Marketing Definition: Value and Exchange

Marketing Definition

• Marketing is an orientation that prioritizes the market in business decisions, not just a single department.
• Value is a customer's assessment of an offering's utility, based on perceptions of what is received versus what is given.

Value Dimensions

• Form utility: Providing the product in the desired form.
• Place utility: Making the product available where the customer wants it.
• Time utility: Making the product available when the customer wants it.
• Possession utility: Facilitating ownership of the product.

Total Offering

• Includes the organization's reputation, product features, associated ideals, quality, and price.
• Value is hard to quantify and measure, changing between individuals and situations.
• Value can be expressed as Quantity / Price.

Marketing Exchange

• Successful marketing requires a mutually beneficial exchange.
• Exchange involves the transfer of offerings of value between buyer and seller.
• Successful marketing exchange criteria includes two or more parties, each with something of value desired by the other.
• Exchanges must meet both parties' expectations regarding price and quality.

Seller Value

• Sellers find transactions valuable when they generate profit, prestige, or the ability to educate, delight, motivate, and engage (especially for non-profits).

Marketing Stakeholders

• Marketing aims to meet the needs and wants of customers, clients, partners, and society at large.

Market Evolution Stages

• Trade
• Production orientation
• Sales orientation
• Market orientation

Triple Bottom Line

• Corporate Social Responsibility involves businesses acting in the interest of the societies that sustain them.
• Sustainability is a business philosophy needed to ensure our future.

The Market

• It is a group of customers with heterogenous needs and wants.

The Marketing Mix (4Ps)

• The marketing mix is a set of variables a marketer controls to create an offering for exchange.

Product

• Anything offered to the market, including goods, services, or ideas.
• It is a bundle of attributes.

Price

• The amount of money a business demands in exchange for its offerings.
• It is a complex decision considering production, communication, distribution costs, profitability, partners' requirements, competitors' prices, and customers' willingness to pay.

Promotion

• Marketing activities that create awareness and attract potential customers, partners, and society to a business's offering.
• It includes advertising and other methods to promote products.

Place (Distribution)

• Means of making the offering available to the customer at the right time and place.
• It is largely a logistics function.
• Marketers must understand how logistics impact their ability to deliver a product to suit customer needs and wants.

The Marketing Environment

• Internal and external forces affecting a marketer’s ability to create, communicate, deliver, and exchange offerings of value.
• Environmental analysis involves breaking down the marketing environment for better understanding.

Environmental Analysis

• Helps marketers develop a strategy and direction.
• Strengths and weaknesses are factors under marketer’s control.
• Opportunities and threats are factors not under control.

Internal Environment

• The parts of the organization, people, and processes used to create, communicate, deliver, and exchange offerings of value.
• The organization can directly control its internal environment.
• Strengths and weaknesses are internal factors affecting the organization's ability to compete in the marketplace.

External Environment

• People and processes outside the organization that cannot be directly controlled.
• Marketers seek to influence the external environment.
• Opportunities and threats are external factors affecting the organization’s ability to serve the market.
• Divided into micro-environment and macro-environment.

Microenvironment

• Forces within an organization’s industry that affect its ability to serve its customers and clients, partners, and competitors.
• Consists of customers, clients, partners, and competitors.
• Marketers must understand the current and future needs and wants of their target market.
• Marketers must understand what their customers value and identify changes in customer preferences.
• Marketers must be willing and able to respond to changes and anticipate how needs and wants might change.
• Marketers must be able to influence customer preferences.

Partners

• Include logistics firms (storage and transport), financiers (banking, loans, insurance, and electronic payment infrastructure), retailers, wholesalers (storage and distribution), and suppliers.

Competitors

• Five differing structures of competition include monopoly, monopsony, oligopoly, monopolistic competition, and pure competition.
• Marketers must ensure their offerings provide their target market with greater value than their competitors’ offerings.
• Marketers seek to understand their competitors’ marketing mix, sales volumes, sales trends, market share, staffing, sales per employee, and employment trends.

Macroenvironment

• The macro-environmental framework has been called the PESTEL framework.

