Marketing Notes

Introduction to Services

Services Characteristics V/s Goods Goods

Services

Tangible

Intangible

- Services cannot be inventoried. - Patented. - Readily displayed or communicated. - Pricing is difficult.

Standardized

Heterogeneous

- Service delivery and customer satisfaction depend on employee actions. - Service quality depends on uncontrollable factors

Production the service separate from consumption Nonperishable and

Resulting implications

Simultaneous production and consumption

Perishable

- Customers & employees affect

outcome.

- Difficult to synchronize supply demand with services. - Services cannot be returned or resold.

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The services triangle and technology Company

Internal Marketing

External Marketing

Enabling promises

Making promises

Technology

Providers

Customers Interactive Marketing Keeping promises

Expanded Marketing Mix For Services Product

Place

Physical good features Quality level Accessories Packaging Differentiation

Channel type - Promotion blend Flexibility Exposure - Salespeople Price level Intermediaries Number Terms Outlet locations Selection

Warranties Discounts Product lines Branding

Promotion

Price

Training Transportation Incentives Storage - Advertising Managing channels Targets Media types Types of ads Copy thrust - Sales promotion - Publicity

Allowance

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People

Physical evidence

- Employees Recruiting Standardized Training Motivation Rewards Teamwork - Customers Education Training

Facility design Equipment Signage Employees dress - Other tangibles Reports Business cards Statements Guarantees

Process - Flow of activities

Customized - Number of steps Simple Complex - Customer involvement

Consumer Behaviour in Services

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Continuum of evaluation for different types of products

Most goods

Most services

Easy to evaluate

High in search qualities

High in experience qualities

Difficult to evaluate

High in credence qualities

Consumer decision making and evaluation of services

Information Search

• Use of personal sources • Perceived risk high

Evaluation of Alternatives

• Evoked set smaller

Culture • Language • Values and customs • Material culture * Aesthetics

Purchase and Consumption

•

Emotion & mood • Service provision as drama • Service roles and expected scripts • Compatibility of customers

Postpurchase Evaluation • Attribution of dissatisfaction to self & less complaints • Innovation diffusion slow • Brand loyalty high due to more search costs

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DISTRIBUTION

DISTRIBUTION

A COMPANY LAUNCHING A PRODUCT NEEDS 1. SALES CHANNEL (TALKING ABOUT PRODUCT) 2. DELIVERY CHANNEL (HOME DELIVERY, INSTALLATION) 3. SERVICE CHANNEL THE 3 NEED NOT BE SAME.

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Marketing Channels

M

C

M

C

M

C

C

M

D

M

C

C

M No. of contracts = 3

No of contracts = 9

Marketing Channels
customer marketing channels Manufacturer

Consumer Eureka Forbes

Manufacturer

Retailer

Consumer Medicines

Manufacturer

Wholesaler

Retailer

Consumer Bombay Dyeing

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Marketing Channels
Industrial marketing channels Industrial Consumer

Manufacturer

ABB

Industrial distributor

Manufacturer

Industrial Consumer Bombay Dyeing

Manufacturer

Manufacturer’s sales branch

Industrial Consumer

Industrial distributor

Car spares

CHANNEL LEVELS

EACH INTERMEDIARY WHO BRINGS PRODUCT AND ITS TITLE CLOSER TO BUYER CONSITUTES CHANNEL LEVEL. • ZERO CHANNEL

- Door to door home parties, mail order,

telemarketing, TV selling, manufacture stores. • ONE LEVEL • TWO LEVEL • THREE LEVEL

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CHANNEL DESIGN DECISIONS

Decide what is ideal, feasible, available I. CHANNEL DESIGN IN TUNE WITH MARKETING OBJECTIVES. II. CUSTOMER’S DESIRED SERVICE OUTPUT LEVELS - Eg. CONVENIENCE, FASTER SERVICE, PRODUCT VARIETY, SMALL LOT SIZE ETC. ESTABLISH CHANNEL CONSTRAINTS A. PRODUCT CHARACTERISTICS - PERISHABLE, NONSTANDARDISED, BULKY. B. S/W OF DIFFERENT INTERMEDIARIES C. COMPETITORS CHANNEL D. COMPANY’S STRENGTH & RESOURCES. E. ENVIRONMENTAL CONDITIONS - Eg. IN RECESSION, SHORTER CHANNEL & WITHOUT NON-ESSENTIAL SERVICES.

IDENTIFYING MAJOR CHANNEL ALTERNATIVES

A. TYPES OF INTERMEDIARIES - Eg. CELL PHONES. SEARCH FOR INNOVATIVE CHANNEL BECAUSE LESS DOMINANCE. B. NO. OF INTERMEDIARIES - EXCLUSIVE V/S SELECTIVE V/S INTENSIVE. C. TERMS & RESPONSIBILITIES OF CHANNEL MEMBERS - E.g. TERRITORIAL RIGHTS, MUTUAL SERVICES & RESPONSIBILITIES.

(Franchisees)

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EVALUATING CHANNEL ALTERNATIVES

I. ECONOMIC - AGENT FOR SMALLER FIRMS, LOW VOLUME TERRITORIES. II. CONTROL - LESS ON AGENT. III. ADAPTIVE

CHANNEL MANAGEMENT DECISIONS

I. SELECTING CHANNEL MEMBERS - NO. OF YEARS, OTHER LINES CARRIED, REPUTATION, CO-OPERATIVENESS, GROWTH AND PROFIT RECORD. II. MOTIVATING - THROUGH TRAINING, SUPERVISION & SHARING INFORMATION. - Using power (coercive,reward, legitimate, expert & referent power) to get co-operation. III. EVALUATING CHANNEL MEMBERS. IV. MODIFYING CHANNEL ARRANGEMENTS. V. MANAGING CHANNEL CONFLICT

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Channel dynamics • A conventional marketing channel comprises an independent producer, wholesaler(s), and retailer(s). Each is a separate business entity seeking to maximize its own profits,even if this goal reduces profit for the system as a whole. • A vertical marketing system (VMS), by contrast, comprises the producer, wholesaler(s), and retailer(s) acting as a unified system. One channel member owns the others or franchises them or has so much power that they all cooperate. The vertical marketing system can be dominated by the producer, the wholesaler, or the retailer.

I.

Vertical marketing Systems

1. Corporate VMS - combines successive stages of product & distribution under single ownership. I.e. vertical integration. 2. Administered VMS - Co-ordinates successive stages of production & distribution through size & power of one of the members . E.g. HLL commands high level of cooperation from reseller in terms of shelf-space, displays etc. 3. Contractual VMS - consists of independent firms at different levels of production and distribution integrating their programs on a contractual basis to obtain more economies and /or sales impact than they could achieve alone. E.g. retailer co-operative, franchise organizations.

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I. Horizontal Marketing Systems - In which two or more unrelated companies put together resources or programs to exploit on emerging marketing opportunity ( called symbiotic marketing). E.g. SBI & Management.

III. Multichannel Marketing Systems - Occurs when a single firm uses two or more customer segment.

Channel Conflict • Types of conflict

1. Vertical channel conflict 2. Horizontal channel conflict 3. Multichannel conflict

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Causes of channel conflict • Goal incompatibility - dealers want short-term profits while company wants long-term customer satisfaction. • Unclear roles & rights. • Differences in perception - of market, customer needs, economic outlook / e.g. company optimistic, deal pessimistic). •

Intermediaries great dependence on manufacturer.

Why are marketing intermediaries used & why not direct marketing • Lack of financial resources for direct marketing. • Not feasible / practical. • Channel members add time, place, possession, form utility. Thus it is not whether various channel functions need to be performed but rather who is to perform them. • Key Functions – Information – Promotion – Ordering – Financing – Risk taking – Physical possession – Payment – Title

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PRICING

PRICING

I. CONSISTENT WITH TARGET MARKET & POSITIONING A) PRICE - DETERMINED BY OBJECTIVES - SURVIVAL, PROFIT OR MARKET SHARE OR SIGNALLING LEADERSHIP. B) METHOD - COST BASED V/S CUSTOMER BASED V/S COMPETITOR BASED. C) UNDERSTAND CUSTOMER PRICE SENSITIVITY (PRICE ELASTICITY OF DEMAND) D) OTHER FACTORS

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Setting the Price Selecting the pricing objective

Determining demand Estimating Costs

Analyzing competitor’s costs, prices and offers Selecting a pricing method Selecting the final price

6 MAJOR PRICING OBJECTIVES • • • • • • •

SURVIVAL MAXIMUM CURRENT PROFIT MAXIMUM CURRENT REVENUE MAXIMUM SALES GROWTH MAXIMUM MARKET SKIMMIMG PRODUCT QUALITY LEADERSHIP ANY OTHER - SOCIAL OBLIGATIONS ETC.

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Selecting the Pricing Method • Markup pricing • Target return pricing • Perceived value pricing • Value pricing • Going rate pricing • Sealed bid pricing

Selecting the Final Price • Psychological pricing • Influence of other marketing mix elements on price • Company pricing policy • Impact of price on other parties

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Adapting the Price I. Geographical pricing

II. Pricing discounts & allowance III. Promotional pricing IV. Discriminatory pricing V. Product mix pricing

Adapting the Price I. Geographical pricing

II. Price Discounts & allowances - Cash discounts, Quantity discounts, functional discounts, seasonal discounts, allowances.

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Adapting the price III. Promotional Pricing 1. Loss leader pricing 2. Special event pricing 3. Low interest financing 4. Larger payment terms 5. Warrantees & service contract 6. Psychological discounting - e.g. Rs. 1000/- earlier now Rs. 800. 7. Rebates

IV. Discriminatory Pricing 1. 2. 3. 4. 5.

Customer segments Product form Image Location Time - e.g. Where yield is important.

V.

Product mix pricing

1. 2. 3. 4.

