MARKETING MANAGEMENT

SESSION VII
-PRODUCT MARKETING
-BRANDS
-SERVICES MARKETING

Instructor:
Dr. S. Sahney
Visiting Faculty
School of Management, Asian Institute of Technology, Bangkok.
Source of Slides: 1. Philip Kotler 2. Rajan Saxena 3. Self
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THE PRODUCT AND THE PRODUCT MIX

Product is a key element in the market offering.
Product strategy calls for making coordinated decisions on
product mixes, product lines, brands, and packaging and
labeling.

DEFINITION OF A PRODUCT:
A product is anything that can be offered to a market for attention,
acquisition, use, or consumption that might satisfy a want or a need.

Products that are marketed include physical goods, services,

experiences, events, persons, places, properties, organizations,
information, and ideas.

PRODUCT LEVELS: THE CUSTOMER VALUE

HIERARCHY
In planning its market offering, the marketer needs to think through
five levels of the product.
Each level adds more customer value, and the five constitute a
customer value hierarchy.

Five Product Levels

Some things should be noted about product-augmentation strategy.

a)
Each augmentation adds cost.
-The marketer has to ask whether customers will pay enough to
cover the extra cost.
b)
Augmented benefits soon become expected benefits and
necessary points of parity.
-Today's hotel guests expect a remote-control television set. This
means competitors will have to search for still other features and
benefits.

c)
Third, as companies raise the price of their augmented
product, some competitors offer a "stripped-down" version at a
much lower price.
Today's competition essentially takes place at the productaugmentation level.
In less developed countries, competition takes place mostly at
the expected product level.

Potential product:
- which encompasses all the possible augmentations and
transformations the product or offering might undergo in the future.
Whereas the augmented product describes what is included in the
product today, the potential product points to its possible evolution.
Here is where companies search for new ways to satisfy customers
and distinguish their offer.
Eg. Richard Branson of Virgin Atlantic.
- thinking of adding a casino and a shopping mall in the 600passenger planes that his company will acquire in the next few
years.

PRODUCT CLASSIFICATIONS:
Marketers have traditionally classified products on the basis of
characteristics durability, tangibility, and use (consumer or
industrial).
Each product type has an appropriate marketing-mix strategy.
A
Durability and Tangibility: Non-durable, Durable,
Services
B.
Consumer-Goods Classification: Convenience goods,
Shopping goods, Specialty goods, Unsought goods.

C
Industrial-Goods Classification: Materials and parts,
Capital items, Supplies and business services
8

PRODUCT RELATIONSHIPS:
- Each product can be related to other products to ensure that a firm is
offering and marketing the optimal set of products.
i

Product Systems and Mixes

ii

Product-Line Analysis

iii

Product-Line Length

Product Systems and Mixes:

A product system is a group of diverse but related items that

function in a compatible manner.
For example, the Nikon Company sells a basic 35 mm camera along with an
extensive set of lenses, filters and other options that constitute a product
system.

A product mix (also called a product assortment) is a set of all

products and items a particular seller offers for sale.
-A product mix consists of various product lines.
- A companys product mix has a certain width, length, depth, and
consistency.

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A product mix (also called product assortment) is the set of all

products and items that a particular seller offers for sale.
Example: Kodak's product mix consists of two strong product lines:
information products and image products.

A company's product mix has a certain width, length, depth, and

consistency.
These concepts are illustrated in the Table for selected Proctor and
Gamble consumer products.

11

1.
The width of a product mix refers to how many different
product lines the company carries.
In this example: 5
(P &G has many additional lines)
2.
The length of a product mix refers to the total number of
items in the mix. In the table, it is 16.
Average length of a line: Dividing the total length (here 16) by the
number of lines (here 5), or an average product length of 3.2.
3.
The depth of a product mix refers to how many variants
are offered of each product in the line.
If Gleem comes in three sizes and two formulations (regular and
gel), it has a depth of six.
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4.
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.
P&Gs product lines are consistent insofar as they are consumer goods
that go through the same distribution channels.
The lines are less consistent insofar as they perform different functions
for the buyers.

