1. Chapter 12: PRODUCT AND PROMOTION
Delivering More Value

2. PRODUCT DEFINITION: IT’S PROBABLY MORE THAN YOU THINK
Car Wash ~ Cooking Lesson ~ Computer ~ Soap ~ Car
Product – anything a company offers to satisfy customer needs and wants… including not only physical goods, but also services and ideas.
Brand ~ Image ~ Packaging ~ Reputation ~ Guarantee

3. GOODS V. SERVICES: A MIXED BAG
Ask students to provide examples of products that are pure goods, those that are pure services and those that fall in between. Comment on how many pure goods are not bundled with services that sometimes represent “value”.
Intangibility
Inseparability
Variability
Perishability
Most
services
embody
these
qualities:

4. PRODUCT LAYERS: PEELING THE ONION
Core Benefits
Actual Product
Augmented Products
Communications
Image
Entertainment
Ease of use
Lightness
Ring Tone
Warranty
Insurance
Users Guide

5. PRODUCT LAYERS: PEELING THE ONION
Communications
Entertainment
Image
Warrantee
Owner’s Manual
Insurance
Customer Service
Lightness
Thinness
Look and Feel
Ease of Use
Ring Tones
Game Options

6. PRODUCT CLASSIFICATION: IT’S A BIRD, IT’S A PLANE….
Consumer
Products
Convenience Products
Shopping Products
Specialty Products
Unsought Products
Toothpaste, milk
Installations
Accessory Equipment
Maintenance, Repair, and Operating Products
Raw Materials
Component Parts & Processed Materials
Business Services
Computer, refrigerator
Rolex watch
Production Robots
Copiers
Home warranty
Business
Products
Brooms, nails
Cotton, oil
Payroll services
Batteries

7. PRODUCT DIFFERENTIATION AND PLANNING
A Meaningful Difference:
Product Quality
Features & Benefits
Product Lines & Product Mixes
Branding
Packaging

8. PRODUCT QUALITY
Quality Level – how well a product performs its core functions.
Product Consistency – how reliably a product delivers its promised level of quality.
Product Category
Quality Indicators
Internet Search Engine:
Fast, relevant, far-reaching results
Stylish Blue Jeans:
High-profile designer, high price, celebrity customers
TV Editing Equipment:
Reliability, flexibility, and customer services
Roller Coasters:
Thrill factor, design and setting
Chain Saws:
Effectiveness, safety, and reliability
Product Category
Quality Indicators
Internet Search Engine:
Stylish Blue Jeans:
TV Editing Equipment:
Roller Coasters:
Chain Saws:
What products do you purchase because of quality (regardless of price)? Are these quality products consistent? What would be a glaring issue that the consistency has become an issue?

9. FEATURES AND BENEFITS
Product Features – specific characteristics of a product.
Customer Benefit – the advantage that a customer gains from specific product features.
Product
Product Feature
Customer Benefit
Subway Sandwiches
Contact Lenses
High-definition TV
Hybrid Car
Triple Latte
Lower Fat
Looser pants
Different Colors
A new-looking you
46-inch screen
The party’s at your house
Better gas mileage
More cash for other needs
Caffeine, Caffeine…
More time to, uh, study

10. PRODUCT LINE AND PRODUCT MIX
Product Line – products
that are closely
related, either in terms
of how they work, or the
customers they serve.
Cannibalization –
a producer offers
a new product
that takes sales
away from its
existing product.
Product Mix – the total
number of product
lines by a single firm.
Click the link to view the General Mills website. Click the brands link and click through the variety of brands and product lines offered by General Mills that make up the entire product mix.

11. BRANDING Brand - a product’s Brand Equity – the extra
identity that sets it
apart from other
players in the same
category.
Brand Equity – the extra
money that consumers
will spend to buy that brand.
Brand Name – a catchy,
memorable name is
a powerful part
of strong brand.
Click link to view the BusinessWeek website to list the top 100 International Brands.
IBM, Coca Cola

12. LINE EXTENSIONS AND BRAND EXTENSIONS
Similar
products offered
under the same
brand name
Pepsi
Brand
Extensions
A product in a
new category
under an existing
brand name
The right to use someone’s brand is called licensing. Click the link to view images and comments from BusinessWeek regarding brand extensions gone bad.
Bic

13. COBRANDING
Cobranding - established brands from different companies join forces to market the same product.
Examples:
Ford markets the Eddie Bauer Explorer
Frito-Lay markets KC Masterpiece BBQ chips
Betty Crocker markets brownies with Hershey’s syrup
The link on the right is which is currently co-branding with Full Throttle. 7-eleven keeps the slurpee brand fresh with co-branding. They have co-branded with Mountain Dew and Microsoft. Note: check this link to view the current co-branding.

