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Chapter 8

Developing New
Products
Chapter 8: Developing New Products

LEARNING OBJECTIVES
LO1 Identify the reasons firms create new products
LO2 Describe the diffusion of innovation theory and
how managers can use it to make product line
decisions
LO3 List the stages involved in developing new
products and services
LO4 Describe the product life cycle and summarize
how it is used to make product line decisions
LO1

Product: The first P in the


marketing mix
The first P in the market mix: new products
Central to the creation of value for the consumer
What is a product?
Anything that is of value to a consumer & can be
offered through a marketing exchange
Goods, services, places, ideas, organizations,
people, communities
Innovation adds value
LO1

Why do firms create new products?

New market offerings


provide value to both firms
& customers
Firms MUST innovate in
order to stay in business &
current
Innovation = new products
& services
LO1

Changing customer needs

Adding new products allows


firms to create & deliver
value by satisfying changing
needs of current & new
customers
Sometimes firms take a
well-known product, such
as a vacuum, & make it
much more interesting such
as Dyson
LO1

Market saturation

The longer a product exists


in the marketplace, the
more likely the market will
become saturated
Without new products or
services, the value of the
firm declines
Saturated markets also offer Image courtesy of Getty Images

opportunities
LO1

Managing risk through diversity

Innovation allows firms to


create a broader portfolio
of products
This leads to diversification
of risk
A portfolio of products is
better than having just a
single product
dont put all your eggs in
one basket
LO1

Innovation and value


Pioneers
New-to-the-world products
that create new markets
Breakthrough
Disruptive
First Movers
Pioneers that are first to create
a market or product category

Image courtesy of Getty Images


LO2

Adoption of innovation
LO2

Using the adoption cycle


LO2

observability

The easier the


benefits are to
communicate the
faster the product
will diffuse.
LO2

Complexity & trialability

The more complex the


product the longer it takes
to diffuse.

Products that can be


sampled will diffuse faster.
LO3

How firms develop new products


LO3

IDEA GENERATION

Internal
R&D

Customer
Licensing
Input
Source
of Ideas

Competitors
Brainstorming
Products
LO3

INTERNAL RESEARCH & DEVELOPMENT


(R&D)

High product
development costs
Often the source of
technological products
Often the source of
breakthrough products
LO3

LICENSING

Firms purchase the rights


to technology or ideas
from other research-
intensive firms
University research
centers also often provide
such licenses
LO3

BRAINSTORMING

Groups work together to


generate ideas
No idea can be
immediately dismissed

IDEO Website
LO3

COMPETITORS PRODUCTS

Reverse engineering

Me Too or copycat products


LO3

CUSTOMER INPUT
As much as 85% of new business to
business (B2B) products come from
customers
Lead users modify existing products
according to their own specific
needs
LO3

Concept testing

Concept is a brief written


description of the product
Customers reactions
determine whether or not it
goes forward
Triggers the marketing
research process
LO3

Product development

Prototype

Alpha testing

Beta testing
LO3

Market testing

Premarket Test
tests marketing

Customers Mini product


exposed launch

More expensive
Customers
than premarket
surveyed
tests

Firm makes Market demand


decision is estimated
LO3

Product launch

Promotion

New
Timing Place
Product

Price
LO3

Evaluation of results

Satisfaction of technical requirements

Customer acceptance

Satisfaction of the firms financial


requirements
LO3

Why do new products fail?


Too small target market
Poor design
Low product quality
Incorrect positioning
Wrong price strategy
Poor marketing
communication
Competition
LO4

The product life cycle


LO4

Stages & characteristics of


the product life cycle
LO4

Strategies for extending the


product life cycle

Develop new uses


Modify product
Increase frequency of
use
Increase # of users
Find new users
Reposition product
Tweak marketing
strategy
LO4

Variations on the product life cycle


curve
LO4

Strategies based on product


life cycle: some caveats

Theoretically the curves are


bell shaped but in reality
they can take many shapes

Managers do not know


exactly what the shape
each products life cycle will
take, so there is no way to
know precisely what stage
they are in.
Chapter 9

Product, Branding,
and Packaging
Decisions
Chapter 9: Product, Branding, and
Packaging Decisions

