MKTG 1 FINAL NOTES “small wows” to every customer.

And Nike has

long declared, “It’s not so much the shoes but
where they take you.” Today, however, all kinds
Product - Anything that can be offered to a market for
of firms are recasting their traditional goods and
attention, acquisition, use, or consumption that might
services to create experiences. For example,
satisfy a want or need.
Apple’s highly successful retail stores don’t just
➢ We define a product as anything that can be sell the company’s products. They create an
offered to a market for attention, acquisition, engaging Apple brand experience:
use, or consumption that might satisfy a want or ➢ Apple’s retail stores are very seductive places,
need. Products include more than just tangible where “life-feels-good” experiences abound. The
objects, such as cars, clothing, or mobile phones. store design is clean, simple, and just oozing
Broadly defined, products also include services, with style—much like an Apple iPad or a
events, persons, places, organizations, and ideas featherweight MacBook Air. The bustling stores
or a mixture of these. Throughout this text, we feel more like community centers than retail
use the term product broadly to include any or outlets, with crowds of customers sampling the
all of these entities. Thus, an Apple iPhone, a goods and buzzing excitedly about all things
Toyota Camry, and a Caffé Mocha at Starbucks Apple. The stores encourage a lot of purchasing,
are products. But so are a trip to Las Vegas, to be sure. But they also encourage lingering,
Schwab online investment services, your with tables full of fully functioning Macs, iPods,
Instagram account, and advice from your family iPads, and iPhones sitting out for visitors to try
doctor. Because of their importance in the world and dozens of laid-back Apple employees close
economy, we give special attention to services. at hand to answer questions and cater to every
whim. The stores offer expert technical
Service- An activity, benefit, or satisfaction offered for assistance at the Genius Bar and a full schedule
sale that is essentially intangible and does not result in of workshops where customers at all experience
the ownership of anything levels can learn about their Apple devices and
➢ Services are a form of product that consists of explore their creative sides. You don’t just visit an
activities, benefits, or satisfactions offered for Apple store—you experience it in a way that no
sale that are essentially intangible and do not other consumer electronics company can match.
result in the ownership of anything. Examples As one Apple retail executive explains, “I don’t
include banking, hotel, airline travel, retail, want to be sold to when I walk into a store. Don’t
wireless communication, and home-repair sell! No! Because that’s a turn-off. Build an
services. We will look at services more closely amazing brand experience, and then [sales] will
later in this chapter just naturally happen.”

Products, Services and Experiences

Levels of Product and Services
➢ Products - are a key element in the overall
market offering. Marketing mix planning begins Product planners need to think about products and
with building an offering that brings value to services on three levels (see Figure 8.1). Each level adds
target customers. This offering becomes the more customer value.
basis on which the company builds profitable
Three Levels of Product
customer relationships.
➢ A company’s market offering often includes both
tangible goods and services. At one extreme, the
market offer may consist of a pure tangible
good, such as soap, toothpaste, or salt; no
services accompany the product. At the other
extreme are pure services, for which the market
offer consists primarily of a service. Examples
include a doctor’s exam and financial services
➢ Between these two extremes, however, many
goods and-services combinations are possible.
➢ Today, as products and services become more
commoditized, many companies are moving to a Core Customer value - The most basic level which
new level in creating value for their customers. addresses the question: What is the buyer really buying?
To differentiate their offers, beyond simply When designing products, marketers must first define
making products and delivering services, they the core, problem-solving benefits or services that
are creating and managing customer experiences consumers seek. A woman buying lip stick buys more
with their brands or companies. than lip color. Charles Revson of Revlon saw this early: “In
➢ Experiences have always been an important part the factory, we make cosmetics; in the store, we sell
of marketing for some companies. Disney has hope.” And people who buy an Apple iPad are buying
long manufactured dreams and memories much more than just a tablet computer. They are buying
through its movies and theme parks—it wants entertainment, self-expression, productivity, and
theme park cast members to deliver a thousand
connectivity with friends and family—a mobile and quality, price, and style. When buying shopping
personal window to the world. products and services, consumers spend much
time and effort in gathering information and
Actual Product - At the second level, product planners
making comparisons. Examples include
must turn the core benefit into an actual product. They
furniture, clothing, major appliances, and hotel
need to develop product and service features, a design, a
services. Shopping product marketers usually
quality level, a brand name, and packaging. For example,
distribute their products through fewer outlets
the iPad is an actual product. Its name, parts, styling,
but provide deeper sales support to help
operating system, features, packaging, and other
customers in their comparison efforts.
