Marketers classify innovations based on their

3 The Marketing Mix: Product Supermarket aisle. Fascinadora/iStock/Getty Images Plus Learning Outcomes After reading this chapter, you should be able to List three ways of describing a product, each of which can affect customer value. Describe the implications of the product life cycle for marketers. Explain how the proliferation of product choice has affected marketers’ product strategies. Describe four aspects of service as a "product" that demand a strategic marketing response. Identify the three stages of change required in social marketing. Introduction The subject of what marketers sell—the goods and services on offer and the packaging, customer service, brand reputation, and more that surround them—is covered by the term product as one of the four Ps of marketing management. Under the umbrella term marketing mix, the four Ps of product, place, price, and promotion represent the elements of a strategy that marketers control. This chapter, and the three that follow it, will take up the topic of each P in turn. This chapter focuses on concepts necessary to understand strategic decisions about products, but we are not talking merely about the tangible goods that come home from stores in boxes. Product strategy encompasses all the elements that enable a product to serve its owner. The size and shape of a potato peeler’s handle, the location of menus in a software application, the brightness of a car’s headlights, the quality of manufacture that makes a Yeti cooler more desirable than a Styrofoam ice chest—these are all elements of form that render service. As you learn about offerings ranging from pure goods to pure services and about where new products come from and the life cycles they experience, keep in mind that every purchase transaction has its roots in service-dominant logic. Seen in this light, the product P is really an S for service-product = good or service. 3.1 Designing Products for Customer Value When we say "products," what exactly are we talking about? The AMA defines the term as a "bundle of attributes (features, functions, benefits, and uses) capable of exchange or use; usually a mix of tangible and intangible forms" (Marketingpower.com, 2001). Thus, a product may be a physical entity, a service, an idea, an experience, or any combination thereof. An organization, person, place, experience, or idea can be a product. Consider Ellen DeGeneres: The comedian creates entertainment content through her production company (A Very Good Production) and markets a lifestyle brand (ED by Ellen), among other business ventures. The apparel and home goods sold by ED by Ellen are physical products. The content on The Ellen DeGeneres Show is technically a digital output—and as an experience, it too is a product. For her fans, being in the audience during a taping of the show is thrilling; seats in the television studio are a product for sale as well. And finally, Ellen’s core idea of charitable behavior, captured in the catchphrase with which she closes each program ("Be kind to one another"), is an idea as product that anchors the entire Ellen DeGeneres brand experience in the humanity-centric world of Marketing 3.0. Table 3.1 demonstrates that all product offerings can be positioned somewhere on a continuum from pure good (composed of tangible attributes) to pure service (composed entirely of intangible attributes). To identify a product’s position on this continuum, consider if anything is taking up space after you make the purchase. With a bar of soap, the answer is definitely yes. With completion of a medical exam, the answer is no. Table 3.1: Continuum of products Pure ← Good combination → Pure service Characteristics Tangible Blend of tangible and intangible Intangible Examples Soap Salt Tailored suit Starbucks coffee Cell phone Restaurant meal Auto tune-up Medical exam Haircut Bank transaction Hotel stay Note. All products for sale occupy a position somewhere on the continuum from pure good to pure service. The tangibility of pure goods can create the illusion that people purchase them solely to take possession of physical objects. Not true—behind every purchase is the desire for a benefit that derives from possession, as was discussed in Chapter 1. This reflects the current marketing thought regarding service-dominant logic—the understanding that customers buy offerings that render services (Lusch & Vargo, 2007). Over the past decades, the view that products could be classified on a continuum has been augmented with this understanding that even pure goods have value only to the extent that they render service (utility) to their owners. Tangibles like soap and salt serve their owners, for example, by loosening dirt or enhancing the flavor of a dish. All products on the continuum shown in Table 3.1 fall into two broad classifications: those bought by consumers and those bought by businesses to make products for consumers. Consider the humble paper clip. Individuals and families—especially those including students—buy a box from time to time. But do they buy a shrink-wrapped cube of 12 boxes? Rarely. The big-volume purchasers of paper clips are businesses. Until the modern office goes completely paperless, the simple bent wire will be consumed by the case to organize the paperwork in the offices that manage the making of products for consumers. Where can we begin to study the marketers’ perspective on all these "somethings" for sale, as diverse as Ellen DeGeneres and a paper clip? The answer lies in a fundamental concept introduced in Chapter 1. All products, whether tangible or intangible, are designed to deliver customer value. Designing products for customer value means putting into the product enough features that deliver the benefits customers are looking for but not so many that the product costs more than customers are willing to pay. As you learned in Chapter 1, customers are increasingly