MANAGING THE MARKETING MIX: PRODUCT, PRICE, PLACE, AND PROMOTION Bus101

1. Explain the concept of a total product offer. 2. The concepts of brand name and trademark. 3. The concepts of brand equity and brand loyalty. 4. Pricing objectives and strategies 5. The concept of marketing channels and marketing intermediaries. 6. Retailing and non-store retailing. 7. Promotion and the five traditional tools Bus101

 Value: Good quality at a fair price. When consumers calculate the value of a product, they look at the benefits and then subtract the cost to see if the benefits exceed the costs.  Adapting products to new competition and new markets is an ongoing necessity.  Product development is a key activity in any modern business. Bus101

 Total product offer: Everything that consumers evaluate when deciding whether to buy something.  A successful marketer must think like a consumer and evaluate the total product offer.  Different consumers may want different total product offers, so companies may develop a variety of offerings. Bus101

 Product line: A group of products that are physically similar or are intended for a similar market.  Product mix: The combination of product lines offered by a manufacturer.  Companies must decide what mix is best. Bus101

 Product differentiation: The creation of real of perceived product differences.  Actual product differences are sometimes small, so marketers must use a creative mix of pricing, advertising and packaging to create a different image. Bus101

 Companies have used packaging to change and improve their basic product.  Packaging also helps make a product more attractive to retailers. Bus101

 Trademark: A brand that has been given exclusive legal protection for both the brand name and the pictorial design.  For the buyer, brand names assure quality, reduce search time, and adds prestige to purchases.  For sellers, brand names facilitate new-product introductions, help promotional efforts, add to repeat purchases, and differentiate products. Bus101

 Brand equity: The combination of factors—such as awareness, loyalty, perceived quality, images, and emotions– that people associate with a given brand name.  Brand loyalty: The degree to which customers are satisfied, enjoy the brand, and are committed to further purchase.  Brand awareness: How quickly or easily a given brand name comes to mind when a product category is mentioned.  Brand manager: A manager who has direct responsibility for one brand or one product line; called a product manager in some firms. Bus101

 Awareness  Preference  Necessity Bus101

Popular pricing objectives include:  Achieving a target return on investment or profit  Building traffic  Achieving greater market share  Creating an image  Furthering social objectives Bus101

Three major approaches to pricing are: 1. Cost-based pricing 2. Demand-based pricing  Bundling  Psychological pricing  Target costing 3. Competition-based pricing  Price leadership Bus101

 Break-even analysis: The process used to determine profitability at various levels of sales.  Total fixed costs: All expenses that remain the same no matter how many products are made or sold.  Variable costs: Costs that change according to the level of production. Bus101

BEP = FC/P-VC The iPod was first introduced in 2001 and has become a well known Apple product. Calculate the breakeven point for the iPod at the time it was introduced using the information in the next slide. Bus101

 The retail selling price at the time the product was introduced was $  The variable costs of the iPod were $  Fixed costs were $180,000,000. Bus101

BEP = FC/P-VC $180,000,000 __________________ $400 - $ ,000 Bus101

 Skimming price strategy: A strategy in which a new product is priced high to make optimum profit while there’s little competition.  Penetration price strategy: A strategy in which the product is priced low to attract many customers and discourage competitors. Bus101

 Everyday low pricing (EDLP): Setting prices lower than competitors and then not having any special sales.  High-low pricing strategy: Set prices that are higher than EDLP stores, but have many special sales where the prices are lower than competitors. Bus101

 Marketers tend to stress product imagine and consumer benefits such as comfort, style, convenience and durability rather than price.  The idea is that good service will enhance a relatively homogeneous product.  Few competitors can match the image of a friendly, responsive, consumer-oriented company. Bus101

 Intensive distribution: Distribution that puts products into as many retail outlets as possible.  Selective distribution: Distribution that sends products to only a preferred group of retailers in an area.  Exclusive distribution: Distribution that sends products to only one retail outlet in a given geographic area. Bus101

1. Electronic retailing: Selling goods and services to ultimate customers over the internet. 2. Telemarketing: The sale of goods and services by telephone. 3. Vending machines, kiosks, and carts 4. Direct selling: Selling to consumers in their homes or where they work. Bus101

 Promotion mix: The combination of promotional tools an organization uses.  Integrated marketing communication (IMC): A technique that combines all promotional tools into one comprehensive andunified promotional strategy. Bus101

 Advertising: Paid, non-personal communication through various media by organizations and individuals who are in some way identified in the advertising message.  Marketers must choose which media can best be used to reach the audience they desire.  Global advertising: Involves developing a product and promotional strategy that can be implemented worldwide. Bus101

 Personal selling: The face-to-face presentation and promotion of goods and services.  Internet and other technology has become a big part of personal selling.  It is costly to provide customers with personal attention, so salespeople must be trained to be effective, efficient and helpful. Bus101

 Public relations (PR): The management function that evaluates public attitudes, changes policies and procedures in response to the public’s requests, and executes a program of action and information to earn public understanding and acceptance.  Publicity: Any information about an individual, product, or organization that’s distributed to the public through the media and that’s not paid for or controlled by the seller. Bus101

 Sales promotion: The promotional tool that stimulates consumer purchasing and dealer interest by means of short-term activities.  Internal sales promotion efforts include: 1. Sales training 2. The development of sales aids 3. Participation in trade shows  Sampling: A promotional tool in which a company lets consumers have a small sample of a product for no charge. Bus101

 Companies can keep track of customers Internet purchases and can design products tailored specifically to certain customers.  Companies are tending to use traditional promotional tools less and use the Internet more.  You can search the Internet to find information on a product any time you like. Bus101

 Direct marketing: Uses direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet.  Shopping from home or work is more convenient than going to stores.  It also has disadvantages; can be costly, time consuming, and touches on privacy issues. Bus101

Chapter 16 Accounting Bus101

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