BA 100 Chapter 14

1. ©McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom. No reproduction or further distribution permitted without the prior written consent of McGraw-Hill Education.
CHAPTER 14
Managing the
Marketing Mix:
Product, Price,
Place and
Promotion

2. ©McGraw-Hill Education.
LEARNING OBJECTIVES
1. Explain the concept of a total product offer and
summarize the functions of packaging.
2. Contrast brand, brand name, and trademark, and
discuss the concept of brand equity.
3. Describe the product life cycle.
4. Identify various pricing objectives and strategies, and
explain why non-pricing strategies are growing in
importance.

3. ©McGraw-Hill Education.
LEARNING OBJECTIVES
5. Explain the concept of marketing channels and the
value of marketing intermediaries.
6. Discuss the differences between wholesale and retail
intermediaries and explain the various kinds of non-
store retailing.
7. Define promotion and list the traditional tools that
make up the promotional mix.
8. Assess the effectiveness of various forms of sales
promotion.

4. ©McGraw-Hill Education.
REED HASTINGS
Netflix
• Almost singlehandedly
ended the era of brick and
mortar video rentals.
• In college, Hastings spent
his summers training with
the Marines and joined the
Peace Corps.
• Was inspired to start Netflix
after racking up a $40 late
fee.
Photocredit:©RichardBrian/Reuters/Landov

5. ©McGraw-Hill Education.
NAME that COMPANY
This U.S. company is known for having low prices all
the time. One way it keeps prices low is by
eliminating as many wholesalers as possible and
doing all the wholesale function itself.
Name that company!

6. ©McGraw-Hill Education.
DEVELOPING VALUE LO 14-1
• Value -- Good quality at a fair price.
• What customers perceive as the best value
depends on many factors.
• Adapting products to new markets is an ongoing
challenge.
• Product development is a key activity in any
modern business.

7. ©McGraw-Hill Education.
PRODUCTS CONSUMERS
WON’T GIVE UP LO 14-1
• Internet service
• Cell phone service
• Cable television
• Discount apparel
• Haircuts and coloring
• Fast-food
Photo credit: (c) Lars A. Niki

8. ©McGraw-Hill Education.
PRODUCTS “EXPENDABLE”
by SPENDING CUTS LO 14-1
• Luxury handbags
• Satellite radio
• Specialty apparel
• High-end cosmetics
• Facials
Photo credit: Ingram Publishing

9. ©McGraw-Hill Education.
DEVELOPING a
TOTAL PRODUCT LO 14-1
Total Product Offer -- Everything consumers evaluate
when deciding whether to buy something.
Products are evaluated on many different dimensions,
both tangible and intangible.
Marketers must think like and talk to consumers to find
out what’s important.

10. ©McGraw-Hill Education.
PRODUCT INNOVATION DURING
the GREAT DEPRESSION LO 14-1
Year Product
1929 Electric Razors
1930 Car Radios
1930 Supermarkets
1933 Chocolate Chip Cookies
1933 Laundromats
Source: BusinessWeek Small Biz.

11. ©McGraw-Hill Education.
ANYTHING YOU CAN DO…
Products Replacing Products LO 14-1
Starter Replacer
Replacer’s
Replacement
Future Threat
Friendster MySpace Facebook Quora
Nokia Blackberry iPhone Android
TiVo Blockbuster Netflix Apple TV
Altavista Yahoo; Ask Google Blekko
The Shop Around
the Corner
Borders Amazon Apple
Polaroid Kodak Canon Smartphones
Playstation Wii Xbox Kinect Playstation 4

12. ©McGraw-Hill Education.
POTENTIAL COMPONENTS
of a TOTAL PRODUCT OFFER LO 14-1
Jump to Appendix 1 for long image description

13. ©McGraw-Hill Education.
UNDERSTANDING
PRODUCT LINES LO 14-1
Product Line -- A group of products that are physically
similar or intended for a similar market.
Product lines often include competing brands like:
- Coca-Cola
- Diet Coke
- Coke Zero
- Cherry Coke
Photo Courtesy of: Coca-Cola Art Gallery

