Description Because learning changes everything. ® Chapter 13 Services: The Intangible Product Copyright 2022 © McGraw Hill LLC. All rights

Because learning changes everything. ®
Chapter 13
Services: The Intangible
Product
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
Learning Objectives
Learning Objective 13.1 Describe how the marketing of
services differs from the marketing of products.
Learning Objective 13.2 Discuss the four gaps in the
Service Gaps Model.
Learning Objective 13.3 Examine the five service quality
dimensions.
Learning Objective 13.4 Explain the zone of tolerance.
Learning Objective 13.5 Identify three service recovery
strategies.
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Service
Any intangible offering
that involves a deed,
performance, or effort
that cannot be
physically possessed.
By providing good
customer service, firms
add value to their
products and services.
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Pro Ipad on display at the Apple Store in Bologna, Spain.
Shutterstock / PriceM
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The Service-Product Continuum
Doctor
Dry cleaner
Restaurant
These photos illustrate the continuum from
a pure service to a pure good. Most
offerings lie somewhere in the middle and
include some service and some good (i.e.,
a hybrid of the two).
Grocery store
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Left: Viacheslav Iakobchuk/Alamy Stock Photo; Middle: McGraw-Hill Global Education Holdings, LLC; Right: Jacob Lund/Shutterstock; Bottom: Jeff Greenough/Blend Images/Getty Images
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Economic Importance of Service
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Services Marketing Differs from Product
Marketing
EXHIBIT 13.2 Core Differences between Services and Goods
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Intangible
Services cannot be
touched, tasted, or
seen.
Requires using cues to
aid customers.
Atmosphere is important
to convey value.
Images are used to
convey benefit of value.
© McGraw Hill LLC
Because it is difficult to show a service, Amusement
park owners evoke images in their advertising of
happy families and friends enjoying a ride at one of
their parks.
Shutterstock / bom
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Inseparable Production and Consumption
Production and
consumption are
simultaneous.
Little opportunity for a
consumer to test a
service before use.
Lower risk by offering
guarantees or
warranties.
© McGraw Hill LLC
© McGraw-Hill Education
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Heterogeneous
The more humans are
needed to provide a
service, the more likely
there is to be
heterogeneity or
variability in the service’s
quality.
Solutions
• Technology.
• Training.
• Automation.
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sonya etchison/Shutterstock
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Perishable
Services are perishable
in that they cannot be
stored for use in the
future.
Ski areas, airlines,
cruise ships, movie
theaters, and
restaurants must find
ways to deal with the
challenges of
perishability.
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spinout/Getty Images
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PROGRESS CHECK (1 of 3)
1. What are the four marketing elements that
distinguish services from products?
2. Why can’t we separate firms into just service or
just product sellers?
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Providing Great Service:
The Service Gaps Model
EXHIBIT 13.3 Service Gaps Model for Improving Retail Service Quality
Sources: Valarie Zeithaml, A. Parasuraman, and Leonard Berry, Delivering Quality Customer Service. (New York: Free Press, 1990);
Valarie Zeithaml, Leonard Berry, and A. Parasuraman, “Communication and Control Processes in the Delivery of Service Quality,”
Journal of Marketing 52, no. 2 (April 1988), 35-48.
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Knowledge Gap:
Understanding Customer Expectations
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Understanding Customer Expectations
Expectations are based
on knowledge and
experience.
Expectations vary
according to type of
service.
Expectations vary
depending on the
situation.
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Nikada/Getty Images
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Evaluating Service Quality Using WellEstablished Marketing Metrics
EXHIBIT 13.4 Dimensions of Service Quality
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Marketing Research:
Understanding Customers
Voice-of-customer (VOC) program: Collects
customer inputs and integrates them into
managerial decisions.
Zone of tolerance: Refers to the area between
customers’ expectations regarding their desired
service and the minimum level of acceptable
service.
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Zone of Tolerance
Used to Measure How Well Firms Perform on the Five Service Quality Dimensions
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Exhibit 13.5: Customers’ Evaluation of
Service Quality for Lou’s Local Diner
EXHIBIT 13.5 Customers’ Evaluation of Service Quality
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The Standards Gap: Setting Service
Standards
Difference between the firm’s perceptions of
customer expectations and the service standards
it sets.
Need to set standards for quality.
Develop systems to ensure the standards are
met.
