Bmgt 411 week_7.key


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Bmgt 411 week_7.key

  1. 1. BMGT 411: Week 7 Kotler Chapter 10, 11, 12 Wood Chapters 4, 7 1
  2. 2. BMGT 411: Chapter 10 Marketing Through the Life Cycle 2
  3. 3. Ford Fiesta Blogger Test Drive Page 143 3
  4. 4. Chapter Questions • What are the characteristics of products and how do marketers classify products? • How can companies differentiate products? • How can a company build and manage its product mix and product lines? • How can companies use packaging, labeling, warranties, and guarantees as marketing tools? • What strategies are appropriate for new product development and through the product life cycle? 4
  5. 5. What is a Product? • A product is anything that can be offered to a market to satisfy a want or need, including physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas. • Examples: Starbuck’s 3rd Place. The place between someone’s work and home. Starbuck’s coffee is a product, but the Starbuck’s experience is a product as well, and include comfortable cafe’s, free wifi, and service that is beyond typical fast food and beverage. 5
  6. 6. Figure 10.1 Five Product Levels Page 144 6
  7. 7. Five Product Level Example: Kohl’s • Core Benefit: Clothes • Basic Product: Clothing and home goods in a variety of styles and sizes • Augmented Product: Clothing and home goods, with weekly and seasonal specials, customers will get excited about savings • Potential Product: Any future updates Kohl’s would do in the future to exceed customer expectations (More online offerings, same day shipping, etc) 7
  8. 8. Product Classification Schemes Page 145 Durability Tangibility Use 8
  9. 9. Product Classifications Nondurable goods: tangible goods consumed in one or a few uses. Large availability, smaller markups, induce trial and build preference 9
  10. 10. Product Classifications Durable goods: tangible goods like appliances that survive many uses, higher margins, more service required, and also require more seller guarantees 10
  11. 11. Product Classifications Services: intangible, inseparable, variable products that require more quality control, credibility, and adaptability 11
  12. 12. Consumer Goods Classifications • Convenience Goods: Purchased frequently,, and with minimal effort (often self service) • Ex: Soft Drinks • Shopping Goods: Consumers compare on the basis of suitability, price, and style • Ex. Appliance • Speciality Good: Unique characteristics or brand identification for which enough buyers make a special purchasing effort • Ex. Cars • Unsought Goods: Needs, that the customer does not normally think about buying • Ex. Smoke detectors, first aid kits 12
  13. 13. Industrial Goods Classification • Materials and parts: Go into the final finished product • Ex. Wheat delivered to make cereal • Capital items: Equipment to make final product • Ex. Oven to roast cereal • Supplies/business services: Short term items that help making the final product, like office supplies and consulting fees 13
  14. 14. Product Differentiation • Product form • Features • Customization • Performance • Conformance • Durability • Reliability • Repairability • Style 14
  15. 15. Product Differentiation Form: Products size, shape, or physical structure 15
  16. 16. Product Differentiation Features: Supplement the products basic function, often deployed to users in regular cycles, to increase upgrades and excitement in the product 16
  17. 17. Product Differentiation Customization: A company meets each customers requirements on a mass basis, by individually designing products, services, or programs. 17
  18. 18. Product Differentiation Style: The look and feel of a product to a buyer. Often a key item in creating demand for a product. Style often depends on target market being sought. 18
  19. 19. Service Differentiation • Ordering ease • Delivery • Installation • Customer training • Customer consulting • Maintenance and repair • Returns 19
  20. 20. • Differentiation is based on service: • Ease of ordering • Customer service • Ease of returns 20
  21. 21. Product-Mix Pricing • Product-line pricing: Varying prices in a line of products: Ex. Soda • Optional-feature pricing: Price of product plus options: Ex. Cars • Captive-product pricing: Introduction products and the price of ancillary or captive products: Ex. Razors, Low intro price, and high price of blades • Two-part pricing: Fixed fee plus variable pricing: Ex. Cell Phone + Data Plans • By-product pricing: Price of by products in the production of the main product: Ex. Meats • Product-bundling pricing: Price for a bundle of products or service: Ex. Comcast Triple Play 21
