FHF McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

part 5 FHF 12-2 Chapter 12 Dimensions of Marketing Strategy Chapter 11 Customer-Driven Marketing Chapter 13 Digital Marketing and Social Networking

FHF The Marketing Mix Keys to developing effective marketing strategy Maintain right marketing mix Satisfy target market Long-term customer relationships  Successful companies have at least one dimension of value that surpasses all others 12-3

[] FHF ProductProduct A good, service, or idea that has tangible and intangible attributes that provide satisfaction and benefit to consumers 12-4 The most visible variable of the marketing mix

FHF Developing New Products  Idea development  New idea screening  Business analysis  Product development  Test marketing  Commercialization 12-5

FHF Product Development Process 12-6

FHF Classifying Products: Consumer Products Convenience Products  Purchased without doing research into price  Widely available  Often for immediate consumption  Example: A gallon of milk 12-7 …continued on next page

FHF Classifying Products: Consumer Products Shopping Products  Consumer has compared competitors’ prices and has shopped around done  Price, features, quality, style, service and image all influence the decision to buy  Example: clothing, furniture 12-8 …continued on next page

FHF Classifying Products: Consumer Products Specialty Products  Require the greatest level of research and shopping effort  Not willing to accept substitutes  Consumers know exactly what they want and go out of their way to find it  Price not the strongest consideration  Example: designer clothing, art, antiques 12-9

FHF Classifying Products: Business Products  Used directly or indirectly in the operation or manufacturing processes of a business  Raw materials  Major equipment  Accessory equipment  Component parts  Processed materials  Industrial services 12-10

FHF Product Line and Product Mix Product Line  Group of closely related products that are treated as a unit because of a similar marketing strategy, production, or end-use Product Mix  All the products offered by the company 12-11

FHF The Product Life Cycle 12-12

FHF Identifying Products Branding  The process of identifying products  Name  Term  Symbol  Design Trademark A brand registered with U.S. patent and trademark office Protected from use by any other firm 12-13

FHF Brand Categories  Manufacturer Brands  Initiated and owned by the manufacturer to identify products from production to point of purchase  Private Distributor Brands  Cost less than manufacturer brands; owned and controlled by wholesaler or retailer  Generic Products  No brand name often come in simple packages and carry their generic name 12-14

FHF The Most Valuable Global Brands 12-15

FHF PackagingPackaging External container that holds & describes the product  Protection  Economy  Convenience  Promotion 12-16

FHF LabelingLabeling The presentation of important information on the package (often by law) Ingredients or content Nutrition facts (calories, fat, etc.) Care instructions Suggestions or use (such as recipes) The manufacturer’s address and toll-free number Website Other useful information 12-17

[] FHF Product Quality The degree to which a good, service, or idea meets the demands and requirements of customers 12-18

FHF Pricing Strategy Four Common Pricing Objectives 1. Maximize profits and sales 2. Boost market share 3. Maintain the status quo 4. Survival 12-19

FHF Specific Pricing Strategies New Product Pricing  Price skimming  Penetration pricing Psychological Pricing  Even/odd  Symbolic/prestige pricing Price Discounting  Quantity discounts  Seasonal discount  Promotional discounts 12-20

FHF Premium Pricing in the Pet Market  Consumers in the U.S. spend more on pets than on music, movies and video games combined  Dog segment is largest in the pet market  Dog owners spend over $2,500 on their dogs annually  Many pet owners are willing to pay a premium for natural dog food and products  17 million premium pet households in the U.S.  Complete Natural Nutrition is a premium pet food company 12-21

FHF Distribution Strategies Marketing Channel  A group of organizations that moves products from their producer to consumers Retailers  Buy products from manufacturers and sell them to customers for uses other than resale  Many now compete online Wholesalers  Intermediaries that buy from producers or other wholesalers and sell to retailers  Also called middlemen 12-22

FHF Supply Chain Management Creates alliances between channel members  Channels for consumer products  Channels for business products  More likely to be direct marketing channels 12-23

FHF Channels for Consumer Products 12-24

FHF Intensity of Market Coverage  Depends on buyer behavior, the nature of the target market and competition Intensive  Makes a product available in as many outlets as possible Selective  Uses only a small proportion of all available outlets to expose products Exclusive  Exists when a manufacturer gives a middleman the sole right to sell a product in a defined geographic territory 12-25

FHF Physical Distribution  Includes all the activities necessary to move products from producers to customers  Inventory control  Transportation  Warehousing  Materials handling 12-26

FHF Physical Distribution Transportation  The shipment of products to buyers  Railroads, trucks, air and pipelines  Factors to consider are: cost, capability to handle the product, reliability and availability Warehousing  Design and operation of facilities to receive, store and ship products Materials Handling  Physical handling and movement of products in warehouses and transportation  Can increase efficiency and reduce costs 12-27

FHF Distribution Strategy  The least flexible element of marketing mix  Commits resources and establishes contractual relationships  Difficult to change  Expansion into new markets may require new distribution strategy 12-28

FHF Promotion Strategy  Goal is to communicate with individuals, groups and organizations  Encourages marketing exchanges  Used to influence opinions and attitudes toward organizations, people, or causes 12-29

FHF The Promotion Mix  Advertising  Personal Selling  Publicity  Sales Promotion 12-30

[] FHF Integrated Marketing Communication The process of coordinating the promotion mix elements and synchronizing promotion as a unified effort 12-31

FHF AdvertisingAdvertising  A paid non-personal communication communicated through mass media  Advertising campaign involves designing a series of advertisements and positioning them to reach a target audience  Online advertising is increasing 12-32

FHF Advertising Campaign  Designing a series of ads and placing them in various media to reach a particular target audience  Product’s features, uses and benefits affect the message  Characteristics of the target audience influence content and form  Advertisers use words, symbols and forms familiar to the target audience to communicate effectively 12-33

FHF Online Advertising Ray-Ban’s Official Website Features a Virtual Mirror Advertising Campaign Encourages marketing exchanges Used to influence opinions and attitudes toward organizations, people, or causes 12-34

FHF Personal Selling  Direct two-way communication with buyers/potential buyers Avon Avon uses personal selling  Targets women as customers and salespeople  Personal interaction with customers  Salespeople earn commissions  Flexible hours  The internet is an increasingly important component 12-35

FHF Personal Selling is a Six-step Process 1. Prospecting 2. Approaching 3. Presenting 4. Handling objections 5. Closing 6. Following up 12-36

FHF PublicityPublicity A non-paid, non-personal communication through mass media channels  Mainly informative or descriptive  News story forms  Can be extremely important for a company  Buzz marketing : marketers attempt to create a trend through publicity 12-37

FHF Sales Promotion Direct inducements such items as coupons, contests and free samples to persuade buyers to purchase products Stimulates customer purchasing Enhances other promotional efforts Generally less expensive than advertising 12-38

FHF Promotion Strategies 12-39

FHF Objectives of Promotion Promotion is only one element of the marketing strategy  Must be tied to goals of firm  Stimulate demand  Stabilize sales  Inform  Remind  Reinforce customers Promotional Positioning  To create and maintain an image of a product in buyers’ minds 12-40