Foundation Business Simulation

Foundation Business Simulation

CHAPTER 12: PRODUCT AND PROMOTION Delivering More Value PRODUCT DEFINITION: ITS PROBABLY MORE THAN YOU THINK Car Wash ~ Cooking Lesson ~ Computer ~ Soap ~ Car Product anything a company offers to satisfy customer needs and wants including not only physical goods, but also services and ideas. Brand ~ Image ~ Packaging ~ Reputation ~ Guarantee GOODS V. SERVICES: A MIXED BAG Intangibility Most services embody these qualities:

Inseparability Variability Perishability PRODUCT LAYERS: PEELING THE ONION Core Communications Image Benefits Entertainment Actual Ease of use Lightness Product Ring Tone Augmented

Warranty Products Insurance Users Guide PRODUCT CLASSIFICATION: ITS A BIRD, ITS A PLANE. Consumer Convenience ProductsProducts Toothpaste, milk Shopping Products Specialty Computer, refrigerator Products Installations Rolex watch Production Robots Accessory Equipment

Unsought Products Copiers Maintenance, Repair, an Home warranty Operating Products Brooms, nails Business Raw Materials Products Cotton, oil Component Parts & Processed Materials Payroll services Batteries Business Services PRODUCT DIFFERENTIATION AND PLANNING A Meaningful Difference: 1.

Product Quality 2. Features & Benefits 3. Product Lines & Product Mixes 4. Branding 5. Packaging PRODUCT QUALITY Quality Level how well a product performs its coreProduct Consistency functions.

how reliably a product delivers its promised level of quality. Product Category Quality Indicators Internet Search Engine: Fast, relevant, far-reaching results Stylish Blue Jeans: High-profile designer, high price, celebrity customers TV Editing Equipment: TV Editing Equipment: Roller Coasters: Roller

Chain Coasters: Saws: Reliability, flexibility, and customer services Thrill factor, design and setting FEATURES AND BENEFITS Product Features specific characteristics of a product. Customer Benefit the advantage that a customer gains from specific product features. Product Product Feature Customer Benefit

Lower Fat Looser pants Contact Lenses Different Colors A new-looking you High-definition TV 46-inch screen The partys at your house Hybrid Car Better gas mileage More cash for other needs Triple Latte

Caffeine, Caffeine More time to, uh, study Subway Sandwiches PRODUCT LINE AND PRODUCT MIX Product Line products that are closely related, either in terms Cannibalization of how they work, or the a producer offers customers they serve. a new product that takes sales Product Mix the total away from its number of product existing product. lines by a single firm. BRANDING

Brand - a products Brand Equity the extra money that consumers identity that sets it will spend to buy that brand apart from other players in the same Brand Name a catchy, memorable name is category. a powerful part of strong brand. IBM, Coca Cola COBRANDING Cobranding - established brands from different companies join forces to market the same product. Examples: Ford markets the Eddie Bauer Explorer Frito-Lay markets KC Masterpiece BBQ chips Betty Crocker markets brownies with Hersheys syrup

<> NATIONAL BRANDS VS. STORE BRANDS National Brands/ Manufacturer Brands Brands owned and marketed by the producer. Store Brands/ Private Label Brands Brands produced and marketed by the retailer. PACKAGING Protect the Product Provide Information

Facilitate Storage Suggest Product Uses Promote the Brand Attract Buyer Attention PRODUCT LIABILITY AN ISSUE? Toilet brush: Do not use for personal hygiene.

Scooter: This product moves when used. Bathroom Heater: This product is not to be used in bathrooms. Cardboard car sunshield: Do not drive with sunshield in place. Thermometer: Once used rectally, the thermometer should not be used orally. Baby stroller cautions: Remove child before folding

Electric blender: Never remove food or other NEW PRODUCT DEVELOPMENT Idea Generation Brand new ideas that radically change how people live Records > Tape > CDs > Downloads Idea Screening Analysis Characterized by changes to existing products Development New operating

system for your PC Slight modification of Newan existing product packaging, additional sizes Testing Commercializatio n PRODUCT DIFFUSION RATES Observability How visible is the product to other potential consumers? Trialability How easily can potential

consumers sample the new product? Complexity Can potential consumers easily underst what your product is and how it work Compatibility Relative Advantage How consistent is your product with the existing way of doing things? How much better are the benefits of y new product compared to existing produ PRODUCT LIFE CYCLE AND MARKETING STRATEGIES Phase Examples

Sales/Profits Marketing Strategies Introduction 3D TV, fuel cell technology Low sales, low profits Build awareness, trial, and distribution Growth Hybrid cars, video cell phones, Increasing sales and

profits Reinforce brand positioning, often through heavy advertising Maturity Airlines, DVD players Flat sales and declining profits Target competitors, new product features, competitive advertising, promotion, and price cuts Decline Pagers, videocassettes

Declining sales and profits Reduce spending and consider terminating the product PROMOTION IN CHAOS: DANGER OR OPPORTUNITY? Technology has empowered consumers to choose when they interact with media Internet users spent an average of nearly 33 hours per week surfing the web Network television watching is declining Consumers watching TV are zapping ads with TiVo Rising consumer power and the breakneck pace of technology 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 THE PROMOTIONAL MIX: COMMUNICATING THE BIG IDEA Advertising

