MKT 4309 FINAL EXAM CH. 12, 13, 15, & 18

The Innovation Imperative

In an economy characterized by rapid change, continuous innovation is a necessity.

The Stage-Gate Approach to Developing New Offerings

Many top companies use the stage-gate system to divide the innovation process into stages, with a gate or checkpoint at the end of each stage. The ultimate goal of using a stage-gate approach to new-product development is to ensure market success in a way that minimizes risk and optimizes allocation of the company's resources.

Product Placement

Marketers pay hundreds of thousands of dollars for their products to make cameo appearances in movies and on television.

News

One of the major tasks of PR professionals is to find or create favorable news about the company.

Common market research tools for idea generation and validation:

· Observing customers. Examining people's behavior in their natural environment can be an effective way to gain insights into customer needs. · Interviewing customers. Questioning customers to uncover their unmet needs and gather insights about novel ways in which these needs can be met. · Interviewing employees. Employees can be a source of ideas for developing new products and services. · Interviewing experts. Firms tap external sources of new ideas, including scientists, engineers, patent attorneys, university and commercial laboratories, industrial consultants and publications. · Analyzing the competition. Companies find good ideas by researching the products and services of other companies. · Crowdsourcing lets companies engage outsiders in the new-product development process and receive either unique expertise or a different perspective on a problem.

Many channel functions involve bi-directional flows of goods and services.

· Some functions (storage and movement, title, and communications) constitute a forward flow of activity. · Others (ordering and payment) constitute a backward flow from customers to the company. · The question for marketers is who is to perform channel functions. Changes in channel institutions reflect the discovery of more efficient ways to provide assortments of goods to target customers.

Word of mouth

· The passing of information from person to person by oral communication. Social media can be viewed as a specific instance of word of mouth, where personal communication occurs online and is observable by others.

Differentiation

• Effective packaging can differentiate the company's offering from the competition.

Advantages of Online Marketing Communications

- The variety of online communication options means companies can offer or send tailored information or messages that engage consumers by reflecting their special interests and behavior. - Marketers can easily trace their effects by noting how many unique visitors click on a page or ad, how long they spend with it, what they do on it, and where they go afterward. - Contextual placement means marketers can buy ads on sites related to their own offerings or place advertising based on keywords customers type into search engines to reach people when they've actually started the buying process.

the Focus of Company Communications

A communication objective is a specific task and achievement level to be accomplished with a specific audience in a specific period of time. Objectives are classified according to whether they create awareness by informing and persuading the target audience of the benefits of the offering, or inciting action that benefits the company and its offering. • Creating awareness provides a foundation for brand equity. · Building preferences involves communicating an offering's ability to meet a currently relevant consumer need. · Inciting action involves motivating consumers to decide to purchase the brand or take purchase-related action. - Communication objectives for the company's offering also depend on the current consumer state of awareness.

Publicity and public relations

A variety of programs directed internally to employees of the company or externally to consumers, other firms, the government, and media to promote or protect a company's image or its individual product communications

Advertising

Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor via print media (newspapers, magazines, brochures, books, leaflets, directories), broadcast media (radio and television), network media, and display media (billboards, signs, posters, outer packaging, packaging inserts, ad reprints, and point-of-purchase displays)

Macromodel of marketing communication

Articulates the interaction between the sender (company) and the recipient (consumer) of the communication message. · Two represent the major parties—sender and receiver. · Two represent the major tools—message and media. · Four represent major communication functions—encoding, decoding response, and feedback. · The last element in the system is noise—random and competing messages that may interfere with the intended communication.

Developing an Effective Communication Program

Basics: identifying the target audience, setting the communication objectives, designing the communications, selecting the communication channels, and establishing the total marketing communications budget - The ultimate success of a company's communication campaign depends on the viability of the overall strategy and tactics for managing the company's offering, which serve as a basis for developing a communication plan.

Packaging

Because packaging is perceived during a buyer's first encounter with the product, it can be a determining factor in piquing the buyer's interest. - The label is a highly visible and important element of packaging. - Three principles can develop effective packaging that contributes to market success:

Public Service Activities

Companies can build goodwill by contributing money and time to good causes.

