Presentation on theme: "CHAPTER 12: PRODUCT AND PROMOTION Delivering More Value."— Presentation transcript:
CHAPTER 12: PRODUCT AND PROMOTION Delivering More Value
PRODUCT DEFINITION: ITS PROBABLY MORE THAN YOU THINK 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 Car Wash ~ Cooking Lesson ~ Computer ~ Soap ~ Car
GOODS V. SERVICES: A MIXED BAG Intangibility Inseparability Variability Perishability Most services embody these qualities :
PRODUCT LAYERS: PEELING THE ONION Core Benefits Actual Product Augmented Products Communications Image Entertainment Ease of use Lightness Ring Tone Warranty Insurance Users Guide
PRODUCT LAYERS: PEELING THE ONION Communications Entertainment Image Warrantee Owners Manual Insurance Customer Service Lightness Thinness Look and Feel Ease of Use Ring Tones Game Options
PRODUCT CLASSIFICATION: ITS A BIRD, ITS A PLANE…. Convenience Products Shopping Products Specialty Products Unsought Products Consumer Products Installations Accessory Equipment Maintenance, Repair, and Operating Products Raw Materials Component Parts & Processed Materials Business Services Business Products Toothpaste, milk Computer, refrigerator Rolex watch Home warranty Production Robots Copiers Brooms, nails Cotton, oil Batteries Payroll services
PRODUCT DIFFERENTIATION AND PLANNING A Meaningful Difference: 1. Product Quality 2. Features & Benefits 3. Product Lines & Product Mixes 4. Branding 5. Packaging
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 CategoryQuality 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 CategoryQuality Indicators Internet Search Engine: Stylish Blue Jeans: TV Editing Equipment: Roller Coasters: Chain Saws:
FEATURES AND BENEFITS Product Features – specific characteristics of a product. Customer Benefit – the advantage that a customer gains from specific product features. ProductProduct FeatureCustomer Benefit Subway Sandwiches Contact Lenses High-definition TV Hybrid Car Triple Latte Lower Fat Different Colors Caffeine, Caffeine… 46-inch screen Better gas mileage Looser pants A new-looking you The partys at your house More cash for other needs More time to, uh, study
PRODUCT LINE AND PRODUCT MIX Product Mix Product Mix – the total number of product lines by a single firm. Product Line 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.
BRANDING Brand Brand - a products 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. IBM, Coca Cola
LINE EXTENSIONS AND BRAND EXTENSIONS Line Extensions Similar products offered under the same brand name Brand Extensions A product in a new category under an existing brand name Pepsi Bic
COBRANDING CobrandingCobranding - 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 Hersheys syrup
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. <>
PACKAGING Protect the Product Provide Information Facilitate Storage Suggest Product Uses Promote the Brand Attract Buyer Attention
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.
NEW PRODUCT DEVELOPMENT Brand new ideas that radically change how people live Characterized by changes to existing products Slight modification of an existing product New packaging, additional sizes New operating system for your PC Records > Tape > CDs > Downloads
PRODUCT ADOPTION CATEGORIES First Adopters/Innovators – 2.5% Adventurous Risk Takers Laggards – 16% Everybody else falls in between How willing are consumers to buy/try new products?
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?
PRODUCT LIFE CYCLE AND MARKETING STRATEGIES PhaseExamplesSales/ProfitsMarketing 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 playersFlat sales and declining profits Target competitors, new product features, competitive advertising, promotion, and price cuts Decline Pagers, videocassettesDeclining sales and profits Reduce spending and consider terminating the product
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
INTEGRATED MARKETING COMMUNICATION: CONSISTENCY AND FOCUS Consumers combine – or integrate – information from all sources to form a unified impression Coordinate promotional messages Create a coherent impression in customers mind Identify key points of contact between product and target market Integrated Marketing Communication is the coordination of messages through multiple promotional vehicles
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
THE PROMOTIONAL MIX: COMMUNICATING THE BIG IDEA Advertising Sales Promotion Direct Marketing Personal Selling Emerging Tools These tools can help communicate the Big Idea to your target market
EMERGING PROMOTIONAL TOOLS: THE LEADING EDGE Product Placement Advergaming Minimovies Buzz Marketing Sponsorships
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 & Gambles 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
A MINI CAMPAIGN WITH MAXIMUM PUNCH BMWs promotional budget for the Mini was 10% of the typical BMW budget The team developed a quirky campaign with the message: Lets 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
TRADITIONAL PROMOTIONAL TOOLS: A MARKETING MAINSTAY Advertising Sales Promotion Public Relations Personal Selling
TRADITIONAL PROMOTIONAL TOOLS: ADVERTISING Television Broadcast Cable Newspapers Direct Mail Radio Yellow Pages Magazines Outdoor Internet Which media effectively reaches your target market?
