Lecture 4 Product and Promotion (International Business MARKEC04) PDF

International Business Marketing MARKEC04 A-cluster (1st year, 1st semester) Lecture 4 / 2024-2025 Product and Promotion Marketing: Real People, Real Choices Eleventh Edition, Global Edition Chapter 8...

International Business Marketing MARKEC04 A-cluster (1st year, 1st semester) Lecture 4 / 2024-2025 Product and Promotion Marketing: Real People, Real Choices Eleventh Edition, Global Edition Chapter 8 Product I: Innovation and One: New Product Development Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Learning Objectives 8.1 Explain how value is derived through different product layers. 8.2 Describe how marketers classify products. 8.3 Understand the importance and types of product innovations. 8.4 Show how firms develop new products. 8.5 Explain the process of product adoption and the diffusion of new innovations. 8.6 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 because … Products are successful when they provide value Products are a bundle of attributes – Features, functions, benefits, and uses as well as its 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 How Do Consumers Buy Products? Marketers also classify products based on where and how consumers buy the product. – Similar to how consumer decisions differ in terms of effort they put into habitual decision making v s limited ersu problem solving v s extended ersu problem solving (Chapter 6) Convenience Products Convenience products are typically non-durable goods or services bought with minimal effort. – Staples (e.g., milk, bread) – Consumer packaged good (CPG), also referred to as a fast-moving consumer good (FMCG) – Impulse products – Geofencing marketing – Emergency products Consumers expect convenience products to be low priced and widely available. Shopping Products Shopping products are goods and services for which consumers will spend time and effort to gather information on price, product attributes, and product quality. – Computers – Smart phones – Appliances – Automobiles Consumers are more likely to compare alternatives before they buy. Specialty Products Specialty products have unique characteristics that are important to buyers at almost any price. – Generally, an extended problem-solving purchase that requires a lot of effort to choose – Marketers have to go to a lot of effort to make their products stand out. – Customers tend to be very loyal to brands they have previously purchased and been satisfied with. Unsought Products Unsought products are goods and services for which a consumer has little awareness or interest until a need arises. – Retirement plans – Life insurance – New tires for a car Often require a good deal of advertising or personal selling to interest buyers. What are some other products that you personally would consider unsought products? Adoption Pyramid Adoption Pyramid (1 of 2) Awareness – Customers see that innovation exists. – Media blitz Interest – Customers see how the product might satisfy a need. – Seek out information Evaluation – Costs and benefits are weighed. – Impulse purchases are made without any planning or search effort. Adoption Pyramid (2 of 2) Trial – Actually experience or use the product Adoption – Purchase is made Confirmation – Expected versus actual benefits and costs Categories of Adopters Categories of Adopters (1 of 2) Innovators – 2.5 percent of adopters – Extremely adventurous – Risk takers – Well-educated Early Adopters – 13.5 percent of adopters – Concerned about social acceptance – Heavy media users – Others ask their opinions Categories of Adopters (2 of 2) Early Majority—34 percent of adopters – Avoid being first or last – Middle class – Deliberate and cautious Late Majority—34 percent of adopters – Older – Conservative – Lower than average education and income Laggards—16 percent of adopters – Lower education and income – Bound by tradition Product Factors That Affect the Rate of Adoption The degree to which a new product has each of these characteristics affects the speed of diffusion. –Relative advantage –Compatibility –Complexity –Trialability –Observability Characteristics of Innovations (1 of 3) Relative advantage is the degree to which a consumer perceives a new product as offering superior benefits. – Greater relative advantage means faster adoption Compatibility is the extent to which an innovation is consistent with existing cultural values, customs, practices, and norms. For example, no metal pans in the microwave. – Lack of perceived compatibility slows adoption Characteristics of Innovations (2 of 3) Complexity refers to the degree to which consumers perceive a new product as difficult to understand and use. – Higher the degree of perceived complexity, the slower the rate of adoption. Trialability refers to the ease of sampling a new product and its benefits. – Lower costs associated with trial usage can speed rate of adoption. Characteristics of Innovations (3 of 3) Observability refers to the degree to which others can see the new product and the benefits it provides. – An innovation that is more visible will drive more word-of-mouth communication. Marketing: Real People, Real Choices Eleventh Edition, Global Edition Chapter 9 Product II: Product Two: Strategy, Branding, and Product Management Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Learning Objectives 9.1 Discuss the different product objectives and strategies a firm may choose. 9.2 Understand how firms manage products throughout the product life cycle. 9.3 Explain how branding and packaging strategies contribute to product identity. 9.4 Describe how marketers structure organizations for new and existing product management. 