Marketing Management
N5
Module 1: Product and service policy
THE NATURE OF PRODUCT POLICY
The product serves as the “heart” of the organisation. It is important to note
that all marketing activities start with the product. A product consists of
a collection of tangible (visible) problem-solving, need-satisfying attributes,
which is made available to the market (users) in order to get the market to
pay attention to it, buy it and use it.
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Module 1: Product and service policy (continued)
CLASSIFICATION OF PRODUCTS AND SERVICES
For the purpose of marketing management, products are divided into
homogeneous groups using certain criteria. The three main groups are:
• Consumer products.
• Industrial products.
• Services.
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Module 1: Product and service policy (continued)
THE DEVELOPMENT OF NEW PRODUCTS AND SERVICES
Products move through a life cycle. This causes a constant demand for new
products. Rapid changes in the marketing environment lead to shorter
product life cycles – especially consumer products. Constant development
and marketing of new products have become indispensable to the growth
and progress of any business.
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Module 1: Product and service policy (continued)
THE PRODUCT LIFE CYCLE
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Module 1: Product and service policy (continued)
PRODUCT STRATEGIES
A product strategy can be described as the purposeful and objective
decisions of management to adjust the product range timeously,
economically and efficiently to the present marketing environment and
expected changes in it.
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Module 1: Product and service policy (continued)
BRANDING
Brands are that part of the product decisions that are specifically involved
with the identification and distinction of product items and product lines in the
product range. Manufacturers and even middlemen attempt to differentiate
and to distinguish their products from other competitive products by means of
brands. Brand and packaging decisions are very important and are
subsections of product decisions.
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Module 1: Product and service policy (continued)
PACKAGING AND LABELLING
Packaging also forms part of the product decisions of a business. Packaging
is essential for the protection, storage and physical handling of products.
Packaging can also be usefully applied in certain marketing considerations
like product differentiation, consumer comfort and marketing communication.
Labelling plays a major role in packaging and branding. Sometimes, labels
are woven onto products, as in the clothing industry.
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Module 2: Distribution policy
IMPORTANCE OF DISTRIBUTION
Distribution can be described as a structure that links a group of individuals
or organisations together to facilitate the flow of goods from the stage where
the manufacturing process is finished until it reaches the final consumer. The
main objective of the distribution policy is to get the product to the consumer.
Decisions about distribution channels, particularly those relating to where,
when and how to present products to a specific market, are an important,
sometimes critical, aspect of the total marketing strategy.
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Module 2: Distribution policy (continued)
IMPORTANCE OF INTERMEDIARIES IN MARKETING
• Intermediaries reduce the number of transactions.
• They also perform the following functions:
• Transactional functions.
• Logistical functions.
• Facilitating functions.
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Module 2: Distribution policy (continued)
DISTRIBUTION CHANNEL SYSTEMS
A distribution channel can have the following intermediaries to help channel
the product from producer to consumer:
• Wholesalers;
• Agents;
• Retailers;
• Industrial distributors;
• Government buyers;
• Industrial users; and
• Brokers;
• Mail-order companies.
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Module 2: Distribution policy (continued)
BEHAVIOUR PATTERNS IN THE DISTRIBUTION CHANNEL
Every member in the distribution channel has a specific role to fulfil in a
system that has to adhere to certain standards. Every member has a special
field where he operates and where he has to execute tasks like purchasing,
selling, transportation, storing and communication. The main tasks in the
distribution channel can thus be identified as the following: transportation,
advertising, storing, recruitment and negotiations with final consumers.
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Module 2: Distribution policy (continued)
DISTRIBUTION PLANNING
Distribution planning is making decisions concerning the setting of
distribution objectives, the design and choice of a distribution channel and
the methods of physical distribution that are used to execute the necessary
marketing activities in the target market.
