Strategic Marketing Chapter 9 Capitalism Capitalism Political amp economical philosophy Characterized by marketplace competition Private ownership of business Also known as Free Enterprise ID: 565571
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Slide1
Product concepts
Strategic Marketing
Chapter 9Slide2
Capitalism
Capitalism:
Political & economical philosophy
Characterized by marketplace competition
Private ownership of business.
Also known as Free Enterprise
United States & Japan are two examples
Government takes care of people via social services
Government is associated with capitalism
Democracy
Vote republican, democratic, independent, etc…Slide3
Socialism
Government has an increased role in society
Main goal is to meet the basic needs for all and to provide employment for many
The goal is to have a classless society
No poverty, middle class, rich
Citizens are equalSlide4
Socialism
More social programs to ensure a certain standard of living for their citizens
Medical care & education is free or very cheap
Businesses & individuals pay MUCH higher taxes than those in a capitalistic society
The government runs most industries
Telephone companies, banks, electric companies, water, gas, transportation, etc..
Sweden, Canada, The United Kingdom use this philosophySlide5
Communism
Government controls factors of production
No private ownership of property or capital
Built around the belief that if goods are owned by government they are available to everyone
Promotes a Classless society
Government acts as the community
All workers are assigned jobs
No unemployment
Always get paid (regardless if you go or not)
Housing & education are determined by government
Medical Care is free
No financial incentive for people to work harder
Examples include Cuba and North KoreaSlide6
Assignment
Learning objectives are on back
You should be able to answer each question by end of chapter
Take notes. PowerPoint will not be posted until after lesson. Slide7
Learning Objective 1
The products a company creates are the basis of their marketing mix.
Product is the most important because nothing else could exist without it
What is a product?
Everything both favorable & unfavorable that a person receives in an exchange
Can be a good, service, or ideaSlide8
Learning Objective 2
Types of consumer products consist of either industrial or consumer products
The intended use of product is what distinguishes it
Some products can be both industrial & consumer (e.g. light bulbs, pencils, paper, etc..)
If used for businesses purposes; it is an
industrial product
Manufactures other goods
Facilitate an organizations operations
Resell to other customers
If used for consumer purposes; it is a
consumer product
Bought to satisfy an individual’s personal wantsSlide9
Learning Objective 2
Why does a marketer care if they are dealing with industrial or consumer products?
Each is marketed very differently
Target Markets are very different
Distribution, Pricing, & Promotion is done much differentlySlide10
Learning objective 2
Business Products (Industrial) Classification
Consumer Product Classification
Major Equipment
Shopping Products
Accessory Equipment
Convenience Products
Raw Materials
Specialty
Products
Processed
Materials
Unsought
Products
Supplies
Consumer products are
classified based on how much effort is normally used to shop for them.
Services
Component
PartsSlide11
Distinguishing between
product types
Convenience Product
Relatively
inexpensive
item that merits little shopping effort
Products are
bought regularly & without much planning
Consumer will not shop extensively for such an item
Consumers are aware of brands that sell convenience products
Wide distribution
is required in order for profit goals to be met
Examples:
Candy, soda, aspirin, combs, dry cleaning, car washes, etc…Slide12
Distinguishing between
product types
Shopping Products
are usually more expensive than a convenience product and are sold in fewer stores
Consumers will comparison shop between products to find the best one
There are two types of shopping products
Heterogeneous:
Products that are different & cause consumers to have a hard time comparing products because the prices, quality, & features, vary so much
Consumers buy the product that is best for them
Example: Furniture, clothes houses, etc…
Homogenous:
Similar products that consumers exam and generally select the cheapest brand that has desired features.
Example: Washer & dryerSlide13
Distinguishing between
product types
Specialty Products
are products consumers search extensively for & are reluctant to accept substitutes for
Examples: Rolex watch, Rolls Royce, Bose Speakers, Ruth’s Chris Steak House, & Highly specialized forms of medical car
Marketers use
selective, status-conscious advertising
to maintain their product’s exclusive image.
Distribution is limited
to one or very few outlets in a geographic area
Brand names & quality of service
are key componentsSlide14
Distinguishing between
product types
Unsought Products
are products that are unknown to the potential buyer or a known product that the buyer does not actively seek.