9.5 Understand how to manage your career so that you will be able to adapt and flourish in a changing work environment. Mars Corporation 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 management sometimes called brand management. – Product management is the systematic and usually team-based approach to coordinating all aspects of a product’s strategy development and execution. Figure 9.2 Objectives for Single and Multiple Products Objectives and Strategies for Multiple Products A product line is the firm’s total product offering designed to satisfy a single need or desire of target customers. – Product line length: the number of stock keeping units (SKUs). Product line strategies: – Full-line v s limited-line strategies ersu – Upward, downward, or two-way line stretch – Filling out or contracting a product line – Adding new varieties to the line that appeal to changing tastes – Cannibalization (when new product eats up sales of an existing product) is a risk Product Mix Strategies A product mix is the total set of products a firm offers for sale. Product mix strategies – Width of product mix (number of different lines) must be considered. – Product lines in mix usually have some things in common. Quality as a Product Objective: TQM and Beyond Product quality, often a key objective, is the overall ability of the product to satisfy customer expectations. A philosophy of total quality management (TQM) can help companies achieve quality objectives. TQM is a business philosophy that calls for company-wide dedication to the development, maintenance, and continuous improvement of all aspects of the company’s operations. Product Quality Marketing throughout the Product Life Cycle Many products have long lives, while others are fads that are “here today, and gone tomorrow.” The product life cycle (PLC) is a useful way to explain how market response and marketing activities change over the life of a product. The Product Life Cycle 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. – As many as 95 percent of new products ultimately fail! – Effective advertising and promotion is essential. And some products never fall into the decline state. For example, Coca-Cola has been the number-one cola brand for more than 120 years. Growth, Maturity, and Decline Stages of the PLC Growth stage of the PLC – The product is accepted and sales rapidly increase. Maturity stage of the PLC – Sales peak while profit margins narrow. – Typically longest phase Decline stage of the PLC – Sales decrease as customer needs change. – Firm may drop the product, try a repositioning strategy, or just reduce support and allow the product to remain profitable. Figure 9.5 Marketing Mix Strategies Throughout the Product Life Cycle  It’s Debatable Class Discussion Question How do V8 and the Skinny Cow Truffle Bar brand names stack up against the criteria that distinguish a “good” brand name? 9-36 What’s in a Name (Or a Symbol)? Brand: a name, term, symbol, or any other unique elements of a product that identifies one firm’s products. A “good” brand name: – maintains relationships with customers. – positions a product by: (1) portraying an image or (2) describing how the product works. – is easy to say, spell, read, and remember. – fits the target market, product benefits, customer’s culture, and legal requirements. 38  The value of water 0,01 0,74 1,90 3,95 4,95 28,50 Figure 9.6 Branding Strategies Individual v s Family Brands ersu Family brand strategy is when product items share a common brand name. Family brands such as Campbell’s provides an umbrella under which multiple products can be effectively marketed. National and Store Brands National or manufacturer brands are those produced and marketed by a manufacturer. Store (or private label) brands are those which are offered by a retail store or chain under an exclusive trade name. – Costco: Kirkland’s – Walmart: Sam’s Choice – Some store brands are produced by national manufacturers in the same factory where they produce their national brands. Can you think of other store brands? Generic Brands Generic branding is a strategy that is really no branding, – Generic branded products – are typically packaged in very plain packaging with only the name of the product, for example, Green Beans – are sold at lowest price possible – are very popular in pharmaceuticals because of pricing. Licensing Licensing is when one firm sells to another firm the right to use a legally protected brand name and other specific elements for a specific purpose for a specific period of time. Movie producers license their properties, often to multiple firms to produce multiple products. Well-known examples of this include Star Wars films, Disney films, and action films such as Terminator. Cobranding Cobranding: Two brands agree to work together to market a new product. Ingredient branding: Branded materials become “component parts” of other branded products. Can you think of examples of cobranding and ingredient branding? Packages and Labels: Branding’s Little Helpers A package serves both functional and communication purposes –is the covering or container for a product –protects the product from damage in shipping and from spoilage from moisture, dust, insects, and odors –provides essential communication about the product and its use. Marketing: Real People, Real Choices Eleventh Edition, Global Edition Chapter 13 Promotion I: Planning and One: Advertising Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Learning Objectives 13.1 Understand the communication process and the traditional promotion mix. 13.2 Describe the steps in traditional and multichannel promotion planning. 13.3 Explain what advertising is, describe the major types of advertising, discuss some of the major criticisms of advertising, and describe the process of developing an advertising campaign and how marketers evaluate advertising. 13.4 Understand the elements of direct marketing. 13.5 Understand how to increase your chances of getting a great job or internship by developing an effective résumé and cover letter, how to get these to the right people, and how you can make yourself stand out among other applicants. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Communication Models in a Digital World That Is “Always On” Marketing messages can assume many forms with a variety of objectives. – From quirky TV commercials and viral videos to blimps with blinking messages. – Savvy marketers know each element of the marketing mix is a form of communication! All marketing communications aim to either inform, remind, persuade, or build relationships. