Transcript PowerPoint slides used in chapter 12 lecture.

Developing the Marketing Mix:
In-Depth Look at the Four Ps
Chapter 12
*based on other sources
Product
I. Product - In marketing, any good or
service, along with its perceived attributes
and benefits, that creates value for the
customer.
• General Electric is shifting its emphasis
away from goods toward services:
– 1981, sales were 85% goods/15% services
– 2000, estimated 25% goods/75% services
(Source: Neff & Citrin, Lessons from the Top, 1999, p. 344)
Product (cont’d)
A. Consumer products - personal/family use
1. Convenience products - buy often without
much thought (bread, pop, gasoline)
2. Shopping products - expend time, effort,
and energy (TV, major appliances, homes)
3. Specialty products - will buy no matter the
price or location, will accept NO substitute
(expensive jewelry, rare collectibles)
B. Industrial products - used by organizations
II. Product Line & Product Mix
A. Product line - group of related products
or services marketed by a firm.
(skis, clothing, boots, poles)
B. Product mix - the collection of items
and services a firm offers for sale.
(ski line, bicycle line, canoeing line)
III. Managing the Product Mix
A. Developing new products
1. Generating ideas
2. Screening ideas
3. Business analysis
4. Product development
5. Test marketing
6. Commercializing
Managing the Product Mix (cont’d)
B. The product life cycle
1. Introduction - Profits are usually
small
2. Growth - Profits reach a peak and
begin to decline at the end of this phase
3. Maturity - Sales peak as profits
continue to decline
4. Decline (and possibly death) - sales
fall rapidly
Sales & Profits During Product Life
Cycle
Sales
Profits
Sales & Profits
Introduction
+
0
-
Growth
Maturity
Decline
C. Extending the product life cycle
1. Increasing the frequency of use
2. Identifying new users
3. Finding new uses
4. Product modification
IV. Creating Product Identification
A. Branding
1. Brand - name, sign, symbol, design, or
combination of these used to identify a
product and distinguish it from all others
2. Brand name - part of the brand that
can be spoken
3. Types of brands
a. manufacturer brand
b. private brand
c. generic product
Branding (cont’d)
4. Brand loyalty
a. brand recognition - consumer is familiar with
the product
b. brand preference - customer will buy if it is
available
c. brand insistence - buyer accepts no substitute
5. Importance of Packaging
• Protects the product, prevents damage and spoilage
• Distinguishes product from competition
– Ben & Jerry’s® has an ecologically friendly
unbleached paperboard package for its ice cream
pints, consistent with its socially conscious mission
(Source: Ben & Jerry’s, www.benandjerrys.com)
– Act mouthwash, L’eggs nylons, L’oreal kid’s
shampoo, Mrs. Buttersworth syrup
• Labeling - identifies brand information; provides
essential product information regarding contents, size,
weight, quantity, ingredients, directions for use,
expiration date.
Pricing
I. Factors in pricing decisions
A. Price competition - set prices equal to or
lower than competitors’ prices.
B. Nonprice competition - price based on other
factors, such as quality or service
C. Consumer perceptions of price - generally a
direct relationship between price and quality
Pricing (cont’d)
II. Pricing Methods
A. Cost-oriented pricing - determine
product cost, add on a markup
B. Demand-oriented pricing - based on
demand for product
1. Breakeven analysis
2. Breakeven quantity
C. Competition-oriented pricing - consider
competitors’ prices in setting own prices
III. Product Pricing Strategies
A. Pioneer pricing -setting price for a new product
1. price skimming - high price during intro
stage of the life cycle, lower price later on
2. Penetration pricing - set low prices during
intro stage of the life cycle to achieve large
sales volume
B. Psychological pricing
1. Odd-even pricing - perception that product is
cheaper than actual price
2. Prestige pricing - price is set unusually high to
provide a quality image for product
Place (Distribution)
I. Marketing Channels
Distribution Channels: A series of
marketing entities through which goods
and services pass on their way from
producers to end users.
