Chapter Five

Product, Services, and

Brands: Building
Customer Value-NPD, PLC

06/18/2025 By Aschalew Adane 1

 Topic Outline

What Is a Product?
Product and Services Decisions
Branding Strategy: Building
Strong Brands
Services Marketing
NPD
PLC
 What Is a Product?
Products: Goods+Services

A Product is anything that can be offered in a

market for attention, acquisition, use, or
consumption that might satisfy a need or
want
 What Is a Product?
Levels of Product and Services

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 Product and Service Classifications
Durable Vs Non durable
Consumer products Vs Industrial products

Consumer products are products and

services for personal consumption

Classified by how consumers buy them

Convenience products
Shopping products
Specialty products
Unsought products
Convenience products
Customer usually buys frequently,
immediately, and with a minimum
comparison and buying effort

Newspapers
Candy
Fast food
Shopping products?

Customer compares carefully on

suitability, quality, price, and style

Furniture
Cars
Appliances
 Specialty products
Unique characteristics or brand
identification for which a
significant group of buyers is
willing to make a special purchase
effort

Medical services
Designer clothes
High-end electronics
 Unsought products
Consumer does not know about or
knows about but does not normally
think of buying

Life insurance
Funeral services
Blood donations
 Industrial products
Products purchased for further
processing or for use in
conducting a business

Classified by the purpose for

which the product is purchased
Materials and parts
Capital
Raw materials
 Product and Service Decisions
Individual Product and Service Decisions

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Product and Service Decisions
Individual Product and Service Decisions

Product attributes are the benefits of

the product or service

 Quality

 Features

 Style and design

Product and Service Decisions
Individual Product and Service Decisions

Product quality includes level and

consistency
 Quality level is the level of quality that
supports the product’s positioning

 Conformance quality is the product’s

freedom from defects and consistency in
delivering a targeted level of
performance
Product and Service Decisions
Individual Product and Service Decisions

Product features are a competitive tool

for differentiating a product from
competitors’ products

Product features are assessed based on

the value to the customer versus the cost
to the company
Product and Service Decisions
Individual Product and Service Decisions

Style describes the appearance of the product

Design contributes to a product’s usefulness as

well as to its looks
Product and Service Decisions
Individual Product and Service Decisions

Brand is the name, term, sign, or design

—or a combination of these—that
identifies the maker or seller of a
product or service

Brand equity is the differential effect

that the brand name has on customer
response to the product and its
marketing
Product and Service Decisions
Individual Product and Service Decisions

Packaging involves designing

and producing the container or
wrapper for a product

Labels identify the product or

brand, describe attributes, and
provide promotion
Product and Service Decisions

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
Product and Service Decisions
Product Line Decisions

Product line length is the number of

items in the product line
 Line stretching
 Line filling
Product and Service Decisions
Product Mix Decisions

Product mix consists of all

the products and items that a
particular seller offers for sale
 Width
 Length
 Depth
 Consistency
Branding Strategy: Building Strong Brands
Brand represents the consumer’s
perceptions and feelings about a product
and its performance. It is the company’s
promise to deliver a specific set of
features, benefits, services, and
experiences consistently to the buyers

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Branding Strategy: Building Strong Brands
Brand Name Selection
Desirable qualities
1. Suggest benefits and qualities
2. Easy to pronounce, recognize, and
remember
3. Distinctive
4. Extendable
5. Translatable for the global economy
6. Capable of registration and legal
protection
Branding Strategy: Building Strong Brands
Brand Sponsorship

 Manufacturer’s brand
 Private brand
 Licensed brand
 Co-brand
Branding Strategy: Building Strong Brands
Brand Development Strategies

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Services Marketing
Types of Service Industries

Government
Private not-for-profit organizations
Business services
Services Marketing
Nature and Characteristics of a Service
 Cont’d
New-Product Development and
Product Life-Cycle Strategies

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New-Product Development Strategy
Two ways to obtain new products

Acquisition refers to the buying of a

whole company, a patent, or a license
to produce someone else’s product

New product development refers to

original products, product
improvements, product modifications,
and new brands developed from the
firm’s own research and development
 New-Product Development
Reasons for new product failure

Overestimation of market size

Poor design
Incorrect positioning
Wrong timing
Priced too high
Ineffective promotion
Management influence
High development costs
Competition

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 What Is a New Product?
• New-to-the-world (really-new) products (10% of new products):
Inventions that create a whole new market. Ex.: Polaroid
camera, Sony Walkman, Palm Pilot, Rollerblade skates, P&G
Febreze and Dryel.
• New-to-the-firm products (20%): Products that take a firm into
a category new to it. Ex.: P&G brand shampoo or coffee,
Hallmark gift items, AT&T Universal credit card, Canon laser
printer.
• Additions to existing product lines (26%): Line extensions and
flankers that flesh out the product line in current markets. Ex.:
Tide Liquid, Bud Light, Apple’s iMac, HP LaserJet 7P.
• Improvements and revisions to existing products (26%):
Current products made better. Ex.: P&G’s continuing
improvements to Tide detergent, Ivory soap.
• Repositionings (7%): Products that are retargeted for a new
use or application. Also includes retargeting to new users or
new target markets. Ex.: Arm & Hammer baking soda sold as a
refrigerator deodorant; aspirin repositioned as a safeguard
against heart attacks; Marlboro retargeted as a man’s
cigarette.
• Cost reductions
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 New-Product Development Process
Major Stages in New-Product Development

