Transcript Producing and Distributing Goods and Services

Chapter
Producing and Distributing Goods and Services
4P: Product and Placement
Course: BUS 101
Lecturer: NNA
Classifying Goods and Services
Consumer products are products
and services for personal
consumption.
Classifications:
Convenience products
Shopping products
Specialty products
Ch 8 -2
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Consumer products
Convenience products are consumer products
and services that the customer usually buys
frequently, immediately, and with a minimum
comparison and buying effort.
• Newspapers
• Candy
• Fast food
Ch 8 -3
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Consumer products
Shopping products are consumer products and
services that the customer compares carefully on
suitability, quality, price, and style.
• Furniture
• Used cars
• Appliances
Ch 8 -4
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Consumer products
Specialty products are consumer products and
services with unique characteristics or brand
identification for which a significant group of
buyers is willing to make a special purchase effort.
• Specialist medical services
• Designer clothes
• High-end electronics
• Expensive cars
Ch 8 -5
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Classifying Business Goods
Business products are products purchased for
further processing or for use in conducting a
business.
Classification:
installations,
accessory equipment,
Component parts and materials,
raw materials,
supplies.
Ch 8 -7
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Classifying Business Goods
Installations are
Major capital items.
Expensive and
often involve buyer and seller negotiations that
may last for more than a year before a purchase
actually is made.
factories, offices, heavy machinery
Ch 8 -8
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Classifying Business Goods
Accessory equipment
also includes capital items,
Less expensive and
Shorter lived than installations
Involve fewer decision makers.
Examples : fax machines.
Classifying Business Goods
Materials and component parts are
finished business goods that become
part of a final product
•small motors, tires
Raw materials are farm and natural
products used in producing other
final products
• milk, iron ore, leather, and soybeans.
Classifying Business Goods
Supplies and services Supplies are items used
in a firm’s daily operation that do not become
part of the final product.
Operating supplies: paper, pencil
Repair and maintenance items: paint, nails
Business services: window cleaning, computer
repair
Classifying Services
B2B: Business to Business service
B2C: Business to Consumer service
services can also be convenience (Maid), shopping
(Dentist), or specialty (Lawyer)
Characteristics of Services
• Intangible: Can’t be touched or physically felt
• Inseparable: the service provider is the service; the two
are inseparable in the buyer’s mind
• Perishable: firms cannot stockpile service in inventory
• Difficult to standardize: must meet individual
customers’ needs
Product Lines and Product Mix
Product line group of
related products that are
physically similar or are
intended for the same
market.
Product mix company’s
assortment of product
lines and individual
offerings
Baby Gap is just one of the
product lines offered by the
Gap clothing chain. The retail
group also offers traditional
Gap casual clothing, Old
Navy’s stylish but low-priced
line, and Banana Republic’s
upscale clothing.
Product Mix and Product line
Product Mix (Samsung)
Product Line Samsung TV
LED
LCD
Flat
Product line Samsung Mobile
Galaxy
Guru
Metro
Product Life Cycle PLC)
Product Life-Cycle Strategies
2. Introduction Stage
• Slow sales growth
• Little or no profit
• High distribution and
promotion expense
Dreyer’s, the largest ice cream maker in the
United States, promoted an essay contest
as a first step to giving away 1,500 free ice
cream parties to get people to try its lowerfat ice cream called Slow Churned
Ch 9 -16
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Product Life-Cycle Strategies
3. Growth Stage
• Sales increase
• New customers
• New competitors enter the
market with similar offerings
• Price stability or decline to
increase sales
• Profits increase
Ch 9 -17
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Product Life-Cycle Strategies
4. Maturity Stage
• Sales slows down
• Increase product
availability
• Weaker competitors
leave the market
• Price reduces
• Firms concentrate on
capturing competitors’
customers
• Aggressive promotion
Ch 9 -18
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Cell phone network companies in Bangladesh
are continuously promoting their product to
capture competitors’ customers
Product Life-Cycle Strategies
5. Decline Stage
• Competitors gradually
exit
• Decline stage is caused
by
• Product innovation
• shift in consumer
preferences
• Technological change
Ch 9 -19
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Due to technological change,
vcr and floppy became extinct
and cd ‘s product life cycle
became in the declined position
Stages in New-Product Development
Generate new product ideas
Screening
Concept development and business analysis
Product development
Test marketing
Commercialization
The New-Product Development Process
i) Generate new product ideas is the systematic
search for new-product ideas.
• Sources of new-product ideas:
a. Internal: Gathering new product ideas by-
Own employees
Research scientists
b. External: Gathering new product ideas from-
Ch 9 -21
Distributors
Suppliers
Inventors outside the firm
Customers (most successful source)
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The New-Product Development Process
ii) Idea Screening Screening new-product ideas
to spot good ideas and drop poor ones as soon
as possible
iii) Concept Development and Business analysis:
further screening occurs
•Concept testing—marketing research designed to
solicit initial consumer reaction to new-product ideas
•Focus groups are formal sessions in which
consumers meet with marketers to discuss what they
like or dislike about current products and perhaps
test or sample a new offering to provide some
immediate feedback.
