1. Identify what you thought was the most important concept(s), method(s), term(s), and/or any other thing that you felt was worthy of your understanding.a. Understand what a brand is and its importance.Also, provide a graduate-level response to each of the following questions:b. Read the methodology of Interbrand.com for brand valuations. How might you improve their methods and the sorts of measures they use to assess brand equity? c. Consider the trends described in the chapter (e.g., aging, heightening environmental concern, or China). How will each affect the business you are in (or were in before coming to b-school)? d. Make a list of 3 of your favorite brands. What would be a great brand-, or line-extension that you would like to see developed as a new product?post should be at least 450+ words and in APA format (including Times New Roman with font size 12 and double spaced).Please refer to this textbox: Iacobucci, D. (2018). Marketing management. 5th ed. Cengage LearningNote : no plagiarism please© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7.
7
Brands
© 201 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 2
Marketing Framework
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 3
What Is a Brand?
• Brand
• Portfolio of qualities associated with a name
• Brands immediately invoke certain images
• Brands have value beyond the benefits of
the product
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 4
Brand Associations
• Marketers control some brand
associations
•
•
•
•
Product shape and packaging
Logos, symbols, and colors
Jingles and slogans
Spokespeople
• Marketers should control what they can
• All outgoing messages should be positive
• Marketers do not control all associations
• e.g., Personal memories about brands
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 5
Brand Name
• A brand starts with a name
• Some names immediately convey
information
• e.g., YouTube
• Some names suggest their benefits
• e.g., Optical4less
• Some names are those of their founder
• e.g., Christian Dior
• Marketer should choose a brand name
that conveys its benefits
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 6
Brand Names, Logos, and Color
• Brand name meaning is built over time
through communications with customers
• Brand names and logos are a shorthand
way to communicate with customers
• This is who we are and what we look like
• Brand colors and fonts visually engage
customers
• e.g., The New York Times and Google
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 7
Brand Names and Logos
• Some logos combine a brand name with
a symbol meant to suggest the brand’s
value proposition
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 8
Discussion Questions #1
1. Should a brand name be adapted over
time?
2. If so, when and why?
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 9
Why Brand?
(slide 1 of 2)
• Customer benefits of branding
• Brands identify company ownership
• Brands allow for predictable quality
• Brands make it easier for customers to
make decisions; less perceived risk
• Brands serve as status symbols
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 10
Why Brand?
(slide 2 of 2)
• Company benefits of branding
• Brands induce loyalty—increasing repeat
purchasing
• Brands allow premium prices
• Brands allow a single firm to pursue multiple
market segments
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 11
Hierarchy of Brand Associations
1. Concrete product attributes: 40 mpg
2. Abstract product benefits: Save money
3. Abstract emotional benefits: Feel good
• Attributes are easy to communicate and
easy for competitors to copy
• Benefits are abstract; harder to create and
communicate, but more meaningful
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7. 12
Brands Serve Social Functions
• Brands help customers express their
ideal selves
• e.g., Certain school, car, and clothing
• Brands become the focal point of
bonding through brand communities
• e.g., Subaru, Harley-Davidson, and Lego
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 13
Brand Association Network
(slide 1 of 2)
• Depiction of brand associations
• Unlinked nodes have no or weak
connection; strong links are bold
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7. 14
Brand Association Network
(slide 2 of 2)
• How it works
• When brand name is activated, associations
are triggered
• Nodes closest to the brand are retrieved first
• Customer satisfaction with the brand is most
heavily influenced by the positivity or negativity
of nearest links
• Networks may be simple or complex
• Depends on focus and consistency of
advertising
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 15
Discussion Question #2
• What comes to mind first when Louis
Vuitton is activated?
