BUSN 3rd kelly mcgowen chapter12

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BUSN

Product and Promotion: Creating and Communicating Value

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion:
Creating and Communicating
Value

• What is a product and product classifications?
• What is product differentiation?
• What are 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?
BUSN

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

Product: It’s Probably More Than You Thought

Car Wash ~ Cooking Lesson ~ Computer ~ Soap ~ Car
Product – anything a company offers to
satisfy customer needs and wants
Brand ~ Image ~ Packaging ~ Reputation ~ Guarantee

BUSN

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

Services: A Product by Any Other Name

Most services embody
these qualities:

Intangibility
Inseparability
Variability
Perishability

BUSN

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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BUSN

Product and Promotion: Creating and Communicating Value

Goods and Services Spectrum

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

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

BUSN

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

Consumer Product Categories

Consumer Products – products for personal use or
consumption
Consumer Products

• Convenience Products
• Shopping Products
• Specialty Products
• Unsought Products

BUSN

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

Business Product Categories

Business Products – are purchased to use directly
or indirectly in the production of another product
• Installations
Business
Products

• Accessory Equipment
• Maintenance, Repair, and
Operating Products
• Raw Materials
• Component Parts &
Processed Materials
• Business Services

BUSN

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

Product Differentiation and Planning:
A Meaningful Difference

A Meaningful Difference:
• Product Quality
• Features & Benefits
• Product Lines & Product Mixes
• Branding
• Packaging

BUSN

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

Product Quality

Quality Level – how
well a product performs
its core functions
Product Consistency –
how reliably a product
delivers it promised level
of quality

BUSN

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

Product Features and Benefits

Product Features –
specific characteristics of
a product
Customer Benefit – the
advantage that a customer
gains from specific product
features

BUSN

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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BUSN

Product and Promotion: Creating and Communicating Value

Product Features and Customer Benefits

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

Product Lines and the Product Mix

Product Line – products
that are closely
related, either in terms

of how they work, or the
customers they serve.
Product Mix – the total
number of product
lines by a single firm.

BUSN

Cannibalization –
a producer offers
a new product
that takes sales
away from its
existing product.

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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BUSN

Product and Promotion: Creating and Communicating Value

Amazon’s Product Line and Product Mix

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

Oops! If You Drive Yugo, Maybe You Will Go and
Maybe You Won’t Go…

The tiny Yugo hatchback hit the U.S. market with great
fanfare in 1985
• It was billed as the cheapest new car in
the United States - $3,990
• Drivers began to uncover flaws and
major issues as they drove the car
• Sales plummeted and the company
went bankrupt in 1989
NYC School of Visual Arts professor challenged his students
to make something useful of the car….they made a toaster,
a Port-o-Potty, a confessional and a submarine
BUSN

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

Branding

Brand - a product’s
identity that sets it
apart from other
players in the same
category

BUSN

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

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

BusinessWeek/Interbrand Top Ten Global Brands

Source: BusinessWeek “100 Best Global Brands,” accessed December 14, 2009

BUSN

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

Line Extensions versus Brand Extensions

Line
Extensions

Brand
Extensions

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Similar
products offered
under the same
brand name
A product in a
new category

under an existing
brand name

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

Cobranding

Cobranding established brands
from different
companies join
forces to market the
same product
• Dreyer’s markets various Girl Scout Cookie flavored ice cream
• Kohl’s markets Vera Wang clothing
• Kmart markets Martha Stewart housewares
BUSN

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

Packaging

 Protect the Product
 Provide Information
 Facilitate Storage
 Suggest Product Uses
 Promote the Brand
 Attract Buyer Attention

BUSN

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

Innovation and the Product Life Cycle:
Nuts, Bolts, and a Spark of Brilliance

Discontinuous Innovation – brand
new ideas that radically change
how people live
Dynamically Continuous

Innovation – marked changes to
existing products
Continuous Innovation – a slight
modification of an existing product

BUSN

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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BUSN

Product and Promotion: Creating and Communicating Value

The New Product Development Process

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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BUSN

Product and Promotion: Creating and Communicating Value

The Product Life Cycle:
Maximizing Results over Time

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

Promotion in Chaos: Danger or Opportunity?

• Technology has empowered consumers
to choose when they interact with media
• In 2007, 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 have
created a growing need and stunning
opportunity
BUSN

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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Product and Promotion: Creating and Communicating Value

Integrated Marketing Communication: Consistency
and Focus

Integrated Marketing Communication is the coordination of
messages through multiple promotional vehicles

• Coordinate promotional messages
• Create a coherent impression in customer’s mind
• Identify key points of contact between product and
target market
Consumers combine – or integrate – information from all sources to
form a unified impression
BUSN

©2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

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