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Product and Promotion: Creating and Communicating Value (Product…
Product and Promotion: Creating and Communicating Value
Product: anything an organization offer to satisfy consumer needs and wants, including both goods and services
Service:
intangible: uncertainty -> marketers migate uncertainty by giving clues that suggest value
inseparable: delivery requires interaction between the buyer and the provider, customer directly contribute to the quality of the service
variable: quality varies
perishable: can't be stored for peak period -> cost issues
Goods vs. Service: distinguish can be difficult, esp. when one can be both
pure goods: don't include any service
pure services: don't include any good
Product Layers: what customer purchase: core benefit, actual product, product augmentations
Core benefit: satisfy their need
Actual product: physical good or the delivered service that provide core benefit, include all the attributes that make it unique (brand name, features, packaging)
Augmented product: sharpen their competitive edge, come in different forms
Product Classification
Consumer products: purchased for personal use,
Convenience products: inexpensive goods that are bought frequently
Limited consideration and analysis
Distribution is wide
Promotion by producers
Shopping products: more expensive product, less frequently bought
Customer seek for best value and learn more about features and benefits
Distribution is widespread but more selective
Both producers and retailers do promotions
Specialty products: more expensive, seldom purchased, unwilling to accept substitute
Distribution highly selective
Promotion by producer and retailers to highly targeted audience
Unsought product: hold little (negative) interest for consumer
Price and distribution vary
Promotion aggressive to drum up consumer interest
Business product: purchased in the production of another product
Installations: large capital purchases designed for long productive life
Marketing emphasize personal selling and customization (eg: robot, building, airplanes...)
Accessory equipment: smaller, movable capital purchases, for shorter productive life
Marketing on personal selling but include less customization
eg: PC, furnitures
Maintenance, repair, and operating products: small-ticket items that businesses consume on an ongoing basis but don't become part of the final product
Marketing emphasize efficiency
Raw material: farm and natural products used in producing other products
Marketing emphasize on price and service rather than product differentation
Component parts and processed materials: finished products used in producing other products
Marketing emphasize quality and price and service
Business services: purchased to facilitate operations
Marketing emphasize quality and relationship, role of price can vary
Product differentation and Planning
Product differentation: the attributes that make a good or service different from pother products that compete to meet the same or similar customer need
Product quality:
Quality level: how well a product performs its core functions (right level, not highest possible level of performance)
Product consistency: how reliable a product delivers its promised level of quality
Features and Benefits:
product features: the specific characteristic of a product
customer benefit: the advantage that a customer gains from specific product geatures
-> must deliver highest value at reasonable price
Product lines and Product mix:
Product line: a group of products that are closely related to each other, either in how they work or the customer they serve
Product mix: the total number of product lines and individual items sold by a single firm
-> decision in how many items to include in each product line and in the overall product mix
risk of adding new lines, esp. low-end line:
cannibalization
: when a producer offers a new product that takes sales away from its existing products
Branding
Brand: product's identity (product name, symbol, design, reputation, and image) that sets it apart
Brand equity: the overall value of a brand to an organization
Brand Name
:
short, sweet, easy to pronounce
unique within the industry
good alliteration, esp. for long name
Line extensions vs. Brand extensions
:
line extension: similar products offered under the same brand name
brand extension: new product in new category, introduced under an existing brand name
Licensing
: purchasing the right to use another company's brand name or symbol (risk of low quality or overpriced due to franchisee)
Cobranding
: when established brands from different companies join forces to market the same product (advantage to both partners by leverage their strengths to enter new market and gain more exposure / disadvantage: one partner fail affect everyone)
National brands vs. Store brands
:
national brands (manufacturers' brands): brands that the producer owns and market
store brands (private-label brands): brands that the retailer both produce and distributes (eg: grocery)
low-end private pressure national brands
high-end private brand create and protect consistent upscale image
Packaging: hold the product, protect product, provide information, facilitate storage, suggest product uses, promote the product brand, attract buyer attention
great package stems from consumer needs, creativity
Innovation and the product life cycle
(current product are obsolete quick bc technology, but new product development costly)
Types of innovations:
discontinuous innovation: change people's live
dynamically continuous innovation: marked change to existing products
continuous innovation: slight modification to existing products
The new product development process:
idea generation (customer research, customer complaints, salespeople, engineers, suppliers and competitor)
idea screening (weed out ideas that don't fit)
analysis (estimate cost and forecast sale and which fits resources)
development (detailed descriptions of each concept with specific product features)
testing (soliciting feedback from consumer)
commercialization (introduce the product to the general market)
New product Adoption and Diffusion:
product adoption categories: customer attitude affects rate which individual are willing to adopt new product
product diffusion rate: characteristic affect the rate (the more characteristic there is the faster diffusion):
observability: how it is visible to potential consumer
trialability: how easily can potential consumer sample the new product
complexity: can potential consumer understand what it is or how it work?
