Unit 10: Product Concepts and Brand Management PDF

UNIT 10 Product Concepts and Brand Management, Developing and Managing Products, Service & Nonprofit Marketing Adapted for the fifth Canadian edition by Janice M. Shearer, Consultant AGENDA Part 1: Product Concepts and Brand Management Part 2: Developing and Managing Products Part 3: Service & N...

UNIT 10 Product Concepts and Brand Management, Developing and Managing Products, Service & Nonprofit Marketing Adapted for the fifth Canadian edition by Janice M. Shearer, Consultant AGENDA Part 1: Product Concepts and Brand Management Part 2: Developing and Managing Products Part 3: Service & Nonprofit Marketing Copyright © 2022 by Cengage Canada. PRODUCT CONCEPTS AND BRAND MANAGEMENT PART 1 Copyright © 2022 by Cengage Canada. What Is a Product? • Starting point in creating a marketing mix • Definition: • Anything both favourable and unfavourable received by a person in an exchange for possession, consumption, attention, or shortterm use • Not all products can be owned. Copyright © 2022 by Cengage Canada. What Is a Product? • Can also be a service, idea, person, and places—all things companies offer customers • Products can be tangible but can also be intangible: a service (haircut), idea (don’t litter), person (political candidate), place (tourist destination), or any combination of these. Copyright © 2022 by Cengage Canada. Thinking About Ownership When thinking about Intellectual Property Rights, it is important to understand that ownership is more than physical possession. It's a deep psychological bond between a person and an object, place, or idea. 6 Body Ownership S e l f - Identity Ownership Territorial Ownership Object Ownership The sense of control The sense of identity The sense of control The sense of over our own body and uniqueness that we over a specific possession and and physical space, attribute to ourselves, territory or control over an object and the ability to and the ability to environment, and the or thing, and the ability move and interact express it in various ability to defend it to use it or dispose of with the world. ways. from others. it as we see fit. FOUR TYPES OF PSYCHOLOGICAL OWNERSHIP 7 Body Ownership: Body-Mind Connection What is that we call “mind”? Is it the brain? What exactly are thoughts? How are thoughts able to cause you to act? How can the brain— a 3-lb slab of meat think? How can a thought, which is non-physical, move the physical? Since thought is non-physical, is thought possible without physical matter? Institute for preventive medicine [CC BY-SA 3.0 (https://creativecommons.org/licenses/by-sa/3.0)] 8 9 OBJECT OWNERSHIP: CHOICE OVERLOAD 10 Object Ownership: Endowment Effect After witnessing the violent rage shown by babies whenever deprived of an item, they considered their own, Jean Piaget, a founding father of child psychology, observed something profound about human nature. 11 Object Ownership: Endowment Effect Our sense of ownership emerges incredibly early. Why are we so clingy? There's a well-established phenomenon in psychology known as the endowment effect where we value items much more highly just as soon as we own them. 12 13 14 Types of Consumer Products Convenience Goods Shopping Goods Specialty Goods Unsought Goods Copyright © 2022 by Cengage Canada. Convenience Products • • • • • Inexpensive items Takes little effort to shop for Unwilling to shop extensively for it Require wide distribution Impulse goods Copyright © 2022 by Cengage Canada. Shopping Products • Require comparison shopping • Consumers willing to put the time and effort into shopping Copyright © 2022 by Cengage Canada. Shopping Products Homogeneous Heterogeneous • Product is perceived as similar • Look for lowest-priced brand that has desired features • Product is perceived as different in terms of features, quality, and performance • Consumers shop around but have a hard time because features, prices, and benefits vary Copyright © 2022 by Cengage Canada. Specialty Products • Consumers search for extensively • Unwilling to accept substitutes • Unique characteristics Copyright © 2022 by Cengage Canada. UNSOUGHT PRODUCT • Unknown to the consumer • Known product but not actively sought after • Insurance, burial plots—require personal selling and aggressive advertising • New products—until consumer becomes aware of them Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. Product Items, Lines, Mixes Product Item • Distinct offering Product Line • Group of closely related product items Product Mix • All the products that a company sells Copyright © 2022 by Cengage Canada. Product Mix Product Mix Width • Breadth • Number of product lines offered Product Line Length • Number of product items in a product line Product Line Depth • Number of types and sizes offered for each product in the line Copyright © 2022 by Cengage Canada. Product Items, Lines, Mixes Copyright © 2022 by