Nicosia | Model

• Model between the inter relationships between

• Firms marketing communications
• Attitude about the product is formed
• Consumers decision process including
• Search and Evaluation process
• Actual decision process
• Resultant action of the consumer
• Feedback of the consumers response to the firm
• Purchase / Consumption experience as inputs to consumer attributes
• Dynamic Model
• Information about the resultant action of consumer is fed back into the system
• Feedback allows for
• Firms attribute
• Consumers attribute
 Nicosia | Model

• Field 1 (Represents the output of a

commercial message from the firm in
the form of advertising or other forms
of promotion and its effect on
Message consumer)
Sub Field 1 Exposure Sub Field 2
• Sub Field 1
• Firms and the Products attributes
Firms Consumer
Attributes • Company’s communication to the
Attributes
target audience
• Sub Field 2
• Consumer attributes
• What the consumer makes out of
the stimuli
 Nicosia | Model

• Field 2
• Company’s Input creating certain
attitude
• Evaluation of the advertised product
and other alternatives taken place if
Search and Evaluation
Means and End relations they can get access to those and refine
the message
• If the process results in motivation to
buy, it becomes an input for Field 3
 Nicosia | Model

• Field 3 (Various options are searched and

evaluated)
• Result of motivation
• Stage of action
Search and Evaluation
Means and End relations • Mental process where
• Motivation culminates
• to a certain decision
• Making the buyer to act
 Nicosia | Model

• Field 3 (Decision or Not Decision)

• Result of motivation
• Represents action
• Mental process where motivation
Decision or Action
culminates to a
• Certain decision
• Subsequently shown in action
 Nicosia | Model
• Maybe positive or negative purchase
decision
• If purchasing decision results in
• Purchase of product
• Results in consumption
• Formation of experience
Purchasing decision
• Experience becomes part of the
consumer attribute for future
• Rejection of product
• Feedback maybe used by firm to
improve its attributes
Nicosia | Model
PLC | Overview
 PLC | Introduction Stage

Introduction
Characteristics
Low sales
High CAC
Innovators are targeted
Marketing Mix
Product - Basic Product
Price - Cost +
Distribution - Selective Distribution
Advertising - Build awareness among early adopters
Promotion - Heavy expenditure to create trial
 PLC | Growth Stage

Characteristics
Rapidly increasing sales
Rising profits
Avg . CAC
Growing Competition
Marketing Mix
Product - Product Extensions, Services, Warranties
Price - Penetration Pricing
Distribution - Intensive Distribution
Advertising - Build awareness among mass markets
Promotion - Reduce expenditure to take advantage of consumer
demand
 PLC | Maturity Stage

Characteristics
Peak Sales
Low CAC
High Profits
Middle Majority
Competition declines
Marketing Mix
Product - Diversify brand and models
Price - Beat competition
Distribution - More Intensive Distribution
Advertising - Stress brand differences and benefits
Promotion - Increase to encourage brand switching
 PLC | Decline Stage

Characteristics
Declining Sales
Low CAC
Declining Profits
Laggards are targeted
Declining competition
Marketing Mix
Product - Phase out weak items
Price - Cut price
Distribution - Selective Distribution
Advertising - Reduce to level needed to retain hard core loyalists
Promotion - Redue to minimal level
 Diffusion of Innovation | Decision Process

The Innovation
Channels of Communication
Social System
Time
 Diffusion of Innovation | Types of Buyers

Innovators
They are venturesome and risk takers
They are highly resourceful
They buy the product at the introductory stage

Early Adopters
Opinion Leaders
Likely to transmit word of mouth
Contribute to the growth of the product since it has been accepted by
innovators and early majority
 Diffusion of Innovation | Types of Buyers

Late Majority
They respond to group norms and social pressure
They buy because of decreased availability of the previous product
Laggards
Very sceptical about buying products
Tradition bound and the product is old when they adopt it
 Idea to Innovation | How it is formed

