Marketing Principles Quiz #3

Product Life Cycle

• The product life cycle explains how products go through four distinct stages from ‘birth’ to ‘death’- going through introduction, growth, maturity and decline

• It is a useful way to explain how the market’s response to the product and marketing activities changes over the life of a product

• Your marketing strategies will evolve as your product goes through the life cycle

PLC Stages

• Introduction

• Growth

• Maturity

• Decline

Introduction

Get first-time users to use the product

• Product- Offer a single product

• Price- Either high to recover R&D costs or low price to attract large number of buyers)

• Place- Selective distribution

• Promotion- Build awareness, inform and induce trial & adoption

Growth

Encourage brand loyalty

• Product- Offer product variations, models to increase market share

• Price- Possibly price to penetrate (drop price)- due to increasing competition, particularly if initially charged higher prices.

• Place- Build expand distribution of product

• Promotion- heavy advertising to counter competition…reminding consumers of your brand and benefits, encouraging loyalty (& continue to educate consumers)

Maturity

Attract new users

• Product- Improvements and modifications; new features or new varieties (reposition for new segments or introduce new features)

• Price- Price to maintain market share

• Place- Build even more intensive distribution (availability is crucial in a competitive market)

• Promotion- Stress brand benefits to encourage switching/reminder advertising

Decline

Profitability and keeping or discontinuing product

• Product- Phase out weak brands/lines; fewer variations or discontinue product altogether if unprofitable or draining resources and preventing new product development

• Price- reduce price if product can remain profitable

• Place- Phase out unprofitable outlets

• Promotion- Reduce to minimal level, if at all to reduce costs; used just to maintain profitability

Brand Names

• The brand name is probably the most recognizable and most used form of branding

• Brand names can position a product by conveying a certain image or personality

• Brand names can also position a product by describing how the product works or benefits provided

Trademark

• A trademark is the legal term for a brand name, a brand mark (specific visual characteristics of the brand; e.g. colors, logo, visuals) or trade character.)

• Legally registered by the government and obtain protection for exclusive use in a particular country

Characteristics of Successful Brands

• Excel at delivering benefits consumers truly desire

• Stay relevant

• Pricing strategy based on consumers’ perception of value

• Brand is positioned properly

• Consistent

• Managers understand what brand means to consumers

• Brand is supported and sustained long term

Brand Equity

• The value of a brand to an organization

• How much more a consumer is willing to pay to buy your branded product vs. a generic/unbranded product of the same category

• Brand equity means a brand enjoys customer loyalty because consumers believe it is superior to the competition

• Brand equity is derived from consumers’ positive feelings and connection to a brand; brand must be distinctive in ways relevant to the consumer

• Brand equity gives firms a competitive advantage through

  • Allowing them to set higher prices than the competition with higher profit margins

  • Gaining a larger share of the market

• Allows for brand extensions

The Brand Equity Pyramid

According to K.L. Keller’s model, building a strong brand involves 4 steps (multiple building blocks):

1. Establishing proper brand identity- establishing brand awareness

2. Creating brand meaning through strong + unique + positive brand associations- i.e. establish an image they will associate with the brand/ what brand represents in their minds

3. Eliciting positive brand responses – how consumers respond to the brand

4. Forging an active relationship with consumers- intense loyalty

Brand Meaning

The beliefs and associations consumers have about a brand

Brand Management

Managing meaning

Individual Brand

• Branding strategy using a unique/separate brand for each product item

• can do a good job of clearly communicating the attributes and benefits the consumer can expect from the particular product (e.g. Surf, Gu, Pringles)

• Think Unilever- using an individual brand strategy allows them to market all the brands they own to different consumer bases, with different images, price points etc.

Family Brands

• A brand that a group of individual products or individual brands share

• Leverage the strength of an established brand and its brand equity to introduce new products

• Family/umbrella branding is useful since the attributes, credibility and meanings associated with the established brand can be transferred to the new product. E.g. Samsung, Kraft

• Note- Must ensure same quality & reliability in order to prevent any damage to the family brand and its various products

Sub-brand

• Creating a secondary brand within the main brand that can help differentiate a product line to a desired target group

• Think of it as a hybrid between family brand and individual brand strategies

National/Manufacturer Brand

• Brands that a products’ manufacturer owns and sells (Lays, BMW, Heinz)

Private Label/Store Brand

• Also Own-Brand

• Brands that a certain retailer or distributor owns and sells (Trader Joe’s, M&S, Kylie) – manufactured for a company as opposed to manufacturing product themselves

• Retailers (particularly big ones) have control over which brands they stock and sell. They make more profit selling their own label products than stocking manufacturer or national brands

• They have an advantage of creating unique products which will not be stocked elsewhere .They control shelf space/position, price. Also result in exclusive products which cannot be bought from competitors

Generic Brands

• No Branding!

