Principles of Marketing
Eighteenth Edition, Global Edition
Chapter 8
Products, Services, and Brands:
Building Customer Value
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What is a Product? (1 of 17)
Product is anything that can be offered in a market for
attention, acquisition, use, or consumption that might satisfy
a need or want.
Services are a form of product that consists of activities,
benefits, or satisfactions and that is essentially intangible
and does not result in the ownership of anything.
Services gained more importance in the world economy in
the recent years.
Examples include banking, hotel services, airline travel,
retail, wireless communication, and home-repair services.
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What is a Product? (2 of 17)
Products, Services, and Experiences
Products and services are becoming more commoditized.
Companies are now creating and managing customer
•
experiences with their brands or company.
Disney has long manufactured dreams and memories
•
through its movies and theme parks.
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What is a Product? (3 of 17)
Figure 8.1 Three Levels of Product
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What is a Product? (5 of 17)
Product and Service Classifications
• Consumer products
• Industrial products
• Products also include other marketable entities
such as experiences, organizations, persons,
places, and ideas.
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What is a Product? (7 of 17)
Product and Service Classifications
Consumer products are products and services bought by
final consumers for personal consumption.
• Convenience products
• Shopping products
• Specialty products
• Unsought products
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What is a Product? (8 of 17)
Product and Service Classifications
Convenience products are consumer products and
services that the customer usually buys frequently,
immediately, and with a minimum comparison and buying
effort.
• Newspapers
• Candy
• Fast food
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What is a Product? (9 of 17)
Product and Service Classifications
Shopping products are less frequently purchased
consumer products and services that the customer
compares carefully on suitability, quality, price, and style.
• Furniture
• Cars
• Appliances
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What is a Product? (10 of 17)
Product and Service Classifications
Specialty products are consumer products and services
with unique characteristics or brand identification for which a
significant group of buyers is willing to make a special
purchase effort.
• Medical services
• Designer clothes
• High-end electronics
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What is a Product? (11 of 17)
Product and Service Classifications
Unsought products are consumer products that the
consumer does not know about or knows about but does not
normally think of buying.
• Life insurance
• Funeral services
• Blood donations
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What is a Product? (6 of 17)
Table 8.1 Marketing Considerations for Consumer Products
Type of Consumer Product
Marketing Convenience Shopping Specialty Unsought
Considerations
Customer buying Frequent purchase; Less frequent purchase; much Strong brand preference Little product awareness
behaviour little planning, little planning and shopping effort; and loyalty; special or knowledge (or, if
comparison or shopping comparison of brands on price, purchase effort; little aware, little or even
effort; low customer quality, and style comparison of brands; negative interest)
involvement low price sensitivity
Price Low price Higher price Highest price Varies
Distribution Widespread distribution; Selective distribution in fewer Exclusive distribution in Varies
convenient locations outlets only one or a few outlets
per market area
Promotion Mass promotion by the Advertising and personal selling More carefully targeted Aggressive advertising
producer by both the producer and promotion by both the and personal selling
resellers producer and resellers by the producer and
resellers
Examples Toothpaste, magazines, Major appliances, televisions, Luxury goods, such as Life insurance and Red
and laundry detergent furniture, and clothing Rolex watches or fine Cross blood donations
crystal
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What is a Product? (12 of 17)
Product and Service Classifications
Industrial products are those products purchased for
further processing or for use in conducting a business.
• Materials and parts
• Capital items
• Supplies and services
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What is a Product? (13 of 17)
Product and Service Classifications
Materials and parts include raw materials and
manufactured materials and parts.
Capital items are industrial products that aid in the buyer’s
production or operations - including installations and
accessory equipment
Supplies and services include operating supplies, repair
and maintenance items, and business services.
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What is a Product? (14 of 17)
Product and Service Classifications
Organizations, Persons, Places, and Ideas
• Organization marketing
• Person marketing
• Place marketing
• Social marketing
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What is a Product? (15 of 17)
Product and Service Decisions
Organization marketing consists of activities undertaken to
create, maintain, or change the attitudes and behaviors of
target consumers toward an organization.
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What is a Product? (16 of 17)
Product and Service Classifications
Person marketing consists of activities undertaken to
create, maintain, or change the attitudes or behavior of
target consumers toward particular people.
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What is a Product? (17 of 17)
Product and Service Classifications
Place marketing consists of activities undertaken to create,
maintain, or change attitudes and behavior toward particular
places.
Social marketing uses commercial marketing concepts to
influence individuals’ behavior to improve their well-being
and that of society.
