Transcript Part 4 of BD Marketing Unit

Chapters 10 & 11
Marketing: Creating,
Communicating, and Delivering
Value for Customers
McGraw-Hill/Irwin
Introduction to Business
© 2007 The McGraw-Hill Companies, Inc., All Rights Reserved.
1. QVC team papers due on Friday
2. For Monday, please read the article
“ABC: An Introduction to ERP”
3. Guest Speaker on Monday – Room 1011
4. 30-day trial paper due on Friday
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Step 3 in the Marketing Process
Construct An Integrated
Marketing Program
Marketing Unit, Slide No. 3
The Marketing Mix
• After developing a customer-driven
marketing strategy outlining the
customers the company will serve
and how it will create value for them,
the marketer must develop an
integrated marketing program that
will deliver the intended value to
target customers.
• This program consists of the firm’s
marketing mix, also known as the
4Ps of marketing.
• As shown on the left, the marketing
mix is the combination of a product’s
features and qualities, its price, the
way it is promoted and sold, and the
place at which it is sold.
Marketing Unit, Slide No. 4
Marketing Message and Product
Branding
• When a product’s marketing mix is well-designed and
properly implemented, it sends a strong marketing
message to consumers about how and why the
product will satisfy their needs better than competitors’
products.
• One means of sending a message to consumers
product branding, the process of using a unique
name, design, symbol, or other elements of the
marketing mix to identify the maker of a product and
distinguish the product from its competitors.
…continued on next slide
Marketing Unit, Slide No. 5
Marketing Message and Product
Branding (continued)
• Brand name:
- the specific name, sign, or symbol a company uses to distinguish and
legally protect the identity of its products.
• Brand loyalty:
- the tendency of consumers to consistently purchase a particular product
over time because they believe it can best satisfy their needs.
• Product positioning:
- the process of customizing or tailoring a product relative to its competitors
for a specific market segment. As mentioned earlier, the idea is to create a
superior image or identity for the product in the minds of the consumers in
the particular market segment.
Next, we explore the elements of the marketing mix in greater
detail and how these elements are blended to send a strong
marketing message to consumers.
Marketing Unit, Slide No. 6
The Marketing Mix
Product
Marketing Unit, Slide No. 7
Classifying Products
• The term “product” includes anything that can be offered to a market for
purchase, use, or consumption. Not limited to tangible goods. Includes
services, events, places, people, organizations, ideas, or any combinations
thereof.
• Can be classified as either consumer or business/industrial products.
• Consumer Products:
- Purchased for personal or household use. Fall into the three categories listed
below, based on the consumer’s buying behavior.
• Convenience products: Low-priced items bought frequently by consumers; little shopping
effort involved. Examples: milk, bread, tooth paste.
• Shopping products: Higher-priced items purchased after consumers have compared
competitive products and “shopped around.” Price, product features, quality, style, and
service can all influence purchase decision. Includes appliances, clothing, and furniture.
• Specialty products: Higher-priced that consumers are will to go to more effort to buy. Will not
accept substitutes. Examples: designer clothes, high-end jewelry, and art.
…continued on next slide
Marketing Unit, Slide No. 8
Classifying Products (continued)
• Business/Industrial Products:
- Products used directly or indirectly in the operation or
manufacturing processes of businesses or for resale.
- Several categories:
• Raw materials
• Major equipment used in production
• Accessory equipment, e.g., computers, hand tools, etc.
• Component parts
• Processed materials
• Industrial services
• Supplies
• Goods for resale
Marketing Unit, Slide No. 9
Individual Product Decisions
Marketing Unit, Slide No. 10
Product & Service Attributes
Creating Real vs. Perceived Differences
• Real differences:
- Quality/reliability
- Innovation
- Customer service
- Style and design
• Perceived differences
- Appealing to psychological
needs of consumers
- Value to consumer
Typically, companies try to
create both real and
perceived differences
between their products
and their competitors’
products.
Marketing Unit, Slide No. 11
Branding
As discussed earlier,
branding is the process of
using a unique name,
design, symbol, or other
elements of the marketing
mix to identify the maker
of a product and
distinguish the product
from its competitors.
Marketing Unit, Slide No. 12
Packaging
• Packaging is a marketing mix choice
that concerns the “look” or physical
appearance of a product when it is
presented and sold to consumers.
• Factors such as the shape, color, and
look of the packaging, and the way the
product is presented in a store display
affect consumers’ perceptions of a
product’s quality, value, etc.
• Good packaging:
- Helps market the product;
- Protects the product;
- Ensures product safety, e.g., tamper-proof
or child-proof packaging; and
- Addresses environmental concerns.
