chapter 13 1 creating marketing strategies prepared by norm althouse university of calgary prepared...

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Creating Marketing StrategiesCreating Marketing Strategies

Prepared byNorm Althouse

University of Calgary

Prepared byNorm Althouse

University of Calgary

Copyright © 2011 by Nelson Education Ltd.

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Learning Outcomes

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1 Describe what is meant by a product.

2 Explain the stages of the product life cycle.

3 Discuss the role of pricing and the strategies used for pricing products.

4 Explain distribution and distribution channels.

5 Illustrate how supply chain management can increase efficiency and customer satisfaction.

6 Briefly list the goals of promotional strategy.

7 Discuss the elements of the promotional mix, and integrated marketing communications.

8 Identify the factors that affect the promotional mix.

9 List some of the trends in marketing.


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Creating the Marketing Mix

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Creating the marketing mix combines the four P’s into a concise plan that will meet or exceed the target market’s expectations

Creating the marketing mix combines the four P’s into a concise plan that will meet or exceed the target market’s expectations


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What is a Product?

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Any good or service, along with its perceivedattributes and benefits, that creates value for

the customer.

Any good or service, along with its perceivedattributes and benefits, that creates value for

the customer.ProductProduct


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Classifying Consumer Products

5Copyright © 2011 by Nelson Education Ltd.

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Classifying Business Products

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Capital productsCapital productsLarge, expensive items with a long life span that are purchased by businesses for use in making other products or providing a service.

Large, expensive items with a long life span that are purchased by businesses for use in making other products or providing a service.

Expense itemsExpense itemsItems, purchased by businesses, that are smaller and less expensive than capital products and usually have a life span of less than one year.

Items, purchased by businesses, that are smaller and less expensive than capital products and usually have a life span of less than one year.


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Branding

Brand equity:

the value of company and brand names

Master brand:

a brand so dominant that consumers think of it immediately when a product is mentioned

Brand loyalty:

a consumer’s preference for a particular brand

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Benefits of Branding

1. Product Identification– brands allow marketers to distinguish their

products from all others

2. Repeat Sales– developing brand loyalty

3. New Product Sales– brand equity fuels sales of new products

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Characteristics of Effective Brand Names

Easy to pronounce Easy to recognize Easy to remember Short Distinctive, unique Describes the product Describes the product’s use Describes the product’s benefits Has a positive connotation Reinforces the desired product image Is legally protectable in home and foreign

markets

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Levels of Brand Loyalty

Brand preferenceBrand preference

Brand recognitionBrand recognition

Brand insistenceBrand insistence

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Types of Brands

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The Functions of a Package

Help promote the productHelp promote the product

Protect the productProtect the product

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Labelling

Focuses on a promotionaltheme or logo – consumerinformation is secondary

Focuses on a promotionaltheme or logo – consumerinformation is secondary

Persuasivelabelling

Persuasivelabelling

Designed to helpconsumers make proper

product selections

Designed to helpconsumers make proper

product selections

Informationallabelling

Informationallabelling

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Warranties

WarrantyWarranty Guarantees the quality of a good or service.Guarantees the quality of a good or service.

ImpliedWarrantyImplied

WarrantyAn unwritten guarantee that the good or service is fit for the purpose for which it was sold.

An unwritten guarantee that the good or service is fit for the purpose for which it was sold.

Express WarrantyExpress Warranty A written guaranteeA written guarantee

Full Warranty

Full Warranty

The manufacturer must meet certain minimum standards, including repair of defects, product replacement, or refunds.

The manufacturer must meet certain minimum standards, including repair of defects, product replacement, or refunds.

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Product Development Process

6. Introduce product to marketplace6. Introduce product to marketplace6. Introduce product to marketplace6. Introduce product to marketplace

5. Test-market the new product5. Test-market the new product5. Test-market the new product5. Test-market the new product

4. Develop the concept4. Develop the concept4. Develop the concept4. Develop the concept

3. Screen ideas/concepts3. Screen ideas/concepts3. Screen ideas/concepts3. Screen ideas/concepts

2. Develop new-product ideas2. Develop new-product ideas2. Develop new-product ideas2. Develop new-product ideas

1. Set new-product goals1. Set new-product goals1. Set new-product goals1. Set new-product goals

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The Product Life Cycle


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Strategies for Success


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Pricing Objectives

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Value pricingValue pricingOffering the target market a

high quality product at a fair price and with good service.

Offering the target market a high quality product at a

fair price and with good service.

Profit maximizationProfit maximizationProducing a product as long as

revenue exceeds the cost of producing it.

Producing a product as long as revenue exceeds the cost of producing it.


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How Managers Set Prices

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A certain percentage (the markup) is added to

the product’s cost toarrive at the price.

A certain percentage (the markup) is added to

the product’s cost toarrive at the price.

Markup PricingMarkup Pricing

The price at which a product’s costs are

covered, so additionalsales result in profit.

The price at which a product’s costs are

covered, so additionalsales result in profit.