  22. 22. Ingredient Branding Creating brand equity for the materials or components inside of a finished product, to increase demand and create higher margins based on perceived quality 22
  23. 23. • Packaging, sometimes called the 5th P, is all the activities of designing and producing the container for a product • Sometimes, packaging is just as important as the product itself • Packaging is the customers first experience with the product • It must identify the brand, convey descriptions and persuasive information, facilitate product transportation, and aid in product consumption • Can you think of any iconic brand packaging? 23
  24. 24. Altoids Packaging 24
  25. 25. Mio Packaging 25
  26. 26. Tropicana Packaging 26
  27. 27. New Product Development Process 27
  28. 28. Ways to Find Great New Ideas • Run informal sessions with customers • Allow time off for technical people to putter on pet projects • Make customer brainstorming a part of plant tours • Survey your customers • Undertake “fly on the wall” research to customers • Social Media Crowd sourcing: Gathering popular ideas directly from customers 28
  29. 29. Concept Testing Concept Testing: Who will use this product? What benefit will it provide? When will they use it? • Need level • Perceived value • Purchase intention • User targets, purchase occasions, purchasing frequency 29
  30. 30. Prototype Testing • Alpha testing: Testing within the firm • Beta testing: Testing with a group of customers • Market testing: Testing in a few markets to gauge customer acceptance, sales forecasts, identify any logistic issues 30
  31. 31. True Runner (Dick’s Sporting Goods) Concept: Shady Side 31
  32. 32. True Runner (Dick’s Sporting Goods) Cranberry Township, PA 32
  33. 33. What is Adoption? Adoption is an individual’s decision to become a regular user of a product. 33
  34. 34. Stages in Adoption Process Awareness Interest Evaluation Trial Adoption 34
  35. 35. Figure 10.4 Adopter Categorization on the Basis of Relative time of Adoption Technology is speeding up the life cycles 35
  36. 36. Figure 10.4 Adopter Categorization on the Basis of Relative time of Adoption Technology is speeding up the life cycles 36
  37. 37. Product Life Cycle Marketing • Introduction and Innovator Stage: High marketing costs and low profit, due to getting awareness out to customers and driving trial • Growth: Improve quality, reduce cost, add features to maximize profitability. Can become a market leader in this stage, increasing profitability in the maturity stage • Maturity: Longest section of life cycle. This is where targeted marketing takes over from broad based marketing to increase users at a reduced marketing cost. • Decline: Choice to let the brand die, or innovate to create a new product or service based on new needs, technology, etc. Declining products should not be invested in unless it is to be relaunched 37
  38. 38. Wigle Whiskey • What is the product of Wigle Whiskey? • Is is a good? Or an experience? • What stage of the life cycle is Wigle in? • Who should it target at this stage to grow? 38
  39. 39. BMGT 411: Chapter 11 Designing and Managing Services 39
  40. 40. Chapter Questions? • How do we define and classify services and how do they differ from goods? • What are the new services realities? • How can we improve service quality? • How can goods marketers improve customer support services? 40
  41. 41. What is a Service? A service is any act of performance that one party can offer another that is essentially intangible and does not result in the ownership of anything; its production may or may not be tied to a physical product. 41
  42. 42. Services are Everywhere • Think of some companies that provide a service • What do they provide? • How is success measured? • Where is the service delivered? 42
  43. 43. Categories of Service Mix • Pure tangible good: A tangible good with no accompanying service provided • Ex: Toothpaste • Good with accompanying services: A good that is accompanied by one or more service • Ex. smartphone (good) with data plan (service) • Hybrid: An offering with equal parts goods and services • Ex. Restaurant or Grocery Store 43
  44. 44. Categories of Service Mix • Major Service with Accompanying minor Goods or Service: A major service with additional services or goods • Ex. Airline Service with Drink Service during flight • Pure Service: Primarily an intangible service being provided, with no goods included • Ex. Dentists, Childcare, etc 44
