 2007 Thomson South-Western

1. Chapter Seven Facilitation of Product Adoption, Brand Naming, and Packaging  2007 Thomson South-Western

2. Marcom and New Product Adoption • Introducing new products is essential for most companies’ success and long-term growth • Forced obsolescence • New idea and product failure-rate estimated 35-45% • Marketing communications facilitate successful new product introductions and reduce the product failure rate

3. New-Product Adoption Process Model

4. New-Product Adoption Process Model Three stages of adopting a new product Awareness Class Trier Class Repeater Class

5. New-Product Adoption Process Model Free Samples Awareness Class Coupons Advertising • Variables: free samples, coupons, advertising, and distribution • Successful introduction of new products requires an effective advertising campaign, widespread product distribution, and extensive couponing and sampling Distribution

6. New-Product Adoption Process Model Coupons Distribution Price Trier Class • Variables: coupons, distribution, and price • Once the consumer becomes aware of a new product, there is an increased probability that he will actually try the new offering

7. New-Product Adoption Process Model Repeater Class Personal Selling Advertising Price Distribution Satisfaction • Variables: Personal Selling, Advertising, Distribution, Satisfaction and price • Once the consumer has tried a new product, repeat purchases are largely determined by product satisfaction

8. Trialability Adoption Process Relative Advantage Observability Product Characteristics That Facilitate Adoption Compatibility Complexity

9. Relative Advantage • A product innovation is perceived as better than existing alternatives • Positively correlated with an innovation’s adoption rate • Exist when a new product offers: • Better performance, increased comfort, saving in time and effort, or immediacy of reward • Existing alternatives begin to lose share • Consider mobile phones vs. landlines; digital cameras vs. 35mm film cameras

10. Compatibility • An innovation is perceived to fit into a person’s way of doing things • The greater compatibility, the more rapid a product’s rate of adoption • Overcome perception of incompatibility through heavy advertising to persuade consumers • Consider new releases of software – always compatible with older releases and data files made with older releases • Consider UHT milk and refrigerated milk

11. Complexity • An innovation’s degree of perceived difficulty • The more difficult, the slower the rate of adoption • Consider PCs when they first hit the market

12. Trialability • An innovation can be used on a limited basis prior to making a full blown commitment • The trial experience serves to reduce the risk of a consumer’s being dissatisfied with a product after having permanently committed to it through outright purchase • Example – Car Purchases

13. Observability • The product user or other people can observe the positive effects of new product usage • Higher the visibility, more rapid the adoption rate • Example – Nike Shox

14. Quantifying Adoption PotentialThe Chevy Volt

15. Quantifying Adoption Potential Importance : Scale – 1 (least important) – 5 (Most Important) Evaluation: Scale – minus 5 (most unfavorable) – plus 5 (very favorable); 0 indicates neither favorable nor unfavorable i.e. the car measures neither very favorably nor unfavorably on that attribute

16. Early Majority (34%) Late Majority (34%) Early Adopters (13.5%) Laggards (16%) Diffusion Process • Concerned with the broader issue of how an innovation is communicated and adopted throughout the marketplace • The process of spreading out • Adopter categories • Five different type of consumers • Innovators 2.5%; Early Adopters 13.5%; Early Majority 34%; Late Majority 34%; Laggards 16% • Normal distribution

17. Managing the Diffusion Process Objectives 1. Secure sales quickly - rapid takeoff 2. Achieve rapid acceleration - rapid acceleration 3. Secure maximum sales potential - maximum penetration 4. Maintain sales as long as possible - long-run franchise

18. Securing Rapid DiffusionThe Chevy Volt

19. Securing Rapid DiffusionThe Chevy Volt • What promotion strategies would you employ to • Achieve Rapid Take-off • Achieve Rapid Acceleration • Secure Maximum Sales Potential • Maintain Sales as long as possible

20. Managing the Diffusion Process Rapid takeoff can be facilitated by:

21. Managing the Diffusion Process Rapid acceleration accomplished by:

22. Managing the Diffusion Process Maximum penetration approached by:

23. Managing the Diffusion Process Long-run franchisemaintained by:

24. Stimulating Word of Mouth Influence • Impersonal sources: information received from television, magazines, the Internet, and other mass-media sources • Personal sources: word-of-mouth influence from friends, acquaintances, and from business associates

