Marketing Communication Lectures blok 2.2 Flashcards
What is a product?
A combination of tangible and intangible characteristics that enable an object or a service to satisfy a customer need.’
A product can also be a bundle of benefits -> Media markt, Amazon, Apple etc.
What are the Product levels?
- Core product
- Actual product
- Augmented product
What is a Core product?
What need does the product fulfil?
Example car:
Core product = transportation
What is an actual product?
What is it?
Example car:
Actual product = the car
What is an Augmented product?
core product + augmented product + everything you get and CAN separate
Example car:
Augmented product = free winter tiers
what are the two classifications of products?
- Consumer goods
- Business products
there is a difference in decision making process
what are consumer goods?
Consumer goods are products bought for consumption by the average consumer. Alternatively called final goods, consumer goods are the end result of production and manufacturing and are what a consumer will see on the store shelf. Sold to individuals and families (ultimate consumers/end users)
what are business products?
Sold to organisation (who use or resell it).
What are the 4 types of consumer goods?
- Convenience products
- Shopping products
- Specialty products
- Unsought products
what are convenience products?
products or service we buy without thinking, with minimum effort, we want it to be available everywhere (staples, impulse goods, emergency goods)
-> fast food, magazines, sugar, umbrella. toothpaste,
buying behaviour: frequent purchase, little effort
price: low price
distribution: widespread
promotion: mass promotion
what are shopping products?
Products we go and shop for (several stores), we compare them (example: clothes), we want information so someone present at the point of sale can be useful.
-> furniture, clothing, used cars, airline services, television etc
Homogeneous products: Products that vie with each other in a market but which (from the consumer’s viewpoint) have little or no differentiation in terms of features, benefits, or quality and are, therefore, forced to compete on price or availability.
Heterogeneous products: products with attributes that are significantly different from each other, which makes it difficult to substitute one product for another. An example of a heterogeneous product is a computer. You really can’t substitute a PC for a Mac, because each computer platform is too different.
buying behaviour: less frequent purchase, much effort
price: higher price
distribution: selective
promotion: advertising and personal selling.
what are speciality products?
- Specialty products: products with a big preference, we put a lot of effort in these products, but we usually compare them less then shopping products, should create consumer loyalty. (are consumer products and services with unique characteristics or brand identification for which a significant group of consumers is willing to make a special purchase effort.)
High involvement, high brand loyalty
-> Starbucks (convenience good turned in to specialty product), specific cars (Lamborghini), festivals, luxury goods, designer clothing
buying behaviour: strong brand preference, loyalty
price: high price
distribution: exclusive distribution
promotion: carefully targeted promotion
what are unsought products?
- Unsought products: these are products which we do not know we want/need/consider them.
As a consequence of their nature, unsought products require much more advertising, selling and marketing efforts than other types of consumer products but more specific?
-> iPad, wedding dress, funeral services, new products, life insurance (before advertising)
buying behaviour: little product awareness, knowledge or little interest
price: varies
distribution: varies
promotion: aggressive advertising and personal selling
what is the the impact for a communication strategy?
- Information needs differ hugely between different categories
- Objectives range from TOM awareness to POS to loyalty to “findability”
product life cycle
- Introduction
- Rapid growth
- Turbulence
- Maturity
- Decline
- Evaluate position of product in product life cycle
- Special opportunities and challenges for each phase
Market stretching
Happens in the Maturity stage of the product life cycle.
- Stimulate more frequent use
- > Brush your teeth 3 times a day, kitkat as a morning snack, cup-a-soup 4 hour snack - Tap new markets
- > Coca Cola Zero for men - Suggest alternate use for the product
- > chicken with Coca Cola
Product Mix
- Product quality technical or consumer
- Product warranty
- Product guarantee
- Satisfiers vs dissatisfiers
What is a Brand.
Brand = ‘Name, term, symbol, design or any feature that a firm uses to identify its products/services and differentiate them from those of competitors.’
