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

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

3. 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.

4. 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

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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

15. 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