Ferrell Hirt Ferrell
A CHANGING WORLD
EIGHTH EDITION
FHF
McGraw-Hill/Irwin
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
part
Marketing: Developing
Relationships
5
Chapter 11 Customer-Driven Marketing
Chapter 12 Dimensions of Marketing Strategy
Chapter 13 Digital Marketing and Social Networking
FHF
12-2
The Marketing Mix
Keys to developing effective marketing strategy
 Maintain right marketing mix
 Satisfy target market
 Long-term customer relationships
 Successful companies have at least one dimension of value that
surpasses all others
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12-3
Product
[
A good, service, or idea that has tangible
and intangible attributes that provide
satisfaction and benefit to consumers
]
The most visible variable of the marketing mix
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12-4
Developing New Products
 Idea development





New idea screening
Business analysis
Product development
Test marketing
Commercialization
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12-5
Product Development Process
FHF
12-6
Classifying Products:
Consumer Products
Convenience Products
 Purchased without doing research into price
 Widely available
 Often for immediate consumption
 Example: A gallon of milk
…continued on next page
FHF
12-7
Classifying Products:
Consumer Products
Shopping Products
 Consumer has compared competitors’ prices and has
shopped around done
 Price, features, quality, style, service and image all influence
the decision to buy
 Example: clothing, furniture
…continued on next page
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12-8
Classifying Products:
Consumer Products
Specialty Products
 Require the greatest level of research and
shopping effort
 Not willing to accept substitutes
 Consumers know exactly what they want and go out of their
way to find it
 Price not the strongest consideration
 Example: designer clothing, art, antiques
FHF
12-9
Classifying Products:
Business Products
 Used directly or indirectly in the operation or
manufacturing processes of a business
 Raw materials
 Major equipment
 Accessory equipment
 Component parts
 Processed materials
 Industrial services
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12-10
Product Line and Product Mix
Product Line
 Group of closely related products that are treated as a unit because of a
similar marketing strategy, production, or end-use
Product Mix
 All the products offered by the company
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12-11
The Product Life Cycle
FHF
12-12
Identifying Products
Branding
 The process of identifying products
 Name
 Term
 Symbol
 Design
Trademark
• A brand registered with U.S. patent and trademark office
• Protected from use by any other firm
FHF
12-13
Brand Categories
 Manufacturer Brands
 Initiated and owned by the manufacturer to identify products
from production to point of purchase
 Private Distributor Brands
 Cost less than manufacturer brands; owned and controlled by wholesaler or
retailer
 Generic Products
 No brand name often come in simple packages and carry their generic
name
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12-14
The Most Valuable Global Brands
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12-15
Packaging
External container that holds & describes the product
 Protection
 Economy
 Convenience
 Promotion
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12-16
Labeling
The presentation of important information on
the package (often by law)







