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ipptchap012.pptxPart 5
Marketing: Developing Relationships
© 2015 McGraw-Hill Education.
We continue part 5 of your textbook, Marketing: Developing Relationships.
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| CHAPTER 11 | Customer-Driven Marketing |
| CHAPTER 12 | Dimensions of Marketing Strategy |
| CHAPTER 13 | Digital Marketing and Social Networking |
12-2
Welcome to chapter 12, Dimensions of Marketing Strategy.
The key to developing a marketing strategy is selecting a target market and maintaining a marketing mix that creates long-term relationships with customers.
Getting the right mix of product, price, promotion and distribution is critical if a business is to satisfy its target customers and achieve its own objectives.
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Learning Objectives
LO 12-1 Describe the role of product in the marketing mix, including how products are developed, classified, and identified.
LO 12-2 Define price and discuss its importance in the marketing mix, including various pricing strategies a firm might employ.
LO 12-3 Identify factors affecting distribution decisions, such as marketing channels and intensity of market coverage.
LO 12-4 Specify the activities involved in promotion as well as promotional strategies and promotional positioning.
12-3
In chapter 11, we introduced the marketing concept and the various activities important in developing a marketing strategy.
In this chapter, we’ll take a closer look at the four dimensions of the marketing mix – product, price, distribution and promotion – used to develop the marketing strategy.
The focus of these marketing mix elements is a marketing strategy that builds customer relationships and satisfaction.
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The Marketing Mix
12-4
The marketing mix is the part of the marketing strategy that involves decisions regarding controllable variables
After selecting a target market, marketers develop and manage the dimensions of the marketing mix to give their firm an advantage over competitors
Successful companies offer at least one dimension of the marketing mix that surpasses all competitors
These companies must also maintain acceptable, and if possible distinguishable, differences in the other dimensions as well
The marketing mix is the part of the marketing strategy that involves decisions regarding controllable variables.
After selecting a target market, marketers develop and manage the dimensions of the marketing mix to give their firm an advantage over competitors.
Successful companies offer at least one dimension of the marketing mix that surpasses all competitors.
These companies must also maintain acceptable, and if possible distinguishable, differences in the other dimensions as well.
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Product Strategy
12-5
Product Development Process
Thousands of new products are introduced annually, few succeed
It takes time to get a new product to market
Sometimes a product or idea is shelved, only to be returned to later
The term product refers to goods, services and ideas and the product strategy involves development, classification, mix, life cycle and identification.
We first look at product development and the process of developing a product is shown in this figure.
Remember that thousands of products are introduced each year but very few succeed.
A firm can take considerable time to get a product ready for the market; it took more than 20 years for the first photocopier, for example.
Sometimes a product or idea is shelved, only to be retuned to later.
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Product Strategy
12-6
The process starts when new ideas are generated.
These new ideas may come from within the company in the form of marketing research, or directly from employees; or ideas may come from external sources such as ad agencies, consultants and even consumers.
The new idea is then screened by management, looking at company resources and its ability to produce and market the product; most ideas are rejected in this phase of the process.
Business Analysis is the next phase and it involves analyzing the product’s affects on sales, costs and profits.
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Idea Development
New ideas come internally from marketing research or employees and from external sources such as ad agencies, consultants and customers
New Idea Screening
Screening involves management looking at the company’s resources and its ability to produce and market the product; most ideas are rejected in this phase
Business Analysis
Analyze the product’s affects on sales, costs and profits
Product Strategy
12-7
Product development is the next phase of the process and few products make it to this phase. The ones that do get a prototype revealing all attributes of the product. The beginnings of a marketing strategy also start in this phase.
Test marketing is a trial mini-launch of a product in limited areas that represent the potential market. This phase allows testing of the marketing strategy and weaknesses can be eliminated.
Commercialization is the full introduction of a complete marketing strategy and the launch of the product for commercial success. During this phase the firm gears up for full-scale production, distribution and promotion.
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Product Development
The few products to reach this stage get prototypes and the development of a marketing strategy
Test Marketing
A trial mini-launch of a product in limited areas that represent the potential market
Commercialization
The full introduction of a complete marketing strategy and the launch of the product for commercial success
12-8
Product Strategy
Products are classified as consumer or business products
Consumer products are products intended for household or family use
Products are usually classified as either consumer products or business products.
Consumer products are products intended for household or family use. They are not intended for any purpose other than daily living.