Macro Environmental Factors

• Political forces entail the influence of politics on marketing decisions through lobbying and the effect of political issues on international marketing.
• Economic forces affect how much people and organizations can spend and how they choose to spend it, including income, prices, savings, debt, and credit.
• Sociocultural forces are social and cultural factors affecting people's attitudes, beliefs, behaviors, preferences, customs, and lifestyles.
• Demographics includes statistics about a population, like age, gender, race, ethnicity, education, marital status, and parental status.
• Technological forces enable better ways of doing things and change the expectations and behaviors of customers, clients, and suppliers.
• Environmental forces include natural disasters, weather, and climate change, with growing ecological awareness influencing how firms operate.
• Legal forces include laws enacted by elected officials and regulations that govern what marketing organizations can and cannot legally do.

Laws and Regulations

• Impact privacy, fair trading, consumer safety, prices, contract terms, and intellectual property.

Situational Analysis

• It involves identifying key factors that will be used as a basis for the development of marketing strategy.
• An ongoing process combines organizational objectives and situational analyses to formulate a plan to move the organization from its current state to its desired state.

Marketing Metrics

• These are used to isolate the key, or most important, factors that need to be addressed to continue to compete effectively in the market, such as SWOT.

SWOT Analysis

• Identifies internal strengths and weaknesses and external opportunities and threats in relation to an organization.
• Strengths are attributes of the organization that help it achieve its objectives.
• Weaknesses are attributes of the organization that hinder it in trying to achieve its objectives.
• Opportunities are external factors that are potentially helpful to achieving objectives.
• Threats are external factors that are potentially harmful to achieving objectives.

Market Research

• Market research is a business activity that discovers information of use in making marketing decisions.
• It is an essential component of understanding the market.
• It should contribute to improved performance.

Market Research Information

• Market research informs many types of decisions, including market segmentation, sales performance, product, price, promotion, and place.

Big Data

• Big data has changed marketing practice.
• Improvements are constantly being made and more links are possible.
• Linking data informs decision-making.
• Systems are being created to help more people understand complex data.
• By understanding what people do and when, where, and why, we can build explanations.

Understanding trends

• Describe people's current behavior.
• Identify trends.
• Identify changes in behavioral patterns over time.
• Identify opportunities and areas for action.
• Many online businesses naturally use and generate big data.
• Data includes a user's watch history, search queries, and time spent scrolling or watching a show.
• Includes demographic, internet-based behavior, and browsing behavior.

Insight

• The need for this has grown with the volume of data available.
• According to the UK's National Social Marketing Centre, insight is a piece of understanding that guides strategy.
• It is generated from a combination of analytics and market research and the deep understanding that emerges about what moves and motivates people.

Market Research Components

• Defining the research problem
• Designing the research methodology
• Collecting data
• Analysing data and drawing conclusions

Market Research Considerations

• Before undertaking market research, factors to consider include relevance, timing, availability of resources, the need for new information, and cost-benefit analysis.

Ethics in Market Research

• Market researchers have an ethical responsibility to their clients or employers and to those who participate in the research.

Research Problem

• The question that the market research project is intended to answer.
• Needs to be clearly specified and enable the organization to make marketing decisions.
• As the research proceeds, the original questions asked may be redefined.

Defining a good research problem is important

• The decision-maker may only be aware of a small portion of the true problem.
• Leads to wrongly defining the research problem.
• Marketers often prepare a market research brief to ensure their problem is well defined.
• It outlines the research problem and describes the specific information required.
• Typically states the research problem, information required, timeframe, budget, and any other conditions of the project.

Research Methodology

• Detailed methodology created to guide the research project and address the research problem/ question.
• Multiple approaches are possible, and how you frame your research question will determine the type of research method.

Data Types

• Primary data is collected specifically for the current market research project.
• Secondary data was originally gathered or recorded for a purpose other than to address the current market research problem.

Qualitative Research

• Intended to obtain rich, deep, and detailed information about the attitudes and emotions underlying consumer behavior.
• Often used for exploratory research of problems that have not been studied before.