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UpperCut Images/SuperStock
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The Delivery Gap: Delivering Service Quality
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Empowering Service Providers
Allowing employees to make decisions
about how service is provided to customers.
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Purestock/SuperStock
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Support and Incentives for Employees
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Use of Technology
EXHIBIT 13.6 How Technology Is Augmenting the Human Effort
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Communications Gap
Difference between the Actual Service Provided and
the Service the Firm Promises
Manage customer
expectations.
Promise only what you
can deliver.
Communicate service
expectations.
© McGraw Hill LLC
Shutterstock/ALPA PROD
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Service Quality, Customer Satisfaction, and
Loyalty
Good service quality leads to satisfied and loyal
customers.
Post-purchase Evaluation leads to satisfaction,
dissonance, or loyalty.
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PROGRESS CHECK (2 of 3)
1. Explain the four service gaps identified by the
Service Gaps Model.
2. List at least two ways to overcome each of the
four service gaps.
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Service Recovery
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Listening to the Customers and Involving
Them in Service Recovery
Customers can get
emotional over a service
failure.
Often customers just
want someone to listen.
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leaf/123RF
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Finding a Fair Solution
Distributive fairness.
Procedural fairness.
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Andriy Popov/123RF
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Resolving Problems Quickly
The longer it takes to resolve service failure, the
more irritated the customer will become and the
more people the customer will tell.
It is in the firm’s best interest to solve problems
quickly.
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PROGRESS CHECK (3 of 3)
1. Why is service recovery so important to
companies?
2. What can companies do to recover from a
service failure?
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Because learning changes everything. ®
Chapter 15
Strategic Pricing Methods
and Tactics
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
Learning Objectives
Learning Objective 15.1 Identify three methods that firms use to set their
prices.
Learning Objective 15.2 Describe the difference between an everyday
low pricing (EDLP) strategy and a high/low strategy.
Learning Objective 15.3 Explain the difference between a price
skimming and a market penetration pricing strategy.
Learning Objective 15.4 Identify tactics used to reduce prices to
consumers.
Learning Objective 15.5 Identify tactics used to reduce prices to
businesses.
Learning Objective 15.6 List the pricing practices that are illegal or
unethical.
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Considerations for Setting Price Strategies
EXHIBIT 15.1: Pricing Strategies
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Value-Based Methods
Setting prices that focus on the overall value of the
product offering as perceived by the consumer:
Improvement Value
Method
Cost of Ownership Method
These methods require a great deal of research to
be implemented successfully.
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Value-Based Methods:
Improvement Value
EXHIBIT 15.2 Improvement Value
Incremental Benefits
Improved Value
Benefit Weight
Weighted Factor
Clarity
20%
0.40
8%
Range
40%
0.20
8%
Security
10%
0.10
1%
Battery life
5%
0.20
1%
Ease of use
30%
0.10
3%
1.00
21%
Overall
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PROGRESS CHECK (1 of 3)
1. What are the three different considerations for
setting prices?
2. How can you use value-based methods for
setting prices?
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Pricing Strategies
Everyday low
pricing (EDLP)
© McGraw Hill LLC
High/Low Pricing
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Everyday Low Pricing (EDLP) vs.
High/Low Pricing
Create value for consumers in different ways.
EDLP reduces consumers’ search costs.
High/low provides the thrill of the chase for the lowest price.
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In High/Low Pricing Consumers Use
© McGraw Hill LLC
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New Product Pricing Strategies
Market Penetration Pricing
Price Skimming
Price skimming is often used for high-demand video
games like Far Cry 6 because fans will pay a higher
price to be one of the first to own the newest version.
©Chesnot/Getty Images
© McGraw Hill LLC
Source: Ubisoft Entertainment
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Pricing Tactics Aimed at Consumers (1 of 2)
© McGraw Hill LLC
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Pricing Tactics Aimed at Consumers (2 of 2)
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Leasing/Rentals
Price Bundling
Leader Pricing
Price Lining
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Business Pricing Tactics and Discounts
EXHIBIT 15.3 Business-to-Business Pricing Tactics
Tactic
Description
Seasonal
discounts
An additional reduction offered as an incentive to retailers to order
merchandise in advance of the normal buying season.
Cash discounts
An additional reduction that reduces the invoice cost if the buyer pays
the invoice prior to the end of the discount period.