Ingredients or content
Nutrition facts (calories, fat, etc.)
Care instructions
Suggestions or use (such as recipes)
The manufacturer’s address and toll-free number
Website
Other useful information
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12-17
Product Quality
[
The degree to which a good, service, or
idea meets the demands and
requirements of customers
]
FHF
12-18
Pricing Strategy
Four Common Pricing Objectives
1. Maximize profits and sales
2. Boost market share
3. Maintain the status quo
4. Survival
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12-19
Specific Pricing Strategies
New Product Pricing
 Price skimming
 Penetration pricing
Psychological Pricing
 Even/odd
 Symbolic/prestige pricing
Price Discounting
 Quantity discounts
 Seasonal discount
 Promotional discounts
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12-20
Premium Pricing in
the Pet Market
 Consumers in the U.S. spend more on pets
than on music, movies and video games combined
 Dog segment is largest in the pet market
 Dog owners spend over $2,500 on their dogs annually
 Many pet owners are willing to pay a premium for natural dog food and
products
 17 million premium pet households in the U.S.
 Complete Natural Nutrition is a premium
pet food company
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12-21
Distribution Strategies
Marketing Channel
 A group of organizations that moves products from
their producer to consumers
Retailers
 Buy products from manufacturers and sell them to customers for uses other
than resale
 Many now compete online
Wholesalers
 Intermediaries that buy from producers or other wholesalers and sell to
retailers
 Also called middlemen
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Supply Chain Management
Creates alliances between channel members
 Channels for consumer products
 Channels for business products
 More likely to be direct marketing channels
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12-23
Channels for Consumer Products
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12-24
Intensity of Market Coverage
 Depends on buyer behavior, the nature of the
target market and competition
Intensive
 Makes a product available in as many outlets as possible
Selective
 Uses only a small proportion of all available outlets to expose products
Exclusive
 Exists when a manufacturer gives a middleman the sole right to sell a
product in a defined geographic territory
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12-25
Physical Distribution
 Includes all the activities necessary to move
products from producers to customers
 Inventory control
 Transportation
 Warehousing
 Materials handling
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12-26
Physical Distribution
Transportation
 The shipment of products to buyers
 Railroads, trucks, air and pipelines
 Factors to consider are: cost, capability to handle the product,
reliability and availability
Warehousing
 Design and operation of facilities to receive, store and ship products
Materials Handling
 Physical handling and movement of products in warehouses and
transportation
 Can increase efficiency and reduce costs
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12-27
Distribution Strategy
 The least flexible element of marketing mix
 Commits resources and establishes contractual relationships
 Difficult to change
 Expansion into new markets may require new distribution
strategy
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12-28
Promotion Strategy
 Goal is to communicate with individuals, groups and
organizations
 Encourages marketing exchanges
 Used to influence opinions and attitudes toward organizations,
people, or causes
FHF
12-29
The Promotion Mix
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Advertising
Personal Selling
Publicity
Sales Promotion
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12-30
Integrated Marketing Communication
[
The process of coordinating the promotion
mix elements and synchronizing promotion
as a unified effort
]
FHF
12-31
Advertising
 A paid non-personal communication communicated
through mass media
 Advertising campaign involves designing a series of
advertisements and positioning them to reach a target audience
 Online advertising is increasing
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12-32
Advertising Campaign
 Designing a series of ads and placing them in
various media to reach a particular target audience
 Product’s features, uses and benefits affect the message
 Characteristics of the target audience influence content and form
 Advertisers use words, symbols and forms familiar to the target
audience to communicate effectively
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12-33
Online Advertising
Ray-Ban’s Official Website Features a Virtual Mirror
Advertising Campaign
•
Encourages marketing exchanges
•
Used to influence opinions and attitudes toward
organizations, people, or causes
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12-34
Personal Selling
 Direct two-way communication with
buyers/potential buyers
Avon uses personal selling
 Targets women as customers and salespeople
 Personal interaction with customers
 Salespeople earn commissions
 Flexible hours
 The internet is an increasingly important component
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12-35
Personal Selling is a
Six-step Process
1. Prospecting
2.
3.
4.
5.
6.
Approaching
Presenting
Handling objections
Closing
Following up
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12-36
Publicity
A non-paid, non-personal communication
through mass media channels




Mainly informative or descriptive
News story forms
Can be extremely important for a company
Buzz marketing: marketers attempt to create a trend through
publicity
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12-37
Sales Promotion
Direct inducements such items as coupons, contests
and free samples to persuade buyers to purchase products
 Stimulates customer purchasing
 Enhances other promotional efforts
 Generally less expensive than advertising
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12-38
Promotion Strategies
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12-39
Objectives of Promotion
Promotion is only one element of the
marketing strategy
 Must be tied to goals of firm
 Stimulate demand
 Stabilize sales
 Inform
 Remind
 Reinforce customers
Promotional Positioning
 To create and maintain an image of a product in buyers’ minds
FHF
12-40