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Product and Service Decisions (1 of 11)
Figure 8.2 Individual Product Decisions
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Product and Service Decisions (2 of 11)
Individual Product and Service Decisions
Communicate and deliver benefits by product and service
attributes.
• Quality
• Features
• Style and design
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Product and Service Decisions (3 of 11)
Individual Product and Service Decisions
Product quality refers to the characteristics of a product or service that
bear on its ability to satisfy stated or implied customer needs.
• Total quality management (TQM) is an approach in which all of the company’s people
are involved in constantly improving the quality of products, services, and business
processes.
• Today, companies are taking a return-on-quality approach, viewing quality as an
investment and holding quality efforts accountable for bottom-line results.
• 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 product’s ability to perform its
functions.
• High quality can also mean high levels of quality consistency. Here, product quality
means conformance quality—freedom from defects and consistency in delivering a
targeted level of performance.
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Product and Service Decisions (4 of 11)
Individual Product and Service Decisions
Product Features
• Competitive tool for differentiating a product from competitors’
products
• Assessed based on the value to the customer versus its cost to
the company
• The marketer 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 to these questions provide the company
with a rich list of feature ideas.
• Features that customers value highly in relation to costs should be added.
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Product and Service Decisions (5 of 11)
Individual Product and Service Decisions
Style describes the appearance of the product.
Design contributes to a product’s usefulness as well as to its
looks.
Design is a larger concept than style.
Design begins with observing customers, deeply
understanding their needs, and shaping their product-use
experience.
Product designers should think less about technical product
specifications and more about how customers will use and
benefit from the product.
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Product and Service Decisions (6 of 11)
Individual Product and Service Decisions
Brand is the name, term, sign, or design or a combination of these, that
identifies the maker or seller of a product or service.
The seller’s brand name and trademark provide legal protection for
unique product features that otherwise might be copied by competitors.
Branding helps the seller to segment markets.
A classic stunt by former bargain footwear retailer Payless dramatically
illustrated the power of brands in shaping perceptions. Fashion
influencers paid as much as $645 for “Palessi” shoes that normally sell
for less than $40.
https://youtu.be/JFXmIh4P2dM?t=46
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Product and Service Decisions (6 of 11)
What brands do you tend to purchase consistently? Why?
• Consumer benefits of brands including quality and consistency.
• What the benefits might be for the seller of a strong brand?
– This will include segmentation, positioning, and the ability to
communicate product features.
• Consumers view a brand as an important part of a product, and
branding can add value to a consumer’s purchase.
• Customers attach meanings to brands and develop brand
relationships. Branding has become so strong that today hardly
anything goes unbranded. Brand names help consumers identify
products that might benefit them
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Product and Service Decisions (7 of 11)
Individual Product and Service Decisions
Packaging involves designing and producing the container
or wrapper for a product.
Labels identify the product or brand, describe attributes, and
provide promotion.
The label performs several functions:
The label identifies the product or brand;
describes 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; and helps promote the
brand and engage customers.
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Product and Service Decisions (8 of 11)
Individual Product and Service Decisions
Product support services augment actual products.
• Customer service: Customer service is another element of product
strategy. A company’s offer usually includes some product support services,
which can be a minor part or a major part of the total offering.
• Support services are an important part of the customer’s overall brand
experience. Keeping customers happy after the sale is the key to
building lasting relationships.
• Many companies now use a sophisticated mix of phone, email, online,
social media, mobile, and interactive voice and data technologies to
provide support services that were not possible before.
• Lowe’s has equipped employees with 42,000 iPhones filled with custom apps
and add-on hardware, letting them perform service tasks such as checking
inventory at nearby stores, looking up specific customer purchase histories,
sharing how-to videos, and checking competitor prices—all without leaving the
customer’s side.
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Product and Service Decisions (9 of 11)
Product Line Decisions
Product line is a group of products that are closely related
because they function in a similar manner, are sold to the
same customer groups, are marketed through the same
types of outlets, or fall within given price ranges.
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Product and Service Decisions (10 of 11)
Product Line Decisions
Product line length is the number of items in the product line.
• Line stretching: occurs when a company lengthens its product line beyond its current range −
downward, upward, or both ways
• Line filling: involves adding more items within the present range of the line for earning extra profits,
satisfying dealers, using excess capacity
Product line stretching and filling: Through skillful line stretching and filling, B M W
now has brands and lines that successfully appeal to the rich, the super-rich, and
the hope-to-be-rich.
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Product and Service Decisions (11 of 11)
Product Mix Decisions
Product mix consists of all the product lines and items that a particular seller
offers for sale.