A. Functions of Distribution Channels
1. Ensure that products are available when and
where needed
2. Ease the flow of goods
B. Types of marketing channels
1. Producer---consumer (most services, and
industrial products)
2. Producer---retailer---consumer (bulky
products)
3. Producer---wholesaler---retailer---consumer
(tobacco, appliances, convenience goods)
4. Producer---agent/broker---wholesaler--retailer---consumer (gum, candy bars)
C. Intensity of market coverage
1. Intensive distribution
2. Selective distribution
3. Exclusive distribution
II. Wholesaling - sell to other wholesalers or
retailers
A. Services performed
(ownership, financing, promotional
assistance, transportation)
Wholesaling (cont’d)
B. Types of wholesalers
1. Merchant wholesalers - takes title of
products and resells to retailers
2. Manufacturer-owned wholesalers manufacturer owns the whole business
3. Agents and brokers - wholesaler hired
permanently, wholesaler who brings
together buyers and sellers temporarily
Wholesaling
Wholesaling
Intermediaries
Manufacturer
Merchant
Wholesalers
Full-service
Retailers or
industrial users
Customers
Agents &
Brokers
Limited service
III. Retailing
A. Types of retail stores:
• department store
• discount store
• specialty store
• convenience store
• warehouse clubs
B. Non-store retailing:
• in-home selling
• direct marketing
• vending machines
• home shopping network
• e-commerce
IV. Physical Distribution
A. Selecting modes of transportation
1. Criteria for selecting a mode of transportation include:
-Cost
-Transit time
-Availability
2. Trucks most commonly used;flexible
3. Railroads efficient for heavy products
4. Air transportation good for small, light items
5. Water transportation used for large, bulky items,
especially to international destinations
B. Choosing a warehouse location
C. Inventory management (JIT)
Promotion
I. The role of promotion - to inform, persuade, or
remind consumers and industrial users to engage in the
exchange process
A. Promotional objectives
1. Informing
2. Increasing sales
3. Stabilizing sales
4. Positioning the product
5. Building a public image
B. Promotional mix - the combination of advertising,
personal selling, sales promotion, and public relations
in promoting a product
II. Advertising - paid form of nonpersonal communication
A. Types of advertising
1. Primary-demand advertising create or increase demand for all products
in a product group
2. Selective advertising - create demand
for a specific brand
3. Institutional advertising - used to create
goodwill and favorable public image
B. Advertising Media
1. Types of media:
newspaper, magazine, radio, television, outdoor
advertising, direct mail, Internet
2. Factors influencing choice of media:
-cost
-audience reached
3. Elements of effective advertising
a. vivid, bright colors
b. catchy music, rhythmic jingle
c. sex appeal
d. use of sports starts/actors
e. appeals to your emotions
III. Personal Selling - a face-to-face
presentation to a prospective buyer
A. types of salespeople
1. Order getters
2. Order takers
B. Steps in the selling process
1. Prospecting
2. Approaching customers
3. Presenting and demonstrating
4. Handling objections
5. Closing the sale
6. Following up after the sale
IV. Sales Promotion - form of
communication that provides direct
incentives to customers
A. Consumer Sales Promotion
1. Coupons
2. Rebates
3. Free samples
4. Contests and sweepstakes
B. Promotional Goals Depend
on Type of Customer
Type of customer
Promotional goal
1. loyal to your brand  reinforce behavior, increase
consumption
2. competitor’s
 break loyalty, switch to your
customer
brand
3. brand switchers
 buy your brand more often
4. price buyers
 appeal with low prices or
add value for same price
V. Public Relations - a set of communication
activities designed to create and maintain a
favorable public image.
A. Publicity approaches - public awareness,
build positive image, counter negative news stories
B. Using publicity effectively - appearance as
news adds credibility
C. Public relations activities
- press relations
- product publicity
- public affairs
- corporate communication
- crisis management
VI. Developing the promotion mix
A. Promotional strategies
1. Push strategy - promote product to
wholesalers and retailers
2. Pull strategy - promote product directly to
consumers
B. Product characteristics