Strategic Marketing

Chapter 5
Product, Services, & Branding Strategy

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What is Product, Service, & Experiences?
❖ Product is anything that can be offered in a market
for attention, use, or consumption that might satisfy
a need or want. (Products ➔goods are Tangible)
Ex: Soap, Tooth-paste, Clothes

❖ 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 of anything.
Ex: Banking, hotel, airline, home repair service.

❖ Experiences represent what buying the product or

service will do for the customer (Experiences are
Memorable)
Ex: Disneyland
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Levels of Product and Services

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 Levels of Product and Services
1. Core benefit:
• Represent “What the buyer is really buying?”
• It’s the core problem solving benefits that the
customer seek when they buy a product or service.

Ex: People who buy smart phones are buying more than a wireless
mobile phone, e-mail and web-browsing device, or personal
organizer. They are buying freedom and on-the-go connectivity to
people and resources.

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Levels of Product and Services
2. Actual Product:
It is built around the core product, it must have
5 characteristics
A. Quality level
B. Features
C. Design
D. Brand name
E. Packaging.

Ex: The iPhone is an actual product. Its name, parts styling, features,
and packaging have all been combined carefully to deliver the
core benefits of staying connected.

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Levels of Product and Services
3. Augmented Product:
Must be built around the core and actual products
by offering additional services or benefits of the
actual product.(As warranty, installation, delivery &
credit, after sales service.)

Ex: iPhone must offer more than just a communication device. It must
provide consumers with a complete solution to mobile connectivity
problems. They must give a warranty on parts, instructions on how to
use the device, quick repair service when needed and web site to
use if they have problems.

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Product and Services Classification

➔Consumer Products: are the products and

services for personal consumption.

• Products can be classified by how consumers buy

them
1. Convenience products
2. Shopping products
3. Specialty products
4. Unsought products

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Product and Services Classification
1. Convenience products are consumer
products and services that the customer usually
buys frequently, immediately, and with a
minimum comparison and buying effort.

▪ Price: Low
▪ Distribution: Widespread (Anywhere)
▪ Promotion: Mass promotion by producer

Ex: Newspapers, Candy, Fast food, Pepsi,

Magazines.

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Product and Services Classification
2. Shopping products are consumer products
and services that the customer compares carefully
on suitability, quality, price, and style.

▪ Price: higher price

▪ Distribution: selective distribution (fewer outlets)
▪ Promotion: Advertising and personal selling by
both producer and reseller.

Ex: Furniture, Clothing, Used Cars, Hotel and Airline

Services

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 Product and Services Classification
3. 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.

▪ Price: very high prices, buyer do not compare

specialty products.
▪ Distribution: Exclusive distribution
▪ Promotion: Careful targeted promotion

Ex: Medical services, Designer clothes, High-end

electronics
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Product and Services Classification
4.Unsought products are consumer products that
the consumer does not know about but does not
normally think of buying.

▪ Prices: Varies
▪ Distribution: Varies
▪ Promotion: Aggressive advertising + personal
selling by producer and reseller.

Ex: Life insurance, Blood donations

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Product and Service Decisions
Marketers make product and service
decisions at three levels:

1. Individual product decisions

2. Product line decisions
3. Product mix decisions

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 Product Lines 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.

❖ The major product lines:

Product line length is the number of items in the product
line.
➔The company can increase the length of this product
line into 2 ways:
1. Product line stretching
2. Product line filling

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1. Product line stretching:
is when a company lengthens its product line
beyond its current range

❖ Downward product line stretching is used by

companies at the upper end of the market to plug a
market hole or respond to a competitor’s attack
Ex: Mercedes launched C class

❖ Upward product line stretching is by companies at

the lower end of the market to add prestige to their
current products
Ex: Toyota launched lexus.

❖ Combination line stretching

is used by companies in the middle range of the market
to achieve
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2. Product line filling
occurs when companies add more items
within the present range of the line.

