12 Setting Product Strategy Marketing Management, 13th ed What is a Product? A product is anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-2 Figure 12.2 Five Product Levels Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-3 Five Product Levels • • • • • Core Components :benefit Basic product Expected product : Features Augmented product : Services Potential product: Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-4 Product Classification Schemes • Durability • Tangibility • Use Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-5 Durability and Tangibility • Nondurable goods: Intangible goods consumed in one or few use • Durable goods: Intangible goods that normally survive many uses • Services: Are Intangible ,variable, Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-6 Consumer Goods Classification • • • • Convenience Shopping Specialty Unsought Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-7 Industrial Goods Classification • Materials and parts • Capital items • Supplies/business services Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-8 Product Differentiation • • • • • • • • • • Product form: size ,color or structure Features Customization Performance: levels , low, average , high or superior Conformance: degree to which the product meets the promised specifications Durability: operating life Reliability; probability of fail in specified time period Reparability: ease or difficult of fixing a product when it fails Style: product look and feel to buyer Design : totality of features that affect how the product looks Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-9 Service Differentiation • • • • • • • Ordering ease; place an order Delivery: Time to receive product Installation: work done to operate product Customer training Customer consulting: Data , information Maintenance and repair Returns Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-10 7-Levels of Product Hierarchy • Product need—to satisfy a need e.g. feet protection • Brand (product family)—a name representing a product or line e.g. Nike • Product class—a family of products having similar function e.g. all shoes • Product line—a group of products with closely related functions e.g. sports shoes • Product type—products within a line having similar form e.g. basket-ball shoes • Item (Stock Keeping Unit)—a unit item e.g. one pair of Nike basket-ball shoe 11 The Product Hierarchy Item Product type Product line Product class Product family Need family Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-12 Product Systems and Mixes • • • • • • • Product system: group diverse but related items Product mix Product assortment called product mix Depth: total number of products in Product line Length : total number of products in product mix Width: how many different product line Consistency: how closely the product line are in end use Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-13 Product-Mix Width and Product-Line Length for Gamble Products Proctor& Product-Mix Width Detergents Toothpaste Ivory Snow (1930) Gleem (1952) PRODUCTDreft LINE (1933) LENGTH Tide (1946) Cheer (1950) Disposable Bar Soap Diapers Paper Tissue Ivory (1879) Pampers (1961) Charmin (1928) Kirk’s (1885) Luvs (1976) Puffs (1960) Crest (1955) Lava (1893) Banner (1982) Camay (1926) Summit (1992) Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-14 Product Line Analysis • Core product; Basic laptop that produce high sales • Staples: item lower sales such as memories no promotion but yields to high profits • Specialties: low sale but that might highly promoted , on site training , insulation • Convenience items sell in high volume carrying case and other accessories Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-15 Figure 12.4 Product Map Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-16 Product Line Stretching • Downward stretch by introducing lower range of the products e.g. • In 1989 the Shangri-La, a chain of deluxe hotels and resorts in Asia established the Traders Hotels, a sister brand to deliver high value, mid-range, quality accommodation to the business traveler • Mercedes introduced the “baby Merz” to cater to the upper class mid-sized range of the market • Upward stretch by entering the high end of the market e.g. • Toyota introduced the Lexus and Nissan introduced the Infiniti 17 Product Line Stretching(cont’d) • Two-way stretch by filling the whole line e.g. • Toyota has the Starlet at the lower end; the Corolla in the executive range; the Camry in the upper-management range and the Lexus in the luxury range 18 What is the Fifth P? Packaging, sometimes called the 5th P, is all the activities of designing and producing the container for a product. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-19 Factors Contributing to the Emphasis on Packaging • Self-service sales • Consumer affluence pay more for attracting appearance • Company/brand image • Innovation opportunity ; a large benifits Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-20 Packaging Objectives • Identify the brand • Convey descriptive and persuasive information • Facilitate product transportation and protection • Assist at-home storage • Aid product consumption Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 12-21 13 Designing and Managing Services Marketing Management, 13th ed What is a Service? A service is 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. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 13-23 Service Sectors • • • • • Government Private nonprofit: museum and charities Business: Banks Manufacturing: legal staff Retail: customer services Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 13-24 Categories of Service Mix • Pure tangible good : consumer products • Good with accompanying services: Computers • Hybrid: Restaurants • Service with accompany goods: Airline • Pure service: massage,babysitting Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 13-25 Service Distinctions • Equipment-based or people-based • Service processes: deliver it • Client’s presence required or not: surgery or care repair • Personal needs or business needs • Objectives and ownership: Profit or nonprofit Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 13-26 Distinctive Characteristics of Services Intangibility Inseparability Variability Perishability Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 13-27 Physical Evidence and Presentation Place People Equipment Communication material Symbols Price Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 13-28 How to Increase Quality Control • Invest in good hiring and training procedures • Standardize the service-performance process • Monitor customer satisfaction Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 13-29 Matching Demand and Supply Demand side • Differential pricing: air line season • Nonpeak demand : Restaurants offers • Complementary services: Automated machine • Reservation systems Supply side • Part-time employees • Peak-time efficiency • Increased consumer participation: bag their products • Shared services: Expensive equipment ,hospital • Facilities for future expansion buy surround land Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 13-30 Improving Service Quality • • • • Listening Reliability :quality Basic service Service design: arrange information's • Recovery: solve problems • Surprising customers; in meeting • Fair play: to customers & employees • Teamwork • Employee research: conduct a research • Servant leadership Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 13-31 Figure 13.5 Three Types of Marketing in Service Industries Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 13-32 Table 13.1 Factors Leading to Customer Switching Behavior • • • • • Pricing: high Inconvenience; location Core Service Failure: bill mistake Service Encounter Failures: impolite Response to Service Failure: No response • Competition: found better service • Ethical Problems; cheat • Involuntary Switching: customer moved Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 13-33 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 Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 13-34 Figure 13.6 Service-Quality Model Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 13-35 Determinants of Service Quality • Reliability: performed promise service • Responsiveness: willing to help • Assurance: self confidence of information's • Empathy: caring and attention to customers • Tangibles: equipment Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 13-36 Table 13.4 Top Customer Service Providers • USAA • Four Seasons Hotels • Cadillac • Nordstrom • Wegman Food Markets • Edward Jones • Lexus • UPS • Enterprise Rent-aCar • Starbucks • Ritz-Carlton • Amica Insurance • Southwest Airlines Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 13-37