Download Product Strategy

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Business in a
Changing World
Chapter 13
Dimensions of Marketing Strategy
2
McGraw-Hill/Irwin
Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved.
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Concord Music Group (CMG):
A savvy flair for marketing.
Merger between Concord Records and Fantasy
Records in 2004; added Telarc Records in 2005.
Together, largest and fastest growing independent
music companies in the world.
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The Marketing Mix
Key to developing marketing strategy
•Maintain right mix
•satisfy target market
•Long-term customer relations
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The Marketing Mix
Competitive Advantage
Dimension of value surpassing all others:
•Wal-Mart – price
•Procter & Gamble – top consumer brands
•Domino’s Pizza – distribution via home delivery
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The Marketing Mix
Product Strategy –
•Fred Smith and Federal Express
•Professor said “Smith’s idea would never fly”
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Product Strategy
Developing New Products – Multi-step process
•Idea development
•Screening of new ideas
•Business analysis
•Product development
•Test marketing
•Commercialization
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Product Development
Test marketing –
a trial mini-launch of a new product in limited
areas that represent the potential market.
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Product Development
Commercialization –
The full introduction of a complete marketing
strategy and the launch of the product for
commercial success.
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Product Development
ACNielsen Market Decisions
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Classifying Products
Consumer Products
•Convenience products
•Shopping products
•Specialty products
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Classifying Products
Business Products
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Raw materials
Major equipment
Accessory equipment
Component parts
Processed materials
Industrial services
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Marketing Mix
Product line–
Group of closely related products that are treated as a
unit because of a similar marketing strategy,
production, or end-use
Product Mix –
All the products offered by the company
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Product Life-Cycle
The Life Cycle of a Product
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Product Life Cycle
45 years of strong sales – Mattel’s Barbie doll’s life
cycle is waning. Today, edgier dolls like Bratz dolls
give Barbie a run for her money.
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Product Life Cycle
U.S. Hybrid
Vehicle Sales
1999-2008
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Identifying Products
Branding – process of identifying products
•Name
•Term
•Symbol
•Design
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Branding
Rank
Brand
Brand Value ($
billions)
Brand Value
Change
1
Google
86.1
30%
2
GE (General Electric)
71.4
15%
3
Microsoft
70.9
29%
4
Coca-Cola
58.2
17%
5
China Mobile
57.2
39%
The Most Valuable Brands in the World
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Brands
Manufacturer brands – initiated and owned by the
manufacturer to identify products from production
to point of purchase.
Private distributor brands – cost less than
manufacturer brands; owned and controlled by
wholesaler or retailer
Generic brands – no brand name often come in simple
packages and carry their generic name.
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Packaging
External container holds & describes the product:
•Protection
•Economy
•Convenience
•Promotion
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Brands
Coca-Cola is the most valuable brand in the world
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Branding
Labeling (often by law):
•Ingredients or content
•Nutrition facts (calories, fat, etc.)
•Care instructions
•Suggestions or use (such as recipes)
•The manufacturer’s address and toll-free number
•Web site
•Other useful information
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Product Quality
Product quality -Degree to which a good, service, or idea
meets the demands and requirements of
customers
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Quality
1
AirTran
2
JetBlue
3
Southwest
4
Northwest
5
Frontier
6
Continental
7
Alaska
8
United
9
American
10
Delta
Customer Satisfaction with Airlines
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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
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A Green Marketing Strategy
• Target Market-consumers that want to make ecofriendly decisions
• Product-designed to reduce impact on the
environment
• Price-includes added costs
• Promotion- electronic media to reduce the use of
natural resources
• Distribution-reduce emissions through efficient
transport, communication, & supply chain
management
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Distribution Strategies
Marketing Channels
•Retailers (Wal-Mart, Sears)
•Wholesalers (food brokers to restaurants)
•E-tailers (Amazon.com)
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Retailers
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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
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Distribution
Physical distribution -- includes all the activities
necessary to move products from producers to
customers.
•Inventory control
•Transportation
•Warehousing
•Materials handling
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Promotion Strategy
Promotion mix
•Advertising
•Personal selling
•Publicity
•Sales promotion
Integrated marketing communications
The process of coordinating the promotion
mix elements and synchronizing promotion as
a unified effort
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Personal Selling
Direct, two-way communication with sellers & potential
buyers
•Prospecting
•Approaching
•Presenting
•Handling objections
•Closing – asking for the order
•Following up
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Promotion Strategies: To Push or Pull
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