Product/Services Management

Product/Service Management—Discussion Guide Performance Indicator: Explain the nature and scope of the product/service management function

THINK ABOUT IT

Managing products and services effectively is vital to the success of any business or organization. Products can’t just appear overnight! Products also must be well managed through the stages of growth, maturity, and decline.

KEY CONCEPTS

Slide #1 Product/Service management is a marketing function that involves obtaining, developing, maintaining, and improving a product or service mix in response to market opportunities.

• Every business participates in product/service management, which involves a wide array of activities, including:

  • Discovering opportunities for new products

  • Developing marketing plans and strategies for products

  • Coordinating the product mix

  • Sustaining product success for as long as possible

  • Reassessing products that are not meeting expectations

• In some companies, these responsibilities are distributed over a number of departments. In others, one employee may be responsible for the entire function.

• A few common job titles for these roles are:

  • Product manager

  • Director of product management

  • Brand manager

  • Marketing manager

Slide #2 Product/Service management tasks are affected and influenced by many factors, both within the company and outside it. Businesses must consider the following when managing products and services:

• Company size, goals, and strategies

• Customer needs and wants

• Costs and available resources

• Competition

• The product itself

• Government regulations

• Stage in the product life cycle

• Business and economic trends

Slide #3 There are many benefits to successful product/service management. They include:

• Improved sales and profits

• Increased market share

• Increased ability to beat the competition

• Development of new customers

• Decreased financial risk and lost sales

Slide #4 Every business handles product/service management a little differently, but there are three main phases of the management process that are common to most processes.

They are:

• Developing new products

• Monitoring existing products

• Eliminating weak products

Slide #5 Companies spend a great deal of money, time, and effort developing new products to offer their customers.

• New products may include goods or services that:

  • Have never been offered on the market before

  • Have been modified in some way

  • Will be presented or distributed in a new manner

• While there are a number of ways for a company to obtain a new product, the basic steps for developing a new product internally are:

  • Generate ideas.

    • Ideas for new products can come from a variety of sources.

    • It may take hundreds of ideas to arrive at one that will move onto the next steps in the process.

  • Screen ideas.

    • Ideas are screened, often by top-level management across departments, for those that may be unworkable (too expensive, bad fit for company, unsuccessful in the past, etc.).

  • Test the product concept.

    • Concept testing may involve a simple questionnaire or, in some cases, the creation of an actual prototype of the product.

    • It is important to be very selective at this stage because product development can require a substantial financial investment.

  • Conduct a feasibility analysis.

    • This in-depth analysis takes many factors into account, including demand, cost, competition, required investment, and potential profit.

    • This information will be used to make more detailed decisions about whether or not this product is feasible and further steps should be taken.

  • Develop the product.

    • Product development is a lengthy process that could take months or years to complete.

    • During this step, a working model of the product is tested, modified, and retested until the company decides it is ready to hit the market.

    • The cost of production is estimated, and plans for packaging, labeling, brand name, promotion, and distribution are made.

  • Test market the product.

    • Test marketing involves introducing the product to a limited market to see how well it will be accepted.

    • It serves as a guide to product/service managers in planning actual marketing strategies.

    • Not all new products need test marketing.

  • Commercialize the product.

    • Products that make it through the entire process are finally ready for commercialization.

    • Marketing plans are put into place, service and sales training are conducted, and the product’s life cycle begins.

Slide #6 It is important for product/service managers to keep a close eye on existing products to monitor them in terms of sales, profit, market share, and how well they are meeting company goals and expectations.

• Product/Service managers may decide that an existing product is performing well and needs no modifications.

• Or, they may choose to add new features or change the design or packaging in some way.

• Making changes to an existing product often follows similar steps to those in the development of a new product.

Slide #7 Weak products are those with declining sales and profitability.

• The process of product discontinuation must be planned carefully to prevent damaging the company’s image.

• Some products are dropped immediately, while others are withdrawn from the market over a period of time.

• Either way, product/service managers must discontinue weak products due to their cost to the company.

Product Life Cycles—Discussion Guide

Performance Indicator: Identify the impact of product life cycles on marketing decisions

THINK ABOUT IT

No new product is marketed or managed the same way from its first sale to its last. There are stages of each product’s life, and each stage has a great influence on the decisions marketers make. Approaching the product’s life cycle appropriately can lead to greater marketing success and higher profits.

KEY CONCEPTS

Slide #1 The product life cycle refers to the stages a product moves through from the time it is introduced to the market until the time it is taken off the market.

• There are four stages in the product life cycle:

  • Introduction

  • Growth

  • Maturity

  • Decline

• Each stage presents marketers with a unique combination of opportunities and challenges.

• Decisions about the four P’s of marketing (product, promotion, price, and place) depend greatly on where a product is in its life cycle.

Slide #2 A product enters the market during the introduction stage.

• During this time, profits are usually nonexistent because sales are usually slow at first.

• Costs, however, tend to be very high when introducing a new product.

  • Researching and developing, testing, producing, and marketing the product can all be quite expensive.

• This stage is critical for the product, its marketers, and the company itself.

  • The failure rate for products during this phase is very high.

• The four P’s of marketing in the introduction stage:

  • Product:

    • Marketers tend to keep the product line short and simple during the introduction stage.

    • This allows them to hold down costs and inventory as much as possible.

  • Promotion:

    • Inform potential customers that the new product exists.

    • Build awareness of the product’s unique ability to meet needs and wants.

    • Stimulate demand for the new product.

  • Price:

    • Marketers tend to either practice price skimming (setting prices high to recover the costs of product introduction as quickly as possible)

    • Or penetration pricing (setting prices low to sell as many units early as possible)

  • Place:

    • Place and distribution during the introduction stage are critical to a product’s success.

    • Promotion of a new product can only accomplish so much if customers are not able to find it.

Slide #3 During the growth stage, a product quickly becomes established in the market.

• Profits improve with the increase in sales, and costs tend to go down.

• This is the stage in which competitors begin to bring rival products to market.

• The four P’s of marketing in the growth stage:

  • Product:

    • This is the time to offer new product features, expand the product line, or upgrade the product quality.

  • Promotion:

    • Since competitors have entered the market by this stage, promotion is generally shifted away from the product and onto the brand.

  • Price:

    • At this stage, marketers can lower the price due to economies of scale (as a company produces a greater number of goods, and the process of production becomes more efficient, the cost-per-unit goes down).

    • If demand remains greater than the supply, however, they can choose to keep prices where they are.

  • Place:

    • Marketers often work to expand distribution during the growth stage to make the product more widely available and continue to compete with rival products.

Slide #4 The maturity stage is usually the longest lasting of the product life cycle.

• In this stage, the product has achieved acceptance by most of its potential buyers.

• Sales are still high, but sales growth slows down, and profits stabilize.

• Competition is still quite high, although weaker competitors have left the market.

• Most marketers agree that marketing during the maturity stage is one of the most difficult challenges they face.

• The four P’s of marketing in the maturity stage:

  • Product:

    • Marketers focus on differentiating their product from those of competitors during the maturity stage.

    • Some strategies for doing this include: making the product easier to use, bundling (selling packages rather than single products), and focusing on service.

  • Promotion:

    • Production costs are usually stable during this stage.

    • One strategy for marketers is to decrease media advertising costs in favor of more in-store promotion or incentives.

  • Price:

    • During the maturity stage, marketers either keep their prices stable or decrease them due to competition.

    • Factors such as the state of the industry or the overall economy may also be considered.

  • Place:

    • To keep a high level of distribution, marketers may offer incentives to distributors in an effort to keep their product front and center for customers.

Slide #5 During a product’s decline stage, sales and profits decrease.

• This may happen due to:

  • Market saturation

  • The availability of superior products

  • A shift in customer tastes, preferences, or values

• Marketers are faced with more tough decisions in the decline stage.

• The four P’s of marketing in the decline stage:

  • Product:

    • There are a few options available to marketers regarding the product during this stage.

    • They could attempt to maintain the product by adding new features or finding additional uses.