• Width: the number of different product lines the company carries.
• Length: the total number of items the company carries within its product lines.
• Depth: the number of versions offered of each product in the line.
• Consistency: how closely the various product lines are in end use, production requirements, or
distribution channels
The product mix: Colgate-Palmolive’s nicely consistent product mix contains
many brands that constitute the “Colgate World of Care”— products that “every
day, people like you trust to care for themselves and the ones they love.”
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Services Marketing (1 of 10)
Types of Service Industries
• Governments offer services through courts, employment
services, hospitals, military services, police and fire
departments, the postal service, and schools.
• Private not-for-profit organizations offer services through
museums, charities, colleges, foundations, and hospitals.
• Business organizations offer services such as airlines,
banks, hotels, insurance companies, consulting firms,
medical and legal practices, entertainment and
telecommunications companies, real estate firms, retailers,
and others.
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Services Marketing (2 of 10)
Figure 8.3 Four Service Characteristics
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Services Marketing (3 of 10)
Marketing Strategies for Service Firms
In addition to traditional marketing strategies, service firms
often require additional strategies.
• Service-profit chain
• Internal marketing
• Interactive marketing
• In a service business, the customer and the front-line service
employee interact to co-create the service. Effective interaction, in turn,
depends on the skills of front-line service employees and on the
support processes backing these employees.
• Thus, successful service companies focus their attention on both their
customers and their employees.
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Services Marketing (4 of 10)
Marketing Strategies for Service Firms
Service-profit chain links service firm profits with employee
and customer satisfaction.
• Internal service quality requires superior employee selection and training, a
quality work environment, and strong support for those dealing with customers.
• Satisfied and productive service employees are more satisfied, loyal, and
hardworking employees.
• Greater service value relates to more effective and efficient customer value
creation and service delivery.
• Satisfied and loyal customers make repeat purchases and refer other
customers.
• Healthy service profits and growth relate to superior service firm performance.
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Services Marketing (5 of 10)
Figure 8.4 Three Types of Services Marketing
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Services Marketing (6 of 10)
Marketing Strategies for Service Firms
Internal marketing means that the service firm must orient
and motivate its customer-contact employees and supporting
service people to work as a team to provide customer
satisfaction.
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Services Marketing (7 of 10)
Marketing Strategies for Service Firms
Interactive marketing means that service quality depends
heavily on the quality of the buyer-seller interaction during
the service encounter.
• Service differentiation
• Service quality
• Service productivity
Four Seasons selects only people with an innate “passion to serve”
and provides three months of training to instruct them carefully in
the fine art of interacting with customers to satisfy their every need.
The same is true for Starbucks Baristas
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Services Marketing (8 of 10)
Marketing Strategies for Service Firms
Managing service differentiation creates a competitive advantage.
• Offer
– The offer can include innovative features that set one company’s offer apart from competitors’
offers.
• Delivery
– Companies can differentiate their service delivery by having more able and reliable customer-
contact people, developing a superior physical environment in which the service product is
delivered, or designing a superior delivery process.
• Image
Service differentiation: Emirates offers first-class
suites in its Boeing 777 airplanes featuring door-to-
ceiling sliding doors, closets for hanging clothes,
wireless tablets with 2,500 channels, 32-inch TV
screens, personal minibars, and “inspiration kits”
containing moisturizing pajamas and skin care kits.
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Services Marketing (9 of 10)
Marketing Strategies for Service Firms
Managing service quality enables a service firm to differentiate itself by
delivering consistently higher quality than its competitors provide.
• The customer-driven quality notion requires service providers to identify what
target customers expect in regard to service quality.
• Service quality is harder to define and judge than product quality. Customer
retention is perhaps the best measure of quality.
• Top service companies set high service-quality standards. They watch service
performance closely, both their own and that of competitors. They do not settle
for merely good service—they strive for 100 percent defect-free service
• Service quality will always vary, depending on the interactions between
employees and customers, yet even the best companies will occasionally
deliver services which fall short of customer expectations. However, good
service recovery can turn angry customers into loyal ones and can win more
customer purchasing and loyalty than if things had gone well in the first place.
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Services Marketing (10 of 10)
Marketing Strategies for Service Firms
Managing service productivity refers to the cost side of
marketing strategies for service firms.
• Employee hiring and training
• Service quantity and quality
• A service provider can harness the power of technology to
make service workers more productive.
• However, companies should be careful not to take service
out of the service. In fact, a company may purposely lower
service productivity in order to improve service quality, in
turn allowing it to maintain higher prices and profit margins.