Problem / Need felt in the world by someone

Creativity is unleashing the potential of the mind to conceive new ideas
Idea is born
Innovation is about introducing change in relatively stable systems
Product Innovation - Phone with speakers
Process Innovation - Hi touch to Low touch
Business Model Innovation - Nespresso, Xerox
 Diffusion of Innovation | Overview

A process by which
An innovation is communicated through certain channels over time
Spread in a social group
Becomes an innovation
Diffusion is a type of social change and is behind “Implementation”
Innovation without diffusion remains only an idea
Diffusion
A macro process concerned with the spread of a new product - an
innovation - from its source to the consuming public
Adoption
The micro process concerned with the stage the consumer goes
through in deciding to accept or to reject the new product
 Diffusion Process | Innovation Types

Firm Oriented Innovation

Product is new to the company
Company may market or manufacture for the first time
IPL, Reliance
Product Oriented Innovation
Focusses on the feature inherent in the product itself and on the effects
these features are likely to have on consumers established uses
patterns
Continuous Innovation
Dynamically Continuous Innovation
Discontinuous Innovation
 Diffusion Process | Discontinuous Innovation

Discontinuous Innovation - Major technological advance - Difficult to

diffuse into the market because consumers should learn new
behaviour patterns.
Creates major changes in the way we live
Aeroplane, Car, Computer have radically changed modern lifestyles
Cycle continues as new innovations like new versions of software are
constantly being made
 Diffusion Process | Continuous Innovation

Continuous Innovation
Modification of an existing Product
Used to set one brand apart from its competitors
These are evolutionary rather than revolutionary
Small changes are made to position the product
Addition of line extensions to alleviate consumer boredom
Innovation adds range of choices available
 Diffusion Process | Innovation Types

Product Oriented
Dynamically Continuous Innovation - Some technical advances - still
does not alter consumer behaviour and usage patterns
Pronounced change in an existing product
Self focusing cameras or touch tone telephones
These innovations have a modest impact on the way people do things,
create some behavioural changes
 Diffusion Process | Requisites for adoption

Relative Advantage
New products that are most likely to succeed are those that appeal
to strongly felt needs
Can you do it Faster, Better, Cheaper
Compatibility
Innovation should be compatible with consumers lifestyles and
existing values
Day in Life and fitment into the consumers life
Trial-ability
Ability to make trials easy for new products without economic risks
to consumers
How can you make the consumer use it to believe the product and
then make a purchase
 Diffusion Process | Requisites for adoption
Observability
Reflects the degree to which results from using a new product are
visible to friends and to neighbours
Can you give a ride by side comparison, before and after
comparison, testimonials
Complexity
Degree to which an innovation is perceived as difficult to
understand and to use
 Diffusion Process | Innovation Types

Consumer Oriented
All aspects of corporate customer interaction including marketing,
sales, delivery , customer service and everything in between
Focus is on how to serve the customers
Better Advertisement
Better After sales service
 Diffusion Process | Innovation Types

Market Oriented
How much exposure the consumers have about the new product or
service
New product is it has been in the market for a short time
Purchased / Used by a smaller population
Broad group - Bigger Market
 Diffusion Process | Channels of Communication

How quickly an innovation spreads into a market depends on

communication between
Marketer to Consumer
Consumer to Consumer
Influential impersonal sources
Impersonal - Mass / Pull >> Company to Company
Interpersonal - One on One Push >>> Customer to Customer
 Diffusion Process | Social System

Social System
Diffusion of new product usually take place in social setting
Social system = Physical + Social + Cultural environment
Traditional Social System
Individual >> Family >> Community >> Society
Modern Social System
Individual decision makers
Positive attitude towards change
Advanced technology and skilled labor force
Respect for education and science
An outreach perspective where members interact with outsiders
A system where members can see themselves in different roles
 Diffusion Process | Time

