Topic Seven: creating marketing offers(1)

Objectives

• Product Characteristics• Building & Managing the Product Mix & Product Lines• Brand Decisions• Packaging & Labeling• Product life cycle• Developing new product• Service

Components of the Market Offering

Value-based prices

Services mixand quality

Product featuresand quality

Attractiveness ofthe market offering

Five Product Levels

Specialty ProductsSpecialty Products Unsought ProductsUnsought Products

Shopping ProductsShopping ProductsBuy less frequently> Gather product information> Fewer purchase locations> Compare for:

• Suitability & Quality • Price & Style

Convenience ProductsConvenience Products

Special purchase efforts> Unique characteristics> Brand identification> Few purchase locations

New innovations> Products consumers don’t want to think about. >Require much advertising & personal selling

Buy frequently & immediately> Low priced> Many purchase locations> Includes:

• Staple goods• Impulse goods• Emergency goods

Consumer-Goods Classification

Product Mix

WidthWidth - number of different product lines

WidthWidth - number of different product lines

LengthLength - total number of items

within the lines

LengthLength - total number of items

within the lines

Depth Depth - number of versions of each

product

Depth Depth - number of versions of each

product

Product Mix - Product Mix - all the product

lines offered

Product Mix - Product Mix - all the product

lines offered

Co

nsi

sten

cy

Product-Line Length

• Line Stretching– Downmarket– Upmarket– Two-way

• Line Filling• Line Modernization• Line Featuring & Line Pruning

Two-Way Product-Line Stretch: Marriott Hotels

Quality

Economy SuperiorStandard Good

Pri

ce

Pri

ce

High

Aboveaverage

Average

Low Fairfield Inn(Vacationers)

Courtyard(Salespeople)

Marriott(Middle

managers)

MarriottMarquis

(Topexecutives)

What is a Brand?

Attributes Benefits Values

Culture

User

Personality

Brand Equity

No Brand Loyalty(customer will change)

No Brand Loyalty(customer will change)

Satisfied Customer(no reason to change)Satisfied Customer

(no reason to change)

Satisfied & Switching CostSatisfied & Switching Cost

Values the Brand(brand as friend)

Values the Brand(brand as friend)

Devoted to Brand

Devoted to Brand

An Overview ofBranding Decisions

BrandingDecision

•Brand

•No brand

Brand-SponsorDecision

•Manu-facturerbrand

•Distribu-tor(private)brand

•Licensedbrand

Brand-Name

Decision

•Individualbrandnames•Blanketfamilyname•Separatefamilynames•Company-individualnames

Brand-Repositioning

Decision

•Reposi-tioning

•Noreposi-tioning

Brand-StrategyDecision

•Lineextension

•Brandextension

•Multi-brands

•Newbrands

•Cobrands

Brand Strategies

BrandExtension

New

Bra

nd

Nam

e

Product Category

LineExtension

Existing

Existing

MultibrandsNew NewBrands

Good Brand Names:

SuggestProductBenefits

Distinctive

Lack PoorForeign

LanguageMeanings

SuggestProductQualities

Easy to:PronounceRecognizeRemember

Why Package Crucial as a Marketing Tool

• Self-service• Consumer affluence• Company & brand image• Opportunity for innovation

Labels

IdentifyIdentify

DescribeDescribe

PromotePromote

Sales & Profit Life Cycles

Introduction Growth Maturity Decline

Time

Sal

es &

pro

fits

($)

Four IntroductoryMarketing Strategies

Rapid-skimmingstrategy

Rapid-skimmingstrategy

Rapid-penetration

strategy

Rapid-penetration

strategy

Slow-penetration

strategy

Slow-penetration

strategy

Slow-skimmingstrategy

Slow-skimmingstrategy

Price

Low

High

PromotionHigh Low

Maturity Stage

• Market Modification• Product Modification• Marketing-Mix Modification

Decline Stage

• Decrease investment• Resolve uncertainties - stable investment• Selective niches• Harvesting• Divesting

Market Evolution

• Emergence• Growth• Maturity• Decline

Why New Products Fail

• “Over Championing”• Overestimated Demand• Poor Design• Poor Marketing Execution• High Development Costs• Strong Competitive Reaction

Challenges in NPD

• Idea Shortage• Fragmented Markets• Social & Governmental Constraints• Cost• Capital Shortage• Need for Speed• Shorter Product Life Cycles