being invited into cocreation of value, which removes some of the guesswork from the question "What do customers want and what are they willing to pay for it?" As consumers, all of us expect the things we buy to deliver a certain degree of reliability and fitness for use at a reasonable price. The more reliable the offering is and the better its functionality, the higher the price we are likely to consider reasonable. When a company gets the balance between value and price right, customers say, "Now, that is a good deal." Consumer Product "Marketing Fails" Unsuccessful examples are likewise educational. Google Glass was unceremoniously withdrawn from Google’s new product lineup in 2016. Tech industry observers generally agree that the failure resulted from inadequate research on consumer behavior and attitudes. While the idea of a ubiquitous computer housed in a hands-free device worn like a pair of eyeglasses seemed promising, the fact that it housed a camera caused privacy concerns to top the list of reasons it failed. Poor design, lack of a clear functional purpose, high purchase price, and a marketing strategy that backfired helped push it into its grave. The design was considered "geeky" at best, and possibly dangerous. "Please tell me if I’m being paranoid here but isn’t the small, sharp-edged cube of glass placed directly in front of my very delicate eye an accident waiting to happen?" wrote Karsten Strauss (2013, para. 3) in a Forbes product review). Functionality would appear to be a given with any device that promises to be a "ubiquitous computer"—but almost everyone already carries a mobile device that delivers the functions Google Glass offered. Even the engineers who designed it couldn’t agree on what its unique functional advantage was (Doyle, 2016). Now let’s look closer at the failed marketing strategy—which includes its high purchase price, one of marketing’s four Ps. At $1,500 for a product that was barely out of beta testing, the product failed to resemble "a good deal" for most potential buyers. Recognizing that, Google Glass was promoted exclusively to early adopters. "Unfortunately, this group was comprised mainly of tech geeks and journalists who wouldn’t really benefit from the key features that Google Glass had to offer," wrote Bob Doyle (2016, para. 14) on Business2community.com. (He named as primary features the ability to have a feed of information available at a glance and to quickly capture images.) "The worst part was the fact that some tech geeks and journalists are very opinionated people, and they do have the habit of sharing their experiences. . . . Consequently, the underwhelming experience . . . damaged its reputation prematurely" added Doyle (2016, para. 17). But don’t be surprised if Google Glass makes a comeback: In the summer of 2017, Alphabet (Google’s parent company) announced a Google Glass product for the workplace that allows wearers to shift between actual and virtual views. Google Glass Enterprise, as the redesigned product is known, solves a problem for workers who need two hands free while accessing or inputting digital information. In settings as disparate as airline factories and doctors’ offices, Google Glass Enterprise is increasing productivity and accuracy. By shifting from targeting consumers to targeting business buyers (a shift in marketing strategy), Google has been able to recover from its "marketing fail" and breathe new life into its innovation (Levy, 2017). Follow the link in Field Trip 3.1 to read about a museum started by an innovation researcher who began collecting failed products. Field Trip 3.1: Museum of Failure Organizational psychologist Dr. Samuel West opened the Museum of Failure in Helsingborg, Sweden, in 2017 to provide a learning experience about the "risky business of innovation," according to the museum’s website. Among its notable fails: Bic for Her (pens in pastel colors) and Harley Davidson eau de toilette. The museum traveled to Los Angeles for an exhibition in late 2017. http://www.museumoffailure.se Research in Food Product Development Loblaw's brand sets out to create a Mexican-inspired food product that will appeal to a broad range of tastes. Where would this product fall on the continuum of products shown in Table 3.1? Even pure goods render service (utility), as food products do by providing nutrition. What services might a new Mexican food product offer, in addition to nutrition? Product Strategy: Three Perspectives Imagine that you have been invited to sit in on a strategy session of the Acme Paper Clip Company’s new product development committee. In the room are Eugene from engineering, Sally from sales, and Alvin from accounting. As an engineer, Eugene’s perspective on paper clips is purely focused on what paper clips are and do—the form they take and the functionality they deliver. As a salesperson, Sally’s perspective is more expansive. She thinks about the paper clip’s value as customers perceive it—not just how the paper clip attaches paper, but the price and the packaging that go into the product, that make it easier for her to sell. Alvin from accounting sees the paper clip purely in terms of what it does for the company. He’s counting costs against income to calculate profit, worrying about liability issues and wondering what will happen to Acme Paper Clip if paper clips become obsolete in the future. These three points of view add up to a product strategy for Acme Paper Clip. A product strategy describes the product offering from three perspectives: core, expanded, and concept, as shown in Figure 3.1. Figure 3.1: Product strategy perspectives The three perspectives of the product strategy are increasingly comprehensive. Illustration showing the three perspectives of the product strategy: core product, expanded product, and product concept. The core product describes the product in terms of its solution for sale—the form/function utility that creates