Events

Companies can draw attention to new products or other company activities by arranging and publicizing special events.

Identity Media

Companies need a visual identity that the public immediately recognizes.

Publications

Companies rely extensively on published materials to reach and influence their target markets.

Speeches

Company executives must field questions from the media or give talks at events.

Events and experiences

Company-sponsored activities and programs designed to create daily or special brand-related interactions with consumers, including sports, arts, entertainment, and cause events as well as less formal activities

Word of Mouth

Consumers use word of mouth to talk about dozens of brands each day, from media and entertainment products such as movies, TV shows, and publications to food products, travel services, and retail stores. Viral marketing relies on word of mouth that encourages consumers to pass along audio, video, or written information about company-developed products and services to others online. · Positive word of mouth sometimes happens organically with little advertising, but it can also be managed and facilitated. · Without question, more advertisers now seek greater earned media—unsolicited professional commentary, personal blog entries, social network discussion—as a result of their paid media and owned media efforts. · Products don't have to be outrageous or edgy to generate word-of-mouth buzz. Research has shown that consumers tend to generate positive word of mouth themselves and to share information about their own positive consumption experiences.

Experiential marketing

Experiential marketing not only communicates features and benefits but also connects a product or service with unique and interesting experiences. · Experiential marketing aims to let customers experience how the company's offering fits in their life. · Many firms are creating their own events and experiences to create consumer and media interest and involvement. · A popular form of experiential marketing involves event sponsorship. Companies can even create a strong image by inviting prospects and customers to visit their headquarters and factories.

online presence

Firms can create a strong online presence and offer alternative points of view if negative feedback occurs. · If the firm has a strong online community, members will defend the brand and play a policing role regarding inaccurate or characterizations.

The Process of Developing New Product Offering

Innovation is the key to developing viable new offerings. Innovation is not limited to the development of new products or services. - It can involve a new technology, a new approach to brand building, a new pricing mechanism, a new way of managing incentives, new channels of communication, or a novel distribution method. - Innovation is particularly important in industries that are characterized by high technological uncertainty, high market uncertainty, fierce competition, high investment costs, and short product life cycles. - Innovative offerings disrupt existing business models and make companies that fail to adapt to changing market conditions superfluous by devising new ways to create market value.

The Role of Distribution Channels

Intermediaries between producers and users constitute a marketing channel (also called a trade channel or distribution channel). · Distribution channels are sets of interdependent organizations participating in the process of making a product or service available for use or consumption. · They are the set of pathways a product or service follows after production, culminating in purchase and consumption by the final end user. · Merchants buy, take title to, and resell the merchandise. · Agents are brokers, manufacturers' representatives, sales agents who search for customers and may negotiate on the producer's behalf but do not take title to the goods. They are facilitators.

Crafting the Communication Message

Marketers are always seeking the "big idea" that resonates with consumers rationally and emotionally, distinguishes the brand from competitors, and is broad and flexible enough to translate into different media, markets, and time periods.

Customers are increasingly online

Of the total time U.S. consumers spend with all media, more than half is spent online.

Online Communities and Forums

Often created by consumers or groups of consumers with no commercial interests or company affiliations. · Others are sponsored by companies whose members communicate with the company and with each other through postings, text messaging, and chat discussions about special interests related to the company's products and brands. · Online communities and forums can be a valuable resource for companies and fill multiple functions by both collecting and conveying key information. · A key for success in online communities is to create individual and group activities that help form bonds among community members. · Information flow in online communities and forums is two-way and can provide companies with useful, hard-to-get customer information and insights. Blogs, regularly updated online journals or diaries, have become an important outlet for word of mouth. · Blogs bring together people with common interests. · Some consumers use blogs to get retribution for bad service or faulty products.

Place Advertising

Place advertising includes creative and unexpected forms to grab consumers' attention where they work, play, and shop. - Billboards use colorful, digitally produced graphics, backlighting, sounds, movement, and unusual—even 3D—images. - Public Spaces. Movie screens, airplane bodies, and fitness equipment, as well as in classrooms, sports arenas, office and hotel elevators, and other public places - As the effectiveness of traditional means of communication declines, advertisers use public spaces to create a memorable impression of the company and its offerings.