Cengage Canada. Adjustments to Product Items, Lines and Mixes • Product Modifications Quality Modification Functional Modification Copyright © 2022 by Cengage Canada. Style Modification PLANNED OBSOLESCENCE The process of modifying products so that those products that have already been sold become obsolete before they actually need replacement Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. PLANNED OBSOLESCENCE Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. Adjustments to Product Items, Lines and Mixes Repositioning • Changing consumers’ perceptions Product Line Extensions • Adding more options to the line Product Line Contraction • Reducing the number in the line Copyright © 2022 by Cengage Canada. Branding Symbol Term Name Design Brand Copyright © 2022 by Cengage Canada. Combination Brand Name, Brand Mark • Brand name: The part of a brand that can be spoken, such as letters, words, numbers • Brand mark: The elements of a brand that cannot be spoken Copyright © 2022 by Cengage Canada. Brand Logos Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. Branding Guide • https://www.northerncollege.ca/about/brand/ Copyright © 2022 by Cengage Canada. Branding Copyright © 2022 by Cengage Canada. Benefits of Branding Product Identification • Distinguishes a product from competition • Brand equity • Global brand Repeat Sales • Identifies brands the consumer wants to buy again • Brand loyalty New-Product Sales • Well-known brands, highly recognized brand names make new-product introductions easier Copyright © 2022 by Cengage Canada. Branding Strategies Manufacturers’ Brands vs. Private Brands Generic Products vs. Branded Products Individual Brands vs. Family Brands Cobranding Branding Strategies Copyright © 2022 by Cengage Canada. Branding Copyright © 2022 by Cengage Canada. ETHICS: WHEN BRANDING GOES WRONG Copyright © 2022 by Cengage Canada. FDA ADVISORY PANEL: SUDAFED, BENADRYL AND MOST DECONGESTANTS DON’T WORK Copyright © 2022 by Cengage Canada. Trademarks • The exclusive right to use a brand or part of a brand • Service mark—same for services • Shapes: Coca-Cola bottle • Ornamental colour or design: Levi’s tag • Catchy phrase: “Just do it.” • Abbreviations: FedEx • Sounds: MGM lion’s roar Copyright © 2022 by Cengage Canada. Colour Trademark Copyright © 2022 by Cengage Canada. Packaging Promoting Containing and protecting Facilitating storage, use, convenience Facilitating recycling Packaging Copyright © 2022 by Cengage Canada. LABELLING • Persuasive labelling • Focuses on a promotional theme or logo and consumer information is secondary • Informational labelling • Designed to help the consumer make proper product selections and to lower cognitive dissonance after purchase • Consumer Packaging and Labelling Act Copyright © 2022 by Cengage Canada. Deceptive Food Labels: Unmasking Misinformation and Empowering Consumers Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. Two Monkeys Were Paid Unequally: Excerpt from Frans de Waal's TED Talk • The Canadian government assists companies wishing to market in Canada by providing clear guidelines to specific details on packaging, such as the requirement for bilingual labelling. • The UPC code on packaging was first introduced as a package requirement in 1974. • The bar code lines are read by the scanner that match the bar code to brand names, sizes and price. This is extremely valuable sales data for retailers. Copyright © 2022 by Cengage Canada. Global Issues One brand name everywhere Adaptations and modifications Different in different Brand Name Decision Copyright © 2022 by Cengage Canada. Global Issues Aesthetics Proper Labelling Climate Considerations Packaging Copyright © 2022 by Cengage Canada. PRODUCT WARRANTIES • Warranty protects the buyer and provides essential information about the product • Express warranty: simple to extensive • Example: 100 percent cotton to technical language documents • Implied warranty • Unwritten guarantee that the good is fit for the purpose for which it is sold • Actual warranties vary depending on province or territory. • Federal protection: Competition Act Copyright © 2022 by Cengage Canada. DEVELOPING AND MANAGING PRODUCTS PART 2 Copyright © 2022 by Cengage Canada. THE IMPORTANCE OF NEW PRODUCTS New products • sustain growth • increase revenue and profits • replace obsolete items • meet ever-changing new consumer wants To be successful • • • • • Brand incrementality Mass potential Category distinction Longevity Specific target appeal • New technologies • Shrinking product life cycle Copyright © 2022 by Cengage Canada. Categories of New Products Copyright © 2022 by Cengage Canada. Categories of New Products New to the World New Product Lines Additions to Product Lines • Discontinuous innovation • Creation of entirely new market • Not previously offered by the firm • Allows a firm to enter an established market • New products to supplement existing