W3: Case Discussion
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Unit3_Chapter6PowerPoint.pptPrinciples of Marketing 4.0
Jeff Tanner and Mary Anne Raymond
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CHAPTER 6
Creating Offerings
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LEARNING OBJECTIVES
Distinguish between the three major components of an offering: product, price, and service.
Explain, from both a product-dominant and a service-dominant approach, the mix of components that comprise different types of offerings.
Distinguish between technology platforms and product lines.
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PRODUCT, PRICE, SERVICE
Product
Most offerings consist of a product, or a tangible good people can buy, sell, and own.
Products have features which are characteristic of the offering.
Price
Offerings have a price that is paid for the product benefits.
Total cost of ownership (TCO) is the amount paid to own, use, and dispose of a product.
Service
An action that provides a buyer with an intangible benefit.
Usually require that the consumer be physically present.
Services are perishable; can’t be stored.
Many tangible products have intangible service components attached to them.
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THE RATER MODEL
The RATER model is used to focus marketers’ attention on key dimensions of services.
Reliability: the ability to deliver a specific level of quality over a number of trials.
Assurance: the degree to which the consumer can trust the service provider to live up to promises.
Tangibles: tangible products that often signal to consumers that they have received a high-quality service, such as shampoo and the appearance of furniture during a hotel stay.
Empathy: service providers need to be able to put themselves into the shoes of customers to understand what is wanted and needed.
Responsiveness: the service provider’s ability to respond to consumers’ interests and desires.
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PRODUCT-DOMINANT MARKETING
Product dominance started with the industrial revolution.
Focus was on producing products cheaply.
Firms became product oriented, believing the best way to gain market share was with better products at lower prices.
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SERVICE-DOMINANT APPROACH TO MARKETING
Service dominance integrates the product, price, and services of an offering.
Marketers should consider what services it takes for the customer to acquire their offerings, enjoy them and dispose of them.
Critics argue that the product-dominant approach also integrated services (though not price).
For many pure products, the product-dominant approach can be helpful in bundling different augmentations for different markets.
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SERVICE-DOMINANT APPROACH TO MARKETING
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SHARING ECONOMY
Information technology allows owners of assets to increase utilization of their assets, whether for money or exchange of services.
Based on service-dominant logic
Functions:
Make it possible for anyone to share an asset
Drive costs down and availability up
Disrupt many established businesses
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PRODUCT LEVELS AND PRODUCT LINES
A product’s technology platform is the core technology on which it is built.
Some new offerings take a technology platform and re-bundle its benefits.
Technology platforms are not limited to tangible products.
Knowledge can be a type of technology platform in a pure services environment.
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PRODUCT LEVELS
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PRODUCT LINES
Line depth: the number of offerings in a product line.
Line extension: when a new but similar product is added to a line.
Line breadth: a function of how many different, or distinct product lines a company has.
Product mix: the entire assortment of products that a firm offers.
GROUP OF RELATED OFFERINGS AND IS CREATED TO MAKE MARKETING STRATEGIES EFFICIENT
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KEY TAKEAWAYS
Companies market offerings composed of a combination of tangible and intangible characteristics for certain prices.
During the Industrial Revolution, firms focused primarily on products and not so much on customers.
The service-dominant perspective to marketing integrates three different dimensions of an offering—not only the product but also its price and the services associated with it.
This perspective helps marketers think more like their customers, which helps firms add value to their offerings.
An offering is based on a technology platform, which can be used to create a product line. A product line is a group of similar offerings.
A product line can be deep (many offerings of a similar type) and/or broad (offerings that are very different from one another and cover a wide range of customers’ needs).
The entire assortment of products that a company offers is called the product mix.
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LEARNING OBJECTIVES
Define the various types of offerings marketed to individual consumers.
Explain why a single offering might be marketed differently to different types of consumers.
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FOUR GENERAL CATEGORIES OF CONSUMER OFFERINGS
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Convenience
Little effort in shopping. Bread is an example
Shopping
Compare products and select
Consumers often care about brand names
Unsought
Products that buyers do not want to shop for until they need them
Specialty
Highly differentiated. Available through limited channels
KEY TAKEAWAYS
Convenience offerings, shopping offerings, specialty offerings, and unsought offerings are the major types of consumer offerings.
