READINGS’ SUMMARY Dr.

Indirah Indibara
EXTEND PROFITS, NOT PRODUCT LINES
Reasons for introducing Pitfalls of Proliferation: What To Do:
new product lines: • Improve cost accounting
• Weaker Line Logic
• Customer Segmentation • Allocate resources to winners
• Lower Brand Loyalty
• Consumer Desires • Research consumer
• Underexploited Ideas behaviour
• Pricing Breadth • Apply line logic test
• Stagnant Category Demand
• Excess Capacity • Coordinate marketing across
• Poorer Trade Relations the line
• Short-term Gain
• More Competitor • Work with channel partners
• Competitive Intensity Opportunities
• Expect product-line turnover
• Trade Pressure • Increased Costs • Manage deletions
MARKETING INTANGIBLE PRODUCTS & PRODUCT INTANGIBLES

Instead of ‘services’ and ‘goods’, we should speak of ‘intangibles’ and ‘tangibles’

A product is a “promise” - “Degree of Intangibility” inherent in both.
To gain a customer:
 Importance of ‘surrogates’ like metaphors and similes to ‘tangibilize’ the intangible aspects
 Importance of Impressions (Physical Evidence)

“Customers usually don’t know what they are getting until they don’t get it.”
To keep a customer:
 Intangibles are ‘people intensive’ (Inseparability)
 Minimize the human factor – ‘Industrialization’ of service (hard, soft, hybrid technologies)
 Regularly remind the customers what they are getting
EAGER SELLERS AND STONY BUYERS
Types of cost in switching:
 Economic costs – transaction, learning and obsolescence costs
 Psychological costs

Psychological factors to be considered:

 Gains and Losses – Loss Aversion (Losses have a greater impact than similarly sized gains)
 Endowment Effect – People value products that they already possess due to loss aversion
 Status-quo Bias – People tend to stick with what they have even if a better alternative exists

Balancing product and behaviour changes:

 9X effect
 Easy Sells, Sure Failures, Long Hauls, Smash Hits
 Accept Resistance – be patient, strive for 10x improvement, eliminate the old
 Minimize Resistance – make behaviorally compatible products, seek out the unendowed, find believers
THE GOOD-BETTER-BEST APPROACH TO PRICING
 Add or subtract product features to create variably priced bundles targeted to customers of
varying economic means or those who value features differently.
 Capitalizing on GBB:
 Going on the offensive
 Companies can dramatically lift margins by creating a high-end best version
 A low-priced offering can make a product accessible to price-sensitive or dormant customers for whom the existing product line is out of reach
 GBB can increase revenue through a new best offering that boosts the entire brand
 Lower priced good version can spark ancillary revenue from related or complementary goods and services
 Playing defense
 Creating a new good product is a better defensive strategy against a low-cost rival
 Drawing on consumer psychology
 GBB helps potential buyers focus on and understand features and think about which ones they value, and how much they are willing to pay for them
 Customers prefer having choices to feeling under an ultimatum, so 3 differently priced options can give them a sense of empowerment
 When faced with multiple options, customers tend to decide more quickly whether they are going to buy something

 Fence Attribute
 One that constitutes a barrier preventing existing customers from crossing over to something cheaoer
 MARKETING PROMOTIONS
6M Model of Hierarchy of Effects: (Link Major Promotional Tools:
Communication: with AIDA)  Advertising
 Market: To whom the  Unaware  Personal Selling
communication is addressed
(Target)  Awareness  Sales Promotion
 Mission: Objective of  Knowledge  Consumer Sales Promotion
intervention (Objective)  Liking  Trade Sales Promotion
 Message: What points to  Indirect Forms
communicate (Content)  Preference
 Conviction  Third Parties – Word of Mouth
 Media: Which vehicles to use
(Channels and Tools)  Purchase  Public Relations
 Money: How much to spend  Publicity
 Repeat Purchase
(Budget)  Product Placement
 Measurement: Assessing the
impact (Results)
THE CONTINUING POWER OF MASS ADVERTISING
Four innovative strategies to reach broader audiences:

 Catch people in bottlenecks

 Transit places like escalators, elevators, airplanes, taxis, restrooms

 Use a Trojan Horse

 Sneaking ads into unexpected places like coffee cups, pizza boxes, paychecks, deposit slips, garbage trucks

 Target people at play

 During vacation, golfing like golf carts, cruise ships, amusement parks, hotels

 Get people to play games

 Interactive medium
DIGITAL MARKETING AND SOCIAL MEDIA: WHY BOTHER?
Digital Marketing Benefit Perception:
Usage: 1. Information gathering
2. Competition follow-up
1. Institutional website or
microsite 3. Customer data
obtainment
2. Website or microsite for 4. Information supply about
clients innovations
3. Chat/voice/video over IP 5. Information/knowledge
sharing
4. Mobile network 6. Communication with
5. Mobile applications customers
7. Awareness creation
6. Discussion Forums
8. Internal communication
7. Facebook 9. Socialization
8. Twitter 10. Response to information
requests
9. Orkut
11. Communication with
10. Blogs partners/suppliers
12. Employee’s training
13. Conversation/activity
monitoring
14. Employees’ recruitment
CUSTOMER-DRIVEN DISTRIBUTION SYSTEMS
 Find out what your customers want
 Segments

 Decide on appropriate outlets

 Clusters of demands for service

 Find out about the costs

 Bound the ideal
 Researchers invite the executives

 Compare your options

 Existing, Ideal and Management-bound

 Review your pet assumptions

 Bring in outsiders

 Confront the gap

 Prepare to implement
HOW TO WIN IN AN OMNICHANNEL WORLD