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These four product-mix dimensions permit the company to expand

its business in four ways:
1.It can add new product lines, thus widening its product mix.
2.It can lengthen each product line.
3.It can add more product variants to each product and deepen its
product mix.
4.Finally, a company can pursue more product-line consistency.

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Product-Mix Width and Product-Line Length for Proctor&

Gamble Products
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)

Kirks
(1885)

Luvs
(1976)

Puffs
(1960)

Crest (1955)

Lava
(1893)

Banner
(1982)

Camay
(1926)

Summit
(1992)

15

Product-Mix Width and Product-Line Length for Unilever Ltd.

Products

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ii) Product-Line Analysis:

- Product-line managers need to know the sales and profits of each
item in their line in order to determine which items to build, maintain,
harvest, or divest.
a) Sales and Profits
b) Market Profile: how the line is positioned against competitors lines.

17

iii) Product-Line Length:

-A product line is too short if profits can be increased by-adding items;
the line is too long if profits can be increased by dropping items

Company objectives influence product-line length.

1.
One objective is to create a product line to induce upselling.
Thus, Toyota would like to move customers up from the a chaper
model to a more expensive one.
2.
A different objective is to create a product line that facilitates
cross-selling. Hewlett-Packard sells printers as well as computers.
3.
Still another objective is to create a product line that protects
against economic ups and downs; thus the GAP runs various
clothing-store chains covering different price points in case the
economy moves up or down (GAP, Old Navy, Banana Republic,
Piperlime, Athleta).
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Companies seeking high market share and market growth will

generally carry longer product lines.
Companies that emphasize high profitability will carry shorter lines
consisting of carefully chosen items.
Product lines tend to lengthen over time.
But as items are added, several costs rise: design and engineering
costs, inventory-carrying costs, manufacturing-changeover costs,
order-processing costs, transportation costs, and new-item
promotional costs.

Eventually, someone calls for a halt and pruning follows.

19

A company lengthens its product line in two ways: by line

stretching and line filling.
a) Line stretching occurs when a company lengthens its product
line beyond its current range.
The company can stretch its line downmarket, upmarket, or both ways.
Downmarket Stretch: A company positioned in the middle market may want to
introduce a lower-priced line (Mercedes launched C class Mercedes for
30000$; John Deere launched low cost tractors called Sabre).

Upmarket Stretch: Companies may wish to enter the high end of the market
for more growth, higher margins, or simply to position themselves as full-line
manufacturers (Toyotas Lexus; Hondas Acura).
Two-Way Stretch: Companies serving the middle market might decide to
stretch their line in both directions.
e.g-mobile phone handsets;
Hidesign launched Salsa for the young, teenaged low priced segment.
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b) Line Filling: A product line can also be lengthened by adding more

items within the present range.
There are several motives for line filling:
-trying to satisfy dealers who complain about lost sales because of
missing items in the line,
-trying to utilize excess capacity,
-trying to be the leading full-line company, and
-trying to plug holes to keep out competitors.
FMCG companies start with detergents, soaps and shampoos and then
move on to edibles, staples or vice versa.
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3. Line modernization, featuring and pruning:

Product lines need to be modernized.

The product-line manager selects one or few items in the line to

feature.
Product-line managers must periodically review the line for
deadwood that is depressing profits and prune accordingly. The
weak items can be identified through sales and cost analysis and
may be pruned.
- pruning is also done when the company is short of production
capacity.

Companies typically shorten their product lines in periods of

tight demand and lengthen their lines in periods of slow
demand.
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PACKAGING, LABELING, WARRANTIES, AND

GUARANTEES:
-Most physical products have to be packaged and labeled.
-Many marketers have called packaging a fifth P.
-Most marketers, however, treat packaging and labeling as an element
of product strategy.

