Review MKT 102

HHU Spring 2013

What Is a Product?Levels of Product and Services

Services Marketing

Nature and Characteristics of a Service

New-Product DevelopmentReasons for new product failure

Overestimation of market size

Poor design

Incorrect positioning

Wrong timing

Priced too high

Ineffective promotion

Management influence

High development costs

Competition

Branding Strategy: Building Strong BrandsBrand Development Strategies

Online Marketing

Business to consumer

(B2C)

Business to business (B2B)

Consumer to consumer

(C2C)

Consumer to business (C2B)

Online Marketing Domains

Product Life-Cycle Strategies

Product Life Cycle

• Product development – Sales are zero and investment costs mount

• Introduction – Slow sales growth and profits are nonexistent

• Growth– Rapid market acceptance and increasing profits.

• Maturity – Slowdown in sales growth and profits level off or decline

• Decline– Sales fall off and profits drop

Product Life-Cycle Strategies

Product Life-Cycle Strategies

• Market modifying• Product

modifying• Marketing mix

modifying

Maturity Stage Modifying Strategies

New-Product Pricing Strategies

• Market-skimming pricing

• Market- penetration pricing

Pricing Strategies

New-Product Pricing Strategies

Market-skimming pricing is a strategy with high initial prices to “skim” revenue layers from the market

• Product quality and image must support the price• Buyers must want the product at the price• Costs of producing the product in small volume

should not cancel the advantage of higher prices• Competitors should not be able to enter the market

easily

New-Product Pricing Strategies

Market-penetration pricing sets a low initial price in order to penetrate the market quickly and deeply to attract a large number of buyers quickly to gain market share

• Price sensitive market• Inverse relationship of production and

distribution cost to sales growth• Low prices must keep competition out of the

market

Pricing Strategies

What Is a Product?

• Consumer products are products and services for personal consumption

• Classified by how consumers buy them– Convenience products– Shopping products– Specialty products– Unsought products

Product and Service Classifications

New-Product Pricing Strategies

Market-penetration pricing sets a low initial price in order to penetrate the market quickly and deeply to attract a large number of buyers quickly to gain market share

• Price sensitive market• Inverse relationship of production and

distribution cost to sales growth• Low prices must keep competition out of the

market

Pricing Strategies

Supply Chains and the Value Delivery Network

Upstream partners include raw material suppliers, components, parts, information, finances, and expertise to create a product or service

Downstream partners include the marketing channels or distribution channels that look toward the customer

Supply Chain Partners

Channel Behavior and Organization

Conventional distribution systems consist of one or more independent producers, wholesalers, and retailers. Each seeks to maximize its own profits, and there is little control over the other members and no formal means for assigning roles and resolving conflict.

Conventional Distributions Systems

Channel Behavior and Organization

Vertical marketing systems (VMSs) provide channel leadership and consist of producers, wholesalers, and retailers acting as a unified system and consist of:

• Corporate marketing systems• Contractual marketing systems• Administered marketing systems

Vertical Marketing Systems

Channel Behavior and Organization

Corporate vertical marketing system integrates successive stages of production and distribution under single ownership

Vertical Marketing Systems

Channel Behavior and Organization

Contractual vertical marketing system consists of independent firms at different levels of production and distribution who join together through contracts to obtain more economies or sales impact than each could achieve alone. The most common form is the franchise organization.

Vertical Marketing Systems

Channel Behavior and Organization

Franchise organization links several stages in the production distribution process

– Manufacturer-sponsored retailer franchise system– Manufacturer-sponsored wholesaler franchise system– Service firm-sponsored retailer franchise system

Vertical Marketing Systems

Channel Behavior and Organization

Administered vertical marketing system has a few dominant channel members without common ownership. Leadership comes from size and power.

Vertical Marketing Systems

The Promotion MixMajor Promotion Tools

The Promotion Mix

Advertising is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor

• Broadcast• Print• Internet• Outdoor

Major Promotion Tools

The Promotion Mix

Sales promotion is the short-term incentives to encourage the purchase or sale of a product or service

• Discounts• Coupons• Displays• Demonstrations

Major Promotion Tools

The Promotion Mix

Public relations involves building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events

• Press releases• Sponsorships• Special events• Web pages

Major Promotion Tools

The Promotion Mix

Personal selling is the personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships

• Sales presentations• Trade shows• Incentive programs

Major Promotion Tools

The Promotion Mix

Direct marketing involves making direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships—through the use of direct mail, telephone, direct-response television, e-mail, and the Internet to communicate directly with specific consumers

• Catalog• Telemarketing• Kiosks

Major Promotion Tools

Promotion Mix Strategies

Setting the Total Promotion Budget and Mix

The New Direct Marketing Model

Direct marketing is:• A marketing channel

without intermediaries

• An element of the promotion mix

• Fastest-growing form of marketing

Growth and Benefits of Direct Marketing

• Convenience• Ready access to many products• Access to comparative information about

companies, products, and competitors• Interactive and immediate

Benefits to Buyers

Growth and Benefits of Direct Marketing

• Tool to build customer relationships• Low-cost, efficient, fast alternative to reach

markets• Flexible• Access to buyers not reachable through other

channels

Benefits to Sellers

Online Marketing

Online marketing will remain an important approach in the marketing mix to:

• Build customer relationships• Improve sales• Communicate company and product

information• Deliver products and services more effectively

and efficiently

The Promise and Challenges of Online Marketing