Product line pricing Optional feature pricing Captive product pricing Two parts pricing - (Fixed + Variable) e.g. telephone operators Byproduct pricing Product bundling pricing

5. 6.

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PRICING TERMINOLOGY

VALUE PRICING - GIVING MORE VALUE IN RELATIONSHIP TO PRICE PAID. PENETRATION PRICING - CHARGING LOWER PRICE TO GAIN MARKET SHARE. SKIMMING PRICING - CHARGING AS HIGH AS POSSIBLE TO GET FIRST LAYER OF CUSTOMERS AND THEN PROGRESSIVELY LOOK DOWNWARDS. TARGET COSTING - DETERMINE PRICE AT WHICH PRODUCT MUST SELL GIVEN ITS APPEAL AND COMPETITION AND THEN WORK BACKWARDS.

PENETRATION

SKIMMING

1. WHEN PROFITS POSSIBLE THROUGH VOLUMES

1. HIGH PRICE-PERCEIVED QUALITY RELATIONSHIP

2. PRICE-SENSITIVE MARKET

2. PRICE INSENSITIVITY

3.

HIGH COMPETITION

3. COMPETITION IMMINENT

4.

COST IS MORE FIXED THAN VARIABLE

4. COST IS MORE VARIABLE THAN FIXED.

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MEASURING PERCEIVED VALUE

I.

PV

>

PRICE

>

V COST

>

VC

MAY BE DELIBERATE II.

PRICE >

PV

REDUCE PRICE OR INCREASE PERCEIVED VALUE III. PRICE >

VC

>

PV

FAILURE SCENARIO IV. OPTIMAL IS PRICE = PV > VC

METHODS FOR CALCULATING PERCEIVED VALUE

1. DIRECT PRICE RATING METHOD WHAT PRICE WILL YOU PAY FOR C IF A IS RS. 90/2. DIRECT PERCEIVED VALUE RATING METHOD GIVE MARKS OUT OF 100 TO A B C. IF PRICE OF A IS 90. WHAT SHOULD BE PRICE OF C. 3. DIAGNOSTIC METHOD PRODUCT ATTRIBUTES

IMP

A

B

C

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METHODS FOR CALCULATING PERCEIVED VALUE

4. ECONOMIC VALUE TO CUSTOMER REFERENCE

NEW

NEW

PRODUCT A

PRODUCT Y

PRODUCT Z

(SAME AS X)

WITH INCREMENTAL FEATURES

PURCHASE PRICE

300

600*

700*

STARTUP COSTS

200

100

200

POST PURCHASE COSTS

500

300

400

1000

1000

1300

ESTIMATING PRICE SENSITIVITY NAGLE HAS IDENTIFIED FOLLOWING FACTORS FOR LESS SENSITIVITY 1. UNIQUE VALUE EFFECT 2. SUBSTITUTION AWARENESS 3. DIFFICULT COMPARISION Eg. CARPETS, DOCTORS 4. TOTAL EXPENDITURE EFFECT (VIS-A-VIS INCOME) Eg. SALT 5. END COST EFFECT - PRODUCT SMALL PART OF END PRODUCT 6. SHARED COST EFFECT 7. SUNK INVESTMENT - PRODUCT USED IN CONJUNCTION WITH ASSETS PREVIOUSLY BOUGHT 8. PRICE - QUALITY EFFECT 9.

INVENTORY EFFECT - CANNOT STORE PRODUCT

IF DEMAND ELASTIC, LOWER PRICE

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OTHER FACTORS

1. PRICE AS INDICATOR OF QUALITY 2. BUYERS HAVE REFERENCING PRICING IN MIND - FAIR PRICE, PRICE BANDWIDTH. 3. PSYCHOLOGICAL PRICING BARRIER 4. ODD END PRICING SHOULD BE AVOIDED IF HIGH PRICE IMAGE IMPORTANT. 5. HOW IMPORTANT IS PRICE TO INDIA IN PURCHASE DECISION_JUST ASKING CUSTOMERS THROUGH SURVEYS IS NOT ENOUGH (CONJOINT ANALYSIS BETTER).

INITIATING PRICE CHANGES INITIATING PRICE CUT

INITIATING PRICE INCREASE

REASONS

REASONS

1. Excess capacity

1. Expected improved profitability

- Might trigger a price war 2. Declining market share

2. Cost Inflation 3. Overdemand

3. Drive to dominate through lower costs Risks - Low Quality trap - Fragile Market Share trap. Buyer loyalty is not ensured - Shallow pocket trap. Reserves are less. Staying power is less. 4. Economic recession

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BETTER METHOD THAN INCREASING PRICE (ESPECIALLY PRICE SENSITIVE MARKET)

1. Shrink amount of product 2. Substitute less expensive materials 3. Reduce or remove product features / services 4. Less expensive packaging or promoting larger pack sizes. 5. Reducing number of models / sizes 6. Creating new economic brands

REACTIONS TO PRICE CHANGES CUSTOMER’S REACTIONS

TO PRICE CUT 1. Product might be faulty 2. Not selling well 3. Financial trouble. Company may go out of business. 4. Prices may fall further. Hence wait. 5. Quality is reduced 6. New model TO PRICE INCREASE

COMPETITOR’S REACTIONS

Competitor will react when few firms, product homogeneous, buyers highly informed. It is important to estimate the competitor’s likely reactions before affecting a price change. The factors to be considered are : 1. Competitor’s Financial Position 2. Competitor’s Sales and Capacity, Customer loyalty 3. Competitor’s Corporate Objectives • Market Share - Likely to match p/c

1. Item is hot

• Profit Maximisation - Likely to improve Quality & Sales Efforts

2. Item has good value

4. Customer Loyalty

3. Seller is greedy

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RESPONDING TO COMPETITOR’S PRICE CHANGES Analyse the problem on the following lines: • Why was the price reduced? • Is it permanent? • How are other competitors likely to respond? • What will happen to company’s market share and profits if it does not respond? Response varies with situation - importance of product in Co’s portfolio, stage of PLC, markets price sensitivity, behaviour of costs with volume. It is better to anticipate than to react.

Homogeneous-product Market

Nonhomogeneous product Market Factors

• Little choice but to match price cut • However, price increase need not be matched. Ultimately competitors will be forced to reduce.

Price

Quality

Realiability

Service

Strength of these factors may desensitize buyers to price changes

RESPONDING TO COMPETITOR’S PRICE CHANGES

Reactions: 1. Maintain Price when • Not likely to lose market share • Might regain market later 2. Raise perceived quality 3. Reduce Price when Costs fall with volume Market is price sensitive Difficult to rebuild market share later 4. Launch lower price fighter line

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PRICE-REACTION PROGRAM FOR MEETING A COMPETITOR’S PRICE CUT NO

HAS COMPETITOR CUT HIS PRICE?

HOLD THE PRICE AT PRESENT LEVEL…CONTINUE TO WATCH COMPETITOR’S PRICE.

YES NO IS THE PRICE LIKELY TO HURT PRESENT YES SALES?

BY < 2% INCLUDE DISCOUNT COUPON FOR THE NEXT PURCHASE

NO

IS IT LIKELY TO BE PERMANENT PRICE CUT?

BY 2-4% DROP PRICE BY HALF OF THE COMPETITOR’S PRICE CUT

YES

HOW MUCH HAS THE PRICE BEEN CUT?

BY > 4% DROP PRICE TO COMPETITOR’S PRICE

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INTRODUCTION TO INTEGRATED MARKETING COMMUNICATIONS

And Yet Another… by AAAA … a concept of marketing communications planning that recognizes the added value of a comprehensive plan that evaluates the strategic roles of a variety of communications disciplines-for example, general advertising, direct response, sales promotion and public relations-and combines these disciplines to provide clarity, consistency, and maximum communications’ impact through the

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Thus IMC can help us deliver • Different media for same message: Nescafe- ads Vs Sales Promotion, Bagpiper- yaaron ka yaar (TV, Radio) • Consistency over time: Lux • Different message over different audience: Fair & Lovely- Urban Vs Rural areas • Same message in different languages: Coke

WHY I M C

????????

In early 90s, no one made a fuss about IMC. In fact not many people were even aware of this. Then why is it so important now ?

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IN THOSE DAYS • 1 single channel – everyone saw it • MDH Masala and Hawkins could place an ad every weekend to become legends • Limited competition in markets • Which meant functional claims would take years to bridge

HOWEVER TODAY… • • • •

Market: Cluttered More competition: Less Buyers Media Exposure is very high Media Fragmentation: Many TV Channels and even more newspapers and weekly newsmagazines • Lifestyle change: Malls and Cafes • Technology – Email, net, mobile, SMS easy access to information for customer

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AND.. • Shrinking budgets and demand for accountability • And acceptance by marketing managers that specialization is important Advertising

Sales Promotion Public Relations IMC

Direct Marketing Event Marketing Internet Marketing

MARKETING COMMUNICATIONS MIX

ALSO CALLED PROMOTION MIX CONSISTS OF 1.

ADVERTISING

2.

SALES PROMOTION

3.

PUBLIC RELATIONS AND PUBLICITY

4.

PERSONAL SELLING

5.

DIRECT MARKETING

6.

MERCHANDISING

7.

EVENT SPONSORSHIP

8.

PRODUCT DESIGN

9.

ONLINE ADVERTISING

10. WORD OF MOUTH RECOMMENDATION

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COMMON COMMUNICATION PLATFORMS ADVERTISING

SALES PROMOTION

PUBLIC RELATIONS

PERSONAL SELLING

DIRECT MARKETING

Print and broadcast ads Packaging—outer Packaging inserts Motion pictures Brochures & booklets Posters and leaflets Directories Reprints of ads Billboards Display signs Point-of-purchase displays Audio-visual material Symbols and logos Videotapes

Contests, games, sweepstakes, lotteries Premiums and gifts Sampling Fairs & trade shows Exhibits Demonstrations Coupons Rebates Low-interest financing Entertainment Trade-in allowances Continuity programs Tie-ins

Press kits Speeches Seminars Annual reports Charitable donations Sponsorship s Publications Community relations Lobbying Identity media Company magazine Events

Sales presentations Sales meetings Incentive programs Samples Fairs and trade shows

Catalogs Mailings Telemarketing Electronic shopping TV shopping Fax mail E-mail Voice mail

COMMUNICATIONS: THE OLD MODEL VS NEW Single Medium

Traditional Model Of Communications

?????????