Print Advertising

Print media can provide detailed product information and effectively communicate user and usage imagery. - The static nature of the visual images in print media makes dynamic presentations or demonstrations difficult, and print media can be fairly passive. - Newspapers are timely and pervasive, magazines are typically more effective at building user and usage imagery. iv. Print advertising has steadily declined in recent years. - Although advertisers have some flexibility in designing and placing newspaper ads, relatively poor reproduction quality and short shelf life can diminish the impact. - A print ad should be clear, consistent, and well branded.

Radio Advertising

Radio's main advantage is flexibility—stations are very targeted, ads are relatively inexpensive to produce and place, and short closings for scheduling them allow for quick response. - Radio can engage listeners through a combination of popular brands, local presence, and strong personalities. - It is a particularly effective medium in the morning; it can also let companies achieve a balance between broad and localized market coverage. - Radio advertising is benefiting from the growing popularity of podcasts. - Radio's obvious disadvantages are its lack of visual images and the relatively passive nature of the consumer processing that results.

Social Media

Social media are a means for consumers to share text, images, audio, and video information with one another and with companies, and vice versa. · Social media allow marketers to establish a public voice and presence online. · They can cost-effectively reinforce other communication activities. · Because of their day-to-day immediacy, they can also encourage companies to stay innovative and relevant. · Marketers can build or tap into online communities, inviting participation from consumers and creating a long-term marketing asset in the process. Social media allow consumers to become engaged with a brand at a deeper and broader level. · Research suggests that brands and products vary in how social they are online. · Only some consumers want to engage with some brands online—and even then, only some of the time. One challenge is the speed with which social media marketers are expected to react to relevant news and events. · The internet permits scrutiny and criticism from consumers and organizations.

Social networks

Social networks have become an important force in business-to-consumer and business-to-business marketing. · Influencer marketing refers to the use of a popular online figure to promote a product, service, or brand within his or her social media feed. · The high fees collected by influencers and the lack of accurate measures of their market impact have created a global marketplace for social media fraud. Customer reviews can be especially influential in shaping customer preferences and buying decisions. Research has shown that social influence can lead to disproportionally positive online ratings, and subsequent raters are more likely to be influenced by previous positive ratings than negative ones. · Consumers posting reviews are susceptible to conformity pressures and adopting norms of others. · Positive online reviews or ratings are often not as influential or valued as much as negative ones.

Television Advertising

Television is generally acknowledged as the most powerful advertising medium and reaches a broad spectrum of consumers at low cost per exposure. - TV can vividly demonstrate product attributes and persuasively explain corresponding consumer benefits. - TV can dramatically portray user and usage imagery, brand personality, and other intangibles. - Television has the opportunity to tap a captive audience during live programming at important events. - Product-related messages and the brand itself can be overlooked. - High volume of nonprogramming material on television creates clutter that makes it easy for consumers to ignore or forget ads. - Another consideration is the relatively high cost of television advertising. - With online streaming, television programming has expanded to streaming to computers, laptops, tablets, and mobile phones.

Point of Purchase

The appeal of point-of-purchase advertising is that consumers make many brand decisions in the store (e.g., shopping carts, cart straps, aisles, and shelves and in-store demonstrations, live sampling, and instant coupon machines).

Marketing communications

The means by which firms attempt to inform, persuade, and remind consumers—directly or indirectly—about the products and brands they sell. - They represent the voice of the company and its brands; they are a means by which the firm can establish a dialogue and build relationships with consumers - By strengthening customer loyalty, they can contribute to customer equity. - Works by showing consumers how and why a product is used, by whom, where, and when. - Consumers can learn who makes the product and what the company and brand stand for, and they can become motivated to try or use it. - They can contribute to brand equity—by establishing the brand in memory and creating a brand image—as well as drive sales and even affect shareholder value.