LEARNING OBJECTIVES
LO1 Describe the components of a product
LO2 Identify the types of consumer products
LO3 Explain the difference between a product mixs breadth
and a product lines depth
LO4 Identify the advantages that brands provide firms and
consumers
LO5 Summarize the components of brand equity
LO6 Describe the types of branding strategies used by firms
LO7 State how a products packaging and label contribute to a
firms overall strategy
LO1

Complexity of products and


types of products
LO2

Types of products - Consumer

Specialty Shopping

Convenience Unsought
LO3

Product mix and product


line decisions
LO3

Product mix breadth and


product line depth

Breadth Depth
Number of products within
Number of product lines
a product line
LO3

Change product mix


breadth

Increase Breadth
Add new product
lines

Decrease Breadth
Delete entire
product lines
LO3

Change product line depth

Increase Depth Decrease Depth


Band-Aid now has over 40 Unilever eliminated 400
products to heal cuts. core brands including Ragu
sauce & Sunlight laundry
detergent
LO3

Change number of skus

Addition or
deletion of SKUs
in existing
categories
Designed to
stimulate sales or
react to consumer
demand
LO4

branding

A brand can use: Name, logos, symbols, characters,


slogans, jingles and even distinctive packages.

Oscar Meyer
Commercial
LO4

What makes a brand?


LO4

Value of branding
LO5

Brand overview
LO5

Brand equity: awareness


LO5

Brand equity: perceived value

Perceived value

Discussion question

How does First Choice


Haircutters create value for
customers?
LO5

Brand equity: brand


associations
- Mental Links -
Consumers make between a brand & its key
product attributes such as the logo, slogan or
famous personality.

Toyota Prius: economical, stylish, environmentally friendly


Volvo: safety
State Farm: like a good neighbour
Hallmark Cards: show you care with quality cards
LO5

Brand equity: brand loyalty

1. Consumers are often less sensitive to price


2. Marketing costs are much lower
3. Loyal customers praise the virtues of their
favourite products, retailers or services
4. High level of brand loyalty insulates the firm
from competition
LO6

Branding strategies: brand ownership


LO6

Naming brands and product


lines
LO6

Choosing a name

Should be descriptive &


suggestive of benefits &
qualities of the product
Easy to pronounce,
recognize, remember
Register as a trademark &
protect it legally
Easy to translate
LO6

Brand extension - benefits


Use of the same brand
name for new products.
Well established name
Perception of high
quality carries over
Lower marketing costs
Synergy among
complementary
products
Boost sales of the core
brand
LO6

Brand extension negative


consequences
Use of the same brand
name for new products.
Core brand & new
extension may not fit
well together
Brand associations
between the two may
not be similar
Too many extensions
results in brand dilution
Ensure the brands can
be distanced from one
another if need be
LO6

Brand dilution

Evaluate consumer
Evaluate the fit between
perceptions of the
the product class
attributes of the core brand
of the core brand
and seek out extensions
and the extension.
with similar attributes.

Refrain from Is the brand


extending the brand extension distanced
name to too many enough from the
products. core brand?
LO6

cobranding

Two or more brands together


on the same package or
promotion.
LO6

Brand licensing
Lacoste
Founded in 1933 by David
Lacoste
Still sold in stores today
Harley Davidson
ConAgra recently introduced Harley Davidson Beef Jerky into
the $2.7 billion per year beef snack category
The product will be sold in convenience stores and in Harley
Davidson dealerships
Canadian Tire/Nascar
official automotive retailer of NASCAR in Canada
LO7

packaging

An important brand element


with physical benefits.
LO7

USING PACKAGING TO CREATE VALUE


How can firms use packaging to create value for the firm
and excitement for customers?
LO7

labelling
LO7

Ethical dilemma 9.1: video girl


barbie brings girls to foursquare
Barbie enters the world of
technology
Barbie Video Girl doll that
has a tiny video camera in
her necklace that can
record up to 25 minutes
of video
Shes also a celebrity
FourSquare user that uses
social networking sites
Have the lines between
play & advertising been
blurred?
Chapter 10

Services: The
Intangible Product
Chapter 10: Services: The Intangible
Product

LEARNING OBJECTIVES
LO1 Describe how marketing a service differs from
marketing a product by applying the principles of
intangibility, inseparability, inconsistency, and
inventory
LO2 Outline the four gaps in the Gaps model used to
understand and manage customer expectations
LO3 Describe strategies that firms can use to help
employees provide better service
LO4 Identify three service recovery strategies
LO1

service

By providing good
customer service, firms
add value to their
products and services.
LO1

