Chapter 12 Commerce - PDF

Products and Promotion: Creating and communicating value CHAPTER 12 Suzaan Hughes  Planning ahead - Learning Outcomes Explain the characteristics of “products” and identify product classifications Describe product differentiation and the key elements of...

Products and Promotion: Creating and communicating value CHAPTER 12 Suzaan Hughes  Planning ahead - Learning Outcomes Explain the characteristics of “products” and identify product classifications Describe product differentiation and the key elements of product planning Discuss innovation and the product life cycle Analyze and explain promotion and integrated marketing communications Discuss development of the promotional message Discuss the promotional mix and the various promotional tools  Chapter 12 Outline 1. Products and Services a. Services: a product by any other name b. Goods versus services c. Product layers d. Actual product e. Product classifications 2. Product differentiation and planning a. Product quality b. Features and benefits c. Product lines and product mix d. Branding e. Packaging  Chapter 12 Outline 3. Innovation and the Product life cycle a. Types of innovation b. The new product development process c. New product adoption and diffusion d. The product life cycle: maximizing results over time 4. Promotion and Integrated Marketing Communication a. Promotion in Chaos b. Integrated Marketing Communication: Consistency and Focus c. Coordinating the communication d. A meaningful message e. An International perspective 5. Promotional tools a. Emerging promotional tools b. Traditional Promotional tools c. Choosing the right promotional mix Products and Services Product: Anything that an organisation offers to satisfy consumer needs and wants Service: A product by any other name ◦ Qualities of services include: Goods and services spectrum  Layers of a Product Core benefit Consumers buy a core benefit that satisfies their needs Actual product Physical good or the delivered service that provides the core benefit Augmented product Additional goods and services provided with the actual product that sharpen the product’s competitive edge Consumer Products Purchased for personal use or consumption ◦ Convenience products - Inexpensive goods and services that consumers buy frequently ◦ Shopping products - More expensive products that consumers buy less frequently ◦ Specialty products - Much more expensive products that consumers seldom purchase ◦ Unsought products - Goods and services that hold little interest or even negative interest for consumers Business Products Purchased to use either directly or indirectly in the production of other products ◦ Installations ◦ Accessory equipment ◦ Maintenance, repair, and operating products ◦ Raw materials ◦ Component parts and processed materials ◦ Business services Product Differentiation and Quality Product differentiation ◦ Attributes that make a good or service different from other products that compete to meet the same or similar customer needs Aspects of product quality ◦ Quality level: Measure of how well a product performs its core functions ◦ Product consistency: Measure of how reliable a product is in delivering its promised level of quality Product Features and Benefits Product Specific characteristics of a features product Advantages that a customer Customer gains from a specific product benefits feature Product Lines and the Product Mix Product line: Group of products that are closely related to each other, either in terms of how they work or the customers they serve Product mix: Total number of product lines and individual items sold by a single firm Firms can add new product lines to reach new customers ◦ Risk - Cannibalization ◦ Cannibalization: When a firm's new product takes sales away from its existing products Brand Brand*: A product’s identity—including product name, symbol, design, reputation, and image—that sets it apart from other players in the same category Brand equity: Overall value of a brand to an organisation Brand name: Catchy, memorable name Unique in the industry Line vs Brand extensions: Line extensions ◦ Similar products offered under the same brand name Brand extensions ◦ New product, in a new category, introduced under an existing brand name Brand (continued) Licensing: Purchasing the right to use another company’s brand name or symbol Cobranding: Established brands from different companies joining forces to market the same product National vs Store brands National brands (manufacturers’ brands) ◦ Brands that the producer owns and markets Store brands (private-label brands) ◦ Brands that the retailer both produces and distributes Packaging Protects the product Provides information Facilitates storage Suggests product uses Promotes the brand of the product Attracts buyer attention  Types of Innovation Discontinuous innovation Brand-new ideas that radically change how people live Dynamically continuous innovation Characterized by marked changes to existing products Continuous innovation Features a slight modification of an existing product New Product Development Process  New Product Adoption and Diffusion New Product Adoption and Diffusion Rate of new product spread depends on both individual consumers and the product itself PRODUCT ADOPTION CATEGORIES ◦ First adopters are risk takers ◦ Laggards are late to adopt products ◦ Most adopters fall somewhere between the two Characteristics That Determine Product Diffusion Rate Observability ◦ Visibility of a product to other potential consumers Trialability ◦ Ease with which potential consumers sample a new product Complexity ◦ Ease with which potential consumers easily understand a product Compatibility ◦ Consistency of a product with prior experiences Relative advantage ◦ Benefits of the new product in comparison with an existing product  Product life cycle for a typical product category  Promotion Promotion ◦ Marketing communication designed to influence consumer purchase decisions through information, persuasion, and reminders Promotion in Chaos: Danger or Opportunity? oTechnology has empowered consumers to choose how and when they interact with media oKey is to reach the right customers, at the right time, with the right message Integrated Marketing Communication Integrated Marketing Communication: Consistency and Focus Integrated marketing communication*: The coordination of marketing messages through every promotional vehicle to communicate a unified impression about a product Coordinating the Communication Coordinating the message starts at the top of the organization Information needs to flow top-down, bottom-up, and laterally to keep everyone on the same page * Words accompanied by an asterisk are key terms from the chapter. Positioning Statement A brief statement that articulates how the marketer would like the target market to envision a product relative to the competition Marks the beginning of the creative development process ◦ Can yield a big idea, which is either based on a rational or an emotional premise ◦ Careful research is required to translate big ideas across cultures 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: The Leading Edge Businesses face greater consumer expectations and empowerment Consumers show less tolerance for impersonal corporate communication Digital technology continues to change the promotional landscape Promotional Channels Specific marketing communication vehicles Include the following tools: Advertising Sales promotion Direct marketing Personal selling Advergaming and Internet minimovies Emerging Promotional Tools  The Promotional Mix Traditional Promotional Tools: A Marketing Mainstay ADVERTISING – Advertising*: Paid, nonpersonal communication, designed to influence a target audience with regard to a product, service, organization, or idea – Major media categories:  The Promotional Mix SALES PROMOTION ◦ Sales promotion*: Marketing activities designed to stimulate immediate sales activity through specific short-term programs aimed at either consumers or distributors ◦ Consumer promotion*: Marketing activities designed to generate immediate consumer sales, using tools such as premiums, promotional products, samples, coupons, rebates, and displays ◦ Trade promotion*: Marketing activities designed to stimulate wholesalers and retailers to push specific products more aggressively over the short term  The Promotional Mix Public Relations Public relations (or PR)*: Ongoing effort to create positive relationships with all of a firm’s different publics Publicity*: Unpaid stories in the media that influence perceptions about a company or its product Personal Selling Personal selling*: Person-to-person presentation of products to potential buyers Stages of a Sales Process  Factors That Help in Developing the Right Promotional Mix Choosing the Right Promotional Mix: Not Just a Science Product characteristics Product life cycle Target audience Choosing between push and pull strategies Competitive environment Budget