Chapter 14. Managing the Marketing Mix: Product, Price, Place, and Promotion

Functions of Packaging

1. contain and protect 2. promote 3. facilitate storage, use, and convenience 4. facilitate recycling

marketing intermediaries (middlemen)

Organizations that assist in moving goods and services from producers to businesses (B2B) and from businesses to consumers (B2C).

4 P's of Marketing

Product, Price, Place, Promotion

warehouse club

Sells food and general merchandise in facilities that are usually larger than supermarkets and offer discount prices; membership may be required (Costco, Sam's club)

convenience store

Sells food and other often-needed items at convenient locations; may stay open all night (7-Eleven)

high-low pricing strategy

Setting prices that are higher than EDLP stores, but having many special sales where the prices are lower than competitors'.

public relations (PR)

The management function that evaluates public attitudes, changes policies and procedures in response to the public's requests, and executes a program of action and information to earn public understanding and acceptance.

sales promotion

The promotional tool that stimulates consumer purchasing and dealer interest by means of short-term activities.

product line

a group of products that are physically similar or are intended for a similar market

product differentiation

the creation of real or perceived product differences

Supply Chain (or value chain)

the sequence of linked activities that must be performed by various organizations to move goods from the sources of raw materials to ultimate consumers

price leadership

the strategy by which one or more dominant firms set the pricing practices that all competitors in an industry follow

brand equity

the value of the brand name and associated symbols

Examples of product promotion to consumers:

-Rebates -Coupons

Trademark

A brand that has exclusive legal protection for both its brand name and its design

consumers calculate the value of a product by:

considering whether all of the benefits exceed all of the costs

break-even point equation

fixed cost / (unit price - unit variable cost)

skimming price strategy

strategy in which a new product is priced high to make optimum profit while there's little competition

brand loyalty

the degree to which customers are satisfied, like the brand, and are committed to further purchases

intensive distribution

the distribution that puts products into as many retail outlets as possible

The product cycle is a valuable tool for:

-Adjusting the marketing mix -Planning the marketing strategies -Anticipating market developments

disadvantages of publicity

-Not always under the control of an organization -Negative stories are highly damaging

Packaging carries more of the promotional burden today than in the past. Some of these examples are:

-Promotional messages -Pricing information

Television advertising is:

-desirable but expensive to buy time -desirable but costly to produce the ads

trial close

a step in the selling process that consists of a question or statement that moves the selling process toward the actual close

Integrated Marketing Communications (IMC)

a technique that combines all the promotional tools into one comprehensive, unified promotional strategy

target costing is another name for:

demand based pricing

total product offer

everything that consumers evaluate when deciding whether to buy something; also called a value package

Bundling

grouping two or more products together and pricing them as a unit

brand awareness

how quickly or easily a given brand name comes to mind when a product category is mentioned

psychological pricing

pricing goods and services at price points that make the product appear less expensive than it is

value

Good quality at a fair price. When consumers calculate the value of a product, they look at the benefits and then subtract the cost to see if the benefits exceed the costs.

Advertising

Paid, non-personal communication through various media by organizations and individuals who are in some way identified in the advertising message.

brand manager

a manager who has direct responsibility for one brand or one product line; called a product manager in some firms

retailer

a marketing intermediary that sells to ultimate consumers (people who will actually use the product than sell it)

variable costs

costs that change according to the level of production

merchant wholesalers

independently owned firms that take title to the merchandise they handle

it is unusual for a company to sell:

one product

Many companies have used packaging to change and improve their basic _____

product

product mix

the combination of product lines offered by a manufacturer

promotional tools

the communication link between sellers and buyers for the purpose of influencing, informing, or persuading a potential buyer's purchasing decision

selective distribution

the distribution that sends products to only a preferred group of retailers in an area

True or False: price and cost are not always related

true

brand

A name, symbol, or design (or combination thereof) that identifies the goods or services of one seller or group of sellers and distinguishes them from the goods and services of competitors.

promotion mix

The combination of promotional tools an organization uses.

personal selling

The face-to-face presentation and promotion of a product, including the salesperson's search for new prospects and follow-up service.

