principles of marketing lecture-23. summary of lecture-22
TRANSCRIPT
Principles of Marketing
Lecture-23
Summaryof
Lecture-22
Consumer Adoption Process
Communicate Availability Communicate Availability
Communicate Benefits Communicate Benefits
Emphasize Advantages Emphasize Advantages
Motivate Consumers Motivate Consumers
Ensure Satisfaction Ensure Satisfaction
Strategy
Strategy
Strategy
Strategy
Strategy
AwarenessAwareness
InterestInterest
EvaluationEvaluation
TrialTrial
AdoptionAdoption
Product Life-Cycle (PLC)
Time
ProductDevelopment
Stage
Introduction
Profits
Sales
Growth Maturity Decline
Sales andProfits ($)
Sales and Profits Overthe Product’s Life FromInception to Demise
Today’s Topics
Product
Value-Driven MarketingValue
–A customer’s subjective assessment of benefits relative to the costs in determining the worth of a product• Customer value = customer benefits – customer costs
–Customer benefits• Anything desired by the customer that is received in an
exchange–Customer costs
• Anything a customer gives up in an exchange for benefits–Monetary price of the benefit–Search costs (time and effort) to locate the product–Risks associated with the exchange
Benefits Consumers don’t buy products;
they buy benefits
Functional benefits: relating to the practical purpose a product serves
Psychological benefits: relating to how a product makes one feel
Segmentation
1. Identifysegmentationvariables andsegment themarket
2. Develop profiles ofresultingsegments
3. Evaluateattractivenessof eachsegment
4. Select thetargetsegment(s)
5. Identifypossible
positioningconcepts foreach target
segment
6. Select,develop, andcommunicate
the chosenpositioning
concept
MarketMarketSegmentationSegmentation
MarketMarketTargetingTargeting
MarketMarketPositioningPositioning
Question: Why do you buy a
product?
Marketing Mix4 Ps
Marketing is the involved process of determining the 4 P’s of the Marketing Mix
–Product
–Price
–Promotion
–Place (Distribution)
The Marketing Mix–Four marketing activities—product, Price, Place and Promotion—that a firm can control to meet the needs of customers within its target market
ProductProduct
PricePrice
PlacePlace
PromotionPromotion
TargetTargetMarketMarket
DefinitionsProduct
– Anything offered to a market for attention, acquisition, use, or consumption that might satisfy a need or want.
Service– Any activity or benefit that one party can offer
to another that is essentially intangible and does not result in ownership of anything.
Goods Services
Tangible
Produced Then Sold
Intangible
Sold Then Produced and/or Consumed Same Time
Goods Services
Tangible
Produced Then Sold
Intangible
Sold Then Produced and/or Consumed Same Time
Can Store and Transport
Produced SeparateFrom Consumer
Perishable
Often Produced InConsumer's Presence
Goods Services
Levels of Products
BrandName
QualityLevel
Packaging
Design
Features
Delivery& Credit
Installation
Warranty
After-Sale
Service
CoreBenefit orService
CoreBenefit orService
ActualProduct
ActualProduct
CoreProduct
CoreProduct
AugmentedProduct
AugmentedProduct
Product Classifications
Individual Product Decisions
Product Attributes
Branding
Packaging
Labeling
Product Support Services
Developing a Product or Service Involves
Defining the Benefits that it Will Offer
Product Attributes
QualityQualityQualityQuality FeaturesFeaturesFeaturesFeatures
DesignDesignDesignDesign
Branding
BrandA name, term, sign, symbol, or
design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those competitors
To Brand or Not to Brand?
Why Incur the Cost & Efforts
to Brand?
Brand Name Selection
• Short and simple• Suggestive of product
benefits• Legally available• No negative imagery• Easy to spell, read, and
pronounce• Adaptable for international
markets• Adaptable to
packaging/labeling needs• Adaptable to any
advertising medium
A GoodBrand Name
Is...
A GoodBrand Name
Is...
Brand Development
Line Extension
Multibrands
Brand Extension
New BrandsBra
nd
Nam
e
Existing New
Product Category
Existing
New
Four Brand Strategies
Packaging
Goals of Packaging
Protection against damage, spoilage, tampering etc.
Assistance in marketing the product
Cost effectiveness (and good for the environment)
Labeling
PromotesIdentifies
Competitive Advantages
Describes
SalesTasks
Product Safety
Packaging
Labeling
Packaging
Labeling
Universal Product Code (UPC) A bar code on a product’s package that
provides information read by optical scanners.
UPC codes provide several advantages: labor saving, improve inventory control, and help with marketing research.
