Transcript What is a Product? - FMT-HANU

POM FINAL EXAM REVISION 2013
Kotler, Brown, Adam & Armstrong: International Marketing 3e © 2006 Pearson Education Australia
EXAM FORMAT
1.
Section I: Word/ phrase finding ( 2 marks each = 20 marks)
Example: The IMC budget is spent based on how much the
company can spend is called “ ....”
2. the answer is “affordable method)
1.
2.
3.
Section II: MCQs ( 2 marks each = 30 marks)
Section III: Written answers (10 marks each = 30 marks) – see
the SLIDES
1.
2.
4.
Question 1 & 3: Chapter 8
Question 2: Chapter 9
Section IV: Case study: 20 marks (Chapter 12&13)
Kotler, Adam, Brown & Armstrong: International Marketing 3e © 2006 Pearson Education Australia
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Chapter 8
Products: goods, services and
experiences
Kotler, Brown, Adam & Armstrong: International Marketing 3e © 2006 Pearson Education Australia
Chapter 8
Products: goods, services and
experiences
Kotler, Brown, Adam & Armstrong: International Marketing 3e © 2006 Pearson Education Australia
What is a Product?

A product is anything that can be offered to a market for
attention, acquisition, use or consumption that might
satisfy a want or need. Marketing management need to
think about their product offerings on three levels:
1. The most basic level is the core product, which addresses
the question: What is the buyer really buying?
2. Actual products may have as many as five characteristics:
a quality level, features, styling, a brand name, &
packaging
3. Augmented product, additional consumer services and
benefits built around the core and actual products
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Figure 8.2: Three Levels of
Product
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Figure 8.3: Illustrating three
levels of product
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Services

Service organisations offer customers something
that is intangible: the interaction does not result
in the ownership of anything that endures

Services are responsible for over 70%of ‘total
value added’ and over 80% of ‘total employment’
in Australia
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Characteristics of Services
 Intangibility
 High involvement and personal nature
 Variability
 Synchronous delivery and
consumption
 Perishability
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Service Quality Measures
 Service consumption mostly involves
people in service encounters, services
are experiential in nature and often
require special measures to assess
quality such as mystery shoppers
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Figure 8.5: Individual Product
Decisions
Product Attributes
Branding
Packaging
Labelling
Product Support Services
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Product Attribute Decisions
 Product quality: the ability of a product to
perform its functions; it includes the
product’s durability, reliability, precision,
ease of operation and repair, and other valued
attributes
 Strategic quality involves gaining an edge
over competitors by consistently offering
products and services that give customers
better quality
 ‘quality is not a problem to be solved; it is a
competitive opportunity’
Kotler, Adam, Brown & Armstrong: International Marketing 3e © 2006 Pearson Education Australia
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Product Attribute Decisions
 Product feature: a product can be
offered with varying features. From a
basic model to a higher level e.g. car
industry
 Product design: the process of
designing a product’s style and
function
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Branding
 Branding is a major strategic decision
 Branding requires long-term marketing
investment, especially for advertising,
promotion and packaging
 Powerful brands gain brand recognition and
can command consumer loyalty
 Companies that develop brands with strong
consumer franchise are protected against
competitors strategies. Such companies have
high brand equity
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Brands
Benefits
Attributes
Value
Levels of
Brand Meaning
Awareness
Personality
Brand
Equity
Preference
Portfolios
Loyalty
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Major Brand Decisions
To Brand or Not to Brand
Brand
No Brand
Brand Name Selection
Selection
Protection
Brand Sponsor
Manufacturer’s Brand
Private Brand
Licensed Brand
Brand Strategy
New Brands
Line/Brand Extensions Multibrands
Brand Repositioning
Brand Repositioning
No Brand Repositioning
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Figure 8.7:
Four Brand Strategies
Brand Name
Product Category
Existing
New
Existing
Line
Extension
Brand
Extension
New
Multibrands
New
Brands
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Packaging
Secondary
Shipping
Immediate
Packaging
Identifies
Labelling
Promotes
Describes
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Chapter 9
New products
Kotler, Brown, Adam & Armstrong: International Marketing 3e © 2006 Pearson Education Australia
The Product Lifecycle (PLC)