Time
Amount of purchase time
Time that elapses between a consumers initial awareness to the
point of purchase
Important because of the predictor it is of the overall length of time
for a widespread adoption
Purchase time
Adopter Categories
Rate of adoption
 Diffusion Process | Adapter Categories

Innovator
First to buy iPhone 7
Early Adaptors
Will buy iPhone 7 a few days after launch
Early Majority
Members of the 1st half to the mass market
Late Majority
2nd half of the mass market
Laggards
Very late to purchase iPhone 7
 Diffusion Process | Adapter Categories

Awareness
Consumer is first exposed to the product innovation
Eg: John sees an ad for iPhone 7 in a TV Ad
Interest
Consumer is interested in the product and searches for additional
information
Eg: John reads information on Apple website and goes to a retail
outlet to feel it
Evaluation
Consumer decides whether or not to believe that this product or
service will satisfy the need - “Mental Trial”
Eg: After referring to a friend John decides that the iPohone will fit
in with his aspirations. He also explores an exchange sceheme
 Diffusion Process | Adapter Categories

Trial
Consumer uses the product on a limited basis
Eg: Eg: John buys it from Amazon because it offers a 10 day no
obligatory trial
Adoption (Rejection)
If trial favourable, consumer decides to use the product on a full basis
or the consumer rejected
Eg: John continues to use the product
International Marketing | Consumer Behaviour
 International Marketing | Self Reference Criteria (SRC)
An unconscious reference to ones own cultural values, experiences and
knowledge as a basis for decisions
Most important impediment to success is a persons SRC and an associated
ethnocentrism
Risk of SRC
Prevents you from becoming aware of cultural differences
Influence the evaluation of the appropriateness of a domestically designed
marketing mix for a foreign market
Ethnocentrism
The notion that ones own culture or company knows best how to do things
Marketers need to keep SRC in mind
Americans like to have some space between people but certain cultures like
going close
Britishers like to be formal while Americans like to be a bit informal
Eg: British manufacturers of chocolate biscuits (cookies in america) ignoring its
SRC - packages its biscuits differently for the Japanese market.
International Marketing | Self Reference Criteria
 International Marketing Orientation | Ethnocentric Approach
Ethnocentric
Home country orientation - Domestic market is the best
Domestic techniques and personnel are considered superior
Overseas operations are viewed as secondary to domestic operations
Considered as a means to dispose off surplus domestic production
Plans for overseas are developed in home office, utilising policies and
procedures identical to those employed in the domestic market
Overseas marketing is looked after by home country nationals
No research is conducted overseas
No major modifications are made to products sold in overseas markets
Prices are calculated on the same basis as in the home market with the
addition of overseas distribution costs
Promotion and distribution strategies are similar to that employed in the
home country
International Marketing Orientation | Walmart Entry in Germany
Walmart Initial entry in Germany - Acquired Retailer Wertkauf(24) & Interspar (74)
Every day Low Price strategy
Buy in bulk - One shop consumer behaviour
Interiors redesigned as per Walmart style
Payment upon next shipment
Senior executives not speaking german
Germany zoning regulations < 800 Sq Meter in areas not designated for
retailing
Town council to approve the products from a local competitors perspective
Till 2003 - Weekdays - 6:30 PM, Saturdays - 8:00 PM, No sundays unless
essentials
No bargaining power to buy products at low cost from local suppliers
Investment in employees who greets people and doing in-store design also
increased costs which led to 1% profit.
International Marketing Orientation | Surf Entry in Japan

Detergents did not dissolve in wash because of weather conditions

Surf was not designed to work in low agitation washing machines
Fresh smell did not work well because clothes were dried in fresh air
 International Marketing Orientation | Polycentric

Prioritise local relevance with customer over scale

Local personnel and techniques are best suited to deal with local
market conditions
Likely to establish businesses in each target country
Full decentralisation, minimal coordination with HQ
Subsidiaries are established in overseas market
Each subsidiary operates independently with its own marketing
objectives and plans
Marketing activities are organised on country by country basis
Marketing research is conducted independently in each country
Separate product lines are developed in each country
Home country products are modified to meet local needs
Each subsidiary will have its own pricing and promotion policy
 International Marketing Orientation | Polycentric