Qualitative Research - Examples

• Interviews
• Involve depth interviews that are research driven, either structured or semi-structured.
• Semi-structured interviews are more natural but can lead to unknown discoveries.
• The interviewer can bias the results on solicitation and interpretation.
• Relatively long duration.
• Focus groups
• Involve a group of respondents brought together, introduced to an idea, concept, or product, and their observations and interactions are observed.
• Gives rise to common issues not foreseeable by researchers.
• A good moderator is very important.
• Participants can influence each other and social influence is very strong.

Quantitative Research

• Collects information that can be represented numerically.
• Usually used for descriptive and causal research.
• Approaches include survey, experimentation, observation, and neuroscience.
• Is useful for monitoring market size, identifying market patterns and trends, predicting the success of proposed marketing campaigns, and tracking customer perceptions for existing products.
• Can be (mostly) more generalisable than qualitativeresearch methods, we can sample larger pockets of the population.

Quantitative Research - Examples

• Surveys
• Tend to be the most common quantitative research tool.
• Surveys can be interviewer-led OR self-response.
• They rely on the researcher to formulate questions that can elicit a relatively closed answer.
• All surveys are prone to distortion, and low response rates are a common issue.
• Experiments
• Involves manipulating variables of interest whilst holding everything else constant.
• Often used for causal research
• Variable of interest = independent variable.
• Outcome variable = dependent variable.
• Artificial settings don’t always reflect real life.
• Other variables not being measured could be influencing the outcome
• Biometrics
• monitoring participant’s physiological responses to stimuli.
• Includes heart rate, emotional responses, brain activity.
• Provides actual behavior
• Extremely expensive and invasive, cannot tell us how.

Managing the research project

• Data must be collected according to the methods specified in the research design and ethical practices must be followed.

Managing data collection

• Population
• All of the things (often people) of interest to the researcher in the particular research project.
• Sampling
• The process of choosing members of the total population.
• Sample
• The group chosen for the study.
• Random sampling
• Each member of the population has a random chance of being sampled.
• Stratified sampling
• Each member is grouped on a characteristic and a sample is extracted from that.
• Quota sampling
• The population is divided into groups based on a number of characteristics. Researcher chooses arbitrarily from them.
• Convenience sampling
• Given that time and financial resources are limited, budgeting and scheduling need to be planned and managed to ensure the most benefit is derived from the investment in market research.
• During a project, some phases must be completed before others can begin
• The market research process is not always a straightforward, linear path from start to finish.
• A number of tools exist to help project managers maintain control of projects, the most commonly used are Gantt charts and the critical path method

Data analysis

• Once data has been collected, it needs to be filtered and organized
• Once data is cleaned, results need to be analyzed.
• Qualitative data
• Looking at results as rich detailed information
• Reduction
• Coding

Reporting the findings

• Once data is analyzed and conclusions drawn, the findings must be presented in a format that will enable the marketing decision-makers to use the information.
• Reporting should be concise and to the point Market researchers most typically report key findings in presentation formats

Responding to the research problem

• Market research is a continuous process.
• It is essential that marketers evaluate the effectiveness of each and every marketing activity undertaken to optimize effectiveness.
• By undertaking high-quality research we can deliver irrefutable evidence of the return on investment.
• Findings can build business cases for future projects.

Consumer Behaviour

• Used to describe the analysis of the behaviour of individuals and households who buy goods and services for personal consumption.
• An understanding of informs every decision made about the marketing mix, and the range of possible consumer behaviours is almost limitless.

Situational Influences

• Classified as physical, social, time, motivational, and mood.
• Nudge theory
• Makes (positive) advantage of situational influences.
• Involves slightly altering the environment – choice architecture.
• Make people behave in a predictable way.
• Does so in a way without disposing of alternatives.
• Does not provide significant incentives to for the behavioural change.

Cultural Factors

• Come from the level of the whole society or of major groups within society.
• From a marketing perspective, this level of analysis corresponds with that of the mass market.
• Concerned with the aggregate behavior of markets as a whole.
• Social class is of interest to marketers when can explain or reliably predict differences in buyer or consumer behavior.

