Chapter 8 Notes: Products, Services, and Brands – Building Customer Value

Core Concepts

What is a Product?

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

• Includes physical goods, services, experiences, events, persons, places, organizations,

ideas, or a mixture.

Services

• Intangible activities, benefits, or satisfactions offered for sale that don’t result in ownership (e.g.
banking, hotels, airlines).

• Products can be:

o Pure goods (e.g. soap)

o Pure services (e.g. consulting)

o Mixed offers (e.g. restaurant – food + service)

Objective 8-1: Major Classifications of Products & Services

1. Consumer Products

Classified by shopping behavior:

• Convenience Products: Frequent, immediate, low effort (e.g. candy).

• Shopping Products: Compared on quality, price, and style (e.g. furniture).

• Specialty Products: Unique, brand-driven, high effort (e.g. luxury cars).

• Unsought Products: Not usually thought of (e.g. insurance, funeral plans).

2. Industrial Products

Used in business:

• Materials & Parts: Raw materials, components.

• Capital Items: Tools, machines, buildings.

• Supplies & Services: Operating supplies (paper), maintenance, advisory.

3. Other Marketable Entities

• Organizations, places, people, ideas can be branded and marketed (e.g. tourism marketing for
cities, political campaigns).

Objective 8-2: Product & Service Decisions

Levels of Product (3 Levels)

1. Core Customer Value: What is the customer really buying?

2. Actual Product: Brand name, features, design, packaging.

3. Augmented Product: Additional benefits—warranty, delivery, support.

Individual Product Decisions

1. Product Attributes

o Quality: Performance and consistency.

o Features: Competitive tool; add based on value vs. cost.

o Style & Design: Looks + user experience.

2. Branding

o Name, term, symbol, etc. to identify & differentiate a product.

3. Packaging

o Protection, promotion, ease of use.

4. Labeling

o Identifies, describes, and promotes the product.

5. Product Support Services 1. Product Line Decisions

A product line is a group of related products under a
single brand that serve a similar function or are
o Customer service before, during, after purchase. marketed to the same customer group.

Key Dimensions of a Product Line:

Product Line Decisions a. Length
Refers to the number of items in a product line.
• A product line is a group of related products. Example: Apple’s iPhone line includes iPhone SE,
iPhone 14, iPhone 14 Pro, etc.
Strategic Implication: A longer line may offer more
o Length: Number of items in the line. choices but can also increase costs and complexity.

b. Product Line Filling

o Product line filling/stretching to serve more segments. Adding more items within the existing range.
Purpose: To plug market gaps, fight competition, or
increase shelf presence.
Example: A shampoo brand adding a new herbal
variant between its basic and premium offerings.

c. Product Line Stretching

Expanding the line beyond its current range:
Downward Stretch: Adding lower-end products (e.g.,
Mercedes introducing A-Class).
Upward Stretch: Adding higher-end products (e.g.,
Toyota launching Lexus).
Two-Way Stretch: Doing both (e.g., Marriott with
Fairfield Inn and Ritz-Carlton).
 2. Product Mix (Portfolio)
The product mix (or product assortment) is the total set of
products a company offers.
Product Mix (Portfolio) Key Dimensions of a Product Mix:

• Width: Number of product lines. a. Width

The number of product lines a company offers.
Example: Procter & Gamble has lines in hair care, oral
• Length: Total items across all lines. care, cleaning products, etc.

b. Length
• Depth: Variants per product (e.g., sizes, flavors). The total number of items across all product lines.
If P&G has 5 lines and each has 10 products, the length
is 50.
• Consistency: How related product lines are. c. Depth
The number of variants of each product in a line.
Example: A toothpaste brand offering 5 flavors, 3 sizes,
and 2 packaging types.

d. Consistency
Objective 8-3: Services Marketing How closely related the product lines are in terms of:
End use
Production requirements
4 Key Characteristics of Services Distribution channels
Example:
High consistency: Colgate (oral care, personal hygiene)
1. Intangibility: Can't be seen, touched (e.g. surgery). Low consistency: Samsung (phones, TVs, refrigerators,
ships)
2. Inseparability: Can't separate service from provider.

3. Variability: Quality depends on who/when/where/how.

4. Perishability: Can't be stored for later (e.g. unsold hotel rooms).

Service Strategies

• Make it Tangible: Use physical evidence, symbols.

• Increase Productivity: Technology, training, self-service.

• Manage Demand & Supply: Pricing, reservations, flexible staffing.

The Service-Profit Chain

1. Internal Service Quality →

2. Satisfied Employees →

3. Greater Service Value →

4. Satisfied Customers →

5. Loyalty & Profits

3 Types of Service Marketing

• External: Firm → Customer (ads, pricing).

• Internal: Firm → Employees (training, motivation).

• Interactive: Employee ↔ Customer (service delivery).

 Objective 8-4: Branding Strategy – Building Strong Brands

1. Brand Equity

• The positive differential effect that knowing the brand name has on customer response.

• Driven by:

o Differentiation: What makes it unique?

o Relevance: Meets customer needs?

o Knowledge: How much customers know it.

o Esteem: Respect & trust.

2. Brand Value

• Total financial value of a brand (e.g. Apple: $246B+).

3. Benefits of Strong Brands

• More loyalty, premium pricing, reseller power, easier brand extensions, competitive edge.

Major Brand Strategy Decisions (Fig 8.5)

A. Brand Positioning

• Position on:

1. Attributes (e.g. durability),

2. Benefits (e.g. saves time),

3. Beliefs & Values (e.g. Nike: "Just do it").

B. Brand Name Selection

• Desirable qualities: easy to pronounce, memorable, extendable, legally protected.

C. Brand Sponsorship

1. Manufacturer’s Brand (national)

2. Private Brand (store brands)

3. Licensing (use name/symbol for a fee)

4. Co-Branding (two brands on one product)

D. Brand Development

1. Line Extension: New versions (e.g. Coke Zero).

2. Brand Extension: New category (e.g. Dove shampoo).

3. Multibrands: New brands in same category (e.g. Pepsi owns Mountain Dew).

4. New Brands: Entirely new category + name.

Managing Brands

• Keep positioning consistent, but evolve with consumer needs.

• Use ads, social media, and customer experience to reinforce brand identity.

• Train employees to live the brand.

• Regularly audit brand performance and perception.

Key Terms (Rapid Review)

• Product: Market offering

• Service: Intangible benefit

• Brand: Identifier/differentiator

• Brand equity: Brand’s impact on perception

• Product mix: All products offered by company

• Product line: Group of related products

• Line extension: New versions

• Brand extension: New category

• Service intangibility/inseparability/variability/perishability

Exam Tips

• Know examples: e.g., GoPro for experiences, Apple stores for augmented product, Nike for
beliefs & values.

• Be ready to apply concepts to real-life cases.

• Understand figures like 8.1 (Levels of Product) and 8.5 (Branding Decisions).

• Practice definitions + diagrams + application = full marks.