They can be further classified into:
Convenience products – items bought frequently with no planning, such as eggs, milk, bread or newspapers.
Shopping products – purchased after the consumer has “shopped around.” Price, product features, quality, style, service and image all influence the decision to buy.
Specialty products – require greater research and shopping effort. Consumers know what they want and are unwilling to accept substitutes.
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Convenience Products – items bought frequently with no planning, such as eggs, milk, bread and newspapers
Shopping Products – purchased after consumer has “shopped around”
Specialty Products – require greater research and shopping effort; consumers unwilling to accept a substitute
Product Strategy
12-9
Product relationships are of key importance
Business products are used directly or indirectly in the operation or manufacturing processes of businesses.
They can be further classified into:
Raw materials are natural products from the earth.
Major equipment is large, expensive items used in production.
Accessory equipment are items not part of the final product, such as computers, fax machines and hand tools.
Component parts are finished items ready to be assembled into the final products.
Processed materials are things used directly in production or management operations but not identifiable as component parts.
Supplies include materials that make operations possible, such as paper, pencils, paint etc.
Industrial services are financial, legal, security and janitorial services the company may provide internally or from an outside supplier.
Product relationships within an organization are of key importance.
A product line is a group of closely related products that are treated as a unit because of similar marketing strategy, production or end-use considerations.
A product mix is all the products offered by an organization
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Product Line
A group of closely related products that are treated as a unit because of similar marketing strategy, production or end-use considerations
Product Mix
All the products offered by an organization
Business Products
Used directly or indirectly in the operation or manufacturing processes of businesses
Product Strategy
12-10
The Life Cycle of a Product
Like people, products are born, grow, mature and eventually die
With redesign or new uses, products can be reborn
Like people, products are born, grow, mature and eventually die. With redesign or new uses, products can be reborn from the decline or maturity stage back into the growth stage.
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Product Strategy
12-11
As products pass through the four life cycle stages, they get new advertising and pricing strategies for each stage
Marketers focus on making consumers aware of the product and its benefits
The firm tries to strengthen its market position by emphasizing benefits
Severe competition and heavy costs
Firms may eliminate models, cut costs and finally phase out products
As products pass through the four life cycle stages, they get new advertising and pricing strategies for each stage.
Introductory stage – marketers focus on making consumers aware of the product and its benefits.
Growth stage – the firm tries to strengthen its market position by emphasizing benefits.
Maturity stage – brings severe competition and heavy expenditures.
Decline stage – firms may eliminate models, cut costs and finally phase out products.
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Introductory Stage
Growth Stage
Maturity Stage
Decline Stage
Product Strategy
12-12
A brand is a name, term, symbol, design or combination that identifies a product
A brand name is the part that can be spoken and consists of letters, words and numbers
A brand mark is the part of the brand that is a distinctive design, such as McDonald’s arches
Branding is the process of naming and identifying products.
A brand is a name, term, symbol, design or combination that identifies a product.
A brand name is the part that can be spoken and consists of letters, words and numbers.
A brand mark is the part of the brand that is a distinctive design, such as McDonald’s arches.
A trademark is a brand registered with the U.S. Patent and Trademark Office and is thus legally protected from use by any other firm.
Protecting a brand name is important in maintaining a brand identity.
Xerox has become synonymous with photocopying and Kleenex with tissues.
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Branding
The process of naming and identifying products
Trademark
A brand registered with the U.S. Patent and Trademark Office and is thus legally protected from use by any other firm
Product Strategy
12-13
Two major categories of brands are manufacturer brands and private distributor brands.
Manufacturer brands are initiated and owned by the manufacturer to identify products from the point of production to the point of purchase. Kellogg’s, Sony and Texaco are examples.
Private distributor brands may cost less than manufacturer brands, they are owned and controlled by a wholesaler or retailer. Kenmore appliances are from Sears and Sam’s grocery products are owned by Walmart and Sam’s Wholesale Club.
Generic products are products with no brand name that often come in simple packages and carry only their generic name. These appeal to consumers willing to sacrifice quality for a lower price.
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Manufacturer Brands
Initiated and owned by the manufacturer to identify products from the point of production to the point of purchase
Private Distributor Brands
May cost less than manufacturer brands, they are owned and controlled by a wholesaler or retailer
Generic Products
Products with no brand name that often come in simple packages and carry only their generic name
Product Strategy
12-14
Packaging is the external container that holds and describes the product; influences consumers’ attitudes.