The service-product continuum

Most offerings lie somewhere in the middle


LO1

Economic importance of service


Household
maintenance
became more
specialized
Developed economies are
increasingly service
oriented economies

High value
Production was
placed on
cheaper in
convenience
other countries
and leisure
LO1

Services marketing differs


from product marketing
LO1

intangible
Cannot be touched,
tasted or seen
Requires using cues to
aid customers
Atmosphere is
important to convey
value
Images are used to
convey benefit of
value
LO1

Inseparable production &


consumption
Production &
consumption are
simultaneous
Little opportunity to
test a service before
use
Lower risk by offering
guarantees or
warranties

FedEx Commercial
LO1

inconsistent
Training & standardization
Customized services to
meet specific needs
Bundled packages
Replace people with
machines
Self-service technology
The Internet
LO1

ADDING CONVENIENCE THROUGH


SELF-CHECK OUT MACHINES

Increasing use of self-


checkout machines
Consumers enjoy faster
checkout
Retailers save on labour
and training costs
LO1

inventory

How are each of these perishable services?


LO2

PROVIDING GREAT SERVICE:


THE GAPS MODEL
The knowledge gap: LO2

knowing what customers


want
Marketing
research:
understanding
customers

The Knowledge Gap

Understanding
Evaluating service
customer
quality
expectations
LO2

Filling the knowledge gap

How does a
college increase
successful
outcomes for its
students?
LO2

Understanding customer
expectations
Expectations are based on knowledge and experience

Expectations vary according to type of service

Expectations vary depending on the situation

versus
LO2

ZONE OF TOLERANCE

What is the desired and expected level of


service for each dimension?

What are the customers perceptions


of how well the focal service
performs and how well a
competitive service performs?

What is the importance of each service


quality dimension?
LO3

The standards gap: setting service standards

Achieve service goals


through training
Commitment to service
quality
LO3

The delivery gap: delivering service quality


LO3

Empowering service providers

Allowing employees
to make decisions
about how service is
provided to
customers
LO3

Providing support & incentives

Provide emotional Provide support


support to service necessary to deliver
providers service

Reducing
delivery gap

Consistent and coherent Reward employees for


management excellent service
LO3

Using technology

RFID (radio frequency


identification device)
Retail store assistant
(RSA)
LO3
The communication gap:
communicating the service
promise
Manage customer
expectations

Promise only what you


can deliver

Communicate service
expectations

J.D. Power and Associates Website


LO4

Service recovery

Resolve
problems
quickly
Listen to Provide a
the fair
customer solution

Increase
Service
Recovery
LO4

Listening to the customer

Customers can
become very
emotional about
service failure
Customers want to be
heard
LO4

Finding a fair solution

Distributive
fairness

Procedural
fairness
LO3

Resolving Problems Quickly


The longer it takes to resolve service failure the more irritated the
customers
It is in the firms best interest to solve problems quickly
Chapter 11

Pricing Concepts
and Strategies:
Establishing Value
Chapter 11: Pricing Concepts and
Strategies: Establishing Value

LEARNING OBJECTIVES
LO1 Explain what price is and its importance in establishing
value in marketing
LO2 Illustrate how the 5 Cs company objectives, customers,
costs, competition, and channel members influence
pricing decisions
LO3 Describe various pricing methods and strategies that are
used in marketing
LO4 Identify pricing tactics targeted to channel members and
consumers
LO5 Summarize the legal and ethical issues involved in pricing
LO1, LO3, LO4

Groupon the one-two


punch!

Reach a wide audience of


interested customers that cant
ignore the deal
A cost-effective way to bring in
new customers
But are consumers suffering
from deal-fatigue?
LO1

The importance of pricing

A strategic opportunity
to create value
Not an after thought to
the rest of the
marketing mix
Pricing signals quality or
a lack of quality
LO1

The role of price in the marketing mix

Price is usually ranked as


one of the most important
factors in purchase
decisions

Price is the only element in


the marketing mix that
generates revenue
LO2

The five cs of pricing


LO2

1st C: Company objectives

Profit Orientation
- Maximize profits
- Target return pricing
- Target profit pricing
Sales Orientation
Competitor Orientation
Customer Orientation
LO2

2ND C: CUSTOMERS

The most important C!!!


