2. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12 Product and Promotion: Creating and Communicating Value Explain product and identify product classifications Describe product differentiation and the key elements of product planning Discuss innovation and the product life cycle Analyze and explain promotion and integrated marketing communications Discuss development of the promotional message Discuss the promotional mix and the various promotional tools 2 12-1 12-2 12-3 12-4 12-5 12-6

3. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product ￭ Goods or services that an organization offers to satisfy consumer needs and wants ￭ Qualities of services  Intangibility  Inseparability  Variability  Perishability 3

4. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 12.1 - Goods and Services Spectrum 4

5. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product Layers 5 Most fundamental level that satisfies customers’ needs Core benefit Physical good or the delivered service that provides the core benefit Actual product Additional goods and services that sharpen a product’s competitive edge Augmented product

6. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Classification of Products: An Overview Purchased for personal use or consumption Convenience products Shopping products Specialty products Unsought products Consumer products Purchased for use either directly or indirectly in the production of other products Installations and accessory equipment Maintenance, repair, and operating products Raw materials, component parts, and processed materials Business services Business products 6

7. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Products: Distinction and Planning ￭ Product differentiation: Make a product different from others competing to meet same or similar customer needs ￭ Quality level: How well a product performs its core functions  Product consistency: How reliably a product delivers its promised level of quality 7

8. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 12.2 - Product Quality Indicators 8

9. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Features and Benefits 9 Specific characteristics of a product Product features Advantage that a customer gains from specific product features Customer benefit

10. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product Lines and the Product Mix Group of products closely related to each other, in how they work or the customers they serve Product line Total number of product lines and individual items sold by a firm Product mix Cannibalization: When a producer offers a new product that takes sales away from its existing products Risk of adding new lines 10

11. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Branding ￭ Brand: Product’s identity that sets it apart from other players in the same category  Name, symbol, design, reputation, and image ￭ Brand equity: Overall value of a brand to an organization 11

12. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 12.5 - Brand Name Categories 12

13. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Branding 13 Similar products offered under the same brand name Line extensions New product, in a new category, introduced under an existing brand name Brand extension Purchasing the right to use another company’s brand name or symbol Licensing Established brands from different companies join forces to market the same product Cobranding

14. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. National Brands versus Store Brands ￭ National brands  Owned and marketed by the producer  Increasing quality of low-end private-label brands increase pressure on national brands to innovate at low prices ￭ Store brands  Private labels, produced and distributed by the retailer 14

15. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Packaging ￭ Protects the product ￭ Provides information ￭ Facilitates storage ￭ Suggests product uses ￭ Promotes the product brand ￭ Attracts buyer attention 15

16. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product Innovation and Evolution 16 Brand-new ideas that radically change the way people live Discontinuous innovation Marked changes to existing products Dynamically continuous innovation Slight modification to an existing product Continuous innovation

17. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Web-link: IBM Patents and Innovation ￭ The link offers insight into IBM’s focus on innovation http://www.research.ibm.com/articles/pat ents.shtml 17

18. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. New Product Development Process 18 Idea generationIdea screeningAnalysis Development Testing

19. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Characteristics Affecting Product Adoption and Diffusion Rate 19 ObservabilityTrialability ComplexityCompatibility Relative Advantage

20. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 12.7 - Product Life Cycle for a Typical Product Category 20

21. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit 12.8 - The Product Life Cycle and Marketing Strategies 21

22. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Promotion: Tool to Aid Consumer Choice ￭ Influencing consumer purchase decisions through information, persuasion, and reminders ￭ Integrated marketing communication: Coordination of marketing messages through every promotional vehicle  To communicate a unified impression about a product 22

23. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Promotional Message: Tools and Development ￭ Positioning statement: Brief statement that articulates how the target market is to envision the product relative to the competition ￭ Creative development process yields a big idea  Based on a rational or an emotional premise 23

24. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Emerging Tools for Promotion 24 Internet advertising Social media Product placement Advergaming Buzz marketing Sponsorship

25. Reality TV Video Slide 25 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. www.cengage.com/introbusiness/book_content/9781 285187822_kelly/videos/12startupjunkies.html

26. © iStockphoto.com / DNY59 ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. ￭ What purpose does promotion serve for Earth Class Mail? ￭ The sales executives at Earth Class Mail rely heavily on personal selling. What process should the sales executives follow in order to build sales and fill the company’s sales pipeline with orders? 26

27. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Traditional Tools for Promotion ￭ Advertising  Paid, nonpersonal communication designed to influence a target audience 27

28. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Traditional Tools for Promotion ￭ Sales promotion  Stimulate sales activity through specific short-term programs  Consumer promotion: Generate immediate consumer sales  Trade promotion: Push specific products more aggressively over the short term 28

29. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Traditional Tools for Promotion Ongoing effort to create positive relationships with all of a firm’s different publics Public relations (PR) Unpaid stories in the media that influence perceptions about a company or its products Publicity Person-to-person presentation of products to potential buyers Personal selling 29

30. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Factors to Consider When Choosing the Promotional Mix ￭ Product characteristics and the competitive environment ￭ Target audience and budget ￭ Push strategy: Motivating distributors to promote a product through heavy trade promotion ￭ Pull strategy: Creating demand so that consumers actively seek the product 30

31. ©2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 31 12-1 12-2 12-3 12-4 Explain product and identify product classifications Describe product differentiation and the key elements of product planning Discuss innovation and the product life cycle Analyze and explain promotion and integrated marketing communications Discuss development of the promotional message Discuss the promotional mix and the various promotional tools 12-5 12-6