14. ©McGraw-Hill Education.
The PRODUCT MIX LO 14-1
Product Mix -- The combination of all product lines
offered by a manufacturer or service provider.
Product mixes like Procter & Gamble’s can be
extensive:
- Toothpaste
- Cosmetics
- Diapers
- Batteries
- Bar soap

15. ©McGraw-Hill Education.
SEALING the DEAL
• As a Navy Seal, Randy Hetrick found keeping his
fitness levels up while in the field was difficult.
• He created the TRX out of parachute harnesses.
• While earning his
MBA, he raised
capital to launch
Fitness Anywhere.
Now, a $50 million
company!
Photo credit: © Spencer Brown/SanFrancisco Business Times

16. ©McGraw-Hill Education.
DIFFERENTIATING PRODUCTS LO 14-1
Product Differentiation -- The creation of real or
perceived product differences.
Marketers use a mix of pricing, advertising and
packaging to create different images. Examples
include:
- Bottled water
- Aspirin
- Fast-food
- Laundry detergent
- Shampoo
Photocredit:(c)D.Hurst/Alamy

17. ©McGraw-Hill Education.
USES of PACKAGING LO 14-1
Companies often use packaging to change and
improve their basic product. Examples include:
- Microwave popcorn
- Tuna pouches
- McDonald’s green packaging
Good packaging can also make a product more
attractive to retailers.

18. ©McGraw-Hill Education.
SOME KEY FUNCTIONS
of PACKAGING LO 14-1
1. To attract buyers’ attention
2. Protect the goods inside and be
tamperproof
3. Be easy to open
4. Describe and give information about the
product
5. Explain the product’s benefits
6. Provide warranty information and warnings
7. Give an indication of price, value, and uses
Photo credit: Courtesy of Future Partners LLC

19. ©McGraw-Hill Education.
BUNDLING LO 14-1
Bundling -- Grouping two or more products together
and pricing them as a unit.
• Virgin Airlines
bundles door-to-door
limo service and
inflight massage with
some tickets.
• Financial institutions
bundle advice with
purchases.
Photo Credit: Joey Day

20. ©McGraw-Hill Education.
TEST PREP
1. What value enhancers may be included in a total
product offer?
2. What is the difference between a product line and
a product mix?
3. What functions does packaging now perform?

21. ©McGraw-Hill Education.
UNDERSTANDING BRANDING LO 14-2
Brand -- Name, symbol, or design that identifies
the goods or services and distinguishes them from
competitors’ offerings.
Trademark -- A brand that has
exclusive legal protection for both its
brand name and design.
Photo credit: Pamela Carley

22. ©McGraw-Hill Education.
PLAYING the NAME GAME
• With a couple hundred countries on
the cyber-platform, choosing the
right name is a global issue.
• Every once in a while, a successful
name is created by accident.
Häagen-Dazs means nothing!
• What would you rename Very
Vegetarian if given the chance?
Would you want to ask an expert? Photo credit: © Mbr/MCRT/Newscom

23. ©McGraw-Hill Education.
The NAME GAME
Product Name Why?
Blackberry
The “B” sounds relaxing and the “Y”
sounds friendly.
Oreo
The bookending “O”s mirror the shape of
the cookie.
Viagra V is for vigor, vitality, virile and victory.
Wii
The double ii symbolizes two players as
does the pronunciation.
Source: Bloomberg Businessweek, www.businessweek.com, accessed November 2014.

24. ©McGraw-Hill Education.
ESTABLISHING BRAND EQUITY
and LOYALTY
LO 14-2
• Brand Equity – The value of the brand name and
associated symbols.
• Brand Loyalty -- The degree to which consumers
are satisfied and are committed to further purchases.
• Brand Awareness -- How quickly or easily a given
brand name comes to mind when someone mentions
a product category.

25. ©McGraw-Hill Education.
MOST VALUABLE BRANDS LO 14-2
Brand Value (in $millions)
Apple $124.2
Microsoft $63.0
Google $56.6
Coca-Cola $56.1
IBM $47.9
McDonald’s $39.9
GE $37.1
Samsung $35.0
Toyota $31.3
Louis Vuitton $29.9
Source: Forbes, www.forbes.com, accessed November 2014.

