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PLC Introduction

new product class, sales/profits are low, marketing effort (stimulate demand for PRODUCT TYPE/primary demand), target "innovators"

PLC Growth

Sales/profits grow, competition expands, differentiate product, stimulate demand for brand (secondary demand), target "early adopters"

PLC Maturity

Sales plateau/product is familiar, competition intense, new product and class competitors, differentiation continues (change color), promotion increases while price declines, target "early" and "late majority", try to remove risk

PLC Decline

Competition (increases outside product class, decreases within product class)


consumer is first exposed to product innovation (David sees an ad for a new digital camera)


consumer is interested in the product and searches for additional info (David reads about the camera on the manufacturer's Web site, then goes to camera store near his office and has a salesman show him the camera)


consumer decides whether or not to believe that this product will satisfy the need (After talking with friend, David decides the camera should be able to provide him with the photos he needs for Powerpoint presentation)


consumer uses the product on a limited basis (David buys the camera from a dealer offering a 14-day full refund policy)


if trial is favorable, consumer decides to use the product on a full, rather than limited basis (David find that the camera is easy to use and the results are excellent, keeps camera)

Penetration Pricing

set price low to gain immediate sales/market share, scare off competitive entry

Negative of Penetration Pricing

set price low to gain immediate sales/market share, scare off competitive entry

When to use Penetration Pricing

low price elasticity, standard issues, examples= new airline route fares, Internet browsers

Price Skimming

set price high to achieve quick/large profits

When to use price skimming

technological change, entry barriers, examples= Apple, Intel's newest Pentium innovations always price high

Flexible Pricing

if a product is PERISHABLE, Foods-produce, bread/bakery items, etc, Services=airline flights, concerts and sports events, Short time demand=Christmas cards/wrapping paper, merchandising tie-ins, high-fashion clothing

Discriminatory pricing

legal as long as it doesn't substantially hinder competition. For it to work:
*Market must be segmented and segments must have different intensities of demand
*Members in low-priced segment must not be able to sell product to high-priced segment
*Cost of servicing different segments must not exceed profit generated by discrimination
*Must not breed resentment or ill will

-Victoria's Secret costs more in Orange County, CA than Boone County, MO
-Insurance companies charge younger people more for auto insurance
-Guys pay cover fee in bars while women do not

Intensive Distribution

provide offering in as many outlets as possible
-Maximize exposure in geographical area
ex=gum, cigarettes
Maximum coverage and no sale effort at point of purchase
Usually lower priced items

Selective Distribution

provide offering in selective outlets
-Restrict distribution in geographical area to intermediaries based on performance capability
ex=Compaq computers, Calphalon cookware
-Coverage/Sales effort trade-off
Middle ground= medium coverage and sales effort

Extensive Distribution

using only one outlet in geographical area
-Maximize "push" of distributor
ex=Ferrari, Rolex, Steinway pianos
-Coverage/sales effort trade-off
Maximum sales effort at point of purchase-minimum coverage


paid form of non-personal communication, good for reaching people who are geographically dispersed

Personal Selling

two-way, personal (face-to-face) communication

Sales Promotion

short-term inducement of value to arouse interest

Public Relations

communications management that seeks to influence stakeholders

Introduction Phase

advertising (objective is to inform) - to stimulate demand,
personal selling to channel members

Growth Phase

(objective: persuade), advertising to differentiate brand, personal selling to channel members

Maturity Phase

(objective: remind), reminder advertising (Budweiser), sales promotion - to encourage switching

Push Strategy

(target channel members), personal selling (to inform/gain support), sales promotion (contests to motivate, discount allowances to support channel effort)

Pull Strategy

(target consumers/end users), advertising, Ex: Nicoderm "Ask your doctor"


get the ATTENTION of the target market, involves right choice of media and message, distinctive & relevant message


generate INTEREST of what you're selling, talk directly to the needs of your market


desire - using logic and emotion, logic: show benefits and uses of product/service


action - get target market to act direct action - buy the product, try the product, send free info about product

indirect action

encode a thought or image-remember name of product, have positive image, associate product with benefit

Short-term activity to motivate buying

-usually by lowering price or adding value (Online coupons)
-internet's timeliness (contests, event info)


an extra item offered with purchase (toy in cereal box)

Contests and sweepstakes

contests involve skill, sweepstakes involve luck only (McDonald's monopoly, HGTV Dream House Giveaway)


displays set up at retail locations (shelf talkers, extenders, end-aisle displays)

trade allowances

price reduction to intermediaries

push money

contests or cash incentives for retail sales people

To help push through distribution channel

training or store demonstrations, free merchandise, conventions and trade shows


efforts to capture media attention, Includes: press relations and product publicity, Key to good press release: avoid hyping the product, write like a journalist and keep it short

Main promo tools limitations

Clutter, Low credibility contexts and sophisticated/jaded consumers

Product Placement

paid integration of product communication into media, fastest growing promo expenditure (expected to grow at 30% rate through 2010)
-Where its growing fastest: Reality TV and niche learning channels (food, outdoor, learning cable outlets)

Which types of promotion have increased and decreased in recent years?