Multiple Medium

????????

Multiple audiences

IMC

Single Message

And / or Multiple Tasks

Multiple Message

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Contd…. Single Medium Multiple Medium

Traditional Model Of Communications

Only where audiences Can be segregated by Media Usage

IMC

IMC

Multiple audiences

Led primarily by Advertising. Uniquely defined audience.

And / or Multiple Tasks

Single Message

Multiple Message

ELEMENTS OF COMMUNICATION SENDER

Encoding

Message

Decoding

RECEIVER

Media

Noise

Feedback

Response

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DEVELOPING EFFECTIVE COMMUNICATIONS

1.

UNDERSTAND COMMUNICATION PROCESS

2.

UNDERSTAND CONCEPTS OF SELECTIVE ATTENTION, DISTORTION, RETENTION

DEVELOPING EFFECTIVE COMMUNICATIONS •

IDENTIFY TARGET AUDIENCE – affects what to say, how to say, when, where and to whom to say.

•

SITUATION ANALYSIS & DETERMINE COMMUNICATION OBJECTIVES

•

DESIGNING THE MESSAGE

•

SELECT THE COMMUNICATION CHANNELS

•

ESTABLISH TOTAL PROMOTION BUDGET

•

DECIDE ON PROMOTION MIX

•

MEASURE PROMOTION RESULTS

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DETERMINING COMMUNICATION OBJECTIVES MARKETER CAN SEEK A COGNITIVE, AFFECTIVE OR BEHAVIOURAL RESPONSE FROM TARGET AUDIENCE.

HIERARCHY OF EFFECTS MODEL AWARENESS COGNITIVE STAGE KNOWLEDGE

AFFECTIVE STAGE

LIKING

PREFERENCE

CONVICTION

BEHAVIOUR STAGE

THIS SEQUENCE IS LEARN-FEEL-DO (HIGH INVOLVEMENT/HIGH DIFFERENCE) DO-FEEL-LEARN (HIGH INVOLVEMENT/LOW DIFFERENCE) LEARN-DO-FEEL (LOW INVOLVEMENT)

PURCHASE

Design the Message • Based on the AIDA model Awareness

Interest

Desire

Attention

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Message Issues • What to say ? ( Message Content ) – Benefit promise/USP. eg- Maggie 2 minutes • How to say it logically? ( Message Structure )- Appeal, Conclusion Drawing .eg- Femina – Woman of Substance • How to say it symbolically? ( Message Format ) • Who should say it? ( Message Source ) – Celebrity, expert, Common man. Eg – Amitabh Bacchhan- Reid and Taylor, Sachin- TVS Victor, Dentist- toothpaste,

SELECTING COMMUNICATION CHANNELS

1.

PERSONAL CHANNELS – Advocate channel (salespersons) expert channel (independent) social channel (neighbors, friends etc.)

2.

NON-PERSONAL CHANNELS – Media, atmospheres and events.

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ESTABLISH TOTAL PROMOTION BUDGET 1.

AFFORDABLE METHOD

2.

UNIT OF SALES OR CASE RATE METHOD

3.

PERCENTAGE OF SALES METHOD

4.

COMPETITIVE PARITY METHOD – spend as much as competition

5.

SHARE OF VOICE METHOD

6.

OBJECTIVE & TASK METHOD

7.

EMPIRICAL METHOD

8.

QUANTITATIVE MATHEMATICAL MODEL

9.

INVESTMENT SPENDING

10. PECKHAM’S METHOD - For new products spend twice, For established products same share or less

PROMOTIONAL TOOLS UNDERSTANDING UNIQUE CHARACTERISTICS AND COSTS OF EACH 1.

ADVERTISING – Strategic and long term, most economical form of consumer contact, transforms products into brands. Persuasive, expressive public presentation hence perceived as legitimate but impersonal .

2.

SALES PROMOTION – Short term, tactical Creates quick response but not effective in building long-run brand preference.

3.

PUBLIC RELATIONS & PUBLICITY – High credibility, dramatization, catch buyers off guard.

4.

PERSONAL SELLING – Useful in later stages but long-term cost commitment.

5.

DIRECT MARKETING – Customized, interactive, secrecy.

6.

MERCHANDISING or Point of Purchase activity for traffic building in outlets especially self-service outlets

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PROMOTIONAL TOOLS

7.

EVENT SPONSORSHIP – should be relevant target audience.

8.

PRODUCT DESIGN – and packaging and brand name acts as silent salesmen.

9.

ONLINE ADVERTISING – internet users few, but interactive.

10. WORD OF MOUTH recommendations – need to be stimulated through proper identification of opinion leaders

DECIDING ON PROMOTION MIX

FACTORS a)

TYPE OF PRODUCT MARKET – business v/s consumer markets

b) Push v/s Pull strategy c)

Buyer – readiness stage

d) Product lifecycle stage

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The Communication Process

Communication - passage

of information, the exchange of ideas, or the process of establishing a commonness or oneness of thought between the sender and receiver.

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Success Factors • Nature of Message: striking, eye catching, • Audience’s interpretation of it • Environment in which it is received: eg. 20% off in recession would be more effective. Words, pictures, sounds, colours may have different meanings to different people Eg: Black; in urban areas- sophisticated, in rural areas- death

Basic Model of Communication

Sender’s field of experience

Sender Feedback

Encoding

Receiver's field of experience

Message Noise

Decoding

Receiver Response

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Target Audience Identification & Communication • Individuals: Personal selling • Groups: Multi-level personal selling • Market Niches: Personal selling/ Direct Mail • Market Segments: Newspapers, Magazines, TV • Mass Markets: Advertising, Publicity

Models of Response Process AIDA model represents stages of sales-person must take a Customer through in personal selling.

Stages

AIDA Model

Cognitive Stage

Attention

Affective stage

Interest Desire

Behavior al Stage

Action

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Models of Response Process Developed by Robert Levidge and Gary Steiner, the model helps in Setting and measuring objectives.

Stages

Hierarchy of Effects Model Cognitive Awareness Stage Knowledge Affective Liking stage Preference Conviction Behavior Purchase al Stage

Models of Response Process For adoption of new product. Trial through demonstration and Sampling. Leading to adoption/rejection.

Stages

Innovation Adoption Cognitiv Awareness Model e Stage Affectiv Interest e stage Evaluation Behavio Trial ral Adoption Stage

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Models of Response Process • Information Processing Model: Developed by William Mc Guire • Similar to Hierarchy of effects model, attention and comprehension are similar to awareness and knowledge. Yielding is similar to liking. There is a new element ‘retention’ in this model. • Model assumes the receiver as an information processor and is in a ‘being persuaded’ situation (e.g.: advertising) and this is a response hierarchy.

Models of Response Process Stages Cognitive Stage Affective stage Behavioral Stage

Information Processing Model Presentation Attention Comprehension Yielding Retention Behaviour

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Methods of obtaining Feedback Effectiveness tests Circulation reach Listener, reader, viewer recognition Recall. Checklists

Steps in persuasion Exposure/presentati process on Attention Comprehension

Brand attitudes, purchase intent Recall over time

Message acceptance/ yielding Retention

Inventory, PoP consumer panel

Purchase behaviour

Integrated Information Response Model (for Low Involvement)

Cognition

Trial

Affect

Commitment

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Integrated Information Response Model (for High Involvement) Advertising

Low

Lower order beliefs

+

Lower order affect

Trial

Direct Exp.

High

Higher order beliefs Higher order affect

Commitment

FCB Planning Model

High Involveme nt

Low Involveme nt

Thinking

Feeling

1. Informative (thinker) Car, house, furnishings, new 3.products Habit Formation (doer) Food, household

2. Affective (feeler) Jewelry, cosmetics, motorcycles 4. Self satisfaction (reactor) Cigarettes, liquor, candy

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ADVERTISING, MEDIA & SALES PROMOTION

DEVELOPING & MANAGING AN ADVERTISING PROGRAM

• MISSION • MONEY • MESSAGE • MEDIA • MEASUREMENT

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Creative Strategy

POSSIBLE ADVERTISING OBJECTIVES

1.

INFORMATIVE ADVERTISING – used in pioneering stage to build primary demand.

2.

PERSUASIVE ADVERTISING – important in competitive stage, to build selective demand. Comparative advertising.

3.

REMINDER ADVERTISING – for mature products reinforcement advertising for assurance.

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TABLE 21.1 POSSIBLE ADVERTISING OBJECTIVES TO INFORM Telling the market about a new product Suggesting new uses for a product Informing the market of a price change TO PERSUADE Explaining how the product works Building brand preference Encouraging switching to the brand Changing buyers’ perception of product attributes TO REMIND Reminding buyers that the product may be needed in the near future Reminding buyers where to buy it

Describing available services Correcting false impressions Reducing buyers’ fears Building a company image Persuading buyers to purchase now Persuading buyers to receive a sales call Keeping it in buyers’ minds during off-seasons Maintaining its top-of-mind awareness

DECIDING ON ADVERTISING BUDGET

FACTORS 1.

STAGE IN PRODUCT LIFECYCLE

2.

MARKET SHARE AND CONSUMER BASE

3.

COMPETITION AND CLUTTER

4.

ADVERTISING FREQUENCY REQUIRED

5.

