Products, Services and Brands The Product-Service Continuum Sugar Pure Tangible Good Restaurant Education Pure Service Offer another example of a pure service. What Is a Product? • Anything offered to a market that satisfies a want or need. – Includes: physical objects, services, events, persons, places, organizations, ideas, or some combination thereof. What Is a Service? • Activities, benefits, or satisfactions offered to a market that are essentially intangible and do not result in the ownership of anything. – Examples: banking, hotel, airline, retail, tax preparation, home repairs. Consumer Experiences • In-store Theater is more important than ever • Consider ALL consumer touch-points • Eliminate shopping drudgery • Work fun into the shopping experience, but don’t overdo it Knot Tying Clinic Art Gallery Entrance 7-5 Three Levels of Product Individual Product Decisions Product Attributes What is an attribute? • Quality – Performance vs. Conformance quality • Benefits vs. Features – Consumers generally value benefits, not features • Style and design – Influences product choice and experience • Price Branding • A brand is a name, term, sign, symbol, or design, or a combination of these that identifies the maker or seller of a product or service. • Product = “Body” • Brand = “Soul” Branding - Advantages • Advantages to buyers: – – – – Eases product identification Simplifies the purchase process (choice heuristic) Signal of quality “Repository of Trust” (- Jordan) • Advantages to sellers: – Drive loyalty to company and its products – Provides legal protection – Helps segment markets (i.e. “Branded Variants”) How Branding Happens Attributes of Strong Brands • Excels at delivering desired benefits • Stays relevant • Priced to meet perceptions of value • Positioned properly • Communicates consistent brand messages • Well-designed brand hierarchy • Uses multiple marketing activities • Understands consumerbrand relationship • Supported by organization • Monitors sources of brand equity Marketing Advantages of Strong Brands • Improved perceptions of product performance • Greater loyalty • Less vulnerable to competition • Less vulnerable to crises • Larger margins • Inelastic consumer response to price increases • Elastic consumer response to price decreases • Greater trade cooperation • Increase in effectiveness of IMC • Licensing opportunities • Brand extension opportunities Packaging • Container, wrapper or “external face” for a product. • Good packages – – – – – – – market the brand effectively protect the internal elements protect the external elements are easy/straightforward to use don’t become “stale” over time ensure consumer’s safety are responsive to local environmental and social concerns Innovative Packaging Dutch Boy’s packaging innovation offers paint in plastic containers with twist-off tops. The paint container is easy to carry, doesn’t need a screwdriver to pry open, doesn’t dribble when poured, and doesn’t take a hammer to bang the lid shut. Labeling • Printed information appearing on or with the package. • Performs several functions: – Identifies or reinforces identification of product/brand – Provides “valuable” information about product contents or ingredients – Co-promotes the product along with packaging Labeling The FDA now requires food manufacturers to list trans fat on the Nutrition Facts portion of product labels. The Ethics and Legality of Labeling Product Line Decisions • Product Line – Group of products with variations (flavors/types/appeals). • Product Line Stretching • Downward • Upward • Both directions • Product Line Filling – Examples • Ice Tea • Pet Foods Product Line Stretching - Marriott Marriott offers a full line of hotel brands, each aimed at a different market. Product Mix Decisions • Product mix: – What combination of products do we carry? • Product mix decisions: – Product Line Length: the number of items in a line. – Product Line Width: the number of different product lines the company carries. (i.e. Wal-Mart has toys, food, cards, clothes, music, etc.) – Product Line Depth: the number of versions offered of each product in the line. (i.e. 2 or 3 different sizes or sub-types) Question du Jour Is product variety a blessing or curse for consumers? Brand Loyalty & Brand Equity • Brand Loyalty – Definition: Willingness to re-purchase due to favorable brand impressions – How measured? • Brand Equity – Definition: The positive effect that knowing the brand name has on consumer response to the product. – Psychological Value – Financial Value • The Link between Brand Loyalty & Brand Equity Brand Loyalty Measurement Methods • • • • • Repeat Purchases Reported Loyalty Price Sensitivity Analysis Brand Set “Squares” Method Other Methods Measuring Brand Equity Brand Audits Brand Tracking Brand Valuation Brand Values Brand Brand Value (Billions) Coca-Cola Microsoft IBM GE $67.39 $61.37 $53.79 $44.11 Intel Disney McDonald’s $33.50 $27.11 $25.00 Nokia Toyota Marlboro $24.04 $22.67 $22.13 Interbrand’s Brand Equity Formula Brand earnings • Brand sales • Costs of sales • Marketing costs • Overhead expenses • Remuneration of capital charge • Taxation Brand strength • Leadership (25%) • Stability (15%) • Market (10%) • Geographic spread (25%) • Trend (10%) • Support (10%) • Protection (5%) Brand Equity Models • Brand Asset Valuator • Aaker Model • BRANDZ Brand Asset Valuator (BAV) Brand Equity Factors Knowledge Esteem Relevance Differentiation Aaker Model – Brand Identity Brand-as-product Brand-as-organization Brand-as-person Brand-as-symbol Aaker Model – Brand Assets Brand loyalty Brand associations Proprietary assets Brand awareness Perceived quality The BRANDZ Model Bonding Advantage Performance Relevance Presence Major Brand Strategy Decisions Brand Elements Brand Names Slogans URLs Elements Logos Characters Symbols Slogans • Like a good neighbor, State Farm is there • Just do it • Nothing runs like a Deere • Help is just around the corner • Save 15% or more in 15 minutes or less • • • • • • • • We try harder We’ll pick you up Nextel – Done Zoom Zoom I’m lovin’ it Innovation at work This Bud’s for you Always low prices Brand Element Choice Criteria • Memorable • Meaningful • Likeable • Transferable • Adaptable • Protectible Brand Positioning • Brands can be positioned at three levels: – Product features/ attributes • Least desirable • Easily copied – Brand benefits – Beliefs and values • Hits consumers on a deeper level, tapping “universal” emotions. Brand Name Selection • Good Brand Names: 1. Straightforwardly suggest the product’s benefits and qualities. 2. Are easy to spell, pronounce and recognize. 3. Are distinctive and memorable. 4. Are extendable into different product lines (i.e. facilitate brand extensions). 5. Translate easily into foreign languages. 6. Provide the maximum legal protection from infringement. Brand Name Selection Boudreaux’s Butt Paste is a real product used in the treatment of diaper rash. Is this a good brand name? Good Brand Names: 1. 2. 3. 4. 5. 6. Straightforwardly suggest the product’s benefits and qualities. Are easy to spell, pronounce, recognize, and remember. Are distinctive and memorable. Are extendable into different product lines (i.e. facilitate brand extensions). Translate easily into foreign languages. Provide the maximum legal protection from infringement. Brand Naming – Multi-brand strategies Individual names/ “House of Brands” Blanket family names/ ”Branded House” Parent/Sub-Brand combination names Crest Whitestrips Brand Sponsorship • Manufacturer’s brands – Also called “National Brands” (Tide, Coke, Pringles, etc.) • Private-label brands – Also called “Store” or “Distributor” Brands (Stop & Shop’s “Mi Casa”, Costco’s “Kirkland”) • Store vs. Private Label Trends • Co-branding – “Tag-team Branding” (Waffle House and Minute Maid OJ) • Ingredient Branding (“Intel Inside”) Mi Casa brand products are only available at Stop & Shop stores. Brand Development Strategies Line Extensions Brand Extensions Brand Development – Multibranding & New Brands • Multi-branding – appeal to different buying motives and segments – “branded variants” – Cannibalization issues • Example: Toyota sells Corolla, Camry, Scion, Yarris • New Brands – waning power of existing brands or product portfolio – diversification advantages – can develop (Black & Decker develops De Walt) or buy (i.e. Wendy’s buys Baja Fresh) Branding Terms • • • • • • Brand line Brand mix Brand extension Sub-brand Parent brand Family brand • • • • • • Line extension Category extension Branded variants Licensed product Brand dilution Brand portfolio Services Four Service Characteristics Four Service Characteristics – Restaurant Example How do the service characteristics of intangibility, variability, inseparability, and perishability relate to restaurants?