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1、setting product strategy12 c h a p t e r learning objectivesafter reading this chapter, students should:q know what are the characteristics of products and how can they be classifiedq know how companies can differentiate productsq know how a company can build and manage its product mix and product l
2、inesq know how companies can combine products to create strong co-brands or ingredient brandsq know how companies can use packaging, labeling, warranties, and guarantees as marketing toolschapter summary product is the first and most important element of the marketing mix. product strategy calls for
3、 making coordinated decisions on product mixes, product lines, brands, and packaging and labeling. in planning its market offering, the marketer needs to think through the five levels of the product: the core benefit, the basic product, the expected product, the augmented product, and the potential
4、product that encompasses all the augmentations and transformations the product might ultimately undergo. products can be classified in several ways. in terms of durability and reliability, products can be nondurable goods, durable goods, or services. in the consumer-goods category, products are conv
5、enience goods (staples, impulse goods, emergency goods), shopping goods (homogeneous and heterogeneous), specialty goods, or unsought goods. in the industrial-goods category, products fall into one of three categories: materials and parts (raw materials and manufactured materials and parts), capital
6、 items (installations and equipment), or suppliers and business services (operating supplies, maintenance and repair items, maintenance and repair services, and business advisory services). brands can be differentiated on the basis of a number of different product or service dimensions: product form
7、, features, performance, conformance, durability, reliability, repairability, style, and design, as well as such service dimensions as ordering ease, delivery, installation, customer training, customer consulting, and maintenance and repair. most companies sell more than one product. a product mix c
8、an be classified according to width, length, depth, and consistency. these four dimensions are the tools for developing the companys marketing strategy and deciding which product lines to grow, maintain, harvest, and divest. to analyze a product line and decide how many resources should be invested
9、in that line, product-line manages need to look at sales and profits and market profile.a company can change the product component of its marketing mix by lengthening its product via line stretching (down-market, up-market, or both) or line filling, by modernizing its products, featuring certain pro
10、ducts, and pruning its products to eliminate the least profitable. brands are often sold or marketed jointly with other brands. ingredient brands and co-brands can add value assuming they have equity and are perceived as fitting appropriately.physical products have to be packaged and labeled. well-d
11、esigned packages can create convenience value for customers and promotional value for producers. in effect, they can act as “five-second commercials” for the product. warranties and guarantees can offer further assurance to consumers. opening thought students will be familiar with their “idea” of a
12、tangible productthe physical manifestationtheir cell phone or the shoes they are wearing for example. however, students may have trouble understanding the “totality” of the product physically demonstratedthe core benefit, the basic product, expected product, augmented, and potential product. the ins
13、tructor is encouraged to use the class period to allow the students to try to uncover or explore these additional components of the “product” concept so that the students will begin to understand these dimensions better. students should have no problems understanding the concepts of durability and r
14、eliability, nor should they have problems with brands differentiation or product line depth and breath. perhaps, the most challenging concept of the chapter is the concept of line stretching, and/or line filling. again, the instructor is encouraged to use examples from manufacturers and/or personal
15、experience to communicate these concepts successfully. finally, the labeling of a product includes both advertising copy and governmental regulations will be new material for many students. teaching strategy and class organizationprojects1. at this point for the semester-long project, students shoul
16、d have set their group projects product or service strategy. instructors are to evaluate their submissions on the product (or services) features, quality, and price and other the other considerations of “product” found in this chapter. 2. in planning its market offering, the marketer needs to addres
17、s five product levels: core benefit, basic product, expected product, augmented product, and potential product. students should select a firm within an industry and through research (internet and other formats) outline the firms five product levels for its products. in their research, students shoul
18、d be challenged to discover the firms perception of the customers value hierarchy and total consumption system. 3. sonic pda marketing plan decisions about products are critical elements of any marketing plan. during the planning process, marketers must consider issues related to product mix and pro
19、duct lines. product marketers distinguish five levels of product, each adding more customer value: core benefit, basic, expected, augmented, and potential. in assessing product strategy: how would you define the core benefit for sonic 1000? how would you define the augmented product for sonic 2000,