After launching the new product, management
wants the product to enjoy a long and happy life.
 Although it does not expect the product to sell
forever, management wants to earn a decent
profit to cover all the effort and risk that went into
it.
 Management is aware that each product will have
a life cycle, although the exact shape and length
is not known in advance.
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The Product Lifecycle (PLC)

Product Development


Maturity

Begins when the
company finds and
develops a new
product ideas.
Introduction



A period of slow sales
growth as the product
is being introduced to
the market

Decline

Growth

A period of slowdown
in sales growth as the
product gained
acceptance by most of
buyers.
Period of drop in sales
and profits as
customers switch to
new products
Period of rapid market
acceptance and sales
growth
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Figure 9.3 - Product Life
Cycle (PLC)
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Style

A style is a basic and distinctive mode of
expression. For example, styles appear in homes
(colonial, federation), clothing (formal, casual)
and art (realistic, surrealistic, abstract). Once a
style is invented, it may last for generations,
coming in and out of vogue. A style has a cycle
showing several periods of renewed interest.
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Fashion

A fashion is a currently accepted or popular
style in a given field.

Fashions pass through many stages. First, a
small number of consumers take an interest in
something new to set themselves apart. Then
other consumers become interested out of a
desire to copy the fashion leaders. Next, the
fashion becomes popular and is adopted by
the mass market.
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Fad

Fads are fashions that enter quickly, are
adopted with great zeal, peak early and
decline very fast.

They last only a short time and tend to attract
only a limited following. Fads often have a
novel or quirky nature, as when people started
buying Rubik’s Cubes, go-go boots, platform
shoes, Trivial Pursuit games, Thermal and
Moisture Changing Images T-shirts or yo-yos.

Fads appeal to people looking for excitement,
a way to set themselves apart, or something to
talk about to others.
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Figure 9.4 -Fashion, Style and
Fad
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PLC Concept: Application
 The PLC concept can be applied by marketers as a
useful framework for describing how products and
markets work.
1. But using the PLC concept for forecasting product
performance or for developing marketing strategies
presents some practical problems.
2. For example, managers may have trouble identifying
which stage of the PLC the product is in, pinpointing
when the product moves into the next stage, and
determining the factors that affect the product’s
movement through the stages.
3. In practice, it is difficult to forecast the sales level at
each PLC stage, the length of each stage and the shape
of the PLC curve.
4. Yet, when used carefully, the PLC concept can help in
developing good marketing strategies for different
stages of the product life cycle.
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Life Cycle Stages
Growth
Decline
Introduction
Maturity
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Table 9.6: Summary of product life-cycle
characteristics, objectives and strategies
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PowerPoint to accompany
Philip Kotler,
Stewart Adam,
Linden Brown
& Gary
Armstrong
Kotler, Brown, Adam & Armstrong: International Marketing 3e © 2006 Pearson Education Australia
Chapter 12
IMC: advertising and public
relations
Kotler, Brown, Adam & Armstrong: International Marketing 3e © 2006 Pearson Education Australia
Integrated Marketing
Communication (IMC)

IMC entails co-ordinating the organisation’s
promotional efforts using such major communication
elements as:






advertising,
sales promotion,
public relations,
direct and online marketing,
and personal selling.
An organisation’s integrated marketing communication
program consists of a specific blend of the above
mentioned elements that will most effectively meet
objectives such as to inform, persuade, and remind
consumers as well as to reinforce their attitudes and
perceptions.
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Steps in developing integrated
marketing communication





