Transcript Did You Know?

13
Dimensions of Marketing Strategy
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc. All rights reserved.
The Marketing Mix
• Maintaining the right marketing mix that
satisfies the target market and creates
long-term relationships with customers
Did You Know?
Domino’s Pizza delivery drivers cover 9 million
miles a week delivering 400 million pizzas a year.
Product Strategy
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Product development
Classification
Mix
Life cycle
Identification
Developing New Products
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New Idea Screening
Business Analysis
Product Development
Test Marketing
Commercialization
Did You Know?
In 2001, Microsoft planned to
spend $4 billion on R&D.
Source: Rebecca Buckman, “Window into the future,” Wall Street Journal, June 25, 2001, p. R19.
Classifying Products
• Consumer Products
– Convenience products
– Shopping products
– Specialty products
• Business Products
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Raw materials
Major equipment
Accessory equipment
Component parts
Processed materials
Industrial services
Product Line and Product Mix
• Product Line
– Closely related products
that are treated as a
unit because of similar
marketing strategy,
production, or end-use
considerations
• Product Mix
– All of the products
offered by an
organization
Colgate-Palmolive’s Product Mix
and Product Lines
Source: “Our Products,” Colgate-Palmolive (n.d.), www.colgate.com/app/Colgate/US/Corp/Products.cvsp (accessed
June 5, 2004).
Product Life Cycle
Identifying Products
• Branding
– The process of naming and identifying
products; can use a brand mark or trademark
• Packaging
– The external container that holds and
describes the product
• Labeling
– The presentation of important information on
a package
The 10 Most Valuable Brands in
the World
Categories of Brands
• Manufacturer Brands
– Kellogg’s, Ford, Sony
• Private Distributor Brands
– Kenmore appliances (Sears)
• Generic Brands
– peanut butter, dog food, kitty litter
Packaging Functions
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Protection
Economy
Convenience
Promotion
Did You Know?
While shopping, the average time a
consumer looks at a package is 2.5
seconds.
Labeling
• The content of labeling, often required by law,
may include:
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Ingredients or content
Nutrition facts (calories, fat, etc.)
Care instructions
Suggestions or use (such as recipes)
The manufacturer’s address and toll-free number
Web site
Other useful information
Product Quality
• The degree to which a good, service, or
idea meets the demands and
requirements of customers
Pricing Strategy
• Four Common Pricing Objectives:
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Maximize profits and sales
Boost market share
Maintain the status quo
Survival
Pricing Strategies
• New Product Pricing
– Price skimming
– Penetration pricing
• Psychological Pricing
– Odd/Even
– Prestige pricing
• Price Discounting
– Quantity discounts
– Seasonal discount
– Promotional discounts
Price vs. Non-Price Competition
• For the following products, indicate whether they
are sold using price competition or non-price
competition and defend your selection:
– Toyota Hybrid Prius
– Hyundai Sonata
– Porsche Cayenne SUV
– Estee Lauder Electric Intense Lipcreme
– Avon Brilliant Moisture Lip Color
– Louis Vuitton’s Murakami Handbags
– Olay Complete Moisturizing Lotion
– Toshiba Widescreen Televisions
Distribution Strategy
• Marketing Channels
– Retailers (Wal-Mart, Sears)
– Wholesalers (food brokers to restaurants)
– E-tailers (Amazon.com)
Supply Chain Management
• Long-term partnerships among channel
members to reduce costs, waste, and
unnecessary movement through the
channel to satisfy customers
Channels for Consumer
Products
Channels for Business Products
• More than half of all business products are
sold through direct marketing channels.
• Other business products may be
distributed through channels employing
wholesaling intermediaries.
– Industrial distributors
– Manufacturer’s agents
Intensity of Market Coverage
• Intensive distribution
– Makes a product available in as many outlets as
possible
• Selective distribution
– Uses only a small proportion of all available outlets to
expose products
• Exclusive distribution
– Exists when a manufacturer gives a middleman the
sole right to sell a product in a defined geographic
territory
Physical Distribution
• Physical distribution includes all the
activities necessary to move products from
producers to customers.
– Inventory control
– Transportation
– Warehousing
– Materials handling
Importance of Distribution in a
Marketing Strategy
• Distribution decisions are the least flexible
marketing decisions.
– Use committed resources
– Establish contractual relationships
– Are bound by time
The Promotion Mix
• A strong promotion program results from the
careful selection and blending of:
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Advertising
Personal selling
Publicity
Sales promotion
• Integrated marketing communications
– The process of coordinating the promotion mix
elements and synchronizing promotion as a unified
effort
Advertising
• A paid form of non-personal
communication transmitted through a
mass medium
– Advertising campaign
Advertising Media
• Print media
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Newspapers
Magazines
Direct mail
Outdoor (billboards)
• Electronic media
– Television
– Radio
– Cyber ads
U.S. Advertising Expenditures in
Millions of Dollars
Internet Advertising
• Total revenues from internet advertising in
the U.S. increased over 30 % between
2004 and 2005 and now totals over $12.5
billion.