These tools can help communicate the Big Idea to your target market Sales Promotion Direct Marketing Personal Selling Emerging Tools EMERGING PROMOTIONAL TOOLS: THE LEADING EDGE Product Placement Advergaming Minimovies Buzz Marketing Sponsorships A MINI CAMPAIGN WITH MAXIMUM PUNCH BMWs promotional budget for the Mini was 10%

of the typical BMW budget The team developed a quirky campaign with the message: Lets Motor! Ads appeared in Playboy, Rolling Stones and on billboards A 40-page booklet inserted in U.S. Magazines The car played a feature role in the movie Italian Job Brand awareness rose from 2% to 60% Mini sales exceeded expectations by 50% In 2009 Mini launched an official public field trial TRADITIONAL PROMOTIONAL TOOLS: A MARKETING MAINSTAY Advertising Sales Promotion Public Relations Personal Selling TRADITIONAL PROMOTIONAL TOOLS: ADVERTISING Television

Broadcast Cable Newspapers Direct Mail Radio Which media effectively reaches your target market? Yellow Pages Magazines Outdoor Internet

TRADITIONAL PROMOTIONAL TOOLS: CONSUMER PROMOTION Premiums Promotional Products Samples Coupons Rebates Displays designed to stimulate immediate sales TRADITIONAL PROMOTIONAL TOOLS: TRADE PROMOTION

Special Deals Allowances Trade Shows Contests Sweepstakes Special Events Designed to simulate wholesalers and retailers to push specific products. IF YOURE NOT BLOGGING, YOURE SLOGGING Great ideas and scandals spread quickly. Blogs offer great opportunity for savvy firms, here are some tips: Surf through the blogosphere everyday.

Consider launching a company blog. Consider advertising on blogs Consider using the blogosphere to generate word-of-mouth. TRADITIONAL PROMOTIONAL TOOLS: PUBLIC RELATIONS 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 33

TRADITIONAL PROMOTIONAL TOOLS: PERSONAL SELLING Prospect and Qualify Today selling means building relationships Personal selling is best for: High-ticket items Complex products High volume customers Prepare Present Handle Objection

s Close Sale Follow-up CHAPTER 11: MARKETING Building Profitable Connections with Your Customers MARKETING IS MORE THAN ADVERTISING Marketing the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. PRODUCTS PROVIDE UTILITY IN A NUMBER

OF WAYS Think UPS or FedEx Satisfies wants by providing Time goods and Utility services at a convenient time Think Smoothie King Satisfies wants Form Utility by converting products into a finished form The ability of

Satisfies wants by providing goods and services at a convenient place goods and services to Place Utility Think ATMs satisfyOwnership wants. Utility Think hassle free purchasing Satisfies wants

by smoothly transferring ownership of goods and services from seller to buyer THE SCOPE OF MARKETING: ITS EVERYWHERE People Marketing Place Marketing Event Marketing

Idea Marketing THE EVOLUTION OF MARKETING: FROM THE PRODUCT TO THE CUSTOMER What is Customer Relationship Management? The on-going process of acquiring, maintaining, and growing profitable customer relationships by delivering unmatched value. Requires collecting, managing, and applying the right data at the right time for the right person (and every repeat customer is the right person!) THE CUSTOMER: FRONT AND CENTER Customer Relationship Management (CRM)

Limited Relationships Full Partnerships Perception is key Value Relationship between the cost and the benefit of your product Customer Delivering perceived Satisfaction value above and beyond customer expectations.

The payoff from Customer Loyalty delivering value and generating satisfaction. They come back! Customer Relationship Management Customer acquisition/retention tool Sales and marketing support Data collected at all contact points Stored in data warehouse Data

analysis and data mining Ultimate objective is lock-in Joes home page Vested interest not to change Customer Relationship Management Did you know ???? It cost 6x more to sell to a new customer than to an existing one

A typical dissatisfied customer will tell 8 to 10 people about his/her experience Annual Customer Retention of 90% means that a business will lose half of their customers every 5 years A company can boost its profits 85% by increasing its customer retention by just 5% 70% of complaining customers will do business with a company again if it quickly takes care of the service snafu... THE MARKETING MIX Product Strategy

4 P's Price Strategy Promotion Strategy Place Strategy Product Price Promotion Place And now a fifth P Service MARKETING STRATEGY keting Mix assists in answering . Where are you going and how will you get there? Who is your target audience and how will you reach them? Competitiv

e Produc Produc tt Strateg Strateg y y Social / Cultural Pricing Pricing Strateg Strateg y y Targ et Mark

et Promot Promot ion ion Strateg Strateg y y Technologi cal Economic Distribu Distribu tion tion Strategy Strategy /Place /Place

Political / Legal MARKET SEGMENTATION Selecting a target Marketers Marketers may may select select multiple segments to target. multiple segments to target. dividing your market market begins with into segments.

