Current MCV Notes.pdf

Marketing and Customer Value Lecture, Tutorials & Read Lecture Slides before lecture Assessments; - 25% 2x Quizzes; March 18 & April 8 - 30% Group Marketing Plan May 3 - 40% Final Exam - 2hr Exam - 5% Marketing Research Report April 26 Module 1 Inroduction to M&CV Marketing & Selling: The Difference...

Marketing and Customer Value Lecture, Tutorials & Read Lecture Slides before lecture Assessments; - 25% 2x Quizzes; March 18 & April 8 - 30% Group Marketing Plan May 3 - 40% Final Exam - 2hr Exam - 5% Marketing Research Report April 26 Module 1 Inroduction to M&CV Marketing & Selling: The Differences Maketing: - Profit focus - Long term - Future focus Selling: - Volume focused - Short term - Now focused - Component of marketing Marketing types; market research, product design, prototypes, manufacturing, packaging, advertising. Marketing Centre of business decisions Involves getting right product to right people Total offering, not one product Market = Group of people with different needs and wants Market types - Geographic - Product - Demographic Value Customer’s assessment of the utility of an offering. Refers to offering’s total features, reputation, ideals Necessary for customer and seller Form utility (transforming raw material to usable product), place utility (Making product available to customers), time utility (Getting product to people at right time) or possession utility (Allowing customers to own or use product) utility. Value = Quality/Price Marketing Exchange Mutually beneficial exchange (Meet both party’s expectations) needs to take place for marketing to be successful. Exchange of value consists of offering being understood, created, communicated and delivered. Marketing Evolution 1. Trade 2. Production orientation 3. Sales orientation 4. Market orientation 5. Societal market orientation Triple Bottom Line Business has a Corporate Social Responsibility to act in best interest of shareholders Businesses need to act sustainably for the future. Marketing Mix Set of variables the marketer can exercise control over in creating an offer of exchange. Will be tailed to suit target audience. Product - Anything offered to marketing (good, service, idea) - Best understood as group of attributes (features & functions) Price - Marketing decisions that takes into account production costs, req. profitability, partner’s requirements, competitor prices, customer’s willingness to pay, prestige of brand. Place - Marketing activities that make customers, public aware of business offerings - Not just advertising, multiple promotional methods used. Promotion - Means of making offerings available to customer at right time and place - Logistics function - Marketers understand how logistics impacts ability to deliver a product at time and place that suits customer’s needs. The Marketing Environment All internal, external factors influencing ability to market offerings Environmental analysis breaks marketing environment into smaller parts for better understanding - Helps marketers develop strategy and direction - Identifies strengths and weaknesses (internal) and opportunity and threat (external) (SWOT) - Internal Environment - Organisation, people, processes within used to create offerings - Strengths and weaknesses which are directly controllable and effective company’s ability to compete in the marketplace - Most successful organisations are where all departments focus on creating and delivering value to market. - Internal relationships can arise conflict influencing this successful delivery - As organisational complexity increases, so too does potential for conflict - Senior Management: Make decisions about overall objectives, direction - Middle Management: Responsible for department or geographic region - Functional Departments: Where orgs are structured around specific functions (Marketing/sales/research) - Employees: Work meets department objectives. Their attitudes and behaviours influence customers - External Vendors (Outsourcing): Employees must manage service relationship with vendors. If relationship is fickle, can effect company’s functioning and failure of vendors external relations. - External Environment & :Logistics - Microenvironment (Industry/partners/customers/competitors) - Outside company but within industry level, where competitors are - Company can’t control others but develop methods of dealing with them - Risks include balance of power between partners, risking relationships with the other party. - 5 structures of competition in Microenvironment 1. Monopoly: One dominant supplier e.g. gov roads and rail. Some choose to open opportunity to private competition. 2. Monopsony: One main buyer e.g. coal town where company acts as sole employer thus, sole purchaser of labour 3.Oligopoly: Few main players; US media, Walt Disney, 21st Century, Time Warner Bros 4. Monopolistic Competition: Numerous comp, want to differentiate e.g. market for laptops, differential factors. 