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1、Chapter 12: Setting Product StrategySETTING 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
2、manage its product mix and product linesq 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 marke
3、ting mix. Product strategy calls for 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 a
4、ugmented product, and the potential 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 consum
5、er-goods category, products are convenience 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 manufa
6、ctured materials and parts), capital 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
7、 or service dimensions: product form, 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 mo
8、re than one product. A product mix can 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 ho
9、w many resources should be invested 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
10、 its products, featuring certain products, 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 hav
11、e to be packaged and labeled. Well-designed 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
12、 be familiar with their “idea” of a 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, augme
13、nted, and potential product. The instructor 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 understand
14、ing the concepts of durability and reliability, 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
15、 from manufacturers and/or personal 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 s
16、emester-long project, students should 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 of
17、fering, the marketer needs to address 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 product
18、s. In their research, students should 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 i
19、ssues related to product mix and product 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 th
20、e augmented product for Sonic 2000, 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
21、 this chapter details the success of 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 example
22、s of company products performing at 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 sele
23、cted products. 2. Convenience items 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 consumer
24、s. Students should select a convenience 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 De
25、pth and Breath of a Firms Product Portfolio,” 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
26、 paper summarizing their findings and 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 add
27、ing value in the service component of 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 pr
28、esented in this chapter. Think-Pair-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,
29、hotels/motels, automobile companies, 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. Produc
30、t differentiation is essential to the 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 dif
31、ferentiated and branded for each of 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 th
32、e marketplace labeled “low-carb” to 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 t
33、han the previously produced product (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
34、 Bad? The “form versus function” debate 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: P
35、roduct functionality is the key to brand 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 (gettin
36、g the product, using the product, and 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 accept
37、able level according to the consumers 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 creat
38、ed, although these functions are at 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 c
39、onsumers need that are not related to 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.
40、sports car, luxury car) that appeals 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, reli
41、ability, or packaging. A well-designed 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 DISCUSSIONConsi
42、der the diverse means of differentiating 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, stu
43、dent answers should encompass the following distinctions:Products differentiation includes: Form Features Performance quality Conformance quality Durability Reliability Repairability StyleServices differentiation includes: Ordering ease Delivery installation Customer training Customer consulting Mai
44、ntenance and repairMARKETING SPOTLIGHTToyotaDiscussion 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 governmenta
45、l changes.b. Rapid copying by competitors.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 recommend
46、ations would you make to senior marketing 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
47、in their target markets definitions 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 hea
48、rt of a great brand is a great product. 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 features 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