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7. 16
Brand Personalities
• Brand can have a distinct personality
• Personalities capture
1. Specific information about the brand
2. Holistic perceptions about the brand
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7. 17
Types of Brand Experiences
• Consumers experience brands
• Affective (heart), intellectual (mind), and
behavior (action)
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 18
Brand Communities
• Brand communities
• Customers who connect with like-minded
customers
• They have extreme attachments to brands
• e.g., Apple, Nintendo, Harley-Davidson
• Marketers should try to build and
capitalize on these communities
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 19
Branding Strategies
(slide 1 of 2)
• Umbrella approach
• Attaching the same brand name to products
• Subsequent product introductions are easier
for the customer to understand and accept
• Higher initial awareness levels
• Builds stronger brand associations
• Stronger financial outcomes
– e.g., Nike, Canon, and GE
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 20
Branding Strategies
(slide 2 of 2)
• House of brands approach
• Introducing a new brand name for every
product line
• Any problems with one brand should not
influence the other brands
• Brand images do not need to be consistent,
which allows for targeting multiple segments
• Requires more advertising expense
– e.g., Procter & Gamble has 80 major brands
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 21
Brand Extensions
• Brand extensions
• Leverages the brand’s good name to get
customers to buy something new
• Line extensions
• Increase depth—new product within a line
– e.g., Cheerios has various flavors
• Product category extensions
• Increase breadth—new product line
– e.g., Amazon sells many different things
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 22
Discussion Questions #3
1. How might Oscar Meyer extend its line?
2. How might Oscar Meyer implement a product
category extension?
3. Why would it do either?
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 23
Co-branding
(slide 1 of 2)
• Co-branding
• Two companies form a joint venture to
create a product from both companies
– e.g., Tevlar fabric
• Ingredient branding
• Form of co-branding in which one company
adds value to a host product
• One company dominates the other
– e.g., Intel in many PCs
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 24
Co-branding
(slide 2 of 2)
• Co-branding works well when a company
is introducing a new product attribute
• e.g., Adding cough medicine to candy
• Self-branding
• Branding own ingredient to differentiate its
quality from competitors
• Works better when tweaking a minor
attribute
• e.g., Tide’s EverFresh scent
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 25
Global Brands
• Global brand
• 30% of revenues from other countries
• Global strategies
• Glocalization
• Different names in different countries
– “Manufacturer globally, brand locally”
• Global brands
• Same brand in all countries
• More advantageous
– e.g., Amazon.com and Amazon.co.uk
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 26
Store Brands
• Private label brands
• Good for price-sensitive markets
• Can be more of a “me-too” product offering
• Can be premium private label
– e.g., Walmart’s “Sam’s Choice”
• Retailer can offer decent quality for lower
prices due to reduced advertising costs
• Manufacturers are launching second labels
to compete with store brands
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 27
Brand Equity
(slide 1 of 2)
• Brand equity
• The worth of a brand
• Measurement approaches
• Determining the price premium of brand
•
•
“How much are you willing to pay for gas at Shell?” vs.
“How much are you willing to pay at a local station?”
• Comparing branded and unbranded
•
•
“How much do you like this $499 Sony flat screen with
screen-within-a-screen?” vs.
“How much do you like this $499 unknown brand flat
screen sharing the same features?”
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 28
Brand Equity
(slide 2 of 2)
• Measurement approaches (continued)
• Interbrand: assess the value of a firm,
subtract its physical and financial assets
• Brand contribution index varies by product
category: high for cologne, lower for retailers
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 29
Discussion Questions #4
1. What do you think are the top U.S.
brands?
2. What do you think are the top non-U.S.
brands?
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7. 30
Top Brands
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7. 31
Managerial Recap
(slide 1 of 2)
• Brands are promises to customers; they
include names, logos, colors, and fonts
• Brands signal information to customers
about predictability
• Anticipated reliability and expected quality
• Brands can command higher prices
because they offset risk
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 32
Managerial Recap
(slide 2 of 2)
• Brand associations are cognitive and
emotional
• Companies can employ umbrella
branding or house of brand strategies
• Brand valuation, the measure of the
worth of brand, is important to marketers
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
7. 33
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 1
8
New Products and
Innovation
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8. 2
Marketing Framework
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 3
Discussion Questions #1
1. List three new products.
2. Why do you think companies introduce
new products?
