2. Module Learning Outcomes
Explain how organizations use the marketing mix to market to their target customers
14.1: Explain common product marketing strategies and how organizations use them
14.2: Explain how organizations use integrated marketing communication (IMC) to support their
marketing strategies
14.3: Explain common product distribution strategies and how organizations use them
14.4: Explain common pricing strategies and how organizations use them
4. Learning Outcomes: Product
14.1: Explain common product marketing strategies and how organizations
use them
14.1.1: Describe common consumer product categories
14.1.2: Explain the elements and benefits of branding
14.1.3: Describe common branding strategies
14.1.4: Describe the product life cycle
14.1.5: Explain marketing considerations through the product life cycle
14.1.6: Explain the stages of the new-product development process
5. Product Marketing
• Product is the core of the marketing mix
and defines what will be priced, promoted,
and distributed.
• If you are able to create and deliver a
product that provides exceptional value to
your target customer, the rest of the
marketing mix is easier to manage.
6. What is a Product?
A product is a bundle of attributes (features, functions, benefits, and uses) that a
person receives in an exchange. The term “product” refers to anything offered by a firm
to provide customer satisfaction, tangible or intangible.
7. Consumer Product Categories
Consumer products are often classified into four groups related to different kinds
of buying decisions:
1. Convenience: inexpensive and requires minimum amount of effort on the part of the
consumer. Examples: bread, pain reliever, power cords
2. Shopping: usually more expensive and are purchased occasionally. Examples: shoes,
microwaves
3. Specialty: from the consumer’s perspective, these products are so unique that it is worth it
to go to great lengths to procure them. Examples: highly differentiated, custom goods
4. Unsought products: products that the consumer never plans or hopes to buy. Examples:
funeral plots, pest-control
8. What is a brand?
• An identifier: a name, sign, symbol, design, or term that identifies an offering
• A promise: a promise of what a company or offering will provide
• An asset: a reputation in the marketplace that can drive premium prices and
customer preference
• A set of perceptions: the sum total of everything individuals believe and experience
about a product, service, or organization
• A “mind share”: the unique position a company or offering holds in the customer’s
mind
9. Tangible and Intangible Elements
Brands are a combination of tangible and intangible elements:
• Visual design elements: logo, color, typography, images, taglines, packaging, etc.
• Distinctive product features: quality, design sensibility, personality, etc.
• Intangible aspects of a customer’s experience with a product or company:
reputation, customer experience, etc.
10. Brands Creates Market Perceptions
• Attributes: specific product features
• Benefits: attributes translate into functional and emotional benefits
• Values: company values and operational principles
• Culture: cultural elements of the company and brand
• Personality: strong brands often project a distinctive personality
• User: brands may suggest the
types of consumers who buy
and use the product
11. Brands Create Value
For the customer: brands help simplify
consumer choices.
For product and service providers:
branding helps create loyalty.
For the retailer: branding helps retailers
differentiate themselves from one another
and build customer loyalty around the
unique experiences they provide.
12. Common Branding Strategies
• Branded house: Apple, BMW
• House of brands: Tang, Kool Aid
• Private label or store branding: Safeway Organics
• “No brand” branding: Yellow Cap
• Personal and organizational
• Place branding: Las Vegas
13. Other Branding Strategies
Co-branding is an arrangement in which two established
brands collaborate to offer a single product or service that
carries both brand names. Example: Fiat and toy maker
Mattel making the Fiat “Barbie”
Brand licensing is the process of leasing or renting the
right to use a brand in association with a product or set of
products within a defined market, geography, or territory.
Line Extension and Brand Extension: line extensions
introduce a new variety of offering within the same
product category. Brand extensions move an existing
brand name into a new product category.
14. Five Stages of a Product Life Cycle
Stage 0: Product development
Stage 1: Market introduction
Stage 2: Growth
Stage 3: Maturity
Stage 4: Decline
16. Common Characteristics Stages 0, 1, and 2
Stage Number Stage Characteristics
Stage 0: Product Development 1. Investment is made
2. Sales have not begun
3. New product ideas are generated,
operationalized, and tested
Stage 1: Market Introduction 1. Costs are very high
2. Slow sales volume to start
3. Little or no competition
4. Demand has to be created
5. Customers have to be prompted to try to product
6. Makes little money at this stage
Stage 2: Growth 1. Costs reduced due to economic scale
2. Sales volume increases significantly
3. Profitability begins to rise
4. Public awareness increases
5. Competition begins to increase with a few new
players in establishing market
6. Increased competition leads to price decreases
17. Common Characteristics Stages 3 and 4
Stage Number Stage Characteristics
Stage 3: Maturity 1. Costs are lowered as a result of increasing
production volume and experience curve effects
2. Sales volume peaks and market saturation is
reached
3. new competitors enter the market
4. Prices tend to drop due to the proliferation of
competing products
5. Brand differentiation and feature diversification is
emphasized to maintain or increase market share
6. Profits decline
Stage 4: Decline 1. Costs increase due to some loss in economies of
scale
2. Sales volume decline
3. Prices and profitability diminish
4. Profits become more a challenge of
production/distribution efficiency than increased
sales
18. Marketing Through the Product Cycle
Marketing Introduction Stage: think of this stage as the product launch. This stage
requires a significant marketing budget. The market is not yet aware of the product or
its benefits.