Its all about understanding
consumers reactions to
different prices
Consumers want value
Price is half of the value
equation
LO2

DEMAND CURVES & PRICING

Knowing demand curves enables to


see relationship between price and
demand
LO2

Price elasticity of demand

How do consumers respond to price increases or decreases?


This is measured by the price elasticity of demand
LO2

Factors Influencing Price Elasticity of Demand:


income & Substitution Effects

Meet Pete, college student


on a budget
Old Spice Sport Deodorant
user
At the store he notices that
Old Spice is more expensive
Pete decides to give
another brand a try & save
money
LO2

Factors Influencing Price Elasticity of Demand:


Cross-Price Elasticity Effect

Meet Kendra, self-supporting


college student
Buys a new printer on sale for
a great price
Learns it requires special ink
cartridges* that cost more
than the printer

*complementary products
LO2

3rd C: costs

Variable Costs
Vary with production volume

Fixed Costs
Unaffected by production volume

Total Cost
Sum of variable and fixed costs
LO2

Break-even analysis & decision


making
LO2

Break-even point

Total Variable Cost = Variable Cost per unit X Quantity


Total Cost = Fixed Cost + Total Variable Cost
Total Revenue = Price X Quantity

Fixed Costs
Break-Even Point (units) =
Contribution per unit
LO2

4th C: competition
LO2

5th c: channel members

Manufacturers, wholesalers
and retailers can have
different perspectives on
pricing strategies
Manufactures must protect
against grey market
transactions
LO2

Other influences on pricing


The Internet
- Increased price sensitivity
- Growth of online auctions

Economic Factors
LO3

Pricing methods & strategies

COST-BASED COMPETITOR-BASED

PRICING STRATEGIES

VALUE-BASED
LO3

Cost-based methods

Cost-base pricing methods


start with cost
All costs calculated on a per
unit basis
Assumes costs dont vary
for different levels of
production
LO3

Competitor-based methods

Set prices to signal


information of how
product compares with
competitors

Premium pricing
LO3

Value-based methods

Setting prices that focus


on the overall value of
the product

Consumer perceptions
LO3

NEW PRODUCT PRICING STRATEGIES

Price skimming

Market penetration
pricing
LO3

Psychological Factors Affecting


value-based Pricing Strategies
Reference
Pricing

Price- Psychological Everyday


quantity pricing low pricing
relationship strategies (EDLP)

Odd prices
LO3

Consumers use of reference


prices

The price against which


buyers compare the
actual selling price of the
product and that
facilitates their
evaluation process
LO3

Reference prices

How do consumers use


reference pricing when
shopping for cars?
How does this ad help
the consumer?
LO3

ODD PRICES

Odd prices may be so


traditional that sellers are
afraid to round them off
May suggest a good deal
May suggest low quality
LO3

EVERYDAY LOW PRICING (EDLP)


Everyday low pricing
High/low pricing
(EDLP)

versus

Value is created in different ways


EDLP saves search costs of finding lowest overall prices
High/low provides the thrill of the chase for the lowest price
LO3

High-low pricing

RELIES ON THE
PROMOTION OF SALES,
DURING WHICH PRICES
ARE TEMPORARILY
REDUCED TO ENCOURAGE
PURCHASES
LO4

PRICING TACTICS - CONSUMERS


LO4

Price lining
Marketers establish a price floor & a
price ceiling & set prices in between
Allows for easy comparison
LO4

Price bundling

Encourage sales of slow


moving items
Encourage stock up
Encourage trial of new
brand
Incentive to purchase
LO4

Leader pricing

Enticing consumers
into the store with the
popular aggressively
priced item and hoping
they will pick up other
items while shopping
LO4

Consumer price reductions

Markdowns

Quantity
Coupons &
discounts for
rebates
consumers
LO4

markdowns

An integral component of high/low


pricing strategy
Enable retailers to get rid of slow
moving or obsolete merchandise
Used to generate store traffic.
LO4