Product placement is the fastest growing
Direct marketing-increase

Informative Advertising

Build primary demand (Introduction stage of PLC)

Persuasive Advertising

Build selective demand (Growth)

Comparison Advertising

Compares one brand to another (Maturity)

Reminder Advertising

Keeps consumers thinking about a product (Decline)

Television Advantages

wide reach and incorporates sound and video

Television Disadvantages

high cost, cluttered airwaves and more potential spillover

Radio Advantages

relatively inexpensive, selectively targeted and wide reach

Radio Disadvantages

no video limits presentation, consumers give less focused attention than TV and exposure periods are short

Magazine Advantages

very targeted and subscribers pass along to others

Magazine Disadvantages

relatively inflexible and has long lead times

Newspapers Advantages

flexible, timely and can localize

Newspaper Disadvantages

expensive in some markets, involves potential loss of control over placement, advertisements have short lifespans

Internet Advantages

linked to detailed content, highly flexible and interactive and allows for specific targeting

Internet Disadvantages

costs not easily comparable to other media, becoming cluttered and blocking software prohibits delivery

Outdoors Advantages

relatively inexpensive, offers opportunities for repeat exposure and is flexible

Outdoors Disadvantages

not easily budgeted, has placement problems in some markets and exposure time is very short

Direct Mail advantages

highly targeted, flexible and allows for personalization

Direct Mail Disadvantages

relatively expensive, cluttered environment, often considered "junk mail"

Brand Leadership -Vision of the Mass Market

Constant monitoring, MR of changing tastes, Ex- Pampers

Brand Leadership - Managerial Persistence

committing effort over long periods of time

Brand Leadership - Financial Commitment

Strong brands require high marketing costs, New product development, marketing research and advertising

Brand Leadership - Relentless Innovation

Products must be updated constantly, Gilette- 20 new products in portfolio, P&G look at Crest, Tide, etc.

Brand Leadership - Asset Leverage

Using strong position in one category to establish leadership in another, related category, Coca Cola

Challenges to managing Brands: Brand Proliferation

Growth in new competitors and line extensions, Example- Crest toothpaste

Challenges to managing Brands: Media Fragmentation/Decreased Ad Efficiency

Growth in # stations (network buys not enough), Growth in ad clutter, Technologies to avoid advertising (remotes, TiVo)

Challenges to managing brands:Smarter/Variety-Seeking Consumers

More info available (Consumer reports, websites)

Challenges to managing brands: Successful new product Development

Consumers more trusting of new brands and line extensions, Dilutes brand equity, Example- Tide

Brand Salience

awareness through linking brand elements to product categories (usage situations)

Depth of Brand awareness

likelihood and ease with which brand comes to mind

Breadth of brand awareness

Range of purchase and usage situations in which brand comes to mind, Ex. Morton's salt used for sore throats (gargle)

Brand resonance

psychological brand bond between consumer and brand

Attitudinal attachment

strong, personal attachment (Apple, Nike)

Sense of Community

desire to affiliate with others associated with brand

Active engagement

willingness to invest resources outside of purchase

Trading Up (Upmarket)

Adding a higher-priced product to a line to attract a higher-income market and improve the sales of existing lower-priced products, Product could flop, Ex. Purina (Purina One Dog Food), Kia, Titleist

Trading Down (Down-market)

Adding a lower priced item to a line of prestige products to encourage purchases from people who cannot afford the higher-priced product, but want the status, Could be bad associations because of lower priced item, Ex. Smirnoff selling Popov, Ipod (shuffle), Mercedes (C-Class)

Add Value in Packaging: Functional value

protect contents and add usage benefit, Ex. Squeezable ketchup bottle, tubes of fish paste, Sun Chips (biodegradable bags), Happy Meal Boxes, Steam bags for veges

