chapter 6: creating offerings
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by Jeff Tanner and Mary Anne Raymondby Jeff Tanner and Mary Anne Raymond
Principles of Marketing
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Chapter 6Chapter 6Creating OfferingsCreating Offerings
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Learning Objectives1.Distinguish between the three major components of an offering: product, price, and service.2.Explain, from both a product-dominant and a service-dominant approach, the mix of components that comprise different types of offerings.3.Distinguish between product platforms and product lines.
What Composes an Offering?What Composes an Offering?
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• Products can be either a good, which is tangible, or a service, which is intangible.
• Many products have attributes of a good and a service.
• Products have features which are a characteristic of the offering.
• Offerings have a price that is paid for the product benefits.
• Total cost of ownership (TCO) is the amount paid to own, use, and dispose of a product.
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Products, Cost of OwnershipProducts, Cost of Ownership
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• Service is an action that provides a buyer with an intangible benefit.– A haircut is an example of a service.
• Many tangible products have intangible service components attached to them.– A meal in a restaurant has both tangible
and intangible features.
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ServiceService
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The Product-Dominant Approach to The Product-Dominant Approach to MarketingMarketing
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In addition to the offering itself, marketers should consider what services it takes for the customer to acquire their offerings.
The Service-Dominant Approach to The Service-Dominant Approach to MarketingMarketing
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• Technology platform is the core technology
on which a product is built.• Some new offerings take a technology
platform and rebundle its benefits.• Technology platforms are not limited to
tangible products.• A product line is a group of related
offerings.
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Product Levels and Product LinesProduct Levels and Product Lines
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• Line depth—the number of functionally related products in a firm’s product line.
• Line extension—when a new similar product is added to a line.
• Line breadth—distinct, product lines of a company.
• Product mix—the entire assortment of products that a firm offers.
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Product Lines and MixesProduct Lines and Mixes
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• Companies market offerings composed of a combination of tangible and intangible characteristics for certain prices.
• During the Industrial Revolution, firms focused primarily on products.
• The service-dominant perspective to marketing integrates three different dimensions of an offering.
• An offering is based on a technology platform.• A product line is a group of similar offerings.• A product line can be deep and/or broad.• The entire assortment of products that a company
offers is called the product mix.
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Key TakeawaysKey Takeaways
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Types of Consumer OfferingsTypes of Consumer Offerings
Learning Objectives1.Define the various types of offerings
marketed to individual consumers.2.Explain why a single offering might be
marketed differently to different types of consumers.
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Consumer Offerings Fall Consumer Offerings Fall into Four General Categoriesinto Four General Categories
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• Convenience offerings, shopping offerings, specialty offerings, and unsought offerings are the major types of consumer offerings.
• Convenience offerings often include life’s necessities (bread, milk, fuel, etc.), for which there is little difference across brands.
• Shopping goods do vary, and many consumers develop strong preferences for some brands versus others.
• Specialty goods are even more exclusive. Unsought goods are a challenge for marketers because customers do not want to have to shop for them until they need them.
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Key TakeawaysKey Takeaways
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Learning Objectives1.Define the various types of offerings
marketed to businesses.2.Identify some of the differences with
regard to how the various types of business offerings are marketed.
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Types of Business-to-Business (B2B) Types of Business-to-Business (B2B) OfferingsOfferings
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• Capital equipment—equipment purchased and used for more than one year.
• Raw materials—are materials firms offer other firms so they can make a product or provide a service.
• OEM or components—raw materials, manufactured materials, and component parts used to make a final product.
• MRO or maintenance, repair, and operating—Janitorial supplies or hardware used to repair equipment.
• Facilitating— includes products and services that support a company’s operations but are not part of the final product it sells such as supplies.
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Primary Categories of B2B Primary Categories of B2B OfferingsOfferings
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• Business buyers purchase various types of offerings to make their own offerings.
• Types of products they use are raw materials, manufactured materials, and component parts and assemblies.
• MRO (maintenance, repair, and operations) offerings are those that keep a company’s depreciable assets in working order.
• Facilitating offerings are products and services a company purchases to support its operations but are not part of the firm’s final product.
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Key TakeawaysKey Takeaways
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Learning Objectives1.Understand the branding decisions firms
make when they’re developing new products.
2.Identify the various levels of packaging for new products.
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Branding, Labeling, and PackagingBranding, Labeling, and Packaging
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• Branding—the set of activities designed to create a brand and position it in the minds of consumers.
• Brand name—the spoken part of a brand’s identity.
• Brand mark—the symbol associated with a brand.
• Cannibalization—occurs when a firm’s new offering eats into the sales of one of its older offerings.
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BrandingBranding
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• Packaging has to fulfill a number of important functions, including:– communicating the brand and its benefits– protecting the product from damage and
contamination during shipment, as well as damage and tampering once it’s in retail outlets
– preventing leakage of the contents– presenting government-required warning and
information labels
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PackagingPackaging
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• Primary packaging holds a single retail unit of a product.
• Secondary packaging holds a single wholesale unit of a product.
• Tertiary packaging is packaging designed specifically for shipping and efficiently handling large quantities.
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Packaging UnitsPackaging Units
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• A brand is a name, picture, design, symbol, or combination of them that is used by a seller to identify its offerings and differentiate them from competitors’ offerings.
• Branding is the set of activities designed to create a brand and position it relative to competing brands in the minds of consumers.
• A brand extension involves utilizing an existing brand name or brand mark for a new product or category (line) of products.
• Cannibalization occurs when a company’s new offering eats into the sales of one of its older offerings.
• Packaging protects products from damage, contamination, leakage, and tampering.
• Packaging is also used to communicate the brand and its benefits, product warnings, and proper use.
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Key TakeawaysKey Takeaways
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Learning Objectives1.Understand the people involved in
creating and managing offerings.2.Recognize the differences in
organizing product marketing for consumers versus B2B companies.
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Managing the OfferingManaging the Offering
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• Brand manager—the person responsible for all business decisions regarding one brand.
• Product manager—someone with business responsibility for a particular product or product line.
• Category manager—has responsibility for business decisions within a broad grouping of offerings.
• Market manager—is responsible for business decisions within a market.
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Product Management PositionsProduct Management Positions
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• Brand managers decide what products are to be marketed and how.
• Category managers are found in consumer markets.
• Market managers can be found in both B2C and B2B markets.
• In some companies, the vice president of marketing or other executive is responsible for the brands.
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Key TakeawaysKey Takeaways