Marketing Principles
Product, Price, Promotion &
Place
Oct 23rd, 2009
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The Marketing Mix
Product
 Development
 Management
 Features/benefits
 Branding
 Packaging
 After-sales service
Price
 Costs
 Profitability
 Value for money
 Competitiveness
 Incentives
Promotion
 Communication mix
 Advertising
 Sales promotion
 Sales
 Public relations
 Direct marketing
Place
 Access to market
 Channel structure
 Channel management
 Retailer image
 Logistics
Communications Mix – How to decide







Who is the intended market? – B2B
What is objective of MarCom Initiative?
What is nature of Product?
What is product Life Cycle Stage?
What are competitors doing?
What is available budget for MarCom?
Use Push Strategy/Pull Strategy
(Push utilizes personal selling for trade market, pull advertising)
Objectives of MarCom Initiative? (Promotion)

Hierarchy of effects – we can advance
out target customer through certain
stages:
Unawareness
Marcom should
move consumers
from one goal to
the next
Awareness
Beliefs/Knowledge
Attitude
Which type
Marcom for which
level?
Purchase Intention
Purchase
(Figure 12.2 pg 424, Marketing Best Practices)
Top 6 Ad Campaigns
1.
Volkswagen, "Think Small",
Doyle Dane Bernbach, 1959
2.
Coca-Cola, "The pause that
refreshes", D'Arcy Co., 1929
3.
Marlboro, The Marlboro Man,
Leo Burnett Co., 1955
4.
Nike, "Just do it", Wieden &
Kennedy, 1988
5.
McDonald's, "You deserve a
break today", Needham,
Harper & Steers, 1971
6.
DeBeers, "A diamond is
forever", N.W. Ayer & Son,
1938
Source: Advertising Age Periodical, Crain Publishing; 2006
Communications Mix
o All covered in Previous IMC slides
Advertising
Sales promotion
Sales (Personal Selling)
Public relations
Direct marketing
See slides from 23/10/09
**Review Chapter 12 of the book
Place – Distribution – Chap 10

A marketing channel (distribution
channel) is defined as a network of
organizations that creates time, place and
possession utilities for consumers and
business users
** Can be NB to success of your business, it led to failure of
Virgin Cola and many others who had all the other Ps under
control except PLACE.
Products/services are essentially useless unless time,
place and possession utilities are added to get them to
the consumer.
Source: Marketing Principles and Best Practices (2005) K. Douglas Hoffman, Michael R. Czinkota, Peter R. Dickson,
Patrick Dunne, Abbie Griffin, Michael D. Hutt, Balaji C. Krishnan, , Robert F. Lusch, Illka A. Ronkainen
3rd Edition
Marketing Channel Structure

Three basic dimensions
1. Length of the channel
2. Intensity at various levels
3. The types of intermediaries involved
Marketing Channel Structure

Length of channel- See Fig 10.1 book
Can range from 2 or 3 levels – Dell.ie
Up to 10 levels
- some channels in Japan
Manufacturer – Agent – Wholesaler –
Retailer – Consumer
Facilitating agencies don’t take title to the goods so aren’t considered
part of the channel structure. (Transport, warehouse, insurance
companies etc)
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Marketing Channel Structure

Intensity of Channel
You can have intensive, selective or
exclusive number of intermediaries
Determinants of channel structure
1.
2.
3.
Distribution tasks that need to be
performed
The economics of performing distribution
tasks
Management’s desire for control of
distribution
Channels can change quickly over time, - Music, Fast
Food, Alcohol
Distribution Tasks
1.
Distribution exists because there are
discrepancies between production and
consumption: - 4 basic groups
-
Discrepancies
Discrepancies
Discrepancies
Discrepancies
in
in
in
in
quantity – production too big
assortment – 000s of products
time – prod not needed immed.
place – Made in China!
Performing Distribution Tasks
1.
Specialization or Division of Labour
Let some channel members develop expertise and
specialize in particular areas
2.
Transaction Efficiency
At all costs, reduce the number of transactions
required between manufacturer and consumer
See Fig 10.3 & 10.4 of book
Management’s Desire for Control
Depending on the type of product or service that you are
trying to distribute, you may require intense control
of the channel, even if this means less economies of
scale.
Gucci vs. Fruit of the Loom
Marketing Channel Management
Major Decision Areas of channel management
1. Formulating Channel Strategy
2. Designing the channel structure
3. Selecting the channel members
4. Motivating the channel members
5. Coordinating channel strategy with the marketing
mix
6. Evaluating channel member performance
**Getting channel management right is an easy way to
beat competitors, example in book – WD 40. This P is most
difficult P to be challenged quickly by competitor!
Formulated Channel Strategy
Channel Strategy is the broad set of principles by which a
firm seeks to achieve its distribution objectives to
satisfy its customers.
Look at some examples of different distribution channel
choices
CDs – HMV or Play.com or Download?
Designing the Channel Structure
Four phases of channel design:
1: Setting distribution Objectives – Dell wanted to inform
the customer
2: Specifying the distribution tasks that need to be
performed by the channel – store, order process etc
3: Considering alternative channel structures – length etc
4: Choosing an optimal channel structure – common
sense, type of product, distance etc
See Fig. 10.7 of book
Selecting Channel Members
This is the last phase of channel design:
1: Developing Selection Criteria **
2: Finding Prospective channel members
3: Evaluating prospective channel members against
certain criteria
4: Converting prospective members into actual members
** See fig. 10.8 of book – Next Slide
Selection Criteria for channel
members
Credit &
Financial
Condition
Attitude
Sales
Strength
Product
Lines
Management
Ability
Prospective
Channel
Member
Management
Sucession
Sales
Performance
Reputation
Market
Coverage
Market
Coverage
Source: Marketing Principles and Best Practices (2005) K. Douglas Hoffman, Michael R. Czinkota, Peter R. Dickson,
Patrick Dunne, Abbie Griffin, Michael D. Hutt, Balaji C. Krishnan, , Robert F. Lusch, Illka A. Ronkainen
3rd Edition
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Motivating Channel Members
Refers to actions taken by manufacturers to get channel
members to implement their channel strategy:
1: You have to learn about the needs and problems of channel
members – McDonalds Campaign 55 situation**
2: Offer support to channel members to help meet their needs
and solve their problems – VMS (vert mgmt sys)
3: Provide ongoing leadership
There were strings attached to Campaign 55, but McDOnalds
competitors had no strings
Coordinating channel strategy with
the marketing mix
1: Product strategy may depend on channel strategy; eg.
For frozen goods, perishables etc
2: Pricing strategy and channel strategy; the advertised
price must be the available price, even after channel
members have added their markup
3: Promotion strategy and channel strategy; if
manufacturer invests time and money in promotion,
retailer should engage in similar effort
Logistics in marketing channels
Can be divided into traditional management of logistics
and newer supply chain approaches.
The newer approach can save €€€€€s for manufacturer
Transportation
Materials Handling
Order Processing
Inventory Control
Warehousing
Packaging
Outputs of the logistics system
Customer Service; is the desired outcome of a well
designed logistics system
It can include:
*Time from order receipt to shipment
- Japanese JIT (Just in Time)
*Order size and assortment constraints
*Percentage of items out of stock – rarely happens!
*Percentage of orders filled within a given number of
days
*Percentage of orders filled
*Percentage of customer orders that arrive in good
condition
*Order Cycle Time
*Ease & flexibility of order placement
Distribution & Logistics – Chap 10
This section is all covered in chapter 10 of the book.
Next section on November ?? will cover:
Marketing Strategies