Chapter 8

1. Chapter 8 Marketing Your Product

2. Section 8.1 Developing Your Marketing Mix

3. Which would you buy?

4. Which would you buy?

5. What is a Marketing Plan? • Market: Group of potential customers • Marketing Plan: way of presenting your business to your customers. • Communicate the value of your product or service • Consists of 2 primary parts: • Marketing Goals • Strategies for reaching your goals (marketing mix)

6. Part 1: Marketing Goals • Each marketing plan is unique to business. • To start: write down everything you want to accomplish • As time goes on, update, modify and adjust goals as you begin to research and see how attainable they actually are. • Should match your business plan. • Goals are more specific and “action-orientated” • Measurable in practicable ways • “I want to increase the number of customers in my store” (too general) ADD: “ by 25%” more measurable.

7. Marketing Goals • Require a time frame • Short range: within next year? Months? • Mid-range: within the next 2-5 years? • Long range: within the next 10-20 years? • Keep in mind: • Motive: “why do you want to reach each objective?” • Consistency: make sure goals don’t conflict with one another, will cause frustration and decrease chance of accomplishing them. • Cost: budget! Money, energy, time, investment.

8. What is Your Market Share?? • Percentage given to a market population that is buying a product or service from a particular business. • Based on level of competition in target market • Large corporations or small businesses. • Hard to capture a large percentage to start • Unique product to market??

9. Sample: Market Share (Nielsen)

10. Sample: Market Share: Energy Drinks

11. Part 2: Marketing Mix 5 P’s = marketing mix = recipe for success! People Product Place Price Promotion

12. People • Target market customers are key to setting up all other strategies in marketing plan. • Include: • Detailed Customer Profile • Description of Staff needed to carry out marketing plan; Your marketing department

13. Product • Description of what your business will provide to meet the needs of your target market. • Using market research • What most appeals to your customer base? • Product Mix=different products and services a business sells. • Mix depends on product image you want to communicate • Also number and type of markets you are targeting • Important to identify features such as: color, size, quality, hours, warranties, delivery, and installation.

14. Every product has features • Other important factors to consider: • Branding: name, symbol or design used to identify your product. • Packaging: box, container or wrapper in which the product is placed. • Labeling: where information about product is listed. • All will help differentiate product from others on market. Product

16. packaging

17. labeling

18. Place, Price, Promotion • Place: Selling and delivery methods • How and where will customers be able to buy or receive you product or service?? • Price: What is reasonable? • Strategy may vary over time • Promotion: Process used to make potential customers aware of product or service • How can you influence them to buy?

19. Attracting Customers to YOU • Product needs to include: • Features: what it does and how it appears to the senses (sight, sound, taste, smell, and touch) • Benefits: reasons why customers chose to buy it (saving time, increase social status, protecting the family, getting rid of a problem, improving a relationship, reducing worry, entertainment, saving money) • Design: label and packaging (color, artwork, etc.) • Packaging: how can you emphasize the product (bottle, box, bag, container)

20. What can you do? • CREATE A BRAND= marketing strategy that can create an emotional attachment to your product in the mind of the consumer. • Perception is key… • (high class, “premium brand” • Lower quality “base line brand” • CREATE a strong image by influencing potential and existing customers = product positioning • CREATE a Brand mark= logo

21. Customer Loyalty Ultimate Goal = keep customer coming back! • Feelings or attitudes that incline a customer to return to a companyto shop and purchase there again the same product, service or brand. • Superiority might not work alone against competition. • Product can be copied or imitated. • Pricing can always be challenged.

22. Chapter 6 Strategies to Maintain Customer Loyalty • Listen and respond to feedback • Strategies for maintaining loyalty • Superior service • More convenient hours than others • No hassle/easy return policies • Store-specific credit cards / gift cards • Personal notes or cards • Frequent buyer programs • Rewards, points, redemption cards, etc.

