Chapter 7 Products, Services, and Brands: Building Customer Value
CHAPTER 7
PRODUCTS, SERVICES, AND BRANDS: BUILDING CUSTOMER VALUE
PREVIEWING THE CONCEPTS – CHAPTER OBJECTIVES
1 Define product and describe the major classifications of products and services.
2 Describe the decisions companies make regarding their individual products and services,
product lines, and product mixes.
3 Identify the four characteristics that affect the marketing of services and the additional
marketing considerations that services require.
4 Discuss branding strategy—the decisions companies make in building and managing their
brands.
JUST THE BASICS
CHAPTER OVERVIEW
In this and the next chapter, we’ll study how companies develop and manage products and
brands. The product is usually the first and most basic marketing consideration.
This chapter begins with a deceptively simple question: What is a product? After addressing this
question, we look at ways to classify products in consumer and business markets.
Then we discuss the important decisions that marketers make regarding individual products,
product lines, and product mixes.
Next, we examine the characteristics and marketing requirements of a special form of product—
services.
Finally, we look into the critically important issue of how marketers build and manage brands.
ANNOTATED CHAPTER NOTES/OUTLINE
FIRST STOP
GoPro: Be a HERO
A growing army of GoPro customers—many of them extreme sports enthusiasts—are now
strapping little GoPro cameras to their bodies or mounting them on anything from the front
bumpers of race cars to the heels of skydiving boots in order to capture the extreme moments of
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Chapter 7 Products, Services, and Brands: Building Customer Value
their lives and lifestyles.
GoPro’s avid customers have become evangelists for the brand. On average, they upload three
new videos to YouTube every minute. In turn, the videos inspire new GoPro customers and even
more video sharing.
What makes GoPro so successful? Part of the formula is the physical product itself: GoPro
cameras are marvels of technology, especially given their affordable starting price of only $200
to $400.
But GoPro knows that it sells much more than just a small metal box that takes action-sports
videos. GoPro users don’t just want to take videos. More than that, they want to tell the stories
and share the adrenaline-pumped emotions of the extreme moments in their lives.
Making good cameras is only the start of GoPro’s success. GoPro founder Nick Woodman, talks
about helping customers through four essential steps in their storytelling and emotion-sharing
journeys: capture, creation, broadcast, and recognition. Capture is what the cameras do—
shooting pictures and videos. Creation is the editing and production process that turns raw
footage into compelling videos. Broadcast involves distributing the video content to an audience.
Recognition is the payoff for the content creator.
The moral of this story: GoPro knows that it doesn’t just sell cameras. More than that, it enables
customers to share important moments and emotions.
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 want or need.
Use Key Term Product here.
Use Chapter Objective 1 here.
Broadly defined, “products” also include services, events, persons, places, organizations, ideas,
or mixes of these.
Services are a form of product that consists of activities, benefits, or satisfactions offered for
sale that are essentially intangible and do not result in the ownership of anything.
Use Key Term Service here.
Products, Services, and Experiences
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Chapter 7 Products, Services, and Brands: Building Customer Value
A company’s market offering often includes both tangible goods and services.
At one extreme, the offer may consist of a pure tangible good, such as soap or toothpaste.
At the other extreme are pure services, for which the offer consists primarily of a service.
To differentiate their offers, marketers are creating and managing customer experiences with
their brands or companies.
Levels of Product and Services (Figure 7.1)
Use Figure 7.1 here.
Product planners need to think about products and services on three levels.
1. Core customer value addresses the question: What is the buyer really buying?
2. Actual product
3. Augmented products are built around the core benefit and actual product by offering
additional consumer services and benefits.
When developing products, marketers first must identify the core customer value that consumers
seek from the product. They must then design the actual product and find ways to augment it in
order to create this customer value and the most satisfying customer experience.
Use Online, Mobile, and Social Media Marketing here.
Use Discussion Question 7-1 here.
Product and Service Classifications
Consumer Products
Consumer products are products and services bought by final consumers for personal
consumption.
