• During his time as a Navy Seal, Hetrick found keeping his fitness levels up while in the field was difficult. • He created the TRX out of parachute harnesses. • While earning his MBA, he raised capital to launch Fitness Anywhere. • By 2011, revenues hit $50 million! 14-4
Chapter Fourteen
NAME that COMPANY It’s no secret that the airline industry is extremely competitive and many airlines have cut basic services like free baggage and food. In order to set itself apart from its competitors, this company takes a different path by offering door-to-door limousine service and in-flight massages. Name that company! Virgin Airlines
14-5
Product Development and the Total Product Offer
LG1
• • • • • •
PRODUCTS CONSUMERS WON’T GIVE UP
Internet service Cell phone service Cable/Paid television Discount apparel Haircuts and coloring Fast-food
What do you consider “untouchable” ” and why? 14-7
• Bocktown Beer and Grill uses mobile media marketing • It holds polls on Facebook and Twitter that let customers pick the beers on tap • It also uses Tabbedout, a mobile app that allows customers to pay their bill without returning to the bar or giving their card to a server Would you use this service? 14-9
Distributed Product Development LG1
DISTRIBUTED PRODUCT DEVELOPMENT
Distributed Product Development The handing off of various parts of your innovation process – often overseas • The increase in outsourcing has resulted in using multiple organizations separated by cultural, geographic and legal boundaries
Developing a Total Product Offer LG1
DEVELOPING a TOTAL PRODUCT
Total Product Offer -- Everything consumers evaluate when deciding whether to buy something.
• Products are evaluated on both tangible and intangible • Marketers must think like and talk to consumers to find out what’s important What’s most important about your smart phone? 14-11
PRODUCT LINES PRODUCT MIX
Product Lines & Product Mix LG1
Product Line -- A group of
Product Mix -- The
products that are physically similar or intended for a similar market.
combination of all product lines offered
Product lines often include competing brands like: -
Coca-Cola Diet Coke Coke Zero Cherry Coke
Product mixes like Procter & Gamble’s can be extensive: -
Toothpaste Cosmetics Diapers Batteries Bar soap
Photo Courtesy of: Coca-Cola Art Gallery
14-16
Marketing Different Classes of Consumer Goods and Services
CLASSIFYING GOODS and SERVICES
LG2
Convenience
Shopping
Specialty
Unsought
Convenience Goods and Services -- Products consumers purchase frequently with minimal effort. These include: - Candy and snacks - Gas - Milk and eggs
14-20
Marketing Different Classes of Consumer Goods and Services
LG2
CLASSIFYING GOODS and SERVICES Convenience
Shopping
Specialty
Unsought
Shopping Goods and Services -- Products consumers buy only after comparing value, quality, price, and styles. These include: - Clothes and shoes - Appliances and furniture - Childcare - Home remodeling
14-21
Marketing Different Classes of Consumer Goods and Services
LG2
CLASSIFYING GOODS and SERVICES Convenience
Shopping
Specialty
Unsought
Specialty Goods and Services -- Products with unique characteristics and brand identity. These include: - Tiffany jewelry - Rolex watches - Lamborghini automobiles - Ritz Carlton Hotels 14-22
Marketing Different Classes of Consumer Goods and Services
LG2
CLASSIFYING GOODS and SERVICES Convenience
Shopping
Specialty
Unsought Goods and Services -- Products consumers aren’t aware of or haven’t thought of buying until they need them. These include: - Car-towing services - Funeral services - Renter’s insurance Photo Courtesy of: Paul Chenoweth
Unsought
Marketing Different Classes of Consumer Goods and Services
LG2
IDENTIFYING CONSUMER GOODS CLASSIFICATIONS
How would you classify these consumer products? -
Beautyrest mattress Honda Accord McDonald’s Big Mac Rolls Royce automobiles Oreo Cookies Harvard University degree
shopping good shopping good convenience good specialty good convenience good specialty good
14-28
Packaging Changes the Product LG3
SOME KEY FUNCTIONS of PACKAGING
1) Warranty information/warnings 2) Give an indication of price, value, and uses 3) Describe/give information 4) To attract buyer attention 5) Explain product benefits 6) Protect the goods inside 7) Tamperproof 8) Easy to open
14-33
The Growing Importance of Packaging
BUNDLING
LG3
Bundling -- Grouping two or more products together and pricing them as a unit (e.g., Happy Meal)
Virgin Airlines bundles door-to-door limo service and inflight massage with upper class tickets 14-34
Branding and Brand Equity
UNDERSTANDING BRANDING
LG4
• Brand -- Name, symbol, or design that identifies the goods or services and distinguishes them from competitors’ offerings.
• Trademark -- A brand that has exclusive legal protection for both its brand name and design.