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 4
Why Improve Products?
•
•
•
•
•
For corporate pride
To be consistent with innovative image
To better attract/satisfy customers
To stave off competition
Because the macroenvironment changes
• Consumer tastes, natural resources,
demographics, cultural changes, etc.
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 5
Approaches to Developing New Products
• Top-down (inside-out)
1. Idea generation
2. Design and development
3. Commercialization
• Customer feedback is sought later in the
process; marketing supports product launch
• Works well in industries where internal R&D
has expertise that end-customers lack
• Co-creation (bottom-up or outside-in)
• Customer & company co-create products
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 6
New Product Development Process
(slide 1 of 2)
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 7
New Product Development Process
(slide 2 of 2)
• The NPD process is not entirely linear
• It is important to continually revisit prior
decisions and change when necessary
• e.g., A good decision in stage 2 may not be a
good decision in later stages
• Marketing is involved throughout process
• Idea generation, refinement, marketing mix
decisions, etc.
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 8
Where Do New Ideas Come From?
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8. 9
Idea Creation & Market Potential
(slide 1 of 2)
1. Idea generation
• Brainstorming: “No idea’s a bad idea; let’s
get everything up on the white board”
• Firms may allocate time for employees to
work on pet projects
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 10
Idea Creation & Market Potential
(slide 2 of 2)
2. In-house winnowing & refinement
•
Screen ideas for plausibility using
•
•
•
Internal experts’ knowledge
Marketers’ target knowledge
Management’s company knowledge
• Feasibility assessments & business
analyses are somewhat fuzzy at this stage
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 11
Concept Testing, Design, & Development
(slide 1 of 4)
3. Obtain feedback on plausible ideas
• Use marketing research to
• Save a company from a bad idea
• Yield information to tweak an idea
• Encourage pursuit of good idea
• Research may include focus groups, online
surveys, etc.
• Conjoint analysis may also be used to
determine trade-offs
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 12
Concept Testing, Design, & Development
(slide 2 of 4)
• Focus groups
• 2–3 groups (per segment) of 8–10
customers
• Usually last 1.5–2 hours
• Goal is background information to improve
product development or product positioning
• Participants give feedback on product
concepts
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 13
Concept Testing, Design, & Development
(slide 3 of 4)
• Conjoint procedure
• Different combinations of attributes are put
together and compared
• Customer says which is best, next best, etc.
• Use in focus groups, online studies, etc.
• Allows marketers to see what attributes are
most attractive
• e.g., Should a laptop be light, powerful,
specific color, and preloaded with software?
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 14
Concept Testing, Design, & Development
(slide 4 of 4)
4. Research results are used to develop a
prototype
•
•
Only one prototype is developed at a time
If the prototype is not successful, another
prototype is developed
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 15
Beta Testing
(slide 1 of 4)
• A beta version is made available for trial
• Ideal to simulate a real-world purchase
• Used to help forecast sales
• Customer reactions to marketing
materials are also examined
• Ad copy, price points, distribution, etc.
• Clarifies image of product to customer
• Allows company to get feedback
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 16
Beta Testing
(slide 2 of 4)
• Try product in market on a small scale
before an expensive full-scale rollout
• Area test markets:
• Product is made available and ads are run in a
few randomly selected metropolitan areas
• Sales are observed and compared to sales in
control markets
• Not as commonly used now because
• They are expensive, require setup, tip off
competition, and sampled areas may have own
“flavors”
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 17
Beta Testing
(slide 3 of 4)
• Electronic test markets are more valid
than area test markets
• Households within a sample of metropolitan
areas are selected: some are designated
“test” and some are “control”
• Electronic (cable) transmissions are sent to
test households, but not sent to the control
households
• Differences between the test and control
households’ purchasing are evaluated
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 18
Beta Testing
(slide 4 of 4)
• Simulated test markets
• Popular premarket launch tests
• Customers are recruited and given play
•
•
•
•
•
money to shop in a simulated environment
They can buy the new product and
competitors’ products
Advertising materials are available with
competitors’ advertising
Marketers record purchases
Customers complete a survey
Data are used as input to forecast sales
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 19
Launch
(slide 1 of 5)
• Forecast sales
• If not promising, abort launch
• If promising, launch
• Forecasts are important to
• Accounting and finance for budgeting
• Sales force for setting sales goals
• Production and logistics for planning
equipment, storage, transportation, etc.