Various Cultural Frameworks

• Hofstede found that national cultures could be distinguished by variations across four core dimensions.
• Power distance: unequal power distributions
• Uncertainty avoidance: to what extent members tolerate uncertainties.
• Individualism: focus on the rights and concerns of each member. Antonym = collectivism
• Masculinity: extent to which members stress different expectations for men and women.
• Subculture
• Group of individuals who differ on some influential dimensions.
• Extracted from the broader culture in which they are immersed.
• Important to consider when their shopping and purchasing behavior is significantly different from the remainder of the population.
• In this case, they may represent a distinct and commercially significant marketing opportunity. Social class
• Individuals of similar social rank within the hierarchy.
• Often better to pay attention to economic indicators Income Occupation Educational background Socioeconomic status can be useful concept where the primary focus is on ‘purchasing power’.

Social Factors

• The social level is concerned with developing an understanding of the behavior of the individual within the wider group.
• Through group pressures on the individual to conform with group norms.
• Such influences are collectively known as social factors.
• Reference Groups Three major types of reference groups have been identified.
• Membership reference groups: Those we are part of already
• Aspirational reference groups: Those we want to be associated with Dissociative reference groups: Those we don’t want to be associated with

Opinion Leader

• A reference group member who provides relevant and influential advice about a specific topic of interest group members.

Family

• For most people, the social group with the most influence over their behavior is the family.
• The family life cycle describes the stages through which most families pass.

Individual Factors

• Factors that influence the consumer’s behavior which operate independently of social circumstances.
• These relate to personal and psychological characteristics.
• These factors can be measured for an individual and are presumed to differ significantly between individuals
• These personal characteristics, in some ways, constitute an individual’s identity and, in this sense, are objective and relatively stable in the short term
• At the level of individual buyer or consumer, we can identify a range of personal characteristics.
• These have been shown to exert a significant influence on consumers’ choice processes and ultimate purchase decisions.

Demographics

• Describe the general make‐up of the population.
• Demographic factors should always be used as part of the description and explanation of consumer behavior.
• In many cases, these demographic characteristics will be sufficient for the marketer’s purposes
• Lifestyle is defined by how they spend their time and how they interact with others.
• Consumers regularly purchase products that play a role in their lifestyle.
• They also often purchase products to enhance or express their preferred lifestyle.
• Personality is the most distinctive characteristic that defines an individual’s behavior.
• While relatively consistent and enduring, it does change throughout life.
• Changes are normally in response to social and environmental influences and personal experiences.

Psychological Characteristics

• Motivation is used to describe the individual’s internal drive to act to satisfy unfulfilled needs or achieve unmet goals.

Motivation Theory

• The most widely recognized theory of motivation is Maslow’s hierarchy of needs.
• Beliefs and attitudes make up the ‘mental map’ and consumers rely upon these when making judgements and products for which there is no readily apparent need.
• The three components that make up an attitude are: the cognitive component, the affective component, and the behavioral component.
• Perception is the psychological process that filters, organises, and attributes meaning to external stimuli.

Selective Exposure

• Perception is selective and can result in selective exposure, selective attention, selective distortion, and selective retention.
• Learning is the process by which individuals acquire new knowledge and experiences, which they can apply to future problems, opportunities, and behaviour.

Decision Making Process

• The consumer decision-making process involves five stages. Need/want recognition Information Search Evaluation of options Purchase Post-purchase evaluation

Habitual Decision Making

• Involves little involvement with the purchase.

Limited Decision Making

• Involves seeking limited information to evaluate options for infrequent purchases within familiar product categories.

Extended Decision Making

• Involves a high level of involvement with the purchase decision in a protracted, deliberate and detailed way.

Business Markets

• Business markets (or ‘business-to-business’ or ‘B2B’ markets) have distinctive characteristics that make them different from consumer markets.
• Business markets frequently have a small number of large competitors and are made up of a small number of large buyers.
• Purchases are often for large amounts.
• Business markets are much larger in revenue terms than the consumer markets they service

Business Purchases

• Business markets are made up of individuals or organizations that purchase products for one or more of the following three purposes. To resell the product To use the product in the production of other products To use the product in their daily business operations. The overall business market comprises four major categories. Reseller markets Producer markets Government markets Institutional markets

Reseller Markets

• Buy products in order to sell or lease them to other parties for profit. Includes wholesalers, industrial distributors, and retailers.
• Producer markets purchase products for use in the production of other products or for use in their daily business operations.

