Strategic Marketing: Products, Services, and Market Dynamics

Posted on Sep 9, 2025 in Marketing

Products and Services in the Economy

The economy is largely services-based, with services accounting for 70% of the economy and 90% of jobs.

Characteristics of Services

  • Intangibility: Cannot be seen or tested before purchase.
  • Variability: Quality depends on who provides them.
  • Inseparability: Cannot be separated from the provider.
  • Perishability: Cannot be stored for later use.

Two-Sided Platforms

These platforms facilitate interaction between two user groups through an intermediary, benefiting both parties.

Advantages of Two-Sided Platforms

  • Inventory is owned by external sellers.
  • Service is provided by external sellers.
  • Service costs are reduced.
  • Service processes are largely simplified.

Challenges for Growth

  • Getting pricing right.
  • Maintaining high service standards.
  • “Winner-takes-all” competition (dominant players).
  • Risk of acquisition by a larger competitor.

Alternatives for Two-Sided Platforms

  • Pricing: Low margin strategies.
  • Service: Offering insurance to suppliers.
  • Competition: Always seeking local partnerships.
  • Acquisition: Utilizing an IPO to raise capital.

Key Takeaway: Liquidity is crucial. This involves transparent information to facilitate comparison and decision-making, along with tooling and an environment to support buyers and sellers in finding the best matches.

Understanding Products

A product is anything offered to a market for attention, use, or acquisition that satisfies a want or need. This includes tangible objects, services, events, persons, places, organizations, and ideas.

Components of a Product

  • Core Value: The fundamental benefits offered and value created.
  • Actual Product: Features, attributes, brand name, and quality.
  • Augmented Product: Additional benefits like warranty, installation, delivery, and credit. These deliver value but are not the primary reason for purchase.

Product Classification

  • Convenience Products: Consumer products bought frequently with minimum comparison and buying effort (e.g., everyday groceries).
  • Shopping Products: Less frequently purchased items where shoppers compare carefully on quality, price, and style (e.g., major appliances, TVs, furniture, clothing).
  • Specialty Products: Products with unique characteristics for which buyers are willing to make special purchase efforts (e.g., Rolex watches, fine crystal).
  • Unsought Products: Products consumers do not normally think of buying or are unaware of (e.g., life insurance, donations).

Product Mix

The product mix encompasses all product lines, brands, and items offered by a company. It is described by:

  • Width: The range of different product lines and brands (e.g., detergents, toothpaste).
  • Length: The number of brands within a product line (e.g., Tide, Cascade).
  • Depth: The number of items within a brand (e.g., different sizes, flavors).
  • Consistency: How well the product lines fit together, indicating synergy.

Product Strategy Approaches

  • Undifferentiated Marketing: Mass marketing, one product for all.
  • Differentiated (Segmented) Marketing: Tailoring products to different market segments.
  • Micromarketing (Individual Marketing): Customizing products for individual customers.
  • Concentrated (Niche) Marketing: Focusing on a specific, smaller market segment.

7 P’s for Service Marketing

The traditional 4 P’s (Product, Price, Place, Promotion) are expanded for services:

  1. Product
  2. Price
  3. Place (Distribution)
  4. Promotion (Communication)
  5. People: Staff, customer service.
  6. Process: Service delivery, operational flow.
  7. Physical Environment: Tangible cues, atmosphere.

Key Product and Service Decisions

  • Product Concept: Core, actual, and augmented product.
  • Product Strategy: Overall approach, product line, and product mix.
  • Service Strategy: Four characteristics of services and the 7 P’s.
  • Branding Strategy: Brand choice and name selection.

Marketing Planning Process

The marketing planning process often begins with a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats).

Market Segmentation

Segmentation involves dividing a market into distinct groups with unique needs that may require separate marketing strategies or mixes. Buyers within a segment are similar, while buyers between segments are different.

Targeting

Targeting is the process of choosing one or multiple market segments to focus on, based on thorough analysis.

Positioning

Positioning is arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target customers. It’s about creating a specific perception in the consumer’s mind.

Developing the Marketing Mix

After segmentation, targeting, and positioning, marketers develop the appropriate marketing mix (Product, Price, Place, Promotion) to deliver value.

Major Segmentation Variables

Marketers use various variables to segment markets:

  • Geographic: Country, region, population size, city, neighborhood.
  • Demographic: Age, sex, income, education, religion, family size.
  • Psychographic: Personality type, lifestyle, attitudes, social class.
  • Behavioral: Loyalty status, benefits sought, usage rate, occasions, user status, readiness stage, attitude towards the product.

Note: Marketers often use psychographic and behavioral variables to segment the market, but use geographic and demographic variables to describe each segment (i.e., who, when, where, why).