Marketing Growth Stage: marketers must now differentiate their product from the
incoming competition, emphasizing key features that appeal to target customers.
Marketing Maturity Stage: growth has plateaued. Marketers usually focus on niche
markets, using promotional strategies to to capture new share in these markets.
Marketing Decline Stage: marketing spend is reduced for products in this life cycle
stage. Often the marketer’s focus at this stage is to transition customers to newer
products that have more favorable economics.
19. The New-Product Development Process
Phase I
• Stage 1: Generating New Product Ideas
• Stage 2: Screen Product Ideas
• Stage 3: Concept Development and Testing
Phase II
• Stage 4: Business Case Analysis
• Stage 5: Technical and Marketing Development
Phase III
• Stage 6: Test Marketing
• Stage 7: Launch
20. Business Case Analysis
Before companies make a significant investment in a product’s development, they need
to be sure that it will bring a sufficient return, by asking:
• What is the market opportunity for this product?
• What are the costs to bring the product to market?
• What are the costs through the product life cycle?
• Where does the product fit in the product portfolio and how will it impact existing product sales?
• How does this product impact the brand?
• How does this product impact other corporate objectives such as social responsibility?
22. Learning Outcomes: Promotion
14.2: Explain how organizations use integrated marketing communication
(IMC) to support their marketing strategies
14.2.1: Explain integrated marketing communication (IMC)
14.2.2: Explain the promotion mix
14.2.3: Describe common marketing communication methods, including their
advantages and disadvantages
14.2.4: Explain how organizations use IMC to support their marketing strategies
23. Integrated Marketing Communication
Marketing communication includes all the messages, media, and activities used by an
organization to communicate with the market and help persuade target audiences to
accept its messages and take action accordingly.
Integrated marketing communication (IMC) brings together a variety of different
communication tools to deliver a common message and make a desired impact on a
customer’s perceptions and behavior.
IMC coordinates marketing communication across different communication methods
and makes marketing communication more efficient and effective because it relies on
multiple communication methods and consumer touch points to deliver consistent
messages.
25. Marketing Communication Methods
Seven common marketing communication methods are:
• Advertising
• Public relations
• Personal selling
• Sales promotion
• Direct marketing
• Digital marketing
• Social media marketing
26. Advertising
Advertising is any paid form of communication from an identified sponsor or source
that draws attention to ideas, goods, services or the sponsor itself.
27. Public Relations
The purpose of public relations is to
create goodwill between an
organization (or the things it promotes)
and the “public” or target segments it is
trying to reach.
Unlike advertising, public relations does
not pay for attention and publicity.
Although organizations earn rather than
pay for the PR attention they receive,
they may spend significant resources
on the activities, events, and people
who generate this attention.
28. Personal Selling
Personal selling uses in-person interaction to sell products and services.
Personal selling puts and emphasis on face-to-face interaction, understanding the
customer’s needs, and demonstrating how the product or service provides value.
29. Sales Promotion
Sales promotions are marketing activities that aim to temporarily boost sales of a
product or service by adding to the basic value offered. Examples of this include but are
not limited to:
• Coupons
• Sweepstakes or contests
• Premiums
• Rebates
• Samples
• Loyalty programs
• Point of purchase displays
30. Direct Marketing
• Direct marketing aims to sell products or
services directly to consumers rather than going
through retailers.
• Catalogues, telemarketing, mailed brochures, or
promotional materials and television home
shopping channels are all common traditional
direct marketing tools.
• Email and mobile marketing are two next-
generation direct marketing channels.
31. Digital Marketing
Digital marketing is an umbrella term for using digital tools to promote and market
products, services, organizations and brands.
Email and mobile marketing overlaps with direct marketing.
Other essential tools in the digital marketing tool kit: Web sites, content marketing,
search-engine optimization (SEO), and social media marketing.
32. Social Media Marketing
Social media are distinctive for their networking capabilities: they allow people to
reach and interact with one another through interconnected networks.
This “social” phenomena changes the power dynamic in marketing: no longer is the
marketer the central gatekeeper for all communication about a product, service,
brand, or organization.
Social media allows for organic dialogue and activity to happen directly between
individuals, unmediated by a company.
33. Class Discussion: Marketing to You
Which method of marketing do you most see or respond to?
