Presentation on theme: "Chapter 12: PRODUCT AND PROMOTION"— Presentation transcript:
1Chapter 12: PRODUCT AND PROMOTION Delivering More Value
2PRODUCT DEFINITION: IT’S PROBABLY MORE THAN YOU THINK Car Wash ~ Cooking Lesson ~ Computer ~ Soap ~ CarProduct – 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
3GOODS 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”.IntangibilityInseparabilityVariabilityPerishabilityMostservicesembodythesequalities:
4PRODUCT LAYERS: PEELING THE ONION Core BenefitsActual ProductAugmented ProductsCommunicationsImageEntertainmentEase of useLightnessRing ToneWarrantyInsuranceUsers Guide
5PRODUCT LAYERS: PEELING THE ONION CommunicationsEntertainmentImageWarranteeOwner’s ManualInsuranceCustomer ServiceLightnessThinnessLook and FeelEase of UseRing TonesGame Options
6PRODUCT CLASSIFICATION: IT’S A BIRD, IT’S A PLANE…. ConsumerProductsConvenience ProductsShopping ProductsSpecialty ProductsUnsought ProductsToothpaste, milkInstallationsAccessory EquipmentMaintenance, Repair, and Operating ProductsRaw MaterialsComponent Parts & Processed MaterialsBusiness ServicesComputer, refrigeratorRolex watchProduction RobotsCopiersHome warrantyBusinessProductsBrooms, nailsCotton, oilPayroll servicesBatteries
7PRODUCT DIFFERENTIATION AND PLANNING A Meaningful Difference:Product QualityFeatures & BenefitsProduct Lines & Product MixesBrandingPackaging
8PRODUCT QUALITYQuality Level – how well a product performs its core functions.Product Consistency – how reliably a product delivers its promised level of quality.Product CategoryQuality IndicatorsInternet Search Engine:Fast, relevant, far-reaching resultsStylish Blue Jeans:High-profile designer, high price, celebrity customersTV Editing Equipment:Reliability, flexibility, and customer servicesRoller Coasters:Thrill factor, design and settingChain Saws:Effectiveness, safety, and reliabilityProduct CategoryQuality IndicatorsInternet 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?
9FEATURES AND BENEFITSProduct Features – specific characteristics of a product.Customer Benefit – the advantage that a customer gains from specific product features.ProductProduct FeatureCustomer BenefitSubway SandwichesContact LensesHigh-definition TVHybrid CarTriple LatteLower FatLooser pantsDifferent ColorsA new-looking you46-inch screenThe party’s at your houseBetter gas mileageMore cash for other needsCaffeine, Caffeine…More time to, uh, study
10PRODUCT LINE AND PRODUCT MIX Product Line – productsthat are closelyrelated, either in termsof how they work, or thecustomers they serve.Cannibalization –a producer offersa new productthat takes salesaway from itsexisting product.Product Mix – the totalnumber of productlines 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.
11BRANDING Brand - a product’s Brand Equity – the extra identity that sets itapart from otherplayers in the samecategory.Brand Equity – the extramoney that consumerswill spend to buy that brand.Brand Name – a catchy,memorable name isa powerful partof strong brand.Click link to view the BusinessWeek website to list the top 100 International Brands.IBM, Coca Cola
12LINE EXTENSIONS AND BRAND EXTENSIONS Similarproducts offeredunder the samebrand namePepsiBrandExtensionsA product in anew categoryunder an existingbrand nameThe 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
13COBRANDINGCobranding - established brands from different companies join forces to market the same product.Examples:Ford markets the Eddie Bauer ExplorerFrito-Lay markets KC Masterpiece BBQ chipsBetty Crocker markets brownies with Hershey’s syrupThe 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.
14NATIONAL BRANDS VS. STORE BRANDS <>NATIONAL BRANDS VS. STORE BRANDSNational Brands/Manufacturer Brands –Brands owned and marketed bythe producer.Store Brands/Private Label Brands –Brands produced and marketedby the retailer.
15PACKAGING Protect the Product Provide Information Facilitate Storage Suggest Product UsesPromote the BrandAttract Buyer AttentionMany innovative product packages are actually new products/product extensions.
