Marketing Chapter 4

Integrated Marketing Communications (IMC)

"a planning process designed to assure that all brand contacts received by a customer or prospect for a product, service, or organization are relevant to that person and consistent over time" Promotional Planning Budgeting Managing and Controlling

Convenience Consumer Products

* relatively inexpensive product that a consumer purchases on a regular, routine basis (routine problem solving), without much thought or effort. *Consumers may or may not be loyal to particular brands of convenience products, resulting in a lack of thought being put into the purchase decision *These products are readily available at multiple outlets. *Examples of products typically viewed as convenience products include toilet paper, gasoline or candy bars. These products are readily available at multiple outlets.

Growth

*Customer demand increases, sometimes quite dramatically. *Competitors recognize potential and enter the market in large numbers. *Customer demand is strong although marketing organizations must continue to expend large sums of money developing marketing strategy *Industry sales grow quickly and industry profits follow.

Consumer Shopping Products

*For products such as these, consumers will expend some effort to compare brands and invest some time to investigate product features and price points. (Limited Problem Solving) *They may have a short list of brands that they treat as relative equals and may randomly choose between brands depending on the purchasing situation. *In a given geographic market, there may be several different locations that the shopper will consider, however, not all retail locations carry the same brands. *A producer will choose a retailer to carry its brand that has characteristics that support the brand's positioning. *Include such products as hair salons, furniture and jewelry.

Business Products

*Installations *Accessory equipment *Raw materials *Component parts *Process materials *MRO (maintenance, repair & operating) *Supplies *Business services.

Speciality Products

*Items that the consumer makes a special effort to search out and buy. *Consumers believe a particular brand is the best because it has unique and desirable characteristics *Consumers will not willingly accept a substitute. *Frequently, only one outlet in a market area will carry this brand *Brand is relatively expensive *Examples of specialty products include Tiffany jewelry, Porsche cars and Four Seasons Hotels.

Introduction

*The industry contains few competitors and sales are just beginning to take hold *Profit is usually negative for the industry as a whole and for a particular company, because companies are attempting to cover product development costs and expending considerable dollars on promotion and distribution costs to build initial customer demand.

Push vs. Pull Strategy

-Push -- increase demand by motivating vendors to highlight a product over competition & push onto consumers (pushy salesman, personal selling, B2B) - Pull -- goal to get consumers to pull product through marketing channel by demanding it & forcing vendors to take notice. Loyalty Companies utilize both.

Categories of Consumer Products

1. convenience 2. shopping 3. specialty products

Private Label Brand (Private Brands/Store Brands/Distributor Brands)

A brand owned or controlled by an intermediary, such as a distributor or a retailer. These brands are exclusive to the intermediary and include examples such as Sears' Kenmore, Abercrombie & Fitch or The Gap. Grocery or discount stores use this strategy frequently to provide customers a familiar brand that is usually less expensive than competing manufacturers' brands but also offers higher profit margins to the retailer

Product

A good, service, or idea.

Product Lines

A group of related products that a company sells under a single brand. The products are similiar and focus on the same market sector.

Brand (AMA)

A name, term, design, symbol, or any other feature that identifies one seller's good or service as distinct from those of other sellers. The legal term for brand is trademark. A brand may identify one item, a family of items, or all items of that seller. If used for the firm as a whole, the preferred term is trade name"

Inseparability

A service is both produced and consumed at the same time. A service is often referred to as a service encounter because it usually requires the presence of both the service provider and the recipient of the service. This characteristic implies that service marketers must manage processes to ensure that the individual service provider performs the service at the time and in the manner that the customer expects. The customer does not separate the service provider from the service.

Intangibility

A service, unlike a good, can not be held, touched, examined or taken home and put on a shelf for the customer's future use. A service does not have physical dimensions but is, rather, an act that takes place at a certain point in time.

Product Category

All the products offering the same functionality

Maturity

An indication that the industry is moving from growth to maturity is the point at which industry profit peaks and begins to decline. While still profitable overall, companies begin to make adjustments to the marketing mix, which usually involves reducing prices to remain competitive .Th eresult is declining profits Early in maturity, industry sales remain high but grow thin industry sales slows. Industry profits have already begun to decline. Companies continue to jockey for position and begin to make adjustments to the product mix - improvements, extensions, adaptations At the mid-point of the maturity phase, industry sales peak and begin to decline. This decline is fueled by competitors that are no longer profitable so they drop out of the market. Customer demand is fully saturated and new competitors are no longer interested in entering the market. This phase can remain very profitable for strong companies and can draw out for many years

Product Items

Anything that is offered to a market to satisfy a customers wants/needs.

AIDA

Attention/Awareness Interest Desire Action

Brand Components (elements)

Brand Name (spoken) Brand Mark (Symbol or design associated with the name)

Factors that influence Adoption of a Product

Complexity: it does not appear to be overly complicated to learn how to use it Compatibility: it is compatible with current products or usage Relative advantage: the relative advantage can be clearly understood Observability: the relative advantage is readily observable Trialability: it is possible to reduce risk through trial

Early and late majority

Early Majority and Late Majority: The next two groups of adopters - early and late majority - each account for about 34 percent of adopters for a total of 68 percent. Clearly,the early majority is easier to influence than the late majority, although both groups are easily persuaded by earlier adopters and critical to diffusion of innovation

Generic Products (not Generic Brands)

Generic means there is no brand name; instead of a brand only the product category name is indicated on the packaging, such as Flour or Sugar.

New Product Development Process

Idea Generation --> screening --> concept testing --> business analysis --> product development --> test marketing --> commercialization Nine out of ten product ideas fail Companies must be involved in innovation/improvement on continual basis to keep filling the funnel w/ new product ideas.

