 2007 Thomson South-Western Facilitating the Success of New Brands Chapter Seven

2 Marcom and New Product Adoption Introducing new products is essential for most companies’ success and long-term growth –Forced obsolescence New idea and product failure-rate estimated % Marketing communications facilitate successful new product introductions and reduce the product failure rate

3 New-Product Adoption Process Model

4 Three stages of adopting a new product Awareness Class Trier Class Repeater Class

5 New-Product Adoption Process Model Variables: free samples, coupons, advertising, and distribution Successful introduction of new products requires an effective advertising campaign, widespread product distribution, and extensive couponing and sampling Awareness Class Distribution AdvertisingCoupons Free Samples

6 New-Product Adoption Process Model Variables: coupons, distribution, and price Once the consumer becomes aware of a new product, there is an increased probability that he will actually try the new offering Trier Class PriceDistributionCoupons

New-Product Adoption Process Model 7 Repeater Class PersonalSelling Advertising PriceDistribution Satisfaction Variables: Personal Selling, Advertising, Distribution, Satisfaction and price Once the consumer has tried a new product, repeat purchases are largely determined by product satisfaction

8 Adoption Process Product Characteristics That Facilitate Adoption Relative Advantage Compatibility Complexity Trialability Observability

9 Relative Advantage A product innovation is perceived as better than existing alternatives Positively correlated with an innovation’s adoption rate Exist when a new product offers: –Better performance, increased comfort, saving in time and effort, or immediacy of reward –Existing alternatives begin to lose share

10 Compatibility An innovation is perceived to fit into a person’s way of doing things The greater compatibility, the more rapid a product’s rate of adoption Overcome perception of incompatibility through heavy advertising to persuade consumers

11 Complexity An innovation’s degree of perceived difficulty The more difficult, the slower the rate of adoption

12 Trialability An innovation can be used on a limited basis prior to making a full blown commitment The trial experience serves to reduce the risk of a consumer’s being dissatisfied with a product after having permanently committed to it through outright purchase

13 Observability The product user or other people can observe the positive effects of new product usage Higher the visibility, more rapid the adoption rate Example –

14 Early Adopters (13.5%) Early Majority (34%) Late Majority (34%) Laggards (16%) Diffusion Process Concerned with the broader issue of how an innovation is communicated and adopted throughout the marketplace The process of spreading out Adopter categories –Five different type of consumers Innovators 2.5%; Early Adopters 13.5%; Early Majority 34%; Late Majority 34%; Laggards 16% –Normal distribution

15 Objectives Managing the Diffusion Process 1. Secure sales quickly - rapid takeoff 2. Achieve rapid acceleration - rapid acceleration 4. Maintain sales as long as possible - long-run franchise 3. Secure maximum sales potential - maximum penetration

16 Managing the Diffusion Process Rapid takeoff can be facilitated by:

17 Managing the Diffusion Process Rapid acceleration accomplished by:

18 Managing the Diffusion Process Maximum penetration approached by:

19 Managing the Diffusion Process Long-run franchise maintained by:

20 Stimulating Word of Mouth Influence Impersonal sourcesImpersonal sources: information received from television, magazines, the Internet, and other mass-media sources Personal sourcesPersonal sources: word-of-mouth influence from friends, acquaintances, and from business associates

21 Strong and Weak Ties People are connected in networks of interpersonal relationships. Tie Strength Strong Weak

22 Opinion Leader A person who frequently influences other individuals’ attitudes or overt behavior An informer, persuader, and confirmer Influence is typically limited to one or several consumption topics Influence moves horizontally through a social class Generally an Early Adopter

23 Opinion Leaders Characteristics More cosmopolitan More gregarious Slightly higher socioeconomics status Generally more innovative Willing to act differently

24 Opinion Leaders Market Mavens Individuals who have information about many kinds of products, places to shop, and other facets of markets, and initiate discussions with consumers and respond to requests from customers about market information.

25 Stimulating Word of Mouth Influence Positive word-of-mouth communication is critical in the success of a new product of service Unfavorable WOM has devastating effects because consumers seem to place more weight on negative information in making evaluations

26 Creating “Buzz” The systematic and organized effort to encourage people to talk favorably about a particular item (a product, service, or specific brand) and to recommend its usage to others. Find opinion leaders who can become ‘cheerleaders’ – practice is called ‘seeding’ ‘Kuchikomi’ the WOM network of teenage girls in Japan – Tamagotchi; the Snuggie Guerilla Marketing, Street Marketing, Viral Marketing – all designed to generate buzz

27 Creating an Epidemic The law of the few –A few well connected people required e.g. opinion leaders, market mavens The stickiness factor –The message must be memorable The power of context –Circumstances have to be just right for the message to spread.

