Chapter 12: PRODUCT AND PROMOTION

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Chapter 12 PRODUCT AND PROMOTION

• Delivering More Value

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PRODUCT DEFINITION ITS 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
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GOODS V. SERVICES A MIXED BAG
Intangibility Inseparability Variability Perishabi
lity
Most services embody these qualities
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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

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PRODUCT CLASSIFICATION ITS A BIRD, ITS A
PLANE.
Consumer Products

• Convenience Products
• Shopping Products
• Specialty Products
• Unsought Products

• Installations
• Accessory Equipment
• Maintenance, Repair, and Operating Products
• Raw Materials
• Component Parts Processed Materials
• Business Services

Business Products
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PRODUCT DIFFERENTIATION AND PLANNING

• A Meaningful Difference
• Product Quality
• Features Benefits
• Product Lines Product Mixes
• Branding
• Packaging

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PRODUCT QUALITY
Quality Level how well a product performs its
core functions.
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
Product Consistency how reliably a product
delivers it promised level of quality.
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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 partys at your house
Better gas mileage
More cash for other needs
Caffeine, Caffeine
More time to, uh, study
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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.
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BRANDING
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.
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LINE EXTENSIONS AND BRAND EXTENSIONS
Similar products offered under the same brand
name
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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 Hersheys
  syrup

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

• Protect the Product
• Provide Information
• Facilitate Storage
• Suggest Product Uses
• Promote the Brand
• Attract Buyer Attention

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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.

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NEW PRODUCT DEVELOPMENT
Nuts, Bolts, And A Spark Of Brilliance

• Brand new ideas that radically change how people
  live
• Characterized by changes to existing products
• Slight modification of
• an existing product

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PRODUCT DIFFUSION RATES
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PRODUCT ADOPTION CATEGORIES

• Innovators 2.5 are the first to adopt and
  display behavior that demonstrates that they
  likely to want to be ahead, and to be the first
  to own new products, well before the average
  consumer.
• Early Adopters 13.5 quick to buy new products
  and services, and so are key opinion leaders with
  their neighbors and friends.
• Early Majority 34 look to the innovators and
  early majority to see if a new product or idea
  works and begins to stand the test of time. They
  stand back and watch the experiences of others.
• Late Majority 34 tends to purchase the product
  later than the average person. They are slower to
  catch on to the popularity of new products,
  services, ideas, or solutions. There is still
  mass consumption, but it begins to end.
• Laggards 16 tend to very late to take on board
  new products and include those that never
  actually adopt at all.

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PRODUCT LIFE CYCLE AND MARKETING STRATEGIES
Introduction Growth Maturity Decline
Characteristics
Sales Low sales Radically rising sales Peak sales Declining sales
Costs High cost per customer High cost per customer Low cost per customer Low cost per customer
Profits Negative Rising High Decline
Customers Innovators Innovators Middle Majority Laggards
Competitors Few Growing number Stable number beginning to decline Declining number
Marketing Objectives Marketing Objectives
Create product awareness and trial Maximize market share Maximize profit while defending market share Reduce expenditure and milk the brand
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PRODUCT LIFE CYCLE AND MARKETING STRATEGIES
Introduction Growth Maturity Decline
Strategies
Product Offer a basic product Offer product extensions, services, warranty Diversify brands and models Phase out weak items
Price Charge cost-plus Price to penetrate the market Price to match or beat competitors Cut prices
Distribution Build selective distribution Build intensive distribution Build more intensive distribution Go selective phase out unprofitable outlets
Advertising Build product awareness among early adopters and dealers Build awareness and interest in the mass market Stress brand differences and benefits Reduce to level needed to retain hard-core loyals
Sales Promotion Use heavy sales promotion to entice trial Reduce to take advantage of heavy customer demand Increase to encourage brand switching Reduce to minimal level
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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

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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 customers mind
• Identify key points of contact between product
  and target market

• Advertising
• Sales Promotion
• Direct Marketing
• Personal Selling
• Emerging Tools

Consumers combine or integrate information
from all sources to form a unified impression
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TRADITIONAL PROMOTIONAL TOOLS ADVERTISING
Which media effectively reaches your target
market?
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TRADITIONAL PROMOTIONAL TOOLS CONSUMER PROMOTION

• Premiums
• Promotional Products
• Samples
• Coupons
• Rebates
• Displays

designed to stimulate immediate sales
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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 dont control
  media perceptions

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TRADITIONAL PROMOTIONAL TOOLS PERSONAL SELLING

• Today selling means building relationships
• Personal selling is best for
• High-ticket items
• Complex products
• High volume customers