Summary Chapter 12: SETTING PRODUCT STRATEGY
Kotler, Philip; Keller, Kevin Lane Marketing Management. 13th Edition. New Jersey: Pearson Prentice hall, 2009
First of all it is necessary to situate the subject that will be dealt with throughout this chapter. In chapter 5 we've seen that in order to build sustainable competitive advantages it is necessary to differentiate. Brands can be differentiated on the basis of many variables, such as:
Personnel: Companies can have better trained employees;
Channel: Companies can more effectively and efficiently design their distribution channels' coverage, expertise and performance;
Image: Companies can craft powerful, compelling images;
Service: Ease to order, delivering, maintenance etc;
Product: Design, Performance, Durability, Quality and features. And that's what chapter 12 is about.
In addition to that, chapter 5 presents that in the choosing process, customers are value maximizers. It means that they estimate which offer will deliver the most perceived value and act on it. The customer perceived value is the difference between the prospective customer's evaluation of all the benefits and all the costs of an offering and the perceived alternatives. The benefits are expected from a given market offering because of the products, services, personnel and image involved. In this way, if a seller is at a customer-perceived-value disadvantage, there are 2 alternatives: to increase total customer benefits or to decrease total customer cost. In this way, chapter 12 is about strengthening the economical, functional and psychological benefits of the variable Product.
In the Dolan model, the variable Product is situated in The 4 P's Mix, and involves the following characteristics: Design, Variety, Packaging, Services, Quality, Warranties, Sizes, Brand name and Features, which are going to be presented in details throughout chapter 12.
The customer will judge the offering by three basic elements: product features and quality, service mix and quality and price (Figure 1). In chapter 12, product is examined.
Figure 1 - Components of marketing offering
In this way, at the heart of a great brand is a great product. Product is the key element in the marketing offering.
Product characteristics and classifications
Many people think that a product is a tangible offering, but a product can be more than that.
Product is everything that can be offered to market to satisfy a want or need. Products that are marketed include physical goods, services, experiences, events, persons, places, properties, organizations, information and ideas.
Product levels: The Customer-Value Hierarchy
Fundamental level: Core benefit - the service or benefit the customer is really buying (marketers - benefit providers);
Second level: Basic product - to turn the core benefit into a basic product;
Third level: Expected product - a set of attributes and conditions buyers normally expect when they purchase this product;
Fourth level: Augmented product -...