Value and Product Layers

Value and Product Layers

• A product encompasses everything a customer receives in an exchange.
• Marketers differentiate products by "layering" them into core, actual, and augmented components.

Classifying Products

• Products can be classified based on how consumers purchase them.
• One classification method is by how consumers buy the product including convenience, shopping, specialty, and unsought products.

Convenience Products

• Convenience products are usually non-durable goods/services that require minimal effort to purchase.
• Examples include staples (milk, bread), fast-moving consumer goods (FMCG), impulse buys, items marketed w/ geofencing, and emergency items.
• Consumers expect convenience products to be widely available and low priced.

Shopping Products

• Shopping products are goods/services where consumers spend time gathering info on price points, attributes, and quality.
• Examples include computers, smartphones, appliances, and automobiles.
• Consumers will likely compare options before buying shopping products.

Specialty Products

• Specialty products possess unique qualities important to buyers, regardless of price.
• Purchasing involves extended problem-solving and significant effort.
• Marketers emphasize differentiating their products.
• Customers tend to display strong brand loyalty.

Unsought Products

• Unsought products include goods/services a customer has little interest in until a need arises.
• Examples include retirement plans, life insurance, and new tires.
• Significant advertising and personal selling are needed to generate interest.

Adoption Pyramid

• Awareness: Consumers become aware of an innovation by means of a media blitz.
• Interest: Consumers determine how the product satisfies a need and seek information.
• Evaluation: Consumers begin weighing costs and benefits. Impulse purchases are made without planning.
• Trial: Consumers gain experience with the product through use.
• Adoption: Consumers make the purchase.
• Confirmation: Consumers weigh the expected benefits and costs versus the actual ones.

Categories of Adopters

• Innovators: They account for 2.5% of adopters, are extremely adventurous risk takers, and well-educated.
• Early Adopters: They account for 13.5% of adopters, are concerned with social acceptance, are heavy media users, and people seek their opinions.
• Early Majority: They account for 34% of adopters, avoid being first or last, and are deliberate and cautious.
• Late Majority: They account for 34% of adopters, are older, conservative, and have lower than average education and income.
• Laggards: They account for 16% of adopters, have lower education and income, and are bound by tradition.

Factors Affecting Product Adoption Rate

• Relative advantage is the degree a consumer believes a new product offers superior benefits. Greater relative advantage = faster adoption.
• Compatibility is the consistency of an innovation with cultural values, customs, and practices. Lack of perceived compatibility slows adoption.
• Complexity is the difficulty consumers perceive in understanding/using a new product. Higher complexity delays adoption.
• Trialability is the ease of sampling a new product and its benefits. Lower costs increase trial usage/adoption.
• Observability is the visibility of a new product and its benefits to others. More visible innovations drive word-of-mouth communication.

Product Lines

• A product line is a company's total product offering satisfies the needs/desires of a target customer.
• Product line length is based on the number of stock keeping units(SKUs).

Product Line Strategies

• Strategies include choices between full or limited lines.
• Upward, downward, or two-way line stretches.
• Filling/contracting a product line.
• Adding new varieties that appeal to shifting consumer interests.
• Cannibalization is the potential risk when a new product eats into sales of an existing one.

Product Mix

• A product mix is the total offering a firm carries for sale.
• Product mix strategies must consider the width of the mix (number of different lines) and lines within the mix should have things in common.

Product Quality

• Product quality is the overall capability of a product to meet customer expectations.
• Total Quality Management (TQM) aims to achieve quality objectives.
• TQM is a philosophy that calls for continuous improvement in all aspects of a company’s operations.

Product Life Cycle (PLC)

• PLC explains how market response and marketing activities change over a product's life.
• Products that are offshoots of well-known brands have an advantage.
• Many products do not make it of the introduction stage due to poor awareness.
• Advertising and promotion is essential.
• Some products like Coca-cola never fall into the decline phase,

Product Life Cycle Stages

• Growth Stage: The product is accepted, and sales rapidly increase.
• Maturity Stage: Sales peak, profit margins narrow. This is usually the longest phase.
• Decline Stage: Sales fall as customer needs change. Firms may drop products or reduce support.

Branding

• A brand includes a name, symbol, or unique product identifier.
• Good brand names maintain customer relationships, position the product and fit the target market.
• Good brand names are easy to say, spell and remember.

Branding Strategies

• Individual Brands
• Family Brands
• National and Store (private label) Brands
• Generic Brands
• Licensing
• Cobranding

Brand Types

• Family brand strategy applies when product items share a common brand name.
• National/manufacturer brands are produced/marketed by a manufacturer.
• Store (private label) brands are offered by a retailer under an exclusive name, like Costco's Kirkland's or Walmart's Sam's Choice.
• Generic branding involves plain packaging with just the product name.
• Generic goods are sold at the lowest possible price and often found in pharmaceuticals.