The New-Product Development Process
iv) Product development involves
the creation and testing of one
or more physical versions by the
R&D or engineering
departments.
v) vii) Test marketing provides the
marketer with experience in
testing the product and entire
marketing program before full
introduction.
Ch 9 -23
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Test marketing: KFC
test marketed its new
Kentucky Grilled
Chicken product for
three years before
rolling it out
nationally.
The New-Product Development Process
vi) Commercialization: the product is made
generally available in the marketplace
• Sometimes this stage is referred to as a product
launch
Product Identification
A major aspect of developing a successful new
product involves methods used for identifying a
product and distinguishing it from competing
offerings.
Both tangible goods and intangible services are
identified by brands, brand names, and
trademarks
Product Identification
brand is a name, term, sign, symbol, design, or
some combination thereof used to identify
the products of one firm and to differentiate
them from competitive offerings.
A brand name is that 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
Selecting an Effective Brand Name
Brand name must beEasy to pronounce, recognize and remember
(advertising campaign of EZ (easy) failed coz in Britain
Z is pronounced as Zed)
Convey the right image to the buyer (Dove soap gives
an impression of mildness)
Legally protectable (brand names cannot contain
words in general use, such as television or
automobile)
Brand Categories
manufacturer’s (or national) brand: A brand
offered and promoted by a manufacturer. E.g.
Tide, Reebok
A private (or store) brand identifies a product
that is not linked to the manufacturer but
instead carries a wholesaler’s or retailer’s label.
E.g. Wal-Mart chicken
Brand Categories
A family brand is a single brand name used for
several related products. E.g. Johnson &
Johnson
an individual branding strategy by giving each
product within a line a different name. e.g.
Procter & Gamble has individual brand names
for its different laundry detergents, including
Tide, Cheer, and Dash
Brand Loyalty
Brand Loyalty Marketers measure brand loyalty
in three stages:
Brand recognition is brand acceptance strong
enough that the consumer is aware of the brand,
but not strong enough to cause a preference over
other brands.
Brand preference occurs when a consumer chooses
one firm’s brand over a competitor’s
Brand insistence is the ultimate degree of brand
loyalty, in which the consumer will accept no
substitute for a preferred brand
Brand Equity
Brand Equity the added value that a respected
and successful name gives to a product.
Brand awareness means the product is the first one
that comes to mind when a product category is
mentioned.
Distribution Strategy: Distribution
Channels
direct distribution channel which carries goods
directly from producer to consumer or business
user
Distribution Channels Using Marketing
Intermediaries: distribution channels that
involve several different marketing
intermediaries. A marketing intermediary (also
called a middleman) is a business firm that
moves goods between producers and
consumers or business users.
Wholesaling
Wholesaler distribution channel member that
sells primarily to retailers, other wholesalers,
or business users.
Manufacturer-Owned Wholesaling
Intermediaries: A manufacturer’s marketing
manager may decide to distribute goods directly
through company owned facilities to control
distribution or customer service.
Wholesaling
Independent Wholesaling Intermediaries
Merchant wholesalers, like apparel wholesaler
WholesaleSarong.com, are independently owned
wholesaling intermediaries that take title to the goods
they handle
• full-function merchant wholesaler provides a complete
assortment of services for retailers or industrial buyers, such as
warehousing, shipping, and even financing
• A limited-function merchant wholesaler also takes legal title to
the products it handles, but it provides fewer services to the
retailers to which it sells.
agents and brokers: They may or may not take
possession of the goods they handle, but they never
take title, working mainly to bring buyers and sellers
together
Retailing
Retailer: channel member that sells goods and
services to individuals for their own use rather
than for resale.
Non-store Retailers
Store retailers
Types of Store Retailers
• Specialty store:
– Sells complete set of
narrow line of
merchandise
• Convenience store:
– Only staple products
– Long hours
– Easy to access locations
Types of Store Retailers
• Warehouse club:
– Warehouse style stores
– Discount for
membership card
holders
• Discount store:
– Products sold in discount
prices
Types of Store Retailers
• Supermarket
– Large self service retailer
• Factory outlet:
– Manufacturer owned shops
– sell overproduced products
– sell for inventory clearance
at discounted price
Types of Store Retailers
• Department stores:
– Offers a wide variety of products in
different department
• Supercenter
– Giant stores selling
foods and general
merchandise
How retailers compete
Identifying a Target Market
Selecting a Product Strategy
Shaping a Customer Service Strategy
Selecting a Pricing Strategy
Choosing a Location
Building a Promotional Strategy
Creating a Store Atmosphere
Distribution Intensity
Intensive distribution involves placing a firm’s
products in nearly every available outlet.
suits low-priced convenience goods such as milk,
newspapers, and soft drinks.
requires cooperation by many intermediaries, including
wholesalers and retailers, to achieve maximum coverage.
Selective distribution is a market-coverage strategy
in which a manufacturer selects only a limited
number of retailers to distribute its product lines.
can reduce total marketing costs
establish strong working relationships within the channel.
Distribution Intensity
Exclusive distribution, at the other end of the
continuum from intensive distribution, limits
market coverage in a specific geographical
region.
suits relatively expensive specialty products such as
Rolex watches
Retailers are carefully selected to enhance the
product’s image to the market and to ensure that
well-trained personnel will contribute to customer
satisfaction.