1. Marketing and Distribution
Chapter 11

2. Development of Marketing
All activities needed to generate consumer demand and to move goods and services from the producer to the consumer
History of Marketing by what the focus has been on
Production
Sales
Advertising
Consumer Sovereignty
Consumer making choices for market production
Today – How will product add to UTILITY

3. 4 Types of Utility Form Utility
Conversion of raw materials into finished products
Place Utility
Having a good or service available where a consumer wants to buy it
Time Utility
Having a good or service available when a consumer wants to buy it
Ownership Utility
Satisfaction a person receives from simply owning the good or service

4. Market Research
Process using research methods to find out what consumer WANTS
Research used to determine how to promote product
What is target Audience?
What is most effective way to reach audience?
When is Market Research done?
Beginning of Product Development
What do consumers want in a product
After development
Taste testing or product sampling
Purpose
Is there a market for the good or service
Who is our intended audience?
Do we need to change product before we offer for sale?
Immediately After release
Is advertising attracting intended buyers?
Is product working for consumers as expected?
What can we do to increase or maintain current sales?

5. Steps in Market Research
Conduct a survey
Who are users of product
Age, gender, income, education, location (urban, rural, suburban)
Questionnaire, Individual interviews, focus group discussions, online
Step 2
Test Market the product
Select small area to release the product
Track sales at various prices
If doing poorly
Alter (very costly) or Abandon the product
If doing well
Offer nationally
Very few make it to this level
Why do producers continue to make new???
Opportunity of high profit product

6. “Four Ps” of Marketing Companies will develop a marketing strategy
Details how to successfully sell product
Includes 4 Ps of Marketing
Product
Price
Place
Promotion

7. Product Market research determines
What to sell
Marketing Department also determines
Services to offer with product
Warranties
How to Package product
Size, design, color, coupons (repeat buyers), rebate offers
EX. New and Improved, Economy Size
What identification to use
Attract consumers to look at, buy, and remember a product
Uses a logo, colors, a song, etc

8. Price Ultimately decided by Supply and Demand
BUT, Producer must consider costs of
Production
Advertising
Selling
Distributing
How much profit desired
When first introduced Penetration Pricing often used
Low introduction price to lure consumers away from similar product
Another tactic is to offer coupons
If consumer satisfied, will buy again without coupon
Prices also determined by Price Leadership
One firm lowers, all others lower
One firm raises, all other raise

9. Place Where should product be sold Other considerations???
Mail, telephone, department stores, specialty shops, supermarkets, discount stores, door-to-door, or on Internet
Could be combination of many
Other considerations???
Location within a store
Cereal/Candy at children’s eye level
More expensive items at Adult eye level/Nearest door
Mail Order Catalogs/Specialty Shops
Geographic Location
Rural vs. Urban

10. Promotion
Use of advertising to inform consumers new or improved product is available
Seeks to convince to purchase new item
Type of Promotion depends on 3 factors
Product
Type of consumer company wants to attract
Amount company plans to spend
Teen Product – teen magazine or Social Media site
Credit Card Company – Usually Direct mail advertising

11. Product Life Cycle Introduction Growth Maturity Decline
Important to understand because marketing different at each stage
Introduction – product must be explained more thoroughly – Prices lower to entice buyers
Growth – Prices much higher to maximize profits
Maturity – Slightly lower prices -
Redesign Packaging
Find new uses for product
Refocus advertising

12. Distribution Movement of goods from producer to consumer
Routes are called Channels of Distribution
Very few products go from producer to consumer
Wholesalers
Purchase large quantities from producers and resell to retailers
Retailers
Businesses that sell consumer goods to the public
Popular use of E-commerce lately

13. Storage and Transportation
Also part of distribution process
Must store goods for future sales
Most retailers keep 2 or 3 month supply on hand
Transportation involves physical movement of good from producer to buyer
Must Consider:
Type of good (perishable food)
Size and weight
Speed of delivery needed (fresh food)

14. Other Distribution Channels
Club Warehouse Store
Buy limited brand and model in large quantities
Get discounted price from Manufacturer
Direct Marketing
Done through catalogs and Internet
No sales tax if catalog/internet company located in another state