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 Development
Reasons 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 Brands
Brand Development Strategies
Online Marketing
Online Marketing Domains
Business to
consumer
(B2C)
Business to
business (B2B)
Consumer to
consumer
(C2C)
Consumer to
business (C2B)
Product Life-Cycle Strategies
Product Life Cycle
Product Life-Cycle Strategies
• 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
Maturity Stage Modifying Strategies
• Market modifying
• Product
modifying
• Marketing mix
modifying
New-Product Pricing Strategies
Pricing Strategies
• Market-skimming
pricing
• Marketpenetration pricing
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
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
What Is a Product?
Product and Service Classifications
• Consumer products are products and services
for personal consumption
• Classified by how consumers buy them
– Convenience products
– Shopping products
– Specialty products
– Unsought products
New-Product Pricing Strategies
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
Supply Chains and the
Value Delivery Network
Supply Chain Partners
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
Channel Behavior and Organization
Conventional Distributions Systems
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.
Channel Behavior and Organization
Vertical Marketing Systems
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
Channel Behavior and
Organization
Vertical Marketing Systems
Corporate vertical
marketing system
integrates successive
stages of production
and distribution
under single
ownership
Channel Behavior and Organization
Vertical Marketing Systems
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.
Channel Behavior and Organization
Vertical Marketing Systems
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
Channel Behavior and Organization
Vertical Marketing Systems
Administered vertical marketing system has a
few dominant channel members without
common ownership. Leadership comes from
size and power.
The Promotion Mix
Major Promotion Tools
The Promotion Mix
Major Promotion Tools
Advertising is any paid form of non-personal
presentation and promotion of ideas, goods, or
services by an identified sponsor
• Broadcast
• Print
• Internet
• Outdoor
The Promotion Mix
Major Promotion Tools
Sales promotion is the short-term incentives to
encourage the purchase or sale of a product or
service
• Discounts
• Coupons
• Displays
• Demonstrations
The Promotion Mix
Major Promotion Tools
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
The Promotion Mix
Major Promotion Tools
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
The Promotion Mix
Major Promotion Tools
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
Setting the Total Promotion
Budget and Mix
Promotion Mix Strategies
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
Benefits to Buyers
• Convenience
• Ready access to many products
• Access to comparative information about
companies, products, and competitors
• Interactive and immediate
Growth and Benefits of Direct
Marketing
Benefits to Sellers
• Tool to build customer relationships
• Low-cost, efficient, fast alternative to reach
markets
• Flexible
• Access to buyers not reachable through other
channels
Online Marketing
The Promise and Challenges of 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