module 7 ppt. (II)

8/7/2019 module 7 ppt. (II)

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Product and DistributionStrategies


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Expl ain marketings definition of ap roduct and list the com ponents of the p roduct strategy.

Describe the c lassification systemfor consumer and business goodsand services.

Distinguish between a p roduct mi x and a p roduct line.

Brief ly describe each of the four stages of the p roduct life cyc le.

List the stages of the new- p roductdeve lopment p rocess.

Expl ain how firms identify their p roducts.

Out line and brief ly describe eachof the major com ponents of an

effective distribution strategy.

Identify the various categories of distribution channe ls and discusthe factors that inf luencechanne l se lection.

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Product - bund le of physica l, service , and symbo licattributes.

Convenience products - items the consumer seeksto purchase frequent ly, immediate ly, and with littleeffort.

Shopping products - typ ica lly purchased on ly after the buyer has com pared com peting products incom peting stores.Specialty products - items that a purchaser is wi llingto make a s pecia l effort to obtain.

Product Strategy


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I nstallations - major ca p ita l items , such as new factories , heavyequi pment and machinery , and custom-made equi pment.

Accessory equipment - inc ludes less e xp ensive and shorter-lived ca p ita l items than insta llations and invo lves fewer decisionmakers.

Component parts and materials - become part of a fina l p roduct.

Raw materials - farm and natural p

roducts used inp

roducingother fina l p roducts.

Supplies - e xp ense items used in a firms dai ly o peration thatdo not become part of the fina l p roduct.


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In B2B , greater em phasis on personal selling for insta llations and many com ponent parts.

M ay invo lve customers in new-product development .

Advertising more common ly used to se ll su ppl iesand accessory equi pment.

A lso a greater em phasis on competitive pricing strategies.


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Product mix- a companys assortment of product lines and individual offerings.

Product line- group of related products that arephysically similar or are intended for the samemarket.


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Product life - four basic stagesintroduction , growth , maturity , and dec linethrough which a successfu l

p roduct p rogresses.


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I ntroduction stage firm promotes demand for its newoffering , informs the market about it , gives free sam plesto entice consumers to make a tria l purchase , ande xplains its features , uses , and benefits.

G rowth stage - sa les c limb quick ly as new customers join ear ly users who are re purchasing the item. Com panybegins to earn profits on the new product.

Maturity stage - industry sa les eventua lly reach asaturation leve l at which further e xp ansion is difficu lt.

D ecline stage - sa les fa ll and p rofits dec line.


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Marketers objective is to e xtend the life cyc le as longas product is profitab le. M arketers goa ls:

Increasing customers frequency of use Adding customers

Finding new uses for p roduct

Changing package sizes , labe ls , and p roduct designs


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Exp ensive , time-consuming , and risky.

On ly 1/3 of new productsbecome success stories.

Each ste p requires a go or

no-go decision.


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Stage 1: Generating ideas for new offerings

Stage 2: ScreeningStage 3: Concept developmentand business analysis phase

Stage 4: Product development

Stage 5: Test marketing

Stage 6: Commercialization


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B rand - name , term , sign , symbo l, design , or somecombination that identifies the p roducts of one firmand differentiates them from com petitors offerings.

B rand name - part of the brand consisting of wordsor letters inc luded in a name used to identify anddistinguish the firms offerings from those of com petitors.

Trademark - brand that has been given lega l protection granted so le ly to the brands owner.


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M anufacturers brand - brand offered and p romoted by amanufacturer. Ex am ples: Tide , Jockey , Gatorade , Swatch , andReebok.

Private or store brand - brand that is not linked to themanufacturer but instead carries a who lesa lers or retai lerslabe l. Ex am ples: Sears DieHard batteries and Wa l-M artsO lRoy dog food & M embers M ark brand

Family branding strategy - a sing le brand name used for

severa l re lated p roducts. Ex am ples: KitchenAid , Johnson &Johnson , Hew lett-Packard , and Do le

Individual branding strategy - giving each p roduct within a linea different name. Ex am ples: Procter & Gamb le p roducts Tide , Cheer , and Dash.


