Transcript Strategic Launch Planning and Implementation File

Ashesi University
COURSE TITLE : NEW PRODUCT
DEVELOPMENT
SEMESTER : SPRING 2016
MODULE 9 : Strategic Launch Planning
and Implementation
Learning Goals
• Build skills in making strategic decisions of
targeting, positioning and branding of new product
for launch.
• Design tactical plan covering the entire marketing
mix for new product launch.
• Develop a comprehensive launch plan/marketing
plan/marketing programme/business plan
The Phases of the New Products Process
2-3
Launch
16-4
Strategic Launh Plan
“ … a coordinated set of strategies and
tactics for introducing a product to a target
market.” (Guiltinan 1999)
A launch plan involves identifying target
markets, establishing marketing mix roles,
forecasting financial outcomes and
controlling the project
Strategic Givens
Corporate, some team decisions made earlier.
Often found in the PIC Guidelines.
• A specified gross margin: affects funding.
• Speed-to-market: affects promotional outlays and
schedules.
• Commitment to a given channel: affects distribution plan.
• Advertising policy: affects promotion decisions.
• Pricing policy: affects decision to use penetration or
skimming pricing (slide down demand curve).
16-6
Revision of PIC Goals
• Customer Acceptance
Goals
–
–
–
–
Use
Satisfaction
Sales
Market Share
• Financial Performance
Goals
– Cash-to-cash (Time to
break even)
– Margins
– IRR, ROI
• Product Level
Performance Goals
–
–
–
–
Cost
Time to Market
Performance
Quality
• Other
– Competitive Effect
– Image Change
– Morale Change
16-7
Strategic Platform Decisions
•
•
•
•
•
•
•
•
Permanence
Aggressiveness
Type of Demand Sought
Competitive Advantage
Product Line Replacement
Competitive Relationship
Scope of Market Entry
Image
16-8
Permanence
• Strategic options: Three types
– Permanent, stand-alone.
– Permanent, but as a bridge to other items —
e.g., platform strategy.
– Temporary: Given firms’ tendency to develop
streams of products, more and more new
products are actually only temporary
(examples: cereals or snacks tied to recent
children’s movies or TV shows).
16-9
Type of Demand Sought
• Primary demand: for new-to-the-world
product
• Replacement demand: for a product
improvement or upgrade (new computer
chip, new compact car)
• Selective demand: for an entry into an
established market.
16-10
Product Line Replacement
Strategies
Butt-on product
replacement
Low-season switch
High-season switch
Roll-in, roll-out
Downgrading
Splitting channels
The existing one is simply dropped when the new one is announced. Example:
Ford's marketing of Mondeo and dropping of Sierra.
Same as butt-on, but arranging the switch at a low point between seasons. Tour
companies use this switch when they develop their new catalogs.
Same as butt-on, but arranging the new item at the top of a season. Example:
Polaroid used this strategy often, putting new replacement items out during the
Christmas season.
Another version of butt-on, but arranged by a sequence of market segments.
Mercedes introduced its C series country by country.
Keeping the earlier product along side the new, but with decreased support.
Example: The 386 chip stayed along side the 486, until the Pentium was
introduced.
Putting the new item in a different channel or diverting the existing product into
another channel. Example: Old electronic products often end up in discounter
channels.
16-11
Scope of Market Entry
This is not test marketing. This is launch.
All forces in place and working.
• Roll out slowly — checking product, trade and
service capabilities, manufacturing fulfillment,
promotion communication, etc.
• Roll out moderately, but go to full market as
soon as volume success seems assured.
• Roll out rapidly — full commitment to total
market, restricted only by capacity.
16-12
Some Other Strategic Platform
Decisions
• Aggressiveness (aggressive versus cautious
attitude at entry)
• Type of demand sought (primary versus
selective)
• Competitive advantage sought (differentiation,
price leadership, or both)
• Competitive relationship (aim at a competitor,
avoid a competitor)
• Image (create a new image, tweak an existing
image, use the already-existing image)
16-13
Strategic Action/Driving Decisions
Target Market
• Positioning
• Branding
• Packaging
•
16-14
The Target Market Decision
Target Market : A group of people
for whom a firm creates and
maintains a marketing mix that
specifically fits the needs and
preferences of that group
How do you the group?