26. ©McGraw-Hill Education.
ORIGINS of
AUTOMOBILE SYMBOLS LO 14-2
Volvo - Symbol for iron
Lamborghini - Company founder’s zodiac sign was
Taurus
Volkswagen - Product of an office contest
Porsche - Coat of arms for city and state
headquarters
Source: World Features Syndicate.

27. ©McGraw-Hill Education.
BRAND MANAGEMENT LO 14-2
Brand Manager -- Person responsible for a particular
brand and handles all the elements of the brand’s
marketing mix.
Many large companies created this position to have
greater control over new-product development and
product promotion.
Some companies have brand management teams.

28. ©McGraw-Hill Education.
MADE in AMERICA?
Home Countries of America’s Favorite Brands LO 14-2
Brand Country
Budweiser Belgium and Brazil
Alka-Seltzer Germany
Good Humor Ice Cream UK and Holland
7-11 Japan
Gerber Switzerland
Firestone Japan
John Hancock Life Canada
Frigidaire Sweden
Holiday Inn UK

29. ©McGraw-Hill Education.
TEST PREP
1. What is the difference between a brand name
and a trademark?
2. What are the responsibilities of a brand
manager?

30. ©McGraw-Hill Education.
The FOUR STAGES of a
PRODUCT LIFE CYCLE LO 14-3
Product Life Cycle -- A theoretical model of what
happens to sales and profits for a product over time.
Product Life Cycle Stages:
1. Introduction
2. Growth
3. Maturity
4. Decline

31. ©McGraw-Hill Education.
SALES and PROFITS DURING
the PRODUCT LIFE CYCLE LO 14-3
Jump to Appendix 2 for long image description

32. ©McGraw-Hill Education.
PROFITS BEYOND the GRAVE
Top Earning Deceased Celebrities in 2014 LO 14-3
Celebrity Earnings Year of Death
Michael Jackson $140 million 2009
Elvis Presley $55 million 1977
Charles Shultz $40 million 2000
Elizabeth Taylor $25 million 2011
Bob Marley $20 million 1981
Marilyn Monroe $17 million 1962
John Lennon $12 million 1980
Albert Einstein $11.5 million 1955
Bettie Page $9 million 2008
Source: Forbes, www.forbes.com, accessed November 2014.

33. ©McGraw-Hill Education.
The PRODUCT LIFE CYCLE and
the MARKETING MIX LO 14-3
Jump to Appendix 3 for long image description

34. ©McGraw-Hill Education.
TEST PREP
1. What is the theory of the product life cycle?
2. When a product is in the mature stage of the
product life cycle, are its profits generally
increasing or decreasing?

35. ©McGraw-Hill Education.
PRICING OBJECTIVES LO 14-4
1. Achieving a target return on
investment or profit
2. Building traffic
3. Achieving greater market share
4. Creating an image
5. Furthering social objectives both
short-run and long-run
Photo credit: © Hugh Threlfall/ Alamy

36. ©McGraw-Hill Education.
PRICING STRATEGIES LO 14-4
Cost-based pricing measures cost of producing a
product including materials, labor, and overhead.
Target Costing – Designing a product that satisfies
customers and meets the firm’s targeted profit margins.
Competition-Based Pricing -- A strategy based on
what the competition is charging for its products.

37. ©McGraw-Hill Education.
USING BREAK-EVEN ANALYSIS LO 14-4
Break-Even Analysis -- The process used to
determine profitability at various levels of sales. The
break-even point is where revenues equals cost.
Total Fixed Costs -- All costs that remain the same no
matter how much is produced or sold.
Variable Costs -- Costs that change according to the
level of production.

38. ©McGraw-Hill Education.
HOW to FIND the
BREAK-EVEN POINT LO 14-4
The break-even point equals the total fixed costs
(FC) divided by the price of one unit (P) minus the
variable cost of one unit (VC).
If you have a fixed cost of $200,000, a variable cost
of $2 per item, and you sell your product for $4
each, what would be your BEP?

39. ©McGraw-Hill Education.
PRICING ALTERNATIVES LO 14-4
Skimming Price Strategy -- Pricing new products
high to recover costs and make high profits while
competition is limited.
Penetration Price Strategy -- Pricing products low
with the hope of attracting more buyers and discouraging
other companies from competing in the market.
Everyday Low Pricing (EDLP) -- Setting prices lower
than competitors with no special sales.