attributes have all been carefully combined to deliver the
core customer value of staying connected. TYPE OF CONSUMER PRODUCT

Augmented Product - Finally, product planners must

build an augmented product around the core benefit and
actual product by offering additional consumer services
and benefits. The iPad is more than just a digital device.
It provides consumers with a complete connectivity
solution. Thus, when consumers buy an iPad, Apple and
its resellers also might give buyers a warranty on parts
and workmanship, quick repair services when needed,
and web and mobile sites to use if they have problems or
questions. Apple also provides access to a huge
assortment of apps and accessories, along with an iCloud
service that integrates buyers’ photos, music, 2. Specialty products – are consumer products and
documents, apps, calendars, contacts, and other content services with unique characteristics or brand
across all of their devices from any location. identifications for which a significant group of buyers is
Consumers see products as complex bundles of benefits willing to make a special purchase effort. Examples
that satisfy their needs. When developing products, include specific brands of cars, high-priced photography
marketers first must identify the core customer value equipment, designer clothes, gourmet foods, and the
that consumers seek from the product. They must then services of medical or legal specialists. A Lamborghini
design the actual product and find ways to augment it to automobile, for example, is a specialty product because
create customer value and a full and satisfying brand buyers are usually willing to travel great distances to buy
experience one. Buyers normally do not compare specialty products.
They invest only the time needed to reach dealers
Product and Service Classifications carrying the wanted brands.
Products and services fall into two broad classes based 3. Unsought products - are consumer products that a
on the types of consumers who use them: consumer consumer either does not know about or knows about
products and industrial products. Broadly defined, but does not normally consider buying. Most major new
products also include other marketable entities such as innovations are unsought until consumers become aware
experiences, organizations, persons, places, and ideas. of them through marketing. Classic examples of known
but unsought products and services are life insurance,
Consumer Products
preplanned funeral services, and blood donations to the
1. Consumer products - are products and services Red Cross. By their very nature, unsought products
bought by final consumers for personal require a lot of promoting, personal selling, and other
consumption. Marketers usually classify these marketing efforts.
products and services further based on how
Industrial Products
consumers go about buying them. Consumer
products include convenience products, 1. Industrial products - are those products
shopping products, specialty products, and purchased for further processing or for use in
unsought products. These products differ in the conducting a business. Thus, the distinction
ways consumers buy them and, therefore, in how between a consumer product and an industrial
they are marketed (see Table 8.1). product is based on the purpose for which the
2. Convenience products - are consumer products product is purchased. If a consumer buys a lawn
and services that customers usually buy mower for use around home, the lawn mower is
frequently, immediately, and with minimal a consumer product. If the same consumer buys
comparison and buying effort. Examples include the same lawn mower for use in a landscaping
laundry detergent, candy, magazines, and fast business, the lawn mower is an industrial
food. Convenience products are usually low product. T
priced, and marketers place them in many - The three groups of industrial products and
locations to make them readily available when services are materials and parts, capital
customers need or want them. items, and supplies and services.
3. Shopping products - are less frequently 1. Materials and parts - include raw
purchased consumer products and services that materials as well as manufactured
customers compare carefully on suitability, materials and parts. Raw materials
 consist of farm products (wheat, cotton, spot, called “Childlike Imagination.” The
livestock, fruits, vegetables) and natural whimsical ad brings GE’s products— from jet
products (fish, lumber, crude petroleum, engines and diesel locomotives to giant wind
iron ore). Manufactured materials and turbines and hospital diagnostics machines—to
parts consist of component materials life through the eyes of a wide-eyed young girl
(iron, yarn, cement, wires) and whose mom works at GE. GE is “Building,
component parts (small motors, tires, powering, moving, and curing the world,” says
castings). Most manufactured materials the company. “Not just imagining. Doing. GE
and parts are sold directly to industrial works.”3
users. Price and service are the major 2. People can also be thought of as products.