Marketers need to understand how
communication works
Communication involves nine elements
The two major parties are the sender and the
receiver of the information
Two major communications tools are the
message and media
Four major communication functions are
encoding, decoding, response and feedback
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Elements in the
communications process
1. Sender: The party sending the message to another party
2. Encoding: The process of putting thought into symbolic
form
3. Message: The set of symbols that the sender transmits-
the actual advertisement.
4. Media: The communication channels through which the
message moves from sender to receiver
5. Decoding: The process by which the receiver assigns
meaning to the symbols encoded by the sender-a
consumer watches the ad and interprets the words and
illustrations it contains.
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Elements in the
communications process
6. Receiver: The party receiving the message sent by
another party-the consumer who watches the ad.
7. Response: The reactions of the receiver after being
exposed to the message-any of hundreds of possible
responses.
8. Feedback: That part of the receiver's response
communicated back to the sender- research shows that
consumers like and remember the ad.
9. Noise: The unplanned static or distortion during the
communication process that results in the receiver
getting a different message from the one which the
sender sent
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Figure 12.2: Elements in the
Communication Process
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Decisions in Developing IMC
1. Identifying The Target Audience
2. Determine Response Sought
3. Selecting a Message
4. Selecting a Media
5. Selecting a Message Source
6. Collecting Feedback
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Decisions in developing IMC
1. Identifying The Target Audience
• A marketing communicator starts with a clear target
audience in mind. The audience may be potential
buyers or current users, those who make the buying
decision or those who influence it. The audience
may be individuals, groups, special publics or the
general public
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Decisions in developing IMC
2. Determine Response Sought
• Awareness
• Knowledge
• Liking
preference
• Conviction
• Purchase
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Figure 12.3:
Buyer Readiness States
Awareness
Knowledge
Liking
Preference
Conviction
Purchase
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Figure 12.4: The brand and
corporate image reputation
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Selecting a message
 Ideally the message should:
 Get Attention
 Hold Interest
 Arouse Desires
 Obtain Action
( A framework known as the AIDA model)
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Decisions in developing IMC
3. Selecting a Message
• Rational Appeals
• Emotional Appeals
• Moral Appeals
• Message Structure
• Message Format
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Decisions in developing IMC
4. Selecting Media
 Personal Communication channels
 Non-personal communication channels
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Selecting Media
Opinion
Leaders
Word of
Mouth
Major
Media
Personal
Media
Non-personal
Media
Events
Atmospheres
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Decisions in developing IMC
5. Selecting the message source
• The message’s impact on the audience is
also affected by how the audience views
the sender. Messages delivered by highly
credible sources are more persuasive
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Decisions in developing IMC
6. Collecting Feedback
 After sending the message, the
communicator must gauge its effect on the
target audience
 This involves asking the target audience
whether they remember the message, how
many times they saw it, what points they
recall, how they felt about the message,
and their past and present attitudes
towards the product and company
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Setting the IMC budget
 Four common methods used to set
the total budget for advertising:
1. affordable method,
2. percentage-of-sales method,
3. competitive-parity method
4. objective-and-task method
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Setting the IMC Mix

The marketing organisation must now divide the total
marketing communication budget among the major
marketing communication categories specific media,
tools and technologies:
1.
2.
3.
4.
media advertising
public relations, sales promotion
direct and online marketing
and personal selling

It must blend the mix of marketing communication so that it
will enable it to achieve its marketing objectives.

Companies within the same industry differ greatly in how
they design their IMC mixes.
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Factors in Developing IMC
Type of
Product and
Market
Stage in
PLC
Issues
for
Setting the
Promotion
Mix
Push
or
Pull
Buyer
Readiness
State
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Major decisions in
advertising
1. Objective Setting
2. Budget Decisions
3. Message Decisions
4. Media Decisions
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Major decisions in
advertising
1. Objective Setting
 An advertising objective is a specific
communication task to be accomplished
with a specific target audience during a
specific period of time.
 Advertising objectives can be classified by
purpose: whether their aim is to inform,
persuade or remind
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Figure 12.7: Major
Advertising Decisions
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Figure 12.8: Possible
Advertising Objectives
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Major decisions in advertising
2. Budget Decisions
 After determining its advertising
objectives, the company can next set its
advertising budget for each product. The
role of advertising is to affect demand for a
product. The company wants to spend the
amount needed to achieve the sales goal.
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Factors to consider when
setting the advertising budget
Product
Differentiation
Advertising
Frequency
Stage in
PLC
Considerations
When Setting
Advertising
Budgets
Market
Share
Competition
and Clutter
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Major Advertising
Decisions
3. Advertising Strategy
 A large advertising budget does not guarantee a
successful advertising campaign. Two advertisers
can spend the same amount on advertising yet have
very different results
 The first step in creating effective advertising
messages is to decide what general message will be
communicated to consumers
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Message Execution
Testimonial
Evidence
Scientific
Evidence
Technical
Expertise
Slice of Life
Lifestyle
Typical
Message
Execution
Styles
Personality
Symbol
Fantasy
Mood or
Image
Musical
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Message Execution
•
Slice-of-life: This style shows one or more people
using the product in a normal setting
•
Lifestyle: This style shows how a product fits in with a
lifestyle
•
Fantasy: This style creates a fantasy around the
product or its use
•
Mood or image: This style builds a mood or image
around the product, such as beauty, love or serenity
•
Musical: This style shows one or more people or
cartoon characters singing a song about the product
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Message Execution
•
Personality symbol: This style creates a character
that represents the product.
•
Technical expertise: This style shows the
company’s expertise in making the product.
•
Scientific evidence: This style presents survey or
scientific evidence that the brand is better or better
liked than one or more other brands.
•
Testimonial evidence: This style features a highly
believable or likeable source endorsing the
product.
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Major Advertising
Decisions (4)
4. Media Decisions
•
The advertiser next chooses advertising
media to carry the message. The four major
steps in media selection are:
1.
2.
3.
4.
deciding on reach, frequency and impact
selecting major media types
selecting specific media vehicles
deciding on media timing
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Table 12.5: Profiles of
major media types
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Advertising Evaluation