40. ©McGraw-Hill Education.
PRICING STRATEGIES
of RETAILERS LO 14-4
High-Low Pricing -- Using regular
prices that are higher than EDLP
stores except during special sales
when they are lower.
Psychological Pricing -- Pricing
products at price points that make a
product seem less expensive than it
is.
Photo credit: © Heinz-Peter Bader/Reuters/Corbis

41. ©McGraw-Hill Education.
TEST PREP
1. List two short-term and two long-term pricing
objectives? Can the two be compatible?
2. What is a disadvantage of using cost-based
pricing strategy?
3. Why is increasing focus being placed on non-
price competition?

42. ©McGraw-Hill Education.
WHAT are MARKETING
INTERMEDIARIES? 1 of 2 LO 14-5
Marketing Intermediaries -- Organizations that assist
in moving goods and services from businesses to
businesses (B2B) and from businesses to consumers
(B2C).
They are called intermediaries because they’re in the
middle of a series of firms that distribute goods.

43. ©McGraw-Hill Education.
WHAT are MARKETING
INTERMEDIARIES? 2 of 2 LO 14-5
Channel of Distribution -- A
group of marketing intermediaries
that joining together to transport
and store goods from producers
to consumers.
Photo credit: © moodboard / Alamy

44. ©McGraw-Hill Education.
TYPES of MARKETING
INTERMEDIARIES? LO 14-5
Agents and Brokers -- Intermediaries who bring
buyers and sellers together and assist in negotiating an
exchange but do not take title to the goods.
Wholesaler -- An intermediary that sells products to
other organizations such as retailers, manufacturers, and
hospitals.
Retailer -- An organization that sells products to
ultimate customers.

45. ©McGraw-Hill Education.
SELECTED CHANNELS
of DISTRIBUTION LO 14-5
Jump to Appendix 4 for long image description

46. ©McGraw-Hill Education.
WHY MARKETING NEEDS
INTERMEDIARIES LO 14-5
Marketing intermediaries make markets more
efficient by reducing transactions and contacts.
Intermediaries perform marketing tasks faster and
cheaper than most manufacturers could provide
them.

47. ©McGraw-Hill Education.
HOW INTERMEDIARIES CREATE
EXCHANGE EFFICIENCY LO 14-5

48. ©McGraw-Hill Education.
TEST PREP
1. What is a channel of distribution, and what
intermediaries are involved?
2. Why do we need intermediaries?
3. Illustrate how intermediaries create exchange
efficiency.

49. ©McGraw-Hill Education.
WHOLESALE INTERMEDIARIES LO 14-6
Wholesalers normally make B2B sales, however,
stores like Staples and Costco also have retail
functions.
- Retail sales are sales of goods and services to customers
for their own use.
- Wholesale sales are sales of goods and services to other
businesses for use in the business or resale.
Consumers are more familiar with retailers than
wholesalers.

50. ©McGraw-Hill Education.
ROLES of AGENTS
and BROKERS LO 14-6
Agents generally maintain long-term relationships
with the clients they represent.
- Manufacturer’s agents represent several manufacturers in
a specific territory.
- Sales agents represent a single client in a larger territory.
Brokers usually represent
clients on a temporary basis.
Photo credit: © Fuse/Getty Images RF

51. ©McGraw-Hill Education.
RETAILING in the U.S. LO 14-6
• Retailers in the U.S. employ about 5 million people
and operate under many different structures.
• There are over 2 million retailers in the U.S., not
including websites.
Photo credit: © Radius Images / Alamy Stock Photo

52. ©McGraw-Hill Education.
FASTEST GROWING RETAIL
CATEGORIES LO14-6
• Video games
• Sports and fitness
• Home, garden, and
furniture
• Event tickets
• Consumer electronics
Photo credit: ©Assembly/Blend Images LLC

53. ©McGraw-Hill Education.
HOW to PREVENT
COUPON FRAUD LO 14-6
• Make sure your
coupons are unique.
• Have clear expiration
dates and rules.
• Train staff on how to
spot fraudulent
coupons.
Source: Entrepreneur, www.entrepreneur.com, accessed November 2014.
Photo Credit: Walmart Stores

54. ©McGraw-Hill Education.
HOW to PREVENT
RETURN POLICY FRAUD LO 14-6
• Always require receipts for
returns.
• Shred receipts so they cannot
be used to return stolen
goods.
• Check for tampering.
• Have customers fill out a
return form and check details. Photo Credit: Bill Ballentyne
Source: Entrepreneur, www.entrepreneur.com, accessed November 2014.