marketing factors; branding and Person marketing consists of activities
advertising tend to be less important. undertaken to create, maintain, or change
2. Capital items - are industrial products attitudes or behavior toward particular people.
that aid in the buyer’s production or People ranging from presidents, entertainers,
operations, including installations and and sports figures to professionals such as
accessory equipment. Installations doctors, lawyers, and architects use person
consist of major purchases such s marketing to build their reputations. And
buildings (factories, offices) and fixed businesses, charities, and other organizations
equipment (generators, drill presses, use well-known personalities to help sell their
large computer systems, elevators). products or causes. For example, Nike spends
Accessory equipment includes portable almost $1 billion annually on endorsement deals
factory equipment and tools (hand tools, with a stable of stars spanning almost every
lift trucks) and office equipment conceivable sport worldwide, including
(computers, fax machines, desks). These headliners such as tennis greats Maria
types of equipment have shorter lives Sharapova and Rodger Federer, world soccer
than do installations and simply aid in superstars Cristiano Ronaldo and Neymar, and
the production process. current and former NBA all-stars Michael Jordan,
3. Supplies and services - The final group of Kobe Bryant, LeBron James, and Kevin Durant.
industrial products is. Supplies include 3. Place marketing - involves activities undertaken
operating supplies (lubricants, coal, to create, maintain, or change attitudes or
paper, pencils) and repair and behavior toward particular places. Cities, states,
maintenance items (paint, nails, regions, and even entire nations compete to
brooms). Supplies are the convenience attract tourists, new residents, conventions, and
products of the industrial field because company offices and factories. The New Orleans
they are usually purchased with a city website shouts “Go NOLA” and markets
minimum of effort or comparison. annual events such as Mardi Gras festivities and
Business services include maintenance the New Orleans Jazz and Heritage Festival.
and repair services (window cleaning, Tourism Australia advertises that “There’s
computer repair) and business advisory Nothing Like Australia” and provides a website
services (legal, management consulting, and smartphone app complete with videos,
advertising). Such services are usually holiday ideas, destination information, and
supplied under contract. about anything else travelers might need to plan
an Australian vacation.
Organizations, Persons, Places, and Ideas 4. Ideas - can also be marketed. In one sense, all
In addition to tangible products and services, marketers marketing is the marketing of an idea, whether it
have broadened the concept of a product to include is the general idea of brushing your teeth or the
other market offerings: organizations, persons, places, specific idea that Crest toothpastes create
and ideas. “healthy, beautiful smiles for life.” Here,
however, we narrow our focus to the marketing
1. Organizations- often carry out activities to “sell” of social ideas.
the organization itself. Organization marketing - This area has been called social marketing
consists of activities undertaken to create, and consists of using traditional business
maintain, or change the attitudes and behavior marketing concepts and tools to encourage
of target consumers toward an organization. behaviors that will create individual and
Both profit and not-for-profit organizations societal well-being. Social marketing
practice organization marketing. Business firms programs cover a wide range of issues. The
sponsor public relations or corporate image Ad Council of America (www.adcouncil.org),
marketing campaigns to market themselves and for example, has developed dozens of social
polish their images. For example, as noted in advertising campaigns involving issues
Chapter 6, GE’s long-running “Imagination at ranging from health care, education, and
Work” campaign markets the industrial giant as a environmental sustainability to human rights
company whose imaginative products and and personal safety. But social marketing
technologies are making a difference in the involves much more than just advertising. It
world. Consider one recent award-winning TV involves a broad range of marketing
 strategies and marketing mix tools designed performance quality level; few customers
to bring about beneficial social change. want or can afford the high levels of quality
offered in products such as a Rolls-Royce
Product and Service Decisions
automobile, a Viking range, or a Rolex watch.
- Marketers make product and service Instead, companies choose a quality level
decisions at three levels: individual product that matches target market needs and the
decisions, product line decisions, and product quality levels of competing products.
mix decisions. We discuss each in turn. - Beyond quality level, high quality also can
mean high levels of quality consistency.
