Chapters 22 23
1 / 43

Chapters 22 & 23 - PowerPoint PPT Presentation

  • Uploaded on

Chapters 22 & 23. Product Development, Distribution, Pricing, & Promotion. Product Development. Product design levels Basic product- the physical product in the simplest form Enhanced product- the product that offers different features and options

I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
Download Presentation

PowerPoint Slideshow about 'Chapters 22 & 23' - orde

An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.

- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Chapters 22 23

Chapters 22 & 23

Product Development, Distribution, Pricing, & Promotion

Product development
Product Development

  • Product design levels

    • Basic product- the physical product in the simplest form

    • Enhanced product- the product that offers different features and options

    • Extended product- product that includes additional features that are not part of the physical product but increases its usability

Product development1
Product Development

  • Product Selection

    • Product Line- a group of similar products with obvious variations in the design and quality to meet the needs of different customer groups

    • Product Assortment- the complete set of all products a business offers to a market

Product development2
Product Development

  • Packaging- Serves 4 Purposes

    • Protects the product

    • Provides important information to the customer

    • Makes product easier to use

    • Promotional tool

Product development3
Product Development

  • Branding- product and store brands play a major role in buying decisions

  • Brand- name, symbol, word, or design that identifies a product, service, or company

Product development4
Product Development

  • Branding

    • Brand Equity- the value of the brand to the owner

    • Attitude Branding- to represent a feeling

    • Brand Extension- use an existing strong brand for new products

      • Line Extension- stay within the product category, but make a new product

Product development5
Product Development

  • Branding (Continued)

    • Multiple Brands- choosing to launch new brand that apparently competes with its own brand to obtain a greater market share

      • Cannibalization- problem with “multi-brand” approach; steal from your own brands

Product development6
Product Development

  • Branding (Continued)

    • Generic/Private Label Brands- unbranded goods save the cost of marketing activities (no advertising and plain packaging)

    • Co-Branding- multiple brand names on a single product or service

    • Brand Protection- register as a trademark

Product development7
Product Development

  • Levels of Consumer Brand Awareness

    • Consumers are unable to identify the brand

    • Consumers can identify the brand but it has limited influence on their purchase decision

    • Consumers can identify the brand but will not purchase it because of the brand

    • Consumers easily recognize the brand and will choose it if available

    • Consumers view the brand as the most satisfying; will not purchase a different brand

Product distribution
Product Distribution

  • Purposes of Distribution

    • Economic Discrepancies- differences between what businesses offer and what consumers want

      • Type of products

      • Quantities of products

      • Location of products

      • Timing of products

Product distribution1
Product Distribution

  • Channels of Distribution

    • Routes products follow while moving from the producer to the consumer, including all related activities and participating organizations

    • Channel Members- businesses that participate in the activities to transfer goods from producer to consumer

Product distribution2
Product Distribution

  • Channels of Distribution (Continued)

    • Direct Distribution- selling directly to the ultimate consumer


Product distribution3
Product Distribution

  • Channels of Distribution (Continued)

    • Indirect Distribution- product goes through many places/organizations before reaching final consumer




Product distribution4
Product Distribution

  • Deciding on a Channel of Distribution

    • Perishability of product

    • Geographic distance between producer and consumer

    • Need for special handling of the product

    • Number of users

    • Number of types of products manufactured

    • Financial strength and interests of the producer

Product distribution5
Product Distribution

  • Transportation Decisions

    • Common transportation methods

      • Railway

      • Trucks

        • Piggyback service

      • Airplanes

    • Other transportation methods

      • Waterways

      • Pipelines

      • Containerization

Product distribution6
Product Distribution

  • Tracking Products- bar codes

  • Product Storage

    • Warehouse- buildings used to store large quantities of products until they can be sold

    • Distribution center- large building designed to accumulate and redistribute products efficiently

Product pricing
Product Pricing

  • The Business Buying Decision

    • What to purchase

    • When to purchase

    • From whom to purchase

    • How much to purchase

Product pricing1
Product Pricing

  • Payment Terms and Discounts

    • List price- the price posted on the product

    • Terms of sale are negotiated from the list price

    • Payment terms- listed on invoice

Product pricing2
Product Pricing

  • Payment Terms and Discounts

    • Discounts- reductions from the price of the product to encourage customers to buy

      • Trade discount

      • Quantity discount

      • Seasonal discount

      • Cash discount

Product pricing3
Product Pricing

  • Payment Terms and Discounts

    • Trade discount- a price reduction that manufacturers give to their channel partners

    • Quantity discount- a price reduction offered to customers that buy in larger quantities

    • Seasonal discount- price reduction offered for ordering or taking delivery of products in advance of the normal buying period

    • Cash discount- price reduction given for paying by a certain date

Product pricing4
Product Pricing

  • Example of Cash Discount

    • 2/10 n 30

      • Customer receives a 2% discount if they pay within 10 days of the invoice date, otherwise must pay full “net” balance within 30 days

      • $128,000, terms 2/10 n 30, Invoice date of Dec 1

      • If pay within 10 days?

