Marketing: An Introduction Product and Services Strategy Place Strategy Marketing: An Introduction Today’s Learning Objectives • Describe the roles of product and service branding, packaging, labelling, and names • Identify the four characteristics that affect the marketing of a service & discuss the additional marketing considerations that services require • Identify the typical marketing strategies marketers apply for products in the different stages of the product Life Cycle 8-2 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction Course completion • Course contract revision and plan for the rest of the semester • Instead of Marketing News Presntations – just hand in your article and short write up. Due by week of April 10th. May hand in earlier. 8-3 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction Market Plan Project – Next Steps • How is it going ? • At this point you should have done the following: – Conduct your SWOT as a group – Rethink and finalize your concept/product idea in light of your research and SWOT & creativity exercises – Set marketing objectives – these are one year objectives so they need to be SMART – Select your primary and secondary target market – describe them – their need, characteristics, purchasing/usage habits related to your category – Develop your market positioning strategy – write a positioning statement 8-4 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction Marketing Planning • What is a goal? • What is an objective? • What are typical marketing objectives related to? • Marketing objectives can include: – – – – 8-5 Sales, profit, market share, ROI Awareness, trial, purchase, repeat purchase, attitude Distribution coverage Marketing promotion efficiency targets, e.g. response rates ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction Objectives, Strategies and Plans Objective: Statements of desired outcomes resulting from a plan. Strategies: Outline in broad-strokes how the objectives will be achieved. Plans: All the specific details needed to execute the strategies. 8-6 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction Example • Objective: – To obtain 60% market share of the ketchup market in Canada • Strategies: 1. Promotion - By maintaining brand awareness via year round TV promotion support 2. Product-By launching a new package format 3. Distribution -By supporting the retail network with innovative category management systems • Plans: for Promotion– ad creative plan, media plan & schedule 8-7 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction Product • Evaluate a product in pairs or threes – select one from the box 8-8 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction Levels of Product Installation Delivery and credit Packaging Brand name Quality level Warranty 8-9 Core benefit or service Augmented product Actual Product (features) Features Core Product (benefits) Design After-sale service ©Copyright 2004, Pearson Education Canada Inc. Figure 8-1 Marketing: An Introduction Exercise on Features and Benefits • List five features of your product and a corresponding benefit to the consumer of each feature • A feature is something about the productit colour, design, materials it is made from etc • A Benefit is what the product does for the customer 8-10 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction Individual Product Decisions 1. Product attribute decisions Product quality (level and consistency), features, style and design 2. Product Brand Name Decisions Brand equity, line and brand extensions, manufacturer’s versus private brands, licensing, co-branding 3. Packaging Roles Protect contents, identify and promote the product and brand, be a self merchandiser Labelling - Ingredients, directions for use, identify and promote 4. Product support services Repair and maintenance, accessories 8-11 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction Individual Product Decisions (continued) • What are the purposes of a package? • Look at your package and discuss at least 3 purposes it serves. • Is there any competitive advantage in the package you are studying? 8-12 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction What is a Brand? • A Brand is the use of name, term, symbol, or design or combination of these to identify a product • Why brand a product or service? – By creating perceived differences among products and developing a loyal customer franchise through branding, marketers create “ value “ 8-13 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction Four Brand Strategies Product category Existing Existing New Line Extension -new flavour, size Brand Extension -Using the name in a new category Brand name New 8-14 Multibrands ©Copyright 2004, Pearson Education Canada Inc. New Brands Figure 8-4 Marketing: An Introduction Brand names should: • • • • • • Suggest something about the product Be easy to pronounce, recognize, and remember Be distinctive Be extendable Translate to other languages Be capable of registration and legal protection 8-15 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction Brand Equity Brand Equity Brand awareness 10-11 8-16 Perceived quality Brand association Brand loyalty ©Copyright 2004, Pearson Education Canada Inc. Group, from Brand Leadership, by Source: Reprinted with permission of The Free Press, a Division of Simon & Schuster Adult Publishing David A. Aaker and Erich Joachimsthaler, p. 17. Copyright © 2000 by David A. Aaker andErich Joachimsthaler. Marketing: An Introduction Kotler’s 5 Dimensions that make a strong brand 1. 