5.Pure Competition: Numerous comp, synonymous products e.g. market for agricultural goods like sugar. Marketers seek to understand competitor’s marketing mix, sales volumes & trends, market share, sales per employees & employment trends. - Macroenvironment (PESTEL) - Not directly controlled, can effect company’s ability, meaning they must deal and cant control these issues - Opp and threat directly effect org’s ability to serve market - Factors include; - Political; Effect of politics on international marketing - Economic: Effect of income, prices, levels of savings and debt. This effect customer;s willingness to spend - Sociocultural: Demographics of age, gender, religion, may effect behaviour, beliefs, lifestyle choices. - Technological: Changes expectation and behaviour of consumers, suppliers - Environmental: Natural disasters, climate, creates global awareness and social changes influencing business e.g. sustainability. - Legal: Governs what marketing organisations cannot do. Includes privacy, fair trading, safety, contracts, intellectual property & Partners include firms · · Wholesalerse suppliers LEVELS OF COMPETITION Level of competition Total Description Example Budgel competition Generic Competition Product competition Brand competition - Situational Analysis Identifying key factors used as a basis for developing marketing strategy Its ongoing and combines org objectives and analysis to formulate plans for future performance 1. Situational analysis: Where the organisations is now 2. Organisational Objective: Where the orgainsation wants to be 3. Marketing Planning: How the org plans to get there Marketing Metrics Marketers need to isolate key factors that need to be addressed in society in order to remain competitive in the market. Module 2 Market Research & Planning Market Research It’s an activity discovering info about useful information for making marketing decision such as market segmentation, sales performance, price, product, promotion, price. Essential to understanding the market and improving performance of company Market are a group of people with heterogenous needs and wants. Research discovers these needs and wants and analyses them in order to develop more sought after products. Marketing Process; 1 Understand 2 Create 3 Communicate 4 Deliver - Use CBE framework of co-create, build, engage - Co-create: Stakeholder orientation, segmentation, competition, theory, insight - Build: Marketing mix, exchange - Engage: Exchange, behaviour change market Intel > whats happening - outside the business e. g. UTS to Institutions - surrounding g data asered ompanywithin Big Data Adv: Enables discovery of new insight, identifies trends form lots of data Data that contains greater variety and statistical power and velocity that is often too complex to be dealt with using traditional data processing software. Improvements in new system creation are being made to link data with informed decision making By analysis of this data, we are more aware of what people do, when and why which can help identify trends in current behaviour, behavioural patterns over time and opportunities/areas for action. E.g. of big data; watch history, search queries, scrolling time. Provides awareness of consumer demographic, internet based behaviour, browsing behaviour. Insight ‘Insight is a piece of understanding that guides strategy’; UKs National Marketing centre Insight generated form combination of analytics, market research and deep understanding of what moves people Cold Start Problem; Customer doesn’t provide their own interest, they get given the standard suggestions/most popular. Components of Market Research; Defining, Designing, Collecting, Analysing, Presenting 5 Components; 1 Defining the problem - Marketers prepare research brief, outlining question research will answer and describing information required - Needs to be clear, specific and enable decision making/be actionable - Evolution of experiment may cause question to evolve - Always concerns future image of company - Decision maker is only aware of 10% of the problem, which can lead to wrongly defining the research problem - Research brief generally states; i) The research problem ii) Information required iii) Timeframe iv) Budget v) Any other project conditions 2 Designing the research Methodology - Detailed methodology to guide project and address problem - Structure of research question will determine research method - Exploratory Research; Gathers more info about loosely defined problem. Sometimes don’t know market at this stage. - Descriptive Research; Solves specific problem by clarifying characteristics of certain phenomena. Describing research using data at hand. - Causal Research; Assumes particular variable causes specific an outcome. Everything else is held constant, which tests whether the variable does effect that outcome. Continues to and fro with a continual hypothesis. 