Part 5
Marketing:
Developing
Relationships
© 2015 McGraw-Hill Education.
12-2
CHAPTER 11
Customer-Driven Marketing
CHAPTER 12
Dimensions of Marketing Strategy
CHAPTER 13
Digital Marketing and Social Networking
12-3
Learning Objectives
LO 12-1 Describe the role of product in the marketing mix,
including how products are developed, classified, and
identified.
LO 12-2 Define price and discuss its importance in the
marketing mix, including various pricing strategies a
firm might employ.
LO 12-3 Identify factors affecting distribution decisions, such as
marketing channels and intensity of market coverage.
LO 12-4 Specify the activities involved in promotion as well as
promotional strategies and promotional positioning.
12-4
Product Strategy
Idea Development
New ideas come internally from marketing research or employees and from external sources such as ad agencies,
consultants and customers
New Idea Screening
Screening involves management looking at the company’s resources and its ability to produce and market the
product; most ideas are rejected in this phase
Business Analysis
Analyze the product’s affects on sales, costs and profits
Product Development
The few products to reach this stage get prototypes and the development of a marketing strategy
Test Marketing
A trial mini-launch of a product in limited areas that represent the potential market
Commercialization
The full introduction of a complete marketing strategy and the launch of the product for commercial success
12-5
Product Strategy
Products are classified as consumer or business products

Consumer products are products intended for
household or family use
Convenience Products – items bought frequently with no
planning, such as eggs, milk, bread and newspapers
Shopping Products – purchased after consumer has
“shopped around”
Specialty Products – require greater research and
shopping effort; consumers unwilling to accept a substitute
Business Products
• Used directly or indirectly in the operation or manufacturing processes of
businesses
12-6
Product Strategy
Product Line
• A group of closely related products that are treated as a unit because of similar
marketing strategy, production or end-use considerations
Product Mix
• All the products offered by an organization
Introductory
Stage
Marketers focus on
making consumers
aware of the product
and its benefits
Growth
Stage
The firm tries to
strengthen its
market position
by emphasizing
benefits
Maturity
Stage
Severe
competition
and heavy
costs
Decline
Stage
Firms may
eliminate models,
cut costs and
finally phase out
products
12-7
Product Strategy
Branding
• The process of naming and identifying products
Trademark
• A brand registered with the U.S. Patent and Trademark Office and is thus
legally protected from use by any other firm
Manufacturer Brands
• Initiated and owned
by the manufacturer
to identify products
from the point of
production to the
point of purchase
Private Distributor
Brands
• May cost less than
manufacturer brands,
they are owned and
controlled by a
wholesaler or retailer
Generic Products
• Products with no
brand name that
often come in simple
packages and carry
only their generic
name
12-8
Product Strategy
Packaging
• The external container that holds and describes
the product; influences consumers’ attitudes
• Performs several functions: protection, economy,
convenience and promotion
Labeling
• The presentation of important information on a
package; closely associated with packaging
• Contains information required by law such as
ingredients, nutrition facts, warnings, instructions
and manufacturer’s address
Quality
• The degree to which a good, service or idea meets the
demands and requirements of customers
12-9
Pricing Strategy
Pricing New Products
Price Skimming is charging the
highest possible price buyers who
want the product will pay
Penetration price is a low price
designed to help a product enter the
market and gain market share rapidly
Psychological Pricing encourages purchasing based on
emotional rather than rational responses to price
Even/Odd Pricing assumes people will buy
more of a product for $9.99 than $10 because it
seems to be a bargain at the odd price
Symbolic/Prestige Pricing assumes that high
prices connote high quality
Discounts
• Temporary price reductions often employed to boost sales
12-10
Distribution Strategy
Marketing Channel
A group of organizations that moves
products from their producer to customers;
also called a channel of distribution
Makes products available to customers
when and where they desire to purchase
them
Middlemen, or intermediaries, are organizations
that bridge the gap between a product’s
manufacturer and the ultimate consumer
Middlemen create time, place and ownership utility
Retailers
• Intermediaries who buy products from manufacturers (or other
intermediaries) and sell them to consumers for home and household
use rather than for resale or for use in producing other products
Wholesaler
• Intermediaries who buy from producers or
from other wholesalers and sell to retailers
12-11
Distribution Strategy
Intensive Distribution
Selective Distribution
• A product is made available in as many
outlets as possible
• Used for frequently purchased items
• Only a small number of all available
outlets are used to expose products
• Used most often when consumers buy
only after shopping and comparing price,
quality and style
Exclusive Distribution
Physical Distribution
• The awarding by a manufacturer to an
intermediary of the sole right to sell a
product in a defined geographic territory
• Includes high-quality merchandise
• All the activities necessary to move
products from producers to customers –
inventory control, transportation,
warehousing and materials handling
• Both goods and services require physical
distribution
Warehousing
• The design and operation of facilities to receive, store and ship products
Materials Handling
• The physical handling and movement of products in warehousing and
transportation
12-12
Promotion Strategy
Integrated Marketing Communications
• Coordinating the promotion mix elements and synchronizing promotion as
a unified effort
Advertising
• A paid form of non-personal communication transmitted
through a mass medium, such as television
commercials or magazine advertisements
Advertising Campaign
• Designing a series of advertisements and placing them
in various media to reach a particular target market
12-13
Promotion Strategy
Personal Selling
• Direct, two-way communication with buyers and potential buyers
Prospecting:
identifying potential
buyers
Approaching:
referral or cold call
Presenting:
demonstrating the
product
Handling
Objections:
countering reasons
for purchase
Closing: asking for
a purchase
Following Up:
checking back
after purchase
12-14
Promotion Strategy
Publicity
Non-personal
Message is presented as a
communication transmitted
news story and the
through mass media but not company is not seen as the
paid for directly by the firm
originator of the message
Purpose
• Advertising in
informative,
persuasive, or both;
publicity is informative
Impact
• Advertising calls for
action; publicity rarely
does
Most companies have a
public relations department
trying to gain favorable
publicity and minimize
negative publicity
Cost
Duration
• Companies pay for
advertising; publicity is
free
• Advertising is repeated
often; publicity
appears once
Sales Promotion
• Direct inducements offering added value or some other incentive for
buyers to enter into an exchange
12-15
Promotion Strategy
An attempt to motivate
intermediaries to push the product
down to their customers
Push
Strategy
Pull
Strategy
Uses promotion to create consumer
demand so consumers exert
pressure on marketing channel
members to make it available
Typical objectives of promotion
Stimulate Demand
• Often through ads and sales
promotion, particularly
important when using a pull
strategy
Stabilize Sales
• Decreasing sales call for sales
promotions and ads
Inform, remind and
reinforce customers
Promotional positioning uses promotion to create and maintain an image of a product
in buyers’ minds