Channel Levels

The number of intermediaries, also referred to as channel levels, define the length and breadth of the distribution channel. · A zero-level channel, also called a direct marketing channel, consists of a manufacturer selling directly to the final customer. · A one-level channel contains one selling intermediary, such as a retailer. · A dual-level channel contains two intermediaries, a wholesaler and a retailer, and a three-level channel contains three. · Channel conflict, excessive cost, or insufficient demand can result from bad channel decisions.

The Communications Process

To achieve their strategic goals, holistic marketers must craft communication campaigns that can break through the clutter and reach customers on a personal level.

Mobile Communication

With the increased capabilities of smartphones, however, mobile ads can be more than just a display medium using static "mini-billboards." Interest has been generated in mobile apps adding convenience, social value, incentives, and entertainment, and making consumers' lives a little or a lot better. · Smart mobile devices are also conducive to boosting loyalty programs. · The ability of mobile to make offers to consumers at the point of purchase (e.g., digital coupons) has interested marketers. · Consumers are more engaged and attentive when using their smartphones than when they are online. A number of m-commerce companies are eliminating ads to allow consumers to make purchases with as few clicks as possible.

Search engine optimization (SEO)

describes activities designed to improve the likelihood that a link for a brand ranks as high as possible in the order of all nonpaid links when consumers search for relevant terms. · SEO is less costly to implement than search engine marketing.

Search engine marketing (SEM)

describes activities whereby the company pays search engine companies to be featured in the results of particular keyword searches that serve as a proxy for the consumer's product or consumption interests. · Advertisers pay only if people click on the links, but marketers believe consumers who have expressed interest by engaging in search are prime prospects. · The cost per click depends on how high the link is ranked on the page and the popularity of the keyword.

Public relations (PR)

includes a variety of programs to promote or protect a company's image among the relevant stakeholders. - The wise company takes concrete steps to manage successful relationships with its key publics. - Most have a PR department that monitors the attitudes of the firm's publics and distributes information and communications to build goodwill.

Native advertising

involves materials resembling the publication's editorial content but is intended to promote the advertiser's product. - With its non-disruptive approach, native advertising has grown in popularity worldwide. - Although it is utilized primarily in online communications, native advertising is also used in traditional media formats including print, television, and radio.

Publicity

involves securing editorial space—as opposed to paid space—in the media to promote a product, service, idea, place, person, or organization. Marketing managers are turning to publicity to build awareness and brand knowledge for both new and established products. Publicity is effective in blanketing local communities and reaching specific groups, and it can be more cost-effective than advertising. Publicity is free—though the advertiser might have to pay an agency to secure media coverage. Because the source of the message is a third party, publicity is more credible and more likely to influence the target audience. The downside of publicity is that it cannot be directly controlled by the company.

Setting the Communication Objectives

involves three key decisions: defining the focus of company communications, setting communication benchmarks, and determining the communication budget.

Exploratory research

is a mainstay of idea generation and validation.

Integrated marketing communications (IMC

is an approach to managing a communication campaign through a coordinated use of different communication tools that reinforce one another to achieve strategic goals.

Mobile communication

· A special form of online marketing that places communications on consumer's cell phones, smart phones, or tablets

Online and social media marketing

· Activities and programs designed to engage customers or prospects and directly or indirectly raise awareness, improve image, or elicit sales of products and services

Company Website

· Companies must design websites that embody or express their purpose, history, products, and vision and that are attractive on first viewing and interesting enough to encourage repeat visits. · Companies employ microsites, individual webpages or clusters of pages that function as supplements to a primary site.

Disadvantages of Online Marketing Communications

· Consumers can effectively screen out most messages. · Marketers may think their ads are more effective than they really are if bogus clicks are generated by software-powered websites. · Advertisers also lose some control over their online messages, which can be hacked or vandalized.

Transparency

· Effective packaging clearly communicates the value of the offering to its target customers.

Three distribution strategies:

· Exclusive distribution severely limits the number of intermediaries. · Selective distribution relies on only some of the intermediaries willing to carry a particular product. · Intensive distribution places the goods or services in as many outlets as possible.

