Product Marketing for business study student

Product Marketing strategy for business student

1. Chapter 4
Chapter 4Chapter 4
Product MarketingProduct Marketing

2. 2
The Marketing Concept

3. 3
What You'll Learn
The marketing concept
The difference between customers and
consumers
What a market is and how it can be
described
The four Ps of the marketing mix
The Marketing Concept

4. 4
The Marketing Concept
Why It's Important
In order to participate in the world of
marketing, you'll want to understand how
businesses focus on the needs and wants
of their customers in order to improve their
products, remain competitive, and increase
sales.

5. 5
The Marketing Concept
Key Terms
marketing concept
customer
consumer
market
target marketing
customer profile
marketing mix

6. 6
The Marketing Concept
The marketing concept states that
businesses must satisfy customers' needs
and wants in order to make a profit.
The Basic Concept

7. 7
The Marketing Concept
Customers buy a product.
Consumers use the product.
Example: Parents who buy video games
from retailers are customers. The kids who
play the video games are the consumers.
Customers vs. Consumers

8. 8
The Marketing Concept
A market is all potential customers who
share common needs and wants and who
have the ability and willingness to buy the
product.
What is a Market?

9. 9
The Marketing Concept
A market can be described as
the people who are potential
customers of a product, as
well as by the classification
of a product in a category.
Would you be considered
part of the market for game
consoles? Why or why not?
What other markets are you
part of?
U.S. Game Console Market

10. 10
The Marketing Concept
The marketing mix comprises four basic
marketing strategies known as the four Ps:
The Marketing Mix
Product
Place
Price
Promotion
Slide 1 of 3

11. 11
The Marketing Concept
Product strategies include what product to
make, how to package it, what brand name to
use, and what image to project.
Place strategies deal with how and where a
product will be distributed.
The Marketing Mix
Slide 2 of 3

12. 12
The Marketing Concept
Price strategies should reflect what
customers are willing and able to pay.
Promotion strategies deal with how
potential customers will be told about the
new product, what the message will be,
when and where it will be delivered, and
with what inducements to buy.
The Marketing Mix
Slide 3 of 3

13. 13
The Marketing Concept
Target marketing is focusing all marketing
mix decisions on the specific group of
people you want to reach.
Target Marketing

14. 14
Reviewing Key Terms and Concepts
1. What does the marketing concept state?
2. Who are the customers of Sony Electronics
and Hershey Chocolates? Who are their
consumers?
3. What is a market?
4. What is target marketing?
5. What are the four Ps of the marketing mix?

15. 15
The Marketing Mix
The Marketing Concept
Consumers
Marketing Research Marketing Segmentation
Product Price Place Promotion

16. Internet Marketing
1.Search Engine Optimization (appear higher in the list of SE)
2.Search Engine Marketing (paid advertisements through
Google/Yahoo)
3.Digital Asset Optimization (new trend in promoting your
products through SE – videos/presentation/docs)
4.Viral Marketing (pass through marketing msg to other sites)
5.Email Marketing (promote by sending direct mail to target
customer)
6.Affiliate Marketing (affiliate/partnership to lead market)
7.Blog Marketing (blogger/wordpress)

17. Pricing of ProductsPricing of Products

18. Pricing and BusinessPricing and Business
•How companies price a product or
service ultimately depends on the
demand and supply for it
•Three influences on demand &
supply:
1.Customers
2.Competitors
3.Costs

19. Influences on Demand & Influences on Demand &
SupplySupply
1.Customers – influence price through their
effect on the demand for a product or service,
based on factors such as quality and product
features
2.Competitors – influence price through their
pricing schemes, product features, and
production volume
3.Costs – influence prices because they affect
supply (the lower the cost, the greater the
quantity a firm is willing to supply)

20. Time Horizons and PricingTime Horizons and Pricing
•Short-run pricing decisions have a time horizon
of less than one year and include decisions such
as:
–Pricing a one-time-only special order with no long-run
implications
–Adjusting product mix and output volume in a competitive
market
•Long-run pricing decisions have a time horizon of
one year or longer and include decisions such as:
–Pricing a product in a major market where there is some
leeway in setting price

21. Markets and PricingMarkets and Pricing
•Competitive Markets - use the market-based
approach
•Less-Competitive Markets – can use either
the market-based or cost-based approach
•Non-Competitive Markets – use cost-based
approaches

22. Market-Based ApproachMarket-Based Approach
•Starts with a target price
•Target Price – estimated price for a product
or service that potential customers will pay
•Estimated on customers perceived value for
a product or service and how competitors
will price competing products or services

