Transcript Chapter 12 PPT - Brookville Local Schools

Chapter
12
Product and Distribution
Strategies
http://www.wileybusinessupdates.com
Learning Objectives
1
2
3
4
Explain marketing’s definition of a
product; differentiate among
convenience, shopping, and specialty
products; and distinguish between a
product mix and a product line.
Briefly describe each of the four stages of
the product life cycle with their marketing
implications.
Explain how firms identify their products.
Outline and briefly describe each of the
major components of an effective
distribution strategy.
5
Distinguish between the different
types of wholesaling intermediaries.
6
Describe the various types of
retailers and identify retail strategies.
7
Identify the various categories of
distribution channels, and discuss
the factors that influence channel
selection.
Product Strategy
Product- a bundle of physical, service, and
symbolic characteristics designed to satisfy
consumer wants
Product Categories:
Convenience products- items the consumer seeks to purchase
frequently, immediately, and with little effort
Shopping products- typically purchased only after the buyer has
compared competing products in competing stores
Specialty products- items a purchaser is willing to make a
special effort to obtain
Product Classification
Classifying Business Goods
Capital versus Expense Items
Installations- major capital items such as new factories,
heavy equipment and machinery, and custom-made
equipment
Accessory equipment- includes less expensive and
shorter-lived capital items than installations and involves
fewer decision makers
Component parts and materials- become part of a final
product
Raw materials- farm and natural products used in
producing other final products
Supplies- expense items used in a firm’s daily operations
that do not become part of the final product
Services
Different from Goods
Intangible
Perishable
Difficult to standardize
Service provider is the service
Marketing Strategy Implications
In B2B, there is a greater emphasis on personal
selling for installations and many component parts
and a concentration on quality and customer
service.
Producers of installations and component parts may
involve customers in new-product development.
Advertising is more commonly used to sell supplies
and accessory equipment.
Producers of supplies and accessory equipment
place a greater emphasis on competitive pricing
strategies.
Product Lines and Product Mix
Product line– a group of related products
marked by physical similarities or intended for a
similar market
Pepsi
Product mix– assortment of product lines and
individual goods and services a firm offers to
consumers and business users
Product Life Cycle
Product life cycle- four basic stages—
introduction, growth, maturity, and decline—
through which a successful product progresses
Stages of the Product Life Cycle
Introduction stage– firm promotes demand for its
new offering; informs the market about it; gives free
samples to entice consumers to make a trial purchase;
and explains its features, uses, and benefits.
Growth stage- sales climb quickly as new customers
join early users who are repurchasing the item.
company begins to earn profits on the new product.
Maturity stage- industry sales eventually reach a
saturation level at which further expansion is difficult.
Decline stage- sales fall and profits decline.
Implications of the Product Life Cycle
Marketer’s objective is to extend the life
cycle as long as product is profitable.
Marketers’ goals:
Increasing customers’ frequency of use
Adding new users
Finding new uses for product
Changing package sizes, labels, and product designs
Stages in New Product Development
Expensive, timeconsuming, and risky.
Only 1/3 of new
products become
success stories.
Each step requires a
“go or no-go” decision.
Product Development Stages
Stage 1: Generating ideas for new
offerings
Stage 2: Screening
Stage 3: Concept development and
business analysis phase
Stage 4: Product development
Stage 5: Test marketing
Stage 6: Commercialization
Product Failures
Product Identification
Brand- name, term, sign, symbol, design, or
some combination that identifies the products of
one firm and differentiates them from
competitors’ offerings
Brand name- part of the brand consisting of
words or letters included in a name used to
identify and distinguish the firm’s offerings from
those of competitors.
Trademark- brand that has been given legal
protection granted solely to the brand’s owner
Brand Categories
Manufacturer’s brand- brand offered and promoted by a
manufacturer. Examples: Tide, Cheerios, Windex, Fossil,
and Nike.
Private or store brand- brand that is not linked to the
manufacturer but instead carries a wholesaler’s or retailer’s
label. Examples: Sears’ DieHard batteries and Walmart’s
Ol’Roy dog food.