CONSUMER MARKETS VS BUSINESS MARKETS Consumer Markets Products for personal consumption. A Well Chosen Target Market: Size Profitability Accessibility

Limited Competition Business Markets Products used How will the directly or buyer use the indirectly to product? produce other products. Different approaches to select target markets. THE GLOBAL MARKETING MIX Do you need to change

your marketing mix for every country? Most consumer products require a new marketing mix for each global market. MARKET SEGMENTATION CONSUMER BUSINESS Market segmentation Market segmentation based on the based on how customers characteristics concentration of of use the product. For

customers. For example, example, sensors. schools the auto or corridor hospitals Senior citizen living facilities Demographic Pickups in southern US Geographic

Porshe, Sports Illustrated Psychographic Behavioral Miller Lite Geographic Customer-based Product-use based CUSTOMER BEHAVIOR: DECISIONS, DECISIONS, DECISIONS CONSUMER DECISION MAKING PROCESS Need Recognition Information Search Evaluation of Alternatives Purchase Decision

Postpurchase Behavior INFLUENCE IN DECISION MAKING Cultural: Social: Personal: Values, attitudes, customs, social class Family, friends & reference groups Demographics, personality Psychologic Motivation, attitudes, perceptions, learning al: BUSINESS BUYER BEHAVIOR Rationale Criteria

Specific Purchase Criteria Objective Standards Input from Multiple Internal Sources Formal Process Frequently Seek Customized Goods REQUEST FOR PROPOSAL (RFP)

An invitation for suppliers, through a bidding process, to submit a proposal on a specific commodity or service. One of the best methods for leveraging a company's negotiating ability and purchasing power with suppliers. Brings structure to the procurement decision and allows the risks and benefits to be identified clearly upfront. Is lengthier than others, so it is used only where its many advantages outweigh any disadvantages and delays caused. Dictates the structure and format of the supplier's response.

The creativity and innovation that suppliers build into their proposals are used to judge supplier proposals MARKETING RESEARCH: SO WHAT DO THEY REALLY THINK? Marketing Research the process of gathering, interpreting Monitor andand applying predict information to uncover opportunities customer behavior and challenges for your business. Evaluate and improve marketing mix

Better marketing decisions More value for consumers More profits for business CONDUCTING MARKET RESEARCH 1. 2. 3. 4. 5. 6. 7. 8. Define the problem Access available information Gather additional information

Review internal records; interview employees Collect outside data Organize and interpret data Make a decision and take action Assess the results of the action DEFINE THE PROBLEM List the possible causes Eliminate any that can not be measured Beware of symptoms Your company has missed its revenue targets Symptom sales declined

Possible causes: Have your customers changed? Have their tastes changed? Have their buying habits changed? Have you changed your product? Are there new competitors? GATHERING INFORMATION Assess what you already have available If you need more

Stay as close to home as possible Sales records Complaints Receipts Credit records Ask your employees MARKETING RESEARCH DATA Secondar y Data: Existing Primary Data: New Data Lower Cost

More Expensive May not be Specific Customized Frequently Outdated Fresh, New Available to Competitors Proprietary

Already published material Trade associations Google???? Direct mail Questionnaires Telephone or street surveys Focus Groups Test marketing ORGANIZING AND INTERPRETING DATA Prioritize the data with the most important on top

What strategies are suggested? How can they be accomplished? How are they different from what Im doing? What current activities should be increased? What current activities should be decreased or dropped? MAKING DECISIONS AND TAKING ACTION Prioritize each possible strategy from the standpoint of:

Immediate goal to be achieved Cost to implement Time to accomplish Measurements Select those with the greatest impact Develop tactics to implement ASSESS THE RESULTS Analyze your progress measures Adjust if necessary At the conclusion..

Did you achieve your goal ? Should the decision be renewed or expanded ? A MAJOR MARKETING SHIFT: SOCIAL RESPONSIBILITY Marketers have responded to social demands: Setting higher standards for environmentalism Abolishment of sweatshops Involvement in the community Many companies have begun to employ green marketing

GO GREEN Target consumers who buy based on their convictions A MAJOR MARKETING SHIFT: TECHNOLOGY Technology has revolutionized marketing Power has shifted from producers to consumers Customers have 24/7 access to information

Marketers have an abundance of promotional opportunities Data can be used to develop one-to-one relationships with customers Companies can mass customize products for customers Marketing To Your Foundation Simulation Customers Product Questions: What do the customers want? What are the characteristics of the product that are important to customers? What is the most important product characteristic In the low tech segment? In the high tech segment?

What is perceived age of a product? How is reliability measured? Pricing Questions: What do the customers want? What is the price range for low / high tech products? How price sensitive are the customers? What are the competitors charging? Can I lower my price and still earn a fair return on my investment? Promotional mix You will invest money in a promotion budget and create awareness. It relates to your advertising efforts. The awareness you create is specific to a single product.

You will invest money in a sales budget and create access to your products. Accessibility applies to the segment, not the product Sales Budget is spent on distribution, order entry, customer service, etc. Sales Forecast Assess how the total market will perform Assess your performance and market share

What is the overall economic climate ? Will customers make decisions on the same basis they have in the past ? How will your competitors perform Will there be new competitors ? Will they introduce new products ? Will some competitors leave the market ?

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