Product Concepts and Convenience Products Quiz

International Business Marketing MARKEC04

• Course: International Business Marketing MARKEC04
• Cluster: A-cluster (1st year, 1st semester)
• Lecture: 4 (2024-2025)
• Topic: Product and Promotion

Marketing: Real People, Real Choices

• Textbook: Marketing: Real People, Real Choices (Eleventh Edition, Global Edition)
• Author: Michael R. Solomon, Greg W. Marshall, Elnora W. Stuart
• Chapter: 8 - Product I: Innovation and New Product Development

Learning Objectives

• Explain how value is derived through different product layers.
• Describe how marketers classify products.
• Understand the importance and types of product innovations.
• Show how firms develop new products.
• Explain the process of product adoption and the diffusion of new innovations.
• Be prepared to develop your personal value proposition.

Build a Better Mousetrap...and Add Value

• "Build a better mousetrap and the world will beat a path to your door." - Old adage, but not always true!
• Woodstream Corp's "Little Champ" failed.
• Products are successful when they provide value.
• Products are a bundle of attributes (features, functions, benefits, and uses, as well as brand and packaging)

Layers of the Product Concept

• A product represents all that a customer receives in an exchange.
• Marketers distinguish among three distinct layers of the product:
  • Core product
  • Actual product
  • Augmented product

Layers of the Product (Example: Automobile)

• Basic benefits (transportation, carrying cargo, excitement, image enhancement)
• Features (engine size, color, interior design, body size, body style, options, model name, workmanship)
• Augmented product (warranty, repair/maintenance service, installation, customer support, delivery, credit, product-use instruction, parts and repair department, owner instruction manual, 2.9% interest auto loan, toll-free customer complaint number, customer problem policies, free lubrication and oil changes, etc.)

How Do Consumers Buy Products?

• Marketers classify products based on where and how consumers buy them.
• Consumer decisions differ in terms of decision making effort (habitual, limited, or extended problem solving).

Convenience Products

• Typically non-durable goods or services bought with minimal effort.
• Examples: staples (milk, bread), consumer packaged goods (CPG/FMCG), impulse products, geofencing marketing, emergency products.
• Consumers expect convenience products to be low-priced and widely available.

Shopping Products

• Goods and services for which consumers will spend time and effort to gather information on price, product attributes, and quality.
• Examples include computers, smart phones, appliances, and automobiles.
• Consumers are more likely to compare alternatives before they buy.

Specialty Products

• Products with unique characteristics that are important to buyers at almost any price.
• Require extensive problem-solving effort.
• Marketers focus on making their products stand out.
• Customers tend to be loyal to brands they have previously purchased and been satisfied with.

Unsought Products

• Goods and services for which a consumer has little awareness or interest until a need arises.
• Examples: retirement plans, life insurance, new tires for a car.
• Often require advertising or personal selling to interest buyers.

Adoption Pyramid

• Reinforce customer choices through advertising, sales promotion, and other communications.
• Make the product available.
• Provide product use information (demos, samples, trial-size packages).
• Provide information to consumers.
• May use teaser advertising.
• Massive advertising.
• Stages: Awareness, Interest, Evaluation, Trial, Adoption, Confirmation

Categories of Adopters

• Innovators (2.5%), Early Adopters (13.5%), Early Majority (34%), Late Majority (34%), Laggards (16%)

Product Factors That Affect the Rate of Adoption

• Relative advantage
• Compatibility
• Complexity
• Trialability
• Observability

Characteristics of Innovations

• Relative advantage: a new product offering superior benefits
• Compatibility: innovation is consistent with existing cultural values, customs, practices, and norms
• Complexity: consumers view a new product as difficult to understand and use, which slows the rate of product adoption.
• Trialability: ease of sampling a new product and its benefits
• Observability: other people can see the new product and its benefits, driving word of mouth communication.

Product Strategy, Branding, and Product Management

• Discusses different product objectives and strategies.
• Explores how firms manage products throughout the product life cycle.
• Explains how branding and packaging contribute to a product's identity.
• Describes how marketers structure organizations for new and existing product management.
• Provides insights on managing a career in the changing work environment.

Product Planning: Develop Product Objectives and Product Strategy

• What makes one product succeed while another fails?
• Effective product planning is guided by a continuous process of product and brand management.
• Product management is a systematic approach to coordinating all aspects of a product’s strategy development and execution.

Objectives for Single and Multiple Products

• Introduce New Products, Regional Product, Mature Product (upward, downward, two-way)
• Product Line Extensions (stretching, filling, or contracting)
• Product Mix (increasing product mix width)

Objectives and Strategies for Multiple Products

• Product Line: firm’s total offering to meet a particular customer need
• Product Line length: number of stock-keeping units (SKUs)
• Product line strategies: Full-line vs limited-line
• Strategies: upward, downward, two-way line stretch, filling out line, or contracting a product line, adding varieties to appeal to changing tastes, cannibalization

Product Mix Strategies

• Product mix: total set of products a firm offers for sale.
• Product mix width: number of different lines in product mix
• Product lines in mix usually have some things in common.