New products that are not advertised or distributed
are unsought products
Products we do not like to talk about or spend money on are typically unsought
Require aggressive personal selling & highly persuasive advertising
Salespeople seek leads and then approach the consumer through personal selling, direct mail, or direct-response advertising
Examples:
Insurance, burial plots, encyclopedias, etc…Slide15
Learning Objective #3
Product Items, lines, & mixes
Product Items:
A specific version of a product that can be designated as a distinct offering among an organizations products
Each item in a mix may require their own marketing strategies
Example:
12
oz
can of
coca-cola
is a product item
20
oz
bottle of
coca-cola
is a different product item
Product Lines:
A group of closely-related
product
items
.
Product Mix
:
All products that an
organization
sellsSlide16
Example: Campbell’s product mixSlide17
Product mix strategies
Advantages of grouping product items into product lines include:
Advertising Economies:
Product lines can market all items with one approach.
Example: “
Mmm
good” is used as the slogan for all Campbell soups.
Packaging uniformity
: Products can be packaged similarly and have a common look
Example: Campbell’s soup label
Standardized Components:
Reduces manufacturing & inventory costs.
Example: General Motors uses the same parts on many automobile makes & models
Efficient Sales & Distribution
: Offer a fuller range of services to consumers
Distributors & retailers are more likely to stock a company’s product if it is a full line
Transportation & warehousing costs are likely to be lower for a product line than a collection of items
Equivalent Quality:
Purchasers usually expect quality amongst all products within a product line to be equalSlide18
Product mix strategies
Product Mix Width (Breadth)
:
The number of product lines an organization offers
.
Diversifies risk
Better to depend on a variety of product lines to generate sales rather than just 1 or 2 lines
Capitalizes on established reputations.
People trust the brand Oreo so when they see it on other products they believe it to be good.
Product Line Depth:
The number of product items in a product line.
Attracts
buyers with different preferences
Increases sales/profits by further market segmentation
Evens
out seasonal sales patternsSlide19
Assignment: individual on paperSlide20
Assignment: solo or duo
on construction paper
Choose a brand (no repeats)
General Motors, Mars, Nestle, Sony, Proctor & Gamble, Kraft, General Mills, Johnson & Johnson, Unilever, Kellogg’s, Coca-Cola,
Pepsico
, Dr. Pepper/Snapple
Create at least 3 product lines based on the mix given.
Label each product line and list as many products as you can that fall within that line.
Answer the questions on your handout when doneSlide21
Examples of Product MixesSlide22
Label each column & list items
Product Line #1
Product Line #2
Product Line #3
Label
each
product line has shallow or deepSlide23
Groups
General Mills Austin & Libby
General Motors John
Mars Maggie
Proctor & Gamble Nate & Ryan
Johnson & Johnson Louis &
Dhraj
Pepsico
Uthman
& Earvin
Coca-Cola Eric
Kellogg's Jackson & Brett
Kraft Blake & Michael
Uniliever
Alec & JackSlide24
TuesdaySlide25
Warm-up & Objective
Warm-up:
Give one example of a convenience, shopping, specialty, & unsought good.
Convenience: Bread
Shopping: Dishwasher Couch
Specialty: Armani Suit
Unsought: Burial Plot
What is the key factor
in
determining what type of good you are
classifying
How much time is spent picking out a product.Slide26
Product Mix:
Label This
ChartSlide27
They
function similarly
All of Chevrolets Cars are a Product Line
They are sold to the same groups of people
All of Staples Supplies sold to schools
Are marketed the same way
Are priced similarly
Product
Line can be determined by:Slide28
Adjustment to product
items, lines, & mixes
Firms change product items, lines, & mixes
to take advantage of product developments or to respond to changes in the environment
Product Modification
Product Repositioning
Product Line Extension or Contraction
Product Modification
Product
Repositioning
Product Line
Extension or Contraction
Adjustments to Product Items,
Lines, and MixesSlide29
Adjustment to product items, lines, & mixes
Product Modification
occurs when 1 or more of a product’s characteristics are altered
Quality
Functional
Style
Planned
Obsolescence
Quality Modification:
Change in products durability or dependability
Decrease quality will make products cheaper
thus increasing buying audience
Increase quality
will allow the company to
compete with rival firms
easier
Increase brand loyalty & chances to segment target market differentlySlide30
Adjustment to product
items, lines, & mixes
Functional Modification:
Change in product’s versatility, effectiveness, convenience, or safety
Example: Tide with Downey Laundry Detergent combines function of cleaning with fabric softener
Style Modification
: Aesthetic product change rather than a quality or functional modification.