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 20
Launch
(slide 2 of 5)
• Forecasting
• Goal is to estimate sales potential ($SP), not
sales
1. Determine market potential (MP)
•
How many units might be sold
–
Start with secondary data
»
»
Census, sales for similar products, etc.
Relevant in-house benchmarking data
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 21
Launch
(slide 3 of 5)
• Forecasting (continued)
2. Estimate the purchase intention (PI)
• Likelihood target will buy the product
• Use recent marketing research
– e.g., Assume research suggests PI = 0.7
• Note: Customers usually overstate PI;
estimate ¾ downward P = ¾(0.7)= 0.525
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 22
Launch
(slide 4 of 5)
• Forecasting (continued)
3. Determine the price (Pr)
• Remember economics; PI may increase as
Pr decreases
• Forecasting equation: $SP = MP × PI × Pr
• Remember this number is not profit; it is
maximum sales
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 23
Launch
(slide 5 of 5)
• Timing
• Process of developing new products can be
relatively quick or slow
• Delays caused by
– Internal activities such as testing
– External factors such as regulations
• e.g., New pharmaceuticals take years
– Promotional efforts are intended to create
enough sales to recoup development costs
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 24
Discussion Question #2
• Outline each likely stage in the new
product development process for the
introduction of Swiffer Sweeper.
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 25
Product Life Cycle
(slide 1 of 5)
• Describes the evolution and duration of a
product in the marketplace
• Phases have predictable sales and profits
as well as optimal marketing actions
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 26
Product Life Cycle
(slide 2 of 5)
• Market introduction
• Low sales
• Heavy marketing spending on awareness
• Pricing strategies
• Penetration: low price
• Skimming: high price; recoup R&D costs
• Limited distribution
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 27
Product Life Cycle
(slide 3 of 5)
• Market growth
• Sales and profits increase
• Distribution coverage is greater
• Price may increase
• Competition
• Competitors enter the market and kill each
other off or specialize
• Product needs competitive advantage
• Promotion focuses on product’s superiority
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 28
Product Life Cycle
(slide 4 of 5)
• Market maturity
• Industry sales level off; competition is fierce
with weaker firms leaving; profits decline
• Promotion focuses on product’s superiority
and provides a reminder to buy
• Product line may be extended and new
benefits may be added
• Marketing costs increase and price falls due
to competition
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 29
Product Life Cycle
(slide 5 of 5)
• Market decline
• Sales and profit decline
• New products replace older generations
• Old products may be
• Divested: sold—sell early to get best price
• Harvested: support reduced
• Rejuvenated: refurbished with new benefits
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 30
Discussion Questions #3
1. Do products have to die?
2. Are the lengths of product life cycles
consistent across products?
3. Do individual brands have shorter or
longer life cycles than product
categories?
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 31
Diffusion of Innovation
(slide 1 of 3)
• A normal curve is utilized to partition
customers into groups to show how new
products spread through the marketplace
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 32
Diffusion of Innovation
(slide 2 of 3)
• Innovators: first 3–5%
• Like to try new products; willing to take risks
• Early adopters: next 10–15%
• Even more influential as opinion leaders
because the group is bigger
• Early majority: next 34%
• More risk averse
• Waiting to hear about favorable experiences
from early adopters
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 33
Diffusion of Innovation
(slide 3 of 3)
• Late majority: next 34%
• Even more cautious
• Often older and more conservative
• Want to buy only proven products
• Laggards or non-adopters: next 5–15%
•
•
•
•
Most risk averse
Skeptical of new products
Stereotypically lower in income
Product category may not be relevant to
them
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 34
Discussion Question #4
• Use the diffusion of innovation model to
explain the growth of the smartphone
market.