23. Understanding the Understanding the
Market EnvironmentMarket Environment
•Understanding customers and competitors is
important because:
1.Competition from lower cost producers has meant
that prices cannot be increased
2.Products are on the market for shorter periods of
time, leaving less time and opportunity to recover
from pricing mistakes
3.Customers have become more knowledgeable
and demand quality products at reasonable prices

24. Five Steps in Developing Five Steps in Developing
Target Prices and Target CostsTarget Prices and Target Costs
1.Develop a product that satisfies the needs of
potential customers
2.Choose a target price
3.Derive a target cost per unit:
–Target Price per unit minus Target Operating Income per
unit
4.Perform cost analysis
5.Perform value engineering to achieve target cost

25. Cost-Based (Cost-Plus) Cost-Based (Cost-Plus)
PricingPricing
•The general formula adds a markup component to
the cost base to determine a prospective selling
price
•Usually only a starting point in the price-setting
process
•Markup is somewhat flexible, based partially on
customers and competitors

26. Forms of Cost-Plus PricingForms of Cost-Plus Pricing
•Setting a Target Rate of Return on Investment:
the Target Annual Operating Return that an
organization aims to achieve, divided by
Invested Capital
•Selecting different cost bases for the “cost-
plus” calculation:
–Variable Manufacturing Cost
–Variable Cost
–Manufacturing Cost
–Full Cost

27. Distribution ChannelsDistribution Channels
All roads lead to Malaysia

28. Chapter ObjectivesChapter Objectives
•Channels Of Distribution
•Functions of distribution channels as below:
a. Manufacturers
b. Wholesalers
c. Retailers
d. Customers
•Importance of distribution channels.
•How the Internet has affected and changed the
balance of power in distribution channels.

29. Nature and Importance of Nature and Importance of
Distribution ChannelsDistribution Channels
•Distribution channels is the circulatory system of a
hospitality company.
•Competition, a global marketplace, electronic
distribution techniques have increased the
importance of distribution.
•In the global economic market, companies should
create innovative ways to approach to new and
existing markets

30. Distribution ChannelDistribution Channel
What is a Distribution Channel?
•A set of organizations (intermediaries) involved in the
process of making a product or service available for use
or consumption by the consumer or business user.
•Used to move the customer towards the product
•Selling through wholesalers and retailers usually is much
more efficient and cost effective than direct sales.

31. Distribution Channel FunctionsDistribution Channel Functions
•Information: gathering and distributing marketing research
and intelligence information about the marketing environment.
•Promotion: developing and spreading persuasive
communications about an offer
•Contact: finding and communicating with prospective buyers
•Matching: shaping and fitting the offer to the buyer’s needs,
including such activities as manufacturing, grading, assembling,
and packaging.

32. Information
Promotion
Contact
Matching
Negotiation
Physical
Gathering and distributing marketing research about
the environment
Developing and spreading persuasive communications
about an offer
Finding and communicating with prospective buyers
Shaping and fitting the offer to the buyer’s need
Agreeing on price and terms of the offer so ownership
or possession can be transferred
Distribution: transporting and storing goods
Financing Acquiring and using funds to cover the costs of
channel work
Distribution Key Functions
Channel
Risk Taking Assuming financial risks such as the inability to sell
inventory at full margin
Distribution Channel Functions

33. Wholesaler Jobber Retailer Consumer   
Consumer
Retailer Consumer
Producer
0-level channel
Wholesaler Retailer Consumer Producer
2-level channel
Producer
3-level channel
1-level channel
Producer
Channel Level - Each Layer of Marketing Intermediaries that Perform Some
Work in Bringing the Product and its Ownership Closer to the Final Buyer.
Number of Channel Levels

34. Internet
–Became an effective distribution channel.
–In 2003, Internet sales reached $ 25.2 billion (10% of the
total travel business market).
–Total hotel sales over internet $5 billion
–Marriott takes 10,000 reservation a day.
–Southwest airlines over a billion dollars through its web
site.
–Restaurants on-line ordering–Pizza Hut, and Domino pizza.
–Expedia: Over 7 million visitors a month
–Advantages-24 hours, color picture, video tour, accessible
anywhere, print hard copy, low cost
Marketing IntermediariesMarketing Intermediaries
T
r
a
v
e
l
o
c
i
t
y
E
xpedia
P
r
i
c
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l
i
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e

