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Credit Sprint's Guide to Marketing Unit 7: Product, Services and Branding

CLEP® weight 12%

The product is the heart of the marketing mix. This unit covers product levels and classes, product lines and mixes, the product life cycle, new product development, branding, packaging and the special features of services.

The product life cycleTimeSales and profit IntroductionGrowthMaturityDecline — sales- - profit

What you need to know

  • A product is anything offered to satisfy a need: goods, services, ideas, people, places. Three levels: core benefit, actual product (features, quality, brand, package, design) and augmented product (warranty, delivery, service).
  • Consumer products: convenience (staples, impulse, emergency), shopping (compared on price and quality), specialty (brand insistence, extra effort) and unsought (such as insurance or funeral services).
  • A product line is a group of related items; the product mix is all items a firm sells. Width is the number of lines, length the total items, depth the versions of each item.
  • The product life cycle: introduction (high cost, low sales, losses), growth (rising sales and profit, competitors enter), maturity (sales peak, intense competition, price pressure) and decline (falling sales; harvest, modify or drop).
  • New product development: idea generation, screening, concept testing, business analysis, development (prototype), test marketing and commercialization. Many ideas fail along the way.
  • Brand: a name, term, symbol or design that identifies a seller's product. Brand equity is the added value a brand name gives a product. Brand loyalty, awareness, perceived quality and associations create equity.
  • Types of brands: manufacturer (national) brands, private (store) brands, and generics. Family branding uses one name for many products; individual branding gives each product its own name.
  • A line extension adds a new version in the same category (new flavor); a brand extension uses a brand name in a new category. Co-branding pairs two brands; licensing rents a brand name.
  • Trademarks protect names and symbols; a service mark protects a service's name. Trade dress protects the look of a product or package. Brands can lose protection if they become generic (like 'escalator' once did).
  • Packaging protects, promotes, makes the product convenient to use and store, and can reduce waste. Labeling must give accurate information; warranties are covered by the Magnuson-Moss Act.
  • Services have four characteristics: intangibility, inseparability (produced and consumed together), variability (heterogeneity) and perishability. Service quality dimensions: reliability, responsiveness, assurance, empathy and tangibles.
  • Internal marketing treats employees as customers so they deliver good service. Strategies for the life cycle include product modification and finding new uses.

Formulas and rules

Product mix width = number of product lines
Product mix depth = number of versions of one product
Brand equity = the extra value a brand name adds

Exam traps

Watch forA line extension stays in the same category; a brand extension jumps to a different one.
Watch forPerishability means a service cannot be stored (an empty airline seat is lost revenue), not that it is cheap.
Watch forTest marketing comes BEFORE commercialization, not after.
Watch forSpecialty products involve brand insistence; shopping products involve comparison.

Key terms

  • Core benefit: The basic need the product satisfies.
  • Augmented product: Extra services and benefits such as warranty and delivery.
  • Convenience product: A frequently bought item needing little effort.
  • Shopping product: An item compared on price, quality and style before buying.
  • Specialty product: An item for which buyers insist on a particular brand.
  • Unsought product: A product buyers do not normally think of buying.
  • Product line: A group of closely related products.
  • Product mix: All the products a firm sells.
  • Introduction stage: First stage of the life cycle: high costs, low sales.
  • Growth stage: Life cycle stage of rising sales and profit as competitors enter.
  • Maturity stage: Sales peak and competition and price pressure are intense.
  • Decline stage: Sales fall; firms harvest, modify or drop the product.
  • Concept testing: Asking consumers to react to a description of a product idea.
  • Brand: A name, term, symbol or design that identifies a seller's product.
  • Brand equity: The added value a brand name gives a product.
  • Private brand: A brand owned by a retailer or wholesaler.
  • Family branding: Using one brand name for several products.
  • Line extension: A new version of a product within the same category.
  • Brand extension: Using an existing brand name in a new product category.
  • Co-branding: Two brands working together on one product.
  • Trademark: A legally protected brand name, symbol or design.
  • Intangibility: Services cannot be seen, touched or tried before purchase.
  • Inseparability: Services are produced and consumed at the same time.
  • Perishability: Services cannot be stored for later sale.
  • Variability: Service quality varies by who provides it, and when.
  • Internal marketing: Treating employees as customers to improve service.

Practice questions

Five of the 61 Unit 7 questions in Credit Sprint. Every choice is explained in the app.

1. In marketing, a product is best defined as
  1. anything offered to a market that satisfies a want or need, including goods, services and ideas
  2. the price a customer pays
  3. the advertising used to sell an item
  4. only a tangible good that can be touched
Show answer

anything offered to a market that satisfies a want or need, including goods, services and ideas. Products are bundles of benefits, not only physical items.

2. A buyer who will travel across town and accept no substitute for a particular brand of guitar is buying a
  1. convenience product
  2. specialty product
  3. shopping product
  4. unsought product
Show answer

specialty product. Brand loyalty and unique features make the buyer willing to make special effort.

3. A company that sells soap, shampoo and razors has a product mix with a width of
  1. one product line
  2. three product lines
  3. zero
  4. one brand
Show answer

three product lines. Each distinct line adds to width.

4. Sales growth slows and competition peaks, with price cutting common. The product is in
  1. maturity
  2. introduction
  3. growth
  4. decline
Show answer

maturity. Most buyers have already adopted it.

5. The first step in the new-product development process is usually
  1. idea generation
  2. test marketing
  3. business analysis
  4. commercialization
Show answer

idea generation. Ideas are collected before screening.