marketing: developing relationships - · pdf file · 2015-09-07marketing:...

Part 5 Marketing: Developing

Relationships

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any

manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

12-2

CHAPTER 11 Customer-Driven Marketing

CHAPTER 12 Dimensions of Marketing Strategy

CHAPTER 13 Digital Marketing and Social Networking

© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

12-3

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.

LO 12-5 Evaluate an organization’s marketing strategy plans.


12-4

The Marketing Mix The marketing mix is the part of the marketing strategy that involves decisions regarding controllable variables After selecting a target market, marketers develop

and manage the dimensions of the marketing mix to give their firm an advantage over competitors

Successful companies offer at least one dimension of the marketing mix that surpasses all competitors

These companies must also maintain acceptable, and if possible distinguishable, differences in the other dimensions as well

DID YOU KNOW? Less that 10% of new products succeed in the marketplace, and 90% of

successes come from a handful of companies © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,

duplicated, forwarded, distributed, or posted on a website, in whole or part.

12-5

Product Strategy

Product Development

Process

Thousands of new products are introduced annually, few succeed

It takes time to get a new product to market

Sometimes a product or idea is shelved, only to be returned to later


12-6

Inspiration for FedEx

While attending Yale in 1966, FedEx founder Fred Smith: Studied a

mathematical discipline called topology

Inspired his vision for creating the company

Realized potential efficiencies of connecting all points on a network through a central hub

Used what he learned to get FedEx off the ground


12-7

Developing New Products

Business Analysis

Analyze the product’s affects on sales, costs and profits

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

Idea Development New ideas come internally from marketing research or employees and from

external sources such as ad agencies, consultants and customers


12-8

Idea Development

Nike has a separate division (Nike Sport Research Lab) Scientists, athletes, engineers, and designers work

together to develop technology of the future

Teams research ideas in biomechanics, perception, athletic performance, and physiology to create unique relevant and innovative products

Final products are tested in environmental chambers with real athletes to ensure functionality and quality before being introduced in the market


12-9

Developing New Products (cont.)

Commercialization The full introduction of a complete marketing strategy and the launch of the product for commercial success

Test Marketing A trial mini-launch of a product in limited areas that

represent the potential market

Product Development The few products to reach this stage get prototypes

and the development of a marketing strategy

Many consumers did not like the taste of BlãK, and Coca-Cola discontinued

the drink in 2008 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,


12-10

ACNielsen Market Decisions


12-11

Classifying Products 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


12-12

Product Line and Product Mix

Business Products • Used directly or indirectly in the operation or manufacturing

processes of businesses

Product relationships are of key importance:

Product Line • 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


12-13

Product Life Cycle The Life Cycle of a Product

Like people, products are born, grow, mature and eventually die

With redesign or new uses, products can be reborn


12-14

Stages of the Product Life Cycle

As products pass through the four life cycle stages, they get new advertising and pricing strategies for each stage

Introductory Stage

Growth Stage

Maturity Stage

Decline Stage

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

Firms may eliminate models, cut costs and

finally phase out products


12-15

Finding New Markets for Old Products Baking soda Baking was only used for cooking and reached

maturity stage quickly

Once discovered it could be used as deodorizer, baking soda moved back into growth stage

Acer Focusses on value by offering quality products

inexpensively

Iconia One 7, 7-in tablet that looks and functions as the competition but cost significantly less

Also introduced hybrid laptop/tablet

Aiming for middle of market position for comeback © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,


12-16

Branding

Branding • The process of naming and identifying products

A brand is a name, term, symbol, design or combination that identifies a product

A brand name is the part that can be spoken and consists of letters, words and numbers

A brand mark is the part of the brand that is a distinctive design, such as McDonald’s arches

Trademark • A brand registered with the U.S. Patent and Trademark Office and

is thus legally protected from use by any other firm


12-17

Identifying Products

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


12-18

Packaging, Labeling and Product 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 © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,


12-19

General Motors Recall

♦ Service quality is judged by consumers, not the service providers

♦ It is quite common for perceptions of quality to fluctuate from year to year

♦ General Motors recalled millions of vehicles due to quality control issues

Problems included faulty ignition switches that prompted GM to issue recall on Chevy Cobalt

