Product Adoption/Diffusion and Marketing Communications

When are each of the elements of the promotions mix most useful?

Innovation An idea, product or

service that an individual perceives to be new.– Remember - in

marketing perception is the key!

Degree of Newness - reflects unique contribution of innovations

Degree of Newness Continuous Innovations

– minor change from existing products– limited impact on consumption patterns

Discontinuous– requires substantial relearning and fundamental

alterations of basic consumption patterns Dynamically Continuous

– require some disruptions but fundamental delivered utility the same

CD players, cell phones

What is a “new” product? Breakthrough

Innovations– computers, phone

Pioneering Innovations– PC, CD player

Adaptive Innovations– dryer sheets

Imitative New Products - clones

Product Innovation essential for long-term survival products become obsolete and replacements

must be developed i.e., typewriter for today’s more critical consumer -

products need to be truly innovative vs. marginally different

environmental factors have an increasingly important role

Promotions and Its Role Awareness Class

– free samples, coupons, advertising and distribution (i.e., convenience and pop displays)

Trier Class– price, coupons distribution,

demonstrations

Repeater Class – advertising, price,

distribution, satisfaction

Product Adoption and Diffusion Process Adoption Process

– decision making activity of an individual through which a new product is accepted

Diffusion of a New Product– process by which the innovation is

spread through a social system over time

Adoption Process Knowledge - Awareness Persuasion - Interest and Liking Decision - Purchase Action (trial) Implementation - Product Usage

(adoption) Confirmation - Satisfaction/Loyalty

Five Characteristics of Innovation Relative Advantage - superior Compatibility - consistent with

experience and values Complexity - difficulty in understanding Communicability - observable use and

communicability to others Trialability - accessible for trial use

5 Categories of Adopters/Diffusion Process Innovators - 3% Opinion

Leaders Early Adopters - 13%

“Keeping up with the Jones”

Early Majority - 34% Avg shopper

Late Majority - 34% Skeptics

Laggards - 16% My Mom

0 20 40

EarlyMaj

Laggards Percentage

The Product Life Cycle Biological Analogy Reflects Life Span

of the Products Intermingle the

PLC, Diffusion of Innovation, Adoption and Promotion!

The Product Life Cycle Introduction

– primary demand stimulation– high percentage of product failures– operations costs are high– distribution limited– net losses expected

The PLC - Growth sales volume rises rapidly new consumers make initial purchases early buyers repurchase sales and profit begin to rapidly competitors enter market prices may fall economies of scale begin to occur begin to stimulate brand demand

PLC - Maturity Industry sales

continue to grow in early part of stage

sales increase at a decreasing rate

price competition intensifies

profits decline competitors dropout

PLC - Decline innovation may bring about declining

demand consumers’ preferences shift away from

the product offerings cost control becomes critical competitors withdraw promotional efforts reduced or withdrawn

How Do Marketing Strategies Change Across the PLC?

expanding the product line – Campbell’s soups offering single

serving sizes, Ivory intros shampoo find new uses for the product

– baking soda find new markets

– tobacco companies going overseas

BCG Matrix

Cash Flow Model Market Share/Market Growth are the axes

Hi Growth/Hi Share

STAR

Low Growth/Hi Share

CASH COW

Hi Growth/Low Share

Question Mark/Problem Child

Low Growth/Low Share

DOG

When is PR Important? Helpful to Stimulate

Interest Diffuse Information

About New Products Informs Investors Generates

Competitive Response Gets the Cheerleaders

Going!

Out-of-Home

Oldest Form of Advertising - often referred to as ‘outdoor advertising’

Delivery Modes include: billboards, blimps, transit ads, etc.

Expenditures are approaching $2 billion

Can be off premises or on premises

Out-of-Home Positives Reach and Frequency Geographic

Flexibility Low CPM Easy Brand ID Purchase Reminder

at the best times!– Hungry - exit now!

Come major inMarketing!!!!!

Billboards Types

– Poster Panels vs. Painted Bulletins

Panels are silk screened - ranging in size from 6’2” by 12’’2” to 12’3” by 24’6”

Painteds- directly painted and leased for 1-3 years

Pros of Billboards– Low CPM– Can be a last

reminder for products like fast food, shopping venues, etc.

– Reach and Frequency– Sell based on

Showings %exposed

Out-of-Home Negatives

nonselectivity minimal exposure time - billboards difficulty in measuring audience environmental concerns limited use of copy

Purchasing Out of Home

Plants– Firms that own billboards– Sell based on ‘showings’

#50 means 50% of population of area is exposed each day to signage

Point of Purchase Displays (POP)

Attract bargain hunters and variety seekers Spending $17 billion a year Range from permanent displays to end of

aisle Attract attention, allow information to be

gathered Make shopping easier … but can become

easily ignored