Chapter 9
Elements of Product Planning
for Goods and Services
For use only with
Perreault/Cannon/
McCarthy texts, © 2009
McGraw-Hill
Companies, Inc.
McGraw-Hill/Irwin
www.mhhe.com/fourps
At the end of this presentation, you should be
able to:
1.
Understand what “Product” really means.
2.
Know the key differences between goods and
services.
3.
Understand what branding is and how to use it
in strategy planning.
4.
Understand the importance of packaging in
strategy planning.
5.
Understand the role of warranties in strategy
planning.
At the end of this presentation, you should be
able to:
6.
Know the differences among the various
consumer and business product classes.
7.
Understand how product classes can help a
marketing manager plan marketing strategies.
Product Decisions for Marketing Strategy
Planning (Exhibit 9-1)
Product Decisions for Marketing Strategy
Planning (Exhibit 9-1)
Chapter 9:
Elements of
Product Planning
for Goods &
Services
Product
idea
Brand
Chapter 10:
Product
Management & New
Product
Development
Package
Warranty
Product
classes
Product Quality and Customer Needs
Relative
Quality
Goods and/or Services Are the Product
(Exhibit 9-2)
Canned soup,
steel pipe,
paper towels
100%
physical
good
emphasis
Restaurant
meal, cell
phone,
automobile
tune-up
Satellite radio,
hair styling,
postal service
100%
service
emphasis
Blend of
physical
good and
service
Differences in
Goods and
Services
Devoted to
erasing
stereotypes
Whole Product Lines Must Be Developed Too
Product Assortment, Product Line or Individual
Product?
© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Branding Is Strategy Decision
(Exhibit 9-3)
Conditions Favorable to Branding
Easy to label
and identify
by brand or
trademark
Favorable
shelf or display
space within
stores
Product quality
and good value
and easy to
maintain
Dependable,
widespread
availability is
possible
Key
Issues
Economies of
scale; costs should
drop and profits
Market price
can be high
enough to make
branding effort
profitable
Achieving Brand Familiarity Is Not Easy
Brand
Insistence
Brand
Preference
Brand
Recognition
Brand NonRecognition
Brand Rejection
Brand
Familiarity
After bathing about
a billion babies…
The Right Brand Name Can Help Build Equity
Short & Simple
Easy to Spell & Read
Easy to Recognize & Remember
Easy to Pronounce
Can Pronounce in Only One Way
Can Pronounce in All Languages
Suggests Product Benefits
Meets Packaging/Labeling Needs
No Undesirable Imagery
Always Timely
Adapts to Any Advertising Medium
Legally Available for Use
A Good Brand Name?
© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Protecting Brand Names & Trademarks
Lanham Act—determines
marks and brand names
that can be protected
You Must Protect
Your Own—if becomes a
generic descriptive word for a
product category, protection
is lost
Counterfeiting Is
Accepted In Some
Cultures, especially in
developing nations
What Kind of Brand to Use?
Family Brand
(e.g., Sunkist)
Licensed
Brand
Brand
Choices
Generic
“Brand”
Individual Brand
(e.g., General Mills—
Bisquick, Gold Meal
Flour)
Licensing
© 2009 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Who Should Do the Branding?
Manufacturer
Brands created
by producers
Dealer Brands or
private brands
• Also called national
brands
• Also called private
brands or store
brands
• Created/owned by
producers
• Develop demand
across many
markets
Battle
of the
Brands
• Created/owned by
intermediaries
• Create higher
margins for dealers
Checking Your Knowledge
Target’s “Cherokee” brand of men’s clothing is available
only at Target stores. The brand provides a low-cost
alternative to other men’s fashions available at department
stores and via catalogs. The Cherokee brand is a(n):
A.
B.
C.
D.
E.
manufacturer brand.
dealer brand.
licensed brand.
national brand.
generic brand.