16PRODUCT 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.”
17NEW PRODUCT DEVELOPMENT Idea GenerationIdea ScreeningAnalysisDevelopmentTestingCommercializationBrand new ideas that radically change how people liveCharacterized by changes to existing productsSlight modification ofan existing productRecords > Tape > CD’s > DownloadsNew operating system for your PCNew packaging, additional sizes
18PRODUCT ADOPTION CATEGORIES How willing are consumersto buy/try new products?First Adopters/Innovators – 2.5%AdventurousRisk TakersLaggards – 16%Everybody else falls in between
19PRODUCT DIFFUSION RATES ObservabilityHow visible is the productto other potential consumers?TrialabilityHow easily can potentialconsumers sample the new product?ComplexityCan potential consumers easily understandwhat your product is and how it works?CompatibilityHow consistent is your productwith the existing way of doing things?Relative AdvantageHow much better are the benefits of yournew product compared to existing products?
20PRODUCT LIFE CYCLE AND MARKETING STRATEGIES PhaseExamplesSales/ProfitsMarketing StrategiesIntroduction3D TV, fuel cell technologyLow sales, low profitsBuild awareness, trial, and distributionGrowthHybrid cars, video cell phones,Increasing sales and profitsReinforce brand positioning, often through heavy advertisingMaturityAirlines, DVD playersFlat sales and declining profitsTarget competitors, new product features, competitive advertising, promotion, and price cutsDeclinePagers, videocassettesDeclining sales and profitsReduce spending and consider terminating the product
21PROMOTION IN CHAOS: DANGER OR OPPORTUNITY? Technology has empowered consumers to choose when they interact with mediaInternet users spent an average of nearly 33 hours per week surfing the webNetwork television watching is decliningConsumers watching TV are zapping ads with TiVoRising consumer power and the breakneck pace of technology have created a growing need and stunning opportunityDiscuss the definition of promotion: Promotion is the power to influence consumers—to remind them, to inform them, to persuade themClick on the link to check out the new website Hulu that broadcasts TV shows online. Discuss how these things are changing TV and advertising.
22INTEGRATED MARKETING COMMUNICATION: CONSISTENCY AND FOCUS Integrated Marketing Communication is the coordination of messages through multiple promotional vehiclesCoordinate promotional messagesCreate a coherent impression in customer’s mindIdentify key points of contact between product and target marketA key aspect of integrated marketing communication is the coordination of communication:Technology allows all managers and decision makers to access customer information:CustomerProductCompetition/marketProduct performanceWeb designers, salespeople, brand managers and marketing research must work as a teamTo coordinate the messagesConsumers combine – or integrate – information from all sources to form a unified impression
23AN INTERNATIONAL PERSPECTIVE DeBeers tried running ads in Japan using a proven western strategyBut 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 apartmentReceiving a diamond, the wife chides her extravagant husband “Oh, you stupid!”Taking a big idea to a foreign market requires careful research
24THE PROMOTIONAL MIX: COMMUNICATING THE BIG IDEA These tools canhelp communicatethe Big Ideato your targetmarketAdvertisingSales PromotionDirect MarketingPersonal SellingEmerging Tools
25EMERGING PROMOTIONAL TOOLS: THE LEADING EDGE Product PlacementAdvergamingMinimoviesBuzz MarketingSponsorshipsProduct Placement exploded with E.T and Reese’s PiecesRisky Business (1983)You’ve Got Mail (1998)James Bond
26INNOVATIVE 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 peersThe teens talk up products in exchange for the inside scoop on new productsClick the link to view the website for the subservient chicken.