Allowances
Advertising or slotting allowances (additional price reductions) offered
in return for specific behaviors. Advertising allowances are offered to
retailers if they agree to feature the manufacturer’s product in their
advertising and promotional efforts. Slotting allowances are offered to
get new products into stores or to gain more or better shelf space.
Quantity discounts
Providing a reduced price according to the amount purchased
Uniform delivered
versus zone
pricing
Uniform delivered price: shipper charges one rate, no matter where
the buyer is located. Zone price: different prices depending on the
geographic delivery area.
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PROGRESS CHECK (2 of 3)
1. What are some consumer-oriented pricing
tactics?
2. What are some B2B-oriented pricing tactics?
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Legal and Ethical Aspects of Pricing
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Deceptive or Illegal Price Advertising
Deceptive reference
prices
Loss-leader pricing
Bait and switch
©Alex Segre/Alamy Stock Photo
© McGraw Hill LLC
©Alex Segre/Alamy Stock Photo
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Predatory Pricing
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Price Discrimination
Is this price discrimination illegal?
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Evelyn Nicole Kirksey/McGraw-Hill
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Price Fixing
Horizontal price fixing
© McGraw Hill LLC
Vertical price fixing
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Gray Market Pricing
Uses irregular but not
necessarily illegal
methods.
Gray market for luxury
goods.
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Stefano Rellandini/Alamy Stock Photo
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PROGRESS CHECK (3 of 3)
1. What common pricing practices are considered
to be illegal or unethical?
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Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
Because learning changes everything. ®
Chapter 11
Product, Branding, and
Packaging Decisions
Copyright 2022 © McGraw Hill LLC. All rights reserved. No reproduction or distribution without the prior written consent of McGraw Hill LLC.
Learning Objectives
(1 of 2)
Learning Objective 11.1 Describe the components of a
product.
Learning Objective 11.2 Identify the types of consumer
products.
Learning Objective 11.3 Explain the difference between a
product mix’s breadth and a product line’s depth.
Learning Objective 11.4 Identify the advantages that
brands provide firms and consumers.
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Learning Objectives
(2 of 2)
Learning Objective 11.5 Explain the various components
of brand equity.
Learning Objective 11.6 Determine the various types of
branding strategies used by firms.
Learning Objective 11.7 Distinguish between brand
extension and line extension.
Learning Objective 11.8 Indicate the advantages of a
product’s packaging and labeling strategy.
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Exhibit 11.1: Product Complexity
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Types of Products: Consumers
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McGraw-Hill Global Education Holdings, LLC
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PROGRESS CHECK (1 of 5)
1. Explain the three components of a product.
2. What are the four types of consumer products?
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Product Mix and Product Line Decisions
(1 of 2)
The complete set of all
products and services
offered by a firm is called its
product mix.
The product mix typically
consists of various product
lines, which are groups of
associated items that
consumers tend to use
together or think of as part
of a group of similar
products or services.
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sergeytikhomirov/123RF
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Exhibit 11.2: Abbreviated List of Daimler AG
Product Mix
Mercedes-Benz Cars
Mercedes-AMG Cars
Smart Cars
Mercedes-Benz Vans
A-Class
A-Class
Smart ForTwo
Sprinter
B-Class
C-Class
Smart ForTwo Cabrio
Metro
C-Class
CLA
Smart ForFour
Metro
CLA
CLS
GLS
E-Class
G-Class
G-Class
E-Class
GLA
GLA
GLC
GLC
GLE
GLS
GT
S-Class
S-Class
SL
SL
SLC
SLC
V-Class
X-Class
© McGraw Hill LLC
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Product Mix and Product Line Decisions
(2 of 2)
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Change Product Mix Depth
Increase Depth:
Decrease Depth:
•
• Procter & Gamble
announced it would be
merging, eliminating, or
selling many of its brands
and keeping only the topperforming 70-80 brand
names.
For Haagen-Dazs brand
ice cream, adding new
flavors such as Banana
Peanut Butter Chip, Honey
Salted Caramel Almond,
and Midnight Cookies &
Cream enables it to appeal
to its variety-seeking
customers.
© McGraw Hill LLC
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Change Product Mix Breadth
Increase Breadth:
Decrease Breadth:
•
• For example, a firm drops its
line of protein bars and
focuses on energy drinks
and vitamin water.
Firms often add new
product lines to capture
new or evolving markets.
For example, a firm adds a
whole new line of yogurt.
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Product Mix Changes
EXHIBIT 11.3 Changes to a Product Mix
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PROGRESS CHECK (2 of 5)
1. What is the difference between product line
breadth and product line depth?