The Strategic Importance of Packaging
Packaging Can
Enhance the
Product
Packaging Sends
a Message
UPC Codes
Speed Handling
Packaging Can
Lower
Distribution Costs
What Is Socially Responsible Packaging?
Consumer
Evaluation of Eco
Impacts;
consumers often
don’t know
Packaging
Can Hurt
Environment
Ethical Decisions
Remain (e.g., downsized
products; dealer branded
products package to look
similar to manufacturer
brands
Socially
Responsible
Packaging
Issues
Federal Fair
Packaging and
Labeling Act; clearly
labeled in easy-tounderstand terms
Checking Your Knowledge
Heinz has a new ketchup bottle that has the cap on the
bottom, instead of the top. The bottle uses gravity to help
the consumer get every last drop of ketchup out of the
bottle. The cap is also designed to pour cleanly, so that
dried ketchup does not accumulate around the opening.
This new bottle demonstrates how packaging can:
A. promote product.
B. protect the product.
C. lower distribution costs.
D. incorporate UPC codes.
E. enhance product usage.
Warranty Policies Are a Part of Strategy
Planning
Magnuson-Moss
Act—must
provide clearly in
writing
Promises in
Writing
Support May
Be Costly
Service Guarantees;
specific levels of
satisfaction and
expectations
May Improve
Marketing Mix;
company stands
behind the
product
Checking Your Knowledge
McDonald’s announced that at select locations, if drivethrough customers do not get exactly what they want within
two minutes of placing the order, their next meal will be
free. This promise by McDonald’s is a good example of
a(n):
A. service guarantee.
B. warranty.
C. unit price.
D. limited warranty.
E. no-fault insurance policy.
Product Classes Help Plan Marketing Strategy
Consumer Products
Business Products
Consumer Product Classes
Staples
Convenience Products
Impulse Products
Emergency Products
Shopping Products
Homogeneous
Shopping Products
Heterogeneous
Shopping Products
Specialty Products
Unsought Products
New Unsought
Products
Regular Unsought
Products
One Product May Be Seen Several Ways
(CONVENIENCE VS. SHOPPING GOOD)
Checking Your Knowledge
Jack White wanted to purchase a new dress shirt. He went
to a local department store, toured the men’s department,
and thought all the brands looked about the same. He
decided to buy the store brand shirt, because it was
the cheapest. For Jack, the new shirt was a(n):
A. convenience product.
B. heterogeneous shopping product.
C. specialty product.
D. homogeneous shopping product.
E. impulse product.
Interactive Exercise: Business Product Classes
Business Products Are Different
Derived Demand
Inelastic Industry Demand;
change in price doesn’t have
effect on the quantity ordered
Tax Treatments Differ;
expense vs. capital items
Business Product Classes – How They Are
Defined
Installations;
important
capital items
Professional
Services
Accessories;
short lived
capital items
Business
Product
Classes
MRO Supplies
Raw
Materials;
unprocessed
expense items
Component
Parts &
Materials;
expense items
that become a
part of the final
product
Study Question 1
Which of the following is a "product"?
A. a used car
B. a bus ride
C. a haircut
D. a dental exam
E. all of the above
Study Question 2
Which of the following would NOT be favorable to
successful branding?
A. The product offers superior customer value
B. Product quality fluctuates due to variations in
raw materials
C. Dependable and widespread availability
D. Economies of scale in production
E. Favorable shelf locations are available
Study Question 3
Carl refuses to buy Billy Goat brand of beer, his
attitude toward this brand is called
_____.
A. brand rejection.
B. brand familiarity.
C. brand non-recognition.
D. brand recognition.
E. brand positioning.
Study Question 4
Good packaging:
A. Can make a product easier or safer to
use.
B. Can be an important promotional tool.
C. Can lower distribution costs.
D. Can make products easier to handle and
display.
E. All of the above.
Study Question 5
Which of the following would be a
convenience product for most
consumers?
A. Gold jewelry
B. Butter
C. Stereo TVs
D. Dress shoes
E. Bicycles
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