1. Chapter 13 1 Creating Marketing Strategies Prepared by Norm Althouse University of Calgary Prepared by Norm Althouse University of Calgary Copyright © 2011 by Nelson Education Ltd.

2. Chapter 13 Learning Outcomes 2 1 Describe what is meant by a product. 2 Explain the stages of the product life cycle. 3 Discuss the role of pricing and the strategies used for pricing products. 4 Explain distribution and distribution channels. 5 Illustrate how supply chain management can increase efficiency and customer satisfaction. 6 Briefly list the goals of promotional strategy. 7 Discuss the elements of the promotional mix, and integrated marketing communications. 8 Identify the factors that affect the promotional mix. 9 List some of the trends in marketing. Copyright © 2011 by Nelson Education Ltd.

3. Chapter 13 Creating the Marketing Mix 3 Creating the marketing mix combines the four P’s into a concise plan that will meet or exceed the target market’s expectations Creating the marketing mix combines the four P’s into a concise plan that will meet or exceed the target market’s expectations Copyright © 2011 by Nelson Education Ltd.

4. Chapter 13 What is a Product? 4 Any good or service, along with its perceived attributes and benefits, that creates value for the customer. Any good or service, along with its perceived attributes and benefits, that creates value for the customer. Product Copyright © 2011 by Nelson Education Ltd.

5. Chapter 13 Classifying Consumer Products 5 Copyright © 2011 by Nelson Education Ltd.

6. Chapter 13 Classifying Business Products 6 Capital products Large, expensive items with a long life span that are purchased by businesses for use in making other products or providing a service. Expense items Items, purchased by businesses, that are smaller and less expensive than capital products and usually have a life span of less than one year. Copyright © 2011 by Nelson Education Ltd.

7. Chapter 13 7 Branding Brand equity: the value of company and brand names Master brand: a brand so dominant that consumers think of it immediately when a product is mentioned Brand loyalty: a consumer’s preference for a particular brand

8. Chapter 13 8 Benefits of Branding 1.Product Identification –brands allow marketers to distinguish their products from all others 2.Repeat Sales –developing brand loyalty 3.New Product Sales –brand equity fuels sales of new products

9. Chapter 13 9 Characteristics of Effective Brand Names  Easy to pronounce  Easy to recognize  Easy to remember  Short  Distinctive, unique  Describes the product  Describes the product’s use  Describes the product’s benefits  Has a positive connotation  Reinforces the desired product image  Is legally protectable in home and foreign markets

10. Chapter 13 10 Levels of Brand Loyalty Brand preference Brand recognition Brand insistence

11. Chapter 13 11 Types of Brands Dealer Brands Dealer Brands Brands that are owned by the wholesaler or retailer. Generic Products Generic Products Products that carry no brand name, come in plain containers, and sell for much less than name-brand products. Manufacturer Brands Manufacturer Brands Brands that are owned by national or regional manufacturers.

12. Chapter 13 12 The Functions of a Package Help promote the product Protect the product

13. Chapter 13 13 Labelling Focuses on a promotional theme or logo – consumer information is secondary Focuses on a promotional theme or logo – consumer information is secondary Persuasive labelling Persuasive labelling Designed to help consumers make proper product selections Designed to help consumers make proper product selections Informational labelling Informational labelling

14. Chapter 13 14 Warranties Warranty Guarantees the quality of a good or service. Guarantees the quality of a good or service. Implied Warranty Implied Warranty An unwritten guarantee that the good or service is fit for the purpose for which it was sold. An unwritten guarantee that the good or service is fit for the purpose for which it was sold. Express Warranty A written guarantee Full Warranty The manufacturer must meet certain minimum standards, including repair of defects, product replacement, or refunds.

15. Chapter 13 15 Product Development Process 6. Introduce product to marketplace 5. Test-market the new product 4. Develop the concept 3. Screen ideas/concepts 2. Develop new-product ideas 1. Set new-product goals

16. Chapter 13 The Product Life Cycle 16 Copyright © 2011 by Nelson Education Ltd.

17. Chapter 13 Strategies for Success 17 Copyright © 2011 by Nelson Education Ltd.

18. Chapter 13 Pricing Objectives 18 Value pricing Offering the target market a high quality product at a fair price and with good service. Offering the target market a high quality product at a fair price and with good service. Target return on investment Target return on investment The price of a product is set to give a company the desired profitability in terms of return on its money. Profit maximization Producing a product as long as revenue exceeds the cost of producing it. Copyright © 2011 by Nelson Education Ltd.

19. Chapter 13 How Managers Set Prices 19 A certain percentage (the markup) is added to the product’s cost to arrive at the price. A certain percentage (the markup) is added to the product’s cost to arrive at the price. Markup Pricing The price at which a product’s costs are covered, so additional sales result in profit. The price at which a product’s costs are covered, so additional sales result in profit. Breakeven Point (Breakeven Analysis) Breakeven Point (Breakeven Analysis) Copyright © 2011 by Nelson Education Ltd.

20. Chapter 13 Markup Pricing Based on Cost Markup percentage = markup amount ÷ item cost Based on Selling Price Markup percentage = markup amount ÷ selling price Note: formulas on page 399 in the textbook are incorrect 20 Copyright © 2011 by Nelson Education Ltd.