the set of benefits that allow it to fill a need. Acme offers paper clips with features like a nonskid surface, colored coating, and heavier gauge of metal, giving its paper clips a range of advantages in form/function utility. The expanded product description includes the mix of tangible attributes and intangible product support that come with the product. This includes how the product is packaged, plus all the factors categorized as part of "ease of possession," one of the four utilities of customer value discussed in Chapter 1. The expanded product (referred to by some marketers as the augmented product) includes the price, payment plan, and any warranties or guarantees that go with a purchase. What differentiates one offering from others on the market, beyond form/function utilities? The expanded product, which establishes the customer’s perception of its value equation. Acme uses packaging to augment its product’s value by selling assorted colors of vinyl-coated paper clips in plastic tubs with internal dividers to keep the different colors separate. It offers a money-back guarantee and discounts for bulk orders. These features of the expanded product are designed to increase their paper clip offerings’ value in consumers’ eyes. Finally, the product concept is the company’s long-range perspective on the product. It describes the market niche to be served by this product, the life cycle it will experience in the marketplace, and the impact of manufacturing and selling it on the company itself. Consumers’ perception of the brand, the company’s social responsibility in producing it, and customers’ experience with the company after they make the purchase all contribute to the product concept. Acme Paper Clips is carefully monitoring the office paper industry and other indicators of trends in business consumption of its humble product and conducting innovation research in search of products that offer value in paperless office environments. These three perspectives form the product strategy—the product P in the four Ps of the marketing mix. Consider how Trader Joe’s Candy Cane Joe Joe’s (an Oreo-like cookie product) would be described in terms of the three perspectives of core product, expanded product, and product concept. The core product is a tasty, generously stuffed chocolate–peppermint cookie. The expanded product is the affiliation of one cookie with all products sold under the Trader Joe’s private label, a widely trusted seal of approval. The product concept, the "big idea" behind this tasty treat, is Trader Joe’s corporate strategy of creating exclusive private-label products that compete with national brands on price to gain a long-term competitive advantage (Private Label Magazine, 2009). Now let’s take a trickier example: the business networking service LinkedIn. Can you define this company’s three product strategy perspectives? Its core product is its customers—specifically, the ability of members to connect with other members. The more members LinkedIn has, the more valuable its core product becomes to those same customers. LinkedIn’s expanded product includes the free and premium membership levels it offers, with "perks" at each level designed to meet the needs of different types of users. The majority of LinkedIn’s members never pay for membership, but it’s the existence of this large pool of professionals that gives the platform value for marketing, sales, and recruiting (Baxter, 2015). LinkedIn’s product concept comprises its strategy to focus on the needs of people in the niches that value the premium features enough to pay for them. Walmart’s Great Value products. Associated Press Decisions about branding, packaging, support, and quality give products points of competitive differentiation by which consumers can compare options and assess value. Product Strategy Captures Value The product strategy is made up of dozens of decisions. Marketing strategists choose which market the product will serve and what the product will do for the people in that market. Other departments make decisions about manufacturing processes and materials sourcing, which affect the cost to produce the product and thus how it can be priced. All these decisions come together in a product strategy that allows an offering to stand out from similar items for sale, due to specific promises of service utility designed to appeal to specific market segments. The product strategy defines the limits of what the product will do, to avoid promising to be all things to all people. When consumers know exactly what a product will do, they can put a value on it. Only then can they differentiate between several offerings and decide which option best suits their needs. The goal of the product strategy is to achieve competitive differentiation. This takes discipline. Decisions add up to a strategy that promises that one product offering delivers value that no competing product does. When a product is truly designed for customer value, it can command a premium price. That is a company’s reward for taking a disciplined approach to competitive differentiation. Marketers’ decisions that affect customer value can be grouped into four areas. branding—a company’s use of its name, reputation, and trademark to attract consumers’ attention packaging—form attributes designed to attract the eye, prevent damage in shipping, and convey information to serve both the sellers’ and the buyers’ needs, like nutrition labels and UPC codes support—postsale services and policies that create customer satisfaction by affirming that a company stands behind its products quality—technical conformance to a standard set by experience, enabling the offering to render the service for which it is intended; more quality creates a better value for the consumer, delivering greater satisfaction with the purchase Think about the product strategy for Yeti coolers, the popular but pricey ice chests first designed