    • They might try harvesting the product (continuing to offer it at a reduced price, but reduce spending on the product as much as possible).

    • They could simply discontinue it by liquidating the remaining inventory and no longer offering the product.

  • Promotion:

    • If marketers are attempting to maintain the product, some costs may go into promoting new features or uses.

    • Otherwise, promotion is largely ceased at this stage.

  • Price:

    • If a product’s decline is slow, marketers may choose to keep prices stable.

    • If the decline comes quickly, marketers lower the prices dramatically to sell as much of the product as possible.

  • Place:

    • Distributors may be reluctant to carry a product in its decline stage.

    • Marketers often have to either convince them to carry it, move the product to nontraditional channels, or offer it exclusively online.

Slide #6 Due to the cost of bringing any new product to the market, marketers will try to extract as much profit from each one as possible. There are a number of strategies for extending the life cycle of a product, including:

• Finding new uses for the product

• Increasing frequency of use by current customers

• Increasing the number of users

  • If the domestic market is saturated, marketers might seek out overseas markets.

• Altering the product physically

  • Sometimes new packaging, labeling, or selling in bulk can prolong a product’s life.

Ethics in Product Management—Discussion Guide Performance Indicator: Explain business ethics in product/service management

THINK ABOUT IT

Just as products are essential to business success, so are customers. Since the safety and satisfaction of customers are at stake, companies have both a moral and an incentivized obligation to manage their products ethically. Besides being the right thing to do, ethical behavior in product/service management also protects customers from harm and safeguards the organization’s reputation—resulting in more loyal customers and greater sales.

KEY CONCEPTS

Slide #1 One key area that often presents ethical challenges for product managers is packaging.

• Product managers are responsible for developing attractive, cost-effective packaging materials for their products.

• Packaging is important because it helps sell products, protect products, create a good impression of the products, and communicate product benefits to customers.

• When making packaging decisions, product managers must consider:

  • Design

    • Choosing design elements may not immediately appear to involve ethics, but product managers must be careful not to imitate competitors’ designs too closely or include inaccurate or misleading depictions of their own products in these decisions.

  • Safety

    • Safety is a critical aspect of packaging decisions.

    • For example, some materials that are weatherproof or tamperproof can aid in transporting and protecting a product, but might also have health risks for the customers who interact with them.

  • Dimensions

    • Companies frequently alter the size and shape of product packaging for many reasons including appearance, shipping issues, bundling, and cost-effectiveness.

    • However, purposely deceiving customers into believing they are getting larger quantities than they are is ethically problematic.

• • Environmental impact

    • Many factors influence decisions about what materials will best protect and/or display a product but will also not negatively affect the environment.

    • Product managers have an important responsibility to consider what will happen to product packaging after the product is used and the packaging is discarded.

Slide #2 Product labeling serves two important purposes: communicating what is inside the package and providing instructions for proper use and/or care of the product.

• The 1967 Fair Packaging and Labeling Act tightened requirements for packaging labels and mandated that all labels offer adequate information concerning the packages’ contents.

• Product managers must make both legal and ethical labeling decisions about:

  • Descriptive words

    • Descriptive words such as “fat-free” and “all-natural” are frequently used in product labels and packaging.

    • However, the definitions for words like these are not always as agreed-upon as you might think.

    • Questions over terms like these has led the Food and Drug Administration to set standards for how and when these descriptive words can be used in labeling.

  • Comparisons

    • Similar to descriptive words about product contents, words about portions and comparisons also require ethical considerations.

    • There is a lot of debate about what size of soft drink should be labeled as “small” or what it means to claim a product is “healthy.”

• • Hazard warnings

    • Labels are especially important when a product poses a potential health or safety risk. Informing customers about possible effects on allergies or whether a product contains possible carcinogens could be a matter of life and death.

    • Advances in science and social trends can also influence what information should be contained in labels.

    • In 2016, the U.S. Congress began requiring all food containing genetically modified organisms (GMOs) be labeled.

Slide #3 In addition to developing product packaging and labeling, product managers are also responsible for monitoring the quality of their products. Among the many ethical considerations with managing quality are:

• Planned obsolescence

  • Planned obsolescence is the practice of designing a product to become unusable before it should reasonably need replacement.

  • For example, Apple and Samsung were investigated in 2018 for issuing software updates that had negative effects on the performance of phones that were more than two years old.

  • There is debate over whether this is an ethical practice.

• Transparency

  • Because many products need to be altered, adjusted, or repositioned throughout their life cycles, product managers have to make difficult choices about altering the quality of a product and informing customers about those changes.

• Risk warnings

  • Not only is it the responsibility of product managers to ensure that their products are safe, but also to alert customers about unforeseen risks associated with product usage.

  • If a risk about a product that is already on the market arises, a company might issue a voluntary recall of a product until the issue can be resolved.

  • Failing to do so could lead to significant harm to customers and to a company’s reputation.

  • Legal repercussions could also result from failure to inform the public about risks associated with a product.

Consumer Protection—Discussion Guide

Performance Indicator: Identify consumer protection provisions of appropriate agencies

THINK ABOUT IT

In today’s world, there are millions of consumer products available. Along with the many benefits these products provide, there are potential risks to the people who use them. Consumer protection measures attempt to minimize these risks as much as possible.

KEY CONCEPTS

Slide #1 Consumer protection includes all of the efforts that businesses and the government take to safeguard consumers from any kind of injury, illness, or harm they might suffer in the process of purchasing or using consumer products.

• Consumer protection occurs in product/service management in many forms, including:

  • Offering products that are safe to use

  • Testing products carefully

  • Labeling products accurately

  • Providing complete product-use instructions

  • Providing protective packaging

  • Promoting products honestly

• Businesses are also responsible for protecting consumers from financial loss. Some businesses help customers get their money’s worth by offering unit pricing to help customers compare the values of similar goods.

• Some businesses will additionally offer warranties (promises that a defective product will be repaired or replaced) or guarantees (promises that the price of an unsatisfactory product will be refunded) to help protect their customers.

Slide #2 There are many reasons why consumers need protection. Here are some of the reasons why the market can present enough risks that these protections are necessary:

• Assortment of products

  • There are so many products available that it can be difficult for consumers to make fully educated decisions without certain assurances about their safety.

  • This becomes increasingly important as advancing technology leads to increasingly complex products.

• Consumer inadequacies

  • Not all consumers are in a position to look out for their own interests effectively.

  • Children, older populations, language-learners, and disabled individuals might struggle to understand product information on their own and rely on these protections.

• Injuries and illness

  • Thousands of people become injured or ill from interacting with consumer products each year.

  • There is a lot at stake for companies and governments to limit these instances as much as possible.

• Dishonest or confusing business practices

  • Unfortunately, not all businesses make ethical decisions or offer easy-to-understand information.

  • In some cases, the government needs to step in to regulate business practices and make them fair to consumers.

• Business protection

  • When businesses protect consumers, they are also protecting themselves from financial losses caused by consumer lawsuits, government fines, negative publicity, or defective/unsafe products that must be removed from the market.

Slide #3 Both federal and state governments have consumer protection agencies, and many cities have consumer-affairs departments that have the authority to enforce the laws under their jurisdiction. Some of the most important federal agencies and areas of regulation of consumer protection are:

• The Federal Trade Commission (FTC) aims to protect consumers and eliminate unfair business competition.

  • In an effort to help consumers make good buying decisions, the FTC enforces laws covering advertising/marketing activities and sales/credit practices.

  • Established by The Federal Trade Commission Act of 1914

• The Consumer Product Safety Commission (CPSC) is largely responsible for ensuring product safety.

  • The CPSC sets product safety standards; recalls or bans unsafe products; and requires producers to test their products, provide warning and instructions, and correct product problems.

  • Established by The Consumer Product Safety Act of 1972

• The Food and Drug Administration (FDA) administers laws that apply to foods, drugs, medical devices, and cosmetics and are intended to protect consumer health.

  • The FDA makes sure that the food supply is safe, drugs and medical devices are safe, cosmetics are clean and harmless, labels are honest and informative, and harmful products are removed from the market.