-> Apple first white earphones (=showing the product without showing the brand)
Packaging and Design
- Technical: protection
- Product information
- Symbolic image
- Product differentiation
- Stimulate consumption
Services
- Intangible -> Can’t catch a service
- Inseparability -> Delivery part of the service
- Perishability -> Once you have it it’s gone
- Heterogenity -> Differs -> involves humans (humans are always different)
New product development
- Idea generation
- Idea screening
- Business Analysis
- Product Development
- Test Marketing
- Commercialization
-> Consumers needs to see the difference
Why new products succeed or fail
Success factors: • Customer Orientation • Core business activity • Superior product • Stimulating corporate culture • Well-planned product development process
Failed introductions: • No clear product benefits • Poor marketing strategy • Quality problems • Unanticipated competitive reactions • Bad Timing
Process van een product
- Awareness
- Interest
- Evaluation
- Trial
- Adoption (or rejection)
Product features and rate of adoption
• Relative advantage • Compatibility • Complexity • Possibility of trial use • Observability
Price
A company wants profit
Revenue = product price *number of products sold
Profit = total revenue – total costs
Pricing decision
Highest price you can ask is based on what is the product worth in the eye of the customer. (perceived value)
Lowest price you can ask is based on what did it cost you to make the product (cost price)
Pricing decision depends on…
1. Company & Marketing Strategy What are your targets? What image do you have or want? What target group do you have? Example: look at the difference between Primark and Dolce & Gabbana
- Competition
Price wars
Substitutes
If a competitor decides to decrease his price, should you?
If a competitor decides to increase his price, should you?
Example: water has no competition - Product Mix
Assortment
Complementary products
Example: Gillette keeps making money because of the blades
Printers keep making money because of the ink - Legislation & ethics
Laws regarding price fixing, cartels or other conspiracies
Predatory pricing
-> Has to look honest in the eyes of the consumer
-> Big companies buy the small ones - Resellers
Distribution chain
Profit margins
-> With how many do you share the profit?
Distribution channels
(= a network)
-> Direct Channel
1. Selling directly to consumer
producer/manufacturer -> consumer
-> Indirect Channel
2. Selling through retailers
producer/manufacturer -> retailer -> consumer
- Selling through wholesalers
producer/manufacturer -> wholesaler -> retailer -> consumer - Selling with a jobber
producer/manufacturer -> wholesaler -> Jobber -> retailer -> consumer
Example:
Zara = direct channel, clothes are only sold in Zara stores, there is no one in between
Nike = indirect channel, shoes are sold in Nike stores, Footlocker, Snipes online and in stores
The big boss is the one who has access to the brand
The pricing of a new product
- Price skimming strategy
• Unique product
• Introduction: high price which eventually decreases (high -> low)
• Maximise revenue
• PLC
• You want to reach the innovators, they are willing to pay more
Example: newest technology like Ipad/Iphone etc.
- Penetration price strategy
• Introduction: low price which eventually increases (Low -> High)
• Maximize market share
• Competition is fierce
• You try to get people hooked, then increase the price
Example: Yakult, Optimel -> try to get into people’s daily routines
Calculating the price
1. Based on Costs Not marketing (no profit) 2. Based on Demand (consumers) Beste -> researchers have looked into it etc 3. Based on Competition Ignoring what you could ask
Based on costs
Distribution channels = “A distribution channel is a network of independent organisations that, combined, perform all of the activities necessary to link producers and end customers.”
Distribution intensity
`` How to decide on the type and number of intermediaries to use at each channel level? ‘’
- Intensive distribution
- Selective distribution
- Exclusive distribution
Intensive distribution
• As many outlets as possible
• All suitable wholesalers & retailers
• Convenience and impulse buying (see lecture 1)
Example: Gum, we want it to be everywhere
Manufacturer -> wholesaler -> retailer -> consumer
Selective distribution
- A number of retailers, but not all
- Arrangements with retailers
- Shopping good
Example: Coffee machine, we do not want to go too far, but we will go further for a coffee machine, then for a pack of gum. Nespresso has a strategy in which they want to be exclusive, they have their own shops and Media Markt.
Manufacturer -> retailer -> consumer
Exclusive distribution
- The opposite of intensive distribution
- Strictly limited number of dealers
- €€€
- Exclusive dealing arrangements
- Manufacturer maintains control
Example: Dior bag
Marketing logistics
Marketing logistics = “Getting the right number of products to the right place at the right time at the lowest total cost.”
How goes the product from A -> B? -> Train/Plain/Truck
Just in time production logistics means things come when you need it
Example: AH Helmstraat
Retailing
Retailing = “Retailing includes all activities involved in selling products and services directly to ultimate consumers for their personal, family or household use.”
HEMA = future of retailing