Quantity discounts for


consumers
Size discount
The more you buy the cheaper the
unit cost
LO4

Coupons & rebates

Coupons
Retailer handles
Rebate
Manufacturer issues
LO4

Business-to-business pricing
tactics & discounts
LO4

Seasonal discounts

Designed to spur buyers into purchasing


merchandise early
LO4

Cash discounts

Reduced invoice cost if


buyer pays prior to the end
of the discount period
Encourages buyers to pay
before the discount period
ends
Seller benefits either way
LO4

allowances

Lowers the final cost in


return for specific
behaviour
Advertising allowance
Listing allowance
LO4

Quantity discounts

Cumulative
quantity
discount

Noncumulative
quantity
discount
LO4

Uniform delivered vs. geographic pricing

Addresses the impact of shipping, which is


often a major cost for manufacturers
LO5

Legal & ethical aspects of pricing

Deceptive or Predatory Pricing


Illegal Price
Advertising

Price Price Fixing


Discrimination
Chapter 12

Distribution
Channels
Chapter 12: Distribution Channels

LEARNING OBJECTIVES
LO1 Explain the importance of distribution and the
interrelationships among distribution channels, supply
chain management, and logistics management
LO2 Describe distribution channel design and
management decisions and strategies
LO3 Identify how distribution channels add value to
businesses and consumers
LO4 Explain how logistics management affects
distribution strategy
LO1, LO3

Walmart innovators in
distribution!
Walmarts success stems
directly from their channel
innovations
Close co-operation with
supplier partners is key
Extensive information
systems
Constantly fine-tuning
efficiencies
LO1

The importance of
distribution
The third P!
Good distribution is critical to
marketing success
Royal Canadian Mint released
worlds first coloured
circulation coin through Tim
Hortons (due to huge reach and speed to
distribute coins)

Coin to raise breast cancer


awareness followed via
Shoppers Drug Mart stores
LO1

Distribution channels, supply


chains, & logistics are related
Distribution channel

Supply chain management

Logistics management

Similar but different


LO1

Distribution components
LO2

Designing distribution channels

Channel Structure
Direct distribution
Indirect distribution
Multichannel distribution

or some combination of these forms


LO2

Direct & indirect distribution


LO2

Multichannel distribution
LO2

Push vs. pull distribution strategies


LO2

Distribution intensity
LO3

Distribution channels add value


LO3

Indirect supply chain with


retailer
LO3

Functions performed by
intermediaries
LO3

Managing channels through


vertical marketing systems
Independent or Vertical Channel?
LO3

Types or phases of vertical


marketing systems
Three types or phases of vertical
marketing systems:
Administered
Contractual
Franchise
Corporate
LO3

Canadas largest franchises


LO4

LOGISTICS MANAGEMENT:
MAKING INFORMATION FLOW
LO4

Data warehouse
LO4

ELECTRONIC DATA INTERCHANGE

Computer-to-computer
exchange of business
documents from retailer to
vendor and back
Advanced shipping notice
Reduces cycle time
Communication is improved
Easy data analysis
LO4

Managing supply chains through


strategic relationships

Open
Common Goals
Communication

Credible
Mutual Trust
Commitments
Strategic
Relationships
LO4

Logistics management: making merchandise


flow
Inbound transportation
Receiving and checking
Storing and cross-docking
Getting merchandise floor-
ready
Shipping merchandise to stores
Just-in-time systems (JIT)
LO4

Inbound transportation

In-bound transportation involves the


co-ordination of deliveries
Dispatcher: a person who is
responsible to co-ordinate all the
deliveries
If deliveries are missed or are not on
time, costs will increase
LO4

Receiving and checking

Radio
Frequency
Receiving Checking
Distribution
(RFID) Tags

Container
Arrival receipt Undamaged computer
chips

Ordered =
received
LO4

Storing and cross-docking

Types of distribution
centres:
Traditional
Cross-docking
Combination
LO4

Getting merchandise floor ready


& shipping to stores
Floor-ready merchandise
Ready to be placed on the selling floor
Create price & ID labels
Suppliers sometimes ship floor-ready
Shipping to stores
A complex process for multistore chains
Sophisticated computer systems are used
LO4

Inventory management
through just-in-time systems

Just-in-time (JIT) Quick response (QR)


LO4

Benefits of jit systems

Reduced lead time

Increased product
availability and lower
inventory investment
Chapter 13

Retailing and
Multichannel
Marketing
Chapter 13: Retailing and
Multichannel Marketing