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 35
Cumulative Diffusion
• Diffusion curve is recast to show
cumulative sales
• Tipping point: point at which sales rate
increases rapidly
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 36
Mathematical Model of Diffusion
•
Two ways to use diffusion model
1. Observe early sales data, fit the model, and
predict future sales
2. Plug in past results on similar products and
predict future sales
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 37
Model of Diffusion
• Coefficient of innovation (p)
• Likelihood purchase or adoption due to
promotion
• Increase p by decreasing price earlier
• Coefficient of imitation (q)
• Likelihood of purchase or adoption due to
word-of-mouth information
• q is usually bigger than p
• Increase q by decreasing price later
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 38
New Product Acceptance
• Acceptance of new products tends to be
higher when the new product:
• Has clear relative advantage
• Is compatible with customers’ lifestyles
• Is not overly complex or has a user-friendly
interface
• Is easily tried or sampled
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 39
New Product Willingness
• Companies vary in their willingness to
pursue new products
• From innovator to reactor
• Market pioneers have difficulty with
“really new” products
• First movers launch “incrementally new”
products because there is less risk
• Early followers have approximately the
same survival risks
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 40
Growth Strategies
(slide 1 of 3)
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 41
Growth Strategies
(slide 2 of 3)
• Market penetration
• Sell the same products to current customers
• New ways to use, better marketing mix, etc.
• Easiest strategy
• Product development
• Sell new or modified products to current
customers
• Introduce extensions or new variations
• Company wants to be innovative
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 42
Growth Strategies
(slide 3 of 3)
• Market development
• Sell existing products to new segments
• Move global or target different segment
• May need to change image, channels, etc.
• Diversification
• Pursue new markets with new products
• Too difficult for most companies due to lack
of experience in product and market
• Toughest strategy
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 43
Trends to Watch
•
•
•
•
Aging of population
Hispanic population growth
More wealthy Americans
Growing concern for environment and
corporate social responsibility
• Cultural differences
• Role of China and fast-growing
economies
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 44
Discussion Questions #5
1. How could firms capitalize on the
opportunity presented by the aging
population?
2. Discuss changes in the global
economy.
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 45
Managerial Recap
(slide 1 of 2)
• New products are crucial to growth
• New product development process
• Idea generation to market potential, to
concept testing, design and development,
then beta testing, and ultimately the launch
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 46
Managerial Recap
(slide 2 of 2)
• Products evolve through a life cycle
• Introduction, growth, maturity, and decline
• Each stage is recognizable by its sales and
profitability and carries 4P recommendations
• Models can be used to forecast sales
• Marketers should study important trends
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
8. 47
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
© 2018 Cengage Learning®. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6.
6
Products: Goods and
Services
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 2
Marketing Framework
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 3
Discussion Questions #1
1. Is Arnold Schwarzenegger a product?
2. What is a product?
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 4
Products
• A product can be either a good or a
service
• It is the most essential decision in the
4Ps because it is what the consumer is
receiving in the exchange
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 5
Marketing Exchange
(slide 1 of 2)
• Exchange
• The company offers something (product)
that will benefit the customer
• The product can be designed to be more or
less attractive
– Increase/decrease quality, service, etc.
• The customer offers something in return
(payment)
• Customer can be more or less attractive
– High/low loyalty, high/low maintenance,
spreads positive word-of-mouth, etc.
