Marketing Program - Product and Promotion

how can consumer goods be classified

convenience goods - bought frequently with minimal efforts

shopping goods - purchased less frequently

specialty goods - high-involvement products and purchased infrequently

unsought goods - purchased infrequently as these are products that consumer wouldn’t normally think of buying

what are the three product propositions

Core, Embodied, Augmented

what is core proposition

its generic

its commodity

its meets buyers’ or users’ basic needs

its easy to copy

what is the embodied proposition

its expected

the value is engineered to satisfy a specific target’s minimum purchase conditions

consumers will often expect other features that are typical of most providers in industry

what is the augmented proposition

it has the added values satisfying non-functional as well as functional need

refers to the embodied along with all the additional factors that distinguish it from similar products offered by competitors

product lifestyles

products will go through several stages in their lifestyle

each stage requires different strategies for promotion, distribution and pricing due to changes in competition

what are the stages in product lifestyle

development

introduction

growth

maturity

decline

what is the development stage

it is where the company invests heavily in R&D - incurs significant expenses

what is the introduction stage

if R&D is successful the product is then launched and heavily advertised

the revenue from sales will not be sufficient to cover advertising costs - so profits are neg

what is the growth stage

if product succeeds, sales grow and cover expenses, the advertising efforts decrease

what is the maturity stage

competitors attract to market so companies may need to increase advertising to combat them or lower the prices to maintain market share

what is the decline stage

if the product is not strong enough or cannot withstand competition, it will begin to decline and advertising efforts are minimal

what does process of diffusion look like

it shows the categories of consumers in terms of adopting to new products

the innovators

the first category of consumers to adopt a new product

they are eager to try new solutions

they are willing to take financial and other risks

they are prepared to pay premium prices

the early adopters and early majority

EAs are more cautious than innovators but still eager

these two and innovators are CRUCIAL for companies as they support new products in the early stages of lifecycle

the late majority

they are more risk-averse and price-sensitive

they sustain the “cash cow” products in a company’s portfolio

the laggards

only will adopt the product when the majority of consumers have moved onto newer solutions

what is a bran

Keller 1998 - a set of mental associations, held by the consumer, which add to the perceived value of a product or service

why do consumers like brands

as it helps them identify their preferred products

it informs consumers about source of product

it helps gauge a level of quality

it reduces level of perceived risk and improves shopping experience

why do manufacturers and retailers like branding

it enables premium pricing

it develops customer loyalty/retention and repeat-purchase buyer behaviour

it contributes to corporate identity programmes

it provides legal protection

Store brands Vs Manufacture brands

store:

advertising costs are lower - product can be offered at lower price

if store has strong reputation this can simplify consumer decision making

offers more flexibility as no need to coordinate decisions on discounts, bundling, or similar strategies with manufacturers

manufacturer:

avoid deep discounts and bundling with other brands

some manufacturers just destroy their leftover stock instead of discounting it to protect brand image

what are caveats of manufacturer brands

usually choose to sell under store labels when they have excess capacity that they won’t sell at discount

they may opt to produce extra units to lower overall manufacturing and distribution costs

different brand policies

individual branding/multi-brand policy:

requires each product offered by an organisation is branded independently of others

family branding/multi-product policy:

requires all products owned by company use the organisation’s name, either entirely or in part - umbrella brand

pros and cons of umbrella branding

Pros:

if umbrella has strong favourable associations, adding new brands requires less investment in advertising

Cons:

if new addition under umbrella is very different to original brand - the brand image may be diluted

Pros and cons of individual branding

Pros

allows market to develop formulations and positioning to appeal to diff segments in diff markets

if new line fails - firm has less damage to image

Cons

much higher marketing costs, resulting in reduced brand profitability