Packaging performs several functions: protection, economy, convenience and promotion.
Labeling is the presentation of important information on a package; closely associated with packaging.
Labels contain information often required by law such as ingredients, nutrition facts, warnings, instructions, manufacturer’s address, website and phone number. This information can have a strong impact on sales.
Quality is the degree to which a good, service or idea meets the demands and requirements of customers.
The level of quality is the amount of quality a product possesses.
The consistency of quality depends on the product maintaining the same level of quality over time.
Service quality is difficult to gauge because it depends on customers’ perceptions of how well the service meets or exceeds their expectations. In other words, service quality is judged by consumers, not the service providers.
Quality can be associated with where the product was made.
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Quality
The degree to which a good, service or idea meets the demands and requirements of customers
Packaging
The external container that holds and describes the product; influences consumers’ attitudes
Performs several functions: protection, economy, convenience and promotion
Labeling
The presentation of important information on a package; closely associated with packaging
Contains information required by law such as ingredients, nutrition facts, warnings, instructions and manufacturer’s address
Logo
12-15
Customers can become really attached to a company’s logo
Made evident when Gap decided to change theirs in 2010 from the navy blue square with tall thin white text to a white background with bulky black text and a decorative blue square on the right
Critics took to social media and created profiles and pages to voice their disdain for the new look
Many may think that this was a marketing disaster, but it actually proved to the company that its customers care about and identify with the brand
Gap took their new logo down within a week
SOURCES: Innovation by Design. “Hands Off That Logo!” Fast Company. October 2013. Page 64; Blake Ellis. “New Gap Logo Ignites Firestorm”. www.money.cnn.com. October 8, 2010. http://money.cnn.com/2010/10/08/news/companies/gap_logo/index.htm. (accessed September 24, 2013)
Logo
Customers can become really attached to a company’s logo. This was made evident when Gap decided to change theirs in 2010 from the navy blue square with tall thin white text to a white background with bulky black text and a decorative blue square on the right. Critics took to social media and created profiles and pages to voice their disdain for the new look. Many may think that this was a marketing disaster, but it actually proved to the company that its customers care about and identify with the brand. This is a good thing for any company. Gap took their new logo down within a week.
SOURCES: Innovation by Design. “Hands Off That Logo!” Fast Company. October 2013. Page 64; Blake Ellis. “New Gap Logo Ignites Firestorm”. www.money.cnn.com. October 8, 2010. http://money.cnn.com/2010/10/08/news/companies/gap_logo/index.htm. (accessed September 24, 2013).
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Pricing Strategy
12-16
Calculating the Value of a Product
Source: Rafi Mohammed, “Use Price to Profit and Grow,” Forbes.com, March 25, 2010, www.forbes.com/ 2010/03/25/profit-gainvalue- mckinsey-sears-whirlpool-cmo-network-rafi-mohammed.html (accessed April 15, 2012).
Almost anything of value can be assessed by a price
Consumers vary in their response to price
The product’s perceived value in the marketplace added to the production costs help determine price
Now we move on to the next marketing mix variable, price and look at pricing strategy.
Previously, we defined price as the value placed on an object exchanged between a buyer and a seller. Almost anything of value can be assessed by a price.
Consumers vary in their response to price: some focus solely on the lowest price, while others consider quality or the prestige associated with a product and its price.
The product’s perceived value in the marketplace added to the production costs help determine price. Perceived value has benefited marketers at Starbucks, Sub-Zero, BMW and Petco.
This table illustrates a method for calculating the value of a product.
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Pricing Strategy
12-17
Price is probably the most flexible variable; can be set or changed in a few minutes
Four common pricing objectives: maximizing profits, boosting market share, maintaining the status quo, and survival
Price is a key element in the marketing mix because it relates directly to revenue and profits.
Price is probably the most flexible variable in the marketing mix; set and changed in a few minutes.
Pricing objectives specify the role of price in an organization’s marketing mix and strategy.
Four common pricing objectives are: maximizing profits and sales, boosting market share, maintaining the status quo and survival.
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Price is a key element in the marketing mix as it related directly to revenue and profits
Pricing objectives specify the role of price in an organization’s marketing mix and strategy
Pricing Strategy
12-18
Pricing strategies provide guidelines for achieving the pricing objectives
Pricing strategies provide guidelines for achieving the pricing objectives and overall marketing strategy.