16-15
WHAT IS A MARKET?
A market consists of the
prospective buyers (individuals or
organizations) willing and able to
purchase the existing or potential
offering (product or service) of an
organization.
WHAT IS A MARKET?
Implications for marketers:
Buyers
Focus on buyers, not products or services.
Effective
Demand
Exchanges cannot occur unless buyers are able and
willing to purchase a product or service.
Offerings
Purchases consist of offerings, not products or services,
due to the values or benefits that buyers derive from
them.
MARKET SEGMENTATION
Market
Segmentation
A technique that involves breaking down or building
up of potential buyers into groups, which are called
market segments.

Each segment possesses a homogeneous characteristic
that relates to its purchasing behavior and response
to a marketing program.

Market segmentation arose because an organization “cannot be all things to all
people.”

Information technology and flexible manufacturing and service delivery systems
can create “segments of one.”
BASES FOR MARKET SEGMENTATION
Consumers
Socioeconomic
Characteristics
Behavioral
Variables
Industrial Buyers
Socioeconomic
Characteristics
• Gender
• Benefits Sought
• Company Size
• Age
• Usage
• Location
• Occupation
• Lifestyle
• Industry
• Income
• Attitudes
• Customers Served
• Family Life Cycle
• Education
• Location
Behavioral
Variables
• Purchasing
Objectives
• Product
Benefits
REQUIREMENTS FOR EFFECTIVE
MARKET SEGMENTATION
Need to answer six buyer-related questions:
 Who are they?
 What do they want to buy?
 How do they want to buy?
 When do they want to buy?
 Where do they want to buy?
 Why do they want to buy?
REQUIREMENTS FOR EFFECTIVE
MARKET SEGMENTATION
Each market segment should be:
Measurable
Differentiable
Accessible
Substantial
MARKET TARGETING
Market Targeting: The process of evaluating
each segment’s attractiveness and selecting
one or more segments to enter
•
•
•
•
Factors
Segment size and growth
Segment structural attractiveness
Company objectives and resources
MARKET TARGETING
Two market targeting approaches:
Differentiated
Marketing
Concentrated
Marketing
 Simultaneously pursues several
different market segments with a
unique marketing strategy for each
segment.
 Focuses on a single market
segment, sometimes marketing one
product to one segment.
 Manages multiple products across
multiple market segments, which
increases marketing expenditures.
 More commonly, offers one or
more product lines to a single
market segment.
 Provides operating economies.
 Limits growth opportunities if the
segment size declines.
Factors Affecting Diffusion of Innovation
Characteristics of Products also affects rate of
diffusion: Derived from classic Rogers model of
diffusion
1. Differential advantage : functional as well psychological
e.g. Blackberry and I Phone
2. Innovation Compatibility with values, experiences,
lifestyles and behaviours e.g. mobile phones, iPod
3. Complexity: Products that difficult to understand or use
may take longer to be adopted.
4. Divisibility : Refers to the degree to which the product
can be tried on a limited basis.
5. Communicability : Benefits and application of the
innovation can be readily observed or described to target
customers.
Diffusion of Innovation and Target
Diffusion of Innovation Process and Targeting
Diffusion of Innovation Process: How a new product
spreads through a market over time.
•
•
•
•
•
Innovators
2.5%
Early adopters
13.5%
Early majority
34%
Late majority
34%
Laggards or non adopters
16%
NB: Target innovators/early adopters very early
in the launch. They tend to be opinion leaders.
Another View of Diffusion:
Crossing the Chasm
• Two adopter groups:
– Visionaries (innovators and early adopters)
– Pragmatists (all later categories)
• The two groups differ in their expectations of the new
products.
• Pragmatists do not use visionaries as their opinion
leaders.
• Visionaries might snap up a cool new cell phone while
pragmatists may just be looking for something that works
well and is not too expensive.
16-26
Crossing the Chasm
• A value proposition may attract the
visionaries but may never get acceptance
in the mass market
• To “cross the chasm,” the firm needs to
develop a value proposition that works for
pragmatists and to develop a launch
strategy that is designed to reach
pragmatists.
16-27
The Product Positioning
Decision
Positioning : Arranging for a product to occupy
a clear, distinctive and desirable place relative
to competing products in the minds of target
consumers
• E.g. E.g. Volvo perceived as car that provides
safety; Mercedes Benz seen as a premium
quality brand used by successful and rich
people.