New Product Development Process

IdeaIdeaGenerationGeneration

ConceptConceptDevelopmentDevelopmentand Testingand Testing

MarketingMarketingStrategyStrategy

DevelopmentDevelopment

IdeaIdeaScreeningScreening

BusinessBusinessAnalysisAnalysis

ProductProductDevelopmentDevelopment

MarketMarketTestingTesting

CommercializatCommercializationion

Probability of Success

Probabilityof technicalcompletion

Overallprobabilityof success =

Probability ofcommercialization

given technicalcompletion

XProbability of

economicsuccess given

commercializationX

Concept Development & Testing

1. Develop Product Ideas into Alternative Product Concepts

1. Develop Product Ideas into Alternative Product Concepts

2. Concept Testing - Test the ProductConcepts with Groups of Target Customers

2. Concept Testing - Test the ProductConcepts with Groups of Target Customers

3. Choose the Best One3. Choose the Best One

High price/oz.

Lo

w in

cal

ori

es

Low price/oz.

Hig

h in

calo

ries

Product & Brand Positioning

(a) Product-positioningmap

(breakfast market)

Expensive

Slo

w

Inexpensive

Qu

ick

Baconandeggs

Pancakes Instantbreakfast

Coldcereal

Hotcereal

b) Brand-positioningmap

(instant breakfast market)

Brand C

Brand B

Brand A

Consumer-Goods Market Testing

Sales-Wave

Research

Test offering trail toa sample of consumers insuccessive

periods.

Sales-Wave

Research

Test offering trail toa sample of consumers insuccessive

periods.

SimulatedTest Market

Test in a simulated shopping environment

to a sample of consumers.

SimulatedTest Market

Test in a simulated shopping environment

to a sample of consumers.

StandardTest Market

Full marketing campaignin a small number of representative cities.

StandardTest Market

Full marketing campaignin a small number of representative cities.

Controlled Test Market

A few stores that have agreed to carry newproducts for a fee.

Controlled Test Market

A few stores that have agreed to carry newproducts for a fee.

Commercialization

When

Where

Whom

ProductPricePlacePromotion

2 1/2%Innovators

13 1/2%Early

adopters

34%Early

majority

34%Late

majority

16%Laggards

Time of adoption innovations

Adopter Categorization of the Basis of Relative Time of Adoption of Innovations

Characteristics of the Innovation Rate of Adoption

• Relative advantage• Compatibility• Complexity• Divisibility• Communicability

Categories of Service Mix

PurePureServiceService

TangibleTangibleGoodGood

w/w/ServicesServices

MajorMajorServiceService

w/ Goodsw/ GoodsHybridHybrid

PurePureTangibleTangible

GoodGood

ServicesServices

InseparabilityServices cannot

be separatedfrom theirproviders

InseparabilityServices cannot

be separatedfrom theirproviders

PerishabilityServices cannot

be stored forlater sale or use

PerishabilityServices cannot

be stored forlater sale or use

IntangibilityServices cannotbe seen, tasted,felt, heard, or

smelled beforepurchase

IntangibilityServices cannotbe seen, tasted,felt, heard, or

smelled beforepurchase

VariabilityQuality of

services dependson who providesthem and when,where, and how

VariabilityQuality of

services dependson who providesthem and when,where, and how

Service characteristics

ServicesServices

InseparabilityIncrease

productivity ofproviders

InseparabilityIncrease

productivity ofproviders

PerishabilityMatch supplyand demand

PerishabilityMatch supplyand demand

IntangibilityUse cues to

make it tangible

IntangibilityUse cues to

make it tangible

VariabilityStandardize

serviceproduction& delivery

VariabilityStandardize

serviceproduction& delivery

Overcoming service challenges

Three Types of Marketingin Service Industries

Internalmarketing

CompanyCompany

CustomersCustomers

Externalmarketing

EmployeesEmployees Interactivemarketing

Cleaning/maintenance

services

Financial/bankingservices

Restaurantindustry

Service Differentiation

Offer

Delivery

Image

Determinants of Service Quality

• Reliability• Responsiveness• Assurance• Empathy• Tangibles

ServiceExcellence

• Strategic Concept• Top-Management Commitment• High Standards• Monitoring Systems• Satisfying Customer Complaints• Satisfying Both Employees & Customers• Managing Productivity

Importance-Performance Analysis

A. Concentrate here B. Keep up the good work

D. Possible overkillC. Low priority

Extremely important

Slightly important

Exce

llent

per

form

ance

Fair

perf

orm

ance

1 2

9

1113

1214

34 5 67

810

# = Attributes

Service marketing mix

• 4P’s• People• Process• Physical evidence