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a) PACKAGING:
- defined as all the activities of designing and producing the container
for a product.

Objectives of packaging:
-Identify the brand
-Convey descriptive and persuasive information
-Facilitate product transportation and protection
-Assist at-home storage
-Aid product consumption

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b) LABELING:
-Sellers must label products
-Labels perform several functions
The label identifies the product or brand

The label might also grade the product

The label might describe the product
The label might promote the product through attractive graphics

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c) WARRANTIES AND GUARANTEES:

Warranties are formal statements of expected product
performance by the manufacturer.
-Warranties, whether expressed or implied are legally enforceable.
Many sellers offer either general guarantees or specific guarantees.

Guarantees reduce the buyers perceived risk.

Guarantees are most effective in two situations:
-Where the company or the product is not well-known.
-Where the products quality is superior to the competition.

26

-BRANDS

27

WHAT IS A BRAND?
The American Marketing Association defines a brand as:
-a name, term, sign, symbol, or design, or a combination of
them, intended to identify the goods or services of one seller or
group of sellers and to differentiate them from those of
competitors.

Thus a brand identifies the seller or maker.

Under trademark law, the seller is granted exclusive rights to the use
of the brand name in perpetuity.

Brands differ from other assets such as patents and copyrights,

which have expiration dates.
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A brand is thus a product or service that adds dimensions that

differentiate it in some way from other products or services designed
to satisfy the same need.
These differences may be functional, rational, or tangible- related to
the product performance of the brand.
They may also be more symbolic, emotional, or intangible -related to
what the brand represents.
A brand is a complex symbol that can convey up to six levels of
meaning:

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1.
Attributes:
Mercedes suggests expensive, well-built, well-engineered, durable, highprestige automobiles.
2.
Benefits:
Attributes must be translated into functional and emotional benefits.
-The attribute "durable" could translate into the functional benefit "I won't have
to buy another car for several years."
-The attribute "expensive" translates into the emotional benefit "The car makes
me feel important and admired."
3.
Values:
Mercedes stands for high performance, safety, and prestige.
4.
Culture:
The Mercedes represents German culture: organized, efficient, high quality.
5.
Personality:
-Mercedes may suggest a no-nonsense boss (person), a reigning lion
(animal), or an austere palace (object).
6.
User:
-We would expect to see a 50+ year-old top executive behind the wheel of a
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Mercedes, not a 20-year-old secretary.

Branding strategy:

Branding is viewed as the major enduring asset of a company,

outlasting products.
They are powerful assets that must be developed and managed.

1. Brand name selection:

-A good name contributes significantly to the success of a brand.
Given the global market, great care needs to be taken regarding the
translation of the brand name.
Desirable qualities for a brand name:
- Should suggest something about the products features and benefits.
- Easy to pronounce, recognise and remember.
- Brand name must be distinctive.
- Must translate easily and accurately into other major languages.
- Must be capable of registration and legal protection.
Once selected, the brand name needs to be legally protected and registered
with the appropriate Trade Marks Register.

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Manufacturers brand (national brand)

Brand created and owned by the producer of the product or service.
Tata, Sony

Private brand (middleman, distributor or store brand)

A brand created and owned by a reseller of a product or service.
Big C, Tesco Lotus
Licensed brand
A product or service using a brand name offered by the brand owner to
the licensee for an agreed fee or royalty.
KFC, Mc Donalds
Co-brand
The practice of using the established brand names of two different
companies on the same product.
ITC Welcome Group and Sheraton
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Branding decision:
1. Individual names: P&G has several individual brands in different
product categories; Vicks (Healthcare), Ariel and Tide (fabric care),
Pantene, Heads and Shoulders (hair care).
2. Blanket family names: Tata (Salt, Tea, Hotels, Steel, Automobiles).
3. Separate family names for all products: Swift and Company for its
ham (Premium) and fertilizers (Vigoro).
4. Corporate name combined with individual product names:
Kelloggs Rice Krispies, Kellogs Corn Flakes;
Sony Bravia

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2.Building brand identity :

Building the brand identity requires additional decisions on the brand's

name, logo, colors, tagline, slogan, character, and symbol.
3. Branding tools:
Marketers use various tools for attracting attention to their brands.
Among the most important are ads, public relations and press releases,
sponsorships, trade shows, event marketing, public facilities, social
cause marketing.