In Figure 8.2 shows the important decisions in the Here, product quality means conformance
development and marketing of individual products and quality—freedom from defects and
services. We will focus on decisions about product consistency in delivering a targeted level of
attributes, branding, packaging, labeling and logos, and performance. All companies should strive for
product support services high levels of conformance quality. In this
Individual Products Decisions sense, a Chevrolet can have just as much
quality as a Rolls-Royce. Although a Chevy
doesn’t perform at the same level as a Rolls-
Royce, it can just as consistently deliver the
quality that customers pay for and expect.
- Five Guys is an American fast casual
PRODUCT AND SERVICE ATTRIBUTES restaurant selling burgers, fries, hot dogs,
- Developing a product or service involves and grilled sandwiches. Five Guys is famous
defining the benefits that it will offer. These for ruling the “better burger” category. Their
benefits are communicated and delivered by burgers are prepared in peanut oil, are hand-
product attributes such as quality, features, crafted, and are made of freshly ground beef.
and style and design. Five Guys says that it does not compete on
1. Product Quality. Product quality is one of the price with McDonalds, Burger King, or
marketer’s major positioning tools. Quality Wendy’s because their product quality is
affects product or service performance; thus, it is better, and people will pay a little extra for
closely linked to customer value and satisfaction. food if it’s worth it. If ever a customer
In the narrowest sense, quality can be defined as questions their higher price, they tell the
“no defects.” But most marketers go beyond this customers to just take it and not pay for it.
narrow definition. Instead, they define quality in And they say that in the many years they
terms of creating customer value and have done this, every single customer has
satisfaction. The American Society for Quality come back and paid for their food and added
defines quality as the characteristics of a product a big tip. The level of quality of Five Guys’
or service that bear on its ability to satisfy stated burgers supports its positioning and has
or implied customer needs. Similarly, Siemens created a cult following for its burgers
defines quality this way: “Quality is when our around the world.
customers come back and our products don’t.” 2. Product Features. A product can be offered with
- Total quality management (TQM) - is an varying features. A stripped-down model, one
approach in which all of the company’s without any extras, is the starting point. The
people are involved in constantly improving company can then create higherlevel models by
the quality of products, services, and adding more features. Features are a competitive
business processes. For most top companies, tool for differentiating the company’s product
customer-driven quality has become a way from competitors’ products. Being the first
of doing business. Today, companies are producer to introduce a valued new feature is
taking a return-on-quality approach, one of the most effective ways to compete.
viewing quality as an investment and holding - How can a company identify new features
quality efforts accountable for bottom-line and decide which ones to add to its product?
results. It should periodically survey buyers who
- Product quality has two dimensions: level have used the product and ask these
and consistency. In developing a product, questions: How do you like the product?
the marketer must first choose a quality level Which specific features of the product do
that will support the product’s positioning. you like most? Which features could we add
Here, product quality means performance to improve the product? The answers to
quality—the product’s ability to perform its these questions provide the company with a
functions. rich list of feature ideas. The company can
-For example, a Rolls-Royce provides higher then assess each feature’s value to
performance quality than a Chevrolet: It has customers versus its cost to the company.
a smoother ride, lasts longer, and provides Features that customers value highly in
more handcraftsmanship, custom design, relation to costs should be added
luxury, and “creature comforts.” Companies 3. Product Style and Design. Another way to add
rarely try to offer the highest possible customer value is through distinctive product
 style and design. Design is a larger concept than Even fruits, vegetables, dairy products, and
style. Style simply describes the appearance of a poultry are branded—Cuties mandarin
product. Styles can be eye catching or yawn oranges, Dole Classic salads, Horizon Organic
producing. A sensational style may grab attention milk, Perdue chickens, and Eggland’s Best
and produce pleasing aesthetics, but it does not eggs.