product lines • Capitalize on brand equity Copyright © 2022 by Cengage Canada. Categories of New Products Improvements or Revisions to Existing Products • New and improved • Significantly or slightly changed • Could be a package improvement Repositioned Products • Existing products targeted at new markets or new segments Copyright © 2022 by Cengage Canada. Lower-Priced Products • Provide performance similar to competing brands at a lower price The New-Product Development Process Companyspecific approach Long-term commitment Capitalize on experience. Key to Success for “Innovation” Copyright © 2022 by Cengage Canada. Establish the environment. New-Product Strategy Idea Generation Customers Employees Consultants Research and Development New Ideas Vendors Distributors Competitors Copyright © 2022 by Cengage Canada. Creativity ENHANCED CREATIVITY Focus-group exercises Brainstorming Copyright © 2022 by Cengage Canada. IDEA SCREENING • The elimination of ideas that are inconsistent with the organization’s new-product strategy • Good screening requires • that management have a clear understanding of what their business is all about • an understanding of business objectives • Concept tests: Survey consumer reactions to description Copyright © 2022 by Cengage Canada. BUSINESS ANALYSIS Second stage of screening, which considers • demand • costs • sales • profitability Copyright © 2022 by Cengage Canada. DEVELOPMENT • Prototype • Marketing strategy • Packaging, branding, labelling • Preliminary promotion, price and distribution • Manufacturing—feasibility of doing so cost effectively relative to price • Laboratory tests can occur • User safety • In-home tests Copyright © 2022 by Cengage Canada. TEST MARKETING • Limited introduction of a product with an associated marketing program to determine reaction • High costs • Financial • Exposure to competition • Alternatives • Simulated laboratory tests • Computer simulation • Internet Copyright © 2022 by Cengage Canada. COMMERCIALIZATION • The decision to market the product • All elements involved in getting the product to market begin with the decision to go. • Time—varies depending on the company and complexity Copyright © 2022 by Cengage Canada. Keys to Success Strong leadership Commitment to the newproduct development Vision of what the future holds History of listening Project-based approach SUCCESS Copyright © 2022 by Cengage Canada. Perfection at each stage Failures Lack of company resources Takes too long Incongruity— product and market FAILURE Copyright © 2022 by Cengage Canada. Poor initial product reviews and few changes made Poor execution of the marketing mix GLOBAL ISSUES IN NEWPRODUCT DEVELOPMENT • Increasing globalization • In many multinational corporations, every product is developed for potential worldwide distribution, and unique market requirements are built in whenever possible. • Some global marketers design their products to meet regulations in their major markets and then, if necessary, meet smaller markets’ requirements country by country. Copyright © 2022 by Cengage Canada. The Spread of New Products • Diffusion of innovation • Innovation—new product as perceived by an adopter • Diffusion—the process by which the adoption of an innovation spreads Copyright © 2022 by Cengage Canada. Categories of Adopters Innovators Early Adopters Early Majority • • • • • • 13.5% • Adopt early in product’s life cycle • Reliant on group norms • Oriented to local community • Opinion leaders 2.5% Eager to try Self-confident Well educated Use scientific sources • Venturesome • High income • 34% • Evaluate pros and cons. • Rely on the group. • Friends of opinion leaders • Deliberate decision makers Copyright © 2022 by Cengage Canada. Categories of Adopters Late Majority • 34% • Adopt because friends have adopted. • Rely on group norms, pressure to conform • Older and below average income • Depend on word of mouth. • Skepticism Laggards • 16% • Do not rely on group norms. • Independence tied to tradition • Influenced by the past • By the time they adopt, product outmoded • Suspicious of new products • Tradition Copyright © 2022 by Cengage Canada. Product Characteristics and Rate of Adoption Relative Advantage Compatibility Complexity Observability Rate of Adoption Copyright © 2022 by Cengage Canada. Trialability Product Characteristics and Rate of Adoption Copyright © 2022 by Cengage Canada. MARKETING IMPLICATIONS OF THE ADOPTION PROCESS • Communication aids diffusion. • Word-of-mouth • Traditional and digital • Direct from marketer to adopter • Appeals, messages, and media used vary, depending on which adopter category is being reached. Copyright © 2022 by Cengage Canada. SERVICE & NONPROFIT MARKETING PART 3 Copyright © 2022 by Cengage Canada. How Services Differ from Goods Intangibility Inconsistency Inseparability Inventory (perishability) Copyright © 2022 by Cengage Canada. INTANGIBILITY • No physical