Agricultural Advertising & MarketingAgricultural Advertising & Marketing

Kristi Murdock

We’ve Learned:That MARKETING involves: “creating a product , then

planning and carrying out the pricing, promotion, and placement of that product to stimulate buying exchanges in which both seller and buyer profit in exchanges in which both seller and buyer profit in some way.”

We’ve learned:� That people don’t buy the

They buy the

In other words, people buy solutions to problems; they buy to satisfy needs.

We’ve learned:� That in order for the buyer to benefit from a sale, the

product must successfully meet the buyer’s need.

� And we’ve learned a little bit about identifying (and � And we’ve learned a little bit about identifying (and appealing to) the different needs that people have.

Next on the Agenda:

The LIFE of a product

Important Concept:

The Product Life CycleMost products don’t “live” forever!

� Stage One: Introduction (the “Launch”)

Stage Two: Growth (assuming launch was successful)� Stage Two: Growth (assuming launch was successful)

� Stage Three: Maturity (we hope this lasts a long time)

� Stage Four: Decline (product may lose viability unless rejuvenated)

Product Life Cycle

Characteristics of the

Introduction Period

� Low sales� Customers may not be aware of your product

and its benefitsCustomers may not be aware of your product and its benefits

� Higher advertising costs� Negative profit usually� GOAL: establish a market and build demand

Marketing Mix During

Introduction

� Product : limited variations� Price : generally high� Promotion

� Goal is to build awareness � Goal is to build awareness and convince sellers to carry product

� Provide samples or trial incentives

� Place: Usually selective but Scattered

Characteristics of the

Growth Period

� Rapid revenue growth� Sales increase� Additional market segments come on board� Additional market segments come on board� More retailers carry the product – expanded

distribution� Competitors enter market & price competition

begins� GOAL: gain customer preference and increase sales

Marketing Mix During Growth

�Product : new product features, packaging, quality improvement

�Price : May be reduced to capture more to capture more customers

�Promotion: Increased advertising to build brand preference

�Place: More extensive

Characteristics of the

Maturity Period

� Most profitable� Slower pace of growth� Slower pace of growth� Less Advertising� Competitors product may be very similar� GOAL: maintain market share and extend

product life cycle

Marketing Mix During Maturity

� Product: Modifications and features added to differentiate product

� Price : Possible reductions to compete better

Promotion� Promotion

� Emphasize differentiation

� Build brand loyalty

� Place: New distribution channels and incentives to avoid losing shelf space

Characteristics of the

Decline Period

�Sales decreasing

�Market is saturated�Market is saturated

�Product is obsolete

�Unit costs may increase with declining production volume

Marketing Mix During Decline� Product

� Number of products in product line reduced

� Try to rejuvenate surviving products� Price

� Prices lowered to liquidate discontinued productsdiscontinued products

� Prices maintained for niche markets� Promotion

� Low expenditures � Reinforce brand image for

continued products� Place

� Distribution more selective� Phase out channels

Period of Decline:

Considering the Options� Shall we maintain the product?

� Can we out-last competitors

� How can we reduce costs?� How can we reduce costs?

� What new uses (needs) can we find for the product?

� Shall we “Harvest” the product?

� Reduce market support (& associated costs)

� “Coast” to see how far it can get.

� Shall we discontinue the product?

� No more profit can be made . Stop production and support.

Where are these products in their

Life Cycle?� Electric cars

� Hybrid cars

� Refrigerators

� Black & white

� Haircuts

� Oil changes

� Genetic testing for breast cancer therapy

� Black & white television sets

� High Definition television sets

� GPS collars for pets

� Rabies vaccine

� Cotton bed sheets

breast cancer therapy

� Horseshoeing

� Home theater design

� Physical therapy for pets

� Telephone operator services

� Mapmaking

A Fad is identified by its Life Cycle

Rapid growth during introduction

But no sustained growth or sales following that

Examples of FadsGenerally, almost anything that is a “Must Have” Christmas present item

is a fad (see http://www.badfads.com/)� Tickle-me Elmo� Cabbage Patch dolls� “Baby on board” signs� Furby� Furby� Rubik’s Cube� Coonskin caps (circa 1950!)� Bell-bottom jeans� Pet rock� Go-go boots� Poodle skirtsAny “named” haircut (pixie, mullet, Dorothy Hamill, Farrah Fawcett)

How can you extend a

product’s life?� Market Modification

� Increase frequency of use by current customers

� Add new customers

� Find new uses for the product (example: baking soda)� Find new uses for the product (example: baking soda)

� Product modification (change product’s market mix)� Product – Add “bonus” features, “new & improved”

� Price – lower

� Promotion – change your advertising

� Place – add new distribution channels

Modifying the Product

Upgrade features and benefits� Example: from litterbox to self cleaning litter

box to litterbox over the toiletbox to litterbox over the toilet

� Example: from portable phone to “device that keeps track of my appointments, does math, works as an alarm clock and memo pad AND works as a portable phone”

� Example: “20% more at the same price!”

Modifying the Price You can always lower the price, but remember:

The price of your product exerts influence over the whole operation

� Customers’ perception of value� Customers’ perception of value

� Image of the product

Under-valuing a product can be as destructive as over-pricing a low value item

Modifying Promotion� Short term strategies

� Give customers incentives to buy

� Coupons

� Sales� Sales

� Business card drawings

� These produce results quickly without lasting impact

� Less common in services but very common in retail

� Change the advertising campaign

� Marshall Macluhan : “The Medium is the Message”

Modifying the Place� Add some distributors, delete some distributors

� Change retail outlets

� New displays, different department or shelf location

Can change the whole concept of the product!

Important Word: CommodityQ: What is a commodity?

A: A product that the customer perceives to be differentiated only on price.

Examples:

� Soybeans, corn, pork bellies, cattle

(The Commodities Market)

� Nalgene water bottles

� Pet bath & blowout

In general, it’s easier to make money on

products that aren’t commodities!

Assignment� Due Tuesday, Jan 27.

� Select a product (hint – this will be more fun if you pick a product that has been around a while) and

1. Identify the product

2. Identify where the product is in the product life 2. Identify where the product is in the product life cycle – and why you think so.

3. Identify changes that you would recommend making in each of the 4Ps to increase sales of this product.

4. Give an example of current promotion of this product.

5. Identify the need(s) that the promotion targets.