Rolex watch positioned as trophy for rare
achievement
16-28
Product Positioning vrs
Market type decisions
Existing
Market
New Market
Resegmented
Market
1. Differentiation along existing
standards
Use attributes, distribution
channels and services
2. Credibility
Capitalize of vision of business and
passion of customers
Think (1) change (2) contribution
Identify a need or want gap
Satisfy it by providing added
value or innovation
Strategies:
1. Niche
2. Low cost
provider
Four Principles of Positioning
Strategy
• Must establish position for firm or product in
minds of customers
• Position should be distinctive, providing one
simple, consistent message
• Position must set firm/product apart from
competitors
• A company cannot be all things to all people—
must focus its efforts but must be relevant to
the target market.
Product Positioning Statement
Positioning Statement: Statement of the
product positioning in the market.
It states the product’s membership in a category
and then shows its point-of-difference from other
members of the category.
Positioning Statement
“Only Beacon Books inspires and equips me to
discover and exploit the gem in my life”
16-31
Developing Product Positioning
• Who are we targeting or whose problem are
trying to solve?
• What is their problem or what need do they want
us to satisfy?
• How are we meeting this need in an unique
way?
16-32
How Do We Make the Claim?
1. Product Attributes :
• Can be stated as one or more features (what it
is).
• Can be stated as a function (how it works).
• Can be stated as one or more benefits (how the
user gains)
2. Surrogate or Attributes outside of the Product
• Can be stated as a surrogate (no features,
functions, benefits).
16-33
Product Positioning Options
Position to an Attribute
•
Feature: A dog food that has “as much protein as ten pounds of sirloin.”
•
Function: BMW “ The Ultimate Driving Machine”
•
Benefit: A new toothpaste “saves you money”
Position on a Surrogate
•
Nonpareil: Jaguar cars, Perrier water.
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Parentage: A Chanel perfume, a Disney movie, a Ralph Lauren designer suit.
•
Manufacture: Budweiser (beechwood aging), Audi (renowned engineering).
•
Target: Airlines designed for the business traveler, Vector tires for use on wet roads.
•
Rank: Hertz, Blue Cross/Blue Shield, and others who claim to be No. 1.
•
Endorsement: Doctor recommendation, celebrity spokesperson.
•
Experience: Stress long use by satisfied customers (Nuprin, Yellow Pages).
•
Competitor: USPS Express Mail and some Kia autos are just like competitors but cheaper.
•
Predecessor: You liked Hershey’s Kisses so you will also like Hugs.
16-34
Sound Positioning Strategy
• Desirability criteria (consumer perspective)
– Personally relevant
– Distinctive and superior
– Believable and credible
• Deliverability criteria (firm perspective)
–
–
–
–
Feasible : Can the firm create the POD?
Profitable
Communicable
Sustainable: Pre-emptive, defensible, and difficult
3.35
to attack
Branding Decisions
• Choosing Brand Elements and Names
• Trademarks and Registrations
• Building Brand Equity
16-36
Brands vs. Products
A brand is a product or service that has a unique
identity. It may have a unique name, logo, design
and packaging. It is more than an undifferentiated
commodity , product or service
Examples: Coca Cola, Nokia, Mercedes Benz, Toyota
etc.
The Brand
“The sum of all characteristics, tangible and
intangible, that make the offer unique.”
Brand Name
Coca-Cola
Brand Logo
Bottle Design and Red Cap
Trademark
™ Legally Protected Marks
Brands and organizations spend considerable sums
telling customers what they stand for.
Branding
• Branding is the process by which companies
distinguish their product offerings from the
competitor.
• It is the process of designing, planning and
communicating the name and the identity, in
order to build or manage the reputation of a
brand
Brand Elements
Brand elements collectively differentiate and distinguish
of brand or product from others .
– Brand names
– URLs (Uniform Resource Locators) also referred to
as domain names; means specific locations on the
Web.