Measuring the communication effect (copy testing)
 Three major methods of advertising pre-testing:

Direct rating
 Portfolio tests
 Laboratory tests

Two popular methods of post-testing advertisements:

Recall tests
 Recognition tests
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International advertising
decisions
 The major decision is the degree to which
global advertising should be adapted to the
unique characteristics of various country
markets
 Standardisation has benefits such as lower
costs and greater coordination of global
efforts but ignores cultural differences
 Most companies think globally and act locally
 Costs and legislative requirements in
different countries need to be considered
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Public Relations Decisions

Another major mass-communication tool is public
relations— it aims at building good relations with
the company’s various publics using different
tools: PENCILS







Publications
Events
News
Community involvments
Identity tools
Lobbying
Social investments
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Socially Responsible
Marketing Communication
 Advertising

Companies must avoid false or deceptive
advertising. Advertisers must not create ads that have the
capacity to deceive. Sellers must avoid bait-and-switch
advertising that attracts buyers under false pretences
 Personal selling

Companies must ensure their salespeople follow the rule of
‘fair competition’ when they sell the products directly
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Chapter 13
IMC: Sales promotion and
personal selling
Kotler, Brown, Adam & Armstrong: International Marketing 3e © 2006 Pearson Education Australia
Sales Promotion
 Sales promotion is the act of influencing
customer/consumer perception and behaviour
to build market share and sales which reinforces
brand image
1. Sales promotion is a term that is closely linked with direct
and online marketing, but has its origins in FMCG.
2. Although the term has as many confused meanings as the
term direct marketing itself, nearly all marketing scientists
and practitioners agree on what sales promotion tools do.
3. The term covers a range of incentives that are used with
products promoted via either mass media advertising or
by direct and online methods.
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Sales Promotion

The main tools falling into this category include:
1. samples
2. redeemable coupons
3. cash-back offers
4. cents-off deals or price packs
5. premium offers
6. advertising specialties
7. patronage rewards
8. point-of-purchase (POP) promotions
9. contests and games of chance and skill
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Purpose of Sales Promotion

Sellers use sales promotions to attract new triers, to
reward brand-loyal customers and thereby retain them,
to reduce the time between purchases, and even to
turn light users into medium or heavy users. The aim
might also be to regain past purchasers who have
ceased buying.

New triers of a product category fall into one of three
groups:
 non-users
 loyal users of another brand
 brand switchers.
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Setting Sales Promotion
Objectives
 Sales promotion objectives are as varied as the
methods used. Sellers may use consumer promotions
to increase short-term sales or to help build long-term
market share.
 The objective may be one of the following:
1. to entice consumers to try a new product or brand
2. to lure consumers away from competitors’ products or
brands
3. to get consumers to ‘load up’ on a mature product
4. to hold and reward loyal customers.
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Selecting Sales Promotion
Tools
Contests and games
of skill and chance
Point-ofPurchase
Patronage
Rewards
Samples
Sales Promotion
tools
Advertising
Specialties
Redeemable
coupons
Cash-back
offers
Cents-off deals
or Price Packs
Premiums
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Developing sales
promotion programs
 A number of decisions must be made in order
to define the full sales promotion program:

Size of the incentive
 How to promote and distribute the program
 The length of the promotion
 Sales promotion budgeting
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