Pricing new products is critical as the wrong price could kill a product.
Price skimming is charging the highest possible price that buyers who want the product will pay.
Penetration price is a low price designed to help a product enter the market and gain market share rapidly.
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Pricing New Products
Price Skimming is charging the highest possible price buyers who want the product will pay
Penetration price is a low price designed to help a product enter the market and gain market share rapidly
Pricing Strategy
12-19
Perfume and cosmetics prices are set artificially high to give the impression of superior quality
Psychological pricing encourages purchasing based on emotional rather than rational responses to price.
Even/odd pricing assumes people will buy more of a product for $9.99 than $10 because it seems to be a bargain at the odd price.
Symbolic/prestige pricing assumes that high prices connote high quality.
Perfume and cosmetics prices are set artificially high to give the impression of superior quality.
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Psychological Pricing encourages purchasing based on emotional rather than rational responses to price
Even/Odd Pricing assumes people will buy more of a product for $9.99 than $10 because it seems to be a bargain at the odd price
Symbolic/Prestige Pricing assumes that high prices connote high quality
Pricing Strategy
12-20
Quantity discounts are given for purchasing in large volumes
Seasonal discounts are those given for purchasing goods or services out of season
Promotional discounts attempt to improve sales by advertising price reductions on selected products; increasing customer interest and profits
Temporary price reductions, or discounts are often employed to boost sales.
Although there are many types, here are three common discounts.
Quantity discounts are given for purchasing in large volumes.
Season discounts are those given for purchasing goods or services out of season.
Promotional discounts attempt to improve sales by advertising price reductions on selected products; increasing customer interest and profits.
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Discounts
Temporary price reductions often employed to boost sales
Distribution Strategy
12-21
The next variable in the marketing mix is distribution, so we move on to the distribution strategy portion of the chapter.
The best products in the world will not be successful unless companies make them available where and when customers want to buy them.
A marketing channel is a group of organizations that moves products from their producer to customers; also called a channel of distribution.
Marketing channels make products available to buyers when and where they desire to purchase them.
Middlemen, or intermediaries, are organizations that bridge the gap between a product’s manufacturer and the ultimate consumer.
Middlemen create time, place and ownership utility.
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Marketing Channel
A group of organizations that moves products from their producer to customers; also called a channel of distribution
Makes products available to customers when and where they desire to purchase them
Middlemen create time, place and ownership utility
Middlemen, or intermediaries, are organizations that bridge the gap between a product’s manufacturer and the ultimate consumer
Distribution Strategy
12-22
Move products from producers to a convenient retail establishment (place utility)
Maintain hours of operation (time utility)
Assume the risk of inventories (ownership utility)
Two types of intermediaries are retailers and wholesalers.
Retailers are intermediaries who buy products from manufacturers (or other intermediaries) and sell them to consumers for home and household use rather than for resale or for use in producing other products.
Retailers move products from producers to a convenient retail establishment providing place utility.
Retailers maintain hours of operation, providing time utility.
They also assume the risk of inventories, providing ownership utility.
Wholesalers are intermediaries who buy from producers or from other wholesalers and sell to retailers.
They usually do not sell to ultimate customers.
Wholesalers are extremely important because of the marketing activities they perform.
If wholesalers were eliminated, their functions must be passed on to some other entity, such as producer, another intermediary or the consumers.
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Retailers
Intermediaries who buy products from manufacturers (or other intermediaries) and sell them to consumers for home and household use rather than for resale or for use in producing other products
Wholesaler
Intermediaries who buy from producers or from other wholesalers and sell to retailers
Distribution Strategy
12-23
A major distribution decision is how widely to distribute a product – how many and what type of outlets
A major distribution decision is how widely to distribute a product – how many and what types of outlets
With intensive distribution a product is made available in as many outlets as possible. This is used for frequently purchased items such as bread or milk.
With selective distribution only a small number of all available outlets are used to expose products. This is used most often when consumers buy only after shopping and comparing price, quality and style.
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Intensive Distribution
A product is made available in as many outlets as possible
Used for frequently purchased items
Selective Distribution
Only a small number of all available outlets are used to expose products
Used most often when consumers buy only after shopping and comparing price, quality and style
Distribution Strategy
12-24
Exclusive distribution is the awarding by a manufacturer to an intermediary of the sole right to sell a product in a defined geographic territory. Used for high-quality merchandise.