PRODUCT SUBSTITUTABILITY

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CHOOSING ADVERTISING MESSAGE

A. MESSAGE CONSTRUCTION - (CONTENT) -

Benefit Promise Or Unique Selling Proposition Should Be Believable, Desirable And Exclusive And Supported By A Reason – Why

-

Benefit Promise Is Strategic In Nature And Should Not Change Unless Change In Product Formulation, Marketing Strategy, Or Changing Consumer Needs / Wants.

-

Should Appear In Headline

CHOOSING ADVERTISING MESSAGE

B. MESSAGE EXECUTION a.

APPEALS – rational, emotional, moral

b.

TONE – positive, humour ?

c.

WORDS

d.

FORMAT – placement of elements, typography (press) background, colour, arresting key frame (TV).

e.

STRUCTURE (conclusion) drawing, one sided v/s two sided argument, order of presentation).

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Promotional Executions • The way the promotional appeal is presented – Cansell be executed in multiple ways through Straight multiple media & promotional elements • Slice of life Technical expertise • Life style Scientific Evidence • Animation Demonstration • Personality symbol Comparison • Fantasy – Direct or indirect • Dramatization • Testimonial • Mood or Image – Authority, celebrity, peer • Musical • • • • •

Message Appeals • Rational- comparative vs competitive • Moral • Emotional – fear, pride, love, sex, humour, joy, grief

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Conclusion Drawing • Should the message draw a firm conclusion or leave it to the receivers? - Messages with explicit conclusion are more easily understood. - Open ended ads are more effective for involved audiences.

Message Sidedness • One sided Message: Mentions only positive attributes. • Two side Message: presents both good and bad points.

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Message Structure • Where should the most important message be placed? - Research on learning and memory indicates that items presented first and last are remembered better than those presented in the middle.

Ad message recall as a function of Order of Presentation Recall

Beginning

Middle

End

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Verbal Vs. Visual Messages • When verbal information is low in imagery value, use of pictures increases both immediate and delayed recall. • When verbal information is high in imagery value addition of pictures does not increase recall.

Source Factors • Credibility: Extent to which the recipient sees the source as having relevant knowledge, skill or experience and trusts the source to give unbiased, objective information.
Applying expertise- use of doctors, dentists etc.
Applying trustworthiness- use of hidden cameras to record consumers liking for the brand.

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Source Attractiveness • Similarity: Athletes endorsing sports goods • Likeability: Using celebrities

Drawbacks • Overshadowing the product • Overexposure of the celebrity

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Summary Slide • Thank You

ADVERTISING COPY STRATEGY (CREATIVE BRIEF)

• SHOULD BE TRUE TO OVERALLPOSITIONING OF PRODUCT • SHOULD BE WRITTEN • POSITIONING SHOULD BE CLEAR, COMPETITIVE, CORRECT FOR PRODUCT & TARGET MARKET, NONGENERIC, BELIEVABLE

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GOOD COPY STRATEGY

HAS FOUR PARTS 1. WHAT ADVERTISING AIMS TO CONVEY - CENTRAL PROMISE 2. FACTS TO SUPPORT 3. CUSTOMER ADDRESSED 4. TONE & ATMOSPHERE

SUPPORT

1. PRODUCT ITSELF - INGREDIANTS - REAL OR PERCEIVED 2. PEOPLE WHO MAKE IT 3. PACKAGING 4. WAY IT IS SOLD 5. ACTUAL CONSUMER REPORTS 6. PEOPLE WHO BUY IT 7. REGION 8. OPINION OF INDEPENDENT JUDGES

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RECOGNISING GOOD ADVERTISING 1. STRATEGIC FIT WITH POSITIONING 2. DISTINCTIVE / EXCLUSIVE 3. COMPETITIVE 4. NON-GENERIC 5. PROVOCATIVE 6. CONTENT MORE IMPORTANT THAN STYLE 7. BOING FACTOR 8. BELIEVABLE LOGIC 9. VISUAL / VERBAL COHERENCE 10. CONSUMER EMPATHY

MEDIA BRIEF • TARGET AUDIENCE • ADVERTISING • REACH V/S FREQUENCY • MEDIA HABITS OF TARGET AUDIENCE • TIMING OF CAMPAIGN • REGIONAL WEIGHTS • SHARE OF VOICE DESIRED IN EACH MARKET • CREATIVE REQUIREMENTS - MINIMUM SIZE OR LENGTH OF TIME

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JUDGING MEDIA PLANS

1. AGREED TARGET AUDIENCE 2. AGREED ADVERTISING MESSAGE 3. MEDIA DECISIONS

AGREED TARGET AUDIENCE

QUESTIONS TO ASK 1. CAPTIVE SALES OR CONQUEST SALES 2. DEMOGRAPHIC CHARACTERISTICS 3. REGIONAL CHARACTERISTICS 4. PSYCHOLOGICAL CHARACTERISTICS

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Media Planning

Brand and Category Analysis Category Development Index Percentage of product CDI = category total sales in market Percentage of total Indian population in market

X 100

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Brand and Category Analysis Brand Development Index Percentage of brand sales in market to total Indian BDI = sales Percentage of total India population in market

X 100

BDI and CDI • Help the product manager achieve focus in locating geographical regions that require focus • These figures help in test marketing of new products and in testing advertisements

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MEDIA PLANNING & STRATEGY

1. Deciding On Reach, Frequency & Impact 2. Choosing Among Major Media Types 3. Selecting Specific Media Vehicles 4. Deciding On Media Timing 5. Deciding On Geographical Media Allocation

DECIDING ON REACH, FREQUENCY & IMPACT

• REACH ( R ): The number of different persons or households exposed to a particular media schedule at least once during a specified time period. • FREQUENCY (F): The number of times within the specified time period that an average person or household is exposed to the message. • IMPACT (I): The qualitative value of an exposure through a given medium (thus a food ad in Good Housekeeping would have a higher impact than in the Police

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Reach and Frequency Reach of One Program

Reach of Two Program

Total market audience reached

Total market audience reached

Duplicated Reach of Both

Unduplicated Reach of Both

Total reached with both shows

Total reach less duplicate

Graph of Effective Reach Percentage Reach

25%

Ineffective Reach

20%

Effective Reach

15%

Ineffective Reach

10% 5% 0% 0

5

10

15

Exposures

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REACH V/S FREQUENCY

REACH

FREQUENCY

• Launching new products • Launching new extensions • Infrequently purchase brands • Undefined target market

• Strong competitors • Complex story • High consumer resistance • Frequent purchase cycle • High forgetting rate

Marketing Factors Important to Determining Frequency • Brand history • Brand share • Brand loyalty • Purchase cycles • Usage cycle • Competitive share of voice • Target group

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Creative Factors In Determining Frequency • • • • • • •

Message complexity Message uniqueness New vs. continuing campaigns Image versus product sell Message variation Wearout Advertising units

Media Factors Important to Determining Frequency • Clutter • Editorial environment • Attentiveness • Scheduling • Number of media used • Repeat Exposures

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CHOOSING AMONG MAJOR MEDIA TYPES

FACTORS 1. TARGET AUDIENCE MEDIA HABITS 2. PRODUCT 3. MESSAGE 4. COST

CHOOSING AMONG MAJOR MEDIA TYPES

1. TV – Best for Demonstration Purpose 2. NEWSPAPER – best for launch announcements, authoritative medium. 3. MAGAZINES – can segment audiences, long life span, pass on readership but periodic hence advertising impactless. 4. RADIO – good reminder medium 5. CINEMA – South and smaller towns 6. OUTDOOR – geographically selective medium 7. OTHERS – neon signs, matchbox covers, wall paintings, tamashas

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SELECTING SPECIFIC MEDIA VEHICLES

DEPENDS ON • In PRINT – circulation, effective audience, effective ad-exposed audience which affects cost per thousand criterion. • In TV – effective audience, TRP, QRP

Determining Relative Cost of Media • CPM (cost per thousand) Cost of ad space/time =

x1000 Circulation/Audience

• CPRP (cost per rating point) Cost of commercial time = Program rating

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DECIDING ON MEDIA TIMING •

Depends on buyer turnover, purchasing frequency forgetting rate

•

Macroscheduling problem

•

Microscheduling problem

•

CONTINUITY

•

CONCENTRATION – spending all in one period

•

FLIGHTING – advertising followed by hiatus then second flight

•

PULSING – continuous advertising at low weight level reinforced periodically by waves of heavier activity.

CONTINUITY V/S BURSTS

CONTINUITY

• FREQUENT PURCHASE PATTERN • HIGH LEVEL OF IMPULSE BUYING

BURSTS

• INFREQUENT PURCHASE PATTERN

• EXPANDING MARKET

• STRONG LOYALTY TO BRAND

• NO BUDGET CONSTRAINTS

• HEAVY LAUNCH WEIGHT • BUDGET LIMITATIONS

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TIMING DEPENDS ON

• BUYER TURNOVER • PURCHASE FREQUENCY • FORGETTING RATE

TIMING PATTERNS (SEE APPENDIX NO.13) Concentrated Level (1)

Rising

Falling

Alternating

( 3)

(2)

( 4)

Continuous (5)

(6)

( 7)

( 8)

( 11)

( 12)

Intermittent ( 10 ) ( 9)

Month

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SALES PROMOTION

SALES PROMOTION

SALES PROMOTION CONSISTS OF A DIVERSE COLLECTION OF INCENTIVE TOOLS, MOSTLY SHORT-TERM, DESIGNED TO STIMULATE QUICKER AND / OR GREATER PURCHASE OF A PARTICULAR PRODUCT BY CONSUMERS OR TRADE.

WHILE ADVERTISING OFFERS A REASON TO BUY, SALES PROMOTION OFFERS AN INCENTIVE TO BUY.