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Why do sellers brand their products when doing so clearly

involves costs?
1.
The brand name makes it easier for the seller to process orders and
track down problems.
2.
The seller's brand name and trademark provide legal protection of
unique product features.
3.
Branding gives the seller the opportunity to attract a loyal and
profitable set of customers. Brand loyalty gives sellers some protection from
competition.
4.

Branding helps the seller segment markets.

5.
Strong brands help build the corporate image, making it easier to
launch new brands and gain acceptance by distributors and consumers.

6.
Distributors and retailers want brand names because brands make
the product easier to handle, hold production to certain quality standards,
strengthen buyer preferences, and make it easier to identify suppliers.
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7. Consumers want brand names to help them identify quality differences and
shop more efficiently.

II

Brand Equity:

Brand equity is defined as the value of the brand, based on the

extent to which it has high brand loyalty, name awareness,
perceived quality, strong brand associations and other assets
such as patents, trademarks and channel relationships.
Brand + Distinctive value (benefits) = Brand equity
Brand equity:

Brands represent the consumers perceptions and feelings about products and
their performance.
The real value of branding is the ability to capture consumer preference and
loyalty.

Brands vary in power and value and have varying degrees of brand awareness,
brand preference and brand loyalty.
36

Perspectives of brand equity:

Customer-based brand equity, which is obtained from post purchase
behaviour and brand loyalty and is the value of the brand to the
customers, and;
Financial based brand equity, where equity is derived from the price
premium and market share or sales turnover which gives value to the
firm.

37

III

Brand development:

-Line extensions
-Brand extensions

-Multi-brands
-New brands

38

Brand development strategies

39

1. Line extensions:
-Using a successful brand name to introduce additional items in a given product
category under the same brand name, such as new flavours, forms, colours,
added ingredients or package size.
-Danger of overextending the brand and losing meaning.
-Danger of cannibalisation of own products.

2. Brand extensions
-Using a successful brand name to launch a new or modified product in a new
category.
-Gives new product greater recognition and faster acceptance.
-Save high advertising costs due to familiar brand name.
-Must ensure the appropriateness of the new product to the brand and market
to customers that value the brand.
-Guard against confusing the consumer.
-Gillette Razors, Gillette Shave forms, Gillette After Shave
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3. Multi-brands:
Firm develops two or more brands in the same product category.
Establishes different features and appeals to different market segments and
buying motives.
Some companies develop multiple brands for different families of products.
This is called range branding and is illustrated by the Matsushita Group with
its ranges of Technics, National, Panasonic and Quasar.
In corporate branding the firm makes its company name the dominant brand
identity across all products, e.g. Johnson & Johnson.
Other companies use the company and individual branding approach, e.g.
Nestl KitKat.

4. New brands:
Some companies create a new brand for a new product if their existing
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brands do not fit or seem appropriate.

IV

Brand loyalty:

Brand loyalty is a biased behaviour of a consumer decision making

process where the same brand is chosen for repeat purchase and
referral irrespective of any change.

1.
Hard-core loyals: buy one brand only:A,A,A,A,A,A,A
2.
Split loyals: loyal to 2 or 3 brabds: A,A,B,B,A,B
3.
Shifting loyals: shift from favoring one brand to another:
A,A,A,B,B,B
4.
Switchers: no lyalty: A,C,E,B,D,A,B

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-SERVICES MARKETING

WHAT IS A 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.