27A MINI CAMPAIGN WITH MAXIMUM PUNCH BMW’s promotional budget for the Mini was 10% of the typical BMW budgetThe team developed a quirky campaign with the message: Let’s Motor!Ads appeared in Playboy, Rolling Stones and on billboardsA 40-page booklet inserted in U.S. MagazinesThe car played a feature role in the movie Italian JobBrand 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
28TRADITIONAL PROMOTIONAL TOOLS: A MARKETING MAINSTAY AdvertisingSales PromotionPublic RelationsPersonal SellingChoosing the Promotional Mix: Not Just a Science – discuss that the promotional mix must be well planned.Product CharacteristicsProduct Life CycleTarget AudiencePush vs. PullCompetitive EnvironmentBudget
30TRADITIONAL PROMOTIONAL TOOLS: CONSUMER PROMOTION PremiumsPromotional ProductsSamplesCouponsRebatesDisplaysdesigned to stimulateimmediate sales
31TRADITIONAL PROMOTIONAL TOOLS: TRADE PROMOTION Special DealsAllowancesTrade ShowsContestsSweepstakesSpecial EventsDesigned to simulate wholesalers and retailersto push specific products.
32IF 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 blogsConsider using the blogosphere to generate word-of-mouth.Draw up commensurate blogging guidelines for your employees.
33TRADITIONAL PROMOTIONAL TOOLS: PUBLIC RELATIONS The media looks for newsworthy storiesSmart firms push potential news of their companyThe advantage of PR is that it is usually credibleThe disadvantage is that marketers don’t control media perceptionsIdeas for Media AttentionLaunch 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.
34TRADITIONAL PROMOTIONAL TOOLS: PERSONAL SELLING Prospect andQualifyPreparePresentHandle ObjectionsClose SaleFollow-upToday selling means building relationshipsPersonal selling is best for:High-ticket itemsComplex productsHigh volume customers
35Building Profitable Connections with Your Customers CHapter 11: MARKETINGBuilding Profitable Connections with Your Customers
36MARKETING 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.
37PRODUCTS PROVIDE UTILITY IN A NUMBER OF WAYS Think UPS or FedExThink Smoothie KingThe ability of goods and services to satisfy wants.FormUtilityTimePlaceOwnershipSatisfies wants by converting products into a finished formSatisfies wants by providing goods and services at a convenient timeSatisfies wants by smoothly transferring ownership of goods and services from seller to buyerSatisfies wants by providing goods and services at a convenient placeThink ATM’sThink hassle free purchasing
38THE SCOPE OF MARKETING: IT’S EVERYWHERE People MarketingPlace MarketingEvent MarketingIdea Marketing
39THE EVOLUTION OF MARKETING: FROM THE PRODUCT TO THE CUSTOMER
40What 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”!)
41THE CUSTOMER: FRONT AND CENTER Perception is keyCustomer RelationshipManagement (CRM)ValueCustomer SatisfactionCustomer LoyaltyRelationship between the cost and the benefit of your productLimitedRelationshipsFullPartnershipsDelivering perceived value above and beyond customer expectations.The payoff from delivering value and generating satisfaction.They come back!
42Customer Relationship Management Customer acquisition/retention toolSales and marketing supportData collected at all contact pointsStored in data warehouseData analysis and data miningUltimate objective is lock-inVested interest not to changeJoe’s home page
43Customer 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”...
44THE MARKETING MIX 4 P's Product Strategy Price Promotion Strategy Place4 P'sPromotionStrategyProductPricePromotionPlaceAnd now – a fifth PService
45Distribution Strategy /Place MARKETING STRATEGYMarketing 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?EconomicPolitical / LegalTechnologicalSocial / CulturalCompetitiveTarget MarketPricing StrategyDistribution Strategy /PlacePromotion StrategyProduct StrategyThe marketer creates the marketing mix but responds to the marketing environment with a single-minded focus on the target market.
46multiple segments to target. MARKET SEGMENTATIONSelecting a target market begins with dividing your market into segments.Marketers may selectmultiple segments to target.
47CONSUMER MARKETS VS BUSINESS MARKETS A Well Chosen Target Market:SizeProfitabilityAccessibilityLimited CompetitionConsumerMarketsBusinessMarketsHow will thebuyer use theproduct?Products used directly or indirectly to produce other products.Products for personal consumption.Different approaches to select target markets.
48THE 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.