2. 3. 4. 5. Should bring to mind certain attributes such as product's features or style Should suggest one or more benefits e.g. Apple's user friendliness Should be able to visualize the brand’s characteristics as if the brand were a person. E.g. Apple would be in his 20”s, IBM in his 60’s Should suggest something about a company's values? Is it innovative, a service icon or socially conscious? Suggests a picture of the brands users- are they young and enthusiastic? Are they a family? Are they older and established? 8-17 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction Brand Loyalty • Four levels – Unknown (consumers are unaware of it) – Familiarity (recognize name and some image) – Preference (will choose it if it is available) – Insistence (will accept no alternatives and will search extensively for it) • What is the other level? 8-18 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction Characteristics of Services 8-19 Intangibility Inseparability Cannot be seen, tasted, felt or smelled before purchasing Production and, consumption, and from the provider Variability Perishability Service quality depends on who provides and under what conditions Cannot be stored, for resale or later use ©Copyright 2004, Pearson Education Canada Inc. Figure 8-5 Marketing: An Introduction Westjet Discuss the marketing strategies that Westjet uses to handle these 4 characteristics of services – Intangibility – Perishability – Inseparability – Variablility 8-20 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction 3 Main Marketing Tasks for Services 1. Service differentiation – provide value to customers 2. Service quality- internal management philosophy and employee satisfaction 3. 8-21 Productivity – efficiency and cost effectiveness ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction Recommended Reading • by Harry Beckwith – “Selling the Invisible” – “What Clients Love” • “Raving Fans” – Kenneth Blanchard 8-22 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction Break 8-23 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction Why is NPD so important? – Follow changing market demands – Remain competitive – Keep up to changing technology – Replace dying products – Diversify product offering to reduce risk 8-24 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction The New Product Adoption Process • Adoption process – The mental process through which an individual passes from first hearing about an innovation to final adoption – Not all consumers want to risk trying new products when they are first introduced • Stages in the process – – – – – 8-25 Awareness Interest Evaluation Trial Adoption ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction New Product Adoption Rates 34% 13.5% 2.5% Innovators Early majority 34% Late majority Early adopters 16% Laggards Time of adoption of innovations Source: reprinted with permission of the Free Press, a Division of Simon & Schuster, from Diffusion of Innovations, Fourth Edition, by E.M. Rugers, 1983. 8-26 ©Copyright 2004, Pearson Education Canada Inc. Figure 6-5 Marketing: An Introduction Influences on the Rate of Adoption • Five characteristics influence the rate of adoption of new product innovations: – Relative advantage • How much better than existing alternatives? – Compatibility • Fit current values and experiences? – Complexity • Ease of understanding? – Divisibility/Trialability • Can it be tried on a limited basis? – Communicability • Can the innovation be observed and communicated? 8-27 ©Copyright 2004, Pearson Education Canada Inc. Marketing: An Introduction Product Life-Cycle Strategies Sales Profit ($) Sales Profits Loss ($) Development 8-28 Introduction Growth Maturity ©Copyright 2004, Pearson Education Canada Inc. Decline Figure 9-2 Marketing: An Introduction Summary of PLC/Marketing Mix R&D Sales Costs Profits Customers Competitors Marketing Objectives Product Price Distribution Advertising Promotion Introduction Growth Maturity Decline Low Increasing Peaking Declining High R&D High Average Low Low Negative Negative Rising High Declining Innovators Early adopters Middle majority Laggards Few Growing Stable number Declining Product Maximize Market share Reduce costs trial market share and profit milk brand In development Basic Extensions tbd Skimming or Penetrate Be price Cut penetration market competitive price tbd Selective Intensive Increase Reduce outlets tbd Educate Awareness Brand Reduce awareness interest differences and remind Heavy to Reduce Increase for Reduce costs tbd Diversify brand Phase out weak encourage trial heavy consumer brand switching minimum level 8-29 ©Copyright 2004, Pearson Education Canada Inc. Table 9-2 Marketing: An Introduction Product Section of Project Plan • Product positioning strategy – include a positioning statement • Core benefit/competitive advantage • Features – packaging, features, added benefits • Brand name(s) & rationale 8-30 ©Copyright 2004, Pearson Education Canada Inc.