  • Given oversight authority by The Federal Food, Drug, and Cosmetic Act of 1938

• The National Highway Traffic Safety Administration (NHTSA) sets safety standards for motor vehicles, investigates safety defects, and has the power to recall any vehicles with safety problems.

• The Consumer Financial Protection Bureau (CFPB) works to make financial products safe for consumers by studying and informing consumer behaviors in addition to supervising banks, credit unions, and other financial-services providers.

  • Established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010

Slide #4 Over the years, many additional laws have been passed to provide regulatory agencies with consumer regulations to enforce, including:

• The National Traffic and Safety Act of 1958 empowers the federal government to set and administer safety standards for motor vehicles and traffic safety.

• The Fair Packaging and Labeling Act of 1967 directs the Food and Drug Administration and the Federal Trade Commission to regulate product labels.

• The Consumer Credit Protection Act of 1968 includes the Truth in Lending Act, which protects consumers who use credit and makes it easier for them to compare terms between credit systems.

• The Magnuson-Moss Warranty Act of 1975 protects consumers against misleading warranties.

• The Do-Not-Call Implementation Act of 2003 establishes a National Do Not Call Registry.

• The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 establishes fair and transparent practices for granting credit to consumers.

Slide #5 There are many ways in which a business can be harmed or helped by its approach to consumer protection.

• Government regulation can increase a business’s expenses, for example.

  • These added expenses may result from efforts to comply with the law and to produce safe products.

  • Or, they may result from failing to comply with the law and producing unsafe products.

• Areas where businesses might incur added costs due to consumer protection and regulation include:

  • Product development

    • Complying with consumer protection laws makes the research and development process for new products longer and more expensive due to required, thorough testing of new products.

  • Product problem correction

    • Government-required correction of advertising, product design, packaging, or instructions can lead to added costs.

    • Government agencies can also require producers to provide free repairs.

  • Product recalls

    • Having a product recalled can be a major expense to a business.

    • The costs of producing the product, receiving the returned product, lost sales and profits, and damage to company image can be extremely high even if the producer is not at fault.

  • Insurance coverage

    • Producers of consumer products must carry product liability insurance to protect the company from financial loss if consumers are injured and sue the company.

    • Successful lawsuits filed against companies lead to increased insurance premiums as insurance companies seek to spread the costs of these lawsuits among multiple clients. Service providers must also be insured.

  • Legal protection

    • Even when businesses do their best to comply with government regulations, they may still have product-related problems that require them to defend themselves in court.

  • Licensing

    • Some types of businesses require licenses to run.

    • This protects consumers from unqualified business operators.

    • The overall cost of these licenses includes the cost of meeting any regulations that must be met in order to attain the license.

Grades and Standards—Discussion Guide

Performance Indicator: Describe the uses of grades and standards in marketing

THINK ABOUT IT

You may not realize it, but a system of grades and standards has a significant impact on food and many other types of products that benefit both businesses and customers. Both industrial and ultimate consumers rely on the assumption that products will meet certain expectations.

KEY CONCEPTS

Slide #1 Standards are specifications or statements that are used as a basis for comparing or judging goods or services.

• Grades are ratings assigned to products that express how well the product meets the standard.

  • The factors that go into setting a standard will vary from product to product and from business to business.

• Standards and grades in business are used in a similar way to grades in school.

  • A standard is set, each product is evaluated in relation to the preset standard, and a grade is given to how well the product meets the standard.

  • As with grades in school, there is an established understanding about what each grade means as it relates to the standard.

• Grades and standards aid in the buying and selling process.

  • Without these systems, each purchase would require much more work on the part of the customer and the salesperson—not to mention much more risk!

Slide #2 Standards and grades are developed by three primary groups.

• Government agencies are often responsible for setting standards and providing grades.

  • They establish standards for medicine, interstate commerce and transportation, advertising, etc.

  • They also issue grades based on their standards for food and businesses like restaurants and salons.

• Trade associations and professional organizations spend years developing and promoting standards in their industries.

  • Their goal is to guarantee product quality, safety, and uniformity.

  • They also occasionally develop their own grading systems, such as hotel star ratings or ski slope rating symbols.

• Businesses also set standards and grades that they require their own products to meet.

  • Sometimes, they also set standards that they require their suppliers to meet.

  • To set their own standards, businesses gather information from their own departments, their suppliers, and their customers.

Slide #3 Standards are used to establish reliability in products. They can be used to:

• Indicate how the product can be used.

  • Some products are required to meet criteria based on how they can be used.

  • For example, grades on milk indicate whether it can be consumed by people or if it requires additional processing so that it can be used in other dairy products.

• Indicate where the product will be sold.

  • Manufacturers often use product grades to determine where they will offer their products for sale.

  • For example, apparel manufacturers might sell below-standard items through discounts outlets or under specific brands.

• Indicate who the user can/should be.

  • Ratings on some products indicate that they are appropriate for industrial or home use.

  • Television and movie ratings indicate appropriate audiences.

• Assist salespeople.

  • Standards and grades furnish information that salespeople use to justify price, compare and recommend products, sell benefits, and meet customer needs.

• Indicate product safety.

  • Customers know that food is safe to eat or that machinery meets industry standards by relying on the system of grades and standards.

• Help sell products abroad.

  • Since each country can have its own set of standards, manufacturers who trade internationally often ensure that their products adhere to international standards for quality known as the ISO 9000 series of standards.

Slide #4 The use of standards and grades is also a marketing activity that occurs in all types of businesses.

• Standards for performance levels are often interrelated and aid businesses in meeting goals and making profits.

• Product/Service managers are often responsible for prioritizing and monitoring standards.

• The most common types of standards that relate to product/service management:

  • Quantity standards specify the amount of work to be done.

    • Production managers often set quotas, the minimum number of units to be produced by workers in a set time period, for their employees.

  • Quality standards indicate the degree of excellence to be expected from a good or service.

    • These are just as important for a business as quantity standards. Doing the job right the first time saves time, cost, and waste.

  • Time standards are closely related to quantity and quality standards and establish criteria for the amount of time it takes to complete an activity.

    • Businesses that do not maintain time standards are at risk of facing financial losses.

  • Cost standards are used to specify project or product costs.

    • Wasting materials or taking more time than necessary to perform a task adds to the cost of doing business.

Slide #5 Although some standards are required by government agencies, the grading based on them is often optional. Because customers prefer purchasing graded products, however, grading has become an accepted practice throughout the United States.

• Farm and food products are inspected by federal agencies, but their grading is not required by law.

  • After their products pass inspection, food manufacturers often pay for voluntary grading by those same government agencies.

• Some examples of graded products are:

  • Food products such as:

    • Meat

    • Fish

    • Dairy

    • Eggs

    • Fruits

    • Vegetables

    • Organic foods

  • Agricultural raw materials such as:

    • Wheat

    • Cotton

    • Lumber

  • Non-food products such as:

    • Oil

    • Fuel

    • Building/Construction materials

    • Household products

Warranties and Guarantees—Discussion Guide Performance Indicator: Explain warranties and guarantees

THINK ABOUT IT

Many people think of warranties and guarantees as being the same thing. They are both promises to customers, but they are not identical.

KEY CONCEPTS

Slide #1 A warranty is a promise made by the seller to the customer that the seller will repair or replace a product that does not perform as expected. Warranties are classified based on the extent of the promises they make in addition to whether or not their promises are stated or simply understood.

• An express warranty is a promise expressed in a specific statement concerning the quality of the product.

  • It is sometimes in the form of a written statement that is given to the customer.

  • Sometimes, it is a spoken promise made by the salesperson.

  • In either case, the business must fulfill the promise.

  • Express warranties also state conditions that can void a warranty.

• An implied warranty is not written or stated verbally.

  • Rather, an implied warranty is an understanding by both the seller and the customer that the product will perform as expected.

  • Any product available for purchase by customers carries an implied warranty that the product will do whatever its label says it will do.