Quality as a Product Objective: TQM and Beyond

• Product quality: overall ability of a product to meet customer expectations.
• Total Quality Management (TQM): company-wide dedication to development, maintenance, and continuous improvement of all aspects of company operations.
• TQM helps companies achieve quality objectives.

Product Quality

• Includes several aspects: Degree of Pleasure, Durability, Reliability, Versatility, Product Safety, Ease of Use, Precision, Satisfies Needs

Marketing throughout the Product Life Cycle

• Many products have long lives, and others are fads.
• The product life cycle (PLC) is a useful tool for explaining market response and marketing activities.

The Product Life Cycle

• Stages: Introduction, Growth, Maturity, Decline
• Introduction stage: no profits initially while recovering R&D costs
• Growth stage: profits increase and peak
• Maturity stage: sales peak, profit margins narrow (longest stage)
• Decline stage: market shrinks, sales fall, profits fall

Introduction Stage of PLC

• New products that are offshoots of well-known brands have an advantage.
• Many products never make it out of the introduction phase due to low awareness.
• Effective advertising and promotion is essential.

Growth, Maturity, and Decline Stages of the PLC

• Growth stage: Product accepted, sales increase rapidly
• Maturity stage: Sales peak, profit margins narrow, typically longest phase
• Decline stage: Sales decrease as customer needs change, firm may drop product, try re-positioning, or reduce support.

Marketing Mix Strategies Throughout the Product Life Cycle

• Introduction: Single company, single product, new product, low awareness, inform customers
• Growth: New competitors, encourage brand loyalty, add features, increase pace, increase sales
• Maturity: Mostly replacement products, attract new users, maintain market share
• Decline: Reduce or maintain price, decide to keep or phase out product

Branding Strategies, Cobranding, National and Store Brands, Generic Brands, Licensing

• Individual brands versus Family Brands
• Cobranding: Two brands agree to work together
• Ingredient branding: Branded materials become component parts of other products
• National vs Store Brands: Manufacturer vs retail chain brands
• Generic branding: No branding, sold at lowest price, popular in pharmaceuticals

Promotion Strategy: Planning and Advertising

• Understanding the communication process and traditional promotion mix.
• Steps in traditional and multichannel promotion planning.
• Major types of advertising, criticisms, and campaign development methods.
• Elements of direct marketing.
• Increasing job perspectives with an effective resume and cover letter

Introduction and Overview

• Communication Models in a Digital World.
• Marketing messages take various forms (TV commercials, viral videos, blimps). Savvy marketers recognize each marketing mix element is communication. All marketing aims to inform, remind, persuade, or build relationships.
• Integrated Marketing Communications (IMC)
• Aims to deliver consistent messaging across platforms
• Use a multichannel promotion strategy
• Combine traditional marketing with social media and other online activities

Models of Marketing Communication

• One-to-Many (advertising, sales promotion, public relations)
• One-to-One (database marketing, direct marketing, personal selling)
• Many-to-Many (buzz building, social media)

Personal Communications

• Communicates on a personal level.
• Direct mail, telemarketing, direct marketing

Mass Communications

• Reaching a large audience simultaneously.
• Advertising, consumer sales promotion, public relations

Communication Process

• Source (encoding), Message, Medium, Noise (factors interfering with the communication), Receiver (decoding). Includes numerous communication tools (Magazines, Newspapers, Television, Radio, Billboards, Direct mail, word of mouth, internet and social media networks). Also encompasses Feedback (Purchase data, product awareness, brand loyalty).

Steps to Develop a Promotion Plan

• Identify target audiences
• Establish communication objectives
• Determine and allocate marketing communication budget
• Design the promotion mix
• Evaluate the effectiveness of the communication program

Promotional Mix(Steps/elements)

• Identifying target audiences, Establishing communication objectives, Determining and allocating marketing communication budget, Designing the promotion mix, Evaluating the effectiveness of the communication program.

Advertising

• Non-personal communication from an identified sponsor using mass media.
• Dates back to ancient Greece and Rome.
• Changes in media landscape have affected its effectiveness.

Owned, Paid, and Earned Digital Media

• Owned media: Websites, blogs, Facebook, Twitter (Controlled by company)
• Paid media: Display ads, sponsorships, paid keywords (Similar to traditional advertising)
• Earned media: Word-of-mouth, social media buzz (Most credible to consumers)

Other Topics/concepts

• Website and Email advertising
• Social Media Advertising
• Direct Marketing (Mail Order, Direct Mail, Telemarketing, M-Commerce)