Chapter 12

1
Chapter 12 Developing the Marketing Mix
2
Chapter 12 Learning Goals

• What is the role of the product in the marketing
  mix, and how are products classified and
  developed?
• What are the stages of the product life cycle?
• What strategies are used for pricing products?
• Describe the distribution channels and the manner
  in which they are organized.

3
Chapter 12 Learning Goals (contd.)

• What are the functions of physical distribution?
  
• Explain the promotional mix and its primary
  elements.
• Describe the trends affecting elements of the
  marketing mix.

4
Product

• Good of service that creates value
• Attributes
• Tangible
• Intangible
• Types
• Consumer
• Business

5
Tangible Intangible Attributes
Imageof store
Serviceafter sale
Warranty
Product type of material, size, shape, smell
Color
Attach-ments
Imageof brand
Pack-aging
Instruc-tions
Create value for the buyer
6
Types of Consumer Products

• Based on the amount of effort consumers are
  willing to exert to obtain the product
• Unsought products
• Convenience products
• Shopping products
• Specialty products

7
Types of Consumer Products, cont.
8
Types of Business Products

• General Types capital products, expense items
• Further Classifications
• Installations
• Accessories
• Components
• Raw materials
• Supplies
• Services

9
Branding

• Brand product identifier
• Trademark legally protected design, name, etc.
• Benefits
• Product identification
• Repeat sales
• New product sales

10
Types of Brands

• Manufacturer Brands
• Nike
• Liz Claiborne
• Dealer Brands
• Kenmore
• Craftsman
• Generic Products
• No Name (garbage bags, paper towels)

11
Packaging

• Why is packaging so important?
• Distinguishes the product from the competition
• Increases its customer value
• Provides protection
• Promotes the product

12
Creating New Products
1. Set new product goals
2. Develop new product ideas
3. Screen ideas/concepts
4. Develop the concept
5. Test-market the new product
6. Introduce the product to the marketplace
13
Product Successes vs. Failures

• Successes
• aspirin tablet (1900)
• laminated safety glass (1909)
• adhesive tape (1925)
• latex paint (1941)

• Failures
• New Coke (1985)
• Apple Newton (1993)
• disposable dress (1966)
• Ford Pinto (1970)

Source Consumer Reports, Jan. 2000, pp. 14-17.
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Creating New Products

• Some new products that incorporate human factors
  engineering
• DaimlerChryslers Neon 2000 has higher placement
  of manual window cranks
• Maytag offers an easy-to-load front-loading
  washer
• warehouse lift trucks that improve operator
  visibility by facing sideways
• coil tubing units that reduce the complexity and
  work of oil drilling

Source Fortune, Mar. 1, 1999, pp. 164B-D.
15
Product Life Cycle

• Introduction
• Growth
• Maturity
• Decline (and death)
• Need to revisit the marketing mix as a product
  moves through its life cycle

16
Sales Profits During Product Life Cycle
SalesProfits
Introduction
Growth
Maturity
Decline
Sales Profits
0-
17
Pricing Strategies

• Price Skimming
• High ? Low
• Penetration Pricing
• Low price in hopes of large sales volume
• Odd-Even Pricing
• Odd Bargain
• Even Quality
• Prestige Pricing
• Increase Price

18
Distribution

• Role of Distribution Channels
• Reduce number of transactions
• Ease the flow of goods
• account numbers help keep track of goods
• individual digits can indicate type of account,
  locations addresses, delivery routes
• 15-digit numbers provide a quadrillion unique
  combinations (Source Fortune, Sept. 28, 1998, p.
  66)
• Perform needed functions

19
Distribution, cont.

• What entities are involved in the distribution
  channel?
• Marketing Intermediaries
• Agents Brokers
• Industrial Distributors
• Wholesalers
• Retailers

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Types of Retailers

• Non-store
• vending machine
• direct selling
• direct-response marketing
• home shopping network
• e-commerce

• In-store
• department store
• specialty store
• variety store
• convenience store
• supermarket
• discount store
• factory outlet

21
How do channels organize and cover markets?

• Vertical Marketing Systems
• Corporate distribution system
• Administrative distribution system
• Contractual distribution system
• Market Coverage Intensity
• Exclusive distribution
• Selective distribution
• Intensive distribution

22
Physical Distribution

• Have to be able to get products to consumers in a
  timely manner
• Choose the location and type of warehouse
• Storage warehouse vs- distribution center
• Set up a materials handling system
• Choose the mode of transportation
• Criteria for selecting a mode of transportation
  include
• Cost, transit time, reliability, capability,
  accessibility, traceability

23
Comparing Modes of Transportation
Highest Lowest Relative cost air truck rail p
ipe water Transit time water rail pipe truck air R
eliability pipe truck rail air water Capability wa
ter rail truck air pipe Accessibility truck rail a
ir water pipe Traceability air truck rail water pi
pe
24
Promotion Strategy

• Convince consumers the product has a differential
  advantage
• Components of the Promotional Mix
• Advertising
• Personal Selling
• Sales Promotion
• Public Relations

25
Advertising

• Nonpersonal presentation that is paid for
• Acquaints potential customers with the product
• Advertising Media
• Newspaper, magazines, radio, TV, outdoor
  advertising, internet, direct mail
• Factors that influence media choice
• Cost
• Reach
• Frequency

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Personal Selling

• Face-to-Face Presentation
• Steps in the selling process
• Prospecting
• Approaching customers
• Presenting Demonstrating
• Handling objections
• Closing the sale
• Following up on the sale

27
Sales Promotion

• Events to stimulate buying
• Coupons, contests, displays, free samples,
  demonstrations, shows
• Marketed to
• The ultimate consumer
• Members of the marketing channel
• The objective of event depends on the behavior of
  the target market

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Promotional Goals Dependon Type of Customer
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Public Relations

• Communication or activity designed to bring
  goodwill or prestige to the company
• Press releases
• Product publicity
• Good or Bad
• Corporate communication
• Public affairs
• Lobbying
• Employee investor relations
• Crisis management

30
Factors That Affect the Promotional Mix

• Nature of the product
• Market characteristics
• Available funds
• Push and pull strategies

31
Trends

• Mass customization
• Superior customer service
• Makes use of technology
• Service distribution
• Decrease wait times
• Manage service capacity
• Improve delivery
• Increase time available
• Increase customer convenience
• Integrated Marketing Communications
• Consistent message that is customer focused

32

• Review
• Product
• Types
• Branding
• Packaging
• Developing
• Life Cycle
• Pricing Strategies
• Distribution
• Intermediaries and the channels they use
• Promotional Mix
• Trends
• Looking Ahead
• Exam 5 Chapters 11 12