These recalls are having a negative impact on consumers’ perceptions of GM’s brand


12-20

Google’s Brand Value

Google is the most valuable brand worldwide Owns a variety of brands: search engine Google, web

browser Chrome, video sharing site YouTube, and social networking site Google+


12-21

Calculating the Value of a Product

o Almost anything of value can be assessed by a price o Consumers vary in their response to price o The product’s perceived value in the marketplace

added to the production costs help determine price

Calculating the Value of a Product

Source: Rafi Mohammed, “Use Price to Profit and Grow,” Forbes.com, March 25, 2010, Use Price to Profit and Grow (accessed April 15, 2012).


http://www.forbes.com/%202010/03/25/profit-gainvalue-mckinsey-sears-whirlpool-cmo-network-rafi-mohammed.html

12-22

Price and Pricing Objectives

Price is a key element in the marketing mix as

it related directly to revenue and profits

Pricing objectives specify the role of price

in an organization’s marketing mix and

strategy

Price is probably the most flexible variable; can be set or changed in a few minutes

Four common pricing objectives: maximizing profits, boosting market share, maintaining the status quo, and survival


12-23

Pricing New Products

Pricing strategies provide guidelines for achieving the pricing objectives

Pricing New Products 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


12-24

Psychological Pricing

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

Perfume and cosmetics prices are set artificially high to give the impression of superior quality


12-25

Reference Pricing and Price Discounting Reference Pricing

• A Type of psychological pricing in which a lower-priced item is compared to a more expensive brand in hopes that the consumer will use the higher price as a comparison price

Discounts • Temporary price reductions often employed to boost sales

o Quantity discounts are given for purchasing in large volumes

o Seasonal discounts are those given for purchasing goods or services out of season

o Promotional discounts attempt to improve sales by advertising price reductions on selected products; increasing customer interest and profits


12-26

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


12-27

Retailers and Wholesalers

• 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

Move products from producers to a convenient retail establishment (place utility)

Maintain hours of operation (time utility) Assume the risk of inventories (ownership

utility)

• Intermediaries who buy from producers or

from other wholesalers and sell to retailers Wholesaler


12-28

General Merchandise Retailers


12-29

Major Wholesaling Functions


12-30

Marketing Channels for Consumer Products


12-31

Intensive and Selective Distribution

A major distribution decision is how widely to distribute a product – how many and what type of outlets

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


12-32

Zoom Systems ► To saturate markets, wholesalers and many varied retailers

try to make the product available at every location where a consumer might desire to purchase it

► Zoom Systems provides robotic vending machines for products beyond candy and drinks

► Zoom has 1,500 machines in airports and hotels across the United States, some selling items such as Apple iPods, Neutrogena hair and skin products, and Sony products ♦ The vending machines accept credit cards and allow sales to

occur in places where storefronts would be impossible

► Through partnering with different companies, today’s ZoomShops sell a variety of brands, including products from Sephora, Best Buy, Macy’s, and Rosetta Stone


12-33

Exclusive and Physical Distribution

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


12-34

Transportation Transportation is the shipment of products to buyers: Railways – least expensive Motor vehicles – greater

flexibility Inland waterways – cheap

but slow Pipelines – transport

petroleum and natural gas Airways – costly but speedy

Factors affecting choice include cost, capability, reliability and availability


12-35

Warehousing and Materials Handling

Warehousing • The design and operation of facilities to receive,

store and ship products Companies can own their own warehouse, lease a

private warehouse or rent space in a public warehouse

Materials Handling • The physical handling and movement of products in

warehousing and transportation Handling processes vary significantly due to

product characteristics © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,


12-36

Packaging

Design thinking produces products that creatively solve problems that touch several people For example, medication bottles have been problematic for a long

time… Incidents of children taking medication because the bottle was easy

for them to open led to the child-proof feature of the cap design

The elderly are also affected by insufficient designs in packaging Generally they have multiple medications in their cabinets, and all

the bottles look the same and the dosage directions are difficult to read

ClearRx was designed specifically for this problem:

♦ It has a larger flat front surface where the label can be easily read and comes with colored bands so the patient can differentiate between medications based on color