Family branding strategy- a single brand name used for
several related products. Examples: KitchenAid, Johnson &
Johnson, Hewlett-Packard, and Arm & Hammer.
Individual branding strategy- giving each product within a
line a different name. Examples: Procter & Gamble
products Tide, Cheer, and Dash.
Brand Loyalty
Brand recognition- consumer is aware of the brand but
does not have a preference for it over other brands
Brand preference- consumer chooses one firm’s brand
over a competitor’s
Brand insistence- consumer will seek out preferred brand
and accept no substitute for it (the ultimate degree of brand
loyalty)
Brand Equity
Brand equity- added value that a respected and
successful name gives to a product
Brand awareness- product is the first one that
comes to mind when a product category is
mentioned
Valuable Brands
Packages and Labels
Packaging affects the durability, image, and
convenience of an item and is responsible for one of
the biggest costs in many consumer products.
Packing is important in product identification and play
is an important role in a firm’s overall product strategy.
Choosing the right package is especially important in
international marketing.
Packing must meet legal requirements of all countries
in which product is sold.
Universal Product Code- bar code read by optical
scanner
Environmental impact of packaging– Sun Chips
Distribution Strategy
Distribution channel: path through which
products—and legal ownership of them—flow
from producer to consumers or business users
Physical distribution: actual movement of
products from producer to consumers or
business users
Distribution Channels
Distribution Channels Using
Marketing Intermediaries
Direct Distribution
Direct contact between producer and customer.
Most common in B2B markets.
Often found in the marketing of relatively expensive, complex
products that may require demonstrations.
Internet is helping companies distribute directly to consumer
market.
Distribution Channels Using Marketing Intermediaries
Producers distribute products through wholesalers and retailers.
Inexpensive products sold to thousands of consumers in widely
scattered locations.
Lowers costs of goods to consumers by creating market utility.
Marketing Intermediaries
Wholesaling
Wholesaler- distribution channel member that sells
primarily to retailers, other wholesalers, or business
users
Manufacturer-Owned Wholesaling Intermediaries
Owned by the manufacturer of the goods or products to control
distribution or customer service
Sales branch that stocks products and fills orders from
inventories
Sales office that takes orders but does not stock the product
Retailers
Retailer- channel member that sells goods and
services to individuals for their own use rather
than for resale
Final link of the distribution channel
Two types: store and nonstore
Non-Store Retailing
Direct response
retailing
Internet retailing
Automatic
merchandising
Direct selling
Retail Stores
Wheel of Retailing
How Retailers Compete
Identifying a Target Market
Selecting a Product Strategy
Selecting a Customer Service Strategy
Selecting a Pricing Strategy
Choosing a Location
Building a Promotional Strategy
Creating a Store Atmosphere
Retail Locations
Planned Shopping Center
Shopping Mall
Regional Mall
Lifestyle Mall
Distribution Channel Decisions
and Logistics
What specific channel will it use?
What will be the level of distribution intensity?
Selecting Distribution Channels
Complex, expensive, custom-made, or perishable products
move through shorter distribution channels involving few—
or no—intermediaries.
Standardized products or items with low unit values
usually pass through relatively long distribution channels.
Start-up companies often use direct channels because
they can’t persuade intermediaries to carry their products,
or because they want to extend their sales reach.
Distribution Intensity
Intensive distribution- firm’s products in
nearly every available outlet; requires
cooperation of many intermediaries
Selective distribution– manufacturer
selects limited number of retailers to
distribute its product lines
Exclusive distribution- limits market
coverage in a specific geographical region
Logistics and Physical Distribution
Supply chain– complete sequence of suppliers that contribute
to creating a good or service and delivering it to business users
and final consumers
Logistics– process of coordinating the flow of goods, services,
and information among members of the supply chain
Physical distribution– the activities aimed at efficiently
moving finished goods from the production line to the
consumer or business buyer
Comparison of Transportation Modes
Customer Service
Customer service standards measure the quality
of service a firm provides for its customers.
Warranties are a firm’s promises to repair a
defective product, refund money paid, or replace
a product if it proves unsatisfactory.
Internet retailers have worked to humanize their
customer interactions and deal with complaints
more effectively.