attributes • Fewer search qualities but greater experience and credence qualities • Requires tangible cues to communicate the nature of the service and the service quality • Logo • Physical surroundings Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. INSEPARABILITY • Consumers are present during the production of the service • Simultaneous production and consumption = lack of centralization of production • Service is inseparable from the service provider • Quality of service is dependent on quality of employee Copyright © 2022 by Cengage Canada. INCONSISTENCY • Services depend on the service deliverer. • Quality inconsistencies • Standardization, training, uniforms, procedures and manual help Copyright © 2022 by Cengage Canada. PERISHABILITY • Services cannot be stored, warehoused, or inventoried. • Produced and consumed at the same time • If not consumed, services perish. • Key challenge—to synchronize demand and supply Copyright © 2022 by Cengage Canada. Copyright © 2022 by Cengage Canada. THE GAP MODEL OF SERVICE QUALITY Gaps Delivery Standards Knowledge Communication Service Gaps Copyright © 2022 by Cengage Canada. Expectation Close the Gap Knowledge Gap • Stay attuned to customer— research Standards Gap • Creation of policies and procedures that relate to the delivery, performance metrics, and training Copyright © 2022 by Cengage Canada. Delivery Gap • Must ensure employees have the skills and the proper tools Close the Gap Communications Gap • Create realistic customer expectations—honest, accurate communication Expectations Gap • Ongoing research to understand consumer perceptions and manage expectations Copyright © 2022 by Cengage Canada. MARKETING MIXES FOR SERVICES The Eight Ps of services marketing 1. Product 2. Price 3. Place 4. Promotion 5. People 6. Process 7. Productivity 8. Physical Evidence Copyright © 2022 by Cengage Canada. PRODUCT (SERVICE) STRATEGY • “Make the intangible tangible” by considering • the type of process involved • core and supplemental services • standardization or customization of the service Copyright © 2022 by Cengage Canada. SERVICE AS A PROCESS Service processes can be placed in one of four categories: 1. People processing—service is directed at a customer 2. Possession processing—service is directed at a customer’s physical possessions 3. Mental stimulus processing—service directed at customers’ minds 4. Information processing—service that uses technology directed at a customer’s assets Copyright © 2022 by Cengage Canada. CORE AND SUPPLEMENTAL SERVICE PRODUCTS Copyright © 2022 by Cengage Canada. CUSTOMIZATION/STANDARDIZATION Copyright © 2022 by Cengage Canada. THE SERVICE MIX: EXAMPLE • Many service organizations market more than one service. • For example, Vancouver City Savings Credit Union, more commonly known as Vancity, is a financial cooperative offering a wide range of banking and investment services to both individuals and organizations. • Each service within the organization’s service mix represents a set of opportunities, risks, and challenges. • Each part of the service mix makes a different contribution to achieving the firm’s overall goals. Copyright © 2022 by Cengage Canada. Process Strategy Market research Standardize Update processes Establishing standards of service Update processes Standardize Market Research Copyright © 2022 by Cengage Canada. PEOPLE STRATEGY • Standards gap and delivery gap must be managed to improve the service • Managing the employee—service provider is highly strategic • Incentives • Training • Recognition programs Copyright © 2022 by Cengage Canada. PLACE STRATEGY • Issues such as convenience, number of outlets, direct versus indirect, location, scheduling Copyright © 2022 by Cengage Canada. PHYSICAL EVIDENCE • The attention paid to the physical evidence benefits all four categories of service processes. • Physical surroundings, quality of the equipment • These are visual cues that communicate a message. Copyright © 2022 by Cengage Canada. Promotion Strategy Stress tangible cues. Use a personal information source. Create a strong organizational image. Engage in postpurchase communication. Copyright © 2022 by Cengage Canada. PRICING STRATEGY • Unit of service consumption • Specific task • Time based • Goods consumed with service • Multiple elements • Bundle price • Separate price • Set pricing objectives • Revenue, operations, or patronage price objectives, or a combination Copyright © 2022 by Cengage Canada. PRODUCTIVITY STRATEGY Supply Quality Copyright © 2022 by Cengage Canada. Relationship Marketing in Services • Membership services—relationship marketing is natural. • Discrete transaction services—more difficult • Use marketing tools. • Sell in bulk. • Loyalty programs • Targeted communications Copyright © 2022 by Cengage Canada. The Four Levels of Relationship Marketing Financial Social Customization Structural Copyright © 2022 by Cengage Canada.