35. E-Commerce: Online DistributionE-Commerce: Online Distribution
The success depends on the characteristics of the consumers in
the market in terms of their disposition to e-commerce and
surfing habits e.g.
•South Korea has the most dynamic Internet surfers in Asia. They
spend the least time—28 seconds—on a web page before moving
on
•Australian surfers were the “stickiest”, clocking one minute per
page
(Source: March 2001 figures from Nielsen / NetRatings Globel Index)

36. The Future: M-CommerceThe Future: M-Commerce
•Mobile commerce is going to be the next revenue stream once
the killer mobile-application is rolled out
•The penetration of mobile data services is low in ASPAC (1%)
compared to the Western Europe (23%), Japan (21%) and the
US (7%)
•Japan’s NTT DoCoMo's recently launched i-Mode, a data
communications service rather like Wap, and signed up
several million customers

37. Channel Behavior & OrganizationChannel Behavior & Organization
•A channel will be most effective when all members
cooperate to attain overall channel goals and satisfy
the target market.
–Channel conflict occurs when channel members are
disagree over goals and roles
•Conflict occurs at two level:
–Horizontal Conflict occurs among firms at the same
level of the channel, i.e retailer to retailer.
–Vertical Conflict occurs between different levels of the
same channel, i.e. wholesaler to retailer.
•For the of a channel each member’s role must be
specified and conflict must be managed.

38. Vertical
marketing
channel
Manufacturer
Retailer
Conventional
marketing
channel
Consumer
Manufacturer
Consumer
Retailer
Wholesaler
W
h
o
l
e
s
a
l
e
r
Conventional Distribution Channel vs.
Vertical Marketing Systems

39. Corporate
Common Ownership at Different
Levels of the Channel
Contractual
Contractual Agreements Among
Channel Members
Administered
Leadership is Assumed by One or
a Few Dominant Members
Degree
of Direct
Control
Channel Organization
Types of Vertical Marketing Systems

40. •The franchisor permits the franchise to use its trademark, name
and advertising.
•In U.S.A. 700,000 franchise ~about $ 850 billion sales
Franchised hotels account ~ 65 percent of room supply.
Starting a new business: 20 percent chance for survival
Buying an existing business: a 70 percent chance for survival
Buying a franchise: a 90 percent chance for survival
Vertical Marketing System
Franchising
Hotel franchises:
Choice hotels, Holiday Inns,
Sheraton Inns, Hilton inns
Restaurant franchises:
Mc Donalds, Burger King, KFC,
Pizza Hut, T.G.I. Franchises

41. Advantages Disadvantages
Franchisor
1. Capital for growth
2. Faster growth
3. Additional management
4. Additional income
1. Lower potential profits
2. Controlling service quality
3. Controlling firm image
Franchisee
1. Lower risk
2. Established brand name
3. Successful business plan
4. Expert assistance
1. Franchisee fees
2. Lack of freedom
3. Controlled by franchisor
Vertical Marketing System
Franchising

42. •Another form of contractual agreement
•Allow two or more organizations to benefit from each
other’s strengths.
•7-Eleven sells Dunkin Donuts in 2,000 of its stores
•Embassy suites has Red Lobster restaurants located
in its hotels.
•Chain fast-food operations are located in
convenience stores.
•Airline alliances: SAS-Continental, Delta-Korean
Airlines
Vertical Marketing System
Alliances

43. Trade for preferred
relationship with global
networks
Gain preferred access to
each other’s local
customer base
Pool policy expertise,
costs, and capabilities
Implement consumer-
oriented,
commercially driven
operations and
services
c
Vertical Marketing System
Alliances

44. © Prentice Hall, 2004 Business In Action 2e Chapter 12 - 44
Promotional StrategiesPromotional Strategies
Promotional Goals
Product Variables
Promotional Mix

45. © Prentice Hall, 2004 Business In Action 2e Chapter 12 - 45
Setting PromotionalSetting Promotional
GoalsGoals
InformingInforming RemindingRemindingPersuadingPersuading

46. © Prentice Hall, 2004 Business In Action 2e Chapter 12 - 46
Analyzing Product VariablesAnalyzing Product Variables
Nature ofNature of
the Productthe Product
Price ofPrice of
the Productthe Product
Product’s PositionProduct’s Position
in the Life Cyclein the Life Cycle

