Marketing: Developing Relationships Part 5 Marketing: Developing Relationships © 2015 McGraw-Hill Education.

CHAPTER 11 CHAPTER 12 CHAPTER 13 Customer-Driven Marketing Dimensions of Marketing Strategy CHAPTER 13 Digital Marketing and Social Networking

Learning Objectives LO 12-1 Describe the role of product in the marketing mix, including how products are developed, classified, and identified. LO 12-2 Define price and discuss its importance in the marketing mix, including various pricing strategies a firm might employ. LO 12-3 Identify factors affecting distribution decisions, such as marketing channels and intensity of market coverage. LO 12-4 Specify the activities involved in promotion as well as promotional strategies and promotional positioning.

Analyze the product’s affects on sales, costs and profits Product Strategy Idea Development New ideas come internally from marketing research or employees and from external sources such as ad agencies, consultants and customers New Idea Screening Screening involves management looking at the company’s resources and its ability to produce and market the product; most ideas are rejected in this phase Business Analysis Analyze the product’s affects on sales, costs and profits Product Development The few products to reach this stage get prototypes and the development of a marketing strategy Test Marketing A trial mini-launch of a product in limited areas that represent the potential market Commercialization The full introduction of a complete marketing strategy and the launch of the product for commercial success

Product Strategy Products are classified as consumer or business products Consumer products are products intended for household or family use Convenience Products – items bought frequently with no planning, such as eggs, milk, bread and newspapers Shopping Products – purchased after consumer has “shopped around” Specialty Products – require greater research and shopping effort; consumers unwilling to accept a substitute Business Products Used directly or indirectly in the operation or manufacturing processes of businesses

Product Strategy Product Line Product Mix A group of closely related products that are treated as a unit because of similar marketing strategy, production or end-use considerations Product Mix All the products offered by an organization Introductory Stage Growth Stage Maturity Stage Decline Stage Firms may eliminate models, cut costs and finally phase out products Marketers focus on making consumers aware of the product and its benefits The firm tries to strengthen its market position by emphasizing benefits Severe competition and heavy costs

Private Distributor Brands Product Strategy Branding The process of naming and identifying products Trademark A brand registered with the U.S. Patent and Trademark Office and is thus legally protected from use by any other firm Manufacturer Brands Initiated and owned by the manufacturer to identify products from the point of production to the point of purchase Private Distributor Brands May cost less than manufacturer brands, they are owned and controlled by a wholesaler or retailer Generic Products Products with no brand name that often come in simple packages and carry only their generic name

Product Strategy Quality The external container that holds and describes the product; influences consumers’ attitudes Performs several functions: protection, economy, convenience and promotion Packaging The presentation of important information on a package; closely associated with packaging Contains information required by law such as ingredients, nutrition facts, warnings, instructions and manufacturer’s address Labeling Quality The degree to which a good, service or idea meets the demands and requirements of customers

Pricing Strategy Pricing New Products Discounts Price Skimming is charging the highest possible price buyers who want the product will pay Penetration price is a low price designed to help a product enter the market and gain market share rapidly Psychological Pricing encourages purchasing based on emotional rather than rational responses to price Even/Odd Pricing assumes people will buy more of a product for $9.99 than $10 because it seems to be a bargain at the odd price Symbolic/Prestige Pricing assumes that high prices connote high quality Discounts Temporary price reductions often employed to boost sales

Distribution Strategy Marketing Channel A group of organizations that moves products from their producer to customers; also called a channel of distribution Middlemen, or intermediaries, are organizations that bridge the gap between a product’s manufacturer and the ultimate consumer Makes products available to customers when and where they desire to purchase them Middlemen create time, place and ownership utility Intermediaries who buy products from manufacturers (or other intermediaries) and sell them to consumers for home and household use rather than for resale or for use in producing other products Retailers Intermediaries who buy from producers or from other wholesalers and sell to retailers Wholesaler

Distribution Strategy Intensive Distribution A product is made available in as many outlets as possible Used for frequently purchased items Selective Distribution Only a small number of all available outlets are used to expose products Used most often when consumers buy only after shopping and comparing price, quality and style Exclusive Distribution The awarding by a manufacturer to an intermediary of the sole right to sell a product in a defined geographic territory Includes high-quality merchandise Physical Distribution All the activities necessary to move products from producers to customers – inventory control, transportation, warehousing and materials handling Both goods and services require physical distribution Warehousing The design and operation of facilities to receive, store and ship products Materials Handling The physical handling and movement of products in warehousing and transportation

Integrated Marketing Communications Promotion Strategy Integrated Marketing Communications Coordinating the promotion mix elements and synchronizing promotion as a unified effort A paid form of non-personal communication transmitted through a mass medium, such as television commercials or magazine advertisements Advertising Designing a series of advertisements and placing them in various media to reach a particular target market Advertising Campaign

Promotion Strategy Personal Selling Direct, two-way communication with buyers and potential buyers Prospecting: identifying potential buyers Approaching: referral or cold call Presenting: demonstrating the product Handling Objections: countering reasons for purchase Closing: asking for a purchase Following Up: checking back after purchase

Promotion Strategy Sales Promotion Publicity Non-personal communication transmitted through mass media but not paid for directly by the firm Message is presented as a news story and the company is not seen as the originator of the message Most companies have a public relations department trying to gain favorable publicity and minimize negative publicity Purpose Advertising in informative, persuasive, or both; publicity is informative Impact Advertising calls for action; publicity rarely does Cost Companies pay for advertising; publicity is free Duration Advertising is repeated often; publicity appears once Sales Promotion Direct inducements offering added value or some other incentive for buyers to enter into an exchange

Promotion Strategy Push Strategy Pull Strategy An attempt to motivate intermediaries to push the product down to their customers Uses promotion to create consumer demand so consumers exert pressure on marketing channel members to make it available Push Strategy Pull Strategy Typical objectives of promotion Stimulate Demand Often through ads and sales promotion, particularly important when using a pull strategy Stabilize Sales Decreasing sales call for sales promotions and ads Inform, remind and reinforce customers Promotional positioning uses promotion to create and maintain an image of a product in buyers’ minds