– Logos and symbols
– Characters
– Slogans
– Packaging
4.40
Criteria for Choosing Brand Elements
•
•
•
•
•
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Memorability
Meaningfulness
Likability
Transferability
Adaptability
Protectability
Marketer’s offensive strategy
and build brand equity
Defensive role for leveraging
and maintaining brand equity
4.41
Brand Naming Guidelines
• Brand awareness
– Simplicity and ease of pronunciation and spelling
– Familiarity and meaningfulness
– Differentiated, distinctive, and uniqueness to
improve recognition.
• Brand associations
– The explicit and implicit meanings consumers
extract from it are important. In particular, the
brand name can reinforce an important attribute
or benefit association 4.42
that makes up its product
positioning.
Brand Naming Guidelines
Selecting a brand name is crucial part of the brand the marketing
planning process:
Desirable Qualities for a brand name
1.
2.
3.
4.
5.
6.
7.
Suggest something about product benefits e.g. Kleenex (tissue paper)
Easy to pronounce, recognize or remember e.g. Dove (soap), Yale
(security products), Shell
The brand name should be distinctive e.g. Virgin, Kodak
It should translate easily (and meaningfully) into foreign languages
It should be capable of registration and legal protection e.g. Miller
Brewery Company not allowed to use “Lite” exclusively for its lowcalorie beer
Evoke positive associations e.g. Pepsi Max, Lexus
Use of numerals or alphanumerics when emphasizing technology e.g.
Audi A 4, Airbus 380 etc.
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•
•
•
•
•
•
•
Questions and Guidelines in Brand
Name Selection
Assess the role or purpose of the brand. If the brand is to aid in
positioning, choose a meaningful brand name like DieHard.
Possibility of extension to a line of products. If so, choose carefully so
that it is not a limitation in the future (Allegheny Airlines became US
Airways).
Possibility of long-term position in market. A dramatic novelty name
usually doesn’t do as well if a long-term position in the market is sought.
Avoid an irritating or insulting name. Can especially be a problem when
entering foreign markets.
Be careful of regional differences in language. An acceptable name in
some Spanish dialects may be offensive in others.
Allocate enough time to brand selection. The brand name should not be a
last-minute rush job.
Don’t choose the wrong comfort level. A provocative and controversial
brand name such as Yahoo! or Bluetooth may be a great strategy,.
Other pitfalls. Not identifying the key decision makers; people involved in
decision don’t understand brand naming; getting “stuck” on a brand name
early in the process; not hiring the best patent attorney.
Source: Lee Schaeffer and Jim Twerdahl, “Giving Your Product the Right Name,” in A. Griffin and S. M. Somermeyer, The PDMA Toolbook 3 for
New Product Development, Wiley, 2007, Ch. 8.
16-44
Brand Naming Procedures
• Define objectives : Based on six criteria especially ideal
meaning the brand should convey.
• Generate names : Sources could include managers,
employees, customers, agencies etc.
• Screen initial candidates against objectives and criteria
articulated earlier.
• Study candidate names : Legal research etc.
• Research the final candidates : To confirm
memorability and meaningfulness of the remaining
names.
• Select the final name : maximizes firm’s branding and
4.45
marketing objectives and register
it.
Q28c
What the name “LOVIT” communicates
about the product
CONSUMERS
FLOUR SELLER
FOOD VENDOR
16
16
16
A PRODUCT WE ARE SUPPOSED TO LOVE
THE FLOUR IS WILL BE VERY DELICIOUS
6
FAMILIES NUMBER ONE CHOICE OF A MAIZE FLOUR
6
12
12
7
10
THE MAIZE IS GOOD AND HEALTHY
5
IT IS GOOD TO ENJOY IT
IT WILL BE NUTRITIOUS
14
12
5
6
6
4
THAT THE NEW MAIZE PRODUCT WOULD BE NICE
VITAMINS AND NUTRIENTS HAVE BEEN ADDED
5.5
IT INDICATES THAT IT WILL TASTE GOOD
6
THE MAIZE FLOUR IS GOOD AND HYGIENICALLY PREPARED
0
2
BASE
CONSUMERS
7
200
FLOUR SELLERS 50
FOOD VENDORS 50
6
4
1 2
THE FLOUR IS UNIQUE AND VERY NEW
8
10
2 3
2
3
IT IS A GOOD PRODUCT TO BUY
12
6
6
6
4
IT SAYS THE NEW MAIZE WOULD BE NICE TO TASTE
15
4
6
8
10
12
14
16
18
Trademarks and Registration
• Trademark: A word, symbol, logo, word string, sound signature that
identifies a product.