TRADITIONAL PROMOTIONAL TOOLS: CONSUMER PROMOTION Premiums Promotional Products Samples Coupons Rebates Displays designed to stimulate immediate sales
TRADITIONAL PROMOTIONAL TOOLS: TRADE PROMOTION Special Deals Allowances Trade Shows Contests Sweepstakes Special Events Designed to simulate wholesalers and retailers to push specific products.
IF YOURE NOT BLOGGING, YOURE 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.
TRADITIONAL PROMOTIONAL TOOLS: PUBLIC RELATIONS 33 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 dont control media perceptions
TRADITIONAL PROMOTIONAL TOOLS: PERSONAL SELLING Today selling means building relationships Personal selling is best for: High-ticket items Complex products High volume customers Prospect and Qualify PreparePresent Handle Objections Close SaleFollow-up
CHAPTER 11: MARKETING Building Profitable Connections with Your Customers
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.
PRODUCTS PROVIDE UTILITY IN A NUMBER OF WAYS The ability of goods and services to satisfy wants. Form Utility Time Utility Place Utility Ownership Utility Satisfies wants by converting products into a finished form Satisfies wants by providing goods and services at a convenient place 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 Think Smoothie King Think UPS or FedEx Think ATMs Think hassle free purchasing
THE SCOPE OF MARKETING: ITS EVERYWHERE People Marketing Place Marketing Event Marketing Idea Marketing
THE EVOLUTION OF MARKETING: FROM THE PRODUCT TO THE CUSTOMER
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!)
THE CUSTOMER: FRONT AND CENTER Limited Relationships Full Partnerships Customer Relationship Management (CRM) Value Customer Satisfaction Customer Loyalty Relationship between the cost and the benefit of your product Perception is key Delivering perceived value above and beyond customer expectations. The payoff from delivering value and generating satisfaction. They come back!
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 Joes home page
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 its profits 85% by increasing its 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...
Product Strategy Price Strategy Place Strategy THE MARKETING MIX Product Price Promotion Place Promotion Strategy And now – a fifth P Service
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
MARKET SEGMENTATION Marketers may select multiple segments to target. Marketers may select multiple segments to target. Selecting a target market begins with dividing your market into segments.
CONSUMER MARKETS VS BUSINESS MARKETS How will the buyer use the product? Consumer Markets Business Markets Products for personal consumption. Products used directly or indirectly to produce other products. Different approaches to select target markets. A Well Chosen Target Market: Size Profitability Accessibility Limited Competition
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.
MARKET SEGMENTATION Geographic Customer-based Product-use based CONSUMERBUSINESS Demographic Geographic Psychographic Behavioral Senior citizen living facilities Pickups in southern US Porshe, Sports Illustrated Miller Lite Market segmentation based on the concentration of customers. For example, the auto corridor Market segmentation based on the characteristics of customers. For example, schools or hospitals Market segmentation based on how customers use the product. For example, sensors.
CUSTOMER BEHAVIOR: DECISIONS, DECISIONS, DECISIONS CONSUMER DECISION MAKING PROCESS Need RecognitionInformation SearchEvaluation of AlternativesPurchase DecisionPostpurchase Behavior
INFLUENCE IN DECISION MAKING Values, attitudes, customs, social class Cultural: Family, friends & reference groups Social: Demographics, personality Personal: Motivation, attitudes, perceptions, learning Psychological:
BUSINESS BUYER BEHAVIOR Rationale Criteria Specific Purchase Criteria Objective Standards Input from Multiple Internal Sources Formal Process Frequently Seek Customized Goods
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
MARKETING RESEARCH: SO WHAT DO THEY REALLY THINK? Monitor and predict customer behavior Evaluate and improve marketing mix Better marketing decisions More value for consumers More profits for business Marketing Research – the process of gathering, interpreting and applying information to uncover opportunities and challenges for your business.
CONDUCTING MARKET RESEARCH 1. Define the problem 2. Access available information 3. Gather additional information 4. Review internal records; interview employees 5. Collect outside data 6. Organize and interpret data 7. Make a decision and take action 8. Assess the results of the action
DEFINE THE PROBLEM List the possible causes 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?
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
MARKETING RESEARCH DATA Already published material Trade associations Google???? Direct mail Questionnaires Telephone or street surveys Focus Groups Test marketing More Expensive Customized Fresh, New Proprietary
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 Im doing? What current activities should be increased? What current activities should be decreased or dropped?
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
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 ?
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
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
Marketing To Your Foundation Simulation Customers
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?
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?
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.
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 ?