3 Collecting Data - Primary (collected at time) and secondary (available prior to problem development) - Marketers should seek secondary to avoid unnecessary research. - Data must be collected according to methods specified in research design - Follow ethical practice - Responses to be recorded correctly, minimise bias, omit errors to ensure design is followed - Data can be stored, collected in house or outsourced - Outsourced by an agency who collect, scrape and mine data for marketers - Managing Data Collection; - Budgeting and scheduling to increase efficiency and effectiveness of data with limited time/financial resources - Budgets determined by estimating likely cost of each phase of project or determining duration and applying standard cost to estimated hours. - Accomodate revisions - Not always linear - Gantt charts and critical path methods; tools to help project managers control projects 4 Analysing and Drawing Conclusions - Once collected, data is filtered and organised - Use quality control techniques to eliminate data invalidity - Data is then analysed - Quantitative and statistical analysis; In Excel/Python etc. These are analytical techniques and analyses need to understand what is appropriate for different data. - Qualitative Data; Must be looked at as rich, detailed information, reduction should occur and coding 5 Presenting Results and Making Recommendations - Once analysed and conclusion are drawn, findings are presented in a clear and concise format for marketers. - Typically presented in PowerPoints/reports - Responding to the Problem; - Market research is a continuous process - Essential for marketers to evaluate effectiveness of each activity to optimise effectiveness. - High quality research and strong evidence can fulfil a return on investment - Findings can build opportunities for future projects. Types of Research Quantitative Research; - Including interviews, focus groups - Intended to obtain detailed info on attitudes, emotions underlying consumer behaviour - Often used for Exploratory Research - Interviews; - Adv; In depth, structured, semi structure, more focused, easy to steer in intended direction, natural - Disadv; Interviewer can influence bias, long - Focus Groups; - Adv; Multiple perspectives, arise common issues not foreseeable by researchers, - Disadv; Need a good moderator, participants influence by one another, strong socials influence role Quantitative Research; - Results of numerical description - For Descriptive and Causal research - Surveying, experimentation, observation, neuroscience. - Current global shift towards quantitative - Can be generalised due to larger sampling size - Useful for monitoring market size, identifying market trends, predicting success of proposed market campaigns, tracking customer perceptions of existing products. - Surveying; Most common, interviewer led, self response, relishes on research to formulate questions that can elicit a relatively close answer. - Experiments; Involves manipulating variables of interest whilst everything else is 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 measured could be influencing outcomes. - Biometrics; Neuromarketing, monitoring of participants psychological response to stimuli, measure HR, emotional response, brain activity - Extremely expensive, invasive, cannot tell us how or why things happen - Stratified Sampling; Member is grouped on a characteristic and a sample is extracted from that - Quote Sampling; Population is divided into groups based on a number of characteristics and a researcher chooses arbitrarily form them. - Convenience Sampling; Participants selected on basis of who is available Considerations Relevance Timing Resource Availability Need for new information Cost-Benefit Analysis Module 3 Consumer & Buyer Behaviour What is Consumer Behaviour and Why is it Important? Consumer and Buyer Behaviour - Consumer behaviour is the term used to describe the analysis of the behaviour of individuals and household who buy goods or services for personal consumption. -Understanding of consumer behaviour, informs all decisions made about the marketing mix - Possible consumer behaviour range is limitless but consumer decision making behaviour can be identified. - Can be a range of simple habitual decision making to highly complex extended decision making. What are the Factors Influence Consumer Behaviour Influences on Consumer Behaviour - Range of factors influencing is virtually limitless - Rather than studying individually, we can develop awareness to issues that may influence an organisation’s target market. Give Examples of Situational Factors dont Wokeebusmess plan Situational Influences croissan - Easiest to understand is rest Principal influences; arran Location within place or context Tence , cause Smell amb o - Physical for Trends-frank greenmore food consumers longer - Social & money Weather-winter spend jacket - Time a - Motivational hungry money - Mood therapy - Nudge