• Examples: BMW Z3 or Z4 Roadster, the GE script lettering, Apple
Inc.’s multicolored apple, Nike’s “Just Do It,” the three-note NBC
chimes or the “Intel Inside” sound.
• Generally, “trademark” refers to legal aspects while “brand” refers
to marketing strategy.
• Technically, services have service marks, and businesses have
trade names (not trademarks).
• If a trademark is registered, the firm can keep the trademark forever
even if another firm can show prior use.
• Trademarks should not be immoral or misleading.
• Trademarks should not be too descriptive of a product type (Light
cigarettes).
• Should not be confusingly similar to other trademarks (consider
Apple Inc. vs. Apple Corps, McSleep vs. McDonald’s).
16-47
How Brand Equity Provides Value
High
Brand
Loyalty
Reduced
marketing
costs
Increased
trade
leverage
High
Brand
Awareness
High
Perceived
Quality
Easier to
make
brand
associations
Supports
quality
positioning
Creates
positive
image
Patents or
trademarks
Supports
higher-price
strategy
Helps
customer
process
information
Strong
channel
relationships
Increased
liking and
familiarity
More/Better
Brand
Associations
Other Brand
Assets
Provides value to customer:
Provides value to firm:
Assists in customer information processing
Increases confidence in purchase
Increases satisfaction in product use
Increases effectiveness of marketing programs
Increases customer loyalty and trade leverage
Facilitates brand extensions
Is a source of competitive advantage
16-48
Packaging
Packaging is the activities of designing and
producing containers and wrappers for a product
• From the perspective of both the firm and
consumers, packaging must achieve a number
of objectives:
–
–
–
–
–
Identify the brand
Convey descriptive and persuasive information
Facilitate product transportation and protection
Assist at-home storage
Aid product consumption
4.49
Packaging
• The role of packaging: containment,
protection, safety, display, and
information/persuasion.
• Packaging can assist the user, permit
reusability, meet environmental needs,
carry warnings, meet legal requirements,
aid in disposability.
• Packaging as a competitive tool:
recognizability, convenience, customer
attraction, etc.
16-50
Guidelines for Creating High –
Impact Packaging
• Know your consumer
• Take the big-picture approach
• Understand that package aesthetics and
functional are both critical
• Know your distribution channels
• Educate management
Implementation of the Strategic
Plan
•
Launch Objectives
•
Marketing Mix : Pricing, Distribution
Communication
• The Launch Cycle
Launch Objectives :A-T-A-R Goals:
• New product group must persuade itself
and management that the plan can
achieve the necessary awareness,
availability, trial, and repeat purchase...
• and that it can do so in sufficient quantity
and at acceptable cost.
17-53
Steps in Developing Effective Communication
Determining the Communications Objectives
Marketers seek a purchase response that results from
a consumer decision-making process that includes the
stages of buyer readiness
•
Awareness
•
Knowledge
•
Liking
•
Preference
•
Conviction
•
Purchase
SMART objectives
Example: “The marketing communications objective for the period
January-March 2003 is to create 65% prompted awareness in
the ABC1, male 30-45 year old age group and those earning
14-24
£25,000 plus”
Pricing Objectives
Pricing Objectives represent the measurable goals a company
wants to achieve through its pricing policy.
1. Profit Oriented Objectives
- Target Return
- Maximize Profit
- Survival
2. Cash Flow
3. Sales Oriented
- Unit Sales Growth
- Growth in Market share
4.
Status Quo Oriented
- Meeting Competition
- Non price competition e.g. product quality
Pricing Strategy
Value to Customers or Perceived Value for Money
Value is the benefit the customer derives from the purchase of the
product. The firm needs to understand the value that the
customer places on the benefits received and then price
accordingly. Effectively, customers assess the price and measure
the benefits received.