14. NATIONAL BRANDS VS. STORE BRANDS
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NATIONAL BRANDS VS. STORE BRANDS
National Brands/
Manufacturer Brands –
Brands owned and marketed by
the producer.
Store Brands/
Private Label Brands –
Brands produced and marketed
by the retailer.

15. PACKAGING Protect the Product Provide Information Facilitate Storage
Suggest Product Uses
Promote the Brand
Attract Buyer Attention
Many innovative product packages are actually new products/product extensions.

16. PRODUCT LIABILITY AN ISSUE?
Toilet brush: “Do not use for personal hygiene.”
Scooter: “This product moves when used.”
Bathroom Heater: “This product is not to be used in bathrooms.”
Cardboard car sunshield: “Do not drive with sunshield in place.”
Thermometer: “Once used rectally, the thermometer should not be used orally.”
Baby stroller cautions: “Remove child before folding”
Electric blender: “Never remove food or other items from the blades while the product is operating.”
Hand-held massager: “Not for use while sleeping or unconscious.”

17. NEW PRODUCT DEVELOPMENT
Idea Generation
Idea Screening
Analysis
Development
Testing
Commercialization
Brand new ideas that radically change how people live
Characterized by changes to existing products
Slight modification of
an existing product
Records > Tape > CD’s > Downloads
New operating system for your PC
New packaging, additional sizes

18. PRODUCT ADOPTION CATEGORIES
How willing are consumers
to buy/try new products?
First Adopters/Innovators – 2.5%
Adventurous
Risk Takers
Laggards – 16%
Everybody else falls in between

19. PRODUCT DIFFUSION RATES
Observability
How visible is the product
to other potential consumers?
Trialability
How easily can potential
consumers sample the new product?
Complexity
Can potential consumers easily understand
what your product is and how it works?
Compatibility
How consistent is your product
with the existing way of doing things?
Relative Advantage
How much better are the benefits of your
new product compared to existing products?

20. PRODUCT LIFE CYCLE AND MARKETING STRATEGIES
Phase
Examples
Sales/Profits
Marketing Strategies
Introduction
3D TV, fuel cell technology
Low sales, low profits
Build awareness, trial, and distribution
Growth
Hybrid cars, video cell phones,
Increasing sales and profits
Reinforce brand positioning, often through heavy advertising
Maturity
Airlines, DVD players
Flat sales and declining profits
Target competitors, new product features, competitive advertising, promotion, and price cuts
Decline
Pagers, videocassettes
Declining sales and profits
Reduce spending and consider terminating the product

21. PROMOTION IN CHAOS: DANGER OR OPPORTUNITY?
Technology has empowered consumers to choose when they interact with media
Internet users spent an average of nearly 33 hours per week surfing the web
Network television watching is declining
Consumers watching TV are zapping ads with TiVo
Rising consumer power and the breakneck pace of technology have created a growing need and stunning opportunity
Discuss the definition of promotion: Promotion is the power to influence consumers—to remind them, to inform them, to persuade them
Click on the link to check out the new website Hulu that broadcasts TV shows online. Discuss how these things are changing TV and advertising.

22. INTEGRATED MARKETING COMMUNICATION: CONSISTENCY AND FOCUS
Integrated Marketing Communication is the coordination of messages through multiple promotional vehicles
Coordinate promotional messages
Create a coherent impression in customer’s mind
Identify key points of contact between product and target market
A key aspect of integrated marketing communication is the coordination of communication:
Technology allows all managers and decision makers to access customer information:
Customer
Product
Competition/market
Product performance
Web designers, salespeople, brand managers and marketing research must work as a team
To coordinate the messages
Consumers combine – or integrate – information from all sources to form a unified impression

23. AN INTERNATIONAL PERSPECTIVE
DeBeers tried running ads in Japan using a proven western strategy
But a Japanese woman would shed tears and feign anger that her husband would spend so much money.
The revised DeBeers campaign featured a man and wife in their tiny apartment
Receiving a diamond, the wife chides her extravagant husband “Oh, you stupid!”
Taking a big idea to a foreign market requires careful research