55. ©McGraw-Hill Education.
TYPES of RETAIL STORES LO 14-6
Types Examples
Department Store Sears, JC Penney, Nordstom
Discount Store Wal-Mart, Target
Supermarket Safeway, Kroger, Albertson’s
Warehouse Club Costco, Sam’s Club
Convenience Store 7-Eleven
Category Killer Toys-R-Us, Bass Pro Shops, Office Depot
Outlet Store Nordstrom Rack, TJ Maxx, Nike Outlet
Specialty Store Jewelry store, shoe stores, bicycle shops

56. ©McGraw-Hill Education.
RETAIL DISTRIBUTION
STRATEGIES LO 14-6
Intensive Distribution -- Puts products into as many
retail outlets as possible.
Selective Distribution -- Uses only a preferred group
of the available retailers in an area.
Exclusive Distribution -- The use of only one retail
outlet in a given geographic area.

57. ©McGraw-Hill Education.
PICK a STRATEGY…
What’s the Correct Retail Strategy for These Products? LO 14-6
• Ralph Lauren Polo Shirts
• Diet Pepsi
• Rolls Royce Automobiles
• Calloway Golf Clubs
• Snickers Candy Bars
• Steinway Pianos Photo credit: (c) Ingram Publishing / Alamy

58. ©McGraw-Hill Education.
FORMS of NON-STORE
RETAILING 1 of 2 LO 14-6
Electronic Retailing -- Selling goods and services
to ultimate consumers online.
Telemarketing -- The sale of goods and services
via the telephone.
Vending machines dispense convenience goods
when consumers deposit sufficient money.

59. ©McGraw-Hill Education.
FORMS of NON-STORE
RETAILING 2 of 2 LO 14-6
Direct Selling -- Selling goods and services to
customers in their homes or workplaces.
Multilevel marketing uses salespeople who work as
independent contractors.
Direct Marketing -- Any
activity that directly links
manufacturers or
intermediaries with ultimate
customers.
Photo credit: © Let’sPizzaUSA/Splash/Newscom

60. ©McGraw-Hill Education.
SUPPLY CHAINS LO 14-6
Supply Chain -- All the linked activities various
organizations must perform to move goods and services
from the source of raw materials to ultimate consumers.
Supply chains include: farmers, miners, suppliers of
all kinds, manufacturers, wholesalers and retailers.
One major concern of supply chain managers is
selecting a mode of transportation.

61. ©McGraw-Hill Education.
COMPARING
TRANSPORTATION MODES LO 14-6
Mode Cost Speed Dependability Flexibility Frequency Reach
Rail Med. Slow Medium High Low High
Trucks High Fast High Medium High Highest
Pipeline Low Medium Highest Lowest Highest Lowest
Ships Lowest Slowest Lowest Highest Lowest Low
Air Highest Fastest Low Low Medium Medium

62. ©McGraw-Hill Education.
TEST PREP
1. What are some of the ways in which retailers
compete?
2. What kinds of products would call for each of the
different distribution strategies: intensive,
selective, and exclusive?
3. Give examples of non-store retailing and
describe each.
4. Which transportation mode is fastest, which is
cheapest, and which is most flexible?

63. ©McGraw-Hill Education.
PROMOTION
in an ORGANIZATION LO 14-7
Promotion Mix -- The combination of promotional
tools an organization uses. The traditional mix
includes:

64. ©McGraw-Hill Education.
INTEGRATED MARKETING COMMUNICATION
(IMC) LO 14-7
Integrated Marketing Communication (IMC) --
Combines the promotional tools into one comprehensive
strategy. IMC is used to:
- Create a positive brand image.
- Meet the needs of consumers.
- Meet the strategic marketing and promotional goals
of the firm.