CHARACTERISTICS OF SERVICES:
-Services are intangible, inseparable, variable, and
perishable.
-Each characteristic poses challenges and requires certain
strategies.
-Marketers must find ways to give tangibility to intangibles; to
increase the productivity of service providers; to increase and
standardize the quality of the service provided; and to match the
supply of services with market demand.

CHARACTERISTICS OF SERVICES AND THE MARKETING

IMPLICATIONS:
I
Intangibility:
- services cannot be seen, heard, touched, tasted or felt.
-To reduce uncertainty, buyers will look for evidence of quality; They will
draw inferences about quality from the place, people, equipment,
communication material, symbols, and price that they see.
- A critical element here is the signs or evidence of service quality to
transform intangible services into meaningful benefits

- Service positioning strategy can be made tangible through:

Place
People
Equipment
Communication material
Symbols
Price

Service companies can try to demonstrate their service quality

through physical evidence and presentation.

II
Inseparability:
- services are produced and consumed simultaneously, and the
provider-client interaction is an important aspect in the outcome
Several strategies exist for getting around this limitation:
- Work with larger groups
- Work faster
- Train more service providers
III
Variability
- the quality of a service depends on when, where and by whom they are
provided, with training a crucial differentiator
- Quality control by:
Good hiring and training procedures
Service blueprint: Standardize the service-performance process
Monitoring customer satisfaction

IV

Perishability:

- services cannot be stored for later use.

-There are several strategies that can be used for producing a better
match between service demand and supply.
- Strategies for better matching between demand and supply in a
service business
Demand side

Supply side

Differential pricing
Nonpeak demand
Complementary services
Reservation systems

Part-time employees
Increased consumer
participation
Shared services

Demand side:
i) Differential pricing: This would shift some demand from peak to off-peak
periods: eg., Air tickets, Movie tickets.
ii) Nonpeak demand: Non peak demand can be cultivated: eg., Airlines,
Hotels, Tourism packages

iii) Complementary services: Alternatives to waiting customers; eg., ATM in

banks, Lounges in Airports, Restaurants (Complementary snacks when the
flight gets delayed).
iv) Reservation systems: Used to manage the demand level. eg., airlines,
hotels, hospitals.

Supply side:
i) Part-time employees: can serve peak demand; eg., Part time teachers, part
time doctors.

ii) Increased consumer participation: eg., patients fill up their own medical
history in the form; consumers bag their own groceries.
iii) Shared services: eg. Hospitals share specialist, equipment, medicine
supply etc; Libraries share books

CATEGORIES OF SERVICE MIX:

The service component can be a minor/major part of the total
offering.
- 5 categories.

i) Pure tangible good: tangible product; no services accompany the

product.
ii) Tangible good with accompanying service: cars, computers, cell
phones.
iii) Hybrid: Equal parts of goods and services; restaurants: both food
and service.
iv) Major Service with accompanying minor goods and services:
Airline: Capital intensive aircraft; We buy transportation services as
also snacks and drinks.
v) Pure service: Physiotherapy.

MARKETING STRATEGIES FOR SERVICE FIRMS:

a) Three additional Ps
People:
- should be competent, caring and responsive
Physical evidence:
- development of a look and observable style; presentation
Processes:
- how the service is delivered
Goal: achieve a high level of interactive marketing between
provider and client

b) Managing differentiation:
- offering, faster and better delivery, image (perceived by customers,
and to develop a differentiated offer, delivery or image as the
alternative to price competition)
- Offering primary service package, secondary service features

c ) Managing service quality:

- one way to differentiate is through consistently higher quality service
that meets or exceeds customer expectations (perceived versus
expected service)

Determinants of service quality:

Reliability: The ability to perform the promised service dependably and
accurately.
Responsiveness: The willingness to help customers and to provide
prompt service.
Assurance: the knowledge and courtesy of employees and their ability
to convey trust and confidence.
Empathy: The provision of caring, individualized attention to
customers.
Tangibles: The appearance of physical facilities, equipments,
personnel and communication materials.