2. Why change product mix breadth?
3. Why change product line depth?
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Branding
Increases awareness and provides a way to differentiate
from competitors.
Oscar Mayer Wiener 1965 Commercial (one of America’s Best Ads)
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Shutterstock / SergZSV.ZP
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What Makes a Brand?
© McGraw Hill LLC
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Value of Branding for the Customer and the
Firm
© McGraw Hill LLC
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Brand Equity for the Owner
Exhibit 11.5: The World’s 10 Most Valuable Brands
Brand
Country
Sector
Bank Value (in $
billions)
2019 Rank
2017 Rank
1
5
Amazon
United States
Retail
$315.5
2
1
Apple
United States
Technology
$309.5
3
2
Google
United States
Technology
$309
4
3
Microsoft
United States
Technology
$251.2
5
N/A
Visa
United States
Financial
Services
$177.9
6
8
Facebook
United States
Technology
$159
7
N/A
Alibaba
China
Retail
$131.2
8
N/A
Tencent
China
Technology
$130.4
9
N/A
McDonald’s
United States
Restaurant
$130.4
10
N/A
AT&T
United States
Communication
$108.4
Source: Lucy Handley, “Amazon Beats Apple and Google to Become the World’s Most Valuable Brand,” CBS News, June 11, 2019,
www.cnbc.com/2019/06/11/amazon-beats -apple-and-google-to-become-the-worlds-most-valuable-brand.html.
© McGraw Hill LLC
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Components of Brand Equity: Brand
How many consumers
in a market are familiar
with the brand?
The more aware
consumers are with a
brand, the higher the
chances of purchase.
© McGraw Hill LLC
While Gatorade’s brand aware-ness is so strong that the brand name
is often used generically, its smaller competitors need to try harder.
WTRMLN WTR gains familiarity by highlighting Beyoncé as an
investor and supporter of the brand.
Source: World Waters, LLC
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Brand Equity: Perceived Value
The relationship
between a product’s
benefits and its costs.
How do discount
retailers like Target, T.J.
Maxx, and H&M create
value for customers?
© McGraw Hill LLC
Shutterstock / Thinglass
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Brand Equity: Brand Associations
The mental and emotional links that consumers
make between a brand and its key attributes.
Brand associations are often the result of a firm’s
advertising and promotional efforts.
State Farm Insurance: “like a good neighbor, State Farm
is there”
© McGraw Hill LLC
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Brand Equity: Brand Loyalty
An important source of
value for firms.
Consumers are less
sensitive to price.
Marketing costs are
much lower.
Firms are insulated from
the competition.
© McGraw Hill LLC
TEA/123RF
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PROGRESS CHECK (3 of 5)
1. How do brands create value for the customer
and the firm?
2. What are the components of brand equity?
© McGraw Hill LLC
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Branding Strategies
Whether to use manufacturer brands or retailer/store
brands.
How to name brands and product lines.
Whether or not to extend the brand name to other
products and markets.
Should the brand name be used with another firm or
licensed to another firm?
Whether or not the brand should be repositioned.
© McGraw Hill LLC
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Brand Ownership
© McGraw Hill LLC
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Naming Brands and Product Lines
Family brands
• Corporate name used
across brands and
product lines.
• Example: Kraft cheeses.
Kraft uses a family branding strategy in which several
product lines are sold under one name.
Individual brands
• Products have individual
identities.
• Example: Kraft owns
Velveeta, Classico, Jello.
© McGraw Hill LLC
Kraft also uses an individual branding strategy because
Velveeta, Classico, Jell-O, Grey Poupon, Heinz, and
others are all marketed using separate names.
Evelyn Nicole Kirksey/McGraw-Hill (top); Daniel Acker/Bloomberg/Getty Images (bottom)
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Brand and Line Extensions
Brand extension: Same brand name in different product line.
Line Extension: Same brand name within the same product
line.
Ferrari has licensed its brand name to manufacturerrelated apparel that appeals to those who can’t afford
the automobile.
© McGraw Hill LLC
Alessia Pierdomenico/Bloomberg/ Getty Images
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Brand Dilution
Not all brand extensions are successful:
• Evaluate the fit between the product class of
the core brand and the extension.
•
Evaluate consumer perceptions of the
attributes of the core brand and seek out
extensions with similar attributes.
•
Refrain from extending the brand name to too
many products.