for hunting and fishing enthusiasts that began showing up at beaches, football tailgate parties, and even as permanent car accessories for ferrying groceries. Yeti’s brand has the cachet of a luxury good (Kurutz, 2017). Its attention to packaging is similarly high end. For example, Yeti vacuum-insulated tumblers are packaged with a combined label and information sheet that, rather than sticking to the mug where adhesive residue could linger, wraps around to adhere to itself and thus can be cleanly removed (Gintzler International, 2014). Yeti offers product support unheard of with the typical coolers and tumblers retailed through mass discounters—Yeti gear comes with a 3- to 5-year warranty, depending on the item. Yeti makes quality the differentiating feature of its product strategy. By using a rotational molding process, it delivers far greater insulating properties and rugged durability; the same process is used to mold kayaks (Kurutz, 2017). A well-manufactured product, wrapped in supportive policies and thoughtful packaging, marketed like a luxury good, appears to be a highly successful strategy for Yeti. To summarize, here’s how product strategy creates the customer’s perception of an offering’s value equation: From the manufacturing company’s point of view, product strategy begins with identifying a target market and a need to fill. Then, strategic decisions about the core product, expanded product, and product concept fill out the picture of what that product is and does. Decisions about branding, packaging, support, and quality give the product its positioning and points of competitive differentiation—how a consumer can compare it to similar options and decide its value. Product Classifications: The Marketing Orientation To those who manufacture and sell products, their output can be classified as items, which are part of product lines, which make up the assortments of goods on offer. These terms are defined as follows. Items: Individual products with specific characteristics; one item equals one SKU (stock-keeping unit). Lines: A set of closely related individual products. Assortments: All the lines and products a company sells, also called its product mix. Note that this terminology differs slightly from that used in the discussion of designing a business portfolio in Chapter 2. That concerned how a manufacturing company or retailer looks at products. But in any company, the marketing department plays the crucial role of representing the customer. Marketers are the ones who keep their buyers’ (and end users’) perspective in mind, bringing a marketing orientation (introduced in Chapter 2) into every discussion of business strategy. Holding this perspective can be difficult; it’s all too easy to slip into the habit of seeing the company’s products from an internal vantage point. That’s why it is important to understand the difference between manufacturers’ and marketers’ thinking about products. Let’s start our examination of these different points of view by looking at how marketers classify products into distinct groups. Classification matters, because marketers sell different products to different people in different ways. Marketing decisions about branding, product strategy, and positioning will all be based on the class in which a specific product fits. Products can be categorized by the type of customer the company sells them to: consumers or businesses. The terms B2B and B2C—abbreviations for "business to business" (B2B) and "business to consumer" (B2C)—are frequently used in marketing to describe these two sales orientations, so it’s good to be familiar with them. B2B describes transactions between businesses, such as between a manufacturer and a wholesaler or between a wholesaler and a retailer. B2C describes transactions between businesses and consumers. A less frequently used term is B2G, for business-to-government transactions. Products for consumers are classified based on the way people shop, while products for businesses are classified based on how the product will be used. A B2C company sells products that fall into four categories, based on how consumers make buying decisions. Convenience: These products are inexpensive, frequently needed, and easily substituted by something else. Consumers buy with a minimum of comparison or effort. Example: soap. Shopping: These products are less frequently needed and typically evaluated based on suitability of style or image. Consumers compare brands, price, and quality. Example: clothing. Specialty: These products require a high investment and are infrequently needed. Consumers research and make careful comparisons. Example: cars. Unsought: These products can be new innovations or simply not a high consumer priority. Consumers must be convinced to want them; their purchase can easily be deferred. Example: funeral services, reference books. To some extent, B2B products can also be classified based on how business consumers shop for them. A purchasing manager will likely shop for printer paper like a convenience product but for a computer printer like a specialty product. A B2B company sells products that other businesses buy, which fall into seven categories. Raw materials: Basic substances in their natural, modified, or semiprocessed state, used as an input to a production process. Component parts: Pieces, assemblies, or subassemblies that are required to finish an activity, item, or production process. Process materials: Substances purchased for incorporation into a product, which cannot be recognized in the finished activity or item. Manufacturing installations: Assemblies or systems required to conduct manufacturing processes, usually custom-designed and installed. Accessory equipment: Assemblies purchased for use in production, administrative, clerical, or marketing activities, not directly used as an input to a production process. Operating supplies: Items used in prodDiscussion 1