        • $2,560 discount

Product pricing5
Product Pricing

  • Components of Price

    • Selling price- actual price customers pay for the product

      • List price – discounts = selling price

    • Cost of goods sold- the cost to produce the product or buy it for resale

    • Markup- the amount added to the cost of goods sold to determine the selling price

    • Markdown- any amount by which the original selling price is reduced before the item is sold

Product pricing6
Product Pricing

  • Pricing Strategies

    • Pricing to meet competition

    • Pricing to earn a specific profit

    • Pricing based on consumer demand

    • Pricing to sell more products

    • Pricing to provide customer services

Product pricing7
Product Pricing

  • Controlling Costs

    • Markdowns- product goes out of style, purchased too many

    • Damaged or stolen merchandise- shoplifting or employee theft; or products damaged

    • Returned merchandise- might have to sell at reduced price, expenses in handling

Product promotion
Product Promotion

  • Promotion as Marketing Communication

    • Consumer Decision-Making Process

      • Problem recognition- what do I need

      • Information search- solution to need

      • Alternative evaluation- weighs options

      • Purchase- chooses one & purchases

      • Post-purchase evaluation- how well did it meet need

Product promotion1
Product Promotion

  • Advertising Purpose

    • To inform and educate consumers

Product promotion2
Product Promotion

  • Advertising Purpose

    • To introduce a new product or business

Product promotion3
Product Promotion

  • Advertising Purpose

    • To announce an improvement or product change

Product promotion4
Product Promotion

  • Advertising Purpose

    • To reinforce important product features and benefits

Product promotion5
Product Promotion

  • Advertising Purpose

    • To increase frequency of use of product

Product promotion6
Product Promotion

  • Advertising Purpose

    • To increase variety of uses of a product

Product promotion7
Product Promotion

  • Advertising Purpose

    • To develop a list of prospects

Product promotion8
Product Promotion

  • Advertising Purpose

    • To convince people to enter a store

Product promotion9
Product Promotion

  • Advertising Purpose

    • To make a brand trademark or slogan familiar

Product promotion10
Product Promotion

  • Advertising Purpose

    • To improve image of company or product

Sam’s Club

Product promotion11
Product Promotion

  • Advertising Purpose

    • To gain support for ideas or a cause

Product promotion12
Product Promotion

  • Media Choices

    • Advertising Media- the methods of delivering the promotional message to the intended audience

      • Publication- newspapers, magazines, journals

      • Mass media- radio, television

      • Outdoor- billboards, signs, posters, vehicle signs, electronic displays

      • Direct- sales letters, catalogs, inserts, telemarketing, fax messages

      • Display-window, counter & aisle displays, trade shows

      • Internet-banners, pop-ups

Product promotion13
Product Promotion

  • Buying Motives

    Status Appetite Comfort Desire for BargainsRecognition Ease of Use Love of Beauty

    Amusement Desire for Good Health Friendship

    Affection Wealth Enjoyment Pride

    Fear Family Love Adventure

    • A product can target more than one motive; potential customers are studied to determine the best motive to appeal to

Product promotion14
Product Promotion

  • Planning & Managing Advertising

    • Advertising Budget- amount allotted for advertising; usually for a one year plan

    • Timing of Advertising- when is advertising most effective

Product promotion15
Product Promotion

  • Personal Selling

    • Studying the wants of customers

    • Presenting and demonstrating the product

    • Answering customer questions

    • Closing the sale

    • Follow-up

Product promotion16
Product Promotion

  • Sales Promotions- any promotional activities, other than advertising and personal selling, intended to motivate customers to buy

    • Coupons

    • Window displays

    • Direct mail inserts

Product promotion17
Product Promotion

  • Truth in Advertising & Selling

    • False advertising- “misleading in a material respect”

    • Full disclosure- provide all information necessary for consumers to make an informed decision

    • Substantiation- be able to prove all claims made about the products and services in promotions

Product promotion18
Product Promotion

  • Truth in Advertising & Selling

    • Cease and desist order- requires the company to stop using specific advertisements

    • Corrective advertising- new advertising designed to change the false impression left by the misleading information

      • In unusual circumstances, the company may have to pay a fine to the government or the consumers harmed