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New-Product 1.
Development Process
Idea Generation

Idea generation is the systematic search

for new-product ideas
Sources of new-product ideas
 Internal
 External
New-Product Development Process
2. Idea Screening

Identify good ideas and drop poor ideas

R-W-W Screening Framework:
Is it real?
Can we win?
Is it worth doing?
New-Product Development Process
3. Concept Development and Testing

Product idea is an idea for a possible

product that the company can see itself
offering to the market
Product concept is a detailed version of
the idea stated in meaningful consumer
terms
Product image is the way consumers
perceive an actual or potential product
New-Product Development Process
4. Marketing Strategy Development

Marketing strategy development refers to the

initial marketing strategy for introducing the
product to the market
Marketing strategy statement includes:
Description of the target market
Value proposition
Sales and profit goals
New-Product Development Process
5. Business analysis
Business analysis involves a review of the
sales, costs, and profit projections to find
out whether they satisfy the company’s
objectives
New-Product Development Process
6. Product development

Involves the creation and testing of

one or more physical versions by the
R&D or engineering departments
 Requires an increase in investment
New-Product Development Process
7.Test marketing
Test marketing is the stage
at which the product and
marketing program are
introduced into more realistic
marketing settings
Provides the marketer with
experience in testing the
product and entire marketing
program before full
introduction
 New-Product Development Process
Commercialization

The introduction of the new product

 When to launch
 Where to launch
 Planned market
Product Life-Cycle Strategies
Product Life Cycle
Introduction Stage of the PLC
Sales
Sales Low
Low sales
sales

Costs
Costs High
High cost
cost per
per customer
customer

Profits
Profits Negative
Negative
Create
Create product
product awareness
awareness
Marketing
Marketing Objectives
Objectives and
and trial
trial
Product
Product Offer
Offer aa basic
basic product
product

Price
Price Use
Use cost-plus
cost-plus

Distribution
Distribution Build
Build selective
selective distribution
distribution

Advertising Build
Build product
product awareness
awareness among
among early
early
Advertising adopters and dealers
adopters and dealers
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Growth
Growth Stage
Stage of
of the
the PLC
PLC

Sales
Sales Rapidly
Rapidly rising
rising sales
sales

Costs
Costs Average
Average cost
cost per
per customer
customer

Profits
Profits Rising
Rising profits
profits

Marketing
Marketing Objectives
Objectives Maximize
Maximize market
market share
share
Offer
Offer product
product extensions,
extensions, service,
Product
Product warranty
service,
warranty
Price
Price Price
Price to
to penetrate
penetrate market
market

Distribution
Distribution Build
Build intensive
intensive distribution
distribution

Advertising Build
Build awareness
awareness and
and interest
interest in
in the
the
Advertising mass
mass market
market
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Maturity
Maturity Stage
Stage of
of the
the PLC
PLC

Sales
Sales Peak
Peak sales
sales

Costs
Costs Low
Low cost
cost per
per customer
customer

Profits
Profits High
High profits
profits

Marketing Maximize
Maximize profit
profit while
while defending
defending
Marketing Objectives
Objectives market
market share
share
Product
Product Diversify
Diversify brand
brand and
and models
models

Price
Price Price
Price to
to match
match or
or best
best competitors
competitors

Distribution
Distribution Build
Build more
more intensive
intensive distribution
distribution

Advertising
Advertising Stress
Stress brand
brand differences
differences and
and benefits
benefits

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Decline
Decline Stage
Stage of
of the
the PLC
PLC

Sales
Sales Declining
Declining sales
sales

Costs
Costs Low
Low cost
cost per
per customer
customer

Profits
Profits Declining
Declining profits
profits

Marketing
Marketing Objectives
Objectives Reduce
Reduce expenditure
expenditure and
and milk
milk the
the brand
brand

Product
Product Phase
Phase out
out weak
weak items
items

Price
Price Cut
Cut price
price
Go
Go selective:
selective: phase
phase out
out unprofitable
unprofitable
Distribution
Distribution outlets
outlets
Advertising
Advertising Reduce
Reduce to
to level
level needed
needed toto retain
retain
hard-core
hard-core loyal
loyal customers
customers
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 Product Life-Cycle Strategies

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 Figure 1.3

Not All New Products Are Planned

Microwave ovens
Aspartame (NutraSweet)
ScotchGard fabric protector
Teflon
Penicillin
X-rays
Dynamite

In each case, an accidental discovery -- but someone knew

they had something when they saw it!

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Breakthrough Innovations that Changed Our Lives Figure 1-7

 Personal Computer  Answering Machine

 Microwave Oven  Velcro Fastener
 Photocopier  Touch-Tone Telephone
 Pocket Calculator  Laser Surgery
 Fax Machine  Apollo Lunar Spacecraft
 Birth Control Pill  Computer Disk Drive
 Home VCR  Organ Transplanting
 Communication satellite  Fiber-Optic Systems
 Bar coding  Disposable Diaper
 Integrated Circuit  MS-DOS
 Automatic Teller  Magnetic Resonance
Imaging
This list was compiled in the early 1990s. Since then one
would certainly have to add the Internet. Anything else you
would add? Which would you delete?
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