 2007 Thomson South-Western Facilitation of Product Adoption, Brand Naming, and Packaging Chapter Seven

2 Chapter Seven Objectives Appreciate marcom’s role in facilitating the introduction of new products. Explain the innovation-related characteristics that influence adoption of new products. Understand efforts employed by marketing communicators to manage the diffusion process. Appreciate word-of-mouth communications in facilitating new product adoption.

3 Chapter Seven Objectives Be familiar with the role of “buzz” in facilitating product adoption. Understand the role of brand naming and the requirements for developing effective brand names. Explain the activities involved in the brand- naming process.

4 Chapter Seven Objectives Appreciate the role of logos. Describe the various elements underlying the creation of effective packages. Explain the VIEW model for evaluating package effectiveness. Describe a five-step package-design process.

5 Marcom and New Product Adoption Introducing new products is essential for most companies’ success and long-term growth New idea and product failure-rate estimated 35-45% Marketing communications facilitate successful new product introductions and reduce the product failure rate

6 New-Product Adoption Process Model

7 Three stages of adopting a new product Awareness Class Trier Class Repeater Class

8 New-Product Adoption Process Model Variables: free samples, coupons, advertising, and distribution Successful introduction of new products requires an effective advertising campaign, widespread product distribution, and extensive couponing and sampling Awareness Class Distribution AdvertisingCoupons Free Samples

9 New-Product Adoption Process Model Variables: coupons, distribution, and price Once the consumer becomes aware of a new product, there is an increased probability that he will actually try the new offering Trier Class PriceDistributionCoupons

10 Advertisement Illustrating the Product Adoption Process

11 New-Product Adoption Process Model Variables: advertising, price, distribution and product satisfaction Consumers repeat the purchase if advertising reminds them about the brand, if the price is reasonable, if the brand is accessible in retail outlets, and if product quality is satisfactory Repeater Class Product Satisfaction DistributionPriceAdvertising

12 Adoption Process Product Characteristics That Facilitate Adoption Relative Advantage Compatibility Complexity Trialability Observability

13 Relative Advantage A product innovation is perceived as better than existing alternatives Positively correlated with an innovation’s adoption rate Exist when a new product offers: –Better performance, increased comfort, saving in time and effort, or immediacy of reward

14 Compatibility An innovation is perceived to fit into a person’s way of doing things The greater compatibility, the more rapid a product’s rate of adoption Overcome perception of incompatibility through heavy advertising to persuade consumers

15 Complexity An innovation’s degree of perceived difficulty The more difficult, the slower the rate of adoption

16 Trialability An innovation can be used on a limited basis prior to making a full blown commitment The trial experience serves to reduce the risk of a consumer’s being dissatisfied with a product after having permanently committed to it through outright purchase

17 Observability The product user or other people can observe the positive effects of new product usage Higher the visibility, more rapid the adoption rate

18 Quantifying the Adoption- Influencing Characteristics

19 Innovators (2.5%) Early Adopters (13.5%) Early Majority (34%) Late Majority (34%) Laggards (16%) Mean Time of Adoption Diffusion Process Concerned with the broader issue of how an innovation is communicated and adopted throughout the marketplace The process of spreading out Adopter categories –Five different type of consumers –Normal distribution

20 Objectives Managing the Diffusion Process 1. Secure sales quickly - rapid takeoff 2. Achieve rapid acceleration - rapid acceleration 4. Maintain sales as long as possible - long-run franchise 3. Secure maximum sales potential - maximum penetration

21 Managing the Diffusion Process : Advertisement of Clomicalm

22 Managing the Diffusion Process Rapid takeoff can be facilitated by: Aggressive sales force to secure trade support for new products Intensive advertising to create awareness Sufficient sales promotion activity to generate trial-purchase behavior

23 Managing the Diffusion Process Rapid acceleration accomplished by: Ensuring quality product that will promote positive word-of-mouth Continuing to advertise heavily to reach later adopter groups Sales force provides reseller support Using sales promotion creatively to encourage repeat-purchase behavior

24 Managing the Diffusion Process Maximum penetration approached by: Continuing the same strategies that stimulated rapid acceleration Revise the product and advertising strategies to appeal to the needs of later adopters

25 Managing the Diffusion Process Long-run franchise maintained by: Mature product continues to meet the market’s needs Distribution suitable to reach the market Advertising continued to remind the market about the product

26 Stimulating Word of Mouth Influence Impersonal sourcesImpersonal sources: information received from television, magazines, the Internet, and other mass-media sources Personal sourcesPersonal sources: word-of-mouth influence from friends, acquaintances, and from business associates

27 Strong and Weak Ties People are connected in networks of interpersonal relationships. Tie Strength Strong Weak

28 Opinion Leader A person who frequently influences other individuals’ attitudes or overt behavior An informer, persuader, and confirmer Influence is typically limited to one or several consumption topics Influence moves horizontally through a social class

29 Opinion Leaders Characteristics More cosmopolitan More gregarious Slightly higher socioeconomics status Generally more innovative Willing to act differently

30 Opinion Leaders Market Mavens Individuals who have information about many kinds of products, places to shop, and other facets of markets, and initiate discussions with consumers and respond to requests from customers from market information.

31 Stimulating Word of Mouth Influence Positive word-of-mouth communication is critical in the success of a new product of service Unfavorable WOM has devastating effects because consumers seem to place more weight on negative information in making evaluations

32 Creating “Buzz” The systematic and organized effort to encourage people to talk favorably about a particular item (a product, service, or specific brand) and to recommend its usage to others.

33 Creating an Epidemic The law of the few The stickiness factor The power of context

34 Igniting Explosive Self-Generating Demand Design the product to be unique or visible. Select and seed the vanguard. Ration supply. Use celebrity icons. Tap the power of lists. Nurture the grass roots.

35 Using the Internet for Creating Buzz Word of Mouth (WOM) Blogs