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REASON FOR SALES PROMOTION INCREASE

1. MANY BRANDS & SEEN AS SIMILAR 2. COMPETITION USES IT 3. CONSUMERS MORE PRICE ORIENTED 4. TRADE DEMANDS MORE DEALS 5. ADVERTISING EFFICIENCY HAS DECLINED 6. MEDIA CLUTTER

WHY SALES PROMOTION POPULAR

1. SALES PROMOTION PRODUCE RESULTS 2. SALES PROMOTION PRODUCE RESULTS QUICKLY 3. SALES PROMOTION IS ALWAYS WELCOMED BY ALL - CONSUMERS, TRADE, SALESFORCE 4. SALES PROMOTION IS RELATIVELY EASY & INEXPENSIVE TO IMPLEMENT 5. MOST PRODUCT MANAGERS ARE UNDER GREAT PRESSURE TO INCREASE THEIR CURRENT SALES 6. SMALL SHARE FIRMS FIND IT ADVANTAGEOUS TO USE SALES PROMOTION AS CANNOT AFFORD TO MATCH MARKET LEADER’S LARGE ADVERTISING BUDGETS & CANNOT OBTAIN SHELF SPACE

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PROBLEMS OF SALES PROMOTION

1. SALES PROMOTION TEND TO ORIENT MARKETING MANAGERS TOWARDS THE SHORT-TERM 2. OVERUSE RESULTS IN ERODING ATTITUDES TOWARDS BRAND 3. SALES PROMOTION OFTEN ATTRACT BRAND SWITCHERS AND NOT LOYALISTS OF OTHER BRANDS. 4.

SALES PROMOTION USED IN MARKETS OF HIGH BRAND SIMILARITY, PRODUCE A HIGH SALES RESPONSE IN SHORT RUN BUT LITTLE PERMANENT GAIN IN MARKET SHARE

5.

IN MARKETS OF HIGH BRAND DISSIMILARITY, SALES PROMOTION CAN ALTER MARKET SHARES PERMANENTLY.

SALES PROMOTION TOOLS

UNDERSTAND WHAT EACH TYPE OF SALES PROMOTION TOOL CAN OR CANNOT DO. CONSUMER FRANCHISE BUILDING TOOLS WHICH REINFORCE THE CONSUMER’S BRAND UNDERSTANDING THROUGH IMPARTING SELLING MESSAGE ALONG WITH DEALS ARE BETTER E.g. PREMIUMS RELATED TO PRODUCT, FREE SAMPLES ETC. TRADE PROMOTIONS - LOOK FOR PROOF OF PERFORMANCE & PREVENT FORWARD BUYING OR DIVERTING. LOOK FOR CREATIVE EDGE.

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Segmentation, targeting and positioning • Must know STP before sales promotion ‘coz – No promotion is directed towards every customer – Buyers have different reasons to buy different products – No sense in directing sales promotion for loyal customers and regular users

Whom to target the Sales Promotion to ? • Segment on basis of Loyalty – Loyal Customers – Competitive Loyals – Switchers – Price buyers – Non Users

Target Market for All Promotion Based Activities

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MAJOR DECISIONS IN SALES PROMOTION 1. ESTABLISH SALES PROMOTION OBJECTIVES 2. SELECT SALES PROMOTION TOOLS - CONSUMER, TRADE, SALESFORCE, BUSINESS 3. DEVELOPING SALES PROMOTION A. SIZE OF INCENTIVE B. CONDITIONS FOR PARTICIPATION C. DURATION D. DISTRIBUTION VEHICLE E. TIMING F. BUDGET 4. PRETEST PROGRAM 5. IMPLEMENT 6. EVALUATE SALES PROMOTION RESULTS THROUGH SALES DATA, CONSUMER SURVEYS & EXPERIMENTS.

CONSUMERS

OBJECTIVES OF SALES PROMOTION

1. TO INTRODUCE NEW PRODUCT & GENERATE TRIAL. • GATHER INFORMATION. • MAKE IT EASY TO REDUCE PROCESS. 2. TO ATTRACT NEW CUSTOMERS 3. TO INDUCE PRESENT CUSTOMERS TO BUY MORE 4. TO HELP FIRM REMAIN COMPETITIVE 5. TO INCREASE OFF SEASON SALES 6. TO REWARD LOYAL CUSTOMERS 7. BUILD LONG - TERM RELATIONSHIP. RETAILERS 1. PERSUADE RETAILERS TO CARRY NEW ITEMS 2. PERSUADE RETAILERS TO CARRY HIGHER LEVEL OF INVENTORY 3. OFF SETTING COMPETITIVE PROMOTIONS 4. INDUCE RETAILERS TO PROMOTE BRAND BY FEATURING DISPLAY 5. STIMULATE RETAILERS TO PUSH THE PRODUCT

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OBJECTIVES OF SALES PROMOTION

SALESFORCE 1. ENCOURAGING SUPPORT FOR NEW PRODUCT 2. ENCOURAGING MORE PROSPECTING 3. STIMULATING OFF SEASON SALES

TYPES OF SALES PROMOTION

CONSUMER PROMOTION - SAMPLES, COUPONS, PRICE OFFS, PREMIUMS PATRONAGE REWARDS, FREE TRIALS, PRIZES, TIE-IN PROMOTIONS, CROSS PROMOTIONS, POINT OF PURCHASE DISPLAYS, DEMONSTRATIONS. TRADE PROMOTION - PRICE OFFS, ADVERTISING & DISPLAY ALLOWANCES, FREE GOODS BUSINESS PROMOTION - TRADE SHOWS, FAIRS, CONVENTIONS, SPECIALITY ADVERTISING SALES FORCE PROMOTION - CONTESTS

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Sales Promotion Tools • • • • • • •

Samples Coupons Cash refund offers or rebates Price packs Premium Gifts Prizes – contests – sweepstakes Patronage awards

Samples • Offer free amount of product or service • Might be delivered – Door to door – Mail – Pick up in a store – Attached to product

• A very expensive way

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Coupons • Help in stimulating sales of mature brand • Should provide at least 15-20 % saving to the customer

Cash Refund / Rebates • Provide a price reduction after purchase rather than at the shop • Proof of purchase necessary

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Price Packs • Savings off the regular price of a product • Maybe through – Reduced price pack – Banded pack

• Are often more effective than coupons

Premiums - Gifts • Merchandise is offered free or at low cost as incentive to purchase a product • Self – liquidating premium is an item sold below its normal price to consumers who request it • Maybe a – Near Pack – On-Pack – In-Pack – With-pack

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Prizes – Contests Sweepstakes • Prize – offers to win an expensive gift when you purchase the product • Contests require the submission of an entry like a jingle or a slogan • Sweepstakes require you to put in your name in the lucky draw • Gain a lot more attention than coupons or small premiums

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SALES PROMOTION

SALES PROMOTION

SALES PROMOTION CONSISTS OF A DIVERSE COLLECTION OF INCENTIVE TOOLS, MOSTLY SHORT-TERM, DESIGNED TO STIMULATE QUICKER AND / OR GREATER PURCHASE OF A PARTICULAR PRODUCT BY CONSUMERS OR TRADE.

WHILE ADVERTISING OFFERS A REASON TO BUY, SALES PROMOTION OFFERS AN INCENTIVE TO BUY.

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REASON FOR SALES PROMOTION INCREASE

1. MANY BRANDS & SEEN AS SIMILAR 2. COMPETITION USES IT 3. CONSUMERS MORE PRICE ORIENTED 4. TRADE DEMANDS MORE DEALS 5. ADVERTISING EFFICIENCY HAS DECLINED 6. MEDIA CLUTTER

WHY SALES PROMOTION POPULAR

1. SALES PROMOTION PRODUCE RESULTS 2. SALES PROMOTION PRODUCE RESULTS QUICKLY 3. SALES PROMOTION IS ALWAYS WELCOMED BY ALL - CONSUMERS, TRADE, SALESFORCE 4. SALES PROMOTION IS RELATIVELY EASY & INEXPENSIVE TO IMPLEMENT 5. MOST PRODUCT MANAGERS ARE UNDER GREAT PRESSURE TO INCREASE THEIR CURRENT SALES 6. SMALL SHARE FIRMS FIND IT ADVANTAGEOUS TO USE SALES PROMOTION AS CANNOT AFFORD TO MATCH MARKET LEADER’S LARGE ADVERTISING BUDGETS & CANNOT OBTAIN SHELF SPACE

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PROBLEMS OF SALES PROMOTION

1. SALES PROMOTION TEND TO ORIENT MARKETING MANAGERS TOWARDS THE SHORT-TERM 2. OVERUSE RESULTS IN ERODING ATTITUDES TOWARDS BRAND 3. SALES PROMOTION OFTEN ATTRACT BRAND SWITCHERS AND NOT LOYALISTS OF OTHER BRANDS. 4.

SALES PROMOTION USED IN MARKETS OF HIGH BRAND SIMILARITY, PRODUCE A HIGH SALES RESPONSE IN SHORT RUN BUT LITTLE PERMANENT GAIN IN MARKET SHARE

5.

IN MARKETS OF HIGH BRAND DISSIMILARITY, SALES PROMOTION CAN ALTER MARKET SHARES PERMANENTLY.

SALES PROMOTION TOOLS

UNDERSTAND WHAT EACH TYPE OF SALES PROMOTION TOOL CAN OR CANNOT DO. CONSUMER FRANCHISE BUILDING TOOLS WHICH REINFORCE THE CONSUMER’S BRAND UNDERSTANDING THROUGH IMPARTING SELLING MESSAGE ALONG WITH DEALS ARE BETTER E.g. PREMIUMS RELATED TO PRODUCT, FREE SAMPLES ETC. TRADE PROMOTIONS - LOOK FOR PROOF OF PERFORMANCE & PREVENT FORWARD BUYING OR DIVERTING. LOOK FOR CREATIVE EDGE.