• Advertising
• Public relations
• Personal selling
• Sales promotion
• Direct marketing
• Digital marketing
• Social media marketing
34. Using IMC to Support Marketing Strategies
To aid in the planning process, marketing managers often use a campaign approach. A
campaign is a planned, coordinated series of marketing communication efforts built
around a single theme or idea and designed to reach a particular goal.
Organizations may conduct many types of IMC campaigns, and several may be run
concurrently.
The IMC approach takes a central theme and pushes that message through
appropriate communication channels.
35. Practice Question 1
Integrated marketing communication (IMC) involves bringing together multiple
communication tools to deliver a common message and make a desired impact on:
A. increasing sales revenue
B. the marketing mix
C. competitor’s claims and assertions
D. customer’s perceptions and behavior
36. Practice Question 2
The objective of marketing communication is to communicate, compete, and:
A. clarify
B. convince
C. convey
D. correlate
37. Practice Question 3
Which of these common marketing communication methods has the biggest advantage
regarding customizing the marketing message to a specific target audience?
A. direct marketing
B. personal selling
C. advertising
D. public relations
39. Learning Outcomes: Place
14.3: Explain common product distribution strategies and how organizations
use them
14.3.1: List the characteristics and flows of a distribution channel
14.3.2: Describe the channel partners that support distribution channels
14.3.3: Explain the role of wholesale intermediaries
14.3.4: Describe the different types of retailer’s businesses use to distribute products
14.3.5: Differentiate between supply chains and distribution channels
40. Channels of Distribution
The Channel of Distribution (also called the marketing channel) is sets of
interdependent organizations involved in the process of making a product or service
available for use or consumption, as well as providing a payment mechanism for the
provider.
The channel consists of organizations, some under the control of the producer and
some outside the producer’s control.
The channel management process is continuous and requires monitoring and
reappraisal.
Channels should have certain distribution objectives guiding their activities
41. Channel Flows
Channel flows reflect the many linkages
that tie channel members and other
agencies together in distribution of goods
and services.
Five important flows are:
• product flow
• negotiation flow
• ownership flow
• information flow
• promotion flow
42. Channel Flows Continued
1. Product flow: the movement of the physical product from the manufacturer through all
the parties who take physical possession of the product until it reaches the ultimate
consumer
2. Negotiation flow: the institutions that are associated with the actual exchange
processes
3. Ownership flow: the movement of title through the channel
4. Information flow: the individuals who participate in the flow of information either up or
down the channel
5. Promotion flow: the flow of persuasive communication in the form of advertising,
personal selling, sales promotion, and public relations
44. Channel Partners
While channels can be very complex, there is a common set of channel structures that
can be identified in most transactions.
Each channel structure includes different organizations. Generally, the organizations
that collectively support the distribution channel are referred to as channel partners.
46. Types of Channels
Direct channel: simplest channel, the producer sells straight to the consumer.
Retail channel: companies that focus on selling directly to consumers. The difference
between the direct channel and the retail channel is that the retailer does not produce the
product.
Wholesale channel: to a consumer, the wholesaler channel looks a lot like the retail
channel. The wholesaler is primarily engaged in buying and usually storing and physically
handling goods in large quantities and then reselling them.
Agent channel: includes on additional intermediary. Agents and brokers are different from
wholesalers in that they do not take title to the merchandise. They do not own the
merchandise because they neither buy nor sell. The brokers bring the buyer and seller
together to negotiate the terms of the transaction.
47. Role of Wholesale Intermediaries
Intermediaries act as a link in the distribution process but the role they fill is broader
than simply connecting the different channel partners.
Wholesalers, often called “merchant wholesalers” help move goods between producers
and retailers.
Functions that a merchant retailer fulfills:
• Purchasing
• Warehousing and Transportation
• Grading and Packaging
• Risk Bearing
• Marketing
• Distribution
48. Retailers that Distribute Products
Retailing involves all activities required to market consumer goods and services to ultimate
consumers who are purchasing for individual or family need.
Beyond the distinction in the products they provide, there are structural differences among
retailers that influence their strategies and results. One of the reasons the retail industry is
so large and powerful is its diversity.
Types of retailers:
• Department stores
• Chain stores
• Supermarkets
• Discount retailers
• Warehouse retailers
• Franchises
• Malls and shopping centers
• Online retailing
• Catalogue retailing
• Non-store retailing
49. Supply Chains and Distribution Channels
A supply chain is the system through which an organization acquires raw materials,
produces products, and delivers the products and services.
On their way from producers to end users and consumers, products pass through a
series of marketing entities known as the distribution channel.
Distribution channels:
• reduce the number of transactions
• ease the flow of goods
51. Supply Chain vs. Marketing Channels
The supply chain and marketing channels can be differentiated in the following ways:
1. The supply chain is broader than marketing channels
2. Marketing channels are purely customer facing
3. Marketing channels are part of the marketing mix
52. Class Discussion: Peanut Butter Supply Chain
Here is a supply chain for peanut
butter. How would a diagram of a
marketing channel be similar?