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Copyright © 2023 Pearson Education Ltd. All Rights Reserved.  Integrated Marketing Communications (IMC) Integrated marketing communication (IMC) involves the planning, execution, and evaluation of coordinated, brand communication programs over time to targeted audiences. – Aim is to deliver consistent messaging across platforms. – Must use a multichannel promotion strategy which combines traditional marketing communication with social media and other online activities. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Three Models of Marketing Communication Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Personal Communications: The One-to-One Model Marketers may sometimes prefer to communicate on a personal level. – Personal selling – Direct mail – Telemarketing – Direct marketing Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Mass Communications: The One-to-Many Model Marketers may sometimes send messages to reach many prospective customers at the same time, a mass audience. The elements of the promotion mix use traditional mass communication. – Advertising – Consumer sales promotion – Public relations Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Communication Process Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Misunderstanding… Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Message..? Copyright © 2023 Pearson Education Ltd. All Rights Reserved. The Promotion Mix Promotion mix refers to communication elements that the marketer controls. – Personal (one-to-one) communication: includes personal selling and direct marketing. – Traditional Mass (one-to-many) Media communication: includes media advertising, sales promotion, and public relations. – Today the Internet adds powerful forms of advertising and marketing communication. Marketers use both traditional promotion tools and more recent additions to deliver messages. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Control Continuum Marketers face inherent trade-offs between the extent of message control and the perceived credibility of the message. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Steps to Develop the Promotion Plan Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Step 1: Identify the Target Audience(s) Must communicate with more than just members of the target market Other stakeholders influence the target market Consumers learn about products from – News media – Friends and family – Producers of competitive products Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Step 2: Establish the Communication Objectives Creating a new customer occurs as a result of a series of messages. Messages are designed to move the consumer closer to purchase, and hopefully, loyalty through a series of steps known as the hierarchy of effects. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Step 3: Determine and allocate the Marketing Communication Budget Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Budget Decision 1: Determine the Total Marketing Communication Budget Top-down budgeting techniques – Percentage-of-Sales method – Competitive-parity method Bottom-up budgeting techniques – Objective-task method Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Budget Decision 2: Decide on a Push or a Pull Strategy Push strategy; the company uses marketing communications to move its products through the channel by convincing channel members to offer them. Pull strategy: the company tries to move its products through the channel by using marketing communications to build desire for the products among consumers, thus convincing retailers to respond to this demand by stocking these items. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Step 4: Design the Promotion Mix Designing the promotion mix involves: – Determining communication tools to be used – Specifying message to be communicated – Determining the communication channels to be used. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Step 5: Evaluate the Effectiveness of the Communication Program Marketers use a variety of ways to monitor and evaluate the company’s communication efforts. Various types of sales promotion are the easiest to evaluate as they often occur over a fixed, short period of time. Advertising, normally measured with pretesting and posttesting, has lagged or delayed effects making it more difficult to clearly link to sales. Accurate measures of brand awareness, recall of product benefits communicated, and image of the brand before and after an ad campaign are possible. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Advertising Advertising is non-personal communication from an identified sponsor using mass media. – Practice dates to ancient Greece and Rome. Changes in media landscape have slowed growth of traditional mass media advertising and made it less effective. Still, mass media communications remain the best way to reach a large audience. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Owned, Paid, and Earned Digital Media For successful digital communications, marketers understand and use all three: Owned Media, Paid Media, and Earned Media Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Where to Say It: Digital Media Owned media may include websites, blogs, Facebook, and Twitter accounts. – Controlled by company, effective for relationship building Paid media includes display ads, sponsorships, and paid key word searches. – Most similar to traditional advertising, less trusted by consumers Earned media refers to word of mouth or buzz on social media. – Most credible to consumers, no company control Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Website and Email Advertising Online advertising is no passing fad. – U.S. adults spend more time on mobile devices. than TV. Website advertising – Banners, buttons, and pop-up ads Email advertising is basically the same price whether you send 10 messages or 10,000. – Permission email marketing Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Social