2007 Thomson South-Western

Facilitating the Success of New Brands

Chapter Seven

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

• 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

Awareness ClassDistribution

AdvertisingCouponsFreeSamples

6

New-Product Adoption Process Model

• 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

Trier ClassPriceDistributionCoupons

New-Product Adoption Process Model

7

Repeater Class Personal Personal

SellingSelling AdvertisingAdvertising

PricePrice DistributionDistribution

SatisfactionSatisfaction

• 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

Adoption Process

Product Characteristics That Facilitate

Adoption

Relative

Advantage

Compatibility

Complexity

Trialability

Observability

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

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

11

Complexity

• An innovation’s degree of perceived difficulty

• The more difficult, the slower the rate of adoption

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

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 –

14

Early

Adopters

(13.5%)

Early

Majority

(34%)

Late

Majority

(34%) 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

15

Objectives

Managing the Diffusion Process

1. Secure sales quickly - rapid takeoff

2. Achieve rapid acceleration- rapid acceleration

4. Maintain sales as long as possible - long-run franchise

3. Secure maximum sales potential- maximum penetration

16

Managing the Diffusion Process

Rapid takeoff can be facilitated by:

17

Managing the Diffusion Process

Rapid acceleration accomplished by:

18

Managing the Diffusion Process

Maximum penetration approached by:

19

Managing the Diffusion Process

Long-run franchise maintained by:

20

Stimulating Word of Mouth Influence

• Impersonal sourcesImpersonal sources: information received from television, magazines, the Internet, and other mass-media sources

• Personal sourcesPersonal sources: word-of-mouth influence from friends, acquaintances, and from business associates

21

Strong and Weak Ties

• People are connected in networks of interpersonal relationships.

Tie Strength

Strong

Weak

22

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

23

Opinion Leaders

Characteristics

• More cosmopolitan• More gregarious• Slightly higher socioeconomics status• Generally more innovative• Willing to act differently

24

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 about market

information.

25

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

26

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; the Snuggie

• Guerilla Marketing, Street Marketing, Viral Marketing – all designed to generate buzz

27

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.

28

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

29

Using the Internet for Creating Buzz

Word of Mouth(eWOM)

Blogs

30

Brand Naming

Brand

A company’s unique designation or

trademark, which distinguishes its

offering from other product category

entries.

31

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

32

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

Are these good brand names?

33

Brand name gaffes

34

Brand name gaffes

35

36

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.”

37

The Brand Naming Process

Step 1Step 1: Specify Objectives for the Brand NameStep 1Step 1: Specify Objectives for the Brand Name

Step 2Step 2: Create Candidate Brand NamesStep 2Step 2: Create Candidate Brand Names

Step 3Step 3: Evaluate CandidatesStep 3Step 3: Evaluate Candidates

Step 4Step 4: Choose a Brand NameStep 4Step 4: Choose a Brand Name

Step 5Step 5: Register TrademarkStep 5Step 5: Register Trademark

38

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

39

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

40

The Role of Logos

41

The Role of Logos

Cingular’s

logo

42

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

43

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.

44

Issues in PackagingColor

Design and ShapePhysical Materials

Product Information

on Package

* VIEW Model (Visibility, Information, Emotional appeal, Workability)

Packaging Size

45

Packaging Structure

ColorDesign,Shape

Size

Physical Materials

46

• 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

ColorDesign, Shape

Size

Physical Materials

The Use of Color

Meanings of Colors

• What do you associate with Red?

• Purple

• With white?

• With gray?

• Good tasting soft drinks

47

48

Design and Shape Cues

• Effective package design provides good eye flow and a point of focus

• Evoke different feeling through the choice of slope, length, and thickness of lines– Horizontal(tranquillity), Vertical(strength),

Slanted lines(upward movement)

• Shapes also arouse certain emotions and have specific connotations– Curving lines(femininity), Sharp lines(masculinity)

ColorDesign, Shape

Size

Physical Materials

49

Packaging Size

• Satisfy the unique needs of various market segments

• Represent different usage situations

• Gain more shelf space in retail outlets

ColorDesign, Shape

Size

Physical Materials

50

Physical Materials

• The most important consideration should be the marketing-communications implications of the materials chosen rather than cost

• Can arouse consumer emotions– Metal(strength, durability, coldness)– Plastics(lightness, cleanliness, cheapness)– Wood(masculinity), Velvet(femininity)

ColorDesign, Shape

Size

Physical Materials

51

Evaluating the Package: The VIEW Model

IInformation

WWorkability

EEmotional Appeal

VVisibility

52

The VIEW Model

Visibility: An Effective Seasonal Package Design

53

Evaluating the Package: The VIEW Model

• Ability of a package to attract attention at the point of purchase

• To have a package stand out on the shelf yet not to detract brand’s image

• Special seasonal and holiday packaging as a way of attracting attention

VVisibility

54

Evaluating the Package: The VIEW Model

• Product usage instructions, claimed benefits, slogans, and supplementary information

• Avoid cluttering the package with excess information

• Useful for– Stimulating trial purchases – Encouraging repeat purchase behavior– providing correct usage instruction

IInformation

55

Information: Frito Lay’s

Smart Snack Label

56

Evaluating the Package: The VIEW Model

• The ability of a package to evoke a desired feeling or mood

• CPM vs. HEM– Some packages emphasize informational

content, while others heavily emphasize emotional content

• Blend informational and emotional content so as to simultaneously appeal to consumers

EEmotional Appeal

57

Evaluating the Package: The VIEW Model

The changing faces of Betty Crocker

58

Evaluating the Package: The VIEW Model

How a package functions (Does it…)• Protect the product contents?• Simplify the consumer’s task in accessing and

using the product?• Protect retailers against unintentional breakage

from consumer handling and from pilferage?• Is the packaging environmentally friendly?

WWorkability

59

Dutch Boy’s “Workable” Package

Important issues in packaging

• Too much packaging

• Environmentally-friendly packaging

• Smart packaging (RFIDs)

60