• Suitable for price-sensitive consumers.

• Uses plain white packaging and black text which simply name the product sold- e.g. ‘Paracetamol’.

• Barely account for much of consumer spending

Liscensing

• Where one company sells to another company the right to use a legally protected brand name for a specific purpose and for a specific period of time. (e.g. trademark, or patent, manufacturing know-how)

• Provides instant recognition of the new product, generates interest and can instantly position a product to target market which already has high brand awareness and connections to the licensed brand. Can involve names of celebrities or characters

• Licensing is a good partnership for both companies involved

Co-Branding

• When two brands from two separate companies work together to make a new product

• Advantages include merging the strengths of 2 different brands & cost sharing

• Allows companies to expand into new product categories they may not have been able to access on their own.

• Involves carefully coordinating their marketing efforts

• Can include ingredient branding- where branded material becomes a component part in another branded product

  • usually no exclusivity

  • benefits include host brand feeding off quality and reliability and equity of ingredient brand; also ingredient brand boosts sales

• A key ingredient is supplied to a manufacturer to use – adds value to final product

Packaging

• The covering or container for the product

• It’s function:

  • To protect the product from damage

  • To store, handle and load/ transport the product

  • To promote the product

  • To identify and differentiate the product

  • To create a competitive advantage

• Packaging plays a central role in communicating the brand personality

• Uses colors, shapes, images and design details to communicate the brand itself and help identify the product

• Provides information about the product- variety, ingredients, size, use of product, warnings and directions for use

• Communicates Universal Product Code (UPC)

• Issues to consider:

  • Industry standards + competition

  • Functionality (protection, re-usability, shelf space, kitchen cupboard dimensions)

  • Ethical Issues (green, consumer health, product protection)

  • Shape and graphics (consumer insights, branding + creativity to attract consumers)

Labelling

• Cannot provide misleading information

• No false statements

• Consumer protection (packaging, description of product and ingredients, warnings, allergies, expiry/use by dates, weight, calorie content, storage instructions, directions for use, country of origin, disposal)

Purpose of Marketing Communication

• Promotion is the coordination of marketing communication efforts to influence attitudes and behaviour.

• All elements of the 4Ps, however, are used to communicate with customers.

• It performs one or more of the following:

• To inform consumers about new goods and services and where they can purchase them

• To remind consumers to continue using a certain product

• To persuade consumers to choose one product over others

• To build relationships with consumers

IMC

Integrated Marketing Communications

• A promotional communications strategy should coordinate diverse forms of marketing to deliver a consistent message

• Strategic process that marketers use to plan, develop, execute and evaluate coordinated, measurable, persuasive brand communication programs over time to targeted audiences

• Since customers come into contact with the brand prior to, during and after purchase, these various touch points are seen in their totality as a single company speaking to them in various places and in different ways

• In order for companies to be successful, they must selectively use some or all of these touch points to deliver a consistent message to their customers in a multichannel promotional strategy

• A multichannel promotional strategy will combine traditional marketing communications (advertising, sales promotions, PR, direct marketing) with social media or other online buzz creating activities

• This is very different from past approaches to marcomms strategies where messages across different platforms were not coordinated.

The Communications Model

• Promotional strategies and marketing communications can only succeed if consumers can understand what the marketers are trying to say to them...

• The communications process involves a message being sent out through a medium by a sender to a receiver who hears and understands this message

• Messages are designed to capture the receiver’s attention and relate to their needs

The Message

• This is the actual content of the physically perceivable communication (physical form of the idea) going from the sender to the receiver.

• Can be an advert, sales promotion, an event, Instagram post etc.

• Needs to include all the information necessary to fulfil its purpose of persuading, informing, reminding or building a relationship.

• Goal is to craft a message so it connects to the audience

The Medium

• No matter how the message is encoded, it must be transmitted via a medium.

• A medium is a communications vehicle used to reach members of a target audience.

• For best results, there must be a fit between the product and medium’s characteristics.