Proctor & Gamble adding
Frabreze
to its products
Common among clothing & car manufacturers
Planned Obsolesce
:
The practice of modifying products so those that have already been sold become obsolete before they actually need replacement
.
Considered unethical by someSlide31
Product Repositioning
Companies reposition
because they want to
change a consumers perception of a brand
Changing Demographics
Declining Sales
Changes in Social Environment
Why reposition established brands?Slide32
Product Line extensions
Product Line Extensions:
Adding additional products to an existing product line in order to compete more broadly in the industry
.
Example:
Nabisco
sells 100 calorie snack packs for people with active lifestylesSlide33
Companies seek to
expanding
their product width by making it
broader
Expanding allows you
Reach more markets
Gain a competitive edge
Example of product width is Red Lobster
Specialize in seafood
Sell pasta, chicken, & steak to broaden product mix
Product Width
: Broadening Slide34
Product Line Contraction
Product Line Contraction:
Deleting products from a product mix so that a company can focus on what it does best
Some products have low sales or cannibalize sales of other items
Resources are disproportionately allocated to slow-moving products
Items have become obsolete because of new product entriesSlide35
In 2009; General Motors (GM) filed for bankruptcy protection
They were told they needed to cut back
GMC
Cadillac
Buick
Chevy
Pontiac
Saturn
Saab
Hummer
Product Width: NarrowingSlide36
REVIEW LEARNING OUTCOME
Product item
,
product line
, and
product mixSlide37
Learning Objective 4
:
Describe marketing uses of Branding
A
Brand
is a
name, term, symbol, design, or combination thereof that identifies a seller’s products and differentiates them from competitors’ products
.
Main tool to distinguish a brand from its competitors
The internet has been helpful in building brand awareness.
Branding has three main purposes
Product Identification**
Repeat sales
New product sales
**Product Identification is the most important purposeSlide38
Benefits of Branding
Key Term
Definition
Brand Name
That part of a brand that can be spoken, including letters, words, and numbers
Brand Mark
The elements of a brand that cannot be spoken (logos)
Brand Equity
The value of company and brand names
Global
Brand
A brand where at least 20 percent of the product is sold outside its home country
Brand Loyalty
A consistent
preference for one brand over all othersSlide39
Branding strategies
Not at firms will choose to
adapt a branding strategy
Generic items
Branding strategies can be accomplished in a variety of ways
Manufacturer Brands
Private Brands
Regardless of manufacturer or private; a company must develop an individual branding, family branding, or combination of both approach
Individual Brand:
Different brands for different products (Proctor & Gamble & Marriot)
Family Brand
: Common names for different products (e.g.: Holiday Inn Hotels & Sony)Slide40
Branding strategies
Generic Items:
A no-frills, no-brand-name, low-cost product that is simply identified by its product category
Usually 30-40% cheaper than manufacturer brand & 20-25% cheaper than private brand
Manufacturers
’
Brand:
The brand name of a
manufacturer
Heavy consumer ads by manufacturers
Attract new customers
Enhance dealer’s prestige
Rapid delivery, carry less inventory
If dealer carries poor quality brand, customer may simply switch brands and remain loyal to dealerSlide41
Types of BrandsSlide42
Branding strategies
Private Brand:
A brand name owned by a wholesaler or a retailer. Also known as a private label or store brand
.
Advantages of Private Brand:
Earn higher profits on own brand
Less pressure to mark down price
Manufacturer can become a direct competitor or drop a brand/reseller
Ties customer to wholesaler or
retailer
Customer who wants a Diehard battery must go to Sears
Wholesalers and retailers have no control over the intensity of distribution of manufacturers’ brandsSlide43
Branding strategies
Brand
No Brand
Manufacturer’s
Brand
Private Brand
Individual
Brand:
Pepsi &
Frito Lay
Family
Brand:
Coach
Combination
Kellogg’s Rice
Krispies
Individual
Brand
Family
Brand:
Kroger
Combi
-
nation:
Sears-KenmoreSlide44
Branding strategies
Co-Branding
entails placing two or more brand names on a product or its package.
