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13-1 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. 13-3 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. 13-4 The Marketing Mix Key to developing marketing strategy •Maintain right mix •satisfy target market •Long-term customer relations 13-5 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 13-6 The Marketing Mix Product Strategy – •Fred Smith and Federal Express •Professor said “Smith’s idea would never fly” 13-7 Product Strategy Developing New Products – Multi-step process •Idea development •Screening of new ideas •Business analysis •Product development •Test marketing •Commercialization 13-8 Product Development Test marketing – a trial mini-launch of a new product in limited areas that represent the potential market. 13-9 Product Development Commercialization – The full introduction of a complete marketing strategy and the launch of the product for commercial success. 13-10 Product Development ACNielsen Market Decisions 13-11 Classifying Products Consumer Products •Convenience products •Shopping products •Specialty products 13-12 Classifying Products Business Products • • • • • • Raw materials Major equipment Accessory equipment Component parts Processed materials Industrial services 13-13 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 13-14 Product Life-Cycle The Life Cycle of a Product 13-15 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. 13-16 Product Life Cycle U.S. Hybrid Vehicle Sales 1999-2008 13-17 Identifying Products Branding – process of identifying products •Name •Term •Symbol •Design 13-18 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 13-19 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. 13-20 Packaging External container holds & describes the product: •Protection •Economy •Convenience •Promotion 13-21 Brands Coca-Cola is the most valuable brand in the world 13-22 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 13-23 Product Quality Product quality -Degree to which a good, service, or idea meets the demands and requirements of customers 13-24 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 13-25 Pricing Strategy Four Common Pricing Objectives: •Maximize profits and sales •Boost market share •Maintain the status quo •Survival 13-26 Pricing Strategies New Product Pricing Price skimming Penetration pricing Psychological Pricing Odd/Even Prestige pricing Price Discounting Quantity discounts Seasonal discount Promotional discounts 13-27 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 13-28 Distribution Strategies Marketing Channels •Retailers (Wal-Mart, Sears) •Wholesalers (food brokers to restaurants) •E-tailers (Amazon.com) 13-29 Retailers 13-30 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 13-31 Distribution Physical distribution -- includes all the activities necessary to move products from producers to customers. •Inventory control •Transportation •Warehousing •Materials handling 13-32 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 13-33 Personal Selling Direct, two-way communication with sellers & potential buyers •Prospecting •Approaching •Presenting •Handling objections •Closing – asking for the order •Following up 13-34 Promotion Strategies: To Push or Pull 13-35