Factors that affect the value they place on the product:
1. Status
2. Service and after sales service quality
3. Level of differentiation from competitor products
4. Quality of any packaging
5. Product functionality
6. Any substitute products which may be available
New Product Pricing Strategies
Promotion
Price
High
Low
High
Low
Rapid Skimming
Slow Skimming
Rapid
Penetration
Slow Penetration
New Product Pricing Strategies
Market-penetration
•
•
•
•
•
•
•
Low initial price charged (Price at a discount to competitors)
Attract large volume sales quickly
Large market share
High volume sales save costs
Economies of scale on production and distribution
It is also used if the competition is likely to follow quickly,
If a low price will give competitors less incentive to enter
New Product Pricing Strategies
Market-skimming
Setting a high price for a new product to skim maximum
revenues layer by layer from the segments willing to pay
the high price, the company makes fewer but more
profitable sales. E.g. Intel
• As competitors enter market, price is lowered
More sensible when :
• Demand is inelastic
• There is an “elite” market that is less price sensitive
• Barriers to entry (patents, etc.)
Stages for Establishing
1
Development of Pricing Objectives
2.
Assessment of Target Market’s evaluation of price
3.
Evaluation of competitors’ price
4
Selection of Basis for Pricing
5
Selection of a Pricing Strategy
6
Determination of a specific price
Price Sensitivity Measure – Consumers
1.2Kg
Q 25
CHEAP
EXPENSIVE
TOO EXPENSIVE
TOO CHEAP
120
80
OPTIMAL PRICE
60
ACCEPTABLE PRICE RANGE
40
20
Brand Price
12500
12000
11500
11000
10500
10000
9500
9000
8500
8000
7500
7000
6500
6000
0
5500
Percent
100
Distribution/Channel Strategy
Marketing Channels
Set of interdependent organizations involved in
the process of making a product or service
available for use or consumption.
The manner by which a product is sold or
distributed can have a profound impact on
the resulting equity and ultimate sales success
of
a new product.
5.62
Channel Design
• Direct channels
– Selling through personal contacts from the company to
prospective customers by mail, phone, electronic means,
in-person visits, and so forth
• Indirect channels
– Selling through third-party intermediaries such as agents
or broker representatives, wholesalers or distributors, and
retailers or dealers
– Push and pull strategies
• Web strategies
5.63
Channel Design : Functions of Members of
Marketing Channel
Information refers to the gathering and distributing research and
intelligence information about actors and forces in the marketing
environment needed for planning and aiding exchange
Promotion refers to the development and spreading persuasive
communications about an offer
Contacts refers to finding and communicating with prospective
Buyers
Matching refers to shaping and fitting the offer to the buyer’s
needs, including activities such as manufacturing, grading,
assembling, and packaging
Negotiation refers to reaching an agreement on price and other
terms of the offer so that ownership or possession can be
transferred
Functions of Members of Marketing Channel
Physical distribution refers to transporting and storing goods
Financing refers to acquiring and using funds to cover the costs or
carrying out the channel work
Risk taking refers to assuming the risks of carrying out the channel
work
Types of Distribution Channels
Consumer Goods Channels
Channel Level
A layer of intermediaries that performs some work in
bringing the product and its ownership closer to the final
buyer
Channel 1
Manufacturer
Channel 2
Manufacturer
Channel 3
Manufacturer
Channel 4
Manufacturer
Consumer
Retailer
Wholesaler
Retailer
Agent Wholesaler Retailer
Consumer
Consumer
Consumer
NB: Hybrid Marketing Channels or multi-channel distribution, as when a single firm
sets up 2 or more marketing channels to reach one or more customer segments.
Establishing Channel Strategies :Distribution
Intensity
3 broad options are intensive, selective and exclusive:
1. Intensive
is a strategy used by producers of convenience products and
common raw materials in which they stock their products in as
many outlets as possible e.g. foods, toiletries, beer etc.
Aim is to achieve saturation coverage of the market
2. Selective
is a strategy when a producer uses more than one but fewer than
all of the intermediaries willing to carry the producer’s products
•
Televisions
•
Appliances
Establishing Channel Strategies :Distribution
Intensity
3. Exclusive is a strategy in which the producer
gives only
a limited number of dealers the exclusive right to
distribute its products in their territories e.g. only one
wholesaler, retailer or industrial distributor is used in
a
geographic area.
•
Luxury automobiles
•
High-end apparel
Rolex Store
Motivating Distributors
• Increase distributor’s unit volume.
• Increase distributor’s unit margin.
• Reduce distributor’s cost of doing
business.
• Change distributor’s attitude toward the
line.