21. Chapter 13 Breakeven Analysis Fixed costs – do not vary with different levels of output Variable costs – change with different levels of output 21 Copyright © 2011 by Nelson Education Ltd Breakeven point = Total Fixed Costs (in Units)Fixed-cost contribution* *(selling price per unit minus the variable costs per unit)

22. Chapter 13 22 Breakeven Analysis $ # of Units Sold Fixed Costs Variable Costs Total Costs Total Revenue Breakeven point Profit Loss

23. Chapter 13 Product Pricing 23 Introducing a product with a high initial price and lowering the price over time Introducing a product with a high initial price and lowering the price over time Price Skimming Selling new products at low prices in the hope of achieving a large sales volume Selling new products at low prices in the hope of achieving a large sales volume Penetration Pricing Copyright © 2011 by Nelson Education Ltd.

24. Chapter 13 Product Pricing 24 Bundling Grouping two or more related products together and pricing them as a single product Odd-Even Pricing Setting a price at an odd number to connote a bargain and at an even number to suggest quality Setting a price at an odd number to connote a bargain and at an even number to suggest quality Leader Pricing Pricing products below the normal markup or below cost to attract customers to a store where they would not otherwise shop Prestige Pricing Increasing the price of a product so that consumers will perceive it as being of higher quality, status, or value Copyright © 2011 by Nelson Education Ltd.

25. Chapter 13 Distribution (Place) 25 Efficiently managing the acquisition of raw materials to the factory and the movement of products from the producer to industrial users and consumers Efficiently managing the acquisition of raw materials to the factory and the movement of products from the producer to industrial users and consumers Distribution (logistics) Distribution (logistics) Copyright © 2011 by Nelson Education Ltd.

26. Chapter 13 Marketing Intermediaries 26 Industrial Distributors Industrial Distributors Independent wholesalers that buy related product lines from manufacturers and sell them to industrial users. Wholesalers Firms that sell finished goods to retailers, manufacturers, and institutions. Agents and Brokers Agents are sales representatives of manufacturers and wholesalers, and brokers are entities that bring buyers and sellers together. Retailers Firms that sell goods to consumers and to industrial users for their own consumption. Copyright © 2011 by Nelson Education Ltd.

27. Chapter 13 Channels of Distribution 27 Copyright © 2011 by Nelson Education Ltd.

28. Chapter 13 Functions of Distribution Channels 28 Ease the flow of goods Perform needed functions Reduce the number of transactions Copyright © 2011 by Nelson Education Ltd.

29. Chapter 13 The Intensity of Market Coverage 29 Selective Distribution Selective Distribution A manufacturer selected a limited number of dealers in an area (but more than one or two) to market its products. Intensive Distribution Intensive Distribution A manufacturer tries to sell its products wherever there are potential customers. Exclusive Distribution A manufacturer selects only one or two dealers in an area to market its products. Copyright © 2011 by Nelson Education Ltd.

30. Chapter 13 Managing the logistical components of the supply chain Sourcing and procurement Production scheduling Choosing a warehouse location and type Setting up a material-handling system Making transportation decisions 30 Responsibilities of Supply Chain Managers Copyright © 2011 by Nelson Education Ltd.

31. Chapter 13 31 Transportation Decisions Criteria for Mode of Transportation Criteria for Mode of Transportation Reliability Transit Time Cost Capability Accessibility Traceability Copyright © 2011 by Nelson Education Ltd.

32. Chapter 13 32 Major Modes of Transportation Copyright © 2011 by Nelson Education Ltd.

33. Chapter 13 33 Promotion The attempt by marketers to inform, persuade, or remind consumers and industrial users to engage in the exchange process. The attempt by marketers to inform, persuade, or remind consumers and industrial users to engage in the exchange process. Promotion A set of unique features of a product that the target market perceives as important and better than the competition’s features. A set of unique features of a product that the target market perceives as important and better than the competition’s features. Differential Advantage (Competitive Advantage) Copyright © 2011 by Nelson Education Ltd.

34. Chapter 13 34 Promotional Goals 2. Getting consumers to try products 3. Providing information 4. Keeping loyal customers 6. Identifying target customers 1. Creating awareness 5. Increasing the amount and frequency of use Copyright © 2011 by Nelson Education Ltd.

35. Chapter 13 35 Integrated Marketing Communications The careful coordination of all promotional activities to produce a consistent, unified message that is customer focused. Integrated Marketing Communications Promotional Mix AdvertisingAdvertising Public Relations Personal Selling Sales Promotion Copyright © 2011 by Nelson Education Ltd.

36. Chapter 13 Factors that Affect the Promotional Mix 36 Copyright © 2011 by Nelson Education Ltd Nature of the Product Market Characteristics Available Funds Push and Pull Strategies

37. Chapter 13 Push and Pull Promotional Strategies 37 Copyright © 2011 by Nelson Education Ltd

38. Chapter 13 38 Category Management Yield Mangement Systems Help Companies Maximize their Revenues Yield Mangement Systems Help Companies Maximize their Revenues Incorporating More Technology at All Levels Trends in Marketing Outsourcing Logistics Functions Copyright © 2011 by Nelson Education Ltd.