Source: “IAB Internet Advertising Revenue Report,” PriceWaterhouseCoopers
and the Interactive Advertising Bureau, April 2006, p. 3.
Top 10 Product Categories for Advertising
Spending in the United States for the year 2003
Product Category
Advertising
Spending
($mil)
Automotive – Factory
$8,938
Auto Dealerships – Local
$4,953
Autos – Dealer Association
$4,320
Department Stores
$4,070
Motion Pictures
$3,468
Restaurant – Quick Service
$3,442
Prescription Drugs – Human
$3,226
Telephone Services – Wireless
$2,307
Direct Response Products
$1,757
Furniture Stores
$1,402
Source: “U.S. Advertising Spending Rose More than 5% in 2003, Nielson Media
Research press release, February 19, 2004, available at http://www.nielsenmedia.com
Ten Leading National
Advertisers
Personal Selling
• Direct, two-way communication with
buyers and potential buyers
• A six-step process:
Did You Know?
A typical sales call on an
industrial customer can cost
between $200 and $300 per
call
– Prospecting
– Approaching
– Presenting
– Handling objections
– Closing – asking for the order
– Following up
Publicity
• Non-personal communication transmitted
through mass media but not paid for
directly by the firm
– Presented in news story form
– Describes what a firm is doing, what products
it is launching, or other newsworthy
information
Sales Promotion
• Direct inducements offering added value or
some other incentive for buyers to enter into
an exchange
Did You Know?
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Annually, 248 billion
Store displays
cents-off coupons are
distributed, but less
Premiums
than 2% are
Sampling and demonstrations
redeemed
Coupons
Consumer contests and sweepstakes
Refunds
Trade shows
Push and Pull Strategies
Objectives of Promotions
• Stimulate demand
• Stabilize sales
• Inform, remind, and reinforce customers
Promotional Positioning
• The use of promotion to create and
maintain an image of a product in the
buyer’s mind
• A natural result of market segmentation
• Assists in product differentiation
Average Salary for Sales and
Marketing Executives, 2003
Total
Compensation
Base
Salary
Bonus Plus
Commissions
Executive
$144,653
$95,170
$49,483
Top Performer
$153,417
$87,342
$66,075
Mid-level Performer
$92,337
$58,546
$33,791
Low-level Performer
$63,775
$44,289
$19,486
$111,135
$70,588
$40,547
Average of all Positions
Source: Galea, Christine. “The 2004 compensation Survey,” Sales & Marketing Management,
May 2004, table p.29.
Solve the Dilemma
1. Design a marketing strategy for the new
product line.
2. Critique your marketing strategy in terms
of its strengths and weaknesses.
3. What are your suggestions for
implementation of the marketing
strategy?
Explore Your Career Options
• Do you think the role of
marketing will continue to be
important in the face of
increasing technological
advances?
– Should professionals such as
doctors, lawyers, and dentists
utilize marketing in the same
way that manufacturing and
retail firms do?
Additional Discussion Questions
and Exercises
1. Research and development is the process
of identifying new ideas and technologies
that can be developed into new products.
– Where do these new ideas come from?
2. Assume you have the opportunity to buy a
company that markets a product.
– Which stage of the life cycle of that product
would offer you the greatest opportunity for
profits? Why?
Additional Discussion Questions
and Exercises
3. What is the difference between a “brand mark”
and a “trademark”?
4. What are the advantages of businesses using
coupons and/or contests and sweepstakes for
sales promotion purposes?
Chapter 13 Quiz
1. In the introductory stage of a product’s life, buyers may
be charged the highest possible price for the product.
This pricing approach is called
a.
b.
c.
d.
penetrating pricing
psychological pricing
price skimming
break-even point
2. Branding may include:
a.
b.
c.
d.
the brand name
the brand mark
the trade mark
all of the above
Chapter 13 Quiz
3. Products that are purchased after the consumer has
compared competitive products are:
a.
b.
c.
d.
convenience products
shopping products
specialty products
a product line
4. Intermediaries who sell products to ultimate consumers
for home and household use rather than for resale or for
use in producing other products are:
a.
b.
c.
d.
wholesalers
retailers
merchant middlemen
agent middlemen
Multiple Choice Questions
about the Video
1. How much market share does Apple have of the
digital music devices market?
a.
b.
c.
d.
90%
60%
30%
10%
2. Which of the following is not currently offered by
Apple?
a.
b.
c.
d.
GarageBand
iMovies
iThing
iWeb