1. Marketing- Product, Price, and Promotion 9 Chapter © 2004 by Nelson, a division of Thomson Canada Limited.

2. 2 Learning Goals 1.What is a product, and how is it classified? 2.How does branding distinguish a product from its competitors? 3.How do organizations create new products? 4.What are the stages of the product life cycle?

3. 3© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goals (cont’d) 5.What is the role of pricing in marketing? 6.How are product prices determined? 7.What are the goals of promotional strategy? 8.What is the promotional mix, and what are its elements? 9.What are the types of advertising?

4. 4© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goals (cont’d) 10.What are the advertising media, and how are they selected? 11.How does public relations fit into the promotional mix?

5. 5© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 1 What is a product, and how is it classified?

6. 6© 2004 by Nelson, a division of Thomson Canada Limited. Product: in marketing, any good or service, along with its perceived attributes and benefits, that creates value for the customer

7. 7© 2004 by Nelson, a division of Thomson Canada Limited. Tangible & Intangible Attributes Create Product Value

8. 8© 2004 by Nelson, a division of Thomson Canada Limited. Types of Products Consumer Product Effort Required Examples UnsoughtNo effortLife insurance New products ConvenienceLittle or minimumSoft drinks Bread, milk ShoppingConsiderableAutomobiles Homes SpecialtyMaximumJewelry Rare collectables

9. 9© 2004 by Nelson, a division of Thomson Canada Limited. Business or Industrial Products Capital products –large, expensive, long life span Expense items –installations –accessories –component parts and materials –raw materials –supplies –services

10. 10© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 2 How does branding distinguish a product from its competitors?

11. 11© 2004 by Nelson, a division of Thomson Canada Limited. Branding: a company’s product identifier that distinguishes the company’s products from those of competitors

12. 12© 2004 by Nelson, a division of Thomson Canada Limited. 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 Branding (cont’d)

13. 13© 2004 by Nelson, a division of Thomson Canada Limited. 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

14. 14© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 3 How do organizations create new products?

15. 15© 2004 by Nelson, a division of Thomson Canada Limited. New Product Development Process

16. 16© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 4 What are the stages of the product life cycle?

17. 17© 2004 by Nelson, a division of Thomson Canada Limited. Product Life Cycle: the pattern of sales and profits over time for a product or product category

18. 18© 2004 by Nelson, a division of Thomson Canada Limited. Stages of the Life Cycle 1.Introduction –profits are usually small or negative 2.Growth –profits reach a peak at the end of this phase 3.Maturity –profits begin to decline 4.Decline –sales and profits fall, possibly death

19. 19© 2004 by Nelson, a division of Thomson Canada Limited. Product Life Cycle

20. 20© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 5 What is the role of pricing in marketing?

21. 21© 2004 by Nelson, a division of Thomson Canada Limited. Price Indicates value Helps position a product in the marketplace Is the means for earning a fair return on investment If price is too high, the product won’t sell, and the firm will lose money If price is too low, the firm may lose money even if the product sells well

22. 22© 2004 by Nelson, a division of Thomson Canada Limited. Pricing Objectives Maximizing profits –obtain the largest possible profit from the product Target return on investment –pricing based on desired rate of return on investment Value pricing –a high quality product, at fair price, with good service

23. 23© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 6 How are product prices determined?

24. 24© 2004 by Nelson, a division of Thomson Canada Limited. Determining Price 1.Markup Pricing a percentage is added to the product cost to determine price 2.Breakeven Analysis determine the number of units needed to be sold at a given price to cover costs, with additional sales resulting in profit

25. 25© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 7 What are the goals of promotional strategy?

26. 26© 2004 by Nelson, a division of Thomson Canada Limited. Promotion: the attempt by marketers to inform, persuade, or remind consumers and industrial users to engage in the exchange process

27. 27© 2004 by Nelson, a division of Thomson Canada Limited. Goals of Promotion Create awareness Get consumers to try products Provide information Keep loyal customers Increase amount and frequency of use Identify target customers

28. 28© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 8 What is the promotional mix, and what are its elements?

29. 29© 2004 by Nelson, a division of Thomson Canada Limited. Promotional Mix: the combination of advertising, personal selling, sales promotion, and public relations used to promote a product

30. 30© 2004 by Nelson, a division of Thomson Canada Limited. Promotional Mix Advertising –any paid form of nonpersonal advertising Personal selling –face-to-face Sales promotion –includes coupons, free samples, demonstrations Public relations

31. 31© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 9 What are the types of advertising?

32. 32© 2004 by Nelson, a division of Thomson Canada Limited. Advertising: any paid form of nonpersonal promotion by an identified sponsor

33. 33© 2004 by Nelson, a division of Thomson Canada Limited. Types of Advertising Product advertising –promotes a specific good or service Comparative advertising –company’s product compared with another Reminder advertising –keeping the product name in the public’s mind Institutional advertising –promotes a company’s image Advocacy advertising –grassroots lobbying

34. 34© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 10 What are the advertising media, and how are they selected?

35. 35© 2004 by Nelson, a division of Thomson Canada Limited. Advertising Media: the channels through which advertising is carried to prospective customers

36. 36© 2004 by Nelson, a division of Thomson Canada Limited. Advertising Media Newspapers Magazines Radio Television (local and network) Outdoor Direct mail Internet

37. 37© 2004 by Nelson, a division of Thomson Canada Limited. Selection of Advertising Media Cost of the medium Audience reach –audience selectivity

38. 38© 2004 by Nelson, a division of Thomson Canada Limited. Advertising Agency Functions: –creative services –media services –research –merchandising –campaign designing and planning

39. 39© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 11 How does public relations fit into the promotional mix?

40. 40© 2004 by Nelson, a division of Thomson Canada Limited. Public Relations: any communication or activity designed to win goodwill or prestige for a company or person

41. 41© 2004 by Nelson, a division of Thomson Canada Limited. Public Relations Publicity –information about the company or product that appears in the news media not paid for by the company New Product –introducing new products and services Event Sponsorship –press coverage to reinforce brand identification

42. 42© 2004 by Nelson, a division of Thomson Canada Limited. Factors Affecting Promotional Mix Nature of product –determines media use Market characteristics –determines extent of advertising Available funds –determines use and amount of advertising

43. 43© 2004 by Nelson, a division of Thomson Canada Limited. Learning Goal 12 What are important trends in promotion?

44. 44© 2004 by Nelson, a division of Thomson Canada Limited. Trends in Promotion Building immediate brand recognition Growth of Internet auctions Growth of Web advertising