Connecting Across Borders
Creating a Brand Name Suggest a brand name for each:
Group Paper (write down those assigned you): 1. A cable TV network targeted at new parents with features on babies and toddlers 2. A chocolate-flavored vitamin drink 3. A sporty car targeted at middle-aged women 4. A glow-in-the-dark light switch 5. A breakthrough prescription drug to treat childhood diabetes 6. A restaurant serving Japanese and Chinese food 7. An easy-to-use handheld e-mail device targeted at tech-phobic senior citizens 8. An inexpensive line of cosmetics featuring vibrant colors 9. A magazine targeted on single career women 10. A high-end all-natural cat food 11. An exclusive line of children’s sports shoes 12. A banana-flavored breakfast cereal
Connecting Across Borders
Creating a Brand Name How to create a NAME
Step 1: Brainstorm • • • • •
Who are my target customers? What's my competitive advantage? What adjectives would I apply to my company? Can I combine any of these words to form a catchy new word or phrase? Any metaphors/symbols that come to mind? (eg., apple is symbol for education)
Step 2: Evaluate your names • • • • • • •
Is it easy to say? Spell? Positive connotation that'll appeal? Is it legally available? Available as a URL? (or some form of it) interesting or unique? Visualize as you read the name? Is it descriptive?
Step 3: Potential customer feedback • •
Get feedback from similar gender/ age/ socioeconomic background, etc. Gauge people's initial reaction
Step 4: Finalize your NAME • • •
Base decision on your personal opinions and the feedback of others Try not to second-guess yourself. When in doubt, go with your gut--that's what customers do!
Creating a Brand Name Suggest a brand name for each:
Group Paper (write down those assigned you): 1. A cable TV network targeted at new parents with features on babies and toddlers 2. A chocolate-flavored vitamin drink 3. A sporty car targeted at middle-aged women 4. A glow-in-the-dark light switch 5. A breakthrough prescription drug to treat childhood diabetes 6. A restaurant serving Japanese and Chinese food 7. An easy-to-use handheld e-mail device targeted at tech-phobic senior citizens 8. An inexpensive line of cosmetics featuring vibrant colors 9. A magazine targeted on single career women 10. A high-end all-natural cat food 11. An exclusive line of children’s sports shoes 12. A banana-flavored breakfast cereal
Generating Brand Equity and Loyalty
MOST VALUABLE BRANDS
LG4
Which brands do you think are the most valuable in the world (2014)?
Generating Brand Equity and Loyalty LG4
MADE in AMERICA? Home Countries of America’s Favorite Brands
Company Lucky Strike Budweiser Vaseline Good Humor Hellmann's Purina French's Frigidaire Popsicle 7-Eleven
Current parent company British American Tobacco Anheuser-Busch Inbev Unilever Unilever Unilever Nestle Reckitt Benckiser AB Electrolux Unilever Seven & I Holdings
Currently headquartered England Belgium England England England Switzerland England Sweden England Japan
14-48
Product Development and Testing LG5
BRINGING NEW PRODUCTS to the MARKET
• Concept Testing -- Takes a product idea to consumers to test reactions.
• Commercialization -Promoting the product to distributors and retailers and developing the promotional campaign.
14-52
Connecting with Small Business
KEEP on FOOD TRUCKIN’ ’
The popularity of food trucks has risen, but it’s no longer just hot dogs and hamburgers: - Clover Food Truck in Boston/Cambridge offers rotating menu of local organic foods. - Sugar Philly Truck in Philadelphia offers crème brulee hot off the truck. - Dim and Den Sum in Cleveland has some of the best food truck art in U.S. - Koi Fusion PDX in Portland is one of the few mobile eateries in that town. 14-53
The Product Life Cycle LG6
SALES and PROFITS DURING the PRODUCT LIFE CYCLE
14-55
Competitive Pricing
PRICING OBJECTIVES
LG7
1) Achieving a target return on investment (profit) 2) Building sales traffic (loss leaders) 3) Achieving greater market share (volume) 4) Creating a prestige image (status) 5) Furthering social objectives (make affordable to all) 14-58
Competitive Pricing
PRICING STRATEGIES
LG7
• Cost-based pricing – measures cost of producing a product including materials, labor, and overhead, use cost as primary basis for price • Demand-based pricing (target costing) – Designing a product that satisfies customers and meets the firm’s targeted profit margins.
• Competition-Based Pricing -- A strategy based on what the competition is charging for its products. 14-59
Break-Even Analysis
USING BREAK-EVEN ANALYSIS
LG7
Break-Even Analysis -- The process used to determine profitability at various levels of sales. The break-even point is where revenues equals cost.
• Total Fixed Costs -- All costs that remain the same no matter how much is produced or sold.
• Variable Costs -- Costs that change according to the level of production.
14-60
Other Pricing Strategies
PRICING ALTERNATIVES
LG7
• Skimming Price Strategy -- Pricing new products high to recover costs and make high profits while competition is limited. EXAMPLE?
• Penetration Price Strategy -- Pricing products low with the hope of attracting more buyers and discouraging other companies from competing in the market. EXAMPLE?
• Everyday Low Pricing (EDLP) -- Setting prices lower than competitors with no special sales. EXAMPLE? 14-62
Other Pricing Strategies LG7
PRICING STRATEGIES of RETAILERS
• High-Low Pricing -- Using regular prices that are higher than EDLP stores except during special sales when they are lower EXAMPLE?
• Psychological Pricing – Pricing products at price points that make a product seem less expensive than it is. EXAMPLE?
