PRODUCT MARKETING

AUGMENTEDAUGMENTED

ACTUAL ACTUAL

CORE CORE

Adapted from Kotler, 1994

PRODUCT LEVELS

3

TYPES PRODUCTS:

Convenience goods—• e.g.,

Shopping goods-- • e.g.,

Specialty goods -

• e.g.,

Unsought goods - • e.g.,

4

WHAT ARE THE IMPORTANT PARTS OF YOUR MIX? Convenience good

• • Why?

Shopping good• • Why?

Specialty good• • Why?

Unsought good• • Why?

Product Life Cycle Products have limited lives,

so ______________

Products pass through different stages--each with different appropriate marketing strategy implications and profitability, so _______________

Shape varies!

Sal

es &

pro

fits

intro growth maturity decline

sales

profits

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Why Is There a PLC?

Adoption Process

Diffusion Process

AWARENESSAWARENESS

INTERESTINTEREST

EVALUATIONEVALUATION

TRIALTRIAL

ADOPTIONADOPTION

THE ADOPTION PROCESS

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The Diffusion Process

innovators early early late laggards adoptors majority majority

What is missing? What are some of the problems with this?

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Now, put it together!

Intro Growth MaturityDecline

Sales

Profits

Comp

Tgt. mkt.

Introduction Growth Maturity Decline

Characteristic

Sales Low Rising Peak Declining

Costs High/customer Averager/cust. Low/cust. Low/cust

Profits Negative Rising High Declining

Customers Innovators Early adopters Middle majority Laggards

Competitors Few Growing # Stable #; may be declining

Declining #

Marketing Objective

Create awareness and trial

Maximize market share

Maximize profit; defend market share

Reduce expenditures; milk brand

Strategies

Product Basic product Extensions &

Service

Diversify brands Phase out weak model

Price One of two Continue strategy

Beat/Match competition

Cut prices

Distribution selective intensive More intensive Phase out

Advertising Build awareness Build awareness Stress differences and benefits

reduce

Sales Promotion Heavy reduce Increase reduce

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Two Mini-cases--Just Do Them!

What stage in the product life cycle is this product in?

Who do you think should be the target market (think about diffusion!)

Develop an appropriate marketing objective.

Outline an appropriate strategy.

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Mini Case 1:

Your R&D department has developed a completely revolutionary way to take notes in the classroom. The product is named “Wilbor”—a short name for “WILLingly takes BORing notes.” To use the product, an individual wears a headphone. Everything that s/he thinks that is addressed to the computer is recorded onto a 51/2 inch diskette. For instance, the EMBA students might think, “Oh dear, I better remember what the early majority is,” so the student thinks, “Wilbor record that the early majority is about 34% of adopters. Consumers in the early majority make deliberate decisions and have many social contacts. End Wilbor.” The electronic record is compatible with Microsoft Word. The student simply puts the diskette into a disk drive and prints out detailed, legible notes. To your knowledge, no other firm can offer this product.

 

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Mini Case 2:

Your R&D department has developed a better way to make banana bread from a mix. The new mix includes all dry ingredients and a special package of banana puree (that does NOT turned that brown disgusting color) mixed with vanilla extract. This package is to be added to the mix prior to baking and results in a more “bananay” taste and a moister bread. Secondary sources suggest that sales of banana bread mixes have been experiencing slow growth during the past few years. Competitors include Betty Crocker, Pillsbury, Martha White and Jim-Dandy.

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Definition Time!

Product mix--• total assortment of product offerings

Product line• --group of individual products that is ________

related - designed to meet a single need

• width--number of product lines

• length-number of products in a line

• consistency-how closely related the product lines are

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Matching1. Cinnabuns offers only two types of buns--

regular and miniature.

2. AT&T goes into the chocolate business.

3. Tootsie Rolls, Inc. makes only one thing--Tootsie Rolls.

4. The Body Shop offers 20 different types of lotion, each with 7 fragrances.

5. AT&T offers a low-priced phone service (Lucky Dog Phone Co.).

6. ACME makes many different types of products--dynamite, electronics, foods, vehicles, etc.

a. High consistency

b. Low consistency

c. Wide line

d. Narrow line

e. Long line

f. Short line

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Expansion is important to a firm! How to Expand:

• downward stretch

• upward stretch

• two-way stretch

• line-filling

Cannibalization

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SERVICES MARKETING

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Important facts about services in the US Demand for services is increasing:

• consumers are VERY busy• consumers have discretionary income• companies are outsourcing• technologies make more services available

Services are making up a (larger or smaller) part of our GDP.

• INTANGIBLE•

• PERISHABLE•

• INSEPARABILITY •

• VARIABILITY•

SERVICE CHARACTERISTICS

Nature of Services vs. Products

Goods ServicesClient Relationships

Perishability

Tangibility

Separability

Customer Effort

Uniformity

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Environmental Influences on Services Economic

Political/legal

Social

Technological

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Services Pricing Make sure everyone knows what is included

in the price.

Price-->Quality connection

Pricing to influence demand•

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Services Promotion

Consumers rely on personal sources for information.

Must detail what the service is.

Must communicate benefits.

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Services Placing

Facility location should be:

a. Close to the customer.

b. Close to the suppliers.

c. It depends.

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Think about:

Your really good service experience:

Your really bad service experience:

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What factors make a good/ bad service experience?

Good

experiences include:

Bad

experiences include:

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Managing Service Quality Perceptions Tangibles --

Price Cues

Responsiveness-

Empathy-

Assurance-

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Managing Aspects of Products & Services

Positioning

Branding

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POSITIONING

Definition:

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PERCEPTUAL MAPPING

PAIRWISE COMPARISONS

MAP SIMILARITY DATA

e.g., compare:

1. Pittsburgh 1 & 2

2. Baltimore 1 & 3

3. Los Angeles 2 & 3

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• Heineken

• Lowenbrau

• Michelob

• Coors

• Bud

•Strohs

• Miller

• Michelob Light

• Bud Light

•Miller Light

•Coors Light

•Natural Light

• Oly Gold

• Hamms Light

• Rolling Rock Light

•Generic Light

• Hamms

• Rainier

• Rolling Rock

• Generic

• Schlitz Malt Liquor

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POSITIONING IMPLICATIONS

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Branding

Provides the recognition factor for products/services

Brand name- • •

Logo (Brand mark)-

Trademark--

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Selecting a brand name

Tells about product benefits

Easy to remember, pronounce, read, and spell

Can be translated into other languages

Distinctive in some way

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Brand Strategies

BRAND EXTENSIONSAdvantages:

Disadvantages:

NEW BRANDAdvantages

Disadvantages

CO-BRAND (associative branding)

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Branding

How important is a brand name?• NOT VERY 1 2 3 4 5 6 7 VERY

• WHY?– from consumers’ viewpoint– from firms’ viewpoint

Brand image-- impression consumer has of brand

Brand loyalty-- commitment and repeat purchasing of brand

Brand equity-- value of brand in marketplace; financial qualities of brand from firm’s perspective

BRAND RECOGNITION

BRAND ACCEPTANCE

BRAND PREFERENCE

BRAND LOYALTY

BUILDING BRAND LOYALTY

LEADS TO:

1.

2.

3.

4.

Brand Loyalty Brand Equity

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Pricing Preparation

Talk to a small business owner/manager or someone in your company who is responsible for determining prices.

Ask the following questions:• 1. How do you set your prices? What things do you consider?

• 2. What causes you to change prices? When is the last time you changed a price(s)?

• How do you know if the price is “right”?

We’ll talk about this in the next class.