24. THE PROMOTIONAL MIX: COMMUNICATING THE BIG IDEA
These tools can
help communicate
the Big Idea
to your target
market
Advertising
Sales Promotion
Direct Marketing
Personal Selling
Emerging Tools

25. EMERGING PROMOTIONAL TOOLS: THE LEADING EDGE
Product Placement
Advergaming
Minimovies
Buzz Marketing
Sponsorships
Product Placement exploded with E.T and Reese’s Pieces
Risky Business (1983)
You’ve Got Mail (1998)
James Bond

26. INNOVATIVE BUZZ CAMPAIGNS
The Subservient Chicken – Burger King launched the website to introduce their new TenderCrisp Chicken Sandwich.
Burger King reports that sales “significantly increased”
Tremor – Procter & Gamble’s Tremor marketing group recruited 200,000 sociable kids to talk up their products to their peers
The teens talk up products in exchange for the inside scoop on new products
Click the link to view the website for the subservient chicken.

27. A MINI CAMPAIGN WITH MAXIMUM PUNCH
BMW’s promotional budget for the Mini was 10% of the typical BMW budget
The team developed a quirky campaign with the message: Let’s Motor!
Ads appeared in Playboy, Rolling Stones and on billboards
A 40-page booklet inserted in U.S. Magazines
The car played a feature role in the movie Italian Job
Brand awareness rose from 2% to 60%
Mini sales exceeded expectations by 50%
In 2009 Mini launched an official public field trial of the environmentally friendly Mini E

28. TRADITIONAL PROMOTIONAL TOOLS: A MARKETING MAINSTAY
Advertising
Sales Promotion
Public Relations
Personal Selling
Choosing the Promotional Mix: Not Just a Science – discuss that the promotional mix must be well planned.
Product Characteristics
Product Life Cycle
Target Audience
Push vs. Pull
Competitive Environment
Budget

29. TRADITIONAL PROMOTIONAL TOOLS: ADVERTISING
Television
Broadcast
Cable
Newspapers
Direct Mail
Radio
Yellow Pages
Magazines
Outdoor
Internet
Which media
effectively
reaches your
target
market?

30. TRADITIONAL PROMOTIONAL TOOLS: CONSUMER PROMOTION
Premiums
Promotional Products
Samples
Coupons
Rebates
Displays
designed to stimulate
immediate sales

31. TRADITIONAL PROMOTIONAL TOOLS: TRADE PROMOTION
Special Deals
Allowances
Trade Shows
Contests
Sweepstakes
Special Events
Designed to simulate wholesalers and retailers
to push specific products.

32. IF YOU’RE NOT BLOGGING, YOU’RE SLOGGING
Great ideas and scandals spread quickly. Blogs offer great opportunity for savvy firms, here are some tips:
Surf through the blogosphere everyday.
Consider launching a company blog.
Consider advertising on blogs
Consider using the blogosphere to generate word-of-mouth.
Draw up commensurate blogging guidelines for your employees.

33. TRADITIONAL PROMOTIONAL TOOLS: PUBLIC RELATIONS
The media looks for newsworthy stories
Smart firms push potential news of their company
The advantage of PR is that it is usually credible
The disadvantage is that marketers don’t control media perceptions
Ideas for Media Attention
Launch a Hall of Fame – induct luminaries from the industry, create a Website and send out press releases.
Repeat each year and build your reputation!
Make a List – the best, the worst, the top 10, the bottom 10…the media loves lists and the possibilities are endless.
Make sure the list is relevant.
Create a Petition – identify a need in your industry and start an online petition.
The more signatures, the more publicity.

34. TRADITIONAL PROMOTIONAL TOOLS: PERSONAL SELLING
Prospect and
Qualify
Prepare
Present
Handle Objections
Close Sale
Follow-up
Today selling means building relationships
Personal selling is best for:
High-ticket items
Complex products
High volume customers

35. Building Profitable Connections with Your Customers
CHapter 11: MARKETING
Building Profitable Connections with Your Customers

36. MARKETING IS MORE THAN ADVERTISING
Marketing – the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

37. PRODUCTS PROVIDE UTILITY IN A NUMBER OF WAYS
Think UPS or FedEx
Think Smoothie King
The ability of goods and services to satisfy wants.
Form
Utility
Time
Place
Ownership
Satisfies wants by converting products into a finished form
Satisfies wants by providing goods and services at a convenient time
Satisfies wants by smoothly transferring ownership of goods and services from seller to buyer
Satisfies wants by providing goods and services at a convenient place
Think ATM’s
Think hassle free purchasing

