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Producing and Distributing Goods and Services4P: Product and Placement
Chapter
12
Course: BUS 101Lecturer: NNA
Classifying Goods and Services
Consumer products are products and services for personal consumption.
Classifications:Convenience productsShopping productsSpecialty products
Ch 8 -2 Copyright © 2011 Pearson Education
Consumer products
Convenience products are consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort.• Newspapers• Candy• Fast food
Ch 8 -3 Copyright © 2011 Pearson Education
Shopping products are consumer products and services that the customer compares carefully on suitability, quality, price, and style.• Furniture• Used cars• Appliances
Ch 8 -4 Copyright © 2011 Pearson Education
Consumer products
Specialty products are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort.• Specialist medical services• Designer clothes• High-end electronics• Expensive cars
Ch 8 -5 Copyright © 2011 Pearson Education
Consumer products
Classifying Business Goods
Business products are products purchased for further processing or for use in conducting a business.
Classification:installations, accessory equipment, Component parts and materials, raw materials, supplies.
Ch 8 -7 Copyright © 2011 Pearson Education
Classifying Business Goods
Installations are Major capital items. Expensive and often involve buyer and seller negotiations that may last for more than a year before a purchase actually is made.factories, offices, heavy machinery
Ch 8 -8 Copyright © 2011 Pearson Education
Classifying Business Goods
Accessory equipmentalso includes capital items, Less expensive and Shorter lived than installationsInvolve fewer decision makers. Examples : fax machines.
Classifying Business Goods
Materials and component parts are finished business goods that become part of a final product•small motors, tires
Raw materials are farm and natural products used in producing other final products• milk, iron ore, leather, and soybeans.
Classifying Business Goods
Supplies and services Supplies are items used in a firm’s daily operation that do not become part of the final product.
Operating supplies: paper, pencilRepair and maintenance items: paint, nailsBusiness services: window cleaning, computer repair
Classifying Services
B2B: Business to Business serviceB2C: Business to Consumer service
services can also be convenience (Maid), shopping (Dentist), or specialty (Lawyer)Characteristics of Services• Intangible: Can’t be touched or physically felt• Inseparable: the service provider is the service; the two
are inseparable in the buyer’s mind• Perishable: firms cannot stockpile service in inventory• Difficult to standardize: must meet individual
customers’ needs
Product Lines and Product Mix
Product line group of related products that are physically similar or are intended for the same market.Product mix company’s assortment of product lines and individual offerings
Baby Gap is just one of the product lines offered by the Gap clothing chain. The retail group also offers traditional Gap casual clothing, Old Navy’s stylish but low-priced line, and Banana Republic’s upscale clothing.
Product Mix and Product line
Product Mix (Samsung)
Product Line Samsung TV
LED LCD Flat
Product line Samsung Mobile
Galaxy Guru Metr
o
Product Life Cycle PLC)
Product Life-Cycle Strategies
2. Introduction Stage• Slow sales growth• Little or no profit• High distribution and
promotion expense
Ch 9 -16 Copyright © 2011 Pearson Education
Dreyer’s, the largest ice cream maker in the United States, promoted an essay contest as a first step to giving away 1,500 free ice cream parties to get people to try its lower-fat ice cream called Slow Churned
Product Life-Cycle Strategies
3. Growth Stage• Sales increase• New customers• New competitors enter the
market with similar offerings• Price stability or decline to
increase sales• Profits increase
Ch 9 -17 Copyright © 2011 Pearson Education
Product Life-Cycle Strategies
4. Maturity Stage• Sales slows down• Increase product
availability• Weaker competitors
leave the market• Price reduces• Firms concentrate on
capturing competitors’ customers
• Aggressive promotionCh 9 -18 Copyright © 2011 Pearson Education
Cell phone network companies in Bangladesh are continuously promoting their product to capture competitors’ customers
Product Life-Cycle Strategies
5. Decline Stage• Competitors gradually
exit• Decline stage is caused
by• Product innovation • shift in consumer
preferences• Technological change
Ch 9 -19 Copyright © 2011 Pearson Education
Due to technological change, vcr and floppy became extinct and cd ‘s product life cycle became in the declined position
Stages in New-Product Development
The New-Product Development Process
i) Generate new product ideas is the systematic search for new-product ideas.• Sources of new-product ideas:
a. Internal: Gathering new product ideas by-- Own employees- Research scientists
b. External: Gathering new product ideas from-- Distributors- Suppliers- Inventors outside the firm- Customers (most successful source)
Ch 9 -21 Copyright © 2011 Pearson Education
The New-Product Development Process
ii) Idea Screening Screening new-product ideas to spot good ideas and drop poor ones as soon as possible
iii) Concept Development and Business analysis: further screening occurs•Concept testing—marketing research designed to solicit initial consumer reaction to new-product ideas•Focus groups are formal sessions in which consumers meet with marketers to discuss what they like or dislike about current products and perhaps test or sample a new offering to provide some immediate feedback.
The New-Product Development Process
iv) Product development involves the creation and testing of one or more physical versions by the R&D or engineering departments.
v) vii) Test marketing provides the marketer with experience in testing the product and entire marketing program before full introduction.