Add Value in Packaging: Attention getting

Ex. Fresh Start detergent in clear plastic bottle, Mrs. Buttersworth

Add Value in Packaging: Provide information

functional information, usage ideas, benefits, Ex. pictures of completed kit on legos box, recipe for rice krispie treats, camping equipment

Transaction Selling

customers are sold to and not contacted again, ex. Wal-mart

Relationship Selling

the seller contacts customer after the purchase to determine if they are satisfied and have future needs, Ex. cell phone companies

Partnering (Selling)

he seller works continually to improve its customers' operations, sales, and profits (what good financial advisers will do), Ex. Edward Jones

(Consultative Selling) Team Leader

Coordinates all of the information, resources, and activities needed to support customers before, during, and after the sale

(Consultative Selling) Business Consultant

Gives advice and service using internal and external resources to gain an understanding of the customers business and market place

(Consultative Selling) Long Term Ally

creates a "win-win" situation(as the customers sales and profits grow, so do the salesperson's), takes interest beyond the sale in the customer, the ability of a salesperson to fulfill the role of long-term ally is a pivotal factor in determining whether a sales transaction is just a transaction or the beginning of a relationship

Selling Process 1: Prospecting

locating and qualifying prospects(do they have resources, can they pay)

Selling Process 2: Pre-approach

obtaining interview, Planning - determining sales call objective, developing customer profile, customer benefit program, and sales presentation strategies

Selling Process 3: Approach

meeting prospect and beginning customized sales presentation

Selling Process 4: Presentation

further uncovering needs, Relating product benefits to needs using demonstration, dramatization, visuals, and proof statements

Selling Process 5: Trial Close

asking prospects opinions during and after presentation

Selling Process 6: Objections

uncovering objections

Selling Process 7: Meet Objections

satisfactorily answering objections

Selling Process 8: Trial Close

asking prospect's opinion after overcoming each objection and immediately before the close

Selling Process 9: Close

bringing prospect to the logical conclusion to buy

Selling Process 10: Follow Up/Service

serving customer after the sale, Most important step: ask about their experiences

Routine Buying Process

Low price, Intensive distribution, Promotion → advertising (pulling product through the channel)

Limited Buying Process

Competitive price, Selective distribution, Promotion → advertising, sales promotion, personal selling (push and pull)

Extensive Buying Process

High price, Exclusive distribution, Promotion →personal selling (push product)

Goal of promotions

reinforce the products position and build long-term customer relationships

Characteristics of Samples

are the most effective yet most expensive way to introduce a new product

Price Packs

more effective than coupons and stimulating short term sales

Trade Promotion Tools

persuade resellers to carry a brand, give it shelf space, promote it in advertising and push it to consumers

discount off the list price

"price -off" given during a stated time period


so much off per case in return for the retailers agreement to feature the product in some way.

free goods

extra cases of merchandise to resellers who buy a certain quantity or who feature a certain flavor or size

push money

cash or gifts to dealers or their sales forces to "push" the manufacturer's goods

sales contest

contest for salespeople which motivates them to increase their performance over a given time period.

Way to measure brand equity

the extent to which customers are willing to pay more for the brand

Because consumers expect stores to carry the brand

the company has more leverage in bargaining with resellers

Because the brand name carries high credibility

the company can more easily launch line and brand extensions

customer equity

the value of the customer relationships that the brand creates

Brands should include the following:

suggest benefits, short and simple, distinctive, extendable, easy to translate, legal protection

Sponsorship Options: National Brand

product launched as manufacturer's brand

Sponsorship Options: Store Brand

manufacturers sell to resellers who give it a private brand

Fastest Growing Licensing category

corporate brand licensing

Advantages of Co-Branding

offers broader consumer appeal/equity, allows company to expand existing brand into category it might otherwise have difficulty entering alone

Limitations of Co-Branding

relationships involve complex legal contracts, must carefully coordinate advertising, must trust each other

Developing Brands: Line Extensions

company introduces additional items in a given product category under the same brand name, low cost, low risk, can command more shelf space

Line Extensions Risks

overextended brand name might lose specific meaning, confusion, sales of an extension may come at the expense of other items in the line

Developing Brands: Brand Extension

gives new product instant recognition, saves advertising costs

Brand Extension Risks

if it fails, it may harm consumer attitudes toward the other products under the same name

Developing Brands: Multi-branding

offers a way to establish different features and appeal to different buying motives. Allows company to lock up more reseller shelf space. Major drawback, each brand might only obtain small market share and have little profit.

Developing Brands: New Brand

when it enters new product category for which none of the company's current brand names is appropriate

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