LEARNING OBJECTIVES

LO1 Outline the considerations associated with choosing


retail partners
LO2 Identify what types of retailers are available to
distribute products
LO3 Describe the components of a retail strategy building
on the four Ps to create value for consumers
LO4 Identify the benefits and challenges of multichannel
retailing
LO1

retailing
Sits at the end of the
supply chain
Marketing meets the
consumer
Fulfilling customer
expectations
Set of business activities
that add value
Stores, catalogues,
Internet
LO1

Factors for establishing a


relationship with retailers
LO1

Choosing retail partners


Channel Structure
Vertical integration
Manufacturer strong
brand in marketplace
Power of the
manufacturer & retailer
Customer Expectations
Retailers - Who do
customers buy from?
Manufacturers target
market expect to find
products & those of
competitors
LO1

Channel member
characteristics

Larger firms

Less likely to use supply


chain intermediaries

Can gain more control, be


more efficient, and save
money
LO2

Identifying types of
retailers
General Merchandise
Food Retailers Retailers

Supermarket Discount store


Big Box Retailer Specialty store
Convenience store Category specialists
Department store
Drugstore
Off-price retailers
Extreme-value retailers
LO2

FOOD RETAILERS
LO2

BREAKING THE MOLD IN FOOD RETAILING

How do you generate excitement for grocery


shopping in consumers?
LO2

General merchandise
retailers
Discount: a broad variety, limited service, low prices
Specialty: limited number of complementary merchandise in a
relatively small store
Category: a narrow variety but a deep assortment of
merchandise
Department store: broad variety, deep assortment, some
customer service, organized into separate departments
Drugstores: specialty store, health & personal grooming
products, pharmaceuticals
Off-Price retailer: inconsistent assortment of merchandise,
low prices
Extreme-value retailer: general merchandise discount store
Services retailer: primarily sell services rather than
merchandise
LO2

FINDING THE RIGHT NICHE

Specialty stores need to serve the segment of


consumer beyond what bigger retailers provide. How
do you fill that niche?
LO3

Developing a retail strategy


LO3

Product
(merchandise assortment)

Providing the right mix of merchandise and services


LO3

price

Price defines the value of both the merchandise and the


service provided
LO3

How do retailers create


value?

Consumers have changed


their preference for price
and quality
Lifestyles have become more
casual
Retailers must go
beyond low price
to create value
LO3

promotion

Retailers use a wide variety


of promotions,
both within their
retail environment &
through mass media
LO3

Presentation
(store design & display)

Promote & showcase what the


store has to offer
Displays are an important type of
promotion
Unusual & exciting store
atmospheres
The goal is to improve
shopability
LO3

The wheel of retailing

McDonalds Websites Europe & Canada


LO3

personnel

Personal selling & customer service representatives


are also part of the overall promotional package
Services: easy to buy & use products
Retail associates provide information, facilitate the
sale
Augmented by technology: in-store kiosks, Internet,
self-checkout lanes
Provide more value to their best customers
LO3

place

Convenience is a key
ingredient to success
LO4

Managing multichannel
options

Store/Retailer Internet

Kiosk Catalogue
LO4

Benefits of Internet &


multichannel retailing
Deeper and Broader
Selection

More information to
evaluate merchandise

Personalization

Personalized customer
service

Personalized offering &


expanded market presence
LO4

Benefits Provided by
Different Channels

Kiosk
Catalogue
LO4

Benefits Provided by
Different Channels
LO4

Effective multichannel
retailing

Role of Brands
Using Technology
Increasing Share of
Wallet
Gaining Insight into
customer shopping
behaviours
Chapter 14

Integrated
Marketing
Communications
Chapter 14: Integrated Marketing
Communications

LEARNING OBJECTIVES
LO1 Outline the process that firms use to communicate with
consumers
LO2 List the steps in planning an integrated marketing
communications campaign
LO3 Describe what appeals advertisers use to get customers
attention
LO4 Identify how firms determine which media to use
LO5 Summarize how firms measure integrated marketing
communications success
LO6 Explain the six tools of integrated marketing communications
campaigns
LO1

Mcdonalds Im lovin it!