Theory - Positively uses situational influences. Environment is slightly altered called choice architecture to make people behave in a predictable way. - This doesn’t dispose of alternatives. - Doesn’t provide significant incentives for behaviour to change. , , , stay , time purchase wanted A but i your confined to B At that time if you out of stock -. wait to eat or home buy food & Uni. Good mood-save bad mood-retail Give Examples of Group Factors Group Influences - Consumer purchasing decisions are profoundly affected by group factors or by groups consumer interacts with. - Group influences comprise of; 1) Social Factors; the influence of other people - Social level is concerned with developing understanding of individual behaviour within their wider group - Social psychology - Focuses on understanding how group influences behaviour of members - Group pressure can cause individual conformity and these influences are known as social factors a) Reference Groups; Group to which an individual looks for guidance on values, attitudes, behaviours friend groups - Reference group influence is strong when individual lacks previous experience in guided behaviour or when behaviour carries social risk. - Groups can have opinion leader who leads influential advice about specific topic. - 3 major types of reference groups; i) Membership Rgs; Those we are already apart of ii) Aspirational Rgs; Those we want to associate with iii) Dissociative Rgs; Those we don’t want to associate with If b) Family; Social group with most influence they have a bably different purchases - Family life cycle describes stages through which most families pass. see needed Minacohabits 2) Roles washin ty b move I Wy likely detergent , & Status 2) Cultural Factors; The influence of the values, beliefs and customs of the person’s community. - Cultural factors come from level of whole society or major societal groups “mass market” - Concerned with aggregate behaviour of entire market - Social class can explain or reliably predict differences in buyer or consumer behaviour a) Culture; Broadest group influence on behaviour. - It is a system of knowledge, beliefs, values, rituals by which a society defines itself. - It is multidimensional and includes intangible and tangible elements - Cultural frameworks exist to categorise these influences - Hofstede found national cultures could be distinguished by four dimensions 1 Power distance; extent to which less powerful members accept and expect unequal power distributions 2 Uncertainty avoidance; extent members tolerate uncertainty 3 Individualism; focus on rights and concerns of each member 4 Masculinity; extent to which members stress different expectations for men and women b) Subculture; Group of individuals who differ on some influential dimensions. - Extracted from broader culture, stick out. um - Notice when shopping and purchasing behaviour is different from remainder of population and as such, may represent distinct marketing opportunity. Class; Individuals of similar social rank. Status can be useful when focus is on purchasing power. higher c) Social- Specific attention to economic factors; price - Income - Occupation - Educational background Ramadan hi Purchases Give Examples of Individual Factors Individual Factors - Factors that influence a consumer’s behaviour, purchase process and final product choice, which occur independently of social circumstance. - Relate to personal and psychological characterisitcs - These factors must be measured and are presumed to differ between individuals 1) Personal Characteristics - Personal characteristics for individual buyer or consumer level - Constitute an individual’s identity and are objective, relatively stable in short term a) Demographics; Described using existing and known objective and measurable characteristics such as income and age as they can be related to the purchase of consumption of different products. - Marketers use demographics as purpose for campaigns. b) Lifestyle; How time is spent, how people interact with others I - Difference between actual and preferred lifestyle I 94m - Consumers purchase products that play a role in their lifestyle and may purchase aspirational or symbolic products to express their preferred lifestyle. c) Personality; Most distinctive definition of individual behaviour - Difficult to measure as can evolve over life in response to social/environmental/personal influences or experiences. 