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Module 2: Distribution policy (continued)
THE ROLE OF THE WHOLESALER
Wholesalers are firms that buy in bulk directly from manufacturers/producers
and then sell the goods mainly to retailers. It also happens that consumers
sometimes buy from wholesalers. A company can be classified as a
wholesaler when the institution earns more than 50% of its gross income
from the sales of goods to resellers and other institutions.
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Module 2: Distribution policy (continued)
THE ROLE OF THE RETAILER
To qualify as a retailer, it is necessary that the company earns more than
50% of its gross income from the public or end-user consumer. The nature of
service supplied by the retailer can take various forms such as:
• Counter service;
• Self-selection;
• Self-service; and
• Direct selling.
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Module 2: Distribution policy (continued)
PHYSICAL DISTRIBUTION
Physical distribution is often referred to as logistics. Physical distribution can
be described as the movement, handling and storing of goods after finishing
the production process, and the delivering thereof to the final consumer or
user.
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Module 3: Price policy
THE NATURE AND IMPORTANCE OF PRICE IN MARKETING
Price can be defined as a value expressed in terms of Rands and cents.
Price is, therefore, the value that is attached to products and services and is
the amount of money needed to obtain such a product, and the benefit or
utility associated with it.
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Module 3: Price policy (continued)
THE DEVELOPMENT OF A PRICE STRATEGY
The following steps are followed when a final price is determined:
1. Analyse the internal and external factors that influence price.
2. Formulate the price objectives.
3. Determine the basic price.
4. Make adjustments to the basic price.
5. Determine the final price.
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Module 3: Price policy (continued)
FORMULATE THE PRICE OBJECTIVES
Price objective
Sales volume objectives
Status quo objectives
Other price
objectives
Maximise profits
Maintain or increase
market share
Maintain price image
Product quality
Leadership
Target return
Maximising sales volume
Stabilise prices
Continuity and
survival
Non-price competition
Social responsibility
Satisfactory profits
Reaction to and prevention
of competition
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Module 3: Price policy (continued)
DETERMINATION OF THE BASIC PRICE
In order to make a transaction take place, it is necessary that every business
determines a price for its products. The approach to this price can be twosided: firstly, the development of a price that aspires to the needs of the
consumer, and secondly, the development of a price that meets the
profitability targets.
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Module 4: Promotion policy
THE NATURE AND IMPORTANCE OF A PROMOTION STRATEGY
Promotion can be described as any form of communication that is used to
inform, to persuade and to remind consumers to buy the product or service
sold by a certain enterprise. promotion strategy may also be called the
marketing communication strategy. The promotional strategy is a plan for the
optimal blend of all the elements of the promotional mix, namely, advertising,
publicity, sales promotion and personal selling.
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Module 4: Promotion policy (continued)
THE COMMUNICATION PROCESS IN MARKETING
Communication is a process by which we exchange or share options by
using a common set of symbols. To compile an effective marketing
communication mix, it is of the utmost importance that the marketer should
have a knowledge or background of the communication channels available
to reach a target audience. Communication can be divided into two main
categories: interpersonal communication and mass communication.
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Module 4: Promotion policy (continued)
PROMOTIONAL OBJECTIVES
Promotion has three general tasks or objectives, namely, to inform the target
market, to persuade the target market, and to remind the target market of the
product or service.
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Module 4: Promotion policy (continued)
THE PROMOTION MIX/MARKETING COMMUNICATION MIX
Elements of the promotion mix
(Promotion mix= Marketing communication mix)
Factors that influence the composition of the
promotion mix
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Advertising.
Personal selling.
Sales promotion.
Publicity.
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Availability of funds.
Nature of the market.
Nature of the product.
Phase of the product life cycle.
Push or pull strategies.
Module 4: Promotion policy (continued)
ADVERTISING AND ADVERTISING MANAGEMENT
Advertising is used to inform, persuade and remind the customer of the
organisation’s product offering and where it is available.
• It is the conveyance of an impersonal message to a certain target
audience.
• It is paid for by an identifiable sponsor, whose objective is to promote a
need-satisfying product, service or idea.
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