complexity: how consistent is your product with the existing products
relative advantage: how better are the new product to existing products
The Product Life Cycle: patterns of sales and profits that typically changes over time
Introduction: low sales and nonexistent profits bc invest in raising awareness
Growth: sales continue to rise, profit usually peak, competitors notice -> enter or new variations
Maturity: sales usually peak, profits decline as competitors intensifies bc can only gain profit by steal consumer rather than bring new users
Decline: sales and profits decline bc technological change or consumer needs change -> find new use for the product, change the product. change the marketing mix
Promotion: marketing communication to influence consumer purchase decisions, through information, persuasion, and reminders
Promotion in Chaos: danger or opportunity: rising consumer power and breakneck pace of technology created growing need and opportunity for marketers to zero in on the right customers, at right time, with right message
Integrated Marketing Communication: the coordination of marketing messages through every promotional vehicle to communicate a unified impression about a product
Coordinating the communication: happen only with solid teamwork, begin at the top of the organization
information is important: customers, product, competition, market and strategy of the organization
A meaningful Message: Finding the big Idea
positioning statement: A brief statement that articulates how the marketer would like the target market to envision a product relative to the competition
Usually positioning statement is not the promotional statement but rather marks the beginning of the creative development process, spearheaded by ad agency creative professional ->
big idea
: meaningful, believable and distinctive concept that cuts through the clutter
An international perspective: some don't travel smoothly, so need careful research
The promotional mix:
Promotional channels: specific marketing communication vehicles, including traditional tools, such as advertising, sales promotion, direct marketing and personal selling and newer tools such as product placement, advergaming and Internet minimovies
Emerging Promotional Tools
Internet advertising: attractive tatic during tough economic times because high accountability - marketers can tell exactly how well their limited advertising dollars are working
Search engine optimization: taking specific steps to ensure that your website appears high on the list when customer look for your product or service via Internet search engine
Online video advertising
Social Media: impressive return on investment, future of marketing promotion
Native Advertising: to mimic the user experience into which it is placed in terms of form and function in your feed that you as user are much more likely to read and click on than typical banner
fully integrated into specific delivery platform, not identified as advertising
Product placement: paid integration of branded products into movies and TV and other media/ is merging promotional tactics, product placement and online video, huge growth rate / risky because quality is bad, cost is growing, benefit tough to measure
Advergaming: video games created as a marketing tool, usually with brand awareness as the core goal
Buzz marketing (guerrilla marketing, viral marketing): active stimulation of word-of-mouth via unconventional, and often relatively low-cost, tactics
Sponsorship: deep association between a marketer and a partner (cultural or sporting event) which involves promotion of the sponsor in exchange for either payment or provision of good
best investment occur when target audience for the marketer completely overlaps the target audience for the event
Traditional Promotional Tools
Advertising: paid, nonpersonal communication, designed to influence a target audience with regard to a product, service, organization, or idea
to drive sales and build reputation
TV, magazine and newspaper
measurement is tough because alternative media tactics are buried in other catergories
Sales Promotions: marketing activities designed to stimulate immediate sales activity through specific short-term programs aimed at either consumer or distributors
Consumer promotion: marketing activities designed to generate immediate consumer sales, using tools such as
premiums: items that consumer receive free of charge/lower cost in return for making a purchase (cosmetics)
promotional products: gifts to consumers of merch that advertise a brand name
samples: reduce the risk of purchasing something new by allowing consumer to try a product before commiting their cash
coupons: immediate price reduction to consumer, requires less effort to entice consumer to try new proudct / downside: focus on price not value make hard to differentiate brands and build loyalty
rebates (in car or electronics business): entice with cash-back offers
displays: generate purchases in-store because consumer make hefty chunk of their decisions as they shop
Trade promotion: marketing activities designed to stimulate wholesalers and retailers to push specific products more aggressively over the short term
another popular form of trade promotion, esp common in rapidly changing industry (toys, electronics)
another forms: contests, sweepstakes, special events for distributors
Personal Selling: the person-to-person presentation of products to potential buyers
costly, but work better than personal selling for high-ticket items, complex products, and high-volume customers
missionary selling: promoting goodwill for a company by providing information and assistance to customers
6 stages
Prospect and Qualify: identify potential customer and choosing those who are most likely to buy your product, make it efficient and focus their limited time in area that will yiel results
Prepare: research (what is want and need? current product lines? key competitors? internal and external challenge? how much time is given?
Present: need good first impression
Handle Objections: view objections as opportunities to learn more about the needs and elaborate on the benefits of your products
Close Sale: asking the prospect to buy - hear of the selling process, might be in the future
Follow-up: quality of the service for future purchase
Trends:
consultative selling: shifting the focus from the products to the customer, need deep understanding of customer needs
team selling: effective for large, complex accounts, includes a group of specialist from key functional areas of the company, to uncover opportunities and respond to need that would be beyond capacity of 1 salesperson -> must coordinate and connect the right network of contact
Public Relations: the ongoing effort to create positive relationships with all of a firm's different "publics". including customers, employeers, suppliers, the community, the general public, and the government
aim to positive publicity: unpaid stories in the media that influence perceptions about a company or its product
grab media attention by:
launch a Hall of Fame: luminaries from industry, repeat each year, build reputation along the way
make a List: best. worst... relevant to your business
create a Petition: harness a growing trend or identify a need in your industry
advantage: credible
disadvantage: no control over how media present the company or its product
Choosing the right promotional mix
Product characteristic
Product life cycle
Target audience
Push vs Pull
Competitive Environement
Budget