  • If it does not, the customer will expect it to be repaired or replaced whether it has a written warranty or not.

  • If a salesperson recommends an item to do a particular job, then the customer would expect the product to do that job.

• A full warranty provides that if a product does not work properly, is defective, or does not live up to the warranty, it must be made good within a reasonable amount of time.

  • If the problem cannot be corrected in a reasonable amount of time, the customer does not have to wait longer and may choose a refund or a replacement.

  • The company providing the warranty may not put time limits on any implied warranties.

  • All the customer has to do is notify the warrantor to obtain repairs.

• A limited warranty does not have all of the provisions of a full warranty.

  • Instead of covering the entire product, it may cover specific parts, certain repairs, or a particular time period.

Slide #2 A guarantee is a promise made by the seller to the customer that the seller will refund the purchase price if the product does not perform as expected.

• While warranties usually apply to goods, guarantees are given for both goods and services.

• Guarantees are sometimes used to promote unknown brands and services in an effort to convince new customers that there is little risk in trying something with which they are not yet familiar.

• Companies providing services often guarantee their work so that customers have confidence that the service will be top quality and do the job promised.

• Effective guarantees are typically unconditional, understandable, and easy for the customer to implement and collect.

Slide #3 Most companies have several purposes in mind when they offer warranties and guarantees with their products, including:

• Increasing customer confidence

• Protecting the producer and the seller

• Earning customer loyalty

• Increasing sales

• Promoting products

• Using as a competitive tool

• Building a company’s image

Slide #4 Both customers and businesses benefit from warranties and guarantees.

• Customers benefit with:

  • Reduced anxiety about purchases

  • Free repairs

  • Legal recourse

  • Service information

• Benefits to businesses include:

  • A customer-oriented focus

  • The establishment of clear standards

  • Increased profits

  • Protection from frivolous lawsuits

  • Feedback-based product improvements

Slide #5 The federal government passed the Magnuson-Moss Warranty Act of 1975 to provide guidelines for businesses offering warranties and guarantees with their products.

• This law also protects customers who buy those products.

• It covers all consumer products and requires businesses to provide product information to consumers even before they make a purchase.

• The law’s intent is to make warranties stronger and easier for consumers to understand.

• The Magnuson-Moss Warranty Act of 1975 also establishes that:

  • The Federal Trade Commission (FTC) has the authority to regulate warranties on any products that sell for more than $15.

  • Written warranties must be clearly expressed, easy to understand, and give the name of the warrantor.

  • Warranties must state what the company responsible will do if a product is defective, how long a period the warranty covers, and whether the warranty covers the whole product.

  • Warranties must define the buyer’s responsibilities, procedure for using the warranty, and any expenses that may be involved.

• Companies with written warranties must supply physical paper copies where the warrantied products are sold or instructions directing consumers to digital versions online.

  • That way, consumers can read the warranties before purchasing the products.

The Product Mix—Discussion Guide Performance Indicator: Explain the concept of product mix

THINK ABOUT IT

Every business must decide what products to offer. It’s one of the most important decisions a company ever makes. By watching the market carefully and changing their products accordingly, businesses meet customers’ changing needs and wants.

KEY CONCEPTS

Slide #1 The particular assortment of products a business offers to meet its market’s needs and its company’s goals is its product mix.

• A typical product mix will vary greatly from industry to industry, and product mixes can also vary for businesses within the same industry.

  • These variations depend on differences in each business’s target market, size, and finances.

• The two components of the product mix are product items and product lines.

  • A product item is an individual good, service, or idea that a business offers for sale.

  • A product line is a group of related product items.

Slide #2 Often the product items that make up a product line will resemble each other in some way. A company may offer any number of product lines and define them in a variety of ways. Product lines may be classified according to:

• Product class—The product line consists of products with similar characteristics or functions.

• Customer group—The product line consists of products that appeal to a certain target market.

• Price/Quality—The product line consists of products in the same price bracket or of the same quality.

• Distribution method—These product lines are set up according to the outlets through which they are marketed.

Slide #3 Most businesses use four dimensions to describe their product mixes. They are:

• Width

  • Also called breadth, width refers to the number of product lines a company carries.

  • A narrow product mix consists of a limited number of products.

    • This allows a company to specialize effectively, produce efficiently, and concentrate its marketing efforts on its few product lines.

• • A broad product mix offers many product lines.

    • This provides a company with many opportunities to make sales, appeal to customers with a variety of needs, and promote one-stop shopping.

• Length

  • Length refers to the total number of products in the product mix.

    • These can be spread across multiple product lines.

  • If a business has many products, it has a long product mix.

    • This gives customers many products to choose from.

  • A business that does not have many products in its product lines is said to have a short product mix.

    • This might help keep costs down and avoid competing with its own products.

• Depth

  • Depth refers to the amount of variation or assortment of sizes, colors, flavors, and models offered in a company’s product lines.

  • A deep product mix offers significant variation of its products.

    • This allows a business to meet a variety of customer needs, use a range of prices, and compete effectively.

  • A shallow product mix offers few variations within a product line.

    • This can help control costs and better ensure a profit.

• Consistency

  • Consistency refers to how closely a company’s product lines are related to each other in terms of end use, methods of production, target markets, and price range.

  • A consistent product mix contains closely related product lines.

  • The product lines of an inconsistent product mix are not closely related.

Slide #4 Some specific ways in which product-mix decisions are important to a business include:

• Appealing to the target market

  • Items in the product mix should be chosen on the basis of their ability to satisfy the needs and wants of the determined target markets for their products.

• Helping present a consistent company image

  • The product mix can help create and sustain the company’s desired image in the eyes of its customers.

  • A wide and shallow product mix can present a discount image, while a narrow and deep product mix might seem more exclusive.

• Affecting profitability

  • If the product mix is made up of items whose sales profit the company, then the company can buy supplies, pay workers, attract investors, pay expenses, and increase production.

• Helping deal with competition

  • A business can add to its product mix to match the offerings of its competitors.

  • It might deepen its assortment in a particular product line to persuade customers that it offers the best selection, for example.

Slide #5 The ways in which businesses manage their product mixes are known as product-mix strategies. There are a variety of product-mix strategies that a business can use to meet the needs of its target markets and satisfy its own objectives, including:

• Expansion

  • Adding additional product items or lines is known as expansion.

  • While expanding the product mix increases costs of inventory, marketing, transportation, storage, personnel, and training, the benefits include:

    • Satisfying customer’s desire for variety

    • Offering complementary products

    • Spreading risk over a wider area

    • Appealing to a new market

    • Increasing sales and profits

    • Enhancing the company’s reputation

    • Making more efficient use of company facilities

• Contraction

  • Contraction refers to removing product items or lines from the product mix.

  • This could increase market risk, allow competitors to draw away customers, and lose customer loyalty and goodwill.

• • However, a company might choose to remove a product that:

    • Has lost its appeal to customers

    • Is no longer appropriate to the company’s goals

    • Is no longer profitable

    • Cannibalizes/Conflicts with another product in the mix

    • Has production problems

    • Has become a legal liability

• Alteration

  • Making changes in a company’s product items or lines is called alteration.

  • This could involve complete product redesign or changes made in basic styles, characteristics, packaging, or pricing.

  • Altering an entire line at one time can be expensive, but making alterations in stages may give competitors a chance to observe these changes and alter their own products to match.

  • It can also be impossible to predict the success of an altered product, making this a potentially risky decision.

  • Alteration can allow a company to:

    • Limit costs

    • Compete effectively

    • Reach a different target market

    • Reach a larger market

    • Keep up with changing consumer preferences

    • Improve products for social good

Slide #6 Adding higher or lower priced products or product lines to a product mix can also be effective product-mix strategies that aid a company in meeting its goals.

• Also known as “stretching up” or “brand leveraging,” trading-up strategies involve adding a higher priced product or line to the product mix.

  • Although this may generate new sales, it could also hurt sales for the established products or lose current customers due to confusion about the company’s image.