17-70
Definition of Communications
Communication is the process whereby
thoughts are conveyed and meaning is
shared between individuals or between
organizations and individuals
Integrated marketing communication
involves identifying the target audience
and shaping a well-coordinated
promotional program to obtain the
desired audience response
Communication Process
2
72
© 2014 by Cengage Learning Inc. All Rights Reserved.
The Promotion Mix
The promotion mix is the specific blend of advertising,
public relations, personal selling, and direct-marketing
tools etc that the company uses to persuasively
communicate customer value and build customer
relationships
14--4
Marketing Communication Mix
Media advertising
TV
Radio
Newspaper
Magazines
Consumer promotions
Samples
Coupons
Refunds and rebates
Contests and sweepstakes
Bonus packs
Price offs
Place advertising
Billboards and posters
Movies, airlplaines, lounges
Product placement
Point of purchase
Point of purchase
Shelf talkers
Aisle markers
Shpping cart ads
In store radio or tv
Event marketing
and sponsorship
Sports
Arts
Entertainemnt
Fairs and festivals
Cause –related
Direct response
Advertising
Mail
Telephone/Mobile
Video
Cd-ROM
Trade promotions
On line
WEb sites
Interactive ads
Publicity and PR
Trade deals and buying allowances
Point of purchase display allowances
Push money
Contests and dealer incentives
Cooperative advertising
Source: Strategic Brand Management – Kevin Lane Keller
Nike
PROMOTION
Product
Advertising
PR
City Attacks
Sponsorship
Events
New media
Retail
Marketing
Complete 360
a mix of traditional & non traditional…
Media
60% outdoor
Website
Coffee shops
PR
White Paper
& the EDA
Activation
‘Join the debate’
Consumer
Involvement:
Van tour
Instore
Steps in Developing Effective Communications Plan
CONTEXT ANALYSIS
• Key Issues
COMMUNICATION OBJECTIVES
Market
Research
COMMUNICATION STRATEGY
• Target Audience
• Positioning
• Choice Promotional Mix
• Push, Pull and Profile Strategy
•Creative and Media Strategy
INTEGRATED COMMUNICATION
PLAN
• Budgets
• Scheduling
• Implementation
Push Strategy versus Pull Strategy
7
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78
Marketing Communications Options or
Tools
•
•
•
•
•
•
Advertising
Promotions
Event marketing and sponsorship
Public relations and publicity
Personal selling
Direct Marketing
6.79
Stages in Developing Advertising Campaign
•
•
•
•
•
•
Define campaign responsibilities
Define target audience
Set campaign objectives
Set budgets
Media Selection and planning
Advertising development and testing
(message strategy, creative concept &
message execution)
• Implementation and scheduling
• Campaign evaluation
Advertising Brief Format
 Why do we want new brand communication? Launch,
 What consumer understanding or insight drives this brief?
 Who is our target audience?
 What do they think and do now? State of mind or current
behaviour
 What would we like them to think and do in response to the
advertising? Objectives
 What is most likely to achieve this change? (i.e. the
differentiator or unique selling proposition) Could be functional
as well emotional
 Why should they believe it? Supporting evidence
 Practical Considerations : e.g. type of ad, media, duration
Brief
Communications Idea
Executional Idea
– Brief
• Distils the point of difference that makes the brand preferred
– Communications Idea
• A creative vehicle which dramatises the point of difference
– Executional Idea
• A single expression of the communications idea which strengthens
its impact to keep the idea fresh
Copy Strategy Statement
• Communications tools used at launch will have certain
deliverables.
• The way in which the firm communicates these
deliverables to the advertising and promotion creative
people is the copy strategy statement.
• Typical contents:
– The market segment targeted
– The product positioning statement
– The communications (promotion) mix
– The major copy points to be communicated.
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Typical Examples of Copy
Points
• “The provider of this insurance policy is the largest in the
world.”
• “This cellular phone has no geographic limitation.”
• “Dockers are available at JCPenney.”
• “Future neurosurgeons benefit from the hand-to-eye
skills of computer games like this one.”
There is no limit to the choices here, but there must be a
focus. Only a few copy points are going to be accomplished
at a time.
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Common Advertising Appeals
3
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Eleven Common Executional Styles for Advertising
3
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Promotions
• Short-term incentives to encourage trial or usage of
a product or service
• Marketers can target sales promotions at either the
trade or end consumers
• Consumer promotions
– Consumer promotions are designed to change the choices,
quantity, or timing of consumers’ product purchases.