65. ©McGraw-Hill Education.
ADVERTISING in the FIRM LO 14-7
Advertising -- Paid, non-personal communication
through various media by organizations and individuals
who are in some way identified in the message.
Major goals of advertising:
- Inform
- Persuade
- Remind
Photo credit: © Show Media/AP Images

66. ©McGraw-Hill Education.
IMPACT of ADVERTISING LO 14-7
• Total advertising expenditures
exceed $215 billion yearly.
• Consumers benefit because
production costs of TV
programs, radio programs,
newspapers and magazines
are paid for by advertisers.
• Marketers choose ad media
that will reach the target
market.
Photo credit: Dave Moyer

67. ©McGraw-Hill Education.
MATCH GAME
Match the Company with the Slogan LO 14-7
• “Everybody doesn’t like something, but nobody
doesn’t like ___________.”
• “We bring good things to life.”
• “It takes a licking and keeps on ticking.”
• “With a name like _________, it has to be good.”
• “Good to the last drop.”
• “Betcha can’t eat just one!”
• “Because you’re worth it.”

68. ©McGraw-Hill Education.
IT’S a DOG’S LIFE
Famous and Not-so-Famous Dogs in Advertising LO 14-7
Pooch Company
Nipper RCA
Tige Buster Brown Shoes
Chihuahua Taco Bell
Spuds McKenzie Bud Light
McGruff The Crime Dog
Duke Bush’s Beans
Bullseye Target

69. ©McGraw-Hill Education.
POPULAR ADVERTISING MEDIA LO 14-7
Product Placement -- Advertisers pay to put their
products into TV shows and movies where the audience
will see them.
TV advertising is still the
dominant media.
Digital Video Recorders
(DVRs) challenge TV
advertising because viewers
can skip ads.
Photo credit: © Sony Pictures Entertainment/PhotoFest

70. ©McGraw-Hill Education.
NOT QUITE the NFL… LO 14-7
Sport Cost Why?
Equestrian $15,000+
The demographic skews to high-
income females.
Bowling $20,000+
It’s shown on television and
lower cost than other televised
sports.
Surfing $25,000+
The young market is responsive
to guerrilla marketing.
Women’s Golf $50,000+
A popular sport in Europe and
Asia and great for global
companies.
Source: Inc., www.inc.com, accessed November 2014.

71. ©McGraw-Hill Education.
PAY-PER-TWEET
• Celebrities can earn large
sums of money just buy
mentioning a product or site
in their tweets.
• Do you think it is ethical for
celebrities to get paid to
tweet pre-written ads that
appear to be their own
personal comments?
Photo credit: © Colin Anderson/Getty Images RF

72. ©McGraw-Hill Education.
SOCIAL SCAMMERS
How to Protect Yourself From Schemers LO 14-7
1. Be wary of requests for
money transfers -- even
from friends’ accounts.
2. Be wary when you use
applications. Don’t give
unnecessary information.
3. Use URL expanders to see
the full address of links on
friends’ pages.
Source: Kiplinger’s Personal Finance, December 2010.
Photo Credit: Paul Klintworth

73. ©McGraw-Hill Education.
GLOBAL ADVERTISING LO 14-7
• Requires marketers to develop a single product
and promotional strategy to implement worldwide.
• Problems can arise in global markets with using
one advertising campaign in all countries -
especially bad translations.

74. ©McGraw-Hill Education.
PERSONAL SELLING LO 14-7
Personal Selling -- The face-to-face presentation and
promotion of a product, including the salesperson’s
search for new prospects and follow-up service.
Salespeople need to listen to
customer needs, help reach a
solution and do everything
possible to make the
transaction as simple as
possible.
Photo credit: © Tony Tallec / Alamy

75. ©McGraw-Hill Education.
BUY THIS!
Successful Selling Strategies LO 14-7
• Know your competition
• Understand your customer’s business
• Differentiate your product or service
• Sell to the people most likely to buy
• Build relationships
• Put the right people in the right selling spots

76. ©McGraw-Hill Education.
WHOOPS!
Sales Slip-Ups LO 14-7
• Not feeling the customer’s pain
• Making money is the only goal
• Seeing sales as just a job
• Getting upset during the presentation
• Failing to properly prepare or over-preparing
• Not being yourself
• Neglecting the relationship

77. ©McGraw-Hill Education.
STEPS in the B2C
SELLING PROCESS LO 14-7

78. ©McGraw-Hill Education.
USING PUBLIC RELATIONS
in PROMOTION LO 14-7
Public Relations (PR) -- Evaluates public attitudes,
changes policies and procedures in response to the
public, and executes a program of action and information
to earn public understanding and acceptance.