2) Psychological Characteristics - Psychology is an individual factor that shapes; - Thinking - Aspiration - Expectations - Behaviours of the individual - Psychological factors are independent of an individual’s situational and social circumstance. a) Motivation; Individual’s internal drive to satisfy unfulfilled need or goal - Specific to individual and situation but some motives can be consistent over time and population - Maslow’s Hierarchy of Needs - Recognised theory of motivation regard earimaly ng b) Beliefs and Attitudes; Make up the mental map - Consumer rely on these for judgement of products for wanted not needed goods. - Three components of an attitude; 1 Cognitive component 2 Affective component 3 Behavioural component c) Perception; Psychological process that filters, organises and attributes meaning to stimuli - Perception is selective and can result in; 1 Selective Exposure 2 Selective Attention ord , 3 Selective Distortion 4 Selective Retention d) Learning; Apply learning to behaviour - Behavioural learning theories stress role of experience and repetition of behaviour - Cognitive learning theories describe learning takes place through problem and emphasises better processing of new information orean, cod organic Explain the General Steps in the Consumer Decision-Making Process Consumer Decision Making Process - Comprises 5 stages usually present in all consumer buying decision 1 Need/Want Recognition - Consumer unaware of unmet needs or wants - Market creates awareness of this 2 Information Search - Seek info from trusted sources and convenient sources 3 Evaluation of Options - Develop ranking criteria, rank options, consider purchase or other use of money 4 Purchase - Chose product and brand and decide whether or not to purchase and purchase 5 Post-Purchase Evaluation - Continue product evaluation - Assess post purchase cognitive dissonance - Assess attitude towards product/brand/seller for future purchases. - Exceptions to process; 1 Habitual Decision Making; Involves little involvement with purchase 2 Limited Decision Making; Limited info to evaluate options for infrequent purchases within familiar product categories 3 Extended Decision Making; High involvement with purchase decision in deliberate and detailed way e.g. laptop We don't a 4 Impulse Purchases; Very little involvement, no planning, forethought. Decision is made before buyer recognises need. can't - Relative importance duration and sequence varies for different decisions hap - Involvement level is important to determining an effective marketing type. something ourselves Buyer Behavour Introduction to Business Markets - B2B (Business Markets); Distinctive characteristics make them different from consumer markets - Small number of large competitors - Small number of large buyers - Purchase for large amounts - Larger in revenue than consumer markets that they service. Business Markets - Made up of individuals or orgs that purchase products for; 1 To resell product 2 To use product in production of other products 3 To use product in daily business operations - Overall business market comprises 4 categories; 1 Reseller Markets; Buy products in order to sell or lease to other parties for profit - Wholesalers purchase from suppliers and producers for resale to other intermediaries - Industrial Distributors purchase products from producers and sell them on to organisational buyers. - Retailers purchase from suppliers, manufacturers and intermediaries for resale to consumers. 2 Producer Markets; Purchase products for use in production of other products or daily business. - Operate across all sectors of economy; primary, secondary, tertiary industries - Gross domestic product generated by manufacturing in Australia and NZ is declining and manufacturers moving to lower cost countries “Offshoring” 3 Government Markets; Substantial provider and purchaser of goods - Demand fluctuates due to fiscal policy used to smooth economic fluctuations and as governments of competing political opinions, fluctuate in power. This time and uncertainty cost, increase company reluctance to deal with government, regardless of sales revenue. 4 Institutional Markets; Markets where Orgs that are neither public nor for profit buy or sell. - NFP orgs typically have specific goals and fewer resources than commercial orgs - Marketing to these orgs is less profitable but overall NFP sector still comprises a substantial market Business Buying Behaviour - Business purchases usually vary from straight rebuy, modified rebuy or new task purchase. - Straight Rebuy; Buyers purchase same products routinely from established vendors whom which they have already dealt with, often through automated system. - Modified Rebuy; Involves some degree of evaluation of alternative products - New Task Purchase; Business has new problem or new product, often involves purchase in a new product category. - Level of involvement reflect in buying approach and can involve; - Negotiation - Description - Inspection - Sampling - Business decision making involves same basic stages as consumer decision making process - For business, stages are more protracted and formal. Module 4 Segmentation, Targeting and Positioning 1. What is the Concept of Market and Target Marketing? Knowing the Market Market is group of people with heterogeneous needs and wants Can’t appeal to all consumers and businesses and so marketers identify and understand part is total market to which