Download Products Developing New Products Classifying Products

Products
Developing New Products
• New Idea Screening
• Business Analysis
• Product Development
• Test Marketing
• Commercialization
Classifying Products
• Consumer
Products
– Convenience
products
– Shopping products
– Specialty products
• Business Products
– Raw materials
– Major equipment
– Accessory
equipment
– Component parts
– Processed materials
– Industrial services
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Product Line and Product Mix
• Product Line
– Closely related
products treated as
a unit because of
similar marketing
strategy, production,
or end-use
considerations
• Product Mix
– All of the
products
offered by an
organization
Colgate-Palmolive’s Product Mix and
Product Lines
Source: “Our Products,” Colgate-Palmolive (n.d.), www.colgate.com/app/Colgate/US/Corp/Products.cvsp (accessed
June 5, 2004).
Product Life Cycle
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Identifying Products
• Branding
– The process of naming and identifying
products; can use a brand mark or
trademark
• Packaging
– The external container that holds and
describes the product
• Labeling
– The presentation of important information
on a package
Categories of Brands
• Manufacturer Brands
– Kellogg’s, Ford, Sony
• Private Distributor Brands
– Kenmore appliances (Sears)
• Generic Brands
– Peanut butter, dog food, kitty
litter
Packaging Functions
• Protection
• Economy
• Convenience
• Promotion
Did You Know?
While shopping, the average time a
consumer looks at a package is 2.5
seconds.
Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved
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Labeling
• The content of labeling, often required by
law, may include:
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Ingredients or content
Nutrition facts (calories, fat, etc.)
Care instructions
Suggestions or use (such as recipes)
Manufacturer’s address and toll-free number
Web site
Other useful information
Product Quality
• The degree to which a good,
service, or idea meets the
demands and requirements of
customers
Pricing Strategy
• Four Common Pricing Objectives:
– Maximize profits and sales
– Boost market share
– Maintain the status quo
– Survival
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Pricing Strategies
• New Product Pricing
– Price skimming
– Penetration pricing
• Psychological Pricing
– Odd/Even
– Prestige pricing
• Price Discounting
– Quantity discounts
– Seasonal discount
– Promotional discounts
Price vs. Non-Price Competition
• For the following products, indicate whether they
are sold using price competition or non-price
competition and defend your selection:
– Toyota Hybrid Prius
– Hyundai Sonata
– Porsche Cayenne SUV
– Estee Lauder Electric Intense Lip Creme
– Avon Brilliant Moisture Lip Color
– Louis Vuitton’s Murakami Handbags
– Olay Complete Moisturizing Lotion
– Toshiba Widescreen Televisions
Distribution Strategy
• Marketing Channels
– Retailers (Wal-Mart, Sears)
– Wholesalers (food brokers to
restaurants)
– E-tailers (Amazon.com)
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Supply Chain Management
• Long-term partnerships among
channel members to reduce
costs, waste, and unnecessary
movement through the channel
to satisfy customers
Channels for Consumer Products
Channels for Business Products
• More than half of all business
products are sold through direct
marketing channels
• Other business products may be
distributed through channels
employing wholesaling
intermediaries
– Industrial distributors
– Manufacturer’s agents
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Intensity of Market Coverage
• Intensive distribution
– Makes a product available in as many outlets as
possible
• Selective distribution
– Uses only a small proportion of all available outlets
to expose products
• Exclusive distribution
– Exists when a manufacturer gives a middleman
the sole right to sell a product in a defined
geographic territory
Physical Distribution
Includes all the activities necessary to
move products from producers to
customers:
– Inventory control
– Transportation
– Warehousing
– Materials handling
Importance of Distribution in a
Marketing Strategy
• Distribution decisions are the least
flexible marketing decisions:
– Use committed resources
– Establish contractual relationships
– Are bound by time
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The Promotion Mix
• A strong promotion program results from the
careful selection and blending of:
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–
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Advertising
Personal selling
Publicity
Sales promotion
• Integrated marketing communications
– Process of 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
– Advertising campaign
• Advertising Media
– Print media
•
•
•
•
Newspapers
Magazines
Direct mail
Outdoor (billboards)
– Electronic media
• Television
• Radio
• Cyber ads
U.S. Advertising Expenditures in
Millions of Dollars
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Top 10 Product Categories for Advertising
Spending in the United States for the year 2003
Product Category
Advertising
Spending ($mil)
Automotive – Factory
$8,938
Auto Dealerships – Local
$4,953
Autos – Dealer Association
$4,320
Department Stores
$4,070
Motion Pictures
$3,468
Restaurant – Quick Service
$3,442
Prescription Drugs – Human
$3,226
Telephone Services – Wireless
$2,307
Direct Response Products
$1,757
Furniture Stores
$1,402
Source: “U.S. Advertising Spending Rose More than 5% in 2003, Nielson Media
Research press release, February 19, 2004, available at
http://www.nielsenmedia.com
Personal Selling
• Direct, two-way communication
with buyers and potential buyers
• A six-step process:
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Prospecting
Approaching
Presenting
Handling objections
Closing – asking for the order
Following up
• Cost: $200-$300
Publicity (Public Relations)
• Non-personal communication
transmitted through mass media
but not paid for directly by the
firm:
– Presented in news story form
– Describes what a firm is doing, what
products it is launching, or other
newsworthy information
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Sales Promotion
• Direct inducements offering added value or
some other incentive for buyers to enter into
an exchange
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Store displays
Premiums
Sampling and demonstrations
Coupons (248B distributed)
Consumer contests and sweepstakes
Refunds
Trade shows
Push and Pull Strategies
Objectives of Promotions
• Stimulate demand
• Stabilize sales
• Inform, remind, and reinforce
customers
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