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TYPES OF SALES PROMOTION

CONSUMER PROMOTION - SAMPLES, COUPONS, PRICE OFFS, PREMIUMS PATRONAGE REWARDS, FREE TRIALS, PRIZES, TIE-IN PROMOTIONS, CROSS PROMOTIONS, POINT OF PURCHASE DISPLAYS, DEMONSTRATIONS. TRADE PROMOTION - PRICE OFFS, ADVERTISING & DISPLAY ALLOWANCES, FREE GOODS BUSINESS PROMOTION - TRADE SHOWS, FAIRS, CONVENTIONS, SPECIALITY ADVERTISING SALES FORCE PROMOTION - CONTESTS

Segmentation, targeting and positioning • Must know STP before sales promotion ‘coz – No promotion is directed towards every customer – Buyers have different reasons to buy different products – No sense in directing sales promotion for loyal customers and regular users

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Whom to target the Sales Promotion to ? • Segment on basis of Loyalty – Loyal Customers – Competitive Loyals – Switchers – Price buyers – Non Users

Target Market for All Promotion Based Activities

MAJOR DECISIONS IN SALES PROMOTION 1. ESTABLISH SALES PROMOTION OBJECTIVES 2. SELECT SALES PROMOTION TOOLS - CONSUMER, TRADE, SALESFORCE, BUSINESS 3. DEVELOPING SALES PROMOTION A. SIZE OF INCENTIVE B. CONDITIONS FOR PARTICIPATION C. DURATION D. DISTRIBUTION VEHICLE E. TIMING F. BUDGET 4. PRETEST PROGRAM 5. IMPLEMENT 6. EVALUATE SALES PROMOTION RESULTS THROUGH SALES DATA, CONSUMER SURVEYS & EXPERIMENTS.

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CONSUMERS

OBJECTIVES OF SALES PROMOTION

1. TO INTRODUCE NEW PRODUCT & GENERATE TRIAL. • GATHER INFORMATION. • MAKE IT EASY TO REDUCE PROCESS. 2. TO ATTRACT NEW CUSTOMERS 3. TO INDUCE PRESENT CUSTOMERS TO BUY MORE 4. TO HELP FIRM REMAIN COMPETITIVE 5. TO INCREASE OFF SEASON SALES 6. TO REWARD LOYAL CUSTOMERS 7. BUILD LONG - TERM RELATIONSHIP. RETAILERS 1. PERSUADE RETAILERS TO CARRY NEW ITEMS 2. PERSUADE RETAILERS TO CARRY HIGHER LEVEL OF INVENTORY 3. OFF SETTING COMPETITIVE PROMOTIONS 4. INDUCE RETAILERS TO PROMOTE BRAND BY FEATURING DISPLAY 5. STIMULATE RETAILERS TO PUSH THE PRODUCT

OBJECTIVES OF SALES PROMOTION

SALESFORCE 1. ENCOURAGING SUPPORT FOR NEW PRODUCT 2. ENCOURAGING MORE PROSPECTING 3. STIMULATING OFF SEASON SALES

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Sales Promotion Tools • • • • • • •

Samples Coupons Cash refund offers or rebates Price packs Premium Gifts Prizes – contests – sweepstakes Patronage awards

Samples • Offer free amount of product or service • Might be delivered – Door to door – Mail – Pick up in a store – Attached to product

• A very expensive way

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Coupons • Help in stimulating sales of mature brand • Should provide at least 15-20 % saving to the customer

Cash Refund / Rebates • Provide a price reduction after purchase rather than at the shop • Proof of purchase necessary

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Price Packs • Savings off the regular price of a product • Maybe through – Reduced price pack – Banded pack

• Are often more effective than coupons

Premiums - Gifts • Merchandise is offered free or at low cost as incentive to purchase a product • Self – liquidating premium is an item sold below its normal price to consumers who request it • Maybe a – Near Pack – On-Pack – In-Pack – With-pack

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Prizes – Contests Sweepstakes • Prize – offers to win an expensive gift when you purchase the product • Contests require the submission of an entry like a jingle or a slogan • Sweepstakes require you to put in your name in the lucky draw • Gain a lot more attention than coupons or small premiums

Tie-in Promotions • Involve two or more brands or companies that team up on coupons, refunds and contests to increase their pulling power • Sales force of two companies push promotions to retailers thus giving strong thrust

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Contests and Loyalty Cards

Some Special Offers

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Trade Promotion Tools • Price-Off – Straight discount off the list price on each case purchased during a stated time period

• Allowance – An amount offered to display prominently the wares

• Free goods – Extra cases of merchandise to intermediaries who buy a certain size

Business Promotions • Trade Shows and Conventions • Sales Contests • Specialty Advertising

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SALES PROMOTION - DEVELOPING THE SALES PROMOTION PROGRAMME 1. CERTAIN MINIMUM INCENTIVE NECESSARY FOR PROMOTION TO SUCCEED. A HIGHER INCENTIVE LEVEL WILL PRODUCE MORE SALES RESPONSE BUT AT DIMINISHING RATE. 2.

DURATION OF PROMOTION - NOT TOO SHORT (NO ONE KNOWS) OR TOO LONG (LOSES ITS ACT NOW FORCE).

3.

OPTIMAL FREQUENCY 3 WEEKS PER QUARTER AND OPTIMAL DURATION - LENGTH OF AVERAGE PURCHASE CYCLE.

4.

EACH DISTRIBUTION VEHICLE INVOLVES DIFFERENT REACH, COST, IMPACT.

5.

TOTAL SALES PROMOTION BUDGET INCLUDES ADMINISTRATIVE COST (PRINTING, MAILING & PROMOTING THE DEAL) & INCENTIVE COST ( COST OF PREMIUM OR PRICE OFF) MULTIPLIED BY EXPECTED NUMBER OF UNITS THAT WILL BE SOLD ON THE DEAL.

FOR CONSUMER PROMOTION TO SUCCEED

1. VALUE OF INCENTIVE SHOULD BE PROPORTIONATE TO MAIN PRODUCT. 2. GIFT SHOULD PREFERABLY NOT BE EASILY AVAILABLE IN THE MARKET. 3. INCENTIVE SHOULD BE A QUALITY PRODUCT. 4. THE INCENTIVE SHOULD BE OF INTEREST TO THE CONSUMER OF THE MAIN PRODUCT. 5. INCENTIVE SHOULD HAVE INDEPENDENT VALUE. 6. ADDITION OF FREE GIFT MUST NOT FORCE THE CUSTOMER TO SPEND MORE ON THE MAIN PRODUCT.

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Pretesting Sales Promotion • • • •

Design on experience but conduct pretests Testing is inexpensive and fast Rank or rate promotion offers Restrict the promotion to a geographical test area only

Implementing and Controlling the Sales Promotion Program • Must decide the lead time and sales time • Lead time – Prepare design, approval of package modifications material to be mailed or distributed, advtg, POP material and the like – Notoifcation of field sales personnel, establishing allocations for distributors, purchase and printing of premiums, inventory mgmt, and eventual distribution to retailer

• Sell-in Time – Begins with promotional launch – Ends when 95% of deal merchandise is in hands of consumers

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Measuring Effectiveness • Sales Data • Consumer Surveys • Experiments

Challenges in Sales Promotions • Consumer franchise building V/S nonfranchise building • Forward buying • Diverting in non deal regions • Inability to police effectively • Wrong billing • Irritation of retailers

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PRODUCT LIFE CYCLE

PLC PHASES

1. INTRODUCTION 2. GROWTH 3. MATURITY 4. DECLINE

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PRODUCT LIFE CYCLE THE LAUNCH PHASE • DEFINING THE POSITIONING; • ACHIEVING WHOLESALE DISTRIBUTION; • ACHIEVING RETAIL DISTRIBUTION; • AROUSING CONSUMER AWARENESS; • ATTRACTING CONSUMER TRIAL; • CONVERTING CONSUMERS TO THE PRODUCT; AND • ACHIEVING BUYING CONTINUITY

FOUR INTRODUCTORY MARKETING STRATEGIES Promotion High

Price

High

Low

Low

Rapidskimming strategy

Slowskimming strategy

Rapidpenetration strategy

Slowpenetration strategy

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PRODUCT LIFE CYCLE THE GROWTH PHASE • INCREASING THE USER BASE; • EXPANDING DISTRIBUTION; • EXPANDING SHELF FACINGS; • INCREASING PURCHASE FREQUENCY; • SHIFT FROM PRODUCT AWARENESS ADVERTISING TO BRAND PREFERENCE ADVERTISING; • LOWER PRICES TO ATTRACT NEW LAYER OF PRICE SENSITIVE BUYERS • ENSURING ADEQUATE INVENTORIES AT WHOLESALE AND RETAIL LEVELS; AND • EXPLORING LINE EXTENSIONS

MATURITY PHASE

1. GROWTH MATURITY - SALES GROWTH RATE DECLINE, LAGGARDS 2. STABLE MATURITY - SALES FLATTEN; SALES GOVERNED BY POPULATION GROWTH & REPLACEMENT DEMAND 3. DECAYING MATURITY - ABSOLUTE LEVEL OF SALES STARTS TO DECLINE, CUSTOMERS SWITCHING TO OTHER PRODUCTS

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PRODUCT LIFE CYCLE

THE MATURITY PHASE • RETAINING CURRENT USERS; • ATTRACTING NEW USERS; • RETAINING DISTRIBUTION; • OPTIMISING PRODUCT LINE AND PACKAGING; AND • OPTIMISING PRODUCT COSTS

MATURITY PHASE 1. MARKET MODIFICATION VOLUME = NO. OF BRAND USERS X USAGE PER USER a) INCREASING USERS • CONVERT NON-USERS • ENTER NEW MARKET SEGMENTS • SNATCH COMPETITOR’S CUSTOMERS b) INCREASING USAGE • MORE FREQUENT USE • MORE USAGE PER OCCASION • NEW AND MORE VARIED USES 2. PRODUCT MODIFICATION 3. MARKETING MIX MODIFICATION

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PRODUCT LIFE CYCLE

REJUVENATION • DEVELOP AND QUALIFY MAJOR PRODUCT IMPROVEMENT; • REPOSITION PRODUCT VIA ADVERTISING; • ACHIEVE NEW DISTRIBUTION OUTLETS; • ACHIEVE CONSUMER TRIAL AND CONVICTION; AND • ATTRACT NEW USERS AND NEW USES.