New tagline introduced in 2003


Platform for global integrated
marketing communications
Campaign is well-recognized &
well-liked worldwide
Delivers a consistent message &
lowers costs
Builds brand equity & drives
sales
LO1

Integrated marketing
communications (IMC)
IMC is the promotion dimension of the four Ps
Uses a variety of communication methods:
General advertising
Personal selling
Sales promotion
Public relations
Direct marketing
Digital media

All done in combination!
LO1

Communicating with consumers:


the communication process
LO1

How consumers perceive


communication

Receivers decode
messages differently
Senders adjust
messages according to
the medium &
receivers traits
LO1

Decoding the message

How does the


advertiser help the
receiver decode this
as a breakfast food?
LO1

Is It Deception to Disguise
the Message Sender?

Marketers use websites to


promote movies & TV
shows
Some sites do not identify
that they are promotional
tools
Is this deception?
LO2

Steps in planning an imc


campaign

Marketing Magazine Website


LO2

1. Identify target audience

Campaign success depends


on how well the advertiser
can identify its target
audience
Research is conducted
Information gathered sets
tone of advertising & media
selected
LO2

2. Set objectives

Pull strategy Push strategy


Nature of the market
Nature of the product
Stage in the product life cycle
LO2

Sample marketing goals &


related campaigns
LO2

3. Determine budget

Considerations

Role that advertising plays in their attempt to


meet their overall promotional objectives

Expenditures vary over the course of the


Product Life Cycle

Nature of the market and the product


influence the size of the budget
LO2

Budgeting methods
LO2

Advertising spend as a percentage


of sales
LO3

4. Convey message

Unique selling proposition

Differentiate a product by
communicating its unique
attributes
Often becomes the common
theme or slogan of the entire
campaign
LO3

The appeal

Rational appeal Emotional appeal


LO4

5. Evaluate & select media

Media planning

Media mix

Media buy
LO4

Mass & niche media

Mass media reach large Niche media reach a


anonymous audience smaller more targeted
audience
LO4

Choosing the right medium


LO4

Determining the advertising


schedule

Continuous

Flighting

Pulsing
LO4

6. Create communication

Creativity plays a Creativity should


major role in the not overshadow
execution stage the message

The type of The execution


medium style must match
determines the the medium and
execution style objectives
Communications
LO4

Creative elements

What appeal is being


used in this ad?
Is the ad effective in
delivering the selling
message?
LO4

Managing creative elements

What to do if creative
elements dont deliver
the selling message?
LO5

7. Assess impact using


marketing metrics

Pretesting

Tracking

Post-testing
LO6

INTEGRATED MARKETING
COMMUNICATIONS TOOLS
LO6

ADVERTISING

Most visible element of


IMC
Extremely effective at
creating awareness and
generating interest

Terry Tate/Reebok Commercial


LO6

PERSONAL SELLING

Some products require the


help of a salesperson
More expensive than other
forms of promotion
Salespeople can add
significant value, which
makes the expense
worth it
LO6

SALES PROMOTIONS

Can be aimed at both end


user consumers or channel
members
Used in conjunction with
other forms of IMC
Can be used for both short-
term and long-term
objectives
LO6

DIRECT MARKETING
LO6

DIRECT MARKETING CHARACTERISTICS

Targeted

Motivates an action

Is measurable

Provides information
LO6

Forms of direct marketing


direct mail/email

A targeted form of
communication
distributed to a
prospective customers
mailbox or inbox

FedEx customer acquisition


campaign direct mail cube
LO6

Forms of direct marketing


catalogues

Hard copy and online


Welcomed in 80% of
Canadian homes
E.g. Sears, Ikea, and
Business Depot
LO6

Forms of direct marketing direct response tv


(drtv)

Short television
commercials and/or
infomercials
Strong call to action via 1-
800 number, mail or
website
For example, see an
original commercial for
the George Forman Grill
LO6

Forms of direct marketing kiosks

Facilitate service delivery,


e.g. airline ticket printing
Sell services and products
to consumers, e.g. Dell,
Virgin Mobile, Hallmark
LO6

Public relations (PR)

Free media attention


Importance of PR has grown
as cost of other media has
increased
Consumers becoming more
skeptical about marketing,
PR becoming more
important
LO6

Elements of a pr toolkit
LO6

Digital media

Digital Media tools


range from:

Websites
Blogs
Social media
Mobile apps
Chapter 15

Advertising, Sales
Promotions, and
Personal Selling
Chapter 15: Advertising, Sales
Promotions, and Personal Selling

LEARNING OBJECTIVES
LO1 Describe advertising and three objectives of
advertising
LO2 Summarize the regulatory and ethical issues of
concern to advertisers
LO3 Explain how sales promotions supplement a firms
IMC strategy
LO4 Describe personal selling and how it adds value for
customers
LO5 Identify the steps in the personal selling process
LO1

Advertising the aida


model
LO1

attention

Senders first must gain


the attention of the
consumers
A multichannel
approach increases
the likelihood the
message will be
received
LO1

interest

After the customer is


aware, they must be
persuaded
The customer must
want to further
investigate the
product/service
LO1

desire
LO1

action

Purchase is just one type of


action.