necessarily make the product perform better. - Branding helps buyers in many ways. Brand
Unlike style, design is more than skin deep—it names help consumers identify products
goes to the very heart of a product. Good design that might benefit them. Brands also say
contributes to a product’s usefulness as well as something about product quality and
to its looks. consistency—buyers who always buy the
- Good design doesn’t start with same brand know that they will get the same
brainstorming new ideas and making features, benefits, and quality each time
prototypes. Design begins with observing they buy. Branding also gives the seller
customers, understanding their needs, and several advantages. The seller’s brand name
shaping their product-use experience. and trademark provide legal protection for
Product designers should think less about unique product features that otherwise
technical product specifications and more might be copied by competitors. Branding
about how customers will use and benefit helps the seller to segment markets. For
from the product. For example, using smart example, rather than offering just one
design based on consumer needs, Sonos general product to all consumers, Toyota can
created a wireless, internet-enabled speaker offer the different Lexus, Toyota, and Scion
system that’s easy to use and fills a whole brands, each with numerous sub-brands—
house with great sound. such as Avalon, Camry, Corolla, Prius, Yaris,
- In the past, setting up a whole-house Tundra, and Land Cruiser.
entertainment or sound system required - Finally, a brand name becomes the basis on
routing wires through walls, floors, and which a whole story can be built about a
ceilings, creating a big mess and lots of product’s special qualities. For example, the
expense. And if you moved, you couldn’t Cuties brand of pint-sized mandarins sets
take it with you. Enter Sonos, which took itself apart from ordinary oranges by
home-audio and theater systems to a new promising “Kids love Cuties because Cuties
level worthy of the digital age. The are made for kids.” They are a healthy snack
innovative company created a wireless that’s “perfect for little hands”: sweet,
speaker system that’s not just stylish but also seedless, kidsized, and easy to peel.10
easy to set up, easy to use, and easy to move Building and managing brands are perhaps
to meet changing needs. With Sonos, you the marketer’s most important tasks. We will
can stream high-quality sound through a discuss branding strategy in more detail later
variety of stylish speakers anywhere in your in the chapter.
home with just an app and a tap on your PACKAGING
smartphone. Smart design has paid off
handsomely for Sonos. Founded in 2002, Packaging - involves designing and producing the
over just the past two years the company’s container or wrapper for a product. Traditionally, the
sales have nearly tripled to an estimated $1 primary function of the package was to hold and protect
billion a year. the product. In recent times, however, packaging has
become an important marketing tool as well.
BRANDING
- Increased competition and clutter on retail
Perhaps the most distinctive skill of professional
store shelves means that packages must now
marketers is their ability to build and manage brands.
perform many sales tasks—from attracting
- A brand is a name, term, sign, symbol, or buyers to communicating brand positioning
design or a combination of these that to closing the sale. Not every customer will
identifies the maker or seller of a product or see a brand’s advertising, social media pages,
service. Consumers view a brand as an or other promotions. However, all
important part of a product, and branding consumers who buy and use a product will
can add value to a consumer’s purchase. interact regularly with its packaging. Thus,
Customers attach meanings to brands and the humble package represents prime
develop brand relationships. As a result, marketing space.
brands have meaning well beyond a - Companies realize the power of good
product’s physical attributes. packaging to create immediate consumer
- Branding has become so strong that today recognition of a brand. For example, an
hardly anything goes unbranded. Salt is average supermarket stocks about 42,000
packaged in branded containers, common items; the average Walmart supercenter
nuts and bolts are packaged with a carries 120,000 items. The typical shopper
distributor’s label, and automobile parts— makes three out of four purchase decisions
spark plugs, tires, filters—bear brand names in stores and passes by some 300 items per
that differ from those of the automakers. minute. In this highly competitive
 environment, the package may be the and using environmentally responsible
seller’s best and last chance to influence packaging materials
buyers. So the package itself becomes an LABELING AND LOGOS
important promotional medium.
- Innovative packaging can give a company an Labels and logos - range from simple tags attached to
advantage over competitors and boost sales. products to complex graphics that are part of the
Distinctive packaging may even become an packaging. They perform several functions. At the very
important part of a brand’s identity. For least, the label identifies the product or brand, such as
example, an otherwise plain brown carton the name Sunkist stamped on oranges. The label might
imprinted with the familiar curved arrow also describe several things about the product—who
from the Amazon.com logo—variously made it, where it was made, when it was made, its
interpreted as “a to z” or even a smiley contents, how it is to be used, and how to use it safely.
face—leaves no doubt as to who shipped the Finally, the label might help to promote the brand and
package sitting at your doorstep. And engage customers. For many companies, labels have
Tiffany’s distinctive blue boxes have come to become an important element in broader marketing
embody the exclusive jewelry retailer’s campaigns.
premium legacy and positioning. As the - Labels and brand logos can support the
company puts it, “Glimpsed on a busy street brand’s positioning and add personality to
or resting in the palm of a hand, Tiffany Blue the brand. In fact, they can become a crucial
- Boxes make hearts beat faster and epitomize element in the brand-customer connection.