PRODUCT LIFE CYCLE

DECLINE PHASE • RETARDING ATTRITION IN USER BASE; • ATTRACTING ‘BARGAIN’ BUYERS; • RESTRICTING PRODUCT LINE; • REDUCING PRODUCT COSTS; • RETARDING DISTRIBUTION LOSSES; • MAXIMISING IMMEDIATE PROFITS

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PRODUCT LIFE CYCLE

THE NEW PRODUCT / ESTABLISHED PRODUCT DISTINCTION FOR THE NEW PRODUCT:

• ASCERTAIN THAT YOU REALLY HAVE A VIABLE PRODUCT BEFORE YOU START MARKETING IT; • CONCENTRATE EFFORTS ON DEVELOPING EFFECTIVE POSITIONING AND ADVERTISING THAT REFLECTS THAT POSITIONING OPTIMALLY; • WITH THE TRADE, AIM AT DISTRIBUTION BEFORE ANYTHING ELSE; • CLEARLY ESTABLISH THE PRICE LEVEL THAT YOU WANT.

PRODUCT LIFE CYCLE THE NEW PRODUCT / ESTABLISHED PRODUCT DISTINCTION FOR THE ESTABLISHED PRODUCT:

• DO NOT WANTONLY CHANGE POSITIONING OR ADVERTISING UNLESS YOU HAVE REAL EVIDENCE THAT THEY ARE FUNDAMENTALLY WRONG; • ENSURE YOUR PRODUCT HAS SUFFICIENT SUPERIORITY TO THE COMPETITION TO MAKE IT VIABLE IN THE MARKET; • CONCENTRATE AS A FIRST PRIORITY ON HOLDING THE VOLUME YOU HAVE INHERITED AND THE USER BASE THAT HAS BEEN BUILT UP; • SEEK TO FIND EXPANSION POSSIBILITIES FOR NEW VOLUME NEW USERS, NEW TRADE OUTLETS, VOLUME PACKS AND PROMOTIONS; • UNDERSTAND AND RESPECT THE PRODUCT’S AND THE BRAND’S HERITAGE.

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PRODUCT LIFE CYCLE STRATEGIES (SEE APPENDIX NO.6)

S a l e s

Introduction Growth

Maturity

Decline

Time

PRODUCT LIFE CYCLE STRATEGIES (SEE APPENDIX NO.6) Characteristics Sales

Low sales

Costs

High cost per customer

Profits

Customers Competitors

Rapidly rising sales

Average cost per customer

Peak sales

Low cost per customer High profits

Negative

Rising profits

Innovators

Early adopters

Middle majority

Growing number

Stable number beginning to decline

Few

Declining sales

Low cost per customer Declining profits

Laggards Declining number

Marketing Objectives Create product awareness and trial

Maximize market share

Maximize profit while defending market share

Reduce expenditure and milk the brand

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Strategies

Product

Price

Distribution

Advertising

Sales Promotion

Offer product Offer a basic product extensions, service, warranty

Diversify brands and models

Phase out weak items Cut price

Price to match or Best competitors

Charge cost-plus

Price to penetrate market

Build selective Distribution

Build intensive distribution

Build more intensive Distribution

Go selective: Phase out unprofitable Outlets

Build product awareness among early adopters and dealers

Build awareness and interest in the mass Market

Stress brand differences and Benefits

Reduce to level Needed to retain Hard-core loyals

Reduce to take Use heavy sales advantage of heavy promotion to entice consumer demand trial

Increase to encourage Brand switching

Reduce to minimal level

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NEW PRODUCTS DEVELOPMENT

WHY DO NEW PRODUCTS FAIL-CHALLENGES

1. PUSHING A FAVORITE IDEA THROUGH INSPITE OF NEGATIVE MARKET RESEARCH FINDINGS 2. IDEA IS GOOD BUT MARKET SIZE IS OVERESTIMATED 3. ACTUAL PRODUCT NOT WELL DESIGNED 4. INCORRECT POSITIONING 5. INEFFECTIVE ADVERTISING 6. OVERPRICED 7. DEVELOPMENT COSTS HIGHER THAN EXPECTED 8. COMPETITORS FIGHT BACK HARDER THAN EXPECTED 9. SHORTAGE OF NEW PRODUCT IDEAS 10. FRAGMENTED MARKETS

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WHY DO NEW PRODUCTS FAIL

11. SOCIAL & GOVERNMENTAL CONSTRAINTS 12. COSTLINESS OF NEW PRODUCT DEVELOPMENT PROCESS 13. CAPITAL SHORTAGES 14. FASTER DEVELOPMENT TIME 15. SHORTER PLC

STAGES IN NEW PRODUCT DEVELOPMENT PROCESS 1. IDEA GENERATION 2. IDEA SCREENING 3. CONCEPT DEVELOPMENT & TESTING 4. MARKETING STRATEGY DEVELOPMENT 5. BUSINESS ANALYSIS 6. PRODUCT DEVELOPMENT 7. MARKET TESTING 8. COMMERCIALISATION

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IDEA GENERATION TECHNIQUES

1. ATTRIBUTE LISTING 2. FORCED RELATIONSHIPS 3. MORPHOLOGICAL ANALYSIS 4. NEED / PROBLEM IDENTIFICATION 5. BRAINSTORMING 6. SYNECTICS

IDEA SCREENING EVALUATING A MARKET OPPORTUNITY IN TERMS OF COMPANY’S OBJECTIVES & RESOURCES I. COMPATIBILITY WITH COMPANY OBJECTIVES • PROFIT OBJECTIVE • SALES VOLUME OBJECTIVE • SALES GROWTH OBJECTIVE • CUSTOMER GOODWILL OBJECTIVE II. COMPATIBILITY WITH COMPANY RESOURCES • NECESSARY CAPITAL • PRODUCTION KNOW-HOW • MARKETING KNOW-HOW • DISTRIBUTION CAPABILITY

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PRODUCT-IDEA RATING DEVICE PRODUCT SUCCESS REQUIREMENTS

(1)

(2)

(3 = 1 X 2)

RELATIVE PRODUCT

PRODUCT

WEIGHT

RATING

SCORE

Unique or superior product

.40

.8

.32

High performance-to-cost ratio

.30

.6

.18

High marketing dollar support

.20

.7

.14

Lack of strong competition

.10

.5

.05

Total

1.00

.69*

*Rating scale : .00 - .30 poor; .31 - .60 fair; .61 - .80 good. Minimum acceptance rate: .61.

CONCEPT DEVELOPMENT AND TESTING

A product idea is a possible product that a company might offer to the market

A product concept is an elaborated version of the idea expressed in meaningful consumer terms

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CONCEPT DEVELOPMENT Any product idea can be turned into several products concepts . A company can form several concepts: Concept 1: An instant breakfast drink Concept 2: tasty snack drink Concept 3: Health supplement Each of these concepts represents a category concept - that is , each positions the idea within a category.It is the category concept, not the product concept, that defines the product’s competition. • Product- positioning map - can be utilized in communicating and promoting the concept to the market. • Brand-positioning map - the product concept has to be turned into a brand concept.

PRODUCT DIMENSIONS TO TEST AT CONCEPT STAGE

1. CLARITY 2. BELIEVABILITY 3. NEED LEVEL

NEED GAP SCORE

BETWEEN NEW PRODUCT AND 4. GAP LEVEL EXISTING PRODUCTS 5. PERCEIVED VALUE 6. PURCHASE INTENTION 7. PERCEIVED USAGE-WHO,WHEN AND HOW OFTEN

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MARKETING STRATEGY DEVELOPMENT •Target market’s size, structure,and behavior; the planned product positioning; and the sales, market share, and profit goals sought in the first few years. • The product’s planned price, distribution strategy, and marketing budget for the first year. • The long-run sales and profit goals and marketing-mix strategy over time.

BUSINESS ANALYSIS A. B.

Estimating Total Sales - First time sales, replacement sales, repeat sales. Estimating Costs and Profits -

Projected five-year cash-Flow Statement (In Thousand Of Dollars) Year 0

Year 1

Year 2

Year 3

Year 4

Year 5

1. Sales revenue 2. Cost of goods sold 3. Gross margin 4. Development costs 5. Marketing costs 6. Allocated overhead 7. Gross contribution 8. Supplementary contribution 9. Net contribution 10. Discounted contribution (15%) 11. Cumulative discounted cash flow

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Break Even Analysis: Financial measures to evaluate the merit of a new-product proposal.

Risk Analysis: Here three estimates (optimistic, pessimistic, and most likely) are obtained for each uncertain variable affecting profitability under an assumed marketing environment and marketing strategy for the planning period.

PRODUCT DEVELOPMENT • Large jump in investment. • The R & D department will develop one or more physical versions of the product concept. • Design required functional characteristics & to communicate its psychological aspects through physical cues. • The functional tests are conducted under laboratory and field conditions to make sure that the product performs for safety & effectiveness. • Consumer Testing includes bringing consumers into a laboratory to giving them samples In-home product placement tests.

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Techniques for measuring consumer preferences: The most three most common are simple ranking, paired comparisons, and ranking scales. • The simple- rank- order method ask the consumer to rank the three items in order of preference. It is difficult to use this method when there are are many objects to be evaluated. • The paired-comparison method calls for presenting pairs of items to the consumer, then asking which one is preferred in each pair. • The monadic -rating method asks the consumer to rate his or her liking of each product on a scale. This rating yields more information than the order methods.even know the qualitative levels of her preference for each.

