Marketing Final
Define advertising and explain why new brands with small market share tend to spend proportionately more for advertising and sales promotion than those with a large market share.
Advertising is any form of impersonal paid communication in which the sponsor or company is identified. New brands with a small market share tend to spend proportionately more for advertising and sales promotion that those with a large market share, typically for two reasons: Beyond a certain level of spending for advertising and sales promotion, diminishing returns set in. That is, sales and market share improvements slow down and eventually decrease no matter how much is spent on advertising and sales promotion. This phenomenon is called the advertising response function. A certain minimum level of exposure is needed to measurably affect purchase habits.
Branding
Brand Name: That part of a brand that can be spoken - including letters, words, and numbers Brand Mark: The elements of a brand that cannot be spoken Brand Equity: The value of company and brand names Global Brand: the brand where at least 20% of the products is sold outside its home country
New-Product Development Process
Idea generation Idea screening Business analytics Development Test Marketing Commercialization New product
Tangible and intangible attributes:
Image of retail store warranty color packaging instructions image of brand attachments service after sale
3 types of cobranding
Ingredient branding, cooperative branding, complementary branding
Why is it important for marketers of consumer products to understand how the target market categorizes their products (e.g. convenience product, shopping product, etc)? Give examples to support your answer.
It is important to know about product classifications because business and consumer products are marketed differently. They are marketed to different target markets and tend to use different distribution, promotion, and pricing strategies. The most effective and popular way to categorize consumer products includes these four types: convenience products, shopping products, specialty products, and unsought products.
Benefits of Branding
Product Identification Repeat Sales New Product Sales
3 kinds of adjustment
Product modification, product repositioning, product line extension or contraction
Product line extension
adding products to an existing product line in order to compete more broadly in the industry
Product Warranties
Warranty: a confirmation of the quality or performance of a good or service Express warranty: a written guarantee Implied Warranty: unwritten guarantee that the good or service is fit for the purpose for which it was sold
Simultaneous Product Development
a new team oriented approach to new product development where all relevant functional areas and outside suppliers participate in the development process
Specialty Product
a particular item for which consumers search extensively and are very reluctant to accept substitutes. Omega watches, Rolls-Royce cars, Bose Speakers, highly specialized forms of medical care, etc.
Consumer product
a product bought to satisfy individuals personal needs or wants. (Convince product, shopping product, specialty product, and unsought product)
Shopping Product
a product that requires comparison shopping, because it is usually more expensive and found in fewer stores
Unsought product
a product unknown to the potential buyer or a known product that the buyer does not actively seek
Unsought Product
a product unknown to the potential buyer or a known product that the buyer does not actively seek.
Business product
a product used to manufacture other goods or services, to facilitate an organization's operations, or to resell to other consumers. ex. computers purchased for use of other businesses, fork lifts, cranes, etc.
Business product
a product used to manufacture other goods or services, to facilitate organizations operations or to resell to other consumer
Convenience product
a relatively inexpensive item that merits little shopping effort
Convenience Product
a relatively inexpensive item that merits little shopping efforts. Candy, soft drinks, aspirin, small hardware items, dry cleaning, car washes, etc.
Express warranty
a written guarantee
3 reasons to reposition
changing demographics, declining sales, changes in social environment
Product Life Cycle
concept that provides a way to trace the stages of a product's acceptance, from its intro (birth) to its decline (death) introductory stage growth stage maturity stage decline stage
Functions of packaging
contain and protect, promote, facilitate storage, use, and convince, facilitate recycling
Cobranding
ingredient branding, cooperative branding, complementary branding
Brand Equity
the value of company and brand names
Specialty product
- a particular item for which consumers search extensively and are reluctant to accept substitutes
New product success factors
- long term commitments - company specific approach - capitalize on experience - establish an environment
6 Categories of new products
- new to the world - new product lines - product line additions - improvements or revisions - repositioned products - lower price products
New product development process
1. new product strategy 2. idea generation 3. idea screening - eliminates ideas that are inconsistent with the organizations new product strategy or or are otherwise inappropriate 4. business analysis - demand, cost, sales, profitability 5. development 6. test marketing - the limited introduction of a product and a marketing program to determine the reactions of potential customers in a market situation 7. commercialization 8. new product
Global Brand
A brand where at least 20 percent of the product is sold outside its home county
Warranty
A confirmation of the quality or performance of a good or service
Consumer Product
A product bought to satisfy an individual's personal needs or wants. convenience products: relatively inexpensive item that merits little shopping effort shopping products: product that requires comparison shopping, because it is usually more expensive and found in fewer stores specialty products: particular item that consumers search extensively and are reluctant to accept substitutes unsought products: product unknown to the potential buyer, or product that the buyer does not actively seek
Adjustments (& overextension)
Adjustments to product items, lines, and mixes product modification quality modification: change in durability and dependability functional modification: change in versatility, safety, convenience, effectiveness style modification product repositioning changing demographics declining sales changes in social environment product line extension or contraction: adding additional products to an existing product line in order to compete more broadly in the industry. overextension: products have low sales or cannibalize sales of other items. Resources are disproportionately allocated to slow-moving products. Items have become obsolete because of new product entries.
