Products, Services, and Brands

Building Customer Value

Course: Principles of Marketing
What Is a Product?
• Product: Anything that can be offered to a market for attention, acquisition, use, or consumption
that might satisfy a want or need. Products include more than just tangible objects, such as cars,
clothing, or smartphones. Broadly defined, products also include services, solutions, events,
persons, places, organizations, and ideas or a mixture of these. Throughout this text, we use the term
product broadly to include any or all these entities.

• Services: A form of product that consists of activities, benefits, or satisfactions offered for sale that
are essentially intangible and do not result in a customer’s the ownership of anything. Examples
include banking, hotel, airline travel, retail, wireless communication, and home-repair services.
Levels of Product and Services
• Product planners need to think about products and services on three levels (see Figure 8.1). Each
level adds more customer value. The most basic level is the core customer value, which addresses
the question: What is the buyer really buying? When designing products, marketers must first define
the core, problem-solving benefits, services, or experiences that consumers seek. Example: people
who buy a classic Airstream travel trailer are buying much more than just a stylish camper.

• At the second level, product planners must turn the core benefit into an actual product. They need
to develop product and service features, a design, a quality level, a brand name, and packaging.
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• Finally, product planners must build an augmented product around the core benefit and actual
product by offering additional consumer services and benefits. Thus, when consumers buy an
Airstream, the company and its dealers give buyers a warranty and quick repair services when
needed.
Product and Service Classifications
Products and services fall into two broad classes based on the types of consumers who use them:
consumer products and industrial products.

Consumer Products

Consumer products are products and services bought by final consumers for personal consumption.
Marketers usually classify these products and services further based on how consumers go about
buying them. Consumer products include:

• Convenience product: A consumer product that customers usually buy frequently, immediately,
and with minimal comparison and buying effort.
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• Shopping product: A consumer product that the customer, in the process of selecting and
purchasing, usually compares on such attributes as suitability, quality, price, and style.

• Specialty product: A consumer product with unique characteristics or brand identification for
which a significant group of buyers is willing to make a special purchase effort.

• Unsought product: A consumer product that the consumer either does not know about or knows
about but does not normally consider buying.
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Industrial Products

• Industrial products are those products purchased for further processing or for use in conducting a
business. Thus, the distinction between a consumer product and an industrial product is based on the
purpose for which the product is purchased.

• The three groups of industrial products and services are materials and parts, capital items, and
supplies and services. Materials and parts include raw materials as well as manufactured materials
and parts. Capital items are industrial products that aid in the buyer’s production or operations,
including installations, machines on the factory floor, and accessory equipment. Supplies include
operating supplies and repair and maintenance items. Business services include maintenance and
repair services and business advisory services. These services are typically intangible in nature.
Individual Product and Service Decisions
Figure 8.2 shows the important decisions in the development and marketing of individual products and
services. We will focus on decisions about product attributes, branding, packaging, labeling and logos ,
and product support services.
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1) Product and Service Attributes:

Developing a product or service involves defining the benefits that it will offer. These benefits are
communicated and delivered by product attributes such as quality, features, and style and design.

• Product quality: The characteristics of a product or service that bear on its ability to consistently
and reliably satisfy stated or implied customer needs.

• Product Features: A product can be offered with varying features. A stripped-down model, one
without any extras, is the starting point. The company can then create higher-level models by
adding more features. Features are a competitive tool for differentiating the company’s product from
competitors’ products.
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• Product Style and Design: Another way to add customer value is through distinctive product style
and design. Design is a larger concept than style. Style simply describes the appearance of a
product. A sensational style may grab attention and produce pleasing aesthetics, but it does not
necessarily make the product perform better. Unlike style, design is more than skin deep—it goes to
the very heart of a product. Good design contributes to a product’s usefulness as well as to its looks.
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2) Branding: A brand is a name, term, sign, symbol, or design, or a combination of these that identifies the
products or services of one seller or group of sellers and differentiates them from those of competitors.
Consumers view a brand as an important part of a product, and branding can add value to a consumer’s
purchase. Brand names help consumers identify products that might benefit them. Brands also say something
about product quality and consistency—buyers who always buy the same brand know that they will get the
same features, benefits, and quality each time they buy. Branding also gives the seller several advantages. 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.

