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Chapter 13
Product and Distribution Strategies
5 List the stages of the new-product
development process.
1
Explain marketing’s definition of a
product and list the components of
the product strategy.
2 Describe the classification system
for consumer and business goods
and services.
3
Distinguish between a product mix
and a product line.
4
Briefly describe each of the four
stages of the product life cycle.
6 Explain how firms identify their
products.
7
Outline and briefly describe each
of the major components of an
effective distribution strategy.
8 Identify the various
categories of distribution
channels and discus the
factors that influence
channel selection.
PRODUCT STRATEGY
Product Bundle of physical, service, and symbolic attributes designed to satisfy
buyers’ wants.
Classifying Goods and Services
Classifying Consumer Goods and Services
• Convenience products are items the consumer seeks to purchase frequently,
immediately, and with little effort.
• Shopping products are those typically purchased only after the buyer has
compared competing products in competing stores.
• Specialty products are those that a purchaser is willing to make a special effort
to obtain.
Classifying Business Goods
• Goods: Five basic categories
• Installations Major capital items.
• Accessory equipment Includes less expensive and shorter-lived capital items
than installations and involve fewer decision makers.
• Component parts and materials Become part of a final product.
• Raw materials Farm and natural products used in producing other final
products.
• Supplies Expense items used in a firm’s daily operation that do not become
part of the final product.
• Services: Unlike goods, they are intangible, perishable, difficult to standardize.
• From buyer’s perspective, the service provider is the service.
Marketing Strategy Implications
• In B2B, greater emphasis on personal selling for installations and many
component parts.
• May also involve customers in new-product development.
• Advertising more commonly used to sell supplies and accessory equipment.
• Also a greater emphasis on competitive pricing strategies.
Product Lines and Product Mix
Product line Group of related products that are physically similar or are intended
for the same market.
Product mix A company’s assortment of product lines and individual offerings.
• Ongoing assessment to ensure company growth, to satisfy
changing consumer needs and wants, and to adjust to
competitors’ offerings.
PRODUCT LIFE CYCLE
Product life Four basic stages—introduction, growth, maturity, and decline—
through which a successful product progresses.
Stages of the Product Life Cycle
• Introduction stage Firm tries to promote demand for its new offering, inform the
market about it, give free samples to entice consumers to make a trial
purchase, and explain its features, uses, and benefits.
• Growth stage Sales climb quickly as new customers join early users who now
are repurchasing the item.
• Maturity stage Industry sales eventually reach a saturation level at which further
expansion is difficult.
• Decline stage Sales fall and profits decline.
Marketing Strategy Implications of the Product Life
Cycle
• Marketer’s objective is to extend the life cycle as long as product is profitable.
• Common strategies include
• Increasing customers’ frequency of use
• Adding customers
• Finding new uses for product
• Changing package sizes, labels, and product designs
Stages in New-Product Development
• Expensive, time-consuming, and risky.
• Only about one-third of new products become success stories.
• Each step requires
a “go or no-go”
decision.
PRODUCT IDENTIFICATION
Brand Name, term, sign, symbol, design, or some combination that identifies the
products of one firm and differentiates them from competitors’ offerings.
Selling an Effective Brand Name
• Good brands are easy to pronounce, recognize, and remember.
Brand Categories
• Manufacturer ’s br and Brand offered and promoted by a manufacturer
• Pr ivate or store br and Brand that is not linked to the manufacturer but instead
carries a wholesaler’s or retailer’s label. Member’s Mark – Wal-Mart
• Family br anding str ategy A single brand name used for several related
products.
• Individual br anding str ategy Giving each product within a line
a different name.
Brand Loyalty and Brand Equity
Brand Loyalty
• Measured in three stages: Brand recognition, brand preference, and brand
insistence
Brand Equity
Brand equity Added value that a respected and successful name gives to a
product.
Category advisor Vendor that is designated by the business customer as the
major supplier to deal with all other suppliers for a special purchase and to
present the entire pack- age to the business buyer.
Packages and Labels
• Important in product identification and play an important role in
a firm’s overall product strategy.
• Labeling plays an important role and must meet legal requirements
of all countries in which product is sold.
DISTRIBUTION STRATEGY
Distribution channel Path through which products—and legal ownership of
them—flow from producer to consumers or business users.
Physical distribution Actual movement of products from producer to consumers
or business users.
Direct Distribution
• Direct contact between producer and customer.
• Often found in the marketing of relatively expensive, complex products that may
require demonstrations.
Distribution Channels Using Marketing Intermediaries
• Producers distribute products through wholesalers and retailers.
• Often used for products that sell inexpensively to thousands of
consumers in widely scattered locations.
WHOLESALING
Wholesaler Distribution channel member that sells primarily to retailers, other
wholesalers, or business user.
Manufacturer-Owned Wholesaling Intermediaries
• Sales branches and sales offices.
Independent Wholesaling Intermediaries
• Merchant wholesalers, agents and brokers, and manufacturers’ reps.
Retailer-Owned Cooperatives and Buying Offices
• Buying groups and cooperatives.
RETAILING
Retailer Channel member that sells goods and services to individuals for their
own use rather than for resale. Two types: Nonstore and store.
Kohl’s – Department Store
Cabela’s – Specialty Store
The Wheel of Retailing
• New retailers enter the
market by offering lower
prices made possible
through reductions in
service.
• New entries gradually add
services as they grow and
ultimately become targets
for new retailers.
How Retailers Compete
• Retailers must choose merchandising, customer service, pricing, and location
strategies that will attract customers in their target market segments.
• Identifying a Target Market
• Selecting a Product Strategy
• Selecting a Customer Service Strategy
• Selecting a Pricing Strategy
• Choosing a Location
• Building a Promotional Strategy
• Creating a Store Atmosphere
DISTRIBUTION CHANNEL DECISIONS
AND LOGISTICS
• Firms face two major decisions about distribution channels:
• What specific channel will it use?
• What will be the level of distribution intensity?
Selecting Distribution Channels
• Market factors greatly affect decision. Generally:
• Complex, expensive, custom-made, or perishable products move through
shorter distribution channels involving few—or no—intermediaries.
• Standardized products or items with low unit values usually pass
through relatively long distribution channels.
• Start-up companies often use direct channels because they can’t
persuade intermediaries to carry their products.
Selecting Distribution Intensity
• Distribution intensity The number of intermediaries or outlets through which a
manufacturer distributes its goods.
• Intensive distr ibution Firm’s products in nearly every available outlet.
• Selective distr ibution Limited number of retailers to distribute its product lines.
• Exclusive distr ibution Limits market coverage in a specific geographical
region.
Logistics and Physical Distribution
Supply chain Complete sequence of suppliers that contribute to creating a good
or service and delivering it to business users and final consumers.
Logistics Activities involved in controlling the flow of goods, services, and
information among members of the supply chain.
Physical Distribution
• Activities aimed at efficiently moving finished goods from the production line to
the consumer or business buyer.
Customer Service
• Customer service standards Measure the quality of service a firm provides for its
customers.
• Warranties Firms’ promises to repair a defective product, refund
money paid, or replace a product if it proves unsatisfactory.