it can offer the most value. Introduction For successful marketing, we need to identify and understand potential customer’s and their needs Consumer markets consistent of households and individuals that buy for private consumption Market segmentation enables organisation to form a segment with common features rather than market to everyone. Organisation develops most effective marketing mix for each segment known as target marketing concept 2. What Does Targeting Mean? Target Marketing Choice of marketing strategy involves degree of compromise between the necessity to respond to specific individual customer desires and the objective of achieving the lowest possible production and marketing costs. Target Marketing is based on three premises - Individual buyers or groups can be identified - Sellers understand the need of buyers - Sellers seek to have their offer to meet the needs of target buyers Mass Marketing; Buyers have common needs, wants, demands - Single product offerings is created, communicated, delivered to meet needs of most in market - Undifferentiated approach to marketing - Mass marketing captures large markets at low cost per unit, ensuring high levels of profitability - Characteristic of commodity products and global mass products e.g. salt One-to-One Marketing; Buyers have unique needs, wants, demands - Appeals to each customer by providing customised offering to meet individual needs e.g. haircut, accountant, advisory - Small business take one to one approach - Results in high unit costs and more restricted market - Conditions form a basis of a focus or niche strategy Target Marketing: Target Specific Subgroups; Market contains subgroups - When choosing target markets, org will consider 1) It’s own resources, 2) Market demand, 3) Competition - With a differentiated targeting strategy, an org identifies a range of market segments which cover the majority of the total market - e.g. different types of toothpaste - For each segment, a unique marketing mix is tailored. Product and Market Specialisation Small orgs with limited resources typically use a specialised approach to marketing; - Product Specialisation - Market Specialisation - Product Market Specialisation Specialisation works if; 1 Market is characterised by wide needs and preferences 2 Clear segments and product categories are identified 3 Market is clearly divided 4 Market segments are profitable enough 5 Segments are actionable 3. How Companies Segment, Target and Position their Products and Services? The Target Marketing Process Target Marketing Process is fundamental for any org Process involves 3 strategies; 1 Segmentation 2 Targeting 3 Positioning 4. How Could Segmentation Be Conducted 1 Market Segmentation; Two steps 1 Identify variables to define meaningful segments - Segmentation variables are characteristics buyers have in common and are related to purchasing behaviour - Possible variables of segmenting fall into four broad categories; 1 Geographic - Climate, local population density, region, topography, urban, suburban, rural 2 Demographic - Related to quantifiable social characteristics of populations - Age, ethnicity, household composition, income, gender 3 Psychographic (psychology + demographic) - Based on consumer characteristic - Based on differences in; - Psychological traits - Geodemographics - Lifestyles 4 Behavioural - Indicator of market segments and their purchasing behaviour - Benefit expectations, brand loyalty, occasion, price sensitivity, volume of usage. - Segmenting Business Markets - Business markets are characterised by small numbers of buyers, each displaying a close relationship with the seller - Traditional segmentation variables less relevant - Customised or one to one best suited - Demographic equivalent relates to industry - Geographic indicator of buyers in certain area. - Effective Segmentation Criteria - Segments must be evaluated to ensure segment is worthwhile pursuing by analysing; - Measurability - Accessibility - Substantiality - Practicability 2 Profile segment so they can be assessed in second stage of target marketing process - Describes potential customer in market segment, common features shared and how they differ between segments - Segment profiles are usually described in a range of segmentation variables 2 Market Targeting - Market targeting involves systematic examination of possible market segments; Potential sales of each Potential revenue Ability to satisfy expectation - Requires understanding of competitors, how their offerings are seen by target segments - Important to know that no company can satisfy everything 1 Evaluate Potential Segments - Involves analysis of; - Sales potential - Competitive situation - Cost Structure - SWOT 2 Select Target Markets - Estimate market potential in each to determine sales volumes and if profitability is sustainable - Selecting particular market segments is at heart of marketing concept - Org is no longer referring to individual buyer or mass market, its referring to segments 5. How do we Position Brands as Marketers and how do we Re-Position Brands? 