Government Markets

• The government sector represents a substantial provider and purchaser of goods and services.
• Demand can fluctuate widely due to ‘fiscal’ policy is used to attempt to smooth macroeconomic fluctuations or as governments of competing political persuasions alternate in power.

Institutional Markets

• Many organizations are neither public nor for- profit. They commonly have charitable or social objectives, the markets in which these organizations buy and sell products are known as institutional markets.

Business Buying Behaviour

• Business purchases usually take the form of a straight rebuy, a modified rebuy or a new task purchase.

Buying Approach

• The level of involvement is also reflected in the buying approach the business takes, which may involve some or all of the following. Negotiation Description Inspection Sampling

Straight Rebuy

• Occurs when buyers purchase the same products routinely from established vendors under already‐established terms of sale.

Modified Rebuy

• Involves some degree of evaluation of alternative product options.

New Task Purchase

• When a business identifies a new problem or introduces a new process or product, it will often need to make a purchase in a product category for the first time.

Business Decision Making Process

• Involves the same basic stages as the consumer decision-making process.
• The business decision process will vary between straight rebuys, modified rebuys and new task purchases.

Knowing the Market

• It is a group of customers with heterogeneous needs and wants.

Consumer Markets

• Consist of households and individuals that buy products for private consumption.
• Market segmentation enables the organization to form a strategy for a group, or segment, that has common features, rather than try to market to everyone.
• The organization develops the most effective marketing mix for each segment. This approach is known as the target marketing concept.

Target Marketing

• Is based on three premises: individual buyers or groups of buyers can be identified, sellers understand the needs of buyers, and sellers seek to shape their offer to meet the needs of target buyers.
• Mass marketing: buyers have common wants, needs and demands.
• One-to-one marketing: Buyers have unique wants, needs and demands.
• Target marketing: target specific subgroups- the market contains subgroups.

Mass Marketing

• A mass marketer sees buyers as having common wants, needs and demands.
• A single product offering is created, communicated and delivered to meet the needs of most people in the market, this is an undifferentiated approach to marketing.

One-to-One Marketing

• The one-to-one marketer seeks to appeal to each customer by providing a unique, customized offering that will meet their individual needs.

Target Marketing Factors

• When choosing target markets, the organization will generally consider three factors:
• Its own resources
• Market demand
• Competition

Differentiated Targeting Strategy

• An organization identifies a range of target market segments that cover the majority of the total market and develops a tailored marketing mix for each segment.

Product and Market Specialization

• Product specialization
• Market specialization
• Product–market specialization.

Specialization Approach

• Specialization approach works if the market is characterized by a wide range of needs and product preferences, clear market segments/product categories are identified, market is clearly divided.

Target Marketing

• The target marketing process is a fundamental component of marketing strategy for any organization and process.

The process involves three main stages

1. Segmentation
2. Targeting
3. Positioning
4. Market segmentation
5. The first stage of the target marketing process is market segmentation

Market Segmentation Phases

• There are two steps in the market segmentation phase:

1. Identifying variables that can be used to define meaningful market segments
2. Profiling the market segments so they can be assessed in the second stage of the target marketing process.

Segmentation Variables

• Segmentation variables are characteristics that buyers have in common and that might be closely related to their purchasing behaviour.
• The possible variables for segmenting consumer markets fall into four broad categories.

Segmentation categories

• Geographic
• Demographic
• Psychographic
• Behavioral.

Geographic Segmentation

• Variables are reliable predictors of customer needs and purchasing behaviours for a wide range of products. Useful geographic variables include:

1. Climate
2. Local population density
3. Region
4. Topography
5. Urban, suburban and rural location.

Demographic Segmentation

• Demographic segmentation is based on demographic variables, which are related to the quantifiable social characteristics of populations.
• Useful demographic variables include:

1. Age
2. Ethnicity
3. Household composition
4. Income
5. Gender.

Psychographic Segmentation

• Psychological traits
• Geodemographics
• Lifestyles
• Behavioral Benefit expectations Brand loyalty Occasion Price sensitivity Volume of usage.