Different?
54. Learning Outcomes: Price
14.4: Explain common pricing strategies and how organizations use them
14.4.1: Explain pricing from the customer’s viewpoint
14.4.2: Describe the objectives businesses hope to achieve with product pricing
14.4.3: Explain the cost-plus pricing method
14.4.4: Explain the methods businesses use for discounts and allowances
55. Customer Value and Price
Whether a customer is the ultimate user of the finished product or a business that
purchases components of the finished product, the customer seeks to satisfy a need
through the purchase of a particular product. The customer’s preference is to pay as little as
possible and to receive the best value for their money.
To increase the value, the business can increase the perceived benefits or reduce the
perceived costs.
57. Profit Oriented Pricing
• Focus on finances of business and product
profit = revenue - price
• Price per product is set higher than the total cost of producing and selling cost
• Ensures company makes a profit on each sale
Risks
• Customers don’t care about a company’s costs, if the product fails to deliver value, it will be
difficult to generate sales
• Competitors can undercut pricing
• Limits pricing flexibility
58. Competitive Oriented Pricing
• Price based on competitors’ costs
• Price either to indicate that the company believes its product provides greater value
or lower to be a low-price solution
• Simple way to price products
Risks
• Does not fully take into account the value of the product to the customer
• Might be priced too low for the value it provides, or too high
59. Customer Oriented Pricing
Customer uses several criteria to decide how much they are willing to spend in order
to satisfy that need.
The company seeks to charge the highest price that supports the value received by
the customer.
Customer oriented pricing requires an analysis of the customer and the market. The
company must understand the buyer persona, the value that the buyer is seeking,
and the degree to which the product meets customer need.
Today’s marketing tends to favor customer-oriented pricing because it prioritizes the
customer and the customer’s perception of value.
60. Cost-Plus/Gross Margin Pricing
• A particular gross margin is selected that will produce a desirable profit
level
• Gross margin is the difference between how much the goods cost and the
actual price for which it sells.
• Is designated by a percent of net sales
• Company does not have to forecast general business conditions or
customer demand
• Consumers find fair, since the price they pay is related to the cost of
producing the item
Risks
• Inflexibility
• Does not take into account consumers’ perceptions of a product’s value
61. Markup
A markup is the calculation of the difference between cost and selling price of
merchandise in stock for a particular department or item.
Example:
A tie costs $14.50
It is sold for $25.23
The markup is $10.73
($25.23 - $14.50)
62. Discounting Strategies
• Quantity discounts are reductions in base
price given for buying some predetermined
quantity of merchandise.
• Seasonal discounts are price reductions
given for out-of-season merchandise.
• Cash discounts are reductions on base
price given to customers paying cash or
within some short period of time.
• Trade discounts are given to middlemen to
encourage them to stock and give preferred
treatment to an organization’s product.
63. More Discounting Strategies
• Personal allowances (rewards to
salespeople) are given to encourage
middlemen to aggressively promote the
organization’s product.
• Trade-in allowances (cars) reduce the
base price of a product or service and are
often used to help the seller negotiate the
best price with the buyer.
• Price bundling (cable package) groups
similar or complementary products and
charges a total price that is lower than if
they were sold separately.
64. Practice Question 4
Why does the customer’s view of price include the value equation?
A. Price is the most important factor in a consumer’s decision to buy.
B. Price is relative—consumers look for the best value for their money.
C. The value equation subtracts perceived discounts from the price.
D. The value equation divides cost by benefit in order to derive a fair price.
65. Practice Question 5
Which of the three objectives businesses use pricing to achieve uses the Price-Value
Equation?
A. customer objective
B. competitive objective
C. profit objective
D. revenue objective
66. Practice Question 6
If the prevailing gross margin goal for the shoe department at Nordstrom is 65%, what
would be retail price be of a pair costing $75.00?
A. $150.00
B. $220.00
C. $500.00
D. $115.00
67. Practice Question 7
When Adobe Software combines 20+ applications into “Creative Cloud” for one price,
which method are they using?
A. quantity discount
B. trade discount
C. seasonal discount
D. price bundling
68. Class Discussion: Marketing Mix
You are a marketing consultant who helps companies get the word out about their
products and services. What marketing communications method (advertising, direct
marketing, personal selling, sales promotion, digital marketing, and public relations)
would you advise your clients to utilize for the following:
• New Laundry Detergent
• Local Tree Service
• Home furnishings
• Wine club
• Business software
69. Quick Review
• How do organizations use common product marketing strategies?
• How do organizations use common pricing strategies?
• How do organizations use common product distribution strategies?
• How do organizations use integrated marketing communication (IMC) to support
their marketing strategies?