Consumer products include the following (see Table 7.1):
•Convenience products are consumer products and services that customers usually buy
frequently, immediately, and with a minimum of comparison and buying effort.
•Shopping products are less frequently purchased consumer products and services that
customers compare carefully on suitability, quality, price, and style.
•Specialty products are consumer products and services with unique characteristics or
brand identifications for which a significant group of buyers is willing to make a special
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Chapter 7 Products, Services, and Brands: Building Customer Value
purchase effort.
•Unsought products are consumer products that the consumer either does not know
about or knows about but does not normally think of buying.
Use Key Terms Consumer Product, Convenience Product, Shopping Product, Specialty Product,
and Unsought Product here.
Use Table 7.1 here.
Industrial Products
Industrial products are those purchased for further processing or for use in conducting a
business.
Use Key Term Industrial Product here.
The distinction between a consumer product and an industrial product is based on the purpose
for which the product is bought.
There are three groups of industrial products and services:
•Materials and parts include raw materials and manufactured materials and parts.
•Capital items are industrial products that aid in the buyer’s production or operations,
including installations and accessory equipment.
•Supplies and services include operating supplies and maintenance and repair services.
Organizations, Persons, Places, and Ideas
Organization marketing consists of activities undertaken to create, maintain, or change the
attitudes and behavior of target consumers toward an organization.
Person marketing consists of activities undertaken to create, maintain, or change attitudes or
behavior toward particular people.
Place marketing involves activities undertaken to create, maintain, or change attitudes or
behavior toward particular places.
Social marketing is the use of commercial marketing concepts and tools in programs designed
to influence individuals’ behavior to improve their well-being and that of society. (social ideas)
Use Key Term Social Marketing here.
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Chapter 7 Products, Services, and Brands: Building Customer Value
PRODUCT AND SERVICE DECISIONS
Individual Product and Service Decisions (Figure 7.2)
Use Chapter Objective 2 here.
Use Figure 7.2 here.
Use Discussion Question 7-2 here.
Product and Service Attributes
Developing a product or service involves defining the benefits that it will offer. These benefits
are communicated and delivered by product attributes such as quality, features, and style and
design.
Product quality involves creating customer value and satisfaction.
Total quality management (TQM) is an approach in which all the company’s people are
involved in constantly improving the quality of products, services, and business processes.
Product quality has two dimensions: level and consistency.
Use Key Term Product Quality here.
The quality level means performance quality or the ability of a product to perform its functions.
Quality conformance means quality consistency, freedom from defects, and consistency in
delivering a targeted level of performance.
Product features are a competitive tool for differentiating the company’s product from
competitors’ products.
The company should periodically survey buyers who have used the product and ask these
questions: How do you like the product? Which specific features of the product do you like
most? Which features could we add to improve the product?
Product style and design is another way to add customer value.
Style describes the appearance of a product. Design contributes to a product’s usefulness as well
as to its looks.
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.
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Chapter 7 Products, Services, and Brands: Building Customer Value
Branding helps buyers in many ways.
• Brand names help consumers identify products that might benefit them.
• Brands say something about product quality and consistency.
Branding gives the seller several advantages.
• The brand name becomes the basis on which a whole story can be built about a product.
• The brand name and trademark provide legal protection for unique product features.
• The brand name helps the seller to segment markets.
Use Marketing Ethics here.
Use Key Term Brand here.
Packaging
Packaging involves designing and producing the container or wrapper for a product.
Use Critical Thinking Exercise 7-7 here.
Use Key Term Packaging here.
Labeling
Labels perform several functions.
• The label identifies the product or brand.
• The label describes several things about the product.
• The label promotes the brand.
Labeling also raises concerns. As a result, several federal and state laws regulate labeling.
The most prominent is the Fair Packaging and Labeling Act of 1966.
Labeling has been affected in recent times by:
•unit pricing (stating the price per unit of standard measure),
•open dating (stating the expected shelf life of the product), and
•nutritional labeling (stating the nutritional values in the product).
Use Critical Thinking Exercise 7-6 here.