Effective Segmentation Criteria

• An almost limitless number of segments can be created using segmentation variables.
• It is crucial that the segments are evaluated against the following criteria to ensure the segment is worthwhile in pursuing:

Criteria Include:

• Measurability
• Accessibility
• Substantiality
• Practicability.

Profile Market Segments

• Having identified the range of ways in which market segments can be described, the next task is to develop a market segment profile.

Market Targeting Components

• Market targeting involves a systematic examination of the range of possible market segments.

Key Factors of Focus

• Includes potential sales volume, potential revenues, and the ability of the organization to satisfy the expectations, it requires a close understanding of competitors how their offerings are seen by potential target market segments.
• It is important to realize that no company or brand can be all things to all people

Evaluation Process

• The evaluation of potential market segments involves detailed and rigorous analysis of sales potential, competitive situation and cost structure.
• SWOT analysis is a good tool to use.

Sales Potential

• Estimating market potential in each target market segment is important to determines whether the chosen target market strategy will lead to healthy sales volumes and sustainable profitability.

Selecting Segments

• Selecting particular market segments (and deciding to ignore others) is therefore at the heart of the marketing concept.

Market and Brand Positioning

• Positioning describes how target markets perceive the organization’s offer relative to competing offers.
• Marketers need to consider customer perceptions when selecting from available alternatives.
• Positioning is based on customer perceptions may or may not closely correspond with the product’s objective characteristics.

Determining Position

• To determine the appropriate positioning for its products, an organization needs to undertake detailed market research to understand its current position.

Analyzing Current Positioning

• Establishing an organization’s current positioning is of strategic importance, it should be undertaken based on rigorous analysis and market research.
• Some commonly used positioning variables include attributes, use/application, product user, price and quality, and product class.

Marketing Mix

• An appropriate marketing mix should consist of these items: be consistent with the desired positioning, be internally consistent, and be sustainable in the long term.

The product is what the marketer takes to the market to get consumers to buy or engage in. Marketers should ensure new products suit new technology and changing tastes. Developing, launching and positioning products can be difficult and uncertain.

Goods, services and ideas

• Product plays a vital role in the marketing process. Without a product, a marketer has nothing to offer.
• A product is defined as a good, service or idea offered to the market for exchange.
• Goods are physical, tangible offerings that are capable of being delivered to a customer.
• Services are intangible offerings to the market.
• An idea can also be offered to the market in the form of a concept, issue or philosophy.

The Total Product

• Products have many different features that can provide value for customers, clients, partners and society.

The total product concept is a way of viewing a product as the totality of value and benefits it provides to the customer. Marketers understand that when customers choose a product, they do not purchase a ‘thing’; rather, they buy a solution to a problem.

• Core product: the fundamental benefit that responds to the customer’s problem of an unsatisfied need or want.
• Expected product: attributes that actually deliver the benefit that forms the core product.
• Augmented product: a bundle of benefits that the buyer may not require. Potential product: all possibilities that could become part of the expected or augmented product.

Product Relationships

• Many organizations produce multiple products or several different styles of a product.
• Product item
• Product line
• Product mix

Product Classification

• Consumer products are classified into one or more of the following main categories:

1. Shopping products
2. Convenience products
3. Specialty products
4. Unsought products
5. Business‐to‐business products are products purchased by individuals and organisations for use in the production of other products or for use in their daily business operations

Shopping Products Involve

• Moderate to high engagement with the decision‐making process that are expected to last a long time.

Shopping Products - Characteristics

• Stocked up small number of retail outlets
• Sell in low volumes
• Reasonably large profit margins.

Convenience Products

• Frequently purchased Stocked up large number of retail outlets Sell in high volumes Low profit margins 3 further categories staple products impulse products emergency products.

Specialty Products

• Unique characteristics desired by their buyers.
• Consumers know exactly what they want.

Unsought Products

• Unknown or unconsidered by the consumer
• Challenge = making consumers aware. 3 Marketing communication efforts = crucial.