  • Trading up can have the further advantages of:

    • Enhancing the company’s image

    • Attracting a new target market

    • Increasing sales of the company’s other products

• Sometimes called “stretching down,” the addition of a lower priced product or line to a company’s product mix is known as trading down.

  • This may damage a company’s reputation for offering only high-quality products and may lead to reduced sales for those higher priced items.

  • This strategy could also:

    • Help attract a new target market

    • Better match competitors’ offerings

Product Bundling—Discussion Guide

Performance Indicator: Describe the nature of product bundling

THINK ABOUT IT

A new game system comes as a boxed set with the console, controllers, and a popular game.

• You are happy to get the latest system, a popular game, and a fresh set of controllers for less than they can be purchased separately.

• You are benefitting from product bundling, a marketing strategy that benefits customers as well as marketers.

KEY CONCEPTS

Slide #1 Product bundling is the practice of selling two or more complementary products together as a package.

Slide #2

• There are two types of product bundles: pure and mixed.

  • A pure bundle is only available as a bundle.

    • A desktop computer is typically sold as a pure bundle that includes the CPU, monitor, keyboard, and mouse.

  • With mixed bundles, the products are available for purchase separately or as a bundle.

    • Value or combo meals at fast-food restaurants are examples of mixed bundles.

      • You can buy a burger, fries, and soda as a package at a single price.

      • However, you could purchase any of the individual items separately.

    • A mixed bundle typically offers savings when the items are purchased together.

• Depending on the products or the marketing strategy, products are bundled by product category, type of customer, or application.

  • Value meals are an example of bundling by product category, while kids’ meals including toys appeal to young customers.

  • Cosmetic and makeup collections are an example of bundling by application.

Slide #3 Product bundling provides benefits to buyers.

• Provides savings. Product bundles are beneficial to customers because they pay less for each item than it would cost to buy each item separately.

• Reduces the pain of paying. Since pricing is less clear, customers are more comfortable paying for the bundle than for each individual item.

  • A customer buying a luxury package for a new car, for example, doesn’t have to think about how much the leather seats or the premium sound system costs.

• Provides convenience. Complementary products packaged together help customers acquire all the items they need at one time.

  • When skiers purchase skis, bindings, boots, and poles packaged together, they receive everything they need to hit the slopes.

Slide #4 Product bundling provides benefits to sellers.

• Increases sales and grows revenue. When products are bundled, the customer is encouraged to spend more which increases overall sales.

  • For example, customers are more willing to pay higher prices for cable subscriptions containing a large variety of channels and networks.

• Obscures individual product prices. Some customers are annoyed when they are charged extra for small products or accessories, such as batteries.

  • With product bundling, the extra costs of small products are included in the package price.

• Reduces marketing efforts and costs. Products sold as a bundle are marketed as one package which significantly reduces the amount of marketing required.

  • In contrast, when products are sold separately, each individual item must be marketed.

• Encourages product sampling. Customers are more likely to try a new product if it is included with a product they already enjoy.

  • This exposes customers to more products which often leads to increased sales.

• Helps reduce inventory. Slow-moving products are easier to sell when they are combined with more popular ones.

Slide #5 Businesses need to evaluate their overall marketing strategy before bundling products.

• Think about why Microsoft Office 365, for example, is sold as a pure bundle with Word, Excel, PowerPoint, Outlook, OneNote, Publisher, and Access as one package.

  • Customers who want only one popular program such as Word or Excel pay the same price and receive all the other programs for free.

• How does this strategy benefit Microsoft?

  • Wouldn’t the company increase revenue by selling its most popular programs separately?

  • This bundling strategy benefits Microsoft by enabling the company to offer customers more value, expose customers to more products, and reduce its marketing costs.

• Since products have different qualities and appeal to different types of customers, there is no set method of bundling, mixed or pure, that benefits every product.

  • Suppose a golf resort offers two free rounds of golf with each room booked to appeal to golfers.

    • However, not every guest is a golfer.

  • The golf resort has to evaluate whether it would make more revenue with golf packages or by selling lodging and rounds of golf separately.

Slide #6 Product bundling can be challenging.

• Bundling can cannibalize the sale of existing products by eliminating the sale of products that customers are willing to purchase separately.

  • A tennis player, for example, is likely to purchase a tennis racket and a set of tennis balls.

  • If a store offers them together for less than their individual costs, the store loses some revenue it could easily have gained.

• Adding an inexpensive product to a strong product can reduce the perceived value of a product bundle.

  • Since humans subconsciously average the value of bundle components together, each additional item has the potential to cheapen the overall value of a package.

    1. For example, if an inexpensive keychain is included with the purchase of a designer handbag in strong demand, the entire bundle is viewed as less expensive and less valuable.

    2. Bundling products in this way can lead to lost sales.

• Complex bundles that offer many products can make it difficult for customers to make buying decisions.

  • If a bundle requires a customer to evaluate a large amount of product information, it can create mental fatigue or result in analysis paralysis that occurs when a customer gets so lost analyzing the information that s/he is unable to make a buying decision.

• Bundled offers can frustrate customers.

  • If customers want a product that can only be purchased in a bundle, they may be annoyed that they have to spend more and purchase items they don’t need.

    1. This can result in customers delaying their purchase by waiting for the “deal” they want.

  • This requires marketers to carefully plan bundled offers.

Positioning Products/Services—Discussion Guide

Performance Indicator: Describe factors used by marketers to position products/services

THINK ABOUT IT

Marketers work very hard to create a certain “position” for each product in the minds of customers. They want a product to be perceived in a certain way and for customers to choose it over all the other options available. This concept of positioning is a very important part of marketing.

KEY CONCEPTS

Slide #1 To sell successfully, every product and brand must be properly positioned. Positioning is a crucial marketing activity in which marketers design a strategy to give a product or brand a distinct place in customers’ minds.

• The ultimate goal of positioning is to show customers why a product is unique and different from those of all its competitors.

• When done well, positioning attempts to:

  • Demonstrate how a product or brand stands out in the crowd.

    • The products that are well positioned seem to have a certain appeal to them that may be difficult to put into words.

    • Maybe the customer thinks that these brands are “cooler”—that these are the brands everyone seems to want.

    • Products communicate these unspoken ideas because marketers have positioned them this way.

  • Express a product’s uniqueness in a memorable way.

    • Having a unique product is a great start, but that fact alone is not enough for real success.

    • For positioning to work, marketers must convey this uniqueness in a way that causes customers to perceive the product or brand how marketers want them to.

    • Sometimes, the answer is as simple as a well-crafted marketing slogan.

  • Connect to customers’ emotions.

    • Almost all customers have favorite products or brands.

    • People might only buy one brand of jeans because they like the way they feel when they wear them.

    • Others might have a fast-food brand that they always prefer on a road trip.

• • • These allegiances are not always based purely on rational thought but on certain emotions that are attached to the idea of a certain product or brand, and may be the result of successful positioning.

• Marketers must keep positioning simple to avoid customer confusion.

  • They should choose how they want to position a product or brand and stick to that choice.

  • Changing a product’s position too frequently or attempting to showcase too many of its benefits can backfire and cause customers to overlook the product’s uniqueness.

Slide #2 A marketer cannot effectively position a product without considering the competition.

• Every positioning strategy should demonstrate a product or brand’s uniqueness and appeal in relation to its competitors.

• Without these comparisons, concepts like “lowest price” or “best quality” don’t make much sense.

• Therefore, an important objective of any positioning strategy should be to gain a competitive advantage, which is any angle or “edge” that a company has that will allow it to create more sales, generate more revenue, retain more customers, etc. than its competition.

• An ice cream shop that offers flavors that aren’t available elsewhere or a car company that was named a “top safety pick” could use these unique attributes to create positioning strategies that will help businesses beat their competition within the target market.

Slide #3 Everything marketers do, from product design to pricing to distribution to promotion, is done with the target market in mind. This includes positioning.

• Marketers aim to position a product within the minds of their target customers, not necessarily the minds of the entire public.

• Before marketers can start positioning a product, they must thoroughly understand their target customers.