47. © Prentice Hall, 2004 Business In Action 2e Chapter 12 - 47
Selection of promotional mix:
Choosing a Marketing ApproachChoosing a Marketing Approach
WholesalerWholesaler RetailerRetailer ConsumerConsumerProducerProducer
WholesalerWholesaler RetailerRetailer ConsumerConsumerProducerProducer
Communication FlowCommunication Flow
Push StrategyPush Strategy
Pull StrategyPull Strategy
Communication FlowCommunication Flow

48. © Prentice Hall, 2004 Business In Action 2e Chapter 12 - 48
Selecting the Selecting the
Promotional MixPromotional Mix
Personal SellingPersonal Selling
AdvertisingAdvertising
Direct MarketingDirect Marketing
Sales PromotionSales Promotion
Public RelationsPublic Relations

49. © Prentice Hall, 2004 Business In Action 2e Chapter 12 - 49
Personal Selling ProcessPersonal Selling Process
Prospecting
1
Preparing
2
Approaching
3
Presenting
4
Handling
Objections
5
Closing
6
Following Up
7

50. © Prentice Hall, 2004 Business In Action 2e Chapter 12 - 50
Advertising and Direct Advertising and Direct
MarketingMarketing
Create
Product Awareness
Maintain
Product Image
Stimulate
Consumer Demand

51. © Prentice Hall, 2004 Business In Action 2e Chapter 12 - 51
Direct Marketing VehiclesDirect Marketing Vehicles
Direct MailDirect Mail
Target E-mailTarget E-mail
TelemarketingTelemarketing
InternetInternet

52. © Prentice Hall, 2004 Business In Action 2e Chapter 12 - 52
Advertising CategoriesAdvertising Categories
NationalNational LocalLocal CooperativeCooperative
ProductProduct
specificspecific
InstitutionalInstitutional
(company)(company)

53. © Prentice Hall, 2004 Business In Action 2e Chapter 12 - 53
Major Advertising Media
(channel of communication)
RadioRadio MagazinesMagazines InternetInternet
NewspapersNewspapers TelevisionTelevision Direct MailDirect Mail

54. © Prentice Hall, 2004 Business In Action 2e Chapter 12 - 54
Sales PromotionSales Promotion
ConsumerConsumer
PromotionPromotion
TradeTrade
PromotionPromotion

55. © Prentice Hall, 2004 Business In Action 2e Chapter 12 - 55
Consumer Consumer
Sales PromotionSales Promotion
•Coupons
•Rebates
•Point-of-Purchase
•Special-Event Sponsoring
•Cross Promotions
•Samples
•Premiums
•Specialty Advertising

56. © Prentice Hall, 2004 Business In Action 2e Chapter 12 - 56
Trade PromotionsTrade Promotions
Contests orContests or
SweepstakesSweepstakes
TradeTrade
AllowancesAllowances
Travel BonusTravel Bonus
ProgramsPrograms
DisplayDisplay
PremiumsPremiums

57. © Prentice Hall, 2004 Business In Action 2e Chapter 12 - 57
Public RelationsPublic Relations
(non-sales communications)(non-sales communications)
News ReleaseNews Release News ConferenceNews Conference
ProductProduct
DemonstrationsDemonstrations
ImportantImportant
NewsNews
MediaMedia
QuestionsQuestions

58. © Prentice Hall, 2004 Business In Action 2e Chapter 12 - 58
IMCIMC
Integrated Marketing Integrated Marketing
CommunicationsCommunications
(to increase effectiveness)(to increase effectiveness)
PublicPublic
RelationsRelations
PersonalPersonal
SellingSelling
AdvertisingAdvertising
DirectDirect
MarketingMarketing
SalesSales
PromotionPromotion
EffectivenessEffectiveness
ConsistencyConsistency
I
m
p
a
c
t
I
m
p
a
c
t
C
l
a
r
i
t
y
C
l
a
r
i
t
y

59. Personal SellingPersonal Selling

60. • Personal selling Interpersonal influence process involving a seller’s
promotional presentation conducted on a person-to-person basis with the
buyer.
• Sixteen million people in the U.S. are employed in sales.
• Personal selling is the single largest marketing expense in many firms.

61. THE EVOLUTION OF PERSONAL SELLING
• Salespeople are problem solvers who focus on meeting customers’ needs
before, during, and after the sale.
• Must be able to do the following:
• Focus on customers’ needs and problems, and offer solutions.
• Follow through with phone calls and other communications.
• Develop expertise about their industry and product.
• Go the extra mile to fulfill customers’ needs beyond their
expectations.
• Bureau of Labor Statistics predicts that jobs in sales will grow by 10
percent over the next decade.

62. THE FOUR SALES CHANNELS (SELLING