38. THE SCOPE OF MARKETING: IT’S EVERYWHERE
People Marketing
Place Marketing
Event Marketing
Idea Marketing

39. THE EVOLUTION OF MARKETING: FROM THE PRODUCT TO THE CUSTOMER

40. What is Customer Relationship Management?
The on-going process of acquiring, maintaining, and growing profitable customer relationships by delivering unmatched value.
Requires collecting, managing, and applying the right data at the right time for the right person (and every repeat customer is the “right person”!)

41. THE CUSTOMER: FRONT AND CENTER
Perception is key
Customer Relationship
Management (CRM)
Value
Customer Satisfaction
Customer Loyalty
Relationship between the cost and the benefit of your product
Limited
Relationships
Full
Partnerships
Delivering perceived value above and beyond customer expectations.
The payoff from delivering value and generating satisfaction.
They come back!

42. Customer Relationship Management
Customer acquisition/retention tool
Sales and marketing support
Data collected at all contact points
Stored in data warehouse
Data analysis and data mining
Ultimate objective is lock-in
Vested interest not to change
Joe’s home page

43. Customer Relationship Management
Did you know ????
It cost 6x more to sell to a new customer than to an existing one…
A typical dissatisfied customer will tell 8 to 10 people about his/her experience…
Annual Customer Retention of 90% means that a business will lose half of their customers every 5 years…
A company can boost it’s profits 85% by increasing it’s customer retention by just 5%…
70% of complaining customers will do business with a company again if it quickly takes care of the service “snafu”...

44. THE MARKETING MIX 4 P's Product Strategy Price Promotion Strategy
Place
4 P's
Promotion
Strategy
Product
Price
Promotion
Place
And now – a fifth P
Service

45. Distribution Strategy /Place
MARKETING STRATEGY
Marketing Mix assists in answering ….
Where are you going and how will you get there?
Who is your target audience and how will you reach them?
Economic
Political / Legal
Technological
Social / Cultural
Competitive
Target Market
Pricing Strategy
Distribution Strategy /Place
Promotion Strategy
Product Strategy
The marketer creates the marketing mix but responds to the marketing environment with a single-minded focus on the target market.

46. multiple segments to target.
MARKET SEGMENTATION
Selecting a target market begins with dividing your market into segments.
Marketers may select
multiple segments to target.

47. CONSUMER MARKETS VS BUSINESS MARKETS
A Well Chosen Target Market:
Size
Profitability
Accessibility
Limited Competition
Consumer
Markets
Business
Markets
How will the
buyer use the
product?
Products used directly or indirectly to produce other products.
Products for personal consumption.
Different approaches to select target markets.

48. THE GLOBAL MARKETING MIX
Do you need to change your marketing mix for every country?
Most consumer products require a new marketing mix for each global market.

49. MARKET SEGMENTATION Demographic Geographic Psychographic Behavioral
CONSUMER
BUSINESS
Market segmentation based on how customers use the product. For example, sensors.
Market segmentation based on the characteristics of customers. For example, schools or hospitals
Market segmentation based on the concentration of customers. For example, the “auto corridor”
Senior citizen living facilities
Demographic
Geographic
Psychographic
Behavioral
Geographic
Customer-based
Product-use based
Pickups in southern US
Porshe, Sports Illustrated
Miller Lite

50. CUSTOMER BEHAVIOR: DECISIONS, DECISIONS, DECISIONS
CONSUMER DECISION MAKING PROCESS
Need Recognition
Information Search
Evaluation of Alternatives
Purchase Decision
Postpurchase Behavior
Post purchase step is important for marketers to help alleviate cognitive dissonance.

