there is no brand, the product is a commodity – NO-BRAND means there is no way for a customer to identify and buy a particular supplier’s product. – It is in the nature of people to name (label) things as a way of organizing and controlling them. – If the marketer does not provide a way of identifying a product, customers will supply a name/identity. MKTG101 2005 Week 7 35 Brand selection of ‘good brands’ – Easy to remember and pronounce – Short and distinctive – Invokes positive interpretation – Suggests product function – Suggests image – Communicates attributes and benefits – Communicates user attributes – Avoids linguistic traps MKTG101 2005 Week 7 36 Brand sponsor The brand sponsor is the owner and the origin of the brand These include: – Manufacturers’ brands – Distributors’ brands • Private • House – Licensing – Co-branding MKTG101 2005 Week 7 37 Ethical issues relating to products • Safety • Deception • Exploitation MKTG101 2005 Week 7 38