79400 80740
Product - Support Services
Product Line Strategies
Product Line ExtensionsProduct Line ExtensionsProduct Line ExtensionsProduct Line Extensions
StretchingStretching
Adding new items to line
FillingFilling
Adding sizes or styles
Downward
Upward
Contracting aContracting aProduct LineProduct Line
Dropping items
Contracting aContracting aProduct LineProduct Line
Dropping items
Two-way
New Product Development
Major Stages in New-Product Development
IdeaGeneration
IdeaScreening
ConceptDevelopmentand Testing
MarketingStrategy
BusinessAnalysis
ProductDevelopment
TestMarketing
Commercialization
Consumer Adoption Process
Communicate Availability Communicate Availability
Communicate Benefits Communicate Benefits
Emphasize Advantages Emphasize Advantages
Motivate Consumers Motivate Consumers
Ensure Satisfaction Ensure Satisfaction
Strategy
Strategy
Strategy
Strategy
Strategy
AwarenessAwareness
InterestInterest
EvaluationEvaluation
TrialTrial
AdoptionAdoption
Product Life-Cycle (PLC)
Time
ProductDevelopment
Stage
Introduction
Profits
Sales
Growth Maturity Decline
Sales andProfits ($)
Sales and Profits Overthe Product’s Life FromInception to Demise
Product Life-Cycle Strategies
Product Development Stage
Time
ProductDevelopment
Stage
Introduction
Profits
Sales
Growth Maturity Decline
Sales andProfits ($)
Sales and Profits Overthe Product’s Life FromInception to Demise
Product development
Introduction
Growth
Maturity
Decline
Begins when the company develops a new-product idea
Sales are zero
Investment costs are high
Profits are negative
PLC PLC Stages Stages
Introduction Stage
Time
ProductDevelopment
Stage
Introduction
Profits
Sales
Growth Maturity Decline
Sales andProfits ($)
Sales and Profits Overthe Product’s Life FromInception to Demise
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Low sales Low sales
High cost per customerHigh cost per customer
NegativeNegativeCreate product awareness
and trialCreate product awareness
and trial
Offer a basic productOffer a basic product
Use cost-plus Use cost-plus
DistributionDistribution Build selective distributionBuild selective distribution
AdvertisingAdvertising Build product awareness among early adopters and dealers
Build product awareness among early adopters and dealers
Growth Stage
Time
ProductDevelopment
Stage
Introduction
Profits
Sales
Growth Maturity Decline
Sales andProfits ($)
Sales and Profits Overthe Product’s Life FromInception to Demise
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Rapidly rising sales Rapidly rising sales
Average cost per customerAverage cost per customer
Rising profitsRising profits
Maximize market shareMaximize market share
Offer product extensions, service, warranty
Offer product extensions, service, warranty
Price to penetrate marketPrice to penetrate market
DistributionDistribution Build intensive distributionBuild intensive distribution
AdvertisingAdvertising Build awareness and interest in the mass market
Build awareness and interest in the mass market
Maturity Stage
Time
ProductDevelopment
Stage
Introduction
Profits
Sales
Growth Maturity Decline
Sales andProfits ($)
Sales and Profits Overthe Product’s Life FromInception to Demise
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Peak salesPeak sales
Low cost per customerLow cost per customer
High profitsHigh profitsMaximize profit while defending
market shareMaximize profit while defending
market share
Diversify brand and modelsDiversify brand and models
Price to match or best competitors
Price to match or best competitors
DistributionDistributionBuild more intensive distributionBuild more intensive distribution
AdvertisingAdvertising Stress brand differences and benefits
Stress brand differences and benefits
Decline Stage
Time
ProductDevelopment
Stage
Introduction
Profits
Sales
Growth Maturity Decline
Sales andProfits ($)
Sales and Profits Overthe Product’s Life FromInception to Demise
SalesSales
CostsCosts
ProfitsProfits
Marketing ObjectivesMarketing Objectives
ProductProduct
PricePrice
Declining salesDeclining sales
Low cost per customerLow cost per customer
Declining profitsDeclining profits
Reduce expenditure and milk the brand
Reduce expenditure and milk the brand
Phase out weak itemsPhase out weak items
Cut priceCut price
DistributionDistribution Go selective: phase out unprofitable outlets
Go selective: phase out unprofitable outlets
AdvertisingAdvertising Reduce to level needed to retain hard-core loyal customers
Reduce to level needed to retain hard-core loyal customers
Extending the Product Life Cycle
To prevent the product going into decline you modify the product
Adding new features, variations, model varieties will change the consumer reaction - create more demand therefore you attract more users
Enough for today. . .
Summary
Product
Next….
4-P’sPrice
Principles of Marketing
Lecture-23