23. Distribution Strategies • Various ways a product can reach the consumer. • How will you get your product into hands of customers? • How can you ensure that your product will be available when needed? • More cost efficient the channel is, the lower you can keep the product’s price. • More time efficient the channel is, the fast it gets to customers. Direct Channel Indirect Channel 2 Main Options

24. Direct vs. Indirect Channels Direct Channel product  producer  consumer Indirect Channel Product producer  one or more intermediaries  consumer Intermediary (bridge) agents, brokers, wholesalers, distributors, retailers.

25. Indirect Channel Example Manufacturer of cell phones (Apple) Wholesaler (Fancy Phones) buys phone from Apple Retailer (Verizon) buys phones for the stores. Consumer goes to Verizon to purchase Apple I phone. How many intermediaries are there?

26. 3 Basic Distribution Strategies #1: Exclusive: retailer/dealer has sole right to sell a product in a certain area. Signed agreement in place that retailer can’t sell competing products. Ex) Fast food fountain soda machines, vending machines. #2) Intensive: opposite of exclusive; sell a product at a variety of stores. Ex) Colgate toothpaste is sold CVS, Walgreens, Shoprite, etc. #3) Selective: sold in moderate outlets, but not everywhere in a particular area. Ex) Car dealers select dealerships based on space and target market.

27. Pricing Strategies Based on target market and potential profits for your company. Price should be: Low enough customers want to buy from you and NOT the competition. High enough you will earn a profit.

28. Determine Price Objective What do you want the price to say about your product? What do you want the price to accomplish for your business? Keep in mind your: business plan goals marketing brand & goals What can your target market afford? (research)

29. 4 Types of Pricing Objectives #1) Build or maintain image Create an image of the product in mind of the consumer Ex) generic vs. brand luxury vs. basic #2) Increase sales volume (quantity) What is the competition doing? Higher price = lower sales Lower price = higher sales

30. 4 Types of Pricing Objectives #3) Obtain or Expand Market Share Initial launch of product may be a lower price Once established, possibly raise price #4) Maximize Profits Introduce product with a high price to max profits If competition imitates or takes attention away from you, drop prices

31. 3 Types of Pricing Strategies • Depends on product mix, price objective & target market • #1) Demand Based: focuses on how much consumers willing to pay. • Most useful when: • Product is considered unique • Has a greater value than others • You can charge the max amount. • Examples??

32. 3 Types of Pricing Strategies • #2) Competition Based: focuses on how much the competition is charging? • Consider: • Are you going to charge the same? More? Less? • How are you going to stay competitive? • Continually focuses on research & competition • #3) Cost Based: focuses on how much does it cost your business to provide product? • Consider: • Markup or markdown costs

33. Price Adjustments • For indirect channels of distribution, price will be adjusted as it moves through different intermediaries. • Retail store buys a product from a wholesaler, an additional amount is added to price to make a profit ==Markup price Calculating Markup Prices • Wholesale cost x Markup % / 100 = Markup amount • Wholesale cost + markup amount= markup price (retail price)

34. Markup Price Example • You sell shampoo to a local drug store. The whole sale cost is $5.05. The markup amount is 30%. • What is the total mark up amount? • $1.51 • $5.05 x 30 / 100 OR $5.05 x .30 What is the retail cost to sell in the drug store? • $6.56 • $5.05 + 1.51 = $6.56

35. Markdown Cost • Retailer wants to reduce the price (sale items) of the product. • Often use this method: • Overstocked • Need to make room for new shipments • Change in customer demand • Ex) clothing store needs to get rid of summer clothes to make room for fall clothes; change of season. • To avoid losing money, make sure that they markdown price is NOT LESSthan the wholesale price.

36. Calculating Markdown Price • Retail price x Markdown Percentage/100=Markdown Amount • Retail Price-Markdown Amount= Markdown (sale price) • Example: Macy’s wants to move the inventory of summer shorts quickly, due to end of the season. It places all denim shorts on sale for 25% off. The retail price is set for $35.99. • What is the markdown price?? • $27.00 • $35.99 x .25 OR $35.99 x 25 / 100

37. Promoting Your Product Section 8.2

38. Principles of Promotion • Type of communication we find throughout our daily lives. • One of the 5 P’s of marketing • Must be done effectively to get the expected results.

