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Chapter Thirteen
Dimensions of
Marketing Strategy
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The Key to Successful
Marketing Strategy
• The Right Marketing Mix to Satisfy
the Customer:
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–
–
–
The Right Product
The Right Promotion
The Right Price
The Right Distribution
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The Right Product Strategy
• To satisfy the target market
• To create long-term relationships with
customers
FAST FACT:
Domino’s is the largest privately held restaurant chain in the world.
In one year in the US, Domino’s used 25.5 million pounds of
pepperoni and 146 million pounds of mozzarella cheese.
Source: Domino’s Web site, http://www.dominos.com/About/PR98Usage.cfm (accessed August 24, 2001).
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Developing New Products
Idea Development
Screening New Ideas
Business Analysis
Product Development
Test Marketing
FAST FACT:
In 2001, Microsoft planned to spend
$4 billion on R&D.
Commercialization
Source: Rebecca Buckman, “Window into the future,” Wall Street Journal, June 25, 2001, p. R19.
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Classifying Products
• Consumer
Products
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• Industrial
Products
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Classifications of
Consumer Products
Convenience Products
Products bought frequently without a lengthy
search and bought for immediate consumption.
Shopping Products
Products purchased after buyer has compared
competitive products.
Specialty Products
Products that the buyer searches for and makes
a special effort to obtain.
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Classifications of
Industrial Products
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•
•
•
•
•
•
Raw Materials
Major Equipment
Accessory Equipment
Component Parts
Processed Materials
Supplies
Industrial Services
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Product Line and Product Mix
• Product Line
– Closely related
products that are
treated as a unit
because of similar
marketing
strategy,
production, or
end-use
considerations.
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• Product Mix
– All of the products
offered by an
organization
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Product Life Cycle
Sales $
Introduction
Growth
Maturity
Decline
Sales
Volume
Profit
0
Time
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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.
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The 10 Most Valuable
Brands in the World
Rank: Brand:
1 Coca-Cola
2
3
4
5
6
7
8
9
10
Microsoft
IBM
GE
Nokia
Intel
Disney
Ford
McDonald’s
AT&T
2001 Brand Value ($billions)
68.9
65.1
52.8
42.4
35.0
34.7
32.6
30.1
25.3
22.8
Source: Gerry Khermouch, Stanley Holmes, and Moon Ihlawn, “The Best Global Brands,”
Business Week, August 6, 2001, p. 50.
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Categories of Brands
• Manufacturer Brands
– Kellogg’s, Ford, Sony
• Private Distributor Brands
– Kenmore appliances (Sears)
• Generic Brands
– Peanut Butter, Dog Food, Kitty Litter
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Packaging
• The external container that holds and
describes the product inside.
• Packaging Functions:
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Protection
Economy
Convenience
Promotion
FAST FACT:
While shopping, the average time a consumer
looks at a package is 2.5 seconds.
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Labeling
• The presentation of important
information on a package:
– Product content information may be
required by law
– Useful information – manufacturer’s
toll-free number and address
– Directions and suggestions for use
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Product Quality
• The degree to which a good, service,
or idea meets the demands and
requirements of customers.
• In the global marketplace, product
quality is a key means of
differentiating products and
positioning them above the
competition in the consumer’s mind.
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Pricing Strategy
Four Common Pricing Objectives:
1. Maximize Profits and Sales
2. Boost Market Share
3. Maintain the Status Quo
4. 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 discounts
Promotional discounts
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Distribution Strategy
• Marketing Channels
– Retailers (Wal-Mart, Sears)
– Wholesalers (food brokers to restaurants)
– E-tailers (Amazon.com)
• Supply Chain Management
– Long-term partnerships among channel
members to reduce costs, waste, and
unnecessary movement through the channel to
satisfy customers.
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Channels for
Consumer Products
Producer
Producer
Producer
Producer
Agents
(Middlemen)
Consumers
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Wholesalers
(Middlemen)
Wholesalers
(Middlemen)
Retailers
(Middlemen)
Retailers
(Middlemen)
Retailers
(Middlemen)
Consumers
Consumers
Consumers
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Channel for Services
• Services are generally produced and
consumed at the same time.
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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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Physical Distribution
Producer
Inventory Planning & Control
Transportation
Warehousing
Materials Handling
Consumer
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Distribution Decisions are
the Least Flexible
Marketing Decisions
• Distribution decisions:
– Use committed resources
– Establish contractual relationships
– Are bound by time
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Integrated Marketing
Communications (IMC)
The Goal of Promotion Strategy
• IMC
– Coordinating the promotion mix
elements and synchronizing promotion
as a unified effort.
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The Promotion Mix
Publicity
Advertising
Sales
Promotion
Personal
Selling
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Advertising
A paid form of non-personal
communication transmitted through a mass
medium, such as television commercials or
magazine advertisements.
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Ad Spending in the US
Total Advertising Expenditures for 2001
General Motors
$2.84 billion
Phillip Morris
$1.77
DaimlerChrysler
$1.67
Procter & Gamble
$1.53
AOL Time Warner
$1.44
Ford Motor
$1.16
Walt Disney
$1.05
Source: Vanessa O’Connell, “Advertising,” Wall Street Journal, May 31, 2001, p. B14.
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Personal Selling
• Direct, two-way communication with
buyers and potential buyers.