Physical distribution is all the activities necessary to move products from producers to customers – inventory control, transportation, warehousing and materials handling. Both goods and services require physical distribution.
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Exclusive Distribution
The awarding by a manufacturer to an intermediary of the sole right to sell a product in a defined geographic territory
Includes high-quality merchandise
Physical Distribution
All the activities necessary to move products from producers to customers – inventory control, transportation, warehousing and materials handling
Both goods and services require physical distribution
Distribution Strategy
12-25
Transportation is the shipment of products to buyers
Railways – least expensive
Motor vehicles – greater flexibility
Inland waterways – cheap but slow
Pipelines – transport petroleum and natural gas
Airways – costly but speedy
Factors affecting choice include cost, capability, reliability and availability
Transportation is the shipment of products to buyers. Transportation creates time and place utility and is a key element in the flow of goods.
The five major modes of transportation is:
Railways are the least expensive for many products
Motor vehicles provide greater flexibility and provide door-to-door service.
Inland waterways and inexpensive but slow.
Pipelines are used to transport petroleum, natural gas, semi-liquid coal, wood chips and certain chemicals.
Air transport is speedy but quite expensive.
Factors affecting the choice of transportation include: cost, capability, reliability and availability.
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Distribution Strategy
12-26
Handling processes vary significantly due to product characteristics
Companies can own their own warehouse, lease a private warehouse or rent space in a public warehouse
Warehousing is the design and operation of facilities to receive, store and ship products.
Companies can own their own warehouse or lease a private warehouse. They can also rent space in a public warehouse.
Materials handling is the physical handling and movement of products in warehousing and transportation. Handling processes vary significantly due to product characteristics.
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Warehousing
The design and operation of facilities to receive, store and ship products
Materials Handling
The physical handling and movement of products in warehousing and transportation
Packaging
12-27
Design thinking produces products that creatively solve problems that touch several people
For example, medication bottles have been problematic for a long time…
Incidents of children taking medication because the bottle was easy for them to open led to the child-proof feature of the cap design
The elderly are also affected by insufficient designs in packaging
Generally they have multiple medications in their cabinets, and all the bottles look the same and the dosage directions are difficult to read
ClearRx was designed specifically for this problem:
It has a larger flat front surface where the label can be easily read and comes with colored bands so the patient can differentiate between medications based on color.
SOURCE: Innovation by Design. “A Better Drug Bottle”. Fast Company. October 2013. Page 44; Tim Adkins. “Design of the Decade: ClearRx”. www.idsa.org. Winter 2010. http://idsa.org/design-decade-clearrx. (accessed September 24, 2013)
Packaging
Design thinking produces products that creatively solve problems that touch several people. For example, medication bottles have been problematic for a long time. Incidents of children taking medication because the bottle was easy for them to open led to the child-proof feature of the cap design. The elderly are also affected by insufficient designs in packaging. Generally they have multiple medications in their cabinets, and all the bottles look the same and the dosage directions are difficult to read. ClearRx was designed specifically for this problem. It has a larger flat front surface where the label can be easily read and comes with colored bands so the patient can differentiate between medications based on color.
SOURCE: Innovation by Design. “A Better Drug Bottle”. Fast Company. October 2013. Page 44; Tim Adkins. “Design of the Decade: ClearRx”. www.idsa.org. Winter 2010. http://idsa.org/design-decade-clearrx. (accessed September 24, 2013).
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Promotion Strategy
12-28
Promotion encourages consumers to accept products and influences opinions and attitudes
Advertising, personal selling, publicity and sales promotion are collectively known as the promotion mix
This approach results in delivery of the desired message to consumers
The final marketing mix variable is promotion and here we will look at promotion strategy.
Promotion is used to encourage consumers to accept products but also to influence opinions and attitudes.
Advertising, personal selling, publicity and sales promotion are collectively known as the promotion mix.
The process of coordinating promotion mix elements and synchronizing promotion as a unified effort is called integrated marketing communications. This approach results in delivery of the desired message to consumers.
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Integrated Marketing Communications
Coordinating the promotion mix elements and synchronizing promotion as a unified effort
Promotion Strategy
12-29
Several factors affect the campaign, including: product features, target audience, marketing objectives and the choice of media used
Advertising is a paid form of non-personal communication transmitted through a mass medium, such as television commercials or magazine advertisements.