Ch 9 -23 Copyright © 2011 Pearson Education
Test marketing: KFC test marketed its new Kentucky Grilled Chicken product for three years before rolling it out nationally.
The New-Product Development Process
vi) Commercialization: the product is made generally available in the marketplace• Sometimes this stage is referred to as a product
launch
Product Identification
A major aspect of developing a successful new product involves methods used for identifying a product and distinguishing it from competing offerings.Both tangible goods and intangible services are identified by brands, brand names, and trademarks
Product Identification
brand is a name, term, sign, symbol, design, or some combination thereof used to identify the products of one firm and to differentiate them from competitive offerings.A brand name is that part of the brand consisting of words or letters included in a name used to identify and distinguish the firm’s offerings from those of competitors
Selecting an Effective Brand Name
Brand name must be-Easy to pronounce, recognize and remember (advertising campaign of EZ (easy) failed coz in Britain Z is pronounced as Zed)Convey the right image to the buyer (Dove soap gives an impression of mildness)Legally protectable (brand names cannot contain words in general use, such as television or automobile)
Brand Categories
manufacturer’s (or national) brand: A brand offered and promoted by a manufacturer. E.g. Tide, ReebokA private (or store) brand identifies a product that is not linked to the manufacturer but instead carries a wholesaler’s or retailer’s label. E.g. Wal-Mart chicken
Brand Categories
A family brand is a single brand name used for several related products. E.g. Johnson & Johnsonan individual branding strategy by giving each product within a line a different name. e.g. Procter & Gamble has individual brand names for its different laundry detergents, including Tide, Cheer, and Dash
Brand Loyalty
Brand Loyalty Marketers measure brand loyalty in three stages:
Brand recognition is brand acceptance strong enough that the consumer is aware of the brand, but not strong enough to cause a preference over other brands.Brand preference occurs when a consumer chooses one firm’s brand over a competitor’sBrand insistence is the ultimate degree of brand loyalty, in which the consumer will accept no substitute for a preferred brand
Brand Equity
Brand Equity the added value that a respected and successful name gives to a product.
Brand awareness means the product is the first one that comes to mind when a product category is mentioned.
MARKETING CHANNELS
Distribution Strategy: Distribution Channels
direct distribution channel which carries goods directly from producer to consumer or business userDistribution Channels Using Marketing Intermediaries: distribution channels that involve several different marketing intermediaries. A marketing intermediary (also called a middleman) is a business firm that moves goods between producers and consumers or business users.
Wholesaling
Wholesaler distribution channel member that sells primarily to retailers, other wholesalers, or business users.
Manufacturer-Owned Wholesaling Intermediaries: A manufacturer’s marketing manager may decide to distribute goods directly through company owned facilities to control distribution or customer service.
Wholesaling
Independent Wholesaling IntermediariesMerchant wholesalers, like apparel wholesaler WholesaleSarong.com, are independently owned wholesaling intermediaries that take title to the goods they handle• full-function merchant wholesaler provides a complete
assortment of services for retailers or industrial buyers, such as warehousing, shipping, and even financing
• A limited-function merchant wholesaler also takes legal title to the products it handles, but it provides fewer services to the retailers to which it sells.
agents and brokers: They may or may not take possession of the goods they handle, but they never take title, working mainly to bring buyers and sellers together
Retailing
Retailer: channel member that sells goods and services to individuals for their own use rather than for resale.
Non-store Retailers Store retailers
Types of Store Retailers
• Specialty store: – Sells complete set of
narrow line of merchandise
• Convenience store:– Only staple products– Long hours– Easy to access locations
Types of Store Retailers
• Warehouse club:– Warehouse style stores– Discount for
membership card holders
• Discount store:– Products sold in discount
prices
Types of Store Retailers
• Supermarket– Large self service retailer
• Factory outlet:– Manufacturer owned shops– sell overproduced products– sell for inventory clearance
at discounted price
Types of Store Retailers• Department stores:– Offers a wide variety of products in
different department
• Supercenter– Giant stores selling
foods and general merchandise
How retailers compete
Identifying a Target MarketSelecting a Product StrategyShaping a Customer Service StrategySelecting a Pricing StrategyChoosing a LocationBuilding a Promotional StrategyCreating a Store Atmosphere
Distribution Intensity
Intensive distribution involves placing a firm’s products in nearly every available outlet.
suits low-priced convenience goods such as milk, newspapers, and soft drinks. requires cooperation by many intermediaries, including wholesalers and retailers, to achieve maximum coverage.
Selective distribution is a market-coverage strategy in which a manufacturer selects only a limited number of retailers to distribute its product lines.
can reduce total marketing costs establish strong working relationships within the channel.
Distribution Intensity
Exclusive distribution, at the other end of the continuum from intensive distribution, limits market coverage in a specific geographical region.
suits relatively expensive specialty products such as Rolex watchesRetailers are carefully selected to enhance the product’s image to the market and to ensure that well-trained personnel will contribute to customer satisfaction.