FAST FACT:
A typical sales call on an industrial customer
can cost between $200 and $300 per call.
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Personal Selling
Three Categories of Salespersons:
1. Order Takers
2. Creative Salespersons
3. Support Salespersons
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Personal Selling is a
Six Step Process
1.
2.
3.
4.
5.
6.
Prospecting
Approaching
Presenting
Handling Objections
Closing – Asking for the Order
Following Up
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In Personal Selling,
Appearance Sells
• Sales managers tell what personal attributes
they feel work against a salesperson’s
ability to sell:
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Sloppy dresser
Unstylish dresser
Physically unattractive
Overweight
Heavy accent
Young looking
94%
75%
59%
54%
54%
32%
Source: “Appearance sells,” USA Today Snapshots, October 9, 2001, p. B1.
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Publicity
• Non-personal communication
transmitted through mass media but
not paid for directly by the firm.
• May be done by the Public Relations
Department or an outside PR firm.
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Principal Publicity Mechanisms
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•
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News releases
Feature articles
Captioned photographs
Press conferences
Interviews
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Sales Promotion
• Direct inducements offering added
value or some other incentive for
buyers to enter into an exchange.
FAST FACT:
Annually, 248 billion cents-off coupons are
distributed, but less than 2% are redeemed.
Source: Renae Merle, “US Slowdown is Good News for Coupon
Seller Valassis,” Wall Street Journal, May 1, 2001, p. B2.
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Tools of Sales Promotion
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Store displays
Premiums
Sampling and demonstrations
Coupons
Consumer contests and sweepstakes
Refunds
Trade shows
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Advertising Media
Print Media
Electronic Media
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•
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• Television
• Radio
• Cyber ads
Newspapers
Magazines
Direct mail
Outdoor
(billboards)
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Internet Advertising
Total revenues from advertising, paid
content, and e-commerce on mobile
devices in the U.S. is projected to grow
from $100 million today to $3.3 billion in
2005.
Source: “E-MONEY,” American Demographics, June, 2001, p. 32.
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Push and Pull Strategies
Pushing Strategy
Producer
Wholesalers
Retailers
Consumers
Retailers
Consumers
Pulling Strategy
Producer
Wholesalers
Flow of Communications
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Objectives of Promotions
• Stimulate Demand
• Stabilize Sales
• Inform, Remind, and Reinforce
Customers
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Promotional Positioning
The use of promotion to create and
maintain an image of a product in the
buyer’s mind.
A natural result of market segmentation.
Assists in product differentiation.
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Marketing Pays
Salary Ranges for Selected Marketing Professionals
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•
•
Corporate Marketing Manager
Ad Agency Marketing Manager
Brand/Product Manager
Public Relations Manager
PR Account Executive
Advertising Copywriter
$51,500 - $85,000
$50,000 - $88,750
$60,000 - $91,500
$56,750 - $88,250
$38,500 - $56,000
$42,000 - $61,500
Source: “Agency and Corporate Advertising and Marketing Professionals Annual Salary Range,”
CareerJournal.com from http://www.careerjournal.com/salaries/industries/advertising/20010417
-advmktgcreative-tab.html (accessed July 10, 2001) and “Public Relations Professionals Annual
Salary Ranges,” CareerJournal.com http://www.careerjournal.com/salaries/industries/publicrelations/
20010417-pr-tab.html (accessed July 10, 2001).
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Solve the Dilemma
1. Design a marketing strategy for the new
product line.
2. Critique your marketing strategy in terms
of its strengths and weaknesses.
3. What are your suggestions for
implementation of the marketing strategy?
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Explore Your Career Options
Do you think the role of marketing will
continue to be important in the face of
increasing technological advances?
Should professionals such as doctors,
lawyers, and dentists utilize marketing
in the same way that manufacturing and
retail firms do?
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Additional Discussion Questions
and Exercises
1. Research and development is the process of identifying
new ideas and technologies that can be developed into
new products. Where do these new ideas come from?
2. Assume you have the opportunity to buy a company
that markets a product. Which stage of the life cycle of
that product would offer you the greatest opportunity
for profits? Why?
3. What is the difference between a “brand mark” and a
“trademark”?
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Additional Discussion Questions
and Exercises
4. What are the advantages of businesses using
coupons and/or contests and sweepstakes for sales
promotion purposes?
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Chapter 13 Quiz
1. In the introductory stage of a product’s life, buyers may be
charged the highest possible price for the product. This
pricing approach is called
a. penetrating pricing.
b. psychological pricing.
c. price skimming.
d. break-even point.
2. Branding may include
a. the brand name.
b. the brand mark.
c. the trade mark.
d. all of the above.
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Chapter 13 Quiz
3. Products that are purchased after the consumer has compared
competitive products are
a. convenience products.
b. shopping products.
c. specialty products.
d. a product line.
4. Intermediaries who sell products to ultimate consumers for
home and household use rather than for resale or for use in
producing other products are
a. wholesalers.
b. retailers.
c. merchant middlemen.
d. agent middlemen.
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Multiple Choice Questions
about the Video
1. Which of the following represents the target market for Alligator
Records?
a. country music fans
b. hard rock fans
c. blues fans
d. classical music fans
2. Which type of market coverage is probably being used by Alligator
Records?
a. selective distribution
b. intensive distribution
c. exclusive distribution
d. ad-hoc distribution
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