29. Value and Satisfaction

In terms of marketing, the product or offering will be successful if it delivers value and satisfaction to the target buyer. The buyer chooses between different offerings on the basis of which is perceived to deliver the most value.

We define value as a ratio between what the customer gets and what he gives. The customer gets benefits and assumes costs, as shown in this equation:

Based on this equation, the marketer can increase the value of the customer offering by (1) raising benefits, (2) reducing costs, (3) raising benefits and reducing costs, (4) raising benefits by more than the raise in costs, or (5) lowering benefits by less than the reduction in costs. A customer choosing between two value offerings, V1 and V2, will examine the ratio V1/V2. She will favor V1 if the ratio is larger than one; she will favor V2 if the ratio is smaller than one; and she will be indifferent if the ratio equals one.

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19. What is a Market?

Traditionally, a “market” was a physical place where buyers and sellers gathered to buy and sell goods. Economists describe a market as a collection of buyers and sellers who transact over a particular product or product class (such as the housing market or the grain market). Five basic markets and their connecting flows are shown in below. Manufacturers go to resource markets (raw material markets, labor markets, money markets), buy resources and turn them into goods and services, and sell finished products to intermediaries, who sell them to consumers. Consumers sell their labor and receive money with which they pay for goods and services. The government collects tax revenues to buy goods from resource, manufacturer, and intermediary markets and uses these goods and services to provide public services. Each nation’s economy, and the global economy, consists of interacting sets of markets linked through exchange processes. Marketers view sellers as the industry and...

33. Product

Companies address customer needs by putting forth a value proposition, a set of benefits that satisfy those needs. The intangible value proposition is made physical by an offering, which can be a combination of products, services, information, and experiences. Product is anything capable of satisfying human wants. A product is anything we can offer to a market for attention, acquisition, use, or consumption that might satisfy a need or want. Thus, a product may be a physical good like a cereal, tennis racquet, or automobile; or a service such as an airline, bank, or insurance company. A product could also be a retail outlet like a department store, specialty store, or supermarket; a person such as a political figure, social media celebrity, entertainer, or professional athlete; an organization like a nonprofit, trade organization, or arts group; or a place including a city, state, or country; or even an idea like a political or social cause. We can define five levels of meaning fo...

08. Products and Services marketing together

The service-dominant logic suggests that the separation between products and services is not a clear one. The ‘servicisation’ of products refers to the relative importance of the service dimension in a given product offering. Thinking in marketing has moved from a strategy that conceives of either a product or a service to one which sees both product and service dimensions in any market offering. Many products have a service component and many services have product components. Take for example a physical product such as a car. We purchase a car, which provides the service of getting from one place to another. But the car comes with its own need for services such as insurance, finance, repairs and even a petrol station. The Swedish car manufacturer Volvo has built a service into its cars that alerts the driver if they are falling asleep. What a great service! Another example is a mobile phone provider such as Nokia. The company provides a product (m...

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