Product & Service Design and Brand Management
Chapter 8: Designing and Managing Products
Creating Customer Value
To achieve market leadership, firms must offer products and services of superior quality that provide unsurpassed customer value. Design relies on several key elements:
- Core Functionality
- Features
- Performance Quality
- Conformance Quality
- Durability
- Reliability
- Form
- Style
- Customization
In a crowded market, aesthetics can be a key differentiator.
Product Portfolio
A company’s product portfolio encompasses all products offered, including various product categories and product lines. Key dimensions of a product portfolio include:
- Width: The number of different product lines.
- Length: The total number of items in the mix.
- Depth: The number of variants offered for each product in the line.
- Consistency: How closely related the various product lines are in end use, production requirements, and distribution channels.
Product Line Management
A product line is a group of related products sold by the same company. Product line analysis helps companies understand customer reactions to new offerings and manage risk through cross-selling. Companies can lengthen their product line through line stretching (expanding beyond the current range) and line filling (adding more items to the existing range).
- Down-Market Stretch: Targeting growth opportunities in lower market tiers.
- Up-Market Stretch: Entering the high-end market for growth and higher margins.
- Two-Way Stretch: Addressing both higher and lower market tiers.
Overdone line filling can lead to cannibalization, confusion, and unmet customer needs.
Packaging and Labeling
Packaging serves three primary functions:
- Primary Packaging: Directly holds the product (e.g., a bottle).
- Secondary Packaging: Contains the primary package (e.g., a box).
- Shipping Packaging: Protects the product during shipping (e.g., a carton).
Packaging is a key marketing tool, influenced by self-service trends, consumer affluence, brand image, and innovation opportunities. Effective packaging undergoes rigorous testing, including engineering, visual, dealer, and consumer tests. Labeling identifies, grades, describes, and promotes the product.
Warranties and Guarantees
Guarantees and warranties reduce buyer risk and should be relevant, easily understood, and easy to invoke.
Product Differentiation
Differentiation allows brands to align needs and value propositions to different consumer segments. Key differentiators include core functionality, features, performance quality, conformance quality, durability, reliability, form, style, and customization. Design thinking, encompassing observation, ideation, and implementation, is crucial for effective product design.
Chapter 9: Designing and Managing Services
Categories of Offerings
Offerings range from pure tangible goods to pure services:
- Pure Tangible Good: No accompanying services (e.g., soap).
- Tangible Good with Accompanying Service: Includes warranty or service agreement (e.g., car).
- Hybrid Offering: Equal parts goods and services (e.g., restaurant meal).
- Major Service with Accompanying Minor Goods and Services: Emphasis on service (e.g., air travel).
- Pure Service: Primarily intangible (e.g., babysitting).
Characteristics of Services
Services are distinguished from products by four key characteristics:
- Intangibility: Cannot be sensed before purchase.
- Inseparability: Production and consumption occur simultaneously.
- Variability: Quality depends on provider, time, and location.
- Perishability: Cannot be stored.
Managing Service Quality
Quality control involves investing in training, standardizing processes, and monitoring customer satisfaction. Strategies for managing service demand and supply are essential for success.
Service Marketing
Effective service marketing involves external, internal, and interactive marketing. Customer-centricity, service quality, understanding high-volume customers, and effective complaint management are crucial for achieving marketing excellence.
Chapter 10: Building Strong Brands
The Power of Brands
Brands can be applied to products, services, stores, places, organizations, and ideas. Brand loyalty creates predictable demand and entry barriers. Brand equity and brand power measure the value created by a brand.
Measuring Brand Equity
Three approaches to measuring brand equity include:
- Cost Approach: Examines the cost of developing the brand.
- Market Approach: Measures the difference in sales revenue between branded and unbranded offerings.
- Financial Approach: Evaluates brand equity as the net present value (NPV) of future earnings.
Building strong brands requires a deep understanding of customer needs and consistent delivery of value.