Product, Services and Branding Strategy

Products, Services and Experiences

 

A product is anything that can be offered in a market for attention, acquisition, use, or consumption that might satisfy a need or want.

 

Service is a form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in ownership.

 

Experiences represent what buying the product or service will do for the customer.

 

 

Level of Products and Services

 

• Core benefit: show the accurate time
• Actual product: Swatch, high quality that meet the Swiss watch standard, young and stylish design, packed in high-quality clear plastic box.
• Augmented product: 1 year international warranty, worldwide service center.

 

Product and Service Classification

 

Consumer products:

• Convenience products
• Shopping products
• Specialty products
• Unsought products

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

 

Shopping products are consumer products and services that the customer compares carefully on suitability, quality, price, and style.
Furniture
Cars
Appliances

 

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.
Designer watches
Branded fashion wear
High-end electronics

 

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

 

Industrial products are products purchased for further processing or for use in conducting a business.
Classified by the purpose for which the product is purchased
Materials and parts
Capital
Raw materials

 

 

Branding Strategy: Building Strong Brand

 

Brand represents the consumer’s perceptions and feelings about a product and its performance. It is the company’s promise to deliver a specific set of features, benefits, services, and experiences consistently to the buyers.

 

 

Brand strategy decisions include:

• Brand positioning
• Brand name selection
• Brand sponsorship
• Brand development

 

 

Brand Positioning:
Product attributes
Product benefits
Product beliefs and values

 

Brand name selection
Suggests benefits and qualities
Easy to pronounce, recognize, and remember
Distinctive
Extendable
Translatable for the global economy

 

Brand sponsorship:
Manufacturer’s brand
Private brand
Licensed brand
Co-brand

 

Private brands provide retailers with advantages.
Product mix control
Slotting fees for manufacturers’ brands
Higher margins
Exclusivity

 

 

Branding Strategy: Brand Development

 

Line extensions: occur when a company extends existing brand names to new forms, colors, sizes, ingredients, or flavors of an existing product category.

 

Brand extensions: is using a successful brand name to launch a new or modified product in a new category.

 

Multibrands: New brand names introduced in the same product category. This offers a way to establish different features and appeal to different buying motives.

 

New brand: New brand names in new product categories. This is developed based on the belief that the power of its existing brand is waning and a new brand name is needed.

 

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Target Marketing Positioning for Competitive Advantage

STEPS IN SEGMENTING, TARGETING, POSITIONING

Target Marketing 

• Evaluating Market Segments
• Segment size and growth
• Segment structural attractiveness
• Level of competition
• Substitute products
• Power of buyers
• Powerful suppliers
• Company objectives and resources

Target Marketing: Selecting Target Market Segments

TARGET MARKETING

Target Marketing: Selecting Target Market Segments

Undifferentiated marketing - targets the whole market with one offer.

• Mass marketing
• Focuses on common needs rather than what’s different

Differentiated marketing - targets several different market segments and designs separate offers for each.

• Goal is to achieve higher sales and stronger position
• More expensive than undifferentiated marketing

Concentrated marketing - targets a large share of a small market

• Limited company resources
• Knowledge of the market
• More effective and efficient

Micromarketing - the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations.

• Local marketing
• Individual marketing

Differentiation and Positioning

Identifying a set of possible competitive advantages to build a position
Choosing the right competitive advantages
Selecting an overall positioning strategy

Competitive advantage is the advantage over competitors gained by offering greater value either through lower prices or by providing more benefits that justify higher prices.

Possible Differentiation and Competitive Advantages

Overall positioning strategy (Value proposition)

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Marketing Segmentation

Creating Value for Targeted Customers 4 major steps

Market Segmentation
Market segmentation is the process that companies use to divide large heterogeneous markets into small markets that can be reached more efficiently and effectively with products and services that match their unique needs.

Market Segmentation 4 Major Bases
Geographical segmentation
Marketing mixes are customized geographically

Demographic segmentation
Most popular segmentation
Demographics are closely related to needs, wants and usage rates

Psychographic segmentation
Lifestyle, social class, and personality-based segmentation

Behavioral segmentation
Typically done first


Consumer Market: Geographic Segmentation
Geographic segmentation divides the market into different geographical units such as nations, regions, states, provinces, or cities.

Consumer Market: Demographic Segmentation
Demographic segmentation is the most popular segmentation method because consumer needs, wants, and usage often vary closely with demographic variables and are easier to measure than other types of variables.

