Topic 2: Product

1. Topic 2: Product

2. Product Trial • This is when a business gets customers to buy a product for the first time. This may be because the product is new on the market. • Hopefully this will instil some brand loyalty and ensure repeat purchases. • Getting a customer to trial a product for the first time means using certain aspects of the 4Ps of marketing.

3. Product Trial • Price: • Penetration pricing can be used when the product is new. This means initially selling it at a much reduced price and then raising the price once it has established some brand loyalty. • Money off coupons can be used in newspapers, magazines and/or through direct mailing. • Promotional pricing can be used if the product is not new. This means lowering the price for a limited time to try and encourage new people to try it out. BOGOF or 2 for 1 could also be used as part of this.

4. Product Trial • Product: • Free samples using magazines, direct mailing or a stand in the supermarket • Test trials e.g. test drive a car • Trying out a product in the shop e.g. new video game

5. Product Trial • Promotion: • Advertising – TV, radio, newspapers, magazines etc. Companies will try to make sure they can reach their target audience by using specific magazines or TV programmes. • Sponsorship – Sponsoring a TV programme is a good way of getting people to notice your product and trial it. • Billboards and/or any flat space e.g. buses • Publicity – have a launch party and invite journalists to come. Give them a brochure and ask them to write about the product in their publications. • Celebrity endorsement – get a celebrity to champion the product. • Viral marketing – use Twitter, FaceBook, YouTube, MySpace to get people talking about it and recommending it to friends.

6. Product Trial • Place: • Manufacturers often need to persuade retailers to devote shelf space to the product. Often this means that they will have to pay for the privilege. • Also manufacturers may have to pay for any promotional deals that the retailer has such as BOGOF and 2 for 1

7. Repeat Purchase • Repeat purchase is when a customer buys a product more than once. • Customer loyalty is the willingness of customers to make many repeat purchases from one company or of one product. • Repeat purchases is the key to success of most business. It is less expensive to achieve than launching new successful products.

8. Repeat Purchase • Promotion: • Advertising is very important for keeping the brand in the consciousness of customers. All forms of advertising are suitable to achieve this. • Many other forms of promotion are also useful for this e.g. money off coupons, competitions, special offers etc.

9. Repeat Purchase • Price: • Showing that the product gives value for money is a good way of considering the price. • Sometimes firms can maintain a high price – known as prestige pricing – because they are attracting people with relatively high incomes who want to purchase something exclusive or of high quality. • Promotional pricing can be very useful occasionally. • BOGOF and 2 for 1 can be good.

10. Repeat Purchase • Product: • Must meet or exceed customer expectations • The brand should match the image of the customer • The product should be made to feel as if the customer cannot live without it • The product needs to be able to satisfy a customer’s need or want • The product could satisfy more than one need or want (dual purpose) • New varieties to keep consumer’s interested. • New technology to keep consumers interested.

11. Repeat Purchases • Place: • Manufacturers often need to persuade retailers to devote shelf space to the product. Often this means that they will have to pay for the privilege. • Also manufacturers may have to pay for any promotional deals that the retailer has such as BOGOF and 2 for 1

12. Questions • 1. Answers B and D • Comments • A incorrect – low or high production costs will not persuade or dissuade a customer from buying the product. • B correct – a relevant free gift acts as an incentive to the purchaser. • C incorrect – this is a human resources matter and has no bearing on a customer’s decision to purchase. • D correct – a reduced price may persuade a customer to buy a product without having to spend too much money on it. • E incorrect – many of the other magazines may have different target markets. • 2. Answer A • Comments • A correct – a lack of loyalty means that customers will not return to purchase the same brand again and again. • B incorrect – a lack of loyalty often reduces sales levels. • C incorrect – good value often results in customer loyalty. • D incorrect – large price cuts are not a guarantee of customer loyalty as it is often based on many different factors

13. Questions • 3. Answer C • Comments • A incorrect – the amount of profit is based on several different factors and not just sales levels. • B incorrect – repeat purchases maintain sales levels for a company. • C correct – advertising encourages people to make repeat purchases. • D incorrect – little brand loyalty would not generate repeat purchases. Also, in the pizza market people do tend to have brand loyalty.

14. Repeat Purchases • Other key factors: • Be sure everyone in your company provides outstanding service to your customers. • Stay in touch with customers and ask for feedback. • Tell someone by in person, on the phone, or by mail, "Thank you for your business.