McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Chapter Thirteen Product and Distribution Strategies

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Product Development & Value Package  Value- Total Product Offer  Product Line  Product Mix  Product Differentiation

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Marketing Classes of Goods & Services  Consumer -Convenience -Shopping -Specialty -Unsought  Industrial

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Mickey Mouse’s Product Mix  Theme parks & resorts  ABC Television Network  TV & radio stations  Film studios & production  Video programs & licensing  Consumer products  Publishing

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Packaging 1)Protect 2)Attract 3)Describe 4)Explain 5)Warranties 6)Price, Value, Uses

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Seals & Deals  American Heart Association seal to Frito-Lay Heartzel in  American Dental Association, 1960s, seal to Crest.  American Academy of Pediatric Dentistry seal to Dasani flouridated water.  AAPD has a Coca Cola Foundation Grant

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Tomato Soup Pop Art  Andy Warhol Foundation licensing  Dividing line between art & commerce  Exclusively at Giant Eagle markets  st red-&-white label diversion since 1898  Run of 300,000

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Branding  Brand & Trademark   Categories -Manufacturers’/ -National -Knockoff -Dealer/Private -Generic  Equity  Loyalty  Awareness  Association

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved World’s 10 Most Valuable Brands  1. Coca-Cola  2. Microsoft  3. IBM  4. GE  5. Intel  6. Nokia  7. Disney  8. McDonald’s  9. Marlboro  10. Mercedes

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Brand Names for Drugs  No unfair claim  Be clear & different (for safety)  Elegant – end in vowel (Godiva vs. Hershey)  3 syllable maximum (4-5 for generics)  Z & X being overused  Not offensive in any language

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Market Value of A Brand Name Source: Source: Interbrand Group Billions of Dollars

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved A Good Brand Name...  Speaks directly to product’s target customers  Easy to pronounce  Attracts/motivates consumers to try it  Is memorable/sticks in customers’ minds  Is distinctive enough to protect it legally  Speaks directly to product’s target customers  Easy to pronounce  Attracts/motivates consumers to try it  Is memorable/sticks in customers’ minds  Is distinctive enough to protect it legally

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Aflack’s Duck American Family Life Assurance Co.  Since year 2000, sales up 20% & consumer awareness from 12% to 90%  (Q score higher than Energizer bunny & Ronald McDonald)  $45 M on yearly advertising  McDonald’s $680 M  Energizer bunny $1 B  Guerilla PR  Ben Affleck on Regis with Aflack Hollyducks with sunglasses  Quack attack team of 15 armed with plush ducks on Today Show Plaza

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved It’s a Faux World in 2003  Gucci shoes  $150 vs  Heel is molded plastic vs stacked leather.  Tommy kids jeans  $9 vs 35  Size on label ins written in felt tip pen.  Bulgari Chronograph watch  $135 vs 4300  Black dial (Bulgari only makes it in white) yet had a sweeping second hand.  Vuitton luggage  $400 vs 1260  Shoddy trim peeled right off.  Burberry scarf  $40 vs 60  Poorly finished edges had begun to fray.  Dior saddle bag  $200 vs 660  Missed the logo on the inside.

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Sales and Profits During the PLC

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved First Products Produced by Five Major Companies Hershey Caramels Amway No-rinse car wash Heinz Horseradish Avon Little Dot perfume set 3M Sandpaper Source: World Features Syndicate

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Consumer Choices of Best Product Innovation of ALL Time Source: American Demographics

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Classic Product Failures Failure CompanyLoss EdselCorfamVideoDiscPCjr New Coke Premier Ford Motor Co. DuPontRCAIBMCoca-Cola R. J. Reynolds $250 M $100 M $500 M $ 40 M No $ Number

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved The Supply Chain

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Channel of Distribution  Marketing Intermediaries  Wholesaler  Retailer  Brokers  Role of Intermediaries  Create Efficiency  Value vs. Cost

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Wholesale Intermediaries  Merchant Wholesalers  Rack Jobbers  Cash-and-Carry  Drop Shippers  Business to Business (B2B) XYZ Warehouse

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Retail Competition  Price  Service  Location  Selection  Entertainment

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Retail Store Distribution  Intensive  Selective  Exclusive

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved The Wheel of Retailing PassageofTime 2. Retail Outlet 1. Retail Outlet Starts 3. Retail Outlet 4. New Outlet Enters  Adds Service  Raises Prices  Better Location  Adds Service  Raises Prices  Better Location  Low Price  Limited Service  Out-of-way Location  Low Price  Limited Service  Out-of-way Location  Higher Prices  Higher Status  Higher Prices  Higher Status  Low Price  Limited Service  Low Price  Limited Service

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Signs of a Shopaholic  Shopping causes emotional distress or impairs you.  You need a shopping “fix” and it’s constantly on your mind.  It results in debt.  It results in family or marital discord.  You often buy things that go unused.  You like to shop at least once a week.

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Unusual Distribution Channels  Gas at Home Depot – 9/05  Underwear at Publix  IPod Vending Machine at Macy’s Dadeland

McGraw-Hill/Irwin  The McGraw-Hill Companies, Inc., 2002 All Rights Reserved Distribution/Storage Mode  Railroad  Motor Vehicles  Water  Pipeline  Air  Intermodal  Storage  Materials Handling