20、the second product to be launched by sonic next year? write your answers to the questions in a written marketing plan or enter it in the product offering and marketing mix sections of marketing plan pro. assignmentssmall group assignments1. the opening vignette of this chapter details the success of
21、 steinway pianos in their delivery of a superior product. there are numerous examples of companies delivering offerings that meet the target customers needs or wants. in this assignment, the students are challenged to compile a list of at least three other examples of company products performing at
22、exceptional levels despite intense competition. in their report, students should not only identify the products and companies in terms of the definition of “product” described in this chapter, but also be able to delineate the salient characteristics of their selected products. 2. convenience items
23、and capital good items can be seen as two ends of the “product continuum.” convenience items are purchased frequently, immediately, and with minimum of effort. capital goods are those items that last a long period of time and are purchased infrequently by consumers. students should select a convenie
24、nce good and a capital good of their choice and compare and contrast the consumers value hierarchy and users total consumption system for each item. individual assignments1. assign the following readings to students: robert bordley, “determining the appropriate depth and breath of a firms product po
25、rtfolio,” journal of marketing research, 40 (february), 2003, pp. 3953 or peter boatwright and joseph c. nunes, “reducing assortment: an attribute-based approach,” journal of marketing, 65 (july), 2001, pp.5063. after reading each article, students should submit a paper summarizing their findings an
26、d illustrating the concepts exposed in these papers to the material covered in this chapter. 2. when the physical product cannot easily be differentiated, the key to competitive success may lie in adding valued services and improving their quality. examples of adding value in the service component o
27、f a product include computers, education, and pizzas. each student is to select a product in which they think that the additional value present lies in the service and quality components. students should be prepared to defend their selections using the material presented in this chapter. think-pair-
28、share1. in the marketing memo entitled, making ingredient branding work, the authors list four requirements for success in ingredient branding. as a group, students should collect examples of ingredient branding currently present in the marketplace (supermarkets, hotels/motels, automobile companies,
29、 and causal dining establishments are good places to start) and examine these examples versus the four requirements stated in the memo. students should be able to defend their positions in comparing these products to the statements in the marketing memo. 2. product differentiation is essential to th
30、e branding process. in choosing to differentiate a product, a marketer has the choice of form, features, performance quality, conformance quality, durability, reliability, repairability, and style. collect examples of currently produced products that have been differentiated and branded for each of
31、these design parameters. marketing todayclass discussion topicsone of the “hottest” consumer trends of recent years is the “low-carb” diet. marketers and manufacturers of food products and food establishments have introduced numerous new and revised products to the marketplace labeled “low-carb” to
32、capitalize on their consumers desire to limit their carbohydrate intakes. in reviewing some of the currently available “low-carb,” products (consumer products and restaurant menu choices) discuss whether or not:a) the products are actually lower in carbohydrates than the previously produced product
33、(product differentiation).b) that the products labeling is abiding with the current labeling laws.c) the firm has just reclassified the product as “low-carb” in order to take advantage of this trend.end-of-chapter supportmarketing debateare line extensions good or bad? the “form versus function” deb
34、ate applies in many arenas, including marketing. some marketers believe that product performance is the end all and be all. other marketers maintain that the looks, feel, and other design elements of products are what really make the difference. take a position: product functionality is the key to b
35、rand success versus product design is the key to brand success. suggested responsepro: consumers buy products to satisfy a need. a consumer uses products and decides on a product based upon their own consumption systemthe way the product is by the consumer (getting the product, using the product, an
36、d disposing of the product). additionally, the customer value hierarchy (core benefit, basic product, expected product, augmented product, and potential product) enters into the decision-making process for a consumer. therefore, a product must perform to an acceptable level according to the consumer
37、s perception of benefits in their customer value hierarchy. a low price, low function product, like a disposable razor must at least perform the task to which it was created. a more expensive product, an electric razor, must meet the function to which it was created, although these functions are at
38、a higher level than the disposable razor. if either product does not perform to the consumers basic product definition then the product will be discarded and not re-purchased. con: products have unique characteristics and specific brand identifications that meet consumers need that are not related t
39、o functionability. such needs as status, self-actualization, and style appeal to a wide audience. for example, most automobiles will perform the task of taking a person from point a to point b. however, it is the design of the automobile (specific make/type: i.e. sports car, luxury car) that appeals