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Chapter 7 Products, Services, and Brands: Building Customer Value
Product Support Services
The first step is to survey customers periodically to assess the value of current services and to
obtain ideas for new ones.
Next, the company can take steps to fix problems and add new services that will both delight
customers and yield profits to the company.
Product Line Decisions
A product line is a group of products that are closely related because they function in a similar
manner, are sold to the same customer groups, are marketed through the same types of outlets, or
fall within given price ranges.
Use Key Term Product Line here.
Use Discussion Question 7-3 here.
Product line length is the number of items in the product line.
Product line filling involves adding more items within the present range of the line.
Product line stretching occurs when a company lengthens its product line beyond its current
range.
Companies located at the upper end of the market can stretch their lines downward.
Companies located at the lower end of the market can stretch their product lines upward.
Companies located in the middle range of the market can stretch their lines in both directions.
Product Mix Decisions
Product mix (or product portfolio) consists of all the product lines and items that a particular
seller offers for sale.
Use Key Term Product Mix (or Product Portfolio) here.
A company’s product mix has four dimensions: width, length, depth, and consistency.
• Product mix width refers to the number of different product lines the company carries.
• Product mix length refers to the total number of items the company carries within its
product lines.
• Product mix depth refers to the number of versions offered of each product in the line.
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Chapter 7 Products, Services, and Brands: Building Customer Value
• Product mix consistency refers to how closely related the various product lines are in end
use, production requirements, distribution channels, or some other way.
The company can increase its business in four ways.
1. It can add new product lines, widening its product mix.
2. It can lengthen its existing product lines.
3. It can add more versions of each product, deepening its product mix.
4. It can pursue more product line consistency.
Use Discussion Question 7-4 here.
Use Linking the Concepts here.
SERVICES MARKETING
Services account for close to 80 percent of U.S. gross domestic product.
Services make up 64 percent of gross world product.
The Nature and Characteristics of a Service
A company must consider four service characteristics when designing marketing programs:
intangibility, inseparability, variability, and perishability (see Figure 7.3).
Use Figure 7.3 here.
Use Key Terms Service Inseparability, Service Intangibility,
Service Perishability, and Service Variability here.
Use Chapter Objective 3 here.
Use Discussion Question 7-5 here.
(1) Service intangibility means that services cannot be seen, tasted, felt, heard, or smelled
before they are bought.
(2) Service inseparability means that services cannot be separated from their providers,
whether the providers are people or machines. Because the customer is also present as the
service is produced, provider-customer interaction is a special feature of services
marketing.
(3) Service variability means that the quality of services depends on who provides them as
well as when, where, and how they are provided.
(4) Service perishability means that services cannot be stored for later sale or use.
Marketing Strategies for Service Firms
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Chapter 7 Products, Services, and Brands: Building Customer Value
Just like manufacturing businesses, good service firms use marketing to position themselves
strongly in chosen target markets.
The Service-Profit Chain
In a service business, the customer and front-line service employee interact to create the service.
Use Key Term Service-Profit Chain here.
The service-profit chain consists of five links:
•Internal service quality: superior employee selection and training, a quality work
environment, and strong support for those dealing with customers, which results in…
•Satisfied and productive service employees: more satisfied, loyal, and hardworking
employees, which results in…
•Greater service value: more effective and efficient customer value creation and
service delivery, which results in…
•Satisfied and loyal customers: satisfied customers who remain loyal, make repeat
purchases, and refer other customers, which results in…
•Healthy service profits and growth: superior service firm performance.
Service marketing requires internal marketing and interactive marketing. (Figure 7.4)
Internal marketing means that the service firm must orient and motivate its customer-contact
employees and supporting service people to work as a team to provide customer satisfaction.
Interactive marketing means that service quality depends heavily on the quality of the
buyer-seller interaction during the service encounter.
Use Key Terms Interactive Marketing and Internal Marketing here.
Use Marketing at Work 7.1 here.
Use Figure 7.4 here.
Service companies face three major marketing tasks: They want to increase their service
differentiation, service quality, and service productivity.
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