Demographic segmentation variables
> Age
> Occupation
> Income
> Gender
> Education
> Nationality
> Family size
> Religion
> Generation
> Family life cycle
> Race


Consumer Market: Psychographic Segmentation
Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality traits.
> Social class
> Lifestyle
> Personality

Consumer Market: Behavioural Segmentation
Behavioral segmentation divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product.
Occasion
Benefits sought
User status
Usage rate
Loyalty status

Business Market
In addition to the same segmentation variables as consumers, business can also be segmented by:
Customer-operating characteristics
Purchasing approaches
Situational factors
Personal characteristics

BUSINESS SEGMENT – INDUSTRY CATEGORIES

• Aerospace and Defense
• Automotive
• Banking
• Chemicals
• Computer Hardware
• Computer Software
• Conglomerates Consumer Durables
• Consumer Non-Durables
• Diversified Services
• Drugs
• Electronics
• Energy
• Financial Services
• Food and Beverage
• Health Services
• Insurance
• Internet
• Leisure
• Manufacturing
• Materials and Construction
• Media
• Metals and Mining
• Real Estate
• Retail
• Specialty Retail
• Telecommunications
• Tobacco
• Transportation
• Utilities
• Wholesale

International Market
Segmenting international markets
Geographic location
Economic factors
Political and legal factors
Cultural factors

Intermarket segmentation divides consumers into groups with similar needs and buying behaviors even though they are located in different countries.

Requirement for effective segmentation

Measurable
Size, purchasing power, and profile of segment

Accessible
Can be reached and served

Substantial
Large and profitable enough to serve

Differentiable
Respond differently

Actionable
Effective programs can be developed

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MicroEnvironment

The MicroEnvironment consists of the actors close to the company that affect its ability to serve its customers, the company, suppliers, marketing intermediaries, customer markets, competitors, and publics.

Microenvironment: The Company

Internal environment includes:

Top management

Finance

R&D

Purchasing

Operations

Accounting

 

Microenvironment: Suppliers

Provide the resources to produce goods and services

Treated as partners to provide customer value

 

Microenvironment: Intermediaries

Help the company to promote, sell, and distribute its products to final buyers. Include:
Resellers
Physical distribution firms
Marketing services agencies
Financial intermediaries


Microenvironment: Customers

Consumer markets consist of individuals and households that buy goods and services for personal consumption.

Business markets buy goods and services for further processing or for use in their production process.

Government markets
Government agencies that buy goods and services to produce public services or transfer the goods and services to others who need them

International markets
Buyers in other countries, including consumers, producers, resellers and governments


Microenvironment: Competitors

Firms must gain strategic advantage by positioning their offerings against competitors’ offerings.

Each firm should consider its own size and industry position compared to those of its competitors.

3 main sources:

Brand

from manufacturers of similar products

Substitute products

Dissimilar products that satisfy the same need

Indirect

Other firms trying to win customers’ purchasing power

Microenvironment: Publics

Any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives:

Financial publics

Media publics

Government publics

Citizen-action publics

Local publics

General public

Internal publics

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MacroEnvironment

The macroenvironment consists of the larger societal forces that affect the microenvironment.
Demographic
Economic
Natural
Technological
Political
Cultural

 

Demographic Environment
Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics. Demographic environment is important because it involves people, and people make up markets.

Demographic Environment: Changing Age Structure of the Population
Generational marketing is important in segmenting people by lifestyle of life state instead of age.
Baby boomers (1946 – 1964): Includes most affluent Asians
Generation X (1965 – 1976): Emphasize quality of life
Generation Y (1987 – 1994) : The internet generation

Demographic Environment: The Changing Asian Family
More people are:
Divorcing or separating
Choosing not to marry
Choosing to marry later
Marrying without intending to have children
Higher divorce rates
Increased number of
working women
More stay-at-home dads

Demographic Environment: Geographic Shifts in Population
Trends include:
Migratory movements between and within countries
Moving from rural to metropolitan areas
Changes in where people work
Telecommuting
Home office
Divorce or separation

Demographic Environment: Changes in the Workforce
Trends include:
More educated
More white collar
More professional

Markets are becoming more diverse
International
National

Trends include:
Ethnicity
Gay and lesbian
Disabled


Economic Environment
Economic environment consists of factors that affect consumer purchasing power and spending patterns.
Subsistence economies consume most of their own agriculture and industrial output.
Industrial economies are richer markets.

Economic Environment: Changes in Income
Value marketing involves ways to offer financially cautious buyers greater value—the right combination of quality and service at a fair price.

Income distribution
Upper-class consumers
Middle-class consumers
Working-class consumers
Underclass consumers

Economic Environment: Changes in Consumer Spending Patterns
Ernst Engel—Engel’s Law
As income rises:
Percentage spent on food declines
Percentage spent on housing remains constant
Percentage spent on savings increases


Natural Environment
Natural environment involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities.