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Brand Strategy: Building Strong Brands
(1 of 6)
Brand Equity and Brand Value
• Brand equity is the differential effect that knowing the
brand name has on customer response to the product or
its marketing.
• Brand value is the total financial value of a brand.
• Positive brand equity derives from consumer feelings
about and connections with a brand. Strong brands are
built around an ideal of improving consumers’ lives in
some relevant way.
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Brand Strategy: Building Strong
Brands (2 of 6)
Figure 8.5 Major Brand Strategy Decisions
Although marketing was traditionally carried out by sellers, the concept now also
includes consumers.
Consumers engage in marketing when they search for products, interact with companies
to obtain information, and make their purchases.
Thus, in addition to customer relationship management, companies must also deal with
customer-managed relationships as customers are empowered
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Brand Strategy: Building Strong Brands
(3 of 6)
Building Strong Brands
Brand Positioning
Marketers can position brands at any of three levels.
• Attributes
• Benefits
• Beliefs and values
Brand positioning: Brands like Disney form strong emotional connections with
customers. Says one Disney World Resort regular: ““I have a deep love and bond
to all things Disney.”
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Pampers Example
• For example, P&G’s Pampers’ early marketing focused on attributes such as
fluid absorption, fit, and disposability. Attributes are the least desirable level for
brand positioning because competitors can easily copy attributes. Customers
are not interested in what the attributes are—they are interested in what the
attributes will do for them.
• A brand can be better positioned by associating its name with a desirable
benefit. Thus, Pampers can go beyond technical product attributes and talk
about the resulting containment and skin-health benefits from dryness.
• The strongest brands are positioned on strong beliefs and values, engaging
customers on a deep, emotional level. For example ,Pampers is positioned as
a “love, sleep, and play brand where we grow together” that’s concerned about
happy babies, parent-child relationships, and total baby care.
• Successful brands engage customers on a deep, emotional level
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Brand Strategy: Building Strong Brands
(4 of 6)
Building Strong Brands
Brand Name Selection
1. Suggests benefits and qualities
2. Easy to pronounce, recognize, and remember
3. Distinctive
4. Extendable
5. Translatable for the global economy
6. Capable of registration and legal protection
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Brand Strategy: Building Strong
Brands (5 of 6)
Brand Sponsorship Protecting the brand name: This ad
asks advertisers and others to always
• Manufacturer’s brand add the registered trademark symbol
• Private brand and the words “Brand Tissue” to the
Kleenex name, helping to keep from
• Licensed brand “erasing our coveted brand name that
we’ve worked so hard for all these
• Co-brand years.”
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Branding Decisions
• Manufacturer’s brands also called national
brands(i.e. Dogus Cay, Glade …)
• Private brands aka called store or distributor
brands(i.e. Migros …)
• Licensed brands(Ferrari hats, Home Depot toys,
Mc Donald's toys …)
• Co-branding
– CarrefourSA, Ülker Kellogg’s
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Brand Strategy: Building Strong Brands
(6 of 6)
Figure 8.6 Brand Development Strategies
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• Line extensions occur when a company extends existing brand names to new forms,
colors, sizes, ingredients, or flavors of an existing product category. For example, over
the years, KFC has extended its “finger lickin’ good” chicken lineup well beyond original
recipe and now offers grilled chicken, boneless fried chicken, chicken tenders, hot wings,
and chicken bites.
• Brand extension extends a current brand name to new or modified products in a new
category. For example, Starbucks has extended its retail coffee shops by adding
packaged supermarket coffees, a chain of teahouses (Teavana Fine Teas + Tea Bar),
and even a single-serve home coffee, espresso, and latte machine
• Multibrands: Companies often market many different brands in a given product
category. For example, in the United States, PepsiCo markets at least eight brands of
soft drinks (Pepsi, Sierra Mist, Mountain Dew, Manzanita Sol, Mirinda, IZZE, Tropicana
Twister, and Mug root beer), three brands of sports and energy drinks (Gatorade, AMP
Energy, and Starbucks Refreshers), four brands of bottled teas and coffees (Lipton,
SoBe, Starbucks, and Tazo), three brands of bottled waters (Aquafina, H2OH!, and
SoBe), and nine brands of fruit drinks (Tropicana, Dole, IZZE, Lipton, Looza, Ocean
Spray, and others).
• New brands: A company might believe that the power of its existing brand name is
waning, so a new brand name is needed. Or it may create a new brand name when it
enters a new product category for which none of its current brand names are
appropriate. For example, Toyota created the separate Lexus brand aimed at luxury car
consumers and the Scion brand, targeted toward Millennial consumers.
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