What is a Product?
Everything both favorable and unfavorable that a person receives in an exchange: Tangible Good Service Idea
Persuasive labeling
Focuses on promotional theme, consumer info is secondary
When retailers decide on location, they have two basic site options: the freestanding store and the shopping center. Briefly describe these location alternatives and discuss the advantages and disadvantages of each location alternative.
Freestanding store: The retailers decide to have their business stand alone instead of in a shopping center or mall. These stores are usually on street corners where they can more easily be seen. Advantages: 1.Separated from the competition 2.No signage or advertising restrictions if the retailer owns the building 3. The design of your building can add to your brand identity (Think Target) 4. Since they are usually on street corners, they are more visible 5.Larger parking lots 6. Rent/lease is cheaper than a mall/shopping center Disadvantages: 1.More difficult to bring in customers; they can't just wander and stumble upon it while shopping Shopping Center: Strip malls and other attached retail locations...Retailers are in one or more buildings with several other retailers. Advantages: 1.Offer many types of stores 2.Comfortable/familiar environment for customers 3.Store hours are consistent Disadvantages: 1.Occupancy costs and rent are high 2.Mall owners control business operations 3. Limited parking
What has led to the increase in marketers taking an IMC approach to promotion? Give an example of a company or product that has successfully executed an IMC program
From the consumer's standpoint, a company's communications are already integrated. Consumers do not think in terms of the five elements of promotion: personal selling, advertising, sales promotion, public relations, and social media. Instead, everything is an "ad". The only people who recognize the distinctions among these communications elements are the marketers themselves. Unfortunately, many marketers neglect this fact when planning promotional messages and fail to integrate their communication efforts from one element to the next. This unintegrated, disjointed approach to promotion has propelled many companies to adopt the concept of integrated marketing communications (IMC). IMC is the careful coordination of all promotional messages - traditional advertising, direct marketing, social media, interactive, public relations, sales promotion, personal selling, event marketing, and other communications - for a product or service to assure the consistency of messages at every contact point where a company meets the consumer. Reasons for IMC growing popularity: The proliferation of thousand of media choices beyond traditional television has made promotion a more complicated task. Instead of promoting a product just through mass media options, like TV and magazines, promotional messages today can appear in many varied sources The mass market has fragmented - more selectively segmented markets and an increase in niche marketing have replaced the traditional broad market groups that marketers promoted to in years past Marketers have slashed their advertising spending in favor of promotional techniques that generate immediate sales responses and those that are more easily measured, such as direct marketing. Online advertising has earned a bigger share of the budget as well due to its measurability. Thus, the interest in IMC is largely a reaction to the scrutiny that marketing communications have come under, and particularly, to suggestions that uncoordinated promotional activity leads to a strategy that is wasteful and inefficient. Example of company: Old Spice was completing in a very mature and competitive market of men's products. Sales had been declining until they developed a TV spot called "The man your man could smell like" with Isaiah Mustafa (NFL player). It became not only a pop culture phenomenon, but a viral blockbuster. Sales increased 107 percent and old spice now has more than a million fans on facebook, thousands of twitter followers, higher website traffic, and press coverage valued close to one billion impressions.
Packaging
Functions: contain and protect, promote, facilitate storage/use/convenience, facilitate recycling
Introductory stage product life cycle
High failure rates Little competition Frequent product modification Limited distribution High marketing and production costs Negative profits with slow sales increases Promotion focuses on awareness and information Communication challenge is to stimulate primary demand
Branding Strategies
Manufacturers' Brand: the brand name of a manufacturer Advantages: heavy consumer ads by manufacturer attract new customers enhance dealer's prestige rapid delivery, carry less inventory if dealer carries poor quality brand, customer may simply switch brands and remain loyal to dealer. Private Brand: brand name owned by a wholesaler or a retailer. Also known as a private label or store brand Advantages: Earn higher profits on own brand less pressure to mark down price manufacturer can become a direct competitor or drop a brand/reseller Ties customer to wholesaler or retailer Generic Brand: A no-frills, no brand-name low-cost product that is simply identified by its product category
3 kinds of branding strategies
Manufactures brand - the brand name of a manufacturer. Advantages - Heavy consumer ads by manufactures Attracts new customers Enhances dealers prestige Rapid delivery, carry less inventory If dealer carries poor quality brand, consumers may simply switch brands and remain loyal to the dealer Private brand - a brand name owned by a wholesaler or a retailer. Also know as a store brand Advantages - Earn higher profits on own brand Less pressure to mark down prices Manufacturer can become a direct competitor or drop a brand/reseller Ties consumer to wholesaler or retailer Generic brand - a no-frills, no brand name, low cost product that is simply identified by its product category
Categories of New Products
New-to-the-world new product lines product line additions improvements or revisions repositioned products lower-priced products
Labeling
Persuasive: focuses on promotional theme/consumer information is secondary Informational: helps make proper selections/lowers cognitive dissonance/includes use/care
There are four promotional strategies for dealing with the unique features of services. Name these strategies and give examples of each, using American Airlines (or another air carrier you are familiar with) as your example service.