Marketing Communication

Initiated by a message sender; that message is encoded using signs, symbols, words, colors, and/or music to effectively convey a message via some form of channel (e.g., TV, radio, Internet) to a receiver, who in turn decodes the message.

Four Stages of a Product Life Cycle

Introduction Growth Maturity Decline

Brand (Strategic)

Is a promise or an organization's commitment to its target market. Thus, a brand represents the totality of that which an organization delivers to its customers

Accessory Equipment

Less expensive, less complex equipment purchased more frequently--copiers/printers

Installations

Major equipment/process that are complex/expensive -- telecommunications systems

Business Services

Processes required in running the business that are often outsourced to other business-- payroll/cleaning services

4 P's

Product, Price, Place (distribution), Promotion out of these 4 s the product is the most important

Component Parts

Products purchased in finished form from other suppliers--tires or sound systems

Product Class

Products that are similiar to each other and somewhat substitutable for each other

Process Materials

Products used in production that become part of the finished product -- sheet metal or plastic used in the car body

MRO (Maintenance, Repair, and Operating)

Products used in production that do not become part of the finished product--light bulbs in the manufacturing plant/computer paper

Packaging

Protection of the product during shipping, handling, storage and use but also promotes the product label design is important regulations require detailed/specific information about a products ingredients and promotional claims A products label can also perform important promotional tasks

Raw Materials

Raw materials - the most basic materials used by producers--iron ore mined a and used in the production of steel

Are more promotional dollars spent on advertising or sales promotion?

Sales Promotion The biggest proportion of sales promotion dollars is spent on incentives to wholesalers or retailers (also known as the "trade") than on consumer incentives.

Personal Selling

Selling that involves a face-to-face interaction with the customer Personal selling plays a larger role in the promotional mix when the product is high value with limited numbers of customers. Personal selling typically follows: prospecting, pre-approach, approach, presentation, overcoming objections, closing the sale and following up

Heterogeneity (variability)

Services are difficult to standardize. Service marketers attempt to provide as much standardization in their services as possible through training programs, uniforms and systems monitoring.

Effective Communication

Takes place when the receiver decodes the message that was intended by the receiver

Public Relations

That form of communication management that seeks to make use of publicity and other non-paid forms of promotion and information to influence the feelings, opinions, or beliefs about the company, its products or services, or about the value of the product or service or the activities of the organization to buyers, prospects, or other stakeholders It is not free. There can be bad Is not under the control of the marketer (all others are)

Perishability

The characteristic that describes the fleeting nature of a service. Since the service involves the performance of an activity, once the time period is over, the window of opportunity to perform the service closes

Promotion

The communications arm of marketing. It is the way that a marketing organization informs, persuades and reminds the target market about its products, brands, company or people

Sales Promotion

The media and non-media marketing pressure applied for a predetermined, limited period of time at the level of consumer, retailer, or wholesaler in order to stimulate trial, increase consumer demand, or improve product availability

Product Mix

The overall group of products that a firm offers is referred to as its product mix. A company's product mix consists of a combination of product items, product categories and product lines.

Advertising

The placement of announcements and persuasive messages in time or space purchased in any of the mass media by business firms, nonprofit organizations, government agencies, and individuals who seek to inform and/or persuade members of a particular target market or audience about their products, services, organizations, or ideas.

Diffiusion of Innovation

The process by which the use of an innovation is spread within a market group, over time and over various categories of adopters

Laggards

The slowest group to finally adopt an innovation is referred to as laggards and make up about 16 percent of adopters. This group is rarely targeted by marketers since they are the most difficult to influence and are so slow to adopt that products have already reached the decline stage of the PLC. At this stage marketers are no longer devoting resources to these products.

Brand Equity (AMA)

The value of a brand. From a consumer perspective, is based on consumer attitudes about positive brand attributes and favorable consequences of brand use" David Aaker proposed that brand equity consists of brand assets and liabilities that add to (or subtract from) the brand's value based on brand name awareness, brand loyalty, perceived quality and brand associations. In essence, brands with high levels of awareness, loyal customers, high quality perceptions and many positive associations have higher degrees of brand equity. Companies invest in strategies designed to increase brand equity for both customers and for the company

Manufacturer's Brand (National Brand)

These brands are owned and controlled by a producer and they may/may not actually be distributed nationally. Examples of manufacturer's brands include Sony, Ralph Lauren and Heinz. In all cases, these brands are found in multiple retail locations and have consistent images, positioning and price points no matter where they are sold.

Early Adopters

This group accounts for approximately 13.5 percent of the adopters and is often the group that marketers target in the early stages of the PLC. Individuals in this group are considered to be opinion leaders by their peers, and therefore can easily influence others to follow their lead

Innovators

This group consists of the first 2.5 percent of adopters and ,regardless of the type of product being adopted, tend to be better educated, younger, and less risk averse than other categories of adopters. They are not always the best group to target for marketers, however, since they tend to lie on the outer edges of the majority and may not be influential enough to pull later adopters along with them.

Decline

Ultimately, industry sales fall to the point where it is no longer in the company's best interest to continue to support the product. Companies will either make a planned exit from the industry or will be forced out due to lack of demand

cannibilization

Unintended reduction in sales of one brand due to the introduction of another very similar variation. Planned cannibilization can be part of a growth strategy.

continuous innovation

a modification of an existing product that sets one brand apart from its competitors

Four Main Promotional Tools

advertising personal selling sales promotion public relations

Narrow Product Mix

limited product lines carried, typically very specialized. A description of the width of a business's product mix offering a limited number of product lines.

Broad Product Mix

many different product lines carried. A description of the width of a business's product mix offering many product lines.

discontinuous innovation

requires new learning and consumption patterns by consumers

Product Line Depth

the number of products within a product line