MARKET TESTING . CONSUMER GOODS MARKET TESTING a. SALES WAVE RESEARCH –Pre-selected consumers are offered company’s & competitor’s products three to five times. Secrecy maintained but distribution issues can not be checked. b. SIMULATED TEST MARKETING – Pre-selected consumers are given money, exposed to ads. & purchase behavior observed. Ads effectiveness checked. c. CONTROLLED TEST MARKETING – Panel of stores carry new products. Checks advertising promotion. But, does not provide information how to sell to trade and also secrecy loss. d. TEST MARKETS – Ultimate way to test a new consumer product.

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TEST MARKETS 1. HOW MANY TEST CITIES – 2 to 6 cities.larger number if regional differences, different marketing strategies, possible loss, possible interference by competitors. 2. WHICH CITIES – Not over tested, good media coverage, representative sample, average competitor activity. 3. LENGTH OF TEST – Depends on repeat purchase rate. Period should be cut down if competitors are rushing to the market. 4. WHAT INFORMATION – Store audit, consumer panels ( switching rates), buyer survey (Consumer attitude, usage , satisfaction). 5. WHAT ACTION TO TAKE – Depends on trial & repurchase rates.

BUSINESS GOODS MARKET TESTING . BUSINESS GOODS MARKET TESTING a. ALPHA TESTING – In company testing to measure & improve product performance, reliability & operating cost. b. BETA TESTING – Inviting potential adaptors to conduct confidential testing at site.Gives clues on problems of safety, servicing, usage & need for training. Also can observe value equipment adds to customer operations as a clue to pricing. c. TRADE SHOWS – Secrecy loss. d. DISTRIBUTOR & DEALER DISPLAY e. TEST MARKETING

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COMMERCIALISATION

1. TIMING – First entry : ( first mover advantages but must be debugged) , parallel entry, late entry. 2. GEOGRAPHICAL STRATEGY – Planned market roll out necessary. 3. TARGET MARKET PROSPECTS – Prime prospects. (early adopters, heavy users, opinion leaders, reached at a low cost) 4. INTRODUCTORY MARKET STRATEGY

DIFFUSION OF INNOVATION Exposure to Innovation Innovation Characteristics

Consumer Characteristics

Consumer- Dependent Relative Advantage Compatibility Perceived Risk Complexity Effect on Adoption of Other Innovations Consumer -Independent Trialability Divisibility Reversibility Realization Communicability Form of Innovation

psychological Variables Perception Motivation Personality Value Orientation Beliefs Attitudes Previous Innovative Experience Demographics Age Education Income

No

Propagation Mechanisms Types Marker- Controlled vs. Nonmarketer Vs. Impersonal Characteristics Credibility Clarity Source Similarity Informativeness

Innovation Resistance No

Adoption

Exposure to Innovation

Yes Is Innovation Amenable to Modification ?

Yes

Modification

Rejection

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Innovators

2.5%

Early Adopters 13.5%

Early Majority 34%

Late Majority 34%

Laggards 16%

Percentage of Adopters by Category Sequence

Adopter Categories ADOPTER CATEGORY

DESCRIPTION

Innovators

Venturesome - very eager to try new Ideas acceptable if risk is daring; more cosmopolite social relationships; communicates with other innovators.

RELATIVE PERCENTAGE POPULATION WITHIN THE THAT EVENTUALLY ADOPTS

Early Adopters

Early Majority

Late Majority

Laggards

Respect - more integrated into the local social system; the persons to check with before adopting a new idea; category contains greatest number of opinion leaders; are role models. deliberate - adopt new ideas just prior to the average time; seldom hold leadership positions; deliberate for some time before adopting. Skeptical- adopt new ideas just after the average time; adopting may be both an economic necessity and a reaction to peer pressures;innovations approached cautiously. Traditional - the last people to adopt an innovation; most “localite” in outlook; oriented to the past; suspicious of the new.

2.5%

13.5%

34.0

34.0

16.0

100.0%

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PRODUCT & BRANDING

5 LEVELS OF PRODUCT

1. CORE BENEFIT 2. BASIC PRODUCT - FEATURES, BENEFITS, DESIGN & STYLE, PACKAGING, BRAND NAME. 3. EXPECTED PRODUCT - CREATES NO PREFERENCE 4. AUGMENTED PRODUCT - TOTAL CONSUMPTION SYSTEM 5. POTENTIAL PRODUCT THE 5 LEVELS CONSTITUTE CUSTOMER VALUE HIERARCHY WITH EACH LEVEL ADDING MORE CUSTOMER VALUE.

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CLASSIFICATION OF PRODUCTS-CONSUMER GOODS DURABILITY & TANGIBILITY 1.

NON-DURABLE GOODS – tangible, consumed in few uses. Many locations, small mark up, heavy advertising.

2.

DURABLE GOODS – personal selling, guarantees, higher margin.

3.

SERVICES – intangible, variable, credibility of supplier very important.

SHOPPING HABITS 4.

CONVENIENCE GOODS – staples, impulse & emergency goods

5.

SHOPPING GOODS – comparison shopping .Homogenous & heterogenous strategies differ.

6.

SPECIALITY GOODS – goods with unique characteristics and or brand identification.Location should be advertised.

7.

UNSOUGHT GOODS – advertising and personal selling.

Classification Of Products

Most goods

Most services

Difficult to evaluate

{ { { { { {

Easy to evaluate

High in search qualities

High in experience qualities

High in credence qualities

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PRODUCT LINE DECISIONS

1. PRODUCT LINE ANALYSIS A. PRODUCT LINE SALES & PROFITS B. PRODUCT LINE MARKET PROFILE - PRODUCT MAPPING C. PRODUCT LINE LENGTH - UPWARD / DOWNWARD / TWO WAY STRETCH D. LINE MODERNIZATION E. LINE FEATURING F. LINE PRUNING

BRAND

A BRAND IS ESSENTIALLY A SELLER’S PROMISE TO CONSISTENTLY DELIVER A SPECIFIC SET OF FEATURES, BENEFITS AND SERVICES TO BUYERS.

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BRANDING DECISIONS

1. BRAND OR NOT – Advantages of branding – easy processing, legal protection, brand loyalty, segmentation ,corporate image. Also distributors and consumer s prefer brands. 2.

SPONSOR – Manufacturer / Distributor / Licensed

3.

BRAND NAME – Individual / Blanket / Separate family / Co. + Individual. Company names legitimizes and individual name individualizes

4.

BRANDING STRATEGY – Line extensions (success rate higher), Brand extensions (risk of brand dilution test association), Multi-brands, New brands, Co brands (also called dual branding).

5.

REPOSITIONING – shifting customer preferences or competitor too close.

ESSENTIALS OF A GOOD BRAND NAME

1.

Easy to pronounce, spell and remember.

2.

Suggest about benefits, quality, use or action.

3.

Unique, distinctive.

4.

Versatile – can be added to new products / global reach.

5.

Registered and protected.

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BRAND NAME TESTS

A. ASSOCIATION TEST B. LEARNING TESTS (PRONOUNCABILITY) C. MEMORY D. PREFERENCE E. GLOBAL REACH

PACKAGING TESTS

1. ENGINEERING 2. VISUAL 3. DEALER & CONSUMER TESTS

BRAND - MEANING

1. ATTRIBUTES 2. BENEFITS - FUNCTIONAL & EMOTIONAL 3. VALUE 4. CULTURE 5. PERSONALITY 6. USER

DEEP V/S SHALLOW BRAND

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BRAND ASSOCIATIONS Product attributes Intangibles Country/geographic area Customer benefits

Competitors

Brand-name and symbol

Relative price

Product class

Lifestyle/personality

Use/application

Celebrity/person

User/customer

HOW VALUES AFFECT BRAND CHOICE FUNCTIONAL VALUE

CONDITIONAL VALUE

SOCIAL VALUE

BRAND CHOICE

EMOTIONAL VALUE

EPISTEMIC VALUE

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BRAND EQUITY (DAVID AAKER)

1. BRAND AWARENESS 2. PERCEIVED BRAND QUALITY AND FUNCTIONALITY 3. POSITIVE BRAND MENTAL & EMOTIONAL ASSOCIATIONS 4. BRAND LOYALTY 5. OTHER ASSETS - PATENTS, TRADEMARKS ,CHANNEL RELATIONSHIPS

ATTITUDE TOWARDS BRAND

1. CUSTOMER WILL CHANGE BRAND FOR PRICE REASONS 2. CUSTOMER IS SATISFIED - NO REASON TO CHANGE 3. CUSTOMER IS SATISFIED & WOULD INCUR COSTS BY CHANGING BRAND 4. CUSTOMER VALUES THE BRAND AND SEES IT AS A FRIEND 5.

CUSTOMER IS DEVOTED TO BRAND.

BRAND EQUITY IS RELATED TO 3, 4, 5.

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IMPORTANCE OF PROPER PACKAGING

1.

PROTECTION

2.

ADVERTISING VALUE

3.

CONVENIENCE TO CONSUMERS

4.

BENEFIT TO RETAILERS

5.

AFTER-USE VALUE

6.

IDENTIFICATION

7.

INFORMATION

FACTORS TO BE CONSIDERED FOR PACKAGE DESIGNING

1.

LANGUAGE

2.

COLOUR

3.

SIZE

4.

CLIMATE

5.

NATURE OF THE PRODUCT

6.

LENGTH OF DISTRIBUTION CHANNEL

7.

ACCEPTED NORMS

8.

METHOD OF TRANSPORT USED

9.

TRENDS IN PACKAGING

10. COST-BENEFIT ANALYSIS

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PACKAGING

1.

PRIMARY

2.

SECONDARY

3.

SHIPPING

DECISIONS 1.

The first task is to establish packaging concept. What packaging should be or do. e.g. protection, novel dispensing method, visibility.

2.

Decision on packing elements

3.

Tests – engineering tests, visual tests, dealer tests and consumer tests.

4.

Labeling – identify, describe and promote.

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