An advertising campaign is designing a series of advertisements and placing them in various media to reach a particular target market.
Several factors affect the advertising campaign, including:
Product features, uses and benefits affect the content of the campaign message and individual ads.
Characteristics of the people in the target audience – gender, age, education, race, income, occupation, lifestyle and other attributes – influence both content and form.
The advertising campaign’s objectives, whether they are to increase sales or brand awareness, affect the content and form of the message.
Finally, the choice of media affects the message. Print media includes newspapers, magazines, direct mail and billboards, while electronic media includes television, radio and Internet advertising.
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Advertising
Advertising Campaign
A paid form of non-personal communication transmitted through a mass medium, such as television commercials or magazine advertisements
Designing a series of advertisements and placing them in various media to reach a particular target market
Promotion Strategy
12-30
Most flexible promotional method but expensive
Three categories of salesperson:
Order takers – retail sales clerks
Creative salespersons – automobiles sales
Support salespersons – customer educators
Personal selling is direct, two-way communication with buyers and potential buyers.
Used for large, expensive products or ones with specialized uses, such as cars, appliances and houses.
Personal selling is the most flexible promotional method but it is expensive.
There are three categories of salesperson:
- Order takers, for example retail clerks and route salespeople
- Creative salespersons, for example automobile, furniture and insurance salespeople
- Support salespersons, for example, customer educators and goodwill builders who usually do not take orders
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Personal Selling
Direct, two-way communication with buyers and potential buyers
Promotion Strategy
12-31
Personal selling is a six-step process
Personal selling is a six-step process:
Prospecting: identifying potential buyers
Approaching: referral or cold call
Presenting: demonstrating the product
Handling objections: countering reasons for purchase
Closing: asking for a purchase
Following up: checking back after purchase
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Prospecting: identifying potential buyers
Approaching: referral or cold call
Presenting: demonstrating the product
Following Up: checking back after purchase
Handling Objections: countering reasons for purchase
Closing: asking for a purchase
Promotion Strategy
12-32
Publicity is non-personal communication transmitted through the mass media but not paid for directly by the firm.
The message is presented as a news story and the company is not seen as the originator of the message.
Most companies have a public relations department trying to gain favorable publicity and minimize negative publicity.
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Publicity
Non-personal communication transmitted through mass media but not paid for directly by the firm
Message is presented as a news story and the company is not seen as the originator of the message
Most companies have a public relations department trying to gain favorable publicity and minimize negative publicity
Promotion Strategy
12-33
Advertising and publicity are both carried by mass media but they differ is several ways
Advertising and publicity are both carried by mass media but they differ is several ways.
Advertising messages tend to be informative, persuasive, or both; publicity is mainly informative.
Advertising is often designed to have an immediate impact or persuade a person to act; publicity describes what a firm is doing, what products it is launching but seldom calls for action.
When advertising is used, the organization must pay for media time and select the media that bests targets their audience. Mass media willingly carries publicity because they believe it has general public interest, and it’s free.
Advertising can be repeated a number of times; most publicity appears in the mass media once and is not repeated.
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Purpose
Advertising in informative, persuasive, or both; publicity is informative
Impact
Advertising calls for action; publicity rarely does
Cost
Companies pay for advertising; publicity is free
Advertising is repeated often; publicity appears once
Duration
Promotion Strategy
12-34
A related concept is viral marketing, which gets Internet users to pass on ads and promotions to others
A variation of traditional advertising is buzz marketing, where marketers attempt to create a trend
Companies seek out trend setters in a community and get them to “talk up” their product. The idea is that accepted members of a group have more credibility than any form of paid communication
Works best as part of an integrated marketing plan
A related concept is viral marketing, which gets Internet users to pass on ads and promotions to others.
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Buzz marketing is a variation of traditional advertising where marketers attempt to create a trend
Companies seek out trend setters in a community and get them to “talk up” their product
The idea is that accepted members of a group have more credibility than any form of paid communication
Works best as part of an integrated marketing plan
Promotion Strategy
12-35
Easier to measure and less expensive than advertising
Includes: store displays, premiums, samples and demonstrations, coupons, contests and sweepstakes, refunds, and trade shows
Used to enhance and supplement other forms of promotion
Sales promotion is direct inducements offering added value or some other incentive for buyers to enter into an exchange.