79. ©McGraw-Hill Education.
PUBLICITY LO 14-7
Publicity -- Any information about an individual, product
or organization that’s distributed to the public through the
media and is not paid for or controlled by the seller.
Advantages of Publicity:
- Free
- Reaches people who would not look
at an advertisement
- More believable than advertising
Photo credit: © Elsa/Getty Images

80. ©McGraw-Hill Education.
DISADVANTAGES of PUBLICITY LO 14-7
• No control over whether the
media will use a story or when
they may release it.
• It can be good or bad.
• Once a story has been run, it is
not likely to run again.
Photo credit: © PhotoAlto/SuperStock

81. ©McGraw-Hill Education.
TEST PREP
1. What are the four traditional elements of the
promotion mix?
2. Define advertising and explain why advertising
today is moving from globalism to regionalism.
3. What is the responsibility of the public relations
department?
4. What are the advantages and disadvantages of
publicity versus advertising?

82. ©McGraw-Hill Education.
SALES PROMOTIONS LO 14-8
Sales Promotion -- The promotional tool that
stimulates consumer purchasing and dealer interest by
means of short-term activities.
Categories of Sales Promotions:
1. B2B Sales Promotions
2. Consumer Sales Promotions
Photo credit: Scott Griessel / 123RF

83. ©McGraw-Hill Education.
SALES PROMOTION TECHNIQUES LO 14-8
Jump to Appendix 5 for long image description

84. ©McGraw-Hill Education.
SOME KEY
CONSUMER PROMOTIONS LO 14-8
• Coupons
• Demonstrations
• Sampling
• Sweepstakes
• In-store Displays
• Contests
Photo credit: © Jeff Greenberg/ Alamy Images

85. ©McGraw-Hill Education.
CLIP THESE
Most Visited U.S. Coupon Clearing Sites LO 14-8
• Coupons, Inc.
• EverSave
• RetailMeNot
• CouponCabin

86. ©McGraw-Hill Education.
USING WORD-of-MOUTH
PROMOTION LO 14-8
Word-of-Mouth Promotion -- People tell others
about products they have purchased.
Word-of-Mouth is important for products like:
- Restaurants
- Daycare and Eldercare
- Car Repair Shops
- Hair Stylists
- Hotels Photo credit: © Image Source, all rights reserved.

87. ©McGraw-Hill Education.
WHAT ARE COMPANIES
YELPING ABOUT?
• Many companies have a website, Facebook page
or some online presence.
• However, on review sites like Yelp, they cannot
control their public image.
• The Federal Trade Commission has received over
2,000 complaints about Yelp.
• Companies can respond to reviews. But often the
damage is already done.

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EMERGING
PROMOTIONAL TOOLS LO 14-8
Viral Marketing -- Paying customers to say positive
things on the Internet or setting up multiple selling
schemes whereby consumers get commissions.
People who promote through viral marketing often
receive SWAG which can include free tickets, shirts,
and other merchandise.

89. ©McGraw-Hill Education.
PUSH, PULL, AND PICK PROMOTIONAL
STRATEGIES LO 14-8
Push Strategy -- Producers use advertising, personal
selling, sales promotion, and other tools to get their
products stocked on shelves.
Pull Strategy -- Directs heavy advertising and sales
promotions efforts towards consumers and gets the
public to request their products from retailers.
Pick Economy -- Refers to consumers who pick out
their products from online outlets.

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TEST PREP
1. What are the sales promotion techniques used to
reach consumers?
2. How does a push strategy differ from a pull
strategy?