  45. 45. Figure 11.1 Continuum of Evaluation for Different Types of Products 45
  46. 46. Qualities of Goods and Services • Search Qualities: The buyer can usually evaluate even before purchases and compare • Ex. Clothing, Food, etc • Experience Qualities: Characteristics the buyer can evaluate after it is purchased • Ex. Haircut, Vacations • Credence Qualities: The buyer can find it hard to evaluate even after consumption • Ex. Auto Repair, Dental Work, Medical 46
  47. 47. Distinctive Characteristics of Services Intangibility Inseparability Variability Perishability 47
  48. 48. Intangibility • Services cannot be seen, tasted, felt, heard, or smelled • Service firms try to demonstrate their service by physical evidence • Ex. Colleges will publish employment statistics, etc to make the intangible seem tangible 48
  49. 49. Inseparability • Services are usually produced and consumed simultaneously vs goods produced elsewhere • Provider/Client interaction is a special feature of service marketing • More training may be involved to make customer service outstanding since it is so visible 49
  50. 50. Variability • Services are highly variable because the quality depends on who provides them • Good hiring and training (Starbucks) • Standardize service performance (Zappos) • Monitor customer satisfaction (Most retailers) 50
  51. 51. Perishability • Services cannot be stored, so perishability can be a problem when demand fluctuates • Off- Peak Pricing (Sonic Happy Hour) • Cultivating non-peak demand (McDonald’s Breakfast) • Offering complimentary services as alternatives (ATM Banking Vs. Tellers) 51
  52. 52. New Service Realities • Customer Empowerment: Social Media has enabled customers to broadcast a bad experience to a very wide audience • Most companies have their customer service departments monitoring social media for negative feedback, and responding almost instantly • Led by @comcastcares and @frankelliason 52
  53. 53. Figure 11.2 Root Causes of Customer Failure 53
  54. 54. • Redesign processes and redefine customer roles to simplify service encounters • Incorporate the right technology to aid employees and customers • Create high-performance customers by enhancing their role clarity, motivation, and ability • Encourage customer citizenship where customers help customers Solutions to Customer Failures 54
  55. 55. Best Practices in Service Companies • Strategic Concept: Customer service is behind everything the company does • Top-Management Commitment: Management commitment to putting service performance along with financial performance as a quality metric • High Standards: Setting very high quality standards to avoid the most customer disruptions • Ex. a 98% errors rate with an electrical supplier would result in no electricity for 8 days 55
  56. 56. Best Practices in Service Companies • Self-Service (Better Options) Technologies: Providing customers with different levels of comfort to use technology to increase service (Airline self check in, grocery store self-checkout, ATMs, Online Banking) • Profit Tiers: Customizing service levels based on profitability of the customers • Ex. AMEX Black Card, Lincoln Concierge • Monitoring Systems • Satisfying Customer Complaints 56
  57. 57. Figure 11.3: Service Quality Model 57
  58. 58. • Gap between consumer expectation and management expectation • The customer may want something entirely different than what is being delivered • Gap between management perception and service quality specification • Ex: Being very clear on specifications, speed in minutes, etc • Gap between service quality specifications and service delivery • Often a result of poor training Managing Customer Expectations 58
  59. 59. • Gap between service delivery and external communications • Ex. Toys R Us Foursquare Check in Discount • Gap between perceived service and expected service • Occurs when the customer misperceives the service quality Managing Customer Expectations 59
  60. 60. Determinants of Service Quality 1.Reliability 2.Responsiveness 3.Assurance 4.Empathy 5.Tangibles 60
  61. 61. Chapter 7: Marketing Plan Handbook • What pricing strategy would you recommend for Wigle? • Is they way you are positioning the product affect the pricing strategy? • Is the stage of the lifecycle affect your pricing recommendation? 61
  62. 62. BMGT 411: Preparing for Week 8 • Test #2 • Chapters 5-11 Kotler • Wood Material will not be covered in test #2 • Project Check in - You should be pretty far along • Read Kotler Chapters 12, Wood Chapter 7 62