Setting Product Strategy

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Setting Product Strategy
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At the heart of a great brand is a great product
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Product
Anything that can be offered to a market to
satisfy a want or need.
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Five Hotel (Product) Levels

• Core benefitsrest and sleep
• Basic productbed, bathroom, towels, desk,
  dresser, and closet
• Expected productclean bed, fresh towels, working
  lamps, relative degree of quiet
• Augmented productcable TV
• Potential producthigh speed internet connection

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Consumer Goods Classification
Convenience
Shopping
Unsought
Specialty
Emergency
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Industrial Goods Classification
Materials and parts
Supplies/ business services
Capital items
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Product Differentiation

• Style
• Design
• Ordering ease
• Delivery
• Installation
• Customer training
• Customer consulting
• Maintenance

• Product form
• Features
• Performance
• Conformance
• Durability
• Reliability
• Reparability

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Product Line Analysis
Core product Basic computers
Staples Faster CPUs
Convenience Items Monitors, Printers
Specialties Digital moviemaking
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Line Stretching
Down-Market Stretch
Up-Market Stretch
Two-Way Stretch
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Line Filling
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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
  costtelephone 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)

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Product Line Pricing
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Two-Part Pricing
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Co-branding
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Ingredient Branding
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Packaging The 5th P
All the activities of designing and producing the
container for a product.
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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
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Innovations in Packaging
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Functions of Labels
Identifies
Grades
Describes
Promotes
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Warranties and Guarantees
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Designing and Managing Services
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IBM has moved from a goods business to a service
business
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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.
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Service Sectors
Government (courts, hospitals, etc.)
Private Nonprofit (museums, churches, etc.)
Business (airlines, banks, etc.)
Retail (cashiers, clerks, etc)
Manufacturing (accountants, legal staff, etc.)
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General Motors OnStar Service
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Categories of Service Mix
Pure tangible goodsoap, salt
Good w/ accompanying servicescars and computers
Hybrid--restaurants
Service w/ accompanying goodsairlines serve food
and drinks
Pure servicebaby sitting
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Service Distinctions

• Equipment-based (vending machines) or
  people-based (window washing)
• Service processes (fast-food, buffet)
• Clients 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)

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Continuum of Evaluation for Different Types of
Products
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Distinctive Characteristics of Services
Intangibility
Inseparability
Variability
Perishability
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Mayo Clinics Tangible Cues
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Blue Man Group includes 33 different performers
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How to Increase Quality Control
Invest in good hiring and training procedures
Standardize the service-performance process
Monitor customer satisfaction
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Matching Demand and Supply

• 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

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Consumer-Friendly Services
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Factors Leading to Customer Switching Behavior

• Pricinghigh, increases, unfair, deceptive
• Inconveniencelocations/hours
• Core Service Failurebilling errors
• Service Encounter Failures--unresponsive
• Response to Service Failurenegative
• Competitionfound better service
• Ethical Problemscheat, unsafe
• Involuntary Switchingprovider closed

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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

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

• Strategic Conceptcustomer obsessed
• Top-Management Commitmentservice quality
• High Standards-reliable
• Self-Service Technologies
• Monitoring Systems
• Satisfying Customer Complaints
• Satisfying Employees

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Customer Importance and Performance Ratings for
an Auto Dealership
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Developing Brand Strategies for Services
Choosing Brand Elementslogos, symbols
Establishing Image Dimensions--associations
Devising Branding Strategyprice and quality
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Customer Worries
Failure frequency (reliability)
Downtime (dependability)
Out-of-pocket costs (maintenance and repair)
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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?