28 Igniting Explosive Self-Generating Demand Design the product to be unique or visible. Select and seed the vanguard. Ration supply. Use celebrity icons Tap the power of lists – get on a list somewhere Nurture the grass roots

29 Using the Internet for Creating Buzz Word of Mouth (eWOM) Blogs

30 Brand Naming Brand A company’s unique designation or trademark, which distinguishes its offering from other product category entries.

31 Power of Brand Name Affects the speed with which consumers become aware of the brand Influences the brand’s image Plays major role in brand-equity information

32 What Constitutes a Good Brand Name? Distinguish the brand from competitive offerings. Describe the brand and its attributes. Achieve compatibility with a brand’s desired image and with its product design or packaging. Be memorable and easy to pronounce and spell. Can be trademarked Consistent in meaning when used in other countries / cultures

Are these good brand names? 33

Brand name gaffes 34

Brand name gaffes 35

36 Exceptions to the “Rules” Some brands become successful in spite of their names The first brand in a new product category can be successful regardless of its name if it offers distinct advantages. Brand Managers sometimes choose names that are intentionally meaningless at inception, like “Lucent Technologies.”

37 The Brand Naming Process Step 1 Step 1: Specify Objectives for the Brand Name Step 2 Step 2: Create Candidate Brand Names Step 3 Step 3: Evaluate Candidates Step 4 Step 4: Choose a Brand Name Step 5 Step 5: Register Trademark

38 The Role of Logos Graphic design element that is related to the brand name Companies use logos with or without brand names Not all brand names possess a distinct logo but many do e.g., the Nike swoosh, Ralph Lauren’s Polo

39 Good Logos Recognized readily Convey essentially the same meaning to all target members Evoke positive feelings Best strategy is to choose a design that is moderately elaborate rather than too simple or too complex

40 The Role of Logos

41 The Role of Logos Cingular’s logo

42 Functions of the Package Contain and protect the product Draw attention to a brand Break through competitive clutter at the point of purchase Justify price/value to the consumer Signify brand features and benefits Motivate consumers’ brand choices

43 Packaging Structure Sensation Transference: a tendency to impute characteristics from a package to the brand itself. Gestalt-consumers react to the unified whole of the package not the individual parts.

44 Issues in Packaging Color Design and Shape Physical Materials Product Information on Package * VIEW Model (Visibility, Information, Emotional appeal, Workability) Packaging Size

45 Packaging Structure Color Design,Shape Size Physical Materials

46 Communicate quality, taste, and product’s ability to satisfy psychological needs Affect people emotionally Add elegance, prestige to products by using polished reflective surface Meaning of color varies from culture to culture Color Design, Shape Size Physical Materials The Use of Color

Meanings of Colors What do you associate with Red? Purple With white? With gray? Good tasting soft drinks 47

48 Design and Shape Cues Effective package design provides good eye flow and a point of focus Evoke different feeling through the choice of slope, length, and thickness of lines –Horizontal(tranquillity), Vertical(strength), Slanted lines(upward movement) Shapes also arouse certain emotions and have specific connotations –Curving lines(femininity), Sharp lines(masculinity) Color Design, Shape Size Physical Materials

49 Packaging Size Satisfy the unique needs of various market segments Represent different usage situations Gain more shelf space in retail outlets Color Design, Shape Size Physical Materials

50 Physical Materials The most important consideration should be the marketing-communications implications of the materials chosen rather than cost Can arouse consumer emotions –Metal(strength, durability, coldness) –Plastics(lightness, cleanliness, cheapness) –Wood(masculinity), Velvet(femininity) Color Design, Shape Size Physical Materials

51 Evaluating the Package: The VIEW Model I I nformation W W orkability E E motional Appeal V V isibility

52 The VIEW Model Visibility: An Effective Seasonal Package Design

53 Evaluating the Package: The VIEW Model Ability of a package to attract attention at the point of purchase To have a package stand out on the shelf yet not to detract brand’s image Special seasonal and holiday packaging as a way of attracting attention V V isibility

54 Evaluating the Package: The VIEW Model Product usage instructions, claimed benefits, slogans, and supplementary information Avoid cluttering the package with excess information Useful for –Stimulating trial purchases –Encouraging repeat purchase behavior – providing correct usage instruction I I nformation

55 Information: Frito Lay’s Smart Snack Label

56 Evaluating the Package: The VIEW Model The ability of a package to evoke a desired feeling or mood CPM vs. HEM –Some packages emphasize informational content, while others heavily emphasize emotional content Blend informational and emotional content so as to simultaneously appeal to consumers E E motional Appeal

57 Evaluating the Package: The VIEW Model The changing faces of Betty Crocker

58 Evaluating the Package: The VIEW Model How a package functions (Does it…) Protect the product contents? Simplify the consumer’s task in accessing and using the product? Protect retailers against unintentional breakage from consumer handling and from pilferage? Is the packaging environmentally friendly? W W orkability

59 Dutch Boy’s “Workable” Package

Important issues in packaging Too much packaging Environmentally-friendly packaging Smart packaging (RFIDs) 60