3) Packaging: Packaging involves designing and producing the container or wrapper for a product.
Traditionally, the primary function of the package was to hold and protect the product. This situation has
shifted dramatically in recent times. Packaging has emerged as a potential driver of customer satisfaction and
even competitive advantage.
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4) Labeling and Logos: Labels and logos range from simple tags attached to products to complex
graphics that are part of the packaging. They perform several functions. At the very least, the label
identifies the product or brand. The label might also describe 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. Finally, the label and logo help to promote the brand and engage customers.

5) 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. Support services are an important part of the customer’s overall brand experience. Good
marketing doesn’t end with making a sale. Keeping customers happy after the sale is the key to
building lasting relationships.
Product Mix Decisions
A product mix (or product portfolio) consists of all the product lines and items that a particular seller
offers for sale. A company’s product mix has four important dimensions:

• Product mix width refers to the number of different product lines the company carries. For
example, Colgate markets a fairly wide product mix, consisting of dozens of 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.”

• Product mix length refers to the total number of items a company carries within its product lines.
Colgate carries several brands within each line. For example, its personal care line includes
Softsoap liquid soaps and body washes, Tom’s of Maine, Irish Spring bar soaps, Speed Stick
deodorants, and Colgate toiletries and shaving products, among others.
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• Product line depth refers to the number of versions offered of each product in the line. Colgate
toothpastes come in numerous varieties, ranging from Colgate Total, Colgate Optic White, and
Colgate Hydris to Colgate Sensitive, Colgate Enamel Health, Colgate with Charcoal, and Colgate
Kids. Then each variety comes in its own special forms and formulations. For example, you can buy
Colgate Total in regular, clean mint, advanced whitening, deep clean, total daily repair, or any of
several other versions.

• Finally, the consistency of the product mix refers to how closely related the various product lines
are in end use, production requirements, distribution channels, or some other way. Colgate’s product
lines are consistent insofar as they are consumer products that go through the same distribution
channels. The lines are less consistent insofar as they perform different functions for buyers.
Services Marketing
Services have grown dramatically in recent years. Service industries vary greatly. 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, churches, colleges, foundations, and hospitals. In addition, a large number of business
organizations offer services—airlines, banks, hotels, insurance companies, consulting firms, real estate
firms, retailers, medical and legal practices, entertainment and telecommunications companies, digital
and social media platforms, and others.
The Nature and Characteristics of a Service
A company must consider four special service characteristics when designing marketing programs:
intangibility, inseparability, variability, and perishability (see Figure 8.3).
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• Service intangibility means that services—unlike physical products—cannot be seen, tasted, felt,
heard, or smelled before they are bought. For example, people undergoing cosmetic surgery cannot
see the result before the purchase. To reduce uncertainty, buyers look for signals of service quality.
They draw conclusions about quality from the place, people, price, equipment, and communications
that they can see. Therefore, the service provider’s task is to make the service tangible in one or
more ways and send the right signals about quality.

• Service inseparability means that services cannot be separated from their providers, whether the
providers are people or machines. If a service employee provides the service, then the employee
becomes a part of the service. And customers don’t just buy and use a service; they play an active
role in its delivery. Customer coproduction makes provider–customer interaction a special feature of
services marketing. Both the provider and the customer affect the service outcome.
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• Service variability means that the quality of services depends on who provides them as well as
when, where, and how they are provided. For example, some hotels—say, Marriott—have
reputations for providing better service than others. Still, within a given Marriott hotel, one
registration-counter employee may be cheerful and efficient, whereas another standing just a few
feet away may be grumpy and slow. Even the quality of a single Marriott employee’s service varies
according to their energy and frame of mind at the time of each customer encounter.

• Service perishability means that services cannot be stored for later sale or use. Some doctors
charge patients for missed appointments because the service value existed only at that point and
disappeared when the patient did not show up. The perishability of services is not a problem when
demand is steady. However, when demand fluctuates, service firms often have difficult problems.
The Service Profit Chain
Service profit chain: The chain that links customer satisfaction and profits for service firms with
employee satisfaction. This chain consists of five links:
• Internal service quality. Superior employee selection and training, a high-quality work
environment, and strong support for those dealing with customers, which results in...