40、 to the buyer. for many consumers style plays a more important role, for some, the only role in their buying decision. a well-designed product can also be a point-of-difference in the marketplace aiding consumer acceptance through its ease of use, durability, reliability, or packaging. a well-design
41、ed product can be a competitive advantage for smaller firms. whatever, the design, however, the product must at least meet the consumers definition of a basic product. once that definition is met, design can be a powerful marketing asset. marketing discussionconsider the diverse means of differentia
42、ting products and services. which ones have the most impact on your choices? why? can you think of certain brands that excel on a number of these different means of differentiation? student answers will differ according to the product/services chosen. however, student answers should encompass the fo
43、llowing distinctions:products differentiation includes: form features performance quality conformance quality durability reliability repairability styleservices differentiation includes: ordering ease delivery installation customer training customer consulting maintenance and repairmarketing spotlig
44、httoyotadiscussion questions1)what have been the key success factors for toyota?a. product differentiation features. b. service differentiation features.2)where is toyota vulnerable?a. rapid changes in the market for automobiles due to environmental or governmental changes.b. rapid copying by compet
45、itors.3)what should marketers watch out for?a. external changes to the automobile market created by environmental or governmental regulations.b. changes in consumer attitudes and preferences in their consumption system and customer value hierarchy.4)what recommendations would you make to senior mark
46、eting executives going forward?a. do not rest on past successes. b. continue to keep abreast in your target markets consumption system and customer value hierarchy. 5)what should they be sure to do with their marketing? a. appeal to those factors that are present in their target markets definitions
47、of: core benefit, basic product, expected product, augmented product, and potential product. b. deliver to the “potential product” while ensuring that the core, basic, expected, and augmented products meet consumers definitions. detailed chapter outline at the heart of a great brand is a great produ
48、ct. product is a key element in the market offering. market leaders generally offer products and services of superior quality. marketing planning begins with formulation an offering to meet target customers needs or wants. the customer will judge the offering by three basic elements: product feature
49、s and quality, services mix and quality, and price. figure 12.1 shows components of the market offering. product characteristics and classifications a product is anything that can be offered to a market to satisfy a want or need. a)products that are marketed include:1) physical goods.2) services.3)
50、experiences.4) events.5) persons.6) places.7) properties.8) organizations.9) information.10) ideas.product levels: the customer value hierarchy in planning its market offering, the marketer needs to address five product levels. each level adds more customer value, and the five constitute a customer
51、value hierarchy. figure 12.2 shows five product levels.a) the fundamental level is the core benefit: the service or benefit the customer is really buying. marketers must see themselves as benefit providers. b) at the second level, the marketer has to turn the core benefit into a basic product. c) at
52、 the third level, the marketer prepares an expected product, a set of attributes and conditions buyers normally expect when they purchase this product. d) at the fourth level, the marketer prepares an augmented product that exceeds customer expectations. 1) differentiation arises on the basis of pro
53、duct augmentation. product augmentation also leads the marketer to look at the total consumption system: the way the user performs the tasks of getting and using products and related services. 2) some things should be noted about product-augmentation strategy: a. first, each augmentation adds costs.
54、b. second, augmented benefits soon become expected benefits and necessary points-of-parity. c. third, as companies raise the price of their augmented product, some competitors offer a “stripped-down” version at a much lower price. e)at the fifth level stands the potential product that encompasses al
55、l the possible augmentations and transformations the product or offering might undergo in the future. 1)here is where companies search for new ways to satisfy customers and distinguish its individual offer. review key definitions here: core benefit, basic product, expected product, augmented product
56、, total consumption system, and potential productproduct classifications marketers have traditionally classified products on the basis of characteristics: durability, tangibility, and use. each product type has an appropriate marketing-mix strategy. durability and tangibility products can be classif
57、ied into three groups, according to durability and tangibility:a) nondurable goods: tangible consumed in one or a few uses. b) durable goods: tangible that normally survives many uses. durable goods require more personal selling and service, command a higher margin, and require more seller guarantee
58、s. c) services: intangible, inseparable, variable, and perishable products that require more quality control, supplier credibility, and adaptability. consumer-goods classification the vast array of goods consumers buy can be classified on the basis of shopping habits. a) the consumer usually purchases convenience goods frequently, immediately, and with a minimum of effort.b) shopping goods are goods that the consumer, in the process of selection and
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