Effective Segment Criteria

For segments to be effective, they must be:

  • Measurable: Quantifiable in size and purchasing power.
  • Substantial: Large enough and profitable, with future potential.
  • Accessible: Reachable and serviceable.
  • Differentiable: Distinct enough to warrant separate strategies.
  • Actionable: The company must have the resources to serve them.

Targeting Strategies

  • Concentrated Marketing: One or more product offers to a single segment (niche).
  • Undifferentiated Marketing: The same product offered to different segments (mass market).
  • Differentiated Marketing: Multiple product offers for multiple segments.

Key Takeaway: Marketers have finite resources and must make strategic decisions about how and where to focus their efforts. Once segments are identified, marketers determine which segments to focus on to support corporate strategy and growth.

Strategic Positioning

Positioning defines how a product offering uniquely creates value better than its competitors in the minds of targeted customers. It is a combination of segmentation and differentiation.

Elements of Positioning

  • Scope (Product-Market Identification): What products for what customers via what technologies.
  • Differentiation:
    • Product Differentiation: Features, performance, style, and design.
    • Services Differentiation: Delivery, installation, repair.
    • Image Differentiation: Symbols, atmospheres, events.
    • Personal Differentiation: Hiring and training superior people.

    Focus on function and benefit differences valued by target customers.

  • Identifying Competitive Advantage: How can this positioning be defended? Consider resources, competencies, and entry barriers.
  • Positioning Map: Visual tool showing key attributes or characteristics that support positioning.

Crafting a Positioning Statement

A positioning statement typically follows this format:

“To (target segment and need), OUR BRAND is A (concept) that (point of difference).”

Fundamentals of Marketing

Marketing is the process of managing profitable customer relationships, creating value for customers, and building strong relationships to capture value from customers in return. It involves discovering and satisfying needs.

Marketing Goals

  • Attracting new customers.
  • Keeping and growing the current customer base.

The Marketing Process Steps

  1. Identify Customer Needs: Understand how customers choose among market offerings, their expectations about value and satisfaction, and their needs and wants.
  2. Identify/Select Target Markets: Decide whom to serve through market segmentation, focusing on segments that can be served well and profitably. Determine how to serve targeted customers through differentiation and positioning, and communicate the value proposition (benefits promised, brand differentiation).
  3. Develop a Marketing Mix: Construct an integrated marketing program that delivers superior value.
  4. Customer Relationship Management: Build profitable relationships and create customer delight through satisfaction.
  5. Evaluation and Control: Monitor and adjust marketing efforts (cap).

Marketing Management Philosophies

These concepts guide how organizations approach the market:

  • Production Concept

    Consumers favor products that are available and highly affordable. Organizations should focus on improving production and distribution efficiency. This can lead to marketing myopia, losing sight of satisfying customer needs and building relationships.

  • Product Concept

    Consumers favor products that offer the most quality, performance, and features. Organizations should focus on continual product improvements. This can also lead to marketing myopia; for example, a better mousetrap might not be needed if a chemical spray or extermination service is a better solution. Products won’t sell unless there’s a convenient distribution channel and buyers are convinced of their superiority.

  • Selling Concept

    Consumers will not buy enough of the firm’s products unless the firm undertakes a large-scale selling and promotion effort (common for unsought goods). This concept focuses on sales transactions rather than long-term relationships.

    Perspective: Inside-out – starts with the factory, focuses on existing products, heavy selling and promotion.

  • Marketing Concept

    Achieving organizational goals depends on knowing the needs and wants of target markets and delivering desired satisfactions better than competitors. Customer focus and value are the path to sales and profit – a “sense and respond” philosophy.

    Perspective: Outside-in – starts with a well-defined market, focuses on customer needs, integrates all marketing activities.

  • Societal Marketing Concept

    Companies’ marketing decisions should consider consumers’ wants, companies’ requirements, consumers’ long-run interests, and society’s long-run interests. This calls for sustainable marketing, recognizing societal needs beyond just company needs (shared value). It is not concerned with short-run economic gains but is values-driven, balancing human welfare, company profits, and consumer satisfaction.

The Changing Marketing Landscape

Modern marketing is continually evolving due to several factors:

  • Digital and Social Media Marketing: Increased online presence and engagement.
  • Mobile Marketing: Growth of mobile applications and advertising.
  • Changing Economic Environment: Adapting to global and local economic shifts.
  • Growth of Not-for-Profit Marketing: Expanding marketing principles to non-commercial sectors.
  • Rapid Globalization: International market expansion and competition.
  • Sustainable Marketing: Focus on environmentally and socially responsible practices.