Convenience offerings often include life’s necessities (bread, milk, fuel, and so forth), for which there is little difference across brands.
Shopping goods do vary, and many consumers develop strong preferences for some brands versus others.
Specialty goods are even more exclusive.
Unsought goods are a challenge for marketers because customers do not want to have to shop for them until they need them.
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LEARNING OBJECTIVES
Define the various types of offerings marketed to businesses.
Identify some of the differences with regard to how the various types of business offerings are marketed.
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PRIMARY CATEGORIES OF B2B OFFERINGS
Capital equipment offering: is any equipment purchased and used for more than one year and depreciated over its useful life.
Raw materials offerings: are materials firms offer other firms so they can make a product or provide a service.
OEM (or original equipment manufacturer) offerings: are components, or parts, sold by one manufacturer to another that get built into a final product without further modification.
MRO (or maintenance, repair, and operations) offerings: refer to products and services used to keep a company functioning.
Facilitating offerings: include products and services that support a company’s operations but are not part of the final product it sells.
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KEY TAKEAWAYS
Business buyers purchase various types of offerings to make their own offerings.
Some of the types of products they use are raw materials, manufactured materials, and component parts and assemblies, all of which can become part of an offering.
MRO (maintenance, repair, and operations) offerings are those that keep a company’s depreciable assets in working order.
Facilitating offerings are products and services a company purchases to support its operations but are not part of the firm’s final product.
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LEARNING OBJECTIVES
Understand the branding decisions firms make when they’re developing new products.
Identify the various levels of packaging for new products.
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BRANDING
Branding: the set of activities designed to create a brand and position it in the minds of consumers.
Brand name: the spoken part of a brand’s identity.
Brand mark: the symbol associated with a brand.
Brand extension: utilizing an existing brand name or brand mark for a new product category.
Cannibalization: when a firm’s new offering eats into the sales of one of its older offerings.
A NAME, PICTURE, DESIGN, OR COMBINATION OF THOSE ITEMS, USED TO IDENTIFY A SELLER’S OFFERINGS AND DIFFERENTIATE THEM FROM COMPETITORS’ OFFERINGS.
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PACKAGING DECISIONS
Packaging has to fulfill a number of important functions, including:
Communicating the brand and its benefits.
Protecting the product from damage and contamination during shipment
Protecting the product from damage and tampering once it’s in retail outlets.
Preventing leakage of the contents.
Presenting government-required warning and information labels.
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PACKAGING
Primary packaging holds a single retail unit of a product.
Secondary packaging holds a single wholesale unit of a product.
Tertiary packaging is packaging designed specifically for shipping and efficiently handling large quantities.
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KEY TAKEAWAYS
A brand is a name, picture, design, or symbol, or combination of those items, used by a seller to identify its offerings and differentiate them from competitors’ offerings.
Branding is the set of activities designed to create a brand and position it relative to competing brands in the minds of consumers.
An important decision companies must make is under which brand a new offering will be marketed. A brand extension involves utilizing an existing brand name or brand mark for a new product or category (line) of products.
Cannibalization occurs when a company’s new offering eats into the sales of one of its older offerings. It is something to be avoided in most cases, but it can also be a sign of progress because it means a company is developing new and better products.
Packaging protects products from damage, contamination, leakage, and tampering, but it is also used to communicate the brand and its benefits, product warnings, and proper use.
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LEARNING OBJECTIVES
Understand the people involved in creating and managing offerings.
Recognize the differences in organizing product marketing for consumers versus B2B companies.
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PRODUCT MANAGEMENT POSITIONS
Brand manager: responsible for all business decisions regarding offerings within one brand.
Product manager: has business responsibility for a particular product or product line.
Category manager: responsible for business decisions within a broad grouping of offerings.
Market manager: responsible for business decisions within a market.
Vertical market managers: responsible for a particular market segment, or a vertical market.
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KEY TAKEAWAYS
Brand managers decide what products are to be marketed and how.
Other important positions include category managers, market managers, and vertical market managers.
Category managers are found in consumer markets, usually in retail.
Market managers can be found in both consumer markets and B2B markets.
However, vertical market managers are found only in B2B markets.
Some companies have market managers but no brand managers.
Instead, a vice president of marketing or other executive is responsible for the brands.
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