•
Is the brand extension distanced enough from
the core brand?
Zippo suffered brand dilution when it extended its brand by introducing a perfume for
women. It turns out that women don’t associate lighters with perfume.
© McGraw Hill LLC
Alessia Pierdomenico/Bloomberg/ Getty Images
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Co-Branding
Marketing two or more
brands together.
Can enhance perceptions of
quality through links
between brands.
Example: Yum! Brands
• Combines two or more of
its restaurant chains
(A&W, KFC, Long John
Silver’s, Pizza Hunt, and
Taco Bell) into one store
space.
© McGraw Hill LLC
calimedia/Shutterstock
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Brand Licensing
The NBA team, the New Orleans Pelicans (licensor),
provides the right to use its brand to apparel
manufacturers (licensee) in return for royalty payments.
© McGraw Hill LLC
Iakov Filimonov/Shutterstock
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Brand Repositioning
Change a brand’s focus.
Can improve the brand’s
fit with its target
segment.
Can boost vitality of old
brands.
Not without costs and
risks.
© McGraw Hill LLC
robynmac/123RF
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PROGRESS CHECK (4 of 5)
1. What are the differences between manufacturer
and private-label brands?
2. What is co-branding?
3. What is the difference between brand extension
and line extension?
4. What is brand repositioning?
© McGraw Hill LLC
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Packaging
An important brand element that has more tangible
or physical benefits than other brand elements have.
Primary vs. Secondary package
What packaging do you as a consumer find useful?
© McGraw Hill LLC
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Key Roles of Packaging
Attracts the consumers’
attention.
Enables products to stand
out from their competitors.
Allows for the same product
to appeal to different
markets with different sizes.
A recent development is
sustainable packaging.
© McGraw Hill LLC
To answer consumers’ call for sustainable
packaging, P&G’s Head & Shoulders shampoo
bottles are fully recyclable and made from plastic
waste recovered from beaches.
Source: Procter & Gamble
34
Product Labeling
Provides information the
consumer needs.
Many labeling
requirements stem from
various laws.
Is a communication tool.
© McGraw Hill LLC
Spauln/Getty Images
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PROGRESS CHECK (5 of 5)
1. Why do firms change packaging?
2. What objectives do product labels fulfill?
© McGraw Hill LLC
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‫المملكة العربية السعودية‬
‫وزارة التعليم‬
‫الجامعة السعودية اإللكترونية‬
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment-3
Marketing Management (MGT 201)
Due Date: May 2024 @ 23:59
Course Name: Marketing Management
Student’s Name:
Course Code: MGT201
Student’s ID Number:
Semester: 2nd
CRN:
Academic Year:
For Instructor’s Use only
Instructor’s Name: Dr/Mr/Ms….
Students’ Grade: Marks Obtained/
2023-24
Level of Marks: High/Middle/Low
General Instructions – PLEASE READ THEM CAREFULLY
•
•
•
•
•
•
•
•
The Assignment must be submitted on Blackboard (WORD format only) via allocated folder.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented, marks may be reduced for
poor presentation. This includes filling your information on the cover page.
Students must mention question number clearly in their answer.
Late submission will NOT be accepted.
Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
All answered must be typed using Times New Roman (size 12, double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.
Learning Outcomes:
1.
2.
3.
Recognize an understanding of the overall marketing concepts, goals and strategies within the context of
organizations goals and strategies. (LO-1)
Demonstrate the ability to formulate marketing strategies that incorporate psychological and sociological
factors which influence consumer’s decision. (LO-3)
Develop critical and analytical thinking necessary to overcome challenges and issues of marketing in the
changing global environment. (LO-4)
Critical Thinking
1. Firms institute a variety of brand-related strategies to create and manage key brand assets that
includes like brand extension and line extension, manufacturer brands and private-label brands,
co-branding and Brand Licensing. Critically examine these all strategies with the help of
suitable examples from the local market.
(CH-11, CLO-1)
2. A local health club is running a promotional campaign that promises you can lose an inch a
month off your waist if you join the club and follow its program. How might this claim cause
a communications gap? What should the club do to avoid a service failure?
(CH-13, CLO-3)
3. Imagine you are the product manager for Neutrogena’s sun protection product line and your
team developed a new type of sunscreen. Which B2B pricing tactics would you use to promote
it? Why?
(CH-15, CLO-4)
Answers
1.
2.
3.

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