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Brand recognition - consumer isaware of the brand but does nothave a preference for it over other brands.

Brand preference - consumer chooses one firmsbrand over a com petitors.

Brand insistence - consumer wi ll seek out preferred brand and acce p tno substitute for it.


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B rand equity - added va lue that ares pected and successfu l namegives to a product.B rand awareness - p roduct is thefirst one that comes to mind whena product category is mentioned.


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Important in p roduct identificationand play an im portant ro le in a firmsovera ll p roduct strategy.

Choosing right package is es pecia llyimportant in internationa l marketing.

M ust meet lega l requirements of a ll

countries in which p roduct is so ld.U niversal Product Code - bar coderead by o p tica l scanner.


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Distribution channel - path through whichp roductsand lega l

ownershi p of themf lowfrom p roducer to

consumers or businessusers.

Physical distribution - actua l movement of

p roducts from p roducer toconsumers or business

users.


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D irect D istribution

Direct contact between p roducer and customer. M ost common in B2B markets.

Often found in the marketing of re lative ly e xp ensive , com ple x p roducts that may require demonstrations.Internet is he lp ing com panies distribute direct ly to consumer market.

D istribution Channels Using Marketing I ntermediaries

Producers distribute p roducts through wh olesalers and retailers .Ine xp ensive p roducts so ld to thousands of consumers in wide lyscattered locations.Lowers costs of goods to consumers by creating market uti lity.


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W holesaler - distribution channe l member that se lls p rimari ly toretai lers , other who lesa lers , or business users.

Manufacturer-Owned W holesaling I ntermediaries Owned by the manufacturer of the good. S ales branc h which stocks p roducts and fi lls orders from

inventories. S ales office which takes orders but does not stock the p roduct.


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Retailer - channe l member that se lls goods andservices to individua ls for their own use rather thanfor resa le.

Fina l link of the distribution channe l.

Two ty pes: store and non-store.


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Di rect response reta ili ng

Internet reta ili ng

Automat icmerchand ising

Di rect se lli ng


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1) Identifying a Target M arket

2) Selecting a Product Strategy

3) Selecting a Customer Service Strategy

4) Selecting a Pricing Strategy

5) Choosing a Location

6) B uilding a Promotional Strategy

7) Creating a Store Atmosphere

1) Identifying a Target M arket

2) Selecting a Product Strategy

3) Selecting a Customer Service Strategy

4) Selecting a Pricing Strategy

5) Choosing a Location

6) B uilding a Promotional Strategy

7) Creating a Store Atmosphere


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R eta il Locat ions

Planned Shopp ing Center

Shopp ing Ma ll

R eg iona l Ma ll

Lif esty le Ma ll


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W hat specific channel will it use?

W hat will be the level of distribution intensity?

Selecting D istribution Channels

Com ple x, e xp ensive , custom-made , or perishab le productsmove through shorter distribution channe ls invo lving fewor nointermediaries.

Standardized p roducts or items with low unit va lues usua lly passthrough re lative ly long distribution channe ls.

Start-u p com panies often use direct channe ls because theycant persuade intermediaries to carry their p roducts.


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I ntensive distribution - firms products in near lyevery avai lab le out let. Requires coo peration of many intermediaries.

Selective distribution - limited number of retai lersto distribute its product lines.

Exclusive distribution - limits market coverage ina s pecific geogra phica l region.


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Supply chain com plete sequence of su ppl iers thatcontribute to creating a good or service and de livering it tobusiness users and fina l consumers.

Logistics the activities invo lved in contro lling the f low of goods , services , and information among members of thesu ppl y chain.

Physical D istribution the activities aimed at efficient lymoving finished goods from the p roduction line to theconsumer or business buyer.


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Customer service standards measure the qua lity of service a firm provides for its customers.

W arranties are a firms promises to re pair a defectiveproduct , refund money paid , or re place a product if itproves unsatisfactory.

Internet retai lers have worked to humanize their

customer interactions and dea l with com plaints moreeffective ly.

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module 7 ppt. (II)