Tiffany’s great heritage of elegance, Customers often become strongly attached
exclusivity, and flawless craftsmanship.” to logos as symbols of the brands they
- Poorly designed packages can cause represent. Consider the feelings evoked by
headaches for consumers and lost sales for the logos of companies such as Google,
the company. Think about all those hard-to- Coca-Cola, Twitter, Apple, and Nike. Logos
open packages, such as DVD cases sealed must be redesigned from time to time. For
with impossibly sticky labels, packaging with example, brands ranging from Yahoo!, eBay,
finger-splitting wire twist-ties, or sealed and Southwest Airlines to Wendy’s, Pizza
plastic clamshell containers that cause “wrap Hut, Black+Decker, and Hershey have
rage” and send thousands of people to the successfully adapted their logos to keep
hospital each year with lacerations and them contemporary and to meet the needs
puncture wounds. Another packaging issue is of new digital devices and interactive
overpackaging—as when a tiny USB flash platforms such as the mobile apps and social
drive in an oversized cardboard and plastic media.
display package is delivered in a giant - However, companies must take care when
corrugated shipping carton. Overpackaging changing such important brand symbols.
creates an incredible amount of waste, Customers often form strong connections to
frustrating those who care about the the visual representations of their brands
environment. and may react strongly to changes. The
- Amazon offers Frustration-Free Packaging to Starbucks logo has become one of the most
alleviate both wrap rage and overpackaging. recognizable icons across the globe. The logo
The online retailer works with more than has gone through many changes over time
2,000 companies, such as Fisher-Price, with the increasing popularity of the
Mattel, Unilever, Microsoft, and others, to Starbucks brand. However, the company has
create smaller, easy-to-open, recyclable been careful not to break away from its key
packages that use less packaging material design element, the iconic two tailed
and no frustrating plastic clamshells or wire mermaid.
ties. It currently offers more than 200,000 - Along with the positives, there has been a
such items and to date has shipped more long history of legal concerns about labels
than 75 million of them to 175 countries. In and packaging. The Federal Trade
the process, the initiative has eliminated Commission Act of 1914 held that false,
nearly 60 million square feet of cardboard misleading, or deceptive labels or packages
and 25 million pounds of packaging waste. constitute unfair competition. Labels can
- In recent years, product safety has also mislead customers, fail to describe
become a major packaging concern. We have important ingredients, or fail to include
all learned to deal with hard-to-open needed safety warnings. As a result, several
“childproof” packaging. Due to the rash of federal and state laws regulate labeling. The
product tampering scares in the 1980s, most most prominent is the Fair Packaging and
drug producers and food makers now put Labeling Act of 1966, which set mandatory
their products in tamper-resistant packages. labeling requirements, encouraged
In making packaging decisions, the company voluntary industry packaging standards, and
also must heed growing environmental allowed federal agencies to set packaging
concerns. Fortunately, many companies have regulations in specific industries. The
gone “green” by reducing their packaging Nutritional Labeling and Educational Act of
 1990 requires sellers to provide detailed
nutritional information on food products,
and recent sweeping actions by the Food and
Drug Administration (FDA) regulate the use
of healthrelated terms such as low fat, light,
high fiber, and organic. Sellers must ensure
that their labels contain all the required
information.
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 part or a major part
of the total offering. Later in this chapter,
we will discuss services as products in
themselves. Here, we discuss services
that augment actual products.
- Support services are an important part of
the customer’s overall brand experience.
Lexus knows that good marketing
doesn’t end with making a sale. Keeping
customers happy after the sale is the key
to building lasting relationships. Lexus
believes that if you delight the customer,
and continue to delight the customer,
you will have a customer for life. So Lexus
dealers across the country will go to
almost any lengths to take care of
customers and keep them coming back.