• For example, clothing brands that target teenagers would not position their products as affordable value brands because the target market is likely less concerned with saving money and more concerned with looking “cool” or following trends.

  • This is called a determinant factor, and every positioning strategy should be based on one.

• • A determinant factor is something that target markets really care about, something that makes a big difference to them.

Slide #4 Each of the four P’s of marketing can and should be used to support a product or brand’s positioning strategy.

• Product

  • The product must match both the target market’s wants and the way it is being positioned.

  • If it doesn’t, either the position or the product needs to be altered.

• Promotion

  • Positioning will be successful only if marketers tailor the message to target customers effectively.

  • Positioning should be communicated consistently through each promotional outlet.

• Place

  • If a product has been positioned with the target market in mind, marketers will choose to distribute the product in places that the target customers are likely to shop.

• Price

  • Just as a product must be distributed where the target market will find it, it must be priced according to what the target market will pay.

Slide #5 There are a number of different strategies that marketers might use to position a product or brand. Here are some of the common ones:

• Positioning by product attributes

  • Marketers often create a position for a product by highlighting the uniqueness of its:

    • Physical form and features

    • Performance

    • Durability

    • Reliability

    • Repairability

    • Process of creation

    • Ease of purchase

    • Quick delivery

    • Quality

• Positioning by people (service)

  • In situations where products are too similar to stand out on attributes alone, marketers might focus on the qualities of the personnel associated with the product or brand like:

    • Competence

    • Training

    • Courtesy

    • Reliability

    • Responsiveness

    • Communication

• Positioning by users

  • Another option is to focus positioning on the type of person who buys or uses a product or brand.

    • Marketers of many luxury brands will emphasize the lifestyle or fashion of a person using their product.

    • Celebrity endorsements can be an effective strategy for this kind of positioning.

• Positioning by use(s)

  • Focusing on how a product is used can be an effective positioning strategy as well.

    • This is especially the case with products designed to be used at specific times, locations, or occasions.

    • Showing flowers and cakes being used in weddings or focusing on athletes consuming electrolyte-heavy sports drinks while working out are examples of this kind of positioning strategy.

• Positioning by product class

  • Sometimes, marketers will position a product by focusing on the entire product class.

    • For example, some marketers of “energy shots” tend to highlight how this product class is a better way to stay focused at school or work than drinking coffee.

    • Instead of suggesting that their product is better than other energy shots, they are asserting that this entire product class is preferable to another one.

Product/Service Branding—Discussion Guide Performance Indicator: Explain the nature of product/service branding

THINK ABOUT IT

Brands are all around us every single day. The breakfast cereal you ate this morning has a brand—so does the car or bus you took to school, the phone in your pocket, and your backpack. Brands are so common because they are effective. They help marketers differentiate their products from those of competitors, and they help customers make decisions about which products to purchase.

KEY CONCEPTS

Slide #1 A product brand is the combination of a name, term, symbol, and/or design that identifies a product and distinguishes it from competitors’ products.

• Almost all product brands consist of at least a brand name (a word, phrase, letter and/or number that can be spoken).

• To go along with that brand name, some marketers will also develop a brand mark or logo (a distinctive symbol, design, sound, or group of letters that is seen or heard but cannot be spoken, e.g., the Nike “swoosh”).

• Brand marks that have been created to seem lifelike are called trade characters.

  • Famous examples of trade characters include Tony the Tiger, Ronald McDonald, and the Michelin Man.

• A manufacturer’s brand, also known as a national brand, is one for which the manufacturer plans to make all the branding decisions.

• A private brand, also known as a store brand, is a brand owned by an intermediary.

  • This means that a supplier produces a product but places an intermediary’s brand on it.

  • For example, the brand Great Value is not produced by Walmart.

    • Instead, companies like Sara Lee produce these products, package them with Great Value labels, and sell them under a brand that is exclusive to Walmart.

• Family branding, sometimes called umbrella branding, involves using the same brand for related products in a product line.

  • Starbucks is an example of a family brand. Although they offer coffee, tea, drinkware, and equipment, all of these product lines are sold under the Starbucks brand.

• Individual branding involves using different brands for products owned by one company.

  • For example, Procter & Gamble markets their varied product lines under the product brands of Pantene, Oral-B, Gillette, Vicks, and more.

• Very large companies that offer wide-ranging individual brands sometimes even practice family branding for their individual brands.

  • This means that the various product lines within a brand like Gillette are managed as though they were family brands.

• Because branding is an expensive process, some companies that sell products that are difficult to differentiate between may opt for selling a product without a brand.

  • Generic items are unbranded products that are plainly packaged, often have lower or standard quality, are sold at lower prices than branded products, and receive little or no promotion.

Slide #2 Marketers tend to agree about the characteristics of a good brand name.

• It is generally agreed that a brand name should:

  • Be easy to pronounce and remember.

  • Be distinctive.

  • Be adaptable.

  • Create appealing images.

• A brand must also be available for use.

  • This might involve legal availability (whether or not another person or company owns a trademark that could conflict with a brand) or online availability (determining what URL or social media handle is available).

• Finally, marketers will need to determine if a brand is appropriate for packaging and advertising.

  • This not only includes making certain that a brand will fit in product packaging and look appealing, but also ensuring that a brand will translate well into other countries and cultures.

  • Depending on the current and future target markets for a particular brand, the impact that a brand might have internationally can be of the highest importance.

Slide #3 The primary reasons that businesses use brands are for identification and differentiation.

• The ability to identify and differentiate specific brands can lead customers to develop certain expectations about the products they buy based on the products’ brand.

• This benefits both customers and businesses.

  • Once a brand has established a certain set of expectations, the company can spend fewer resources on promotion because customers have formed impressions about a brand and may have even developed brand loyalty.

• Brand loyalty typically develops through the successive stages of:

  • Brand recognition (customers become aware of a brand)

  • Brand preference (customers prefer to purchase a brand based on positive experience, but will purchase a competing brand if their preferred one is not available)

  • Brand insistence (customers insist on “their” brand and will not accept a substitute)

Slide #4 Brand strategies are the actions that a company takes once a brand is established in order to accomplish company goals. Frequently used brand strategies include:

• Brand positioning

  • Brand positioning, like product/service positioning, seeks to influence the way customers see a brand as compared to those of competitors.

  • The marketer’s goal in positioning a brand is to try to establish the factor(s) that set(s) a brand apart.

• Brand extensions

  • Using brand extension, some companies will use an existing brand that customers seem to have a positive view of and include new or improved products under the same brand.

  • For example, instead of releasing an entirely new brand of hygiene products for men, Dove extended its brand to include Dove Men+Care to link the new product to a well-established brand.

• Brand licensing

  • Brand licensing allows one company to use another’s brand name, mark, or character for a fee.

  • Although licensees produce and sell these products, they become, in effect, extensions of the core brand.

  • Examples of brand licensing include Popsicles that look like SpongeBob SquarePants or backpacks with images of Marvel’s Avengers.

• Co-branding

  • Increasingly, companies have been co-branding, or joining their brands together to increase recognition, customer loyalty, and sales for both brands.

  • Fast-food restaurants often practice co-branding, whether they share a building and combine menus, offer delivery through a meal delivery service, or offer products like Taco Bell/Doritos Locos Tacos.

Role of Customer Voice in Branding—Discussion Guide Performance Indicator: Describe the role of customer voice in branding

THINK ABOUT IT

You and fellow students ask the school cafeteria for healthy lunch choices.

• The cafeteria provides kale salad and cottage cheese.

• You were hoping for something you would enjoy eating.

• The project failed because the cafeteria didn’t understand your message.

• Brands must listen to customer voice to provide the products customers want.

KEY CONCEPTS

Slide #1 Customer voice is very important for business success.

• Customer voice, also referred to as Voice of the Customer (VOC), is a term used to describe customer expectations, preferences, and dislikes.

• Companies use VOC to focus on customer needs, expectations, and product improvement.

• Brands that listen, understand, and respond to their customers develop better relationships and gain customer loyalty.