Prior to beginning work on this discussion forum,

Read
Week 2 Lecture
Chapter 3 of the course text, Principles of Marketing
Introduction, growth, maturity, and decline—every product has a life cycle story waiting to be told. In this interactive activity, you’re going to document the story of a product that has progressed through the four product life cycle stages.

Instructions:

If the instructions has a plus sign (+), click it to review tips and requirements for completing that section of the discussion prompt.

+Do a web search for dead brands or product fads. the following:

You can use this article, Blast from the past: Vintage Technologies That We No Longer Use for inspiration.

+Pick a service brand and use it as an example, explain how service differ from goods and discuss whether services go through a life cycle.

Be sure to discuss the product, place, price, and advertisement strategy for each phase of the life cycle you find.

You will see 4P's strategies will differ with the shift of the product to another life cycle. Include your analysis of these differences.

Additionally, identify the key events that mark and end of each phase.

Discussion 2

Place Strategy [WLO: 2] [CLO: 4]

Read
Week 2 Lecture
Chapter 4 of the course text, Principles of Marketing
Watch
Segment 4: Burberry in Fashion: Superbrand Chic
The goal of place strategy in terms of the customer value equation is to add value without increasing cost.

Retailers face three strategic issues that affect place strategy.

+Pick one of the strategic issues listed below:

Market Niche

Location

Merchandise Assortment

Explain at least three elements marketers need to consider when it comes to that strategy.

Explain how Burberry implemented innovative "place" strategies use to create value for current and potential customers.

uction, maintenance, or administrative activities. Business support services: Activities required for successful completion of a process or to support administrative functions. To understand these categories, consider a mustard company. It buys mustard seeds and spices (raw materials); plastic bottles (component parts); laundry soap for washing the workers’ uniforms (process materials); a bottling line (manufacturing installation); a photocopier for the office (accessory equipment); c