39. Getting Customers: AIDA • Popular communication model used by companies to plan, create and manage promotions. A: Attention I: Interest D: Desire A: Action

40. A: Attention: 1st step to grab attention of potential customers. Especially if a new product. Example: Celebrity Endorsements. I: Interest: after you get attention, you want to keep it. -What is the message you are trying to convey to audience? -Clearly communicate ideas. D: Desire: What can you do to make your product desirable? -Example: demonstrate how product works, is your product a bargain? -Infomercials, Commercials, You Tube, Social Media, etc. A: Action: Get customers to take action= PURCHASE! -Example: limited time offer, convenience, easy to order, availability. Getting Customers: AIDA

41. Elements of a Promotional Mix • Promotion takes on many different forms; with same goal= BUILD A FAVORABLE AWARENESS! • WILL NOT succeed if customers don’t know about your business. • Promotional Mix: strategy for promoting business using some or all of the following 6 techniques: • Advertising • Visual Merchandising • Public Relations • Publicity • Sales Promotion • Personal Selling

42. Elements of a Promotional Mix • Advertising: public promotional PAID message for an identified sponsor or company. • Print, direct mail, radio, tv, product placement, internet, outdoor, social media

43. Advertising Techniques • #1: Brand Advertising • Wants you to remember the particular brand name and product • Used to introduce a new product OR reinforce customer loyalty • Jingles & Slogans • http://www.youtube.com/watch?v=hF_qgfIDHLs&NR=1 • #2: Informative Advertising • Designed to influence you to buy a product by educating you about the product’s benefits. • Infomercials • http://www.youtube.com/watch?v=TqHSIiAXdSU • #3: Comparative Advertising • Win your purchase by comparing to a competitor’s product. • Convince you to buy the advertised product vs. the competitor product. • Ads are typically slanted in favor of one vs. the other • http://www.youtube.com/watch?v=BpOvzGiheOM • #4:Defensive Advertising • Counter attacks a comparative advertisement • Commonly used to respond to claims made by other companies • http://www.youtube.com/watch?v=MSiSIzXKMXw

44. Product Placement The process by which a manufacturer (or advertiser) pays a fee in order for branded products to be prominently displayed in a movie, television show, or other media production. http://www.youtube.com/watch?v=PrPV9o8HXvs (tv) http://www.youtube.com/watch?v=M1HXXcVFySM (Seinfeld) http://www.complex.com/music/2014/07/blatant-beats-by-dre-product-placement-in-music-videos/

45. Elements of a Promotional Mix Visual Merchandising: • Artistic displays to attract customers in the store. • Visual promotion in stores. • What will catch your potential customer’s eye?

46. Elements of a Promotional Mix • Public Relations: activities aimed at creating goodwill towards the company or product. • Companies partner with charities to help promote product. • Announcements, press release, community events, contests • Publicity: form of promotion for which a company does NOT pay; free advertising. (see next slide)

47. Elements of a Promotional Mix Non-paid form of communication that calls attention to your business through media coverage. May be good or bad publicity. Typically free Using a celebrity could raise price Largely out of business ‘s control Ex) Bad publicity: local restaurant food health code violation. Lose business over bad publicity.

48. Elements of a Promotional Mix • Sales Promotion: short term activity; product demonstrations, coupons, free samples, temporary specials. MOTIVATES customers. • Personal Selling: Direct one to one efforts by company sales reps and builds customer relationships. • Premiums/giveaways: pens, t-shirts, mugs, calendars • Telemarketing • Networking

49. 360 Marketing • Combination of various promotional strategies • Highly effective technique • Ex: John’s Bagels uses direct mail to reach his customers; coupons in the direct mail flyer; social media to target younger demographics; print ads and community events to promote his business.