• In fact, customers’ expectations for brands to suit their individual and specific needs continue to increase in a world of instant messaging, product customization, and overnight delivery.

• For a business to succeed, it must pay attention to the voice of the customer.

Slide #2 VOC plays an important role in branding.

• VOC is essential for developing and improving a company’s products.

  • Companies use customer data and feedback to discover how customers feel about new or changed products.

  • This feedback is then incorporated into product improvement decisions.

    • Video game makers, for example, use customer feedback to continually upgrade their games.

  • Customers regularly prove to be the best source of information for improving a company’s products.

• Companies use VOC to determine the best communication methods, provide superior customer service, and improve customer touchpoints.

  • A hotel analyzing VOC, for example, might discover its customers prefer to book reservations with a specific mobile app.

  • By adopting the app, the hotel can improve service, increase customer loyalty, and book more reservations.

• VOC helps companies discover customers’ interests, concerns, and attitudes.

  • This information helps a company develop its products in ways that are beneficial and pleasing to customers.

  • It can even inform a company’s mission and goals.

    • Many customers, for example, prefer companies that are serious about building a better world.

    • In response, many companies have adopted socially responsible and sustainable practices that have become a part of their company missions, marketing strategies, and branding.

Slide #3 Companies use many methods to gather VOC.

• Blogs, message boards, and social media provide ways for companies to interact with customers in personal and friendly ways.

  • The conversational nature of these formats helps a company obtain candid messages that customers willingly share.

• Employee interactions with customers provide a way for company employees to have two-way conversations with customers.

  • These may occur face-to-face, via phone calls, through live online chats, or in electronic messaging.

  • Employees ask questions to collect detailed information to improve the company’s services and products.

• Chatbots are computer programs powered by artificial intelligence that allow a company to interact with customers via a chat interface.

  • These programs collect data that help companies analyze customer interactions.

  • Helpful types of information collected include frequent customer requests, website navigation preferences, and problematic processes.

• Online reviews give companies insight into customers’ opinions, compliments, and complaints.

  • This type of information helps a company become aware of customer preferences, identify effective strategies, and correct problems.

• Customer surveys are used to collect customer attitudes and opinions about products.

  • Customers may be asked to evaluate products or share information about their personal preferences and product use.

  • Surveys can be used to collect quantitative or qualitative data.

• Focus groups are used to gather selected groups of people to participate in planned discussions.

  • By observing the feelings, perceptions, and thoughts of customers, a company is able to collect qualitative data about its products.

• Interviews help a company interact with customers one on one to collect specific information about its products.

Slide #4 There are challenges involved with using customer voice.

• Must analyze for authenticity and relevance

  • Sometimes, information provided by customers can be misleading.

  • A company has to carefully analyze each customer comment for sincerity, intended message, and whether it is actually relevant to the product.

    • A social media post about a bad hair day, for example, may not have anything to do with the shampoo the customer used that day.

    • Angry customers are known to share extremely negative reviews that are dishonest.

    • In contrast, extremely brand loyal customers often make exaggerated recommendations about their favorite products and brands.

• Difficult to assign value to information

  • Companies have to evaluate how important insights gained from customer messages are.

    • A few customers complaining about the color of a product, for example, may not merit any product changes.

    • On the other hand, sometimes one small complaint can lead to an opportunity to make a significant product improvement.

    • Feedback from one customer convinced Under Armour to develop its successful MagZip, a zipper enhanced with magnets.

• Frequently changing customer attitudes

  • Brands have to be prepared to respond quickly to changing customer attitudes and preferences.

    • When a trend or a societal attitude develops or changes, it can be difficult for a brand to incorporate any needed changes into its brand.

    • Starbucks, for example, has spent several years trying to develop a sustainable, one-use cup design. While the goal is desirable, it cannot be achieved overnight.

Corporate Branding—Discussion Guide Performance Indicator: Explain the nature of corporate branding

THINK ABOUT IT

There are countless reasons why a customer chooses to purchase from one company over another. Ultimately, most of these reasons are rooted in the same cause: the company’s corporate brand. A corporate brand influences the way customers view a company, and it involves much more than just a logo.

KEY CONCEPTS

Slide #1 Corporate brands are all the combined customer impressions and experiences associated with a particular company.

• A strong corporate brand showcases how a company is different from its competition and gives a company an identity.

• Corporate brands also aid in forming customer relationships by building customer trust.

  • When a customer develops positive reactions to a company’s brand, they start to feel good about associating themselves with it.

• The three main components of a corporate brand are:

  • Brand identity

  • Brand values

  • Brand personality

Slide #2 One important component of a company’s brand is its brand identity. A brand identity consists of those elements that are instantly recognized as representing a particular business or product.

• When companies design logos or choose colors, they want to present a certain image to customers.

  • A company that wants to present itself as youthful and fun will strive to create a different brand identity than a company that wishes to appear as traditional and serious.

• Some of the most important elements that make up a brand identity are:

  • Logos

    • A logo is a distinctive symbol, design, or group of letters that is adopted by an organization to allow for visual recognition of the organization or its products.

  • Colors

    • One of the things customers most often remember about a logo is the color.

    • Most brands represent themselves with a few distinct colors, and it is important for brands to keep their signature colors consistent across all visual elements (advertising, packaging, signs, etc.).

  • Names

    • Companies want to make sure that their names help them create their desired brand identity.

    • Both the sound and the appearance of the name should be evaluated for the image that the name projects.

  • Images and graphics

    • No matter where they are used, a company’s images and graphics should be consistent and should always reinforce the company’s corporate brand.

  • Design

    • Design is an important way of communicating brand identity, whether it is the appearance of the company’s website or its buildings.

    • Even minute details like fonts are often considered.

Slide #3 Brand values are beliefs or qualities that a corporate brand stands for and is built around.

• These core values are the things that the company believes in; they get to the heart of what the company truly cares about.

• Brand values are a crucial part of developing a corporate brand.

  • Customers are more likely to build relationships with a brand when they understand and appreciate the brand’s values.

  • Brand values, like any aspect of corporate branding, are also one way for companies to differentiate themselves from their competition.

• A brand promise is a company’s spoken or unspoken agreement with customers that it will consistently meet their expectations and deliver on its brand characteristics and values.

  • When developing a brand promise, companies first think about their brand values.

  • The brand promise gives customers a reason to believe in the company and lets them know what they should expect.

Slide #4 Brand personality is the projection of a brand that encompasses its values and emotional connections with consumers.

• When developing its corporate brand, a company uses its brand values and brand promise to craft a detailed “personal” profile.

  • Companies use their brand personalities as frameworks for how they will behave.

  • When a company understands its brand personality, it can use that knowledge to interact with customers.

• Communicating the brand personality, or "telling the brand story,” is an important aspect of crafting a corporate brand. Two of the most effective tools for communicating the brand story are:

  • Touchpoints

    • Any chance a business gets to interact with customers is a touchpoint.

    • This includes products, packaging, employee interactions, websites, advertisements, social media interactions, and much more.

    • With every touchpoint, the company has another chance to reinforce its corporate brand by embodying its brand values, living up to its brand promise, and demonstrating its brand personality.

  • Brand cues

    • Brand cues are simple reminders of the brand’s identity and values.

    • They are another important tool to communicate a company’s corporate brand.

    • Similar to touchpoints, brand cues are a great way to remind employees about brand values and the brand promise.

    • Companies with strong corporate brands know that their employees have to be on board, so they’re sure to continuously remind employees of their brand story.

Brand Positioning—Discussion Guide Performance Indicator: Describe factors used by businesses to position corporate brands

THINK ABOUT IT

Ryan wants to start a furniture business.

• He’s not sure what type of furniture to offer.

• He needs to position his brand to make marketing decisions.

• Positioning can set him apart and appeal to a specific target market.

KEY CONCEPTS

Slide #1 Brand positioning sets a brand apart.

• Brand positioning puts a corporate brand in a certain position, or place, in customers’ minds.

Slide #2

• Brand positioning helps a company achieve brand recognition.

  • To gain acceptance and market share, a brand needs to be easily recognized by customers.