Media Advertising Social media advertising is advertising that is executed within the confines of social media channels, such as Facebook, Instagram, and Twitter. Search engines Mobile advertising QR code advertising QR (quick response) code advertising uses smartphone GPS technology to deliver ads and other information to consumers in stores and in other locations. Video sharing Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Key Forms of Direct Marketing Direct marketing: direct communication to a customer designed to generate a response Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Mail Order and Direct Mail Mail order comes in two forms: Catalog: a collection of products offered in book form, usually consisting of product descriptions and accompanied by photos of the item Direct mail: – A brochure or pamphlet that offers a specific good or service at one point in time. – A direct mail offer has an advantage over a catalog because the sender can personalize it. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Telemarketing and M-Commerce Telemarketing: The use of the telephone to sell directly to consumers and business customers. – FTC established the National Do Not Call Registry to allow consumers to limit number of telemarketing calls they receive. M-commerce refers to promotional and other e- commerce activities transmitted over mobile phones and other mobile devices. – M-commerce through text messages is known as short-messaging system (SMS) marketing. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Marketing: Real People, Real Choices Eleventh Edition, Global Edition Chapter 14 Promotion II: Social Media Two: Platforms and Other Promotion Elements Copyright © 2023 Copyright © 2023 Pearson Pearson Education Education Ltd. All Rights Ltd. All Rights Reserved. Reserved. Learning Objectives (1 of 2) 14.1 Understand how marketers communicate using an updated communication model that incorporates new social media and buzz marketing activities. 14.2 Explain what sales promotion is and describe the different types of consumer and B2B sales promotion activities. 14.3 Understand the important role of personal selling, the different types of sales jobs, and the steps in the creative selling process. 14.4 Explain the role of public relations and the steps in developing a public relations campaign. 14.5 Understand the importance of networking in managing a successful career Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Social Media Marketing Marketers no longer are the only ones who talk about their products. – Millions of consumers have the ability and desire to spread good (or bad) news about products. – The many-to-many communication model is based on consumers talking to one another about goods, services, and organizations. – The changing communication landscape has been referred to as the groundswell. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Social Networks Social networks, such as Facebook and Twitter, are sites that connect people with other people. – Facebook is the most popular of all social networking sites with 1.7 billion daily active users worldwide. – Marketers monitor social networks to learn what consumers are thinking about their brand and the competition. – Marketers reach influential opinion leaders by participating in social media conversations. – Social networks provide an opportunity to create a brand community. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Buzz Marketing, Brand Ambassadors, and Evangelists Buzz: word-of-mouth communication that customers view as authentic. Buzz marketing: marketing activities designed to create conversation, excitement, and enthusiasm about a brand. Makes PR a more important part of the promotion mix. Zealous consumers can be the best salespeople a company can ever find. Marketers recruit loyal customers to be brand ambassadors or evangelists and help them spread the word about their products, usually for free. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Viral Marketing Viral marketing refers to activities aimed at increasing brand awareness or sales via many-to-many communication. – Apple implements viral marketing when it inserts the message “Sent from my iPad/iPhone” in a text. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Sales Promotion Sales promotions are programs designed to build interest in or encourage purchase of a good or service during a specified period. How does sales promotion compare to advertising? – Both are paid promotional activities with identifiable sponsors. – They differ in that sales promotions typically have a more immediate short- term objective. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Types of Consumer Sales Promotions Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Trade Sales Promotions Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Personal Selling: Adding the Personal Touch to the Promotion Mix Personal selling occurs when a company representative interacts directly with a customer or prospective customer to communicate about a good or service. – Personal selling is a far more intimate form of promotion compared to mass-media communications. – Salespeople are the eyes and ears of firm. – Many opportunities in sales for marketing students! – Will be continued in week 6 Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Public Relations (1 of 2) Public relations (PR) is the communication function that seeks to build good relationships with an organization’s publics including consumers, stockholders, and legislators. – Today, public relations is more conscious, intentional, and ongoing – Brands need to recognize that everything they do impacts relationships with their publics. Copyright © 2023 Pearson Education Ltd. All Rights Reserved. Public Relations (2 of 2) Marketers create and manage publicity, which is unpaid media exposure about a company Crisis management: (the most important PR function) the process of managing a firm’s reputation when a negative event threatens the organization’s image Copyright © 2023 Pearson Education Ltd. All Rights Reserved.