Ingredient Branding
: Occurs when a brand is a part in another product
Examples: Intel microprocessor in a Dell computer or XM radio in a Cadillac
Cooperative Branding:
Occurs when two brands receiving equal treatment borrow from each others brand equity
Example: American Express partners with Ramada Inn to win a flight with Continental Airlines
Complementary Branding:
Products are advertised or marketed together to
suggest usage
Example: Captain Morgan’s & Coca-ColaSlide45
Trademark v. service mark
Trademark:
is the exclusive right to use a
brand.
Service Mark:
Performs the same function for services, such as H&R Block
Many parts of a brand and associated symbols qualify for trademark protection.
Trademark right comes from use rather than registration.
The mark has to be continuously protected.
Rights continue for as long as the
mark
is used.
Trademark law applies to the online world.Slide46
P. 294 items that have been trademarked
A
generic product name
identifies a product by class or type and cannot be trademarked.
Examples: Aspirin, cellophane, coke, monopoly, & shredded wheat
Companies work to fight off knockoffs
Example: BurberrySlide47
AssignmentSlide48
Learning Objective 5: packaging
Packaging has always been used to get the product through the distribution process
Three Most Important Packaging functions:
Contain & Protect products
Promote Products
Facilitate the storage, use, & convenience of products
A growing 4
th
Function is
Facilitate recycling & reducing environmental damageSlide49
Packaging Function
Definition
Contain & Protect products
Package
items in specific quantities
Physical protection of product from spillage, spoilage, light, heat, cold, infestation, breakage, & evaporation
Promote the Products
Differentiates a
product from competing products
Associates a new product with other products from the same manufacturer.
Color of packaging also sets a tone.
Facilitate the storage, use, & convenience of products
Wholesalers want products that are easy to ship, store, &
stock.
Consumers want products that are easy to, handle, open, & reclose
Childproof packaging
Facilitate recycling & reducing environmental damage
Packaging
that is compatible with the environment
Products that are eco-friendly, recyclable, & better for climate
Pump sprays are easier than aerosol Slide50
Meet Customer Needs
:
Squirt Bottle
Ensure Safe Use:
Child Proof Medicine Bottle
Promote & Sell Product
: New Balance
Protect the Product
:
Egg Carton
Environmentally Friendly
: French Rabbit WineSlide51
Labeling
Persuasive
Focuses on promotional theme
Consumer information is secondary
Informational
Helps make proper selections
Lowers cognitive dissonance
Includes use/careSlide52
Universal Product Codes
Universal
Product Codes
(UPCs)
A series of thick and thin vertical lines (bar codes), readable by computerized optical scanners, that represent numbers used to track products.Slide53
Review of Learning objective:
describe marketing uses of packaging & LabelingSlide54
Learning Objective 6:
global issues in branding & packaging
When a firm enters a foreign market they have three options:
One brand name everywhere
Strong brand that can be used without negatives being associated with it
Adaptations & malfunctions
A one-brand name strategy is not possible when the name cannot be pronounced in the local language, is owned by someone else, or name is inappropriate
Different brand names in different markets
Company takes a local name to be familiar or stronger in new marketSlide55
Learning Objective 6:
global issues in branding & packaging
Three aspects of packaging in foreign markets are:
Labeling:
Making sure information is properly translated & meets government regulation
Aesthetics:
Packaging color & size should reflect societies values and needs
Logo adds brand value
Climate Considerations
Products are being shipped further so packaging needs to be more protective, sturdier, & durableSlide56
Learning Objective 7:
Product Warranties
Warranty
Express
Warranty
Implied
Warranty
A confirmation of the quality or performance of a good or service.
A written guarantee.
An unwritten guarantee that the
good or service is fit for the purpose for which it was sold. (UCC)Slide57
Warranty v. Guarantee
Express warranty = written guarantee
Implied warranty = unwritten guarantee