• Trade promotions
– Trade promotions are often financial incentives or
discounts given to retailers, distributors, and other
members of the trade to stock, display, and in other ways
facilitate the sale of a product.
6.87
Two Broad Categories of Sales
Promotion
Trade
Promotions are the incentives
Consumer Promotions are incentives
used by manufacturers and other
members of the marketing channel to
help push products through the
retailers
Entice another member of the channel
to purchase goods for eventual resale.
that are aimed at the end user
Goals: entice the customer to take the
decision to make a purchase, increase
traffic to the store, generate brand
loyalty etc.
They are aimed at retailers,
wholesalers, distributors, brokers or
agents.
Role: Build stronger relations with
members of the channel
Trade Promotion Tools: Trade Allowances,
Trade Contests, Trade Incentives, Training
Programmes, Vendor Support
Programmes, Trade Shows, Specialty
Advertising, Point of Purchase Advertising
Types of Consumer Promotions: Coupons,
Premiums, Contests and Sweepstakes,
Refunds and Rebates, Sampling Bonus
Packs, Price-offs
Tactical Launch Decisions and Actions,
Showing Influences on Demand
Launch Tactic
Promotion
Advertising
Coupons
Publicity
Sampling
Beta Test Sites
Sales and Distribution
Shows/Demonstrations
Technical Support
Distribution Structure
Intensity of Coverage
Distribution Incentives
Pricing
Introductory Pricing
Price Administration
Product
Breadth of Assortment
Timing
Product Deletion
Preannouncing
Effective For:
Cases where awareness will stimulate trial
Reinforcing awareness
New and controversial technologies with high perceived usage risk
Cases where product advantages best learned through usage
Stimulating “sampling” and as a reference for other potential buyers
Clarifying relative product advantages or where uncertainty exists
Cases of incompatibility in usage process
Cases where relative advantage strong (direct channels)
Cases where warranty/maintenance service needs to be offered easily
Cases where availability needs to be stimulated
High relative advantage and compatibility (skimming policy); early
adoption needs to be stimulated (penetration policy)
Cases where economic risk needs to be reduced (i.e., through rebates or
money-back guarantees)
Introducing new product categories with high relative advantage
High margin but strong relative advantage (fast deletion); high switching
costs (slow deletion)
Building hype for new products; useful if relative advantage is high
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The Launch Cycle
Sales and
Expenditures
Expenditures
Prelaunch
Beachhead
Announcement
Sales
Early growth
17-90
Preannouncement
• Getting to be popular, and very creatively
managed.
• Far from the old days of “tease the
public.”
• Preannouncement signaling may be used
(“vaporware”).
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Beachhead
• This refers to the heavy expenditure
needed to overcome sales inertia (“getting
the ball rolling”).
• Steep rising expenditures curve during this
period, up to point where sales are
increasing at an increasing rate.
• Begins with the announcement.
• Key decision during beachhead: when do
you end it? How do you know inertia has
been overcome?
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Barriers to Trial
• Lack of interest in the claim.
• Lack of belief in the claim.
• Rejecting something negative about
product.
• Complacency.
• Competitive ties.
• Doubts about trial.
• Lack of usage opportunity.
• Cost.
• Routines.
• Risk of rejection.
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Appropriate Launch Tactics Given
Relative Advantage and Compatibility
1. Low Compatibility
2. High Compatibility
A. Low Relative Advantage
Penetration price
Slow deletion
Risk-based promotion (leasing,
money-back guarantees,
equipment allowances)
Intensive distribution
Secrecy before entry
Narrow product assortments
Awareness promotion (coupons,
etc.)
Intensive distribution
B. High Relative Advantage
Preannounce
Broad product assortments
Information-based promotion
(shows, demonstrations, websites,
publicity/education)
Selective distribution
Skim price
Fast deletion
Usage-based promotion (samples,
beta tests) to clarify benefits
received
Selective distribution
Source: Adapted from Joseph P. Guiltinan, "Launch Strategy, Launch Tactics, and Demand Outcomes,"
Journal of Product Innovation Management, Vol. 16, No. 6, November 1999, pp. 520-521.
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