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 6
Marketing Exchange
(slide 2 of 2)
• Marketers need to
1. Determine what the customers want in
order to increase the likelihood of
exchange
2. Determine what the company can
profitably offer
• The goal is to create mutually beneficial
exchanges that result in long-term
customer relationships
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 7
Discussion Questions #2
1. Discuss an example of a situation
where a company is only looking for a
discrete transaction with a customer.
2. Why do marketers want to create longterm relationships?
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 8
Goods vs. Services
• Goods and services differ in terms of
•
•
•
•
Intangibility
Search, experience, credence
Perishability
Variability
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 9
Goods vs. Services: Intangibility
• Intangibility:
• Extent to which you have something concrete
• Pure goods: e.g., paper & phone
• Pure services: e.g., massage & babysitting
• Hybrids: e.g., restaurant & beauty salon
• Experience marketing
• Consumers are buying the experience
• e.g., ESPN Zone & Build-a-Bear
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 10
Goods vs. Services: Qualities
(slide 1 of 2)
• Search qualities
• May be evaluated prior to purchase
• Experience qualities
• Need trial/consumption before evaluation
• Credence qualities
• Difficult to judge even post-consumption
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 11
Goods vs. Services: Qualities
(slide 2 of 2)
• Goods are dominated by search and
experience qualities
• Services are dominated by experience
and credence qualities
• Professional service providers are beginning
to understand the value of marketing
• Create professional appearance and setting,
tap their networks, etc.
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 12
Goods vs. Services: Perishability
• Perishability
• Services are simultaneously produced and
consumed; thus,
1. Services cannot be stored; goods can
• Marketers need to even out demand
2. Services cannot be separated from the
provider; goods can
• Customer/service provider interaction
becomes part of the service
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 13
Goods vs. Services: Variability
• Variability
• Goods are made by machines; services are
usually people intensive
• Services change across customers and
across time
• Marketers need to
• Reduce bad variability
• Enhance good variability
• Self-service is advancing in many industries
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 14
Discussion Question #3
• What steps can marketers take to reduce
bad variability?
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 15
Core vs. Value-Added
(slide 1 of 3)
• Core is essential to the product offering
• Value-added is supplemental
• Can use to differentiate & improve satisfaction
• Can use to identify competition
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 16
Core vs. Value-Added
(slide 2 of 3)
• Core elements are expected by
customers
• If core elements are substandard,
dissatisfaction can be triggered
• Recall issued, poor quality, etc.
• Marketers can compete/differentiate on
value-addeds
• Generous service plan, good staff, etc.
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 17
Core vs. Value-Added
(slide 3 of 3)
• Core businesses may change as
industries and firms change
• e.g., Victoria’s Secret was 70% apparel but is
now 70% beauty and fragrance
• It is key to continually ask
• What business are we really in?
• Who are our true competitors?
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 18
Competition through Customers’ Eyes
• Define competition broadly
• Car companies compete with other means of
transportation (bus, taxi, etc.)
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 19
Product Lines: Breadth and Depth
• Product mix
• A company’s product lines
• Breadth
• Number of product lines
• Frigidaire sells refrigerators, washers, dryers,
ranges, etc.
• Depth
• Number of products in a line
• Frigidaire refrigerators have different sizes
and features
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 20
Discussion Questions #4
1. Which option has the least breadth?
2. Which option has the most depth?
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 21
Product Line Strategies
• Product line managers can prune or
supplement existing lines
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 22
Discussion Questions #5
1. Which firm(s) above is leveraging its
segment knowledge efficiently?
2. Inefficiently?
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 23
Managerial Recap
(slide 1 of 2)
• Products are goods and services
• Products are the central offering in the
marketing exchange
• Goods and services share similarities
and differences
• Services are relatively more intangible,
inseparable, perishable, and variable
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 24
Managerial Recap
(slide 2 of 2)
• A firm’s market offering is comprised of
the core and the value-addeds
• Consider competition broadly
• Competition can evolve over time as product
lines are further developed in length and
breadth
© 2018 Cengage Learning.® May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
6. 25
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