3 Market Positioning - Describes how markets perceive the organisation’s offer relative to competing offers - How customers distinguish the organisation and its products from competitors or available alternatives - Positioning is based on customer perception - Can correspond with product’s objective characteristics - Determine Positioning for Each Segment - To determine appropriate positioning for products, org needs to undertake market research to understand positioning in the minds of market segments - Common technique for determining positioning is conceptual mapping: showing how competing brands relate to each other in terms of attributes. - Analysing Current Positioning - Establish current positioning based on analysis - Commonly used positioning variables; - Attributes - Use/Application - Product user - Price and quality - Product class - Determine Marketing Mix for Each Segment - Marketing mix for each segment should - Be consistent with desired positioning - Be internally consistent - Be sustainable long term. Module 4 Product Introduction Product is what marketer takes to market for consumers to buy or engage with Products change to suit new technology Gods, Services and Ideas Product is a good service or idea offered to market for exchange Goods; Physical, tangible offerings, capable of being delivered Services; Intangible offerings Idea; Concept, issue, philosophy Total Product Concept Total reduction concept is way of viewing product as the totality of value and benefits it provides to customers. Crucial for marketers too understand that when consumers choose a produce, they buy a solution to a problem - Core Product; Fundamental benefit that responds to the customer’s problem of an unsatisfied needs - Expected Product; Attributes that actually deliver the benefit that forms the core product - Augmented Product; A bundle of benefits consumer may not require as basic fulfilment of their needs. - Potential Product; All possibilities part of expected or augmented product. Fundamental Features - make calls Communication - Expected Features - Mobile Phone - - - Touch screen sounds/music charging Games form photo company can specifically differential features camera charging What offer APD access Potential Features to Add or Remove from phone editing Product Relationships Many orgs produce multiple products or products of different styles Relationship between brand products include; - Product Item; Just one item - Product Line; Different types of same item e.g. socks but different types for men and women, different colours - Product Mix; Everything bonds makes, e.g. undergarments for all genders, mix of clothing etc. Product Classification Consumer products are products purchased by households and individuals for their own private consumption Consumer products are classified into; - Shopping Products; - Moderate to high engagement in decision making process - Expected to last long time - Infrequent purchase - Small number of retail outlets - Low volumes - Large profit margins - E.g. Electrical appliances, furniture, cameras, clothing - Convenience Products (Staple, Impulse, Emergency); - Frequent purchase - Stocked up large number of retail outlets e.g. woolies - Sell in high volumes - Low profit margins - E.g. Groceries - Specialty Products; - Unique characteristics desired by buyers - Consumers know exactly what they want & is preselected - No close substitutes - Limited outlets - Infrequent - Low volumes - High profit - E.g. Tesla - Unsought Products; - Unknown or unconsidered - Challenge of making customers aware - Marketing is crucial - E.g. Coffins Business to Business Products are products purchased by individuals and orgs for use in production of daily business operations Business to business products classified into; - Parts and Materials - Raw Materials - Components - Equipment - Services and Supplies Product Life Cycle Products must be effectively managed to ensure ongoing profitability. Consider environmental changes; - Technological Changes - Changes in Fashion - Actions of Competitors Way product progresses through lifestyle varies with product and marketing environment Product Life Cycle Stages; 1 New Product Development - NPD has eight phases 1 Idea generation 2 Screening 3 Concept Evaluation 4 Marketing strategy 5 Business analysis 6 Product Development 7 Test Marketing 8 Commercialisation - Product Adoption Process - Marketers need to understand how consumer perceives a new product, learns about it and decides to adopt it - Typically entails 5 stages of product adoption 1 Awareness - Consumer becomes aware of product through promotion, word of mouth, incidental exposure - Consumers knows little about product, how it works and benefits. 