What other actions can


consumers be asked to take?
LO1

LAGGED EFFECT

Advertising does not always


have an immediate impact
Multiple exposures are often
necessary
Difficult to determine which
exposure led to purchase
LO1

advertising

A paid form of
communication
From an identifiable source
Delivered through a
communication channel
Designed to persuade to take
action
LO1

Advertising Objectives

Inform

Persuade

Remind
LO1

Informative advertising

Early in the PLC,


firms use informative
advertising to
educate consumers
about the
product/service
LO1

Persuasive advertising

Generally occurs in the


growth and early maturity
stages of the PLC when
competition is most
intense
In the later stage of the
PLC may be used to
reposition an established
brand
LO1

REMINDER ADVERTISING

After the products have


gained market
acceptance
Top-of-the-mind-
awareness
LO1

FOCUS OF ADVERTISEMENTS

Product-focused Institutional
LO1

PRODUCT PLACEMENT

Product is included in
non-traditional
situations
Example: a scene in a
movie, music videos
LO1

PUBLIC SERVICE
ANNOUNCEMENTS

A special class of
demand advertising
Focus is on public
welfare
Sponsored by non-profit
organizations
A form of social
marketing
LO2

Regulatory & ethical issues in


advertising

Regulation is a mix of formal laws & informal


restrictions
Designed to protect consumers from deceptive
practices
Many federal & provincial laws, self-regulatory
agencies & agreements
LO2

puffery
LO2

Agencies that regulate


advertising
LO3

Sales promotion

Can be targeted at either


the end user consumers
or channel members
Can be used in either
push or pull strategies
LO3

Types of consumer sales


promotions
LO3

Trade channel sales


promotions

Discounts & allowances


Co-operative advertising
Sales force training
LO3

Using sales promotion


tools
Marketers need to be careful in their
use of promotions
Future sales are shifted to now
Short run benefits at the expense of
long-term sales stability
Tools: pop-up stores, cross-promoting
LO3

Evaluating sales promotions


by using marketing metrics
Realized margin

Cost of additional inventory

Potential increase in sales

Long-term impact

Potential loss from switches from more profitable items

Additional sales by customers


LO4

Personal selling scope &


nature

Face to Face
Video Conferencing
Telephone
Internet
LO4

Professional selling as a
career
People love the lifestyle
There is a lot of flexibility
There is a lot of variety in
the job
Can be very lucrative, among
the highestpaying careers for
college graduates
Very visible to management,
good for promotions

Sales Jobs Website


LO4

Unique contribution to the


four ps
Can customize the message for a
specific buyer
Assists in creating strong supply
chain relationships
Increased customer loyalty
through relationship selling
Gather research input from
customers
Crucial to the success of CRM
LO4

The value added by


personal selling

Build relationships

Educate & provide advice

Save time & simplify


buying
LO5

The personal selling process


LO5

Step 1: generate & qualify


leads
LO5

STEP 2: PREAPPROACH

Extends the qualification


procedure
Set goals for what is to be
accomplished
LO5

STEP 3: SALES PRESENTATION &


OVERCOMING OBJECTIONS

The Presentation
Person-to-person
Ask questions, listen
carefully
Handling Objections
Usually occurs during
the presentation
Anticipate in advance
Relax, listen, ask
questions
LO5

ALIGNING THE PERSONAL SELLING


PROCESS WITH B2B BUYING PROCESS
LO5

STEP 4: CLOSING THE SALE

Getting the order


Often most stressful
part of sales process
A no one day may be
the foundation for a
yes another
LO5

STEP 5: FOLLOW-UP
Five Service Quality Dimensions

Reliability

Responsiveness

Assurance

Empathy

Tangibles