Personal selling

· Face-to-face interaction with one or more prospective purchasers for the purpose of making presentations, answering questions, and procuring orders

The stage-gate framework is a streamlined version that comprises five stages

· Idea generation: uncovering an unmet customer need and coming up with an idea about how to fulfill this need better than the available alternatives. · Concept development: the development of an initial version (prototype) of the offering that has the core functionality of the proposed offering. · Business-model design: the validated concept then becomes the core of a business model. · Offering development: to fulfill the needs of its target customers and create value, the company develops the resources to create the offering and develop a market-ready version. · Commercial deployment: the offering is commercially deployed, making it available to customers.

Characteristics of a Mobile Device

· It is uniquely tied to one user. · It is virtually always "on" given it is typically carried everywhere. · It allows for immediate consumption because it is in effect a channel of distribution with a payment system. · It is highly interactive given it allows for geotracking and picture and video taking.

Publicity plays an important role in a variety of tasks:

· Launching new products. The amazing one-time commercial success of toys such as Leap Frog owes a great deal to strong publicity. · Repositioning mature products. In a classic case, New York City had extremely bad press in the 1970s until the "I Love New York" campaign. · Building interest in a product category. Companies and trade associations have used publicity to rebuild interest in declining commodities such as eggs. · Defending products that have encountered public problems. Publicity professionals must be adept at managing crises. · Building the corporate image in a way that reflects favorably on its products. The late Steve Jobs's heavily anticipated Macworld keynote speeches helped to create an innovative, iconoclastic image for Apple Corporation.

Packaging

· The product's styling and price, the shape and color of the package, the salesperson's manner and dress, the store décor, and the company's stationery all communicate something to buyers.

All channel functions have three characteristics:

· They use up scarce resources. · They can often be performed better through specialization. · They can be shifted among channel members.

Marketers report a number of reasons to sponsor events:

· To identify with a particular target market or lifestyle. Old Spice sponsors college sports. · To increase the salience of a company or product name. Events offer sustained exposure to a brand, a necessary condition for reinforcing brand salience. · To create or reinforce perceptions of key brand image associations. Events have associations that help to create or reinforce brand associations. · To enhance corporate image. Sponsoring and organizing events can improve perceptions that the company is likable and prestigious. · To create experiences and evoke feelings. The feelings engendered by an exciting or rewarding event may indirectly link to the brand. · To express commitment to the community or on social issues. Cause-related events sponsor nonprofit organizations and charities. · To entertain key clients or reward key employees. Many events include lavish hospitality tents and other special services or activities for sponsors and their guests. · To permit merchandising or promotional opportunities. Many marketers tie contests or sweepstakes, in-store merchandising, direct response, or other marketing activities to an event.

Direct marketing

· Use of mail, phone, e-mail, online messaging, or in-person interaction to communicate directly with, or solicit response or dialog from, specific customers and prospects

The stage-gate approach has three aims. To develop:

· a desirable offering that target customers will find attractive · a technologically feasible offering that the company will find doable · a viable offering that will create value for the company and its collaborators.

Companies that fail to develop new products leave themselves vulnerable to:

· changing customer needs and tastes · shortened product life cycles · increased domestic and foreign competition · lack of awareness of the potential market opportunities opened up by new technologies

External integration

· coordinates a company's communication activities with those of the external collaborators.

Transformational appeal

· elaborates on a nonproduct-related benefit or image and often attempts to stir up emotions that will motivate purchase.

Informational appeal

· elaborates on product or service attributes or benefits, and assumes strictly rational processing of the communication; logic and reason rule.

Vertical integration

· involves aligning the communication objectives with the higher-level goals.

Horizontal integration

· involves coordinating all relevant marketing actions with the communication campaign to achieve maximum customer impact.

Internal integration

· involves sharing the relevant information from different departments with the communication team to create an effective campaign.

Social Media Platforms include:

· online communities and forums · blogs (individual blogs and blog networks) · social networks (like Facebook, Twitter, and YouTube) · customer reviews

Visibility

• Companies overwhelm consumers with a constant barrage of information. Effective packaging can cut through the information clutter.

PR three main functions:

• They provide press coverage by presenting news and information about the organization in the most positive light. • They manage corporate communications by promoting understanding of the organization. • PR departments engage in lobbying.