Licensing and Cobranding

• Licensing occurs when one firm sells the rights to use their brand to another firm for a specific period.
• Movie producers like Disney and Star Wars use licensing.
• Cobranding occurs when two brands collaborate to market a new product.
• Ingredient branding involves branded components of branded products.

Packaging

• A package serves both functional and communication purpose.
• Packages provide covers/containers, protects against damage from shipping, protects against spoilage/moisture, provides communication about the product.

Marketing Communication

• The messages can take many forms to meet objectives.
• Marketing aims to inform, remind, persuade, or build relationships.
• Marketers understand each element of the marketing mix is a form of communication.

Promotion Mix

• Promotion mix elements include personal selling, advertising, sales promotion, and public relations.
• Personal communication is one-to-one involving personal selling/direct marketing.
• Traditional Mass is one-to-many advertising/sales promotion/public relations
• Today marketers using traditional promotional tools with online efforts.

Integrated Marketing Communication (IMC)

• IMC involves the coordinated planning, execution, and evaluation of brand communication programs over time.
• IMC delivers consistent messaging across platforms and uses a multichannel promotion strategy and combines traditional with social media.

Marketing Communication Models

• One-to-Many: Uses advertising, sales promotion, and public relations.
• One-to-One: Database marketing, direct marketing, and personal selling.
• Many-to-Many: Buzz building and social media.

Promotion Plan Steps

• 1. ID target audience.
• 2. Establish communication objectives.
• 3. Determine/allocate marketing communication budget. Decisions: Total $ Amount, Push VS Pull, Specific Promotional Mix.
• 4. Design promotion mix.
• 5. Evaluate communication program effectiveness.

Promotion Mix Design Factors Include:

• Communication tools.
• Message.
• Communication channels.

Promotion Budgeting

• There are two different approaches to determining a marketing communication budget.
• Top-down budgeting: Techniques include the percentage-of-sales and the competitive-parity methods.
• Bottom-up budgeting: Techniques include the objective-task method.

Push versus Pull

• Push strategy uses marketing communications to move products through the channel by convincing channel members to offer them.
• Pull strategy uses marketing communications to build consumer desire for products, convincing retailers to respond by stocking these items.

Advertising

• Advertising is a non-personal communication from an identified source using mass media.
• A changing media landscape has slowed mass media advertising growth.
• Mass media remains the best way to reach a large audience.

Digital Media Types:

• Owned media: Websites, blogs, Facebook, Twitter. Controlled by company. Effective for relationship building.
• Paid media: Display ads, sponsorships, paid keyword searches. Similar to traditional advertising, less trusted by consumers.
• Earned media: Word of mouth. Most credible to consumers, no company control.

Advertising Types

• Website advertising: Banners, buttons, and pop-up ads
• Email advertising: Permission email marketing
• Social media advertising: Facebook, Instagram, and Twitter
• Mobile advertising
• QR coding
• Video sharing

Direct Marketing Forms

• The key forms of Direct Marketing are mail-order, telemarketing, and M-Commerce.
• Mail-order include catalogs and direct mail.
• Catalogs are product collections in book form.
• Direct mail is a brochure or pamphlet for a specific offering.

Telemarketing and M-Commerce

• Telemarketing markets to consumers and business customers via the phone. The FTC has a "Do Not Call Registry".
• M-commerce promotes ecommerce via mobile phones and devices. Examples include SMS marketing through text messages.

Social Media

• Social media enables a many-to-many communication model.
• With social media customers the ability to discuss and research products.

Social Networks

• Social networks include Facebook and Twitter.
• Facebook is the most popular social network.
• Networks provide an opportunity to build brand communities and reach influential opinion leaders.

Word-of-mouth and Brand Ambassadors

• Buzz comes from word-of-mouth considered authentic among customers.
• Buzz marketing creates brand conversation, excitement, and enthusiasm.
• This makes PR a more important part of the promotion mix.
• Brand ambassadors and evangelists are consumers that create good will for company often for free.

Viral Marketing

• Viral marketing increases brand awareness or sales via many-to-many communication, such as messages that are branded.

Sales Promotion

• Sales promotions help builds interest or encourage purchase. This is done throughout a specified time.
• These programs are different from advertising in that they are generally much shorter than term with more identifiable sponsors.

Consumer Sales Promotions

• Price-Based: Coupons, Deals, Refunds, Frequency-Continuity, and Bundle
• Attention-Grabbing and non-price: Lotteries, Premiums, and Samplings.

Types of Trade Sales Promotions

• Discounts and Deals: Allowances and Coupons for Merchandising; Case-allowances, and Co-Op Advertising..
• Increased Visibility for the Promotion: Trade Shows, Products for Promotional Purposes, and money given for pushing the product.

Personal Selling

• Personal selling occurs when a company rep directly interacts to discuss goods/services.

Public Relations

• PR builds relationships with an organization's publics: consumers, stockholders, and legislators.
• Common PR activities include publicity (unpaid media exposure).
• The most important PR function is managing company reputation during crisis.