©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12 ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

12 ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product and Promotion: Creating and Communicating Value 2 LO1What is a product and product classifications? LO2What is product differentiation and the key elements of product planning? LO3What is innovation and how does it relate to the product life cycle? LO4What is promotion and integrated marketing communication? LO5What is the process to developing promotional messages? LO6What is the promotional mix and available tools?

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product: Its Probably More Than You Thought 3 Product – anything a company offers to satisfy customer needs and wants

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Services: A Product by Any Other Name 4 Intangibility Inseparability Variability Perishability Most services embody these qualities:

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Goods and Services Spectrum 5

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product Layers: Peeling the Onion Core benefit – satisfies the consumers need The actual product – the physical good Augmented product – warrantees, free service, instruction manuals, help lines 6

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Consumer Product Categories 7 Convenience Products Shopping Products Specialty Products Unsought Products Consumer Products – products for personal use or consumption

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Business Product Categories 8 Installations Accessory Equipment Maintenance, Repair, and Operating Products Raw Materials Component Parts & Processed Materials Business Services Business Products – purchased to use directly or indirectly in the production of another product

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product Quality 9 Quality Level – how well a product performs its core functions Product Consistency – how reliably a product delivers it promised level of quality

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Product Lines and the Product Mix 10 Product Mix – the total number of product lines by a single firm Product Line – products that are closely related Cannibalization – A new product eats the sales of an existing line

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Branding 11 Brand - a products identity that sets it apart from other players in the same category Brand Equity – the extra money that consumers will spend to buy that brand Brand Name – a catchy, memorable name is a powerful part of strong brand National brands are brands that the manufacturer produces and markets, while store brands are brands that retailers label and market.

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Line Extensions versus Brand Extensions 12 Line Extensions Similar products offered under the same brand name Brand Extensions A product in a new category under an existing brand name

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Co branding 13 Cobranding - established brands from different companies join forces to market the same product

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Packaging 14 Protect the Product Provide Information Facilitate Storage Suggest Product Uses Promote the Brand Attract Buyer Attention

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Levels of Innovation 15

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The New Product Development Process 16 Idea Generation Idea Screening Analysis Development Testing Commercialization The adoption of new products is called diffusion; consumers try new things at different rates. Consumers range from first adopters to laggards.

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Product Life Cycle: Maximizing Results over Time 17

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Integrated Marketing Communication 18 Coordinate promotional messages Create unified impression in the mind of customers Identify key points of contact between product and target market Integrated Marketing Communication is the coordination of messages through multiple promotional vehicles.

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. An International Perspective DeBeers tried running ads in Japan using a proven western strategy But a Japanese woman would shed tears and feign anger that her husband would spend so much money The revised DeBeers campaign featured a man and wife in their tiny apartment Receiving a diamond, the wife chides her extravagant husband,Oh, you stupid! Taking a big idea to a foreign market requires careful research 19 Source: Professor Paul Herbig, Tristate University, International Marketing Lecture Series, Session 6, International Advertising, accessed June 1, 2005; Taking Global Brands to Japan by Karl Moore and Mark Smith, The Conference Board website, accessed June 1, 2005.

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Promotional Mix: Communicating the BIG IDEA 20 Advertising Sales Promotion Direct Marketing Personal Selling Emerging Tools These tools can help communicate the Big Idea to your target market.

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Emerging Promotional Tools 21 Internet Advertising Social Media Product Placement Advergaming Buzz Marketing Sponsorships

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Advertising & Media Spending 22 Advertising is paid, nonpersonal communication, designed to influence a target audience. Television remains the #1 advertising media. But it is fragmenting….

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Promotion Consumer Promotion Stimulate immediate sales Premiums Promotional Products Samples Coupons Rebates Displays Trade Promotion Stimulate wholesalers and retailers to push specific products Special Deals Allowances Trade Shows Contests Sweepstakes Special Events 23

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Starbucks Samples Samples drive immediate purchases Starbucks invited customers to sample their new VIA coffees in 2010 Sampling allows consumers to try products before purchase Costco and Trade Joes do very well with sampling strategies 24

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Public Relations 25 Create positive relationships with the public Sometimes called publicity The media looks for newsworthy stories Smart firms push potential news of their company The advantage of PR is that it is usually credible The disadvantage is that marketers dont control media perceptions

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Personal Selling 26 Building relationships Personal selling is best for: High-ticket items Complex products High-volume customers Sales People: Prospect and Qualify Prepare Present Handle Objections Close Sales Follow-up Person-to-Person presentation of products

©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 12 ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Looking Back What is a product and product classifications? What is product differentiation and the key elements of product planning? What is innovation and how does it relate to the product life cycle? What is promotion and integrated marketing communication? What is the process to developing promotional messages? What is the promotional mix and available tools? 27