Stressing tangible cues: Tangible cues help people become aware of intangible services. Hotels may turn down the covers of their bed sheets to remind customers that there are workers who maintain the rooms. On American Airlines, there are airbags provided in the pocket of the seat in front of the passenger. This tangible cue makes the intangible service of first aid known to customers. Using personal information sources: Personal information sources are people with whom consumers can relate to either aspirationally or personally. Personal information sources are especially powerful in passing along word-of-mouth communication. In one of their flyers, American Airlines used the 1964 hiring of Dave Harris, the first African-American pilot to fly for a commercial airline, to promote their involvement in the African-American community. Using such a role model appeals to African Americans and inspires them to try out American Airlines' services. Creating a strong organizational image: A strong organizational image should help consumers recognize employees, goods, and services as part of the company. Part of AA's name bears the word American, so they give off the patriotic, American vibe with their red, white, and blue logo with an American eagle. AA airplanes also have red and blue stripes on it and a white body. Likewise, the flight attendants wear blue uniforms with a white blouse, red scarf, and eagle pendant. Just by looking at the employees and vehicles, the consumer should connect them right away to the American Airline brand. Engaging in postpurchase communication: Postpurchase communications consist of any activity a firm may perform in order to extract customer opinion after a transaction. After American Airlines engages customer feedback in surveys, focus groups, and social media to see what customers have to say about them. After ticket purchases are made online, there is always an option to engage in a customer survey. Feedback helps American Airlines understand and meet their customers' needs.
List and describe the four stages of the product life cycle. Then describe the promotional objective used in each stage.
The Product Life Cycle (PLC) is a concept that provides a way to trace the stages of a product's acceptance, from its introduction (birth) to its decline (death) Introductory Stage - represents the full-scale launch of a new product into the marketplace. Promotion strategy in this stage focuses on developing product awareness and informing consumers about the product category's potential benefits. The communication challenge is to stimulate primary demand - demand for the product in general rather than for a specific brand Growth Stage - The second stage of the product life cycle when sales typically grow at an increasing rate, many competitors enter the market, large companies may start to acquire small pioneering firms, and profits are healthy. Emphasis switches from primary demand promotion to aggressive brand advertising and communication of the differences between brands. Maturity Stage - The period at which sales increase at a decreasing rate. Promotion to dealers often intensifies during this stage in order to retain loyalty. Heavy consumer promotion by the manufacturer is also required to maintain market share. Cutthroat competition during this stage can lead to price wars. Another characteristic of the maturity stage is the emergence of "niche marketers" that target narrow, well-defined, underserved segments of a market. Decline Stage - A long-run drop in sales. Some firms have developed successful strategies for marketing products in the decline stage of the PLC. They eliminate all nonessential marketing expenses and let sales decline as more and more customers discontinue purchasing the products.
Growth Stage
increased rate of sales entrance of competitors aggressive advertising of differences between brands wider distribution
Implied warranty
an unwritten guarantee that the good or service is fit for the purpose for which it was sold
Informational labeling
helps make proper selection, lowers cognitive dissonance, includes uses and cares
Shopping Product (homogeneous and heterogeneous)
is a product that requires comparison shopping because it is usually more expensive than a convenience product and is found in fewer stores. homogeneous shopping products: washers, dryers, refrigerators, and televisions heterogeneous shopping products: furniture, clothing, housing, and universities
Decline stage
large inventories of unsold items Elimination of all nonessential marketing expenses Organized abandonment
New product success factors
long-term commitment company-specific approach capitalize on experience establish an environment
3 benefits of branding
product identification, repeat sales, new product sales
3 types of product modification
quality, functionality, style
Maturity stage
sales increase at a decreasing rate Saturated markets Lengthened product lines Service and repair assume important roles Heavy promotions to consumers and dealers
3 symptoms of over extension
some products have low sales or cannibalize sale of other items. Recourses are disproportionally allocated to slow-moving products. Items have become obsolete because of new product entries.
Brand mark
the elements of brand that cannot be spoken
Brand name
the part of a brand that can be spoken, including letters, words, and numbers
Planned Obsolescence
the practice of modifying products so those that have been sold become obsolete before they actually need replacement
Diffusion
the process by which the adoption of an innovation spreads.
Service
the result of applying human or mechanical efforts to people or objects (intangible, inseparable, heterogeneous, perishable)
