Transcript Did You Know?

13
Dimensions of Marketing Strategy
McGraw-Hill/Irwin
© 2008 The McGraw-Hill Companies, Inc. All rights reserved.
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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.
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Product Strategy
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Product development
Classification
Mix
Life cycle
Identification
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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.
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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
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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
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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).
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Product Life Cycle
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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
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The 10 Most Valuable Brands in
the World
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Categories of Brands
• Manufacturer Brands
– Kellogg’s, Ford, Sony
• Private Distributor Brands
– Kenmore appliances (Sears)
• Generic Brands
– peanut butter, dog food, kitty litter
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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.
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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
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Product Quality
• The degree to which a good, service, or
idea meets the demands and
requirements of customers
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Pricing Strategy
• Four Common Pricing Objectives:
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Maximize profits and sales
Boost market share
Maintain the status quo
Survival
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Pricing Strategies
• New Product Pricing
– Price skimming
– Penetration pricing
• Psychological Pricing
– Odd/Even
– Prestige pricing
• Price Discounting
– Quantity discounts
– Seasonal discount
– Promotional discounts
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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
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Distribution Strategy
• Marketing Channels
– Retailers (Wal-Mart, Sears)
– Wholesalers (food brokers to restaurants)
– E-tailers (Amazon.com)
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Supply Chain Management
• Long-term partnerships among channel
members to reduce costs, waste, and
unnecessary movement through the
channel to satisfy customers
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Channels for Consumer
Products
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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
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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
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Physical Distribution
• Physical distribution includes all the
activities necessary to move products from
producers to customers.
– Inventory control
– Transportation
– Warehousing
– Materials handling
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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
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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
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Advertising
• A paid form of non-personal
communication transmitted through a
mass medium
– Advertising campaign
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Advertising Media
• Print media
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Newspapers
Magazines
Direct mail
Outdoor (billboards)
• Electronic media
– Television
– Radio
– Cyber ads
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U.S. Advertising Expenditures in
Millions of Dollars
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Internet Advertising
• Total revenues from internet advertising in
the U.S. increased over 30 % between
2004 and 2005 and now totals over $12.5
billion.
Source: “IAB Internet Advertising Revenue Report,” PriceWaterhouseCoopers
and the Interactive Advertising Bureau, April 2006, p. 3.
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Top 10 Product Categories for Advertising
Spending in the United States for the year 2003
Product Category
Advertising
Spending
($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
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Ten Leading National
Advertisers
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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
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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
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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
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Push and Pull Strategies
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Objectives of Promotions
• Stimulate demand
• Stabilize sales
• Inform, remind, and reinforce customers
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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
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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.
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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?
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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?
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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?
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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?
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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
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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
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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
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