Business-to-Business Products

• Purchsed by individuals and organisations for use in the production of other products or for use in their daily business operations

1. Parts and materials
2. Equipment
3. Services and supplies.

Product Life Cycle

• An organization needs to be adept at developing new products and successfully launching them into the marketplace, they must then be effectively managed to ensure their ongoing profitability
• The way products progress through the life cycle varies with the product and the marketing environment.

Stages of PLM

• The product life cycle (PLC) has five stages include:

1. New product development
2. Introduction
3. Growth
4. Maturity
5. Decline.

New Product Development Phases

The new product development process sets out eight phases for introducing products

• Idea generation
• Screening
• Concept evaluation
• Marketing strategy
• Business analysis
• Product development
• Test marketing
• Commercialisation.

Diffusion of Innovation

• The diffusion of innovation describes how innovations are adopted by the market over time by consumers.

Product Adoption Process

• Marketers need to understand how a consumer perceives a new product, learns about it, and decides to adopt it, this typically entails five sequential stages which form the product adoption process.

1. Awareness
2. Interest
3. Evaluation
4. Trial
5. Adoption

Introduction Stage

• Involves considerable investment and the goal is to build awareness and interest.

Growth Stage

• Involves the increase in popularity, sales and profit.

Maturity Stage

• Novelty wears off and competitors are more of and established.

Decline Stage

• Sales and profits fall and there is little new product entering. It might be time to drop or change the product.

Product Differentiation

• Is the creation of products and product attributes that distinguish one product from another (e.g. design, brand, image, quality, features
• Marketers, must usually modify, upgrade and reposition products during their life cycle to maintain or improve their competitive advantage.

Branding Definitions

• Brand refers to a collection of symbols intended to create an image in the customer’s mind that differentiates a product from competitors’ products
• Brand image is the set of beliefs that a consumer has regarding a particular brand.

Brands

• Part of the brand not made up of words — it often consists of symbols or designs. To protect the brand, an organization can register it as a trade mark with the relevant body. Well‐known brands can be very valuable to an organization in financial and non‐financial terms Brand Equity
• Identifies the organization’s products
• Differentiates the organization’s products from competing products
• Attracts customers
• Helps introduce new products
• Facilitates the promotion of same-brand products.

Brand Loyalty

• Consists of exhibiting a highly favourable attitude towards a specific brand, which the customer would then prefer to buy.
• High brand equity can be a valuable asset for a company and provide a strong competitive advantage.

Brand Equity Metrics

• Brand assets (e.g. trade marks and patents)
• Stock price analysis
• Replacement cost
• Brand attributes
• Brand loyalty
• Willingness‐to‐pay analysis.

Brand Strategies

When developing brands within a product mix, an organization may decide to pursue possible strategies that include:

• Individual branding uses a different brand on each product, giving each its own specific identity.
• Family branding uses the same brand on several of the organization’s products.
• Brand extension gives an existing brand name to new product in a different category.

Brand Ownership

• Manufacturer brands are owned by producers and are the most common type of brand.
• Private label brands are owned by resellers, such as wholesalers or retailers, and are not identified with the manufacturer.

Co-branding

• The use of two or more brand names on the same product and has grown recently as organizations try to: capitalise on the brand equity of multiple brands. improve the perceived value of a product. maintain existing branding after another organization’s brands are acquired.

Packaging

• Marketers may want to: express to customers that the product has changed in some way update the style of package or logo to broaden the customer appeal emphasise certain elements to further differentiate it from the competition.

Labelling

• Usually forms part of the package and provides identifying, promotional, legal and other information. At its most basic level, the label identifies the product and brand name, but can also provide useful information.

Managing products

• Consists of ongoing evaluation and responses to the changing marketing environment. Managing the product may require coordination and cooperation across different business departments.

Approaches to Management

• Managing products requires coordination and cooperation across different areas.
• A business may employ product managers to manage particular products or product lines, or brand managers to manage a particular brand within the organization’s portfolio of brands.
• Another alternative is to appoint a market manager who will be responsible for managing the marketing activities aimed at a particular part of the target market.

Life Cycle Management

• Marketers must determine which life cycle stage their product is in to make appropriate decisions related to the marketing mix. Eventually products may become obsolete. Product obsolescence may be either planned or unplanned.