The best way for companies to compete today is to:

design and promote better products that customers perceive to have the best value

target costing

designing a product so that it satisfies customers and meets the profit margins desired by the firm

determining a good ______ strategy depends greatly on identifying the customer base and understanding how the product is perceived by this target market

differentiation

exclusive distribution

the distribution that sends products to only one retail outlet in a given geographic area

break-even analysis

the process used to determine profitability at various levels of sales

telemarketing

the sale of goods and services by telephone

electronic retailing

selling goods and services to ultimate customers over the internet

wholesaler

a marketing intermediary that sells to other organizations

Advantages of Publicity

-Free -Reaches people who would not look at an advertisement -More believable than advertising

Push vs. Pull Strategy

-Push -- increase demand by motivating vendors to highlight a product over competition & push onto consumers (pushy salesman, personal selling, B2B) - Pull -- goal to get consumers to pull product through marketing channel by demanding it & forcing vendors to take notice

competition-based pricing

A pricing strategy based on what all the other competitors are doing. The price can be set at, above, or below competitors' prices.

Product Life Cycle

A theoretical model of what happens to sales and profits for a product class over time; the four stages of the cycle are introduction, growth, maturity, and decline.

channel of distribution

A whole set of marketing intermediaries, such as agents, brokers, wholesalers, and retailers, that join together to transport and store goods in their path (or channel) from producers to consumers.

publicity

Any information about an individual, product, or organization that's distributed to the public through the media and that's not paid for or controlled by the seller.

Fair Packaging and Labeling Act

Passed in 1966, this required all consumer products to have true and informative labels -Provided more information on product quantity -Provided more information on product content

pull strategy

Promotional strategy in which heavy advertising and sales promotion efforts are directed toward consumers so that they'll request the products from retailers.

push strategy

Promotional strategy in which the producer uses advertising, personal selling, sales promotion, and all other promotional tools to convince wholesalers and retailers to stock and sell merchandise.

product placement

Putting products into TV shows and movies where they will be seen

viral marketing

The term now used to describe everything from paying customers to say positive things on the Internet to setting up multilevel selling schemes whereby consumers get commissions for directing friends to specific websites.

Sampling

a promotional program that allows the consumer the opportunity to try a product or service for free

word-of-mouth promotion

a promotional tool that involves people telling other people about products they've purchased

total fixed cost

all the expenses that remain the same no matter how many products are made or sold

The word brand includes practically:

all the means of identifying a product

direct marketing

any activity that directly links manufacturers or intermediaries with the ultimate consumer

nonstore retailing

any method used to complete an exchange with a product end user that does not require a customer visit to a store

when comparing total product offers, people:

compare intangible and tangible dimensions

agents/brokers

marketing intermediaries who bring buyers and sellers together and assist in negotiating an exchange but don't take title to the goods

Understanding the product life cycle can provide marketing managers a basis for planning ______ _______ strategies

marketing mix

Marketers must continually adapt products to new:

markets and competition

the function of distribution is represented in the 4 P's of the marketing mix as ____ utility

place

direct selling

selling to consumers in their homes or where they work

category killer

sells a huge variety of one type of product to dominate that category of goods (Toys "R" Us, Bass pro shops, Office Depot)

specialty store

sells a wide selection of merchandise in one category (Jewelry stores, shoe stores, bicycle shops)

department store

sells a wide variety of products in separate departments (Sears, JC Penny, Nordstrom)

Outlet Store

sells general merchandise directly from the manufacturer at a discount; items may be discontinued or have flaws (Nordstrom Rack, Liz Claiborne, Nike)

discount store

sells many different products at prices generally below those of department stores (Target, Walmart)

supermarket

sells mostly food with other nonfood products such as detergent and paper products (Safeway, Kroger)

cost-based pricing

setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk

everyday low pricing (EDLP)

setting prices lower than competitors and then not having any special sales

penetration strategy

strategy in which a product is priced low to attract many customers and discourage competition

break-even point

the point where total revenues from sales equals total costs