12-37

Promotion Strategy Promotion encourages consumers to accept products

and influences opinions and attitudes Advertising, personal selling, publicity and sales

promotion are collectively known as the promotion mix

Integrated Marketing Communications • Coordinating the promotion mix elements and

synchronizing promotion as a unified effort

This approach results in delivery of the desired message to consumers


12-38

Advertising and Advertising Campaign

• 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

Several factors affect the campaign, including: product features, target audience, marketing objectives and the choice of media used


12-39

Advertising Campaign

A product’s features, uses, and benefits affect the content of the campaign message and individual ads

♦ Characteristics of the people in the target audience influence both content and form

♦ When Procter & Gamble promotes Crest toothpaste to children, the company emphasizes daily brushing and cavity control, whereas it promotes tartar control and whiter teeth when marketing to adults

Hot Wheels uses colorful packaging and fun

advertisements to appeal to children


12-40

Personal Selling

Personal Selling • Direct, two-way communication with buyers and

potential buyers

o Most flexible promotional method but expensive

o Three categories of salesperson: Order takers – retail sales clerks Creative salespersons –

automobiles sales Support salespersons – customer

educators © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,


12-41

Six-Step Process of Personal Selling

Personal selling is a six-step process

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


12-42

Publicity

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


12-43

How Advertising and Publicity Differ

Advertising and publicity are both carried by mass media but they differ is several ways

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


12-44

Buzz Marketing

Buzz marketing is a variation of traditional advertising where marketers attempt to create a trend

Companies seek out trend setters in a community and

get them to “talk up” their product

The idea is that accepted members

of a group have more credibility than

any form of paid communication

Works best as part of an integrated marketing plan

A related concept is viral marketing, which gets Internet users to pass on ads and promotions to others


12-45

Sales Promotion

Sales Promotion • Direct inducements offering added value or some

other incentive for buyers to enter into an exchange

Easier to measure and less expensive than advertising

Includes: store displays, premiums, samples and demonstrations, coupons, contests and sweepstakes, refunds, and trade shows

Used to enhance and supplement other forms of promotion


12-46

Push and Pull Strategies

When developing a promotion mix, companies must decide whether to push or pull the product

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

A company can use either strategy or a combination


12-47

Push and Pull Strategies (cont.) Personal selling indicates a push strategy

The exclusive use of advertising is a pull strategy © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,


12-48

Objectives of Promotion

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


12-49

The Importance of Marketing Strategy

Marketing creates value through the marketing mix o The marketing mix must be carefully integrated

into an effective marketing strategy o Companies with an effective marketing mix gain

competitive advantage o Advantages often come when a company excels

at one or more elements of the marketing mix o Companies must monitor demand and adapt the

marketing mix when needed


12-50

Solve the Dilemma Better Health with Snacks

Deluxe Chips’ Deluxos tortilla chips are the number-one selling brand in North America and its Ridgerunner potato

chips is also a market share leader ► Wants to stay on top of the market by changing

marketing strategies to: ♦ Match changing consumer needs and preferences

► As middle-aged consumers modify their snacking habits, Deluxe Chips is considering new product line of light snack food ♦ With less fat and cholesterol ♦ Targeted at 35-50 year-old consumers who want to be

more health conscious © 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned,


12-51

Solve the Dilemma Better Health with Snacks (cont.) New healthy chips:

• Will succeed if taste good and consumers may be willing to pay more

• More advertising to overcome competition

• Possible to analyze customer profiles and retail store characteristics

• Match right product with right neighborhood

• Store-specific micromarketing spend promotional dollar more efficiently

Discussion Questions

• Design a marketing strategy for the new product line.

• Critique your marketing strategy in terms of its strengths and weaknesses.

• What are your suggestions for implementation of the marketing strategy?


12-52

Discussion

? What is the product life cycle? How does a product’s life cycle stage affect its marketing strategy?

? How do publicity and advertising differ? How are they related?

? Distinguish between the two ways to set the base price for a new product.

? What does the personal selling process involve? Briefly discuss the process.


marketing: developing relationships - · pdf file · 2015-09-07marketing:...

Documents