• Also must ensure target market is exposed to medium

Decoding by the Receiver

• The receiver is the person or organisation which intercepts and interprets a message

• Messages are interpreted by the receiver based on their own unique experiences

• Decoding is the process by which the message is assigned meaning- or translated into an idea in the mind of the receiver

• Communication is only effective when the receiver and sender have a mutual frame of reference

Noise

• Anything which interferes with effective communication

• Noise can occur at any stage in the communications model and can even block messages

• Noise can occur when:

  • The sender uses incoherent language (encoding stage)

  • The receiver is distracted by their surroundings

  • There are many other marketing messages sent out at the same time trying to capture audiences’ attention

• Marketers try to minimize the impact of noise by placing ads in places where they are less likely to be exposed to distractions or competition

Feedback

• The reaction to the message that can help marketers gauge the effectiveness of their message so they can fine tune it

• Can get feedback via market research

Marketing Communication Strategy and the Promotional Mix

• Promotion is central to most of an organization’s activities. All actions taken by an organization shape how the public and consumers view it, therefore all touch points act as a means of communication…

• Promotion can be broken down into several elements which make up the ‘promotional mix’. This includes:

  • Advertising

  • Sales Promotions (BOGOF)

  • Personal Selling (salespeople/assistants)

  • Public Relations (product review article in a newspaper, events/ activities to create a positive image)

  • Direct Marketing (direct mail, telemarketing etc.)

• Issues to consider:

  • More than just one of these elements are used by organizations, need to ensure they are utilized effectively

  • Must be in tune with all the other elements of the 4Ps; think of ‘product’, ‘price’ and ‘place’, they need to be combined correctly with the promotional mix in order to give an accurate representation of the company and ensure it is positioned correctly in people’s minds

IMC Characteristics

• IMC creates a single unified voice- no conflicting messages, can use different tactics to communicate with different segments, but its one unified brand image and message

• IMC seeks to develop relationships with customers (thinking along the lines of share of customer, not just market share- communicating directly with high value customers)

• IMC involves 2 way communication (feedback from customers and amending communication tactics and delivery)

• IMC focuses on stakeholders, not just consumers (since they also impact customers’ opinions and actions)

• IMC generates a continuous stream of communication information provided in the right amount and at regular time intervals for certain periods of time)

• IMC measures results based upon actual feedback (metrics are crucial)

Developing an IMC Plan/Promotional Planning

1. Identify Target Audience

2. Establish Communication objectives: Move consumers through the Hierarchy of Effects

3. Determine and Allocate the Marketing Communications Budget

   1. Determining Total Marcomm Budget (top-down vs. bottom-up)

   2. Deciding whether to use a push or pull strategy

   3. Allocating Budget to Specific Promotional Mix

   4. Designing the Promotional Mix

   5. Evaluating the effectiveness of the communications programmes

Top-Down Management Techniques

• Management determines how much to allocate to promotional activities and this amount is divided amongst various activities such as PR, advertising, sales promotions

• Percentage of sales: budget is based on last years’ sales or estimates of this years’ sales- also based on industry averages; problem: implies sales cause promotional activities as opposed to sales being the result of promotional activities.

• Competitive parity: budget is based on competition- matching competitions’ spending; problem: can lead to firms losing sight of their own objectives and can lead to only maintaining market share rather than growth.

• Top down issues: ends up being focused less on company objectives and more on industry activities or performance/sales related

Bottom-Up Managing Techniques

• Management identifies promotional goals and allocating money accordingly

• Objective task method: defining goals (e.g. 20 % brand awareness in target market, or 10% increase in sales ) and determining strategies to achieve them

Push Strategy

Pushing product (convincing partners) through wholesalers, agents, retailers [distribution channel] to entice customers to select product → using personal selling and trade sales promotions, trade advertising e.g. exhibits at trade-shows

Pull Strategy

Counts on consumer demand for the product to convince retailers to stock the product→ media advertising to consumers and consumer sales promotions

AIDA Model

• get ATTENTION

• hold INTEREST

• create DESIRE

• produce ACTION

Advertising

The non-personal communication of information, usually paid for and usually persuasive in nature, about products (goods and services), or ideas by identified sponsors through the various media

Institutional Advertising

• Promotes the activities, personality or points of view of a company

• Public Service Announcements: messages in the public interest, run by the media at no charge, that seek to change attitudes and behaviour toward a social issue.

• Advocacy Advertising: seeks to influence public opinion on a specific issue in the interest of the public or a specific group. (also because company may have a stake in the outcome).

• Corporate Advertising: Promoting the company as a whole rather than focusing on their individual product

Ad Specialists Hired by Agencies

• Account Management (executive or manager)- develops campaign strategy for client, supervises daily activities, primary liaison between agency and client and ensures employees are executing strategy correctly

• Creative Services- artists who generate the ideas behind the advert- they craft messages which fit the marketing objectives set; include creative director, art director, copywriter.

• Research and Marketing Services- collect and analyse data to ensure campaign strategy is sensible; collect data and responses to initial ideas and provide information on target market

• Media Planning- determine the media vehicles most suitable/ effective for campaign; determine where, when and how often ad will appear

Developing the Advertising Campaign

1. Understand Target Audience

2. Establish Message Objectives and Budget

3. Design the Advert

4. Pre-test What Ad will Say

5. Choose the Media type(s) and Media Schedule