Marketing Unit, Slide No. 13
Marketing in Action
Innovative
Packaging
Dutch Boy’s packaging
innovation offers paint in
plastic containers with twist-off
tops. The paint container is
easy to carry, doesn’t need a
screwdriver to pry open,
doesn’t dribble when poured,
and doesn’t take a hammer to
bang the lid shut.
Marketing Unit, Slide No. 14
Labeling
• Printed information appearing
on or attached to the package.
• Performs several functions:
- Identifies the product or brand.
- Provides important information,
such as when and where the
product was made, the contents,
nutritional value, expiration date,
how to use it, warnings, and what
to do if a problem occurs.
- Helps promotes the sale of the
product.
Marketing Unit, Slide No. 15
Product Support Services
• In addition to the core features and benefits of the product,
firms must offer additional services and benefits. These socalled product support services create additional value for the
consumer and increase customer satisfaction.
• Can include such as items as:
-
Delivery
Disposal of original product (e.g., buying your old car)
Installation
Credit/financing
Warranty/after-sale service and repair
Product/technical support
• Sometimes product support services can be a source of
supplemental revenue for the company.
Marketing Unit, Slide No. 16
The Marketing Mix
Price
Marketing Unit, Slide No. 17
Price
• Pricing is a complex issue in the marketing mix. For example, if a
company chooses to differentiate itself based on quality, innovation,
and customer service, marketing costs increase. The company will
need to charge a higher price under these circumstances (a “more
for more” value proposition), but how much higher?
• It is marketing’s job to find out how much consumers are willing to
pay for a particular product. The target price is the price a typical
customer will be willing to pay for a product with a particular set of
qualities and features.
• How much consumers are willing to pay—the perceived value they
place on a product and how variations in price affect their demand—
are one set of factors companies use to set their prices.
• The company’s costs and its pricing objectives are two other
important factors, as are competitors’ prices.
Marketing Unit, Slide No. 18
Pricing Objectives
• There are six alternative pricing objectives. The first three are considered
profit-oriented, next two are sales-oriented, and the final one is based on the
status quo:
- Maximize profits: setting prices so that total revenue is as large as possible relative
to total costs.
- Satisfactory profits: a reasonable level of profits; reasonable or satisfactory in the
eyes of the stockholders.
- Target return on investment: the most common profit-oriented pricing objective.
Here the company tries to determine the price at which the firm will make the target
profit—usually stated in terms of return on total assets—it is seeking.
- Maximize market share: set prices so as to boost market share.
- Maximize sales: disregard profits and focus exclusively on increasing sales and
generating cash.
- Maintain the status quo: seek to maintain existing price levels or to meet the
competition’s prices.
Marketing Unit, Slide No. 19
Pricing Strategies
Pricing strategies can vary as the firm faces
different situations:
•New Product Pricing Strategies: Setting
prices when a new product is introduced is
challenge. Typically companies choose
between two broad strategies:
- Market-skimming pricing: Charging the
highest possible price buyers will pay. For
situation where companies need to generate
revenue to help offset high R&D costs and
buyers are insensitive to high prices (a “musthave” product. The original iPhone)
- Market-penetration pricing: Charging a low
price initially in order to enter a market and
quickly build market share. Intended to create
a barrier to entry to competitors.iTunes??
…continued on next slide
Marketing Unit, Slide No. 20
Pricing Strategies (continued)
• Price-Adjustment Strategies: Companies
usually adjust their basic prices to account
for various customer differences and
changing situations. For example:
- Psychological Pricing: Encourages
consumers to make purchases based on
emotional responses to price, not strictly
economics. For example:
• Prestige Pricing: Higher prices often
connote higher quality, thereby
increasing the desirability of a product.
• Odd/Even Pricing: Based on the belief
that consumers will buy more of a
product priced at $9.99 than $10,
because it seems like a bargain at the
odd price.
…continued on next slide
Marketing Unit, Slide No. 21
Pricing Strategies (continued)
• Price-Adjustment Strategies (continued):
- Discount and Allowance Pricing: Most
companies adjust their prices to reward
customers for certain responses. For example:
• Quantity discounts for buyers who
purchase large quantities.
• Seasonal discount to buyers who purchase
out-of-season to even out production
capacity.
- Promotional Pricing: Goal is to improve sales
in the short-term by advertising price reductions
on selected products. However, some
companies, most notably Wal-Mart, have
shunned promotional price discounts, in favor
of everyday low pricing, intended to generate
customer loyalty.
- Pricing/Branding story
Marketing Unit, Slide No. 22