2 Interest - Consumer experiences interest in product and seeks information to learn more 3 Evaluation - Consumer evaluates info and decides whether to try product 4 Trial - Consumer examines and tries product and decides whether product can satisfy need/want 5 Adoption - Consumer decides to purchase, evaluates and considers whether to repurchase. 2 Introduction - Considerable investment required - Goal to build awareness and self interest - Lag in building sales - Sales recoup research and development costs - Minor profits at end 3 Growth - Increase in popularity, sales profit - Dependent on welcomes by market - Competitors begin to enter market with similar products 4 Maturity - Novelty wears off - Competitors more established - Sales peak and profitability falls - Decision to determine future of product by changing mktg mix or leaving market and allowing decline 5 Decline - Sales and profits fall - New products entering - Little interest - Drop or change product Diffusion of Innovation Diffusion of innovation describes how innovations are adopted by market over time. Suggests influence of social groups on decision made by individual and how new products and ideas are adopted Speed and matter of market penetration is dependent on market type/segment Categories of product adopted are defined by adoption behaviour; - Innovators - Early Adopters - Early Majority - Late Majority - Laggards Product Differentiation Product differentiation is creation of products and product attribute that distinguish products from another (design/brand/image/quality) Mostly apart of augmented product layer Not a static concept Marketers usually modify, upgrade, reposition products during their life cycle, to maintain or improve competitive advantage. Branding Brand refers to collection of symbols creating image in customer’s mind that differentiates a product from competitors It comprises; - Name - Slogan - Logo - Design Brand Image is customer’s set beliefs of brand Customers make decision based on brand and brand image Brand Name is the component of brand that is spoken including words, letters, numbers. Brand Mark is part of brand not made up of words e.g. symbols, designs Trade Mark Can register as trade mark to protect brand through IP Australia Brand Equity is the added financial and non financial value of a brand A brand identifies to marketers; - Organisation’s products - Differentiates organisation’s products from competing products - Attracts consumers - Helps introduce new products - facilitates promotion for same brand products Brand Loyalty is when customer shows favourable attitude towards brands Brand Equity Metrics is measuring the value of brands. - High brand equity can be valuable asset and provide competitive advantage - Metrics used; - Brand assets (trade marks, patents) - Stock price analysis - Replacement cost - Brand attributes - Brand loyalty - Willingness to pay analysis Brand Strategies When developing brands in a product mix, can pursue the following strategies; - Individual Branding; Use a different brand on each product to give specific identity - Family Branding; Use same brand on several org’s products - Brand Extension; Gives existing brand name to new product in a different category. Brand Ownership Manufacturer Brands; Owned by producers and are most common Private Label Brands; Owned by resellers e.g. wholesalers, retailers, not identified with manufacturer. Generic Brands; Products that only indicate the product category Licensing Agreement; Uses names and symbols of other brands for a fee Franchising; Parallels with licensing Co-Branding; Use of two or more brand names on same product e.g. Oreo McFlurry - Capitalises brand equity of multiple brands - Improve product’s perceived value - Maintain existing branding after another org’s brands are acquired. Packaging Important for consumer identification, like a brand Effect of packaging includes, express a change in the product, update style to broaden customer appeal, emphasise elements to differentiate from competitors. Labelling - Forms part of packaging - Identifies product, brand name, provides useful product info - Some info is compulsory. Managing Products The product strategy is complex part of marketing mix Multiple decisions that need to be managed throughout the product life cycle Includes ongoing evaluation and responses to evolving marketing environment. Approaches to Management Requires coordination across different departments Product managers may be employed to manage products or product lines or brand managers to manage a particular brand within the org’s portfolio of brands. Managing Products Through the Life Cycle Marketers determine which life cycle product is in anf make appropriate.decisions in response. Line extensions are most common form of new product - derivatives of existing products added to product line, rather than superseding initial product May be need to change asepct of marketing mix to reposition the product Product obsolescence; May be planned or unplanned