Chapter Thirteen Dimensions of Marketing Strategy

Chapter ThirteenDimensions ofMarketing StrategyThe Key to Successful Marketing StrategyThe Right Marketing Mix to Satisfy the Customer:The Right ProductThe Right PromotionThe Right PriceThe Right DistributionThe Right Product StrategyTo satisfy the target marketTo create long-term relationships with customersFAST 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, (accessed August 24, 2001).Developing New ProductsIdea DevelopmentScreening New Ideas CommercializationBusiness AnalysisProduct DevelopmentTest MarketingFAST FACT:In 2001, Microsoft planned to spend $4 billion on R&D.Source: Rebecca Buckman, “Window into the future,” Wall Street Journal, June 25, 2001, p. R19.Classifying ProductsConsumer ProductsIndustrial ProductsClassifications of Consumer ProductsConvenience 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.Classifications of Industrial ProductsRaw MaterialsMajor EquipmentAccessory EquipmentComponent PartsProcessed MaterialsSuppliesIndustrial ServicesProduct Line and Product MixProduct LineClosely related products that are treated as a unit because of similar marketing strategy, production, or end-use considerations.Product MixAll of the products offered by an organizationProduct Life CycleIntroductionGrowthDeclineMaturitySalesVolumeProfitTime0Sales $Identifying ProductsBrandingThe process of naming and identifying products. Can use a brand mark or trademarkPackagingThe external container that holds and describes the product.LabelingThe presentation of important information on a package.The 10 Most Valuable Brands in the WorldRank: Brand: 2001 Brand Value ($billions)Coca-Cola 68.9Microsoft 65.1IBM 52.8GE 42.4Nokia 35.0Intel 34.7Disney 32.6Ford 30.1McDonald’s 25.3AT&T 22.8 Source: Gerry Khermouch, Stanley Holmes, and Moon Ihlawn, “The Best Global Brands,” Business Week, August 6, 2001, p. 50.Categories of BrandsManufacturer BrandsKellogg’s, Ford, SonyPrivate Distributor BrandsKenmore appliances (Sears)Generic BrandsPeanut Butter, Dog Food, Kitty LitterPackagingThe external container that holds and describes the product inside.Packaging Functions:ProtectionEconomyConveniencePromotionFAST FACT:While shopping, the average time a consumer looks at a package is 2.5 seconds.LabelingThe presentation of important information on a package:Product content information may be required by lawUseful information – manufacturer’s toll-free number and addressDirections and suggestions for useProduct QualityThe 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.Pricing StrategyFour Common Pricing Objectives:Maximize Profits and SalesBoost Market ShareMaintain the Status QuoSurvivalPricing StrategiesNew Product PricingPrice skimming Penetration pricingPsychological Pricing Odd/EvenPrestige pricingPrice DiscountingQuantity discountsSeasonal discountsPromotional discountsDistribution StrategyMarketing ChannelsRetailers (Wal-Mart, Sears)Wholesalers (food brokers to restaurants)E-tailers (Amazon.com)Supply Chain ManagementLong-term partnerships among channel members to reduce costs, waste, and unnecessary movement through the channel to satisfy customers.Channels forConsumer ProductsProducerAgents(Middlemen)Wholesalers(Middlemen)Retailers(Middlemen)ConsumersProducerProducerProducerWholesalers(Middlemen)Retailers(Middlemen)Retailers(Middlemen)ConsumersConsumersConsumersChannel for ServicesServices are generally produced and consumed at the same time.Intensity of Market CoverageIntensive 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.Physical Distribution Materials HandlingTransportationWarehousingConsumerProducerInventory Planning & ControlDistribution Decisions are the Least Flexible Marketing DecisionsDistribution decisions:Use committed resourcesEstablish contractual relationshipsAre bound by timeIntegrated Marketing Communications (IMC)The Goal of Promotion StrategyIMCCoordinating the promotion mix elements and synchronizing promotion as a unified effort.The Promotion MixPublicityPersonalSellingSalesPromotionAdvertisingAdvertising A paid form of non-personal communication transmitted through a mass medium, such as television commercials or magazine advertisements.Ad Spending in the USTotal Advertising Expenditures for 2001General Motors $2.84 billion Phillip Morris $1.77 DaimlerChrysler $1.67Procter & Gamble $1.53Walt Disney $1.05AOL Time Warner $1.44Ford Motor $1.16Source: Vanessa O’Connell, “Advertising,” Wall Street Journal, May 31, 2001, p. B14.Personal SellingDirect, 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.Personal SellingThree Categories of Salespersons:Order TakersCreative SalespersonsSupport SalespersonsPersonal Selling is a Six Step ProcessProspectingApproachingPresentingHandling ObjectionsClosing – Asking for the OrderFollowing UpIn Personal Selling, Appearance SellsSales managers tell what personal attributes they feel work against a salesperson’s ability to sell:Sloppy dresser 94%Unstylish dresser 75%Physically unattractive 59%Overweight 54%Heavy accent 54%Young looking 32%Source: “Appearance sells,” USA Today Snapshots, October 9, 2001, p. B1.PublicityNon-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.Principal Publicity MechanismsNews releasesFeature articlesCaptioned photographsPress conferencesInterviewsSales PromotionDirect 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.Tools of Sales PromotionStore displaysPremiumsSampling and demonstrationsCouponsConsumer contests and sweepstakesRefundsTrade showsAdvertising MediaPrint Media Newspapers Magazines Direct mail Outdoor (billboards) Electronic MediaTelevisionRadioCyber adsInternet AdvertisingTotal 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.Push and Pull StrategiesProducerProducerWholesalersWholesalersRetailersRetailersConsumersConsumersPushing StrategyPulling StrategyFlow of CommunicationsObjectives of PromotionsStimulate DemandStabilize SalesInform, Remind, and ReinforceCustomersPromotional PositioningThe 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. Marketing PaysSalary Ranges for Selected Marketing ProfessionalsCorporate Marketing Manager $51,500 - $85,000Ad Agency Marketing Manager $50,000 - $88,750Brand/Product Manager $60,000 - $91,500Public Relations Manager $56,750 - $88,250PR Account Executive $38,500 - $56,000Advertising Copywriter $42,000 - $61,500Source: “Agency and Corporate Advertising and Marketing Professionals Annual Salary Range,” CareerJournal.com from (accessed July 10, 2001) and “Public Relations Professionals Annual Salary Ranges,” CareerJournal.com (accessed July 10, 2001).Solve the Dilemma1. 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?Explore Your Career OptionsDo 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?Additional Discussion Questions and Exercises1. 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”?Additional Discussion Questions and Exercises4. What are the advantages of businesses using coupons and/or contests and sweepstakes for sales promotion purposes?Chapter 13 Quiz1. 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.Chapter 13 Quiz3. 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.Multiple Choice Questions about the Video1. 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 fans2. 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