51. INFLUENCE IN DECISION MAKING
Values, attitudes, customs, social class
Cultural:
Family, friends & reference groups
Social:
Demographics, personality
Personal:
Motivation, attitudes, perceptions, learning
Psychological:

52. BUSINESS BUYER BEHAVIOR
Rationale Criteria
Specific Purchase Criteria
Objective Standards
Input from Multiple Internal Sources
Formal Process
Frequently Seek Customized Goods

53. REQUEST FOR PROPOSAL (RFP)
An invitation for suppliers, through a bidding process, to submit a proposal on a specific commodity or service.
One of the best methods for leveraging a company's negotiating ability and purchasing power with suppliers.
Brings structure to the procurement decision and allows the risks and benefits to be identified clearly upfront.
Is lengthier than others, so it is used only where its many advantages outweigh any disadvantages and delays caused.
Dictates the structure and format of the supplier's response.
The creativity and innovation that suppliers build into their proposals are used to judge supplier proposals

54. MARKETING RESEARCH: SO WHAT DO THEY REALLY THINK?
Marketing Research – the process of gathering, interpreting and applying information to uncover opportunities and challenges for your business.
Monitor and predict customer behavior
Evaluate and improve marketing mix
Better marketing decisions
More value for consumers
More profits for business
In the global environment, marketing research becomes more challenging.

55. CONDUCTING MARKET RESEARCH
Define the problem
Access available information
Gather additional information
Review internal records; interview employees
Collect outside data
Organize and interpret data
Make a decision and take action
Assess the results of the action

56. DEFINE THE PROBLEM List the possible causes Beware of symptoms
Eliminate any that can not be measured
Beware of symptoms
Your company has missed its revenue targets
Symptom – sales declined
Possible causes:
Have your customers changed?
Have their tastes changed?
Have their buying habits changed?
Have you changed your product?
Are there new competitors?

57. GATHERING INFORMATION
Assess what you already have available
If you need more…
Stay as close to home as possible
Sales records
Complaints
Receipts
Credit records
Ask your employees

58. MARKETING RESEARCH DATA
Lower Cost
May not be Specific
Frequently Outdated
Available to Competitors
Secondary Data: Existing
Primary Data: New Data
More Expensive
Customized
Fresh, New
Proprietary
Already published material
Trade associations
Google????
Direct mail
Questionnaires
Telephone or street surveys
Focus Groups
Test marketing

59. ORGANIZING AND INTERPRETING DATA
Prioritize the data with the most important on top
What strategies are suggested?
How can they be accomplished?
How are they different from what I’m doing?
What current activities should be increased?
What current activities should be decreased or dropped?

60. MAKING DECISIONS AND TAKING ACTION
Prioritize each possible strategy from the standpoint of:
Immediate goal to be achieved
Cost to implement
Time to accomplish
Measurements
Select those with the greatest impact
Develop tactics to implement

61. ASSESS THE RESULTS Analyze your progress measures Adjust if necessary
At the conclusion..
Did you achieve your goal ?
Should the decision be renewed or expanded ?

62. A MAJOR MARKETING SHIFT: SOCIAL RESPONSIBILITY
Marketers have responded to social demands:
Setting higher standards for environmentalism
Abolishment of sweatshops
Involvement in the community
Many companies have begun to employ green marketing
GO GREEN
Target consumers who buy based on their convictions
Check out GM’s Live Green, Go Yellow Website.

63. A MAJOR MARKETING SHIFT: TECHNOLOGY
Technology has revolutionized marketing
Power has shifted from producers to consumers
Customers have 24/7 access to information
Marketers have an abundance of promotional opportunities
Data can be used to develop one-to-one relationships with customers
Companies can mass customize products for customers
Click the link to view an example of mass customization on Nike’s website.

64. Marketing To Your Foundation Simulation Customers

65. Customers

66. Product Questions: What do the customers want?
What are the characteristics of the product that are important to customers?
What is the most important product characteristic
In the low tech segment?
In the high tech segment?
What is “perceived age” of a product?
How is reliability measured?

67. Pricing Questions: What do the customers want?
What is the price range for low / high tech products?
How price sensitive are the customers?
What are the competitors charging?
Can I lower my price and still earn a ‘fair return’ on my investment?
Price – Low $15 - $35 High $25 - $45
Seller’s Market - $9.99 above price range with No loss
Buyer’s Market – 10% loss for each $1.00 above or below segment guidelines

68. Promotional mix
You will invest money in a “promotion” budget and create “awareness”.
It relates to your advertising efforts.
The awareness you create is specific to a single product.
You will invest money in a “sales” budget and create “access” to your products.
Accessibility applies to the segment, not the product
Sales Budget is spent on distribution, order entry, customer service, etc.

69. Sales Forecast Assess how the total market will perform
What is the overall economic climate ?
Assess your performance and market share
Will customers make decisions on the same basis they have in the past ?
How will your competitors perform
Will there be new competitors ?
Will they introduce new products ?
Will some competitors leave the market ?