For the sake of seeking these goals:

▪ More profits
▪ Satisfying dealers
▪ Excess capacity

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 Product Mix decision
Product mix consists of all the products and items
that a particular seller offers for sale
Has 4 important dimensions:
1. Product mix width is the number of different
product lines the company carries
2. Product mix length is the total number of items the
company carries within its product lines
3. Product line depth is the number of versions
offered of each product in the line
4. Consistency is how closely the various product
lines are in end use, production requirements, or
distribution channels

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 Example
Unilever’s product mix consists of four major product
lines: food which has 30 products, household
cleaning which has 38 products, cosmetics which
has 48 products, and personal care which has 30
products. What is the product mix width and length
of Unilever
 PART 2: Services Marketing
Nature and Characteristics of a Service

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 Example
The customers of Mohamed el Sagheer's Beauty
Salon have noticed that the quality of a haircut
depends on who provides it that is some of the
workers at the beauty salon are more talented
and better trained than others and that this
affects how the service is provided. Which of
characteristics of service is evident in this
instance?
Product Life-Cycle Strategies

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Product Life-Cycle Strategies

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 Introduction Stage
➔The introduction stage starts when the new product
is first launched.

➢ Low sales
➢ High cost per customer
➢ Negative profits
➢ Innovators customers
➢ Few competitors

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 Introduction Stage
➢ Marketing objectives: create product awareness
and trial.
➢ Strategies:
▪ Product: offer a basic product
▪ Price: use-cost plus
▪ Distribution: build selective distribution
▪ Advertising: build product awareness among early
adopters and dealers
▪ Sales promotion: use heavy sales promotion to
increase trial.

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 Growth Stage
➢ Rapidly rising sales
➢ Average cost per customer
➢ Rising profits
➢ Early adapters customers
➢ Competitors are growing in number

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 Growth Stage
➢ Marketing objectives: maximize market share.

➢ Strategies:
▪ Product: offer product extension, service warranty
▪ Price: price to penetrate market
▪ Distribution: build intensive distribution
▪ Advertising: build awareness and interest in mass
market
▪ Sales promotion: reduce to take advantage of
heavy consumer demand.

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 Maturity Stage
➢ Peak sales
➢ Low cost per customer
➢ High profits
➢ Middle majority customers
➢ Stable number of competitors beginning to decline

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 Maturity Stage
➢ Marketing objectives: maximize profit while
defending market share.

➢ Strategies: Market modifying Product modifying

Marketing mix modifying
▪ Product: diversify brand and models
▪ Price: price to match or beat competitors
▪ Distribution: build more intensive distribution
▪ Advertising: stress brand differences and benefits
▪ Sales promotion: increase to encourage brand
switching

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 Decline Stage
➢ Declining sales
➢ Low cost per customer
➢ Declining profit
➢ Laggards ( last group buying a product)
➢ Competitors are declining in number

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 Decline Stage
➢ Marketing objectives: reduce expenditure and milk
the brand.

➢ Strategies: Maintain the product, Harvest the

product, Drop the product
▪ Product: phase out weak items
▪ Price: cut price
▪ Distribution: go selective: phase out unprofitable
outlets
▪ Advertising: reduce to level needed to retain hard-
core loyals
▪ Sales promotion: reduce to minimal level

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 Summary of PLC Characteristics, Objectives, and Strategies
Characteristics Introduction Growth Maturity Decline
Sales Low sales Rapidly rising sales Peak sales Declining sales
Costs High cost per customer Average cost per Low cost per customer Low cost per customer
customer
Profits Negative Rising Profits High profits Declining profits
Customers Innovators Early adopters Middle majority Laggards
Competitors Few Growing number Stable number beginning Declining number
to decline

Marketing Objectives
Create product awareness Maximize market share Maximize profit while Reduce expenditure
and trial defending market share

Strategies
Product Offer a basic product Offer product extensions, Diversify brand and Phase out weak items
service, warranty models

Price Use cost-plus Price to penetrate market Price to match or beat Cut price

Distribution Build selective Build intensive Build more intensive Go selective: phase out
distribution distribution distribution unprofitable outlets

Advertising Build product awareness Build awareness and Stress brand differences Reduce to level needed to
among early adopters interest in the mass and benefits retain loyal
and dealers market

Sales Promotion Use heavy sales Reduce to take advantage Increase to encourage Reduce to minimal level
promotion to entice trial of heavy consumer brand switching
demand
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