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Transcript
Chapter Thirteen Dimensions of Marketing Strategy McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. The Key to Successful Marketing Strategy • The Right Marketing Mix to Satisfy the Customer: – – – – The Right Product The Right Promotion The Right Price The Right Distribution McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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). McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Classifying Products • Consumer Products McGraw-Hill/Irwin • Industrial Products © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Classifications of Industrial Products • • • • • • • Raw Materials Major Equipment Accessory Equipment Component Parts Processed Materials Supplies Industrial Services McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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. McGraw-Hill/Irwin • Product Mix – All of the products offered by an organization © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Product Life Cycle Sales $ Introduction Growth Maturity Decline Sales Volume Profit 0 Time McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Categories of Brands • Manufacturer Brands – Kellogg’s, Ford, Sony • Private Distributor Brands – Kenmore appliances (Sears) • Generic Brands – Peanut Butter, Dog Food, Kitty Litter McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Packaging • The external container that holds and describes the product inside. • Packaging Functions: – – – – Protection Economy Convenience Promotion FAST FACT: While shopping, the average time a consumer looks at a package is 2.5 seconds. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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 McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Pricing Strategy Four Common Pricing Objectives: 1. Maximize Profits and Sales 2. Boost Market Share 3. Maintain the Status Quo 4. Survival McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Pricing Strategies • New Product Pricing Price skimming Penetration pricing • Psychological Pricing Odd/Even Prestige pricing • Price Discounting Quantity discounts Seasonal discounts Promotional discounts McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Channels for Consumer Products Producer Producer Producer Producer Agents (Middlemen) Consumers McGraw-Hill/Irwin Wholesalers (Middlemen) Wholesalers (Middlemen) Retailers (Middlemen) Retailers (Middlemen) Retailers (Middlemen) Consumers Consumers Consumers © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Channel for Services • Services are generally produced and consumed at the same time. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Physical Distribution Producer Inventory Planning & Control Transportation Warehousing Materials Handling Consumer McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Distribution Decisions are the Least Flexible Marketing Decisions • Distribution decisions: – Use committed resources – Establish contractual relationships – Are bound by time McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Integrated Marketing Communications (IMC) The Goal of Promotion Strategy • IMC – Coordinating the promotion mix elements and synchronizing promotion as a unified effort. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. The Promotion Mix Publicity Advertising Sales Promotion Personal Selling McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Advertising A paid form of non-personal communication transmitted through a mass medium, such as television commercials or magazine advertisements. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Personal Selling Three Categories of Salespersons: 1. Order Takers 2. Creative Salespersons 3. Support Salespersons McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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 McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. In Personal Selling, Appearance Sells • Sales managers tell what personal attributes they feel work against a salesperson’s ability to sell: – – – – – – 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. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Principal Publicity Mechanisms • • • • • News releases Feature articles Captioned photographs Press conferences Interviews McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Tools of Sales Promotion • • • • • • • Store displays Premiums Sampling and demonstrations Coupons Consumer contests and sweepstakes Refunds Trade shows McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Advertising Media Print Media Electronic Media • • • • • Television • Radio • Cyber ads Newspapers Magazines Direct mail Outdoor (billboards) McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Push and Pull Strategies Pushing Strategy Producer Wholesalers Retailers Consumers Retailers Consumers Pulling Strategy Producer Wholesalers Flow of Communications McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Objectives of Promotions • Stimulate Demand • Stabilize Sales • Inform, Remind, and Reinforce Customers McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Marketing Pays Salary Ranges for Selected Marketing Professionals • • • • • • 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). McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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? McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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? McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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”? McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. Additional Discussion Questions and Exercises 4. What are the advantages of businesses using coupons and/or contests and sweepstakes for sales promotion purposes? McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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. McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved. 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 McGraw-Hill/Irwin © 2003 The McGraw-Hill Companies, Inc., All Rights Reserved.