Presentation Transcript

1. Chapters 22 & 23

   Product Development, Distribution, Pricing, & Promotion
2. 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
3. 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
4. Product Development Packaging- Serves 4 Purposes Protects the product Provides important information to the customer Makes product easier to use Promotional tool
5. 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
6. 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
7. 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
8. 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
9. 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
10. 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
11. 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
12. Product Distribution Channels of Distribution (Continued) Direct Distribution- selling directly to the ultimate consumer PRODUCER  CONSUMER
13. Product Distribution Channels of Distribution (Continued) Indirect Distribution- product goes through many places/organizations before reaching final consumer PRODUCERRETAILERCONSUMER Or PRODUCERWHOLESALERRETAILERCONSUMER
14. 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
15. Product Distribution Transportation Decisions Common transportation methods Railway Trucks Piggyback service Airplanes Other transportation methods Waterways Pipelines Containerization
16. 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
17. Product Pricing The Business Buying Decision What to purchase When to purchase From whom to purchase How much to purchase
18. 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
19. 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
20. 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
21. 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
22. 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
23. 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
24. 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
25. 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
26. Product Promotion Advertising Purpose To inform and educate consumers
27. Product Promotion Advertising Purpose To introduce a new product or business
28. Product Promotion Advertising Purpose To announce an improvement or product change
29. Product Promotion Advertising Purpose To reinforce important product features and benefits
30. Product Promotion Advertising Purpose To increase frequency of use of product
31. Product Promotion Advertising Purpose To increase variety of uses of a product
32. Product Promotion Advertising Purpose To develop a list of prospects
33. Product Promotion Advertising Purpose To convince people to enter a store
34. Product Promotion Advertising Purpose To make a brand trademark or slogan familiar
35. Product Promotion Advertising Purpose To improve image of company or product Sam’s Club
36. Product Promotion Advertising Purpose To gain support for ideas or a cause
37. 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
38. 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
39. 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
40. Product Promotion Personal Selling Studying the wants of customers Presenting and demonstrating the product Answering customer questions Closing the sale Follow-up
41. 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
42. 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
43. 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