25. Strong and Weak Ties • People are connected in networks of interpersonal relationships. Tie Strength Weak Strong

26. Opinion Leader • A person who frequently influences other individuals’ attitudes or overt behavior • An informer, persuader, and confirmer • Influence is typically limited to one or several consumption topics • Influence moves horizontally through a social class • Generally an Early Adopter

27. Opinion Leaders Characteristics • More cosmopolitan • More gregarious • Slightly higher socioeconomics status • Generally more innovative • Willing to act differently

28. Opinion Leaders Market Mavens Individuals who have information about many kinds of products, places to shop, and other facets of markets, and initiate discussions with consumers and respond to requests from customers from market information.

29. Stimulating Word of Mouth Influence • Positive word-of-mouth communication is critical in the success of a new product of service • Unfavorable WOM has devastating effects because consumers seem to place more weight on negative information in making evaluations

30. Creating “Buzz” • The systematic and organized effort to encourage people to talk favorably about a particular item (a product, service, or specific brand) and to recommend its usage to others. • Find opinion leaders who can become ‘cheerleaders’ – practice is called ‘seeding’ • ‘Kuchikomi’ the WOM network of teenage girls in Japan – Tamagotchi • Guerilla Marketing, Street Marketing, Viral Marketing – all designed to generate buzz

31. Creating an Epidemic • The law of the few • A few well connected people required e.g. opinion leaders, market mavens • The stickiness factor • The message must be memorable • The power of context • Circumstances have to be just right for the message to spread

32. Igniting Explosive Self-Generating Demand • Design the product to be unique or visible. • Select and seed the vanguard. • Ration supply. • Use celebrity icons. • Tap the power of lists – get on a list somewhere • Nurture the grass roots

33. Brand Naming Brand A company’s unique designation or trademark, which distinguishes its offering from other product category entries.

34. Power of Brand Name • Affects the speed with which consumers become aware of the brand • Influences the brand’s image • Plays major role in brand-equity information

35. What Constitutes a Good Brand Name? • Distinguish the brand from competitive offerings. • Describe the brand and its attributes. • Achieve compatibility with a brand’s desired image and with its product design or packaging. • Be memorable and easy to pronounce and spell. • Can be trademarked • Consistent in meaning when used in other countries / cultures

36. Are these good brand names?

37. Brand name gaffes

38. Brand name gaffes

39. Exceptions to the “Rules” • Some brands become successful in spite of their names • The first brand in a new product category can be successful regardless of its name if it offers distinct advantages. • Brand Managers sometimes choose names that are intentionally meaningless at inception, like “Lucent Technologies.”

40. The Brand Naming Process Step 1: Specify Objectives for the Brand Name Step 2: Create Candidate Brand Names Step 3: Evaluate Candidates Step 4: Choose a Brand Name Step 5: Register Trademark

41. The Role of Logos • Graphic design element that is related to the brand name • Companies use logos with or without brand names • Not all brand names possess a distinct logo but many do e.g., the Nike swoosh, Ralph Lauren’s Polo

42. Good Logos • Recognized readily • Convey essentially the same meaning to all target members • Evoke positive feelings • Best strategy is to choose a design that is moderately elaborate rather than too simple or too complex

43. The Role of Logos

44. The Role of Logos Cingular’s logo

45. Functions of the Package • Contain and protect the product • Draw attention to a brand • Break through competitive clutter at the point of purchase • Justify price/value to the consumer • Signify brand features and benefits • Motivate consumers’ brand choices

46. Packaging Structure • Sensation Transference: a tendency to impute characteristics from a package to the brand itself. • Gestalt-consumers react to the unified whole of the package not the individual parts.

47. Issues in Packaging Color Design and Shape Physical Materials Product Information on Package Packaging Size * VIEW Model (Visibility, Information, Emotional appeal, Workability)

48. Packaging Structure Color Design,Shape Size Physical Materials

49. Color Design, Shape Size Physical Materials The Use of Color • Communicate quality, taste, and product’s ability to satisfy psychological needs • Affect people emotionally • Add elegance, prestige to products by using polished reflective surface • Meaning of color varies from culture to culture

50. Meanings of Colors • What do you associate with Red? • Purple • With white? • With gray? • Good tasting soft drinks