Product Adoption/Diffusion and Marketing Communications

1. Product Adoption/Diffusion and Marketing Communications When are each of the elements of the promotions mix most useful?

2. 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

3. 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

4. What is a “new” product? • Breakthrough Innovations • computers, phone • Pioneering Innovations • PC, CD player • Adaptive Innovations • dryer sheets • Imitative New Products - clones

5. 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

6. 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

7. 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

8. Adoption Process • Knowledge - Awareness • Persuasion - Interest and Liking • Decision - Purchase Action (trial) • Implementation - Product Usage (adoption) • Confirmation - Satisfaction/Loyalty

9. 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

10. 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

11. The Product Life Cycle • Biological Analogy • Reflects Life Span of the Products • Intermingle the PLC, Diffusion of Innovation, Adoption and Promotion!

12. The Product Life Cycle • Introduction • primary demand stimulation • high percentage of product failures • operations costs are high • distribution limited • net losses expected

13. 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

14. 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

15. 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

16. 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

17. BCG Matrix • Cash Flow Model • Market Share/Market Growth are the axes

18. When is PR Important? • Helpful to Stimulate Interest • Diffuse Information About New Products • Informs Investors • Generates Competitive Response • Gets the Cheerleaders Going!

19. 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

20. 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 in Marketing!!!!!

21. 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 Billboards

22. Out-of-Home Negatives • nonselectivity • minimal exposure time - billboards • difficulty in measuring audience • environmental concerns • limited use of copy

23. 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

24. 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