Trends
Shortages of raw materials
Increased pollution
Increased government intervention
Resulting in
Environmentally sustainable strategies
Green marketing


Technological Environment
Most dramatic force in changing the marketplace with many positive and negative effects
Rapid change
Provides new markets and new opportunities
> Internet 
> Weapons
> Credit cards
> Medicine
> Communication
> Miniaturization

Political Environment
Political environment consists of laws, government agencies, and pressure groups that influence or limit various organizations and individuals in a given society.

Legislation regulating business
Public policy to guide commerce—sets of laws and regulations that limit business for the good of society at large

Increasing legislation to:
Protect companies
Protect consumers
Protect the interests of society

Political Environment: Increased Emphasis on Ethics and Socially Responsible Actions
Socially responsible behavior occurs when firms actively seek out ways to protect the long-term interests of their consumers and the environment
Cause-related marketing


Cultural Environment
The cultural environment consists of institutions and other forces that affect a society’s basic values, perceptions, and behaviors.

Cultural Environment: Persistence of Cultural Values
Core beliefs and values have a high degree of persistence, are passed on from parents to children, and are reinforced by schools, churches, businesses, and government.
Secondary beliefs and values are more open to change.

Cultural Environment: Shifts in Secondary Cultural Values
Major cultural values of a society are expressed in people’s view of:
Themselves
Others
Organization
Society
Nature and the universe

People’s view of themselves
Yankelovich Monitor’s consumer segments:
Do-It-Yourselfers—recent movers
Adventurers

People’s view of others

Cultural Environment: Shifts in Secondary Cultural Values
People’s view of organizations

People’s view of society
Patriots defend it
Reformers want to change it
Malcontents want to leave it

People’s view of nature
Some feel ruled by it
Some feel in harmony with it
Some seek to master it

People’s view of the universe
Renewed interest in spirituality

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Product/Market Expansion Grid

Product/Market Expansion Grid

The product/market expansion grid is a tool for identifying company growth opportunities through market penetration, market development, product development, or diversification.

Starbucks

Starbucks is an international coffee and coffeehouse chain based in Seattle, Washington, USA. Starbucks is the largest coffeehouse company in the world, with 16,120 stores in 49 countries, including around 11,000 in the United States, followed by nearly 1,000 in Canada and more than 800 in Japan. Starbucks sells drip brewed coffee, espresso-based hot drinks, other hot and cold drinks, snacks, and items such as mugs and coffee beans.

Market Penetration

Increasing sales of current products to current market segments without changing the product
Add more outlets in current market area
Improve in advertising, quality, selection, prices

Starbucks
Open new stores
(11,000 stores in USA)
More concentrate in advertising
Improve product quality
Offer variety of coffee

Market Development

Identifying and developing new market segments for current company product
Review new demographic markets
Review new geographic markets

Starbucks
New groups -> senior and ethic customers
Expand to another cities, international market

Product Development

Offering modified or new products to current market segments
Developing new products

Starbucks
Offer food during lunch and dinner
Jointed with PepsiCo for bottled Frappuccino drink
Jointed with Breyer’s for Starbucks ice cream
Starbucks on supermarket aisles

Diversification

Growth through starting up or acquiring business outside the company’s current products and markets
Start up new business
Buy new business


Starbucks
Two new restaurant concept – Café Starbuck and Circadia
Hear Music brand of compilation CDs
Starbucks experience in Casual clothing

The Marketing Process

KEY ELEMENTS
Analysing market opportunities
Select target markets
Develop the marketing mix
Manage the marketing effort
Evaluation

 INTEGRATED MARKETING MIX

4 P’S
Product
Price
Place
Promotion

4 C’S
Customer solution
Customer cost
Convenience
Communication

Marketing Management and Analysis - Swot Analysis

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Strategic planning and BCG Matrix

Strategic planning is defined as:

“The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities.”

Mission Statement

• Mission statement: The organization’s purpose, what it wants to accomplish in the larger environment
• Market-oriented mission statement: Defines the business in terms of satisfying basic customer needs

Business Porfolio

The business portfolio is the collection of businesses and products that make up the company.

A strategic business unit (SBU) is a unit of the company that has a separate mission and objectives that can be planned separately from other company businesses.

• Company division
• Product line within a division
• Single product or brand

BCG Matrix

Stars are high-growth, high-share businesses or products requiring heavy investment to finance rapid growth. They will eventually turn into cash cows.

Cash cows are low-growth, high-share businesses or products that are established and successful SBUs requiring less investment to maintain market share.

Question marks are low-share business units in high-growth markets requiring a lot of cash to hold their share.

Dogs are low-growth, low-share businesses and products that may generate enough cash to maintain themselves but do not promise to be large sources of cash.

Matrix approaches to formal planning share many problems:

• Difficult, time-consuming, and costly to implement.
• Focus only on current businesses.
• Too strongly emphasize market share growth or growth via diversification.
• Centralised

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