Chapter 8 Study Note: Products, Services, and Brands – Building Customer Value

Objective Overview

1. Define what a product is and classify products and services.

2. Understand product and service decisions at the individual, line, and mix levels.

3. Learn about service characteristics and strategies.

4. Explore branding strategy and how to build/manage strong brands.

1. What is a Product? ★

Definition:

A product is anything that can be offered to a market for attention, acquisition, use, or consumption that
satisfies a want or need.

• Includes: physical goods, services, ideas, places, events, persons.

• Also called market offerings.

Common Mistake: Not all products are tangible. Services, ideas, and experiences are also products.

2. Products, Services, and Experiences

Type Description Example

Pure Tangible Goods Only physical Soap, salt

Pure Services No physical presence Airline travel, legal advice

Hybrid (Combination) Both Restaurant (food + service)

Experience-Based Marketing

Modern firms aim to create brand experiences, not just products.

Apple, Disney, and Nike are best examples.
 3. Levels of Product ★

Mnemonic: CAP = Core, Actual, Augmented

Diagram: 3 Levels of Product

Augmented Product

(Warranty, Support, Delivery)

Actual Product

(Brand Name, Quality, Design, Features)

Core Customer Value

(What customer is *really* buying)

Example:
Apple iPad

• Core: Productivity, entertainment

• Actual: Tablet, brand, UI

• Augmented: Warranty, Genius Bar, iCloud

4. Product & Service Classifications ★

A. Consumer Products

(Bought for personal use)

Type Description Examples

Convenience Frequently, low effort Toothpaste

Shopping Compared carefully Clothes, furniture

Specialty Unique brand, high effort Rolex, Lamborghini

Unsought Not known or needed Life insurance, blood donation

Memory Aid: C.S.S.U = Can She Save Us?

B. Industrial Products

(Used for production)

1. Materials & Parts – raw inputs

2. Capital Items – machinery

3. Supplies & Services – lubricants, cleaning

5. Product & Service Decisions ★

A. Individual Product Decisions

Mnemonic: A-B-P-L-S = Attributes, Branding, Packaging, Labeling, Support

1. Product Attributes

• Quality – consistency + performance

• Features – what it offers (e.g., waterproof, voice control)

• Style & Design – usability + aesthetics

2. Branding

• Name, term, design to identify/differentiate

3. Packaging

• Protects, markets, and delivers

4. Labeling

• Identifies, describes, promotes

5. Product Support Services

• After-sales service, installation, warranty

B. Product Line Decisions

• Product Line: Closely related products

o E.g., Nike shoes for running, training, walking

• Line Length: Number of items

• Line Filling/Stretching: Add new items to existing line (upward/downward)

C. Product Mix Decisions

Dimension Meaning

Width Number of product lines

Length Total items in all lines

Depth Variations per product

Consistency How closely related lines are

Mnemonic: WiLeDCo

6. Services Marketing ★

Services are intangible activities that do not result in ownership.

4 Characteristics of Services ★

Characteristic Meaning

Intangibility Cannot be seen/touched

Inseparability Produced & consumed together

Variability Quality depends on who/when/where

Perishability Cannot be stored for later use

The Service Profit Chain

Internal service quality → employee satisfaction → better service → customer satisfaction → loyalty → profit

Mnemonic: IVIP = Intangible, Variable, Inseparable, Perishable

7. Branding Strategy ★

Brands are assets—powerful, emotional, and relationship-driven.

Brand Equity

• Definition: Value added by brand to the product

• Components: Differentiation, Relevance, Knowledge, Esteem

Brand Value = Total financial worth of brand

 Branding Strategy Decisions ★

Diagram: Brand Strategy Chart

Step Explanation

1. Brand Positioning Attributes → Benefits → Beliefs/Values

2. Brand Name Selection Easy, distinctive, extendable

3. Brand Sponsorship Manufacturer, Private, Licensing, Co-branding

4. Brand Development Line Extension, Brand Extension, Multibrands, New Brands

Exam-Focused Application Tips ★

Broad Question Tip:

• Start with definition → real-life example → diagram → application → finish with brand impact or
customer value.

Common Mistakes:

• Confusing “product mix” with “product line”

• Forgetting the core product in 3 Levels

• Not including examples in essays

Real-World Case Examples

• Apple: Uses Augmented Product (Genius Bar, iOS ecosystem)

• GoPro: Sells experiences, not just cameras

• Nike: Brand built on lifestyle and beliefs ("Just Do It")

Exam Practice Questions + Model Answers

1. Define the three levels of a product. Provide examples.

→ See 3-level diagram above with iPad example.

2. Distinguish between shopping and specialty products.

→ Shopping: Compare options (e.g., clothing), Specialty: Unique, brand-loyal (e.g., Tesla)

3. Explain the 4 characteristics of services. Provide example.

→ Use IVIP and apply to hotel service.

4. Differentiate product line and product mix.

→ Line = related items. Mix = all offerings.

5. What is brand equity? How can firms increase it?

→ Value added by brand. Build it via trust, positioning, and customer experience.

6. Explain the service profit chain.

→ Internal quality → employee productivity → customer loyalty → profit

7. Identify and explain four brand development strategies.

→ Line Extension, Brand Extension, Multibrands, New Brands (use Coca-Cola as example)

8. Compare core, actual, and augmented product using Starbucks coffee.

→ Core: energy, Actual: drink, Augmented: ambiance, loyalty program

9. Describe the four dimensions of brand strength in BrandAsset Valuator.

→ Differentiation, Relevance, Knowledge, Esteem

10. Case-Based: How does Apple use augmented product to increase customer loyalty?
→ Genius Bar, workshops, clean aesthetic, customer experience = augmented product
 One-Page Summary: Last-Minute Revision Sheet

Key Term Meaning Example

Product Anything offered to satisfy need iPhone, Uber

Core Product Core benefit Relaxation from coffee

Actual Product Tangible part Coffee cup, taste

Augmented Product Extras Delivery, warranty

Consumer Products For personal use Soap, Laptop

Industrial Products For production Machine

Product Line Group of related items Nike running shoes

Product Mix All product lines All Nike products

Services Intangible, no ownership Hotel stay

IVIP Service features Hotel: can't store, can't separate

Brand Symbol/name to identify product Coca-Cola

Brand Equity Value added by brand Apple worth more due to brand

Brand Strategy 4 decisions Positioning, Name, Sponsor, Development

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