• Satisfied and productive service employees. More satisfied, loyal, and hardworking employees,
which results in...
• Greater service value. More effective and efficient customer value creation, engagement, and
service delivery, which results in...
• Satisfied and loyal customers. Satisfied customers who remain loyal, make repeat purchases, and
refer other customers, which results in. . .

• Healthy service profits and growth. Superior service firm performance.

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Services marketing requires more than just traditional external marketing using the four Ps. Figure 8.4
shows that services marketing also requires internal marketing and interactive marketing.
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• 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.
Marketers must get everyone in the organization to be customer centered. In fact, internal marketing
must precede external marketing.

• Interactive marketing means that service quality depends heavily on the quality of the buyer–
seller interaction during the service encounter. In product marketing, product quality often depends
little on the nature of the transaction itself. But in services marketing, service quality depends on
both the service deliverer and the quality of delivery. Service marketers, therefore, have to master
interactive marketing skills.
Building Strong Brands
Branding poses challenging decisions to the marketer. Figure 8.5 shows that the major brand strategy
decisions involve brand positioning, brand name selection, brand sponsorship, and brand development.
1) Brand Positioning:
Marketers need to position their brands clearly in target customers’ minds. They can position brands at
any of three levels. At the lowest level, they can position the brand on product or service attributes. A
brand can be better positioned by associating its name with a desirable benefit. The strongest brands
go beyond attribute or benefit positioning. They are positioned on strong beliefs, values, and feelings,
thereby engaging customers on a deep, emotional level.
2) Brand Name Selection:
A good name can add greatly to a product’s success. However, finding the best brand name is a
difficult task. It begins with a careful review of the product and its benefits, the target market, and
proposed marketing strategies. Desirable qualities for a brand name include the following:
• It should suggest something about the product’s benefits and qualities.

• It should be easy to pronounce, recognize, and remember.

• The brand name should be distinctive.
• It should be extendable.

• The name should translate easily into foreign languages.

• It should be capable of registration and legal protection.
3) Brand Sponsorship:
A manufacturer has four sponsorship options. The product may be launched as a national brand (or
manufacturer’s brand), as when Samsung and Kellogg sell their output under their own brand names
(the Samsung Galaxy tablet or Kellogg’s Frosted Flakes). Or the manufacturer may sell to resellers
who give the product a private label (also called a store brand). Although most manufacturers create
their own brand names, others market licensed brands. Finally, two companies can join forces and co-
brand a product.
4) Brand Development:

A company has four choices when it comes to developing brands (see Figure 8.6).
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• Line Extensions. Line extensions occur when a company extends existing brand names to new
forms, colors, sizes, ingredients, or flavors of an existing product category. A company might
introduce line extensions as a low-cost, low-risk way to introduce new products. Or it might want to
meet consumer desires for variety, use excess capacity, or simply command more shelf space from
resellers. However, line extensions involve some risks. An overextended brand name might cause
consumer confusion or lose some of its specific meaning.

• Brand Extensions. A brand extension extends a current brand name to new or modified products in
a new category. Compared with building new brands, extensions can create immediate new-product
familiarity and acceptance at lower development costs. At the same time, a brand extension strategy
involves some risk. The extension may confuse the image of the main brand.
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• Multibrands. Companies often market many different brands in a given product category.
Multibranding offers a way to establish different features that appeal to different customer
segments, lock up more reseller shelf space, and capture a larger market share. A major drawback of
multibranding is that each brand might obtain only a small market share, and none may be very
profitable. The company may end up spreading its resources over many brands instead of building a
few brands to a highly profitable level.

• New Brands. A company might believe that a new brand name is needed because the power of its
existing brand name is waning. Or it may create a new brand name when it enters a new product
category for which none of its current brand names is appropriate. As with multibranding, offering
too many new brands can result in a company spreading its resources too thin. And in some
industries, such as consumer packaged goods, consumers and retailers have become concerned that
there are already too many brands with too few differences between them.