Sales personnel from these countries

Traditional channels of distribution of those countries
Eg Mcdonalds - Veg burgers in india
No economies of scale, duplicated function, higher final product costs
To satisfy local customer needs and wants, full product modification is
implemented or separate product lines are developed
International Marketing Orientation | Regiocentrism

A regional orientation
Identifies markets based on regional commonalities and leads to the
design of regional strategies
Guided by the global marketing concept
World regions that share economic, political and / or cultural traits
are perceived as distinct markets
Strategies based on location clusters
Regional offices coordinate marketing activities
Managers have considerable freedom in decision making
International Marketing Orientation | Regiocentrism
 International Marketing Orientation | Geocentrism

A world orientation
Best man for the job irrespective of national origin
Whole world as potential market - Identifies homogeneous segments
Achieve position as low cost manufacturers and marketer of product
line
Provides standardised product or service throughout the world
Firm develops policies and organises activities on a regional or
worldwide basis
Standardised product lines for regional or worldwide markets
Regional or global channels of distribution are also developed
Analyses and manages the marketing strategies with an integrated
global marketing program
Eg: Apple / Samsung - Standardised products for worldwide market
Marketing Mix | Product
 Product Development | Standardisation Vs Adaptation
Single Product Vs Multiple Product features
Advantage of Standardization
Cost savings
Standard Advertising, Promotion, Sales
Training
Standard Corporate Image
Standard Pricing strategies
Product Attributes Includes
Physical Product
Brand Name
Accessories
After Sales Service
Warranty
Instructions to use
Packaging
Product Development | Standardisation Vs Adaptation
America

China
Product Development | Standardisation Vs Adaptation
Malaysia
Philipines

UK
 Product Development | Adaptation
Two main reasons
Comply with foreign laws
Additional Instructions Intangible
Additional features for dangerous work or
Adaptation
living environment Brand name
Promotional
Accomplish foreign marketing purposes
Adaptation -
Tangible Adaptation
Price
Modifying products physical elements
Modification -
Size
Adjusting size
Taste
Intermediaries
Packaging
- Local market
Ingredients
size up and
Color
down
 Product Development | Cultural Adaptation
Product Invention - Full product development
Product Adaptation - Only a few features
Promotion Adaptation - Promotional Strategy
change
Global Standardisation - No changes
Product Invention - VacuBot -
Japanese did not want to handle the dirt and empty in bags
Product Adaptation - Only a few features - Bahamas cannot afford
the $600 price tag.
Place Adaptation - Germans buy electronics online because stores
close early and not there on weekends. Online presence was not
there
Promotion Adaptation - Promotional Strategy change - Chinese likes
discounts and will not necessarily buy electronics products
Global Standardisation - No changes
 Product Development | Oreo Adaptation
US Centric way of product, formulation, specification, US inspired
advertising
Research found that Chinese were more of wafer eaters than biscuit
eaters - Market was huge for wafers
Oreo US flavour was more sweet
20 Prototypes were developed and tested
Value conscious Chinese customers perceived that packaging was found
to be costly - 70 cents per package was high - Package size was
reduced
Distribution changed from Hypermarkets to local grocery stores
Introduced chocolate covered wafer sticks
Educating Chinese consumers on having Oreo with milk which was a big
habit in the US consumers
Product Development | Cultural Adaptation
Product Development | Oreo Adaptation
Product Development | Oreo Adaptation
 Product Development | Oreo in India
Indian Market sales was down again
Timely acquisition of Cadburys
Relaunched as Cadburys Oreo (Campaign TLD)
10 Mn households that consumed 70% of
cream biscuits
Sold in kirana stores in addition to super
markets
Grew from 1% to 30% market share in cream
biscuits
Launched “Centre filled Chocolate” and Indias
first “Aerated Chocolate”