Breakeven Point(Breakeven Analysis)

Breakeven Point(Breakeven Analysis)


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Markup Pricing

Based on CostMarkup percentage = markup amount ÷ item cost

Based on Selling PriceMarkup percentage = markup amount ÷ selling

price

Note: formulas on page 399 in the textbook are incorrect


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Breakeven Analysis

Fixed costs – do not vary with different levels of output

Variable costs – change with different levels of output

21Copyright © 2011 by Nelson Education Ltd

Breakeven point = Total Fixed Costs

(in Units) Fixed-cost contribution*

*(selling price per unit minus the variable costs per unit)

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Breakeven Analysis

$

# of Units Sold

Fixed Costs

Variable Costs

Total Costs

Total RevenueBreakeven

point Profit

Loss

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Product Pricing

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Introducing a product with a high initial price and lowering the price

over time

Introducing a product with a high initial price and lowering the price

over time

Price SkimmingPrice Skimming

Selling new products atlow prices in the hopeof achieving a large

sales volume

Selling new products atlow prices in the hopeof achieving a large

sales volume

Penetration PricingPenetration Pricing


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Product Pricing

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Odd-Even PricingOdd-Even PricingSetting a price at an odd number toconnote a bargain and at an even number to suggest quality

Setting a price at an odd number toconnote a bargain and at an even number to suggest quality

Leader PricingLeader Pricing

Pricing products below the normal markup or below cost to attract customers to a store where they would not otherwise shop

Pricing products below the normal markup or below cost to attract customers to a store where they would not otherwise shop


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Distribution (Place)

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Efficiently managing the acquisitionof raw materials to the factory and the movement of products from the producer to industrial users and consumers

Efficiently managing the acquisitionof raw materials to the factory and the movement of products from the producer to industrial users and consumers

Distribution (logistics)

Distribution (logistics)


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Marketing Intermediaries

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Agents andBrokers

Agents andBrokers

Agents are sales representatives of manufacturers and wholesalers, and brokers

are entities that bring buyers and sellers together.

Agents are sales representatives of manufacturers and wholesalers, and brokers

are entities that bring buyers and sellers together.


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Channels of Distribution


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Functions of Distribution Channels

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Ease the flow of goodsEase the flow of goods

Perform needed functionsPerform needed functions

Reduce the number of transactionsReduce the number of transactions


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The Intensity of Market Coverage

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SelectiveDistributionSelective

Distribution

A manufacturer selected a limited number of dealers in an area (but

more than one or two) to market its products.

A manufacturer selected a limited number of dealers in an area (but

more than one or two) to market its products.

IntensiveDistributionIntensive

DistributionA manufacturer tries to sell its products wherever there are

potential customers.

A manufacturer tries to sell its products wherever there are

potential customers.

ExclusiveDistributionExclusive

DistributionA manufacturer selects only one or two dealers in an area to market its

products.

A manufacturer selects only one or two dealers in an area to market its

products.


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Managing the logistical components of the supply chain

Sourcing and procurementProduction schedulingChoosing a warehouse location and typeSetting up a material-handling systemMaking transportation decisions

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Responsibilities of Supply Chain Managers


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Transportation Decisions

Criteria for

Mode ofTransportation

Criteria for

Mode ofTransportation

ReliabilityReliability

Transit TimeTransit Time

CostCost

CapabilityCapability

AccessibilityAccessibility

TraceabilityTraceability


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Major Modes of Transportation


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The attempt by marketers toinform, persuade, or remind

consumers and industrialusers to engage in the

exchange process.

The attempt by marketers toinform, persuade, or remind

consumers and industrialusers to engage in the

exchange process.

PromotionPromotion

A set of unique features ofa product that the target

market perceives asimportant and better thanthe competition’s features.

A set of unique features ofa product that the target

market perceives asimportant and better thanthe competition’s features.

Differential Advantage

(Competitive Advantage)

Differential Advantage

(Competitive Advantage)


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2. Getting consumers to try products2. Getting consumers to try products

3. Providing information3. Providing information

4. Keeping loyal customers4. Keeping loyal customers

6. Identifying target customers6. Identifying target customers

1. Creating awareness1. Creating awareness

5. Increasing the amount and frequency of use5. Increasing the amount and frequency of use


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Integrated Marketing Communications

The careful coordination ofall promotional activities to produce a consistent, unified message that is

customer focused.

The careful coordination ofall promotional activities to produce a consistent, unified message that is

customer focused.

Integrated Marketing

Communications

Integrated Marketing

Communications

Promotional Mix

Promotional Mix

AdvertisingAdvertisingAdvertisingAdvertising

Public Public RelationsRelationsPublic Public

RelationsRelations

PersonalPersonalSellingSelling

PersonalPersonalSellingSelling

SalesSalesPromotionPromotion

SalesSalesPromotionPromotion


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Factors that Affect the Promotional Mix


Nature of the ProductNature of the Product

Market CharacteristicsMarket Characteristics

Available FundsAvailable Funds

Push and Pull StrategiesPush and Pull Strategies

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Push and Pull Promotional Strategies


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Category ManagementCategory Management

Yield Mangement Systems Help CompaniesMaximize their Revenues

Yield Mangement Systems Help CompaniesMaximize their Revenues

Incorporating More Technology at All LevelsIncorporating More Technology at All Levels

Trends in Marketing

Outsourcing Logistics FunctionsOutsourcing Logistics Functions


chapter 13 1 creating marketing strategies prepared by norm althouse university of calgary prepared...

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