Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e
- Elements of Product
Planning for Goods and
Services
Text © The McGraw−Hill
Companies, 2002Warranty support can
be costlyElements of Product Planning for Goods and Services 271Service guarantees Customer service guarantees are becoming more common as a way to attract,
and keep, customers. Pizza Hut guarantees a luncheon pizza in five minutes or it’s
free. General Motors set up a fast-oil-change guarantee to compete with fast-lube
specialists who were taking customers away from dealers. If the dealer doesn’t get
the job done in 29 minutes or less, the next oil change is free. The Hampton
Innmotel chain guarantees “100% satisfaction.” All employees, even the clean-
ing crews, are empowered to offer an unhappy customer a discount or refund on
the spot.
There’s more risk in offering a service guarantee than a warranty on a phys-
ical product. An apathetic employee or a service breakdown can create a big
expense. However, without the guarantee, dissatisfied customers may just go
away mad without ever complaining. When customers collect on a guarantee,
the company can clearly identify the problem. Then the problem can be
addressed.The cost of warranty support ultimately must be covered by the price that con-
sumers pay. This has led some firms to offer warranty choices. The basic price for a
product may include a warranty that covers a short time period or that covers parts
but not labor. Consumers who want more or better protection pay extra for an
extended warranty or a service contract.^27ConclusionIn this chapter, we looked at Product very broadly. A
product may not be a physical good at all. It may be a
service or it may be some combination of goods and serv-
ices—like a meal at a restaurant. Most important, we
saw that a firm’s Product is what satisfies the needs of its
target market.
We introduced consumer product and business prod-
uct classes and showed their affect on planning
marketing mixes. Consumer product classes are based
on consumers’ buying behavior. Business product
classes are based on how buyers see the products and
how they are used. Knowing these product classes—
and learning how marketers handle specific products
within these classes—will help you develop your mar-
keting sense.
The fact that different people may see the same prod-
uct in different product classes helps explain why
seeming competitors may succeed with very different
marketing mixes.
Branding and packaging can create new and more
satisfying products. Packaging offers special opportuni-
ties to promote the product and inform customers.
Variations in packaging can make a product attractive to
different target markets. A specific package may have to
be developed for each strategy.
Customers see brands as a guarantee of quality, and
this leads to repeat purchasing. For marketers, suchroutine buying means lower promotion costs and higher
sales.
Should companies stress branding? The decision
depends on whether the costs of brand promotion and
honoring the brand guarantee can be more than covered
by a higher price or more rapid turnover, or both.
The cost of branding may reduce pressure on the other
three Ps.
Branding gives marketing managers a choice. They
can add brands and use individual or family brands. In
the end, however, customers express their approval or
disapproval of the whole Product (including the brand).
The degree of brand familiarity is a measure of the mar-
keting manager’s ability to carve out a separate market.
And brand familiarity affects Place, Price, and Promo-
tion decisions.
Warranties are also important in strategy planning. A
warranty need not be strong—it just has to be clearly
stated. But some customers find strong warranties
attractive.
Product is concerned with much more than physical
goods and services. To succeed in our increasingly
competitive markets, the marketing manager must
also be concerned about packaging, branding, and
warranties.