  • This is why marketers use brand positioning to help customers identify a product with its name and image.

    • McDonald’s, for example, is known as a place for quick, inexpensive meals.

Brand positioning helps companies identify appropriate marketing objectives.

• For example, coffee franchises branding themselves as customer hangouts typically offer comfortable seating and free Wi-Fi.

• Meanwhile, coffee franchises offering drive-thru pickup emphasize speedy service.

There’s an important relationship between brand positioning and a brand’s target market.

• The interests and concerns of a target market determine what products and product features a company should introduce and how it will promote those products.

• Companies selling casual T-shirts, for example, use very different strategies than companies making designer gowns.

Slide #3 Companies develop their brand positions to highlight their competitive advantage.

• Anything a company does better than its competitors is a competitive advantage that can help position its brand.

  • Some large companies use their size to drive costs down and offer lower priced products.

  • Small companies, in contrast, sometimes offer custom products and personalized service.

  • Other competitive advantages companies frequently promote include quality, reputation, and innovation.

In addition, companies use brand positioning to differentiate themselves from their competitors.

• Flat Cat is a golf brand that offers a golf putter with a unique flat grip shape and an intense green cat eye logo.

• Its eye-catching approach helps set it apart from traditional golf club makers.

There are many ways that companies position their brands.

• Some brands predominately use one positioning technique, while others combine two or more.

• When companies need to adapt to changes in the market, they often change strategies to reposition their brands.

• As you can see, brand positioning is essential for a company’s success.

• It informs nearly every marketing decision a company makes that spans product design, pricing, promotional techniques, and even packaging.

Slide #4 Marketers use different types of positioning strategies.

• Quality

  • Some companies highlight the quality of their products to position themselves.

  • KitchenAid is well-known for its superior appliances and uses quality as the core of its brand positioning.

• Value/Price

  • Old Navy is known for its low prices and discounts.

  • It has developed a brand identity as a provider of low-cost clothing and fashion items.

• Benefits/Attributes

  • Marketers sometimes use significant qualities, benefits, or features of their brands to position them in the market.

  • Burt’s Bees, for example, emphasizes the use of all natural ingredients in its cosmetics.

• Problem/Solution

  • Some companies highlight the problems their products help solve.

  • Companies building products from recycled plastic are quick to promote their brands as environmentally friendly.

• Competitor-based

  • A company can show how it’s different from a significant competitor.

  • Audi and BMW are known for using competitor-based positioning against one another.

• Celebrity-driven

  • Affiliating a brand with a celebrity increases interest in a brand, particularly with the celebrity’s fan base.

  • Sporting goods manufacturers often use famous athletes to promote their brands.

• Distribution

  • Brands position themselves by how they choose to distribute their products.

  • While some shampoos can be found in discount stores and supermarkets, certain specialty brands can only be purchased from hair salons.

• Emotion

  • Appealing to customers’ emotions helps a brand build a personal connection with them.

  • The automaker Mini Cooper uses the unique styling of its cars to appeal to customers’ emotional desire for individuality.

Identifying Customer Touchpoints—Discussion Guide Performance Indicator: Identify customer touchpoints

THINK ABOUT IT

Juanita and her girlfriends visit a new ice cream shop.

• When they enter, the shop owner describes the shop’s most popular ice cream flavors and lets the girls sample as many flavors as they want.

• Juanita and her friends order a variety of sundaes and enjoy reading the amusing ice cream descriptions displayed on the walls.

• When the owner invites the girls to come back next week for a special ice cream sundae building contest, they excitedly accept his invitation.

• This is an example of a shop owner successfully using customer touchpoints to create a positive customer experience for his customers.

KEY CONCEPTS

Slide #1 Customer touchpoints refer to all the opportunities that businesses have to connect with customers and reinforce their brand value.

• Each touchpoint carries a “message” that “touches” the customer in some way.

• Touchpoints create the customer’s experience with a brand, which is often referred to as the customer journey.

• The importance of touchpoints lies in their ability to influence customers and their perception of a brand.

• While individual touchpoints may be small, each one helps create the customer’s experience with a brand.

• A friendly greeting, delicious food, and expert service, for example, add up to a great dining experience.

Slide #2 Touchpoints are categorized as communication, human, physical, and sensory touchpoints.

• Examples of communication touchpoints include a company’s website, email messages, advertising, and even its invoices and customer receipts.

• Human touchpoints include customer interactions with a company’s customer service agents and sales representatives.

• Physical touchpoints refer to a company’s physical location, products, and packaging.

• Sensory touchpoints include sights, sounds, smells, and taste. A hotel lobby enhanced with mood lighting, artwork, music, and fresh brewed coffee has many sensory touchpoints that welcome and relax guests.

• Companies identify customer touchpoints so they can find ways to improve their products and customer interactions to create a good image. When companies analyze their touchpoints, they gain many opportunities and benefits.

Slide #3 Businesses use customer touchpoints in many ways.

• Discover and correct problems.

  • Examining touchpoints with a critical eye helps a company uncover problems that need to be solved.

  • A business that studies its voice mail processes, for example, may discover that customers become frustrated when they cannot easily reach a live customer service rep.

  • This information helps it improve its processes to be more efficient and satisfactory.

• Improve products.

  • Information gained from touchpoints help companies improve their products.

  • Mobile phone makers, for example, use touchpoints to improve the ease of use and functionality of their phones.

  • A few examples of mobile phone improvements include screen size, voice-activated functions, and one-handed operation.

• Provide better customer service.

  • Companies analyze touchpoints to evaluate and improve customer service.

  • Airlines, for example, continually evaluate their check-in and boarding processes to find ways to make air travel more hassle free.

• Increase customer satisfaction.

  • Touchpoints provide ways to improve customer satisfaction.

  • Many online retailers, for example, provide mobile apps that allow customers to track an order while it’s being shipped.

  • The convenience created by package tracking significantly improves the customer’s satisfaction with the buying experience.

• Gain customer loyalty.

  • Effective touchpoints help an organization gain the loyalty and repeat business of customers.

  • Customers who have positive experiences are more likely to make repeat purchases.

• Increase positive word of mouth.

  • When customers have pleasant interactions with a company, they are more likely to share complimentary messages about a business with their friends and family.

• Validate company efforts.

  • Knowledge that a free sample or a thank-you note has a big impact inspires a company to continue interacting with customers in positive ways.

Slide #4 Touchpoint mapping is used to document and analyze customer touchpoints.

• Companies create touchpoint maps to outline each and every interaction a customer may have with its brand.

• The touchpoint mapping process is used to identify all the places where customers come in contact with a brand.

• A touchpoint map is organized by categorizing touchpoints into different phases of the customer journey: awareness, discovery, purchase, use of product, and follow-up phases that happen post-purchase.

  • Once these have been determined, the actions and activities involved with each touchpoint are identified.

  • A hotel examining use of product, for example, may look at key elements such as check-in, use of amenities, checkout, and departure.

• All the identified touchpoints can be arranged in a flowchart to show their order of occurrence and relationship to one another.

Slide #5 Use the following best practices to identify touchpoints.

• Examine customer feedback.

  • Customers’ opinions about your brand are valuable because they are based on real-life experiences.

  • Customer feedback can also highlight unknown problems.

• Use the customer’s point of view.

  • Do not rely on your own knowledge or how you expect customers to behave when using a product or a process.

  • Imagine you are a new customer making an initial purchase.

  • Identify key points that have the potential to impact and influence the customer’s attitude toward your brand and their buying decisions.

• Consider different customer types.

  • Some customers, such as early adopters, basic users, and business customers, interact with your brand in different ways and have different needs and expectations.

  • Think about the touchpoints that are significant to them.

• Recognize how touchpoints affect each other.

  • Many times touchpoints affect one another.

  • If a website is confusing to use, for example, it can impact whether customers make purchases.

• Focus on relevant information.

  • Review information that shows how you can improve interactions with customers.

  • Determine which touchpoints are most significant to your brand, which ones need to be improved, and which ones are working.