Generally easier to measure and less expensive than advertising
Includes: store displays, premiums, samples and demonstrations, coupons, contests and sweepstakes, refunds, and trade shows
Used to enhance and supplement other forms of promotion
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Sales Promotion
Direct inducements offering added value or some other incentive for buyers to enter into an exchange
Promotion Strategy
12-36
When developing a promotion mix, companies must decide whether to push or pull the product
Push Strategy
Pull Strategy
A company can use either strategy or a combination
When developing a promotion mix, companies must decide whether to push or pull the product
Push strategy is an attempt to motivate intermediaries to push the product down to their customers
Pull strategy uses promotion to create consumer demand for a product so consumers exert pressure on marketing channel members to make it available
A company can use either strategy or a combination
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An attempt to motivate intermediaries to push the product down to their customers
Uses promotion to create consumer demand so consumers exert pressure on marketing channel members to make it available
Promotion Strategy
12-37
Personal selling indicates a push strategy
The exclusive use of advertising is a pull strategy
This figure shows the push strategy and the pull strategy.
Personal selling indicates a push strategy.
The exclusive use of advertising is a pull strategy.
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Promotion Strategy
12-38
Promotional positioning uses promotion to create and maintain an image of a product in buyers’ minds
Typical objectives of promotion
Stimulate demand – often through ads and sales promotion, particularly important when using a pull strategy
Stabilize sales – decreasing sales call for sales promotions and ads
Inform, remind and reinforce customers
Promotional positioning uses promotion to create and maintain an image of a product in buyers’ minds
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Stimulate Demand
Often through ads and sales promotion, particularly important when using a pull strategy
Stabilize Sales
Decreasing sales call for sales promotions and ads
Inform, remind and reinforce customers
Typical objectives of promotion
The Importance of Marketing Strategy
12-39
Marketing creates value through the marketing mix
The marketing mix must be carefully integrated into an effective marketing strategy
Companies with an effective marketing mix gain competitive advantage
Advantages often come when a company excels at one or more elements of the marketing mix
Companies must monitor demand and adapt the marketing mix when needed
Marketing creates value through the marketing mix
The marketing mix must be carefully integrated into an effective marketing strategy
Companies with an effective marketing mix gain competitive advantage
Advantages often come when a company excels at one or more elements of the marketing mix
Companies must monitor demand and adapt the marketing mix when needed
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Discussion
What is the product life cycle? How does a product’s life cycle stage affect its marketing strategy?
How do publicity and advertising differ? How are they related?
12-40
What is the product life cycle? How does a product’s life cycle stage affect its marketing strategy?
Product life cycle refers to the life of a product in the marketplace. Like people, products are born and they grow, mature, and eventually die—that is, they are pulled from the market. The four stages of the product life cycle are introduction, growth, maturity, and decline.
A marketer must perform different tasks for each life cycle stage of a product. In the introductory stage, consumer awareness and acceptance are limited. Thus, buyers must be made aware of the fact that the product exists and offers benefits. In the growth stage, competing firms become aware that the product has achieved some success and may make decisions to enter the market. During the growth stage, the firm tries to strengthen its position in the market by emphasizing benefits in identifying market segments that want these benefits. The maturity stage is characterized by severe competition and heavy expenditures for marketing expenses. New competitors emphasize improvements and differentiation of the product. A company may have to introduce new brand extensions. This is done to maintain a large market share. During the decline stage, sales continue to fall rapidly. As profits drop, firms may eliminate certain models or items. Plans must be made for phasing out the product and introducing new products to take its place.
How do publicity and advertising differ? How are they related?
Advertising is paid for by an identified sponsor and is usually directed to a mass market. The seller has complete control over this form of promotion. Publicity is often viewed as being part of a public relations program, a broad set of communication activities designed to maintain favorable relations between an organization and the public. Advertising messages tend to be informative, persuasive, or both; publicity is mainly informative. Advertising is often designed to have an immediate impact or to give specific information to persuade a person to act. Publicity usually describes what a firm is doing and the type of products that are being launched, or it offers other newsworthy information that is not a call for action. When using advertising, the organization must pay for media time. A company may spend money to release information to the press or to call a news conference, but this is not paying for media time. Therefore, people outside the organization shape the message—either positively or negatively. Advertising can be directed and repeated a number of times; most publicity appears in the mass media once and is not repeated.
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