91. ©McGraw-Hill Education.
Appendix 1: POTENTIAL COMPONENTS
of a TOTAL PRODUCT OFFER
A graphic appears as three concentric circles, each divided into
four equal quadrants. Each quadrant lists a value enhancer.
Starting with the innermost circle quadrant and progressing
outward are:
Quadrant 1: speed of delivery, service, brand name
Quadrant 2: image created by advertising, Internet access,
convenience
Quadrant 3: reputation of producer, buyer’s past experience,
package
Quadrant 4: guarantee, store surroundings, price
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92. ©McGraw-Hill Education.
Appendix 2: SALES and PROFITS DURING
the PRODUCT LIFE CYCLE
Two line graphs demonstrate what happens to sales and profits for a
product class over time. The horizontal axis illustrates the four stages
of the product life cycle: introduction, growth, maturity, and decline. The
vertical axis represents sales. The sales line illustrates that all-electric
cars are in the introduction stage of the product life cycle, hybrid cars
are in the growth stage of the product life cycle, smartphones are in the
maturity stage, and videocassette recorders are in the decline stage of
the product life cycle.
During the introduction stage, sales and profit are increasing and
closely correlated. During the growth stage, the profit is still on the rise,
but its distance from the sales line begins to increase. Sales are still
increasing during the maturity stage, but profits are decreasing. At the
beginning of the decline stage, both sales and profits are decreasing,
and the profit line is no longer closely correlated with the sales line.
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93. ©McGraw-Hill Education.
Appendix 3: The PRODUCT LIFE CYCLE and
the MARKETING MIX
Introduction Stage:
• Product characteristics: offer market tested product; keep mix small
• Price characteristics: go after innovators with high introductory price (skimming strategy) or use
penetration pricing
• Place characteristics: use wholesalers, selective distribution
• Promotion characteristics: Dealer promotion and heavy investment in primary demand advertising
and sales promotion to get stores to carry the product and consumers to try it
Growth Stage:
• Product characteristics: improve product; keep product mix limited
• Price characteristics: adjust price to meet competition
• Place characteristics: increase distribution
• Promotion characteristics: heavy competitive advertising
Maturity Stage:
• Product characteristics: differentiate product to satisfy different market segments
• Price characteristics: further reduce price
• Place characteristics: take over wholesaling function and intensify distribution
• Promotion characteristics: emphasize brand name as well as product benefits and differences
Decline Stage:
• Product characteristics: cut product mix; develop new product ideas
• Price characteristics: consider price increase
• Place characteristics: consolidate distribution; drop some outlets
• Promotion characteristics: reduce advertising to only loyal customers
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94. ©McGraw-Hill Education.
Appendix 4: SELECTED CHANNELS
of DISTRIBUTION
There are six channels of distribution for consumer goods.
Channel 1: The manufacturer sells directly to consumers. This channel is used by craftspeople and small farmers.
Channel 2: The manufacturer sells to a retailer who then sells to consumers. This channel is used for cars,
furniture, and clothing.
Channel 3: The manufacturer sells to a wholesaler who then sells to a retailer, who then sells to consumers. This
channel is the most common channel for consumer goods such as groceries, drugs, and cosmetics.
Channel 4: A farmer sells to a broker who then sells to a wholesaler, who then sells to a retailer, who then sells to
consumers. This is a common channel for food items such as produce.
Channel 5: A service organization sells to a broker who then sells to consumers. This is a common channel for
consumer services such as real estate, stocks and bonds, insurance, and nonprofit theater groups.
Channel 6: A nonprofit organization sells to a store who then sells to consumers. This is a common channel for
nonprofit organizations that want to raise funds. Included are museums, government services, and zoos.
There are two channels for industrial goods.
Channel 1: The manufacturer sells directly to industrial users. This is the common channel for industrial products
such as glass, tires, and paint for automobiles.
Channel 2: The manufacturer sells to a wholesaler who then sells to industrial users. This is the way that lower-
cost items such as supplies are distributed. The wholesaler is called an industrial distributor.
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95. ©McGraw-Hill Education.
Appendix 5: SALES PROMOTION
TECHNIQUES
B2B Promotion Techniques: trade shows, portfolios for
salespeople, deals (price reductions), catalogs, and
conventions
B2C Promotion Techniques: Coupons, cents-off
promotions, sampling, premiums, sweepstakes, contests,
bonuses (buy one, get one free), catalogs, demonstrations,
special events, lotteries, and in-store displays
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