Product and Distribution Strategies

Chapter 12

Product- a bundle of physical, service, and symbolic

characteristics designed to satisfy consumer wants.

• Product strategy involves more than just producing a

good or service. It focuses on benefits.

• The marketing conception of a product includes

decisions about package design, brand name,

trademarks, warranties, product image, new-product

development, and customer service.

Product Strategy

• Think about your favorite soft drink. Do you like it for its

taste alone?

• Or do other attributes, such as clever ads, attractive

packaging, ease of purchase from vending machines

and other convenient locations, and overall image, also

attract you?

Product Strategy

Product Categories:

Convenience products- items the consumer seeks

to purchase frequently, immediately, and with little

effort

Product Classification

Product Categories:

Shopping products- typically purchased only after

the buyer has compared competing products in

competing stores

Product Classification

Product Categories:

Specialty products-

items a purchaser is

willing to make a

special effort to obtain

Product Classification

Product Classification

• A shopping product for one person may be a

convenience item for someone else.

• Each item’s product classification is based on

buying patterns of the majority of people who

purchase it.

Product Classification

Product line– a group of related products

marked by physical similarities or intended for a

similar market

Product mix– assortment of product lines and

individual goods and services a firm offers to

consumers and business users

Product Lines and Product Mix

Product Lines and Product Mix

PepsiCo Product Line & Product Mix

Product life cycle- four basic stages—

introduction, growth, maturity, and decline—

through which a successful product progresses

Product Life Cycle

Product life cycle

Introduction stage:

The firm tries to promote demand,

inform the market,

give free samples,

explain the features and benefits

Product Life Cycle

Product life cycle

Growth stage:

Sales climb quickly as new customers join early

users who now are repurchasing the item.

The firm begins to earn profits.

Competitors enter the field. Price competition

develops.

Product Life Cycle

Product life cycle

Maturity stage:

İndustry sales eventually reach a saturation level

• Competition intensifies

• Firms try to capture competitors’ customers by

often dropping prices

Product Life Cycle

Product life cycle

Decline stage:

Profits decline and may become losses as

further price-cutting occurs.

Competitors gradually exit, making some profits

possible for the remaining firms in the shrinking

market.

The decline stage usually is caused by a product

innovation or a shift in consumer preferences.

Sometimes technology change can hasten the

decline stage for a product.

Product Life Cycle

Marketer’s objective is to extend the life

cycle as long as product is profitable.

Marketers’ goals: Increasing customers’ frequency of use

Adding new users

Finding new uses for product

Changing package sizes, labels, and product designs

Implications of the Product Life Cycle

Expensive, time-

consuming, and risky.

Only 1/3 of new

products become

success stories.

Each step requires a

“go or no-go” decision.

Stages in New Product Development

• A brand is a name, term, sign, symbol, design, or some

combination that identifies the products of one firm and

differentiates them from competitors’ offerings.

Exp: Tropicana, Pepsi, and Gatorade are all made by

PepsiCo, but a unique combination of name, symbol,

and package design distinguishes each brand from the

others.

Brand

Manufacturer’s brand- brand offered and promoted by

a manufacturer. Examples: Tide, Cheerios, Windex,

Fossil, and Nike.

Private or store brand- brand that is not linked to the

manufacturer but instead carries a wholesaler’s or

retailer’s label.

Family branding strategy- a single brand name used

for several related products. Examples: KitchenAid,

Johnson & Johnson, Hewlett-Packard, and Arm &

Hammer.

Individual branding strategy- giving each product

within a line a different name.

Brand Categories

Distribution channel: path through which

products—and legal ownership of them—flow

from producer to consumers or business users

Distribution Strategy

Distribution Channels

Wholesaler- distribution channel member that

sells primarily to retailers, other wholesalers, or

business users

Retailer- channel member that sells goods and

services to individuals for their own use rather

than for resale

Two types: store and nonstore

Wholesaler - Retailer

Non-Store Retailing

Non-Store Retailing

Retail Stores

Promotion and Pricing Strategies

Chapter 13

Promotion is the function of informing, persuading,

and influencing a purchase decision.

Promotion

Components of the Marketing Mix

Promotion is the function of informing, persuading,

and influencing a purchase decision.

Objectives of Promotional Strategies

Advertising- paid nonpersonal communication

usually targeted at large numbers of potential

buyers.

Firms need to be more and more creative and

efficient at getting consumers’ attention.

Advertising

Product advertising- messages designed to sell a

particular good or service

Institutional advertising- messages that promote

concepts, ideas, philosophies, or goodwill for

industries, companies, organizations, or government

entities

Cause advertising- institutional messaging that

promotes a specific viewpoint on a public issue as a

way to influence public opinion and the legislative

process about the issues such as literacy, hunger and

poverty, etc.

Types of Advertising

Advertising and the Product Life Cycle

Informative advertising- used to build initial

demand for a product in the introductory phase

Persuasive advertising- attempts to improve the

competitive status of a product, institution, or

concept, usually in the growth and maturity stages

Reminder-oriented advertising - appears in the

late maturity or decline stages to maintain

awareness of the importance and usefulness of a

product

Advertising and the Product Life Cycle

Advertising Media Pie

Sales promotion

consists of forms of

promotion such as

coupons, product

samples, and rebates

that support

advertising and

personal selling.

Sales Promotion

Pricing

- The price is the exchange value of a good or service.

- It is a major factor in consumer buying decisions.

Pricing Objectives in the Marketing Mix

Skimming pricing Setting an intentionally high price relative to the prices of competing

products

Penetration pricing Setting a low price as a major marketing weapon

Everyday low pricing and discount pricing Maintaining continuous low prices rather than relying on short-term

price-cutting tactics such as cents-off coupons, rebates, and special

sales

Competitive pricing Reducing the emphasis on price competition by matching other firms’

prices

Concentrating marketing efforts on the product, distribution, and

promotional elements of the marketing mix

Alternative Pricing Objectives

Price-quality relationships

Consumers’ perceptions of quality closely tied to price

High price = prestige and higher quality

Low price = less prestige and lower quality

Odd pricing

Setting prices in uneven amounts or amounts that

sound less than they really are

Example: $1.99 or $299

Consumer Perceptions of Price