49MARKET SEGMENTATION Demographic Geographic Psychographic Behavioral CONSUMERBUSINESSMarket segmentation based on how customers use the product. For example, sensors.Market segmentation based on the characteristics of customers. For example, schools or hospitalsMarket segmentation based on the concentration of customers. For example, the “auto corridor”Senior citizen living facilitiesDemographicGeographicPsychographicBehavioralGeographicCustomer-basedProduct-use basedPickups in southern USPorshe, Sports IllustratedMiller Lite
50CUSTOMER BEHAVIOR: DECISIONS, DECISIONS, DECISIONS CONSUMER DECISION MAKING PROCESSNeed RecognitionInformation SearchEvaluation of AlternativesPurchase DecisionPostpurchase BehaviorPost purchase step is important for marketers to help alleviate cognitive dissonance.
51INFLUENCE IN DECISION MAKING Values, attitudes, customs, social classCultural:Family, friends & reference groupsSocial:Demographics, personalityPersonal:Motivation, attitudes, perceptions, learningPsychological:
53REQUEST 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
54MARKETING 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 behaviorEvaluate and improve marketing mixBetter marketing decisionsMore value for consumersMore profits for businessIn the global environment, marketing research becomes more challenging.
55CONDUCTING MARKET RESEARCH Define the problemAccess available informationGather additional informationReview internal records; interview employeesCollect outside dataOrganize and interpret dataMake a decision and take actionAssess the results of the action
56DEFINE THE PROBLEM List the possible causes Beware of symptoms Eliminate any that can not be measuredBeware of symptomsYour company has missed its revenue targetsSymptom – sales declinedPossible causes:Have your customers changed?Have their tastes changed?Have their buying habits changed?Have you changed your product?Are there new competitors?
57GATHERING INFORMATION Assess what you already have availableIf you need more…Stay as close to home as possibleSales recordsComplaintsReceiptsCredit recordsAsk your employees
58MARKETING RESEARCH DATA Lower CostMay not be SpecificFrequently OutdatedAvailable to CompetitorsSecondary Data: ExistingPrimary Data: New DataMore ExpensiveCustomizedFresh, NewProprietaryAlready published materialTrade associationsGoogle????Direct mailQuestionnairesTelephone or street surveysFocus GroupsTest marketing
59ORGANIZING AND INTERPRETING DATA Prioritize the data with the most important on topWhat 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?
60MAKING DECISIONS AND TAKING ACTION Prioritize each possible strategy from the standpoint of:Immediate goal to be achievedCost to implementTime to accomplishMeasurementsSelect those with the greatest impactDevelop tactics to implement
61ASSESS THE RESULTS Analyze your progress measures Adjust if necessary At the conclusion..Did you achieve your goal ?Should the decision be renewed or expanded ?
62A MAJOR MARKETING SHIFT: SOCIAL RESPONSIBILITY Marketers have responded to social demands:Setting higher standards for environmentalismAbolishment of sweatshopsInvolvement in the communityMany companies have begun to employ green marketingGO GREENTarget consumers who buy based on their convictionsCheck out GM’s Live Green, Go Yellow Website.
63A MAJOR MARKETING SHIFT: TECHNOLOGY Technology has revolutionized marketingPower has shifted from producers to consumersCustomers have 24/7 access to informationMarketers have an abundance of promotional opportunitiesData can be used to develop one-to-one relationships with customersCompanies can mass customize products for customersClick the link to view an example of mass customization on Nike’s website.
64Marketing To Your Foundation Simulation Customers
66Product Questions: What do the customers want? What are the characteristics of the product that are important to customers?What is the most important product characteristicIn the low tech segment?In the high tech segment?What is “perceived age” of a product?How is reliability measured?
67Pricing 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 - $45Seller’s Market - $9.99 above price range with No lossBuyer’s Market – 10% loss for each $1.00 above or below segment guidelines
68Promotional mixYou 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 productSales Budget is spent on distribution, order entry, customer service, etc.
69Sales Forecast Assess how the total market will perform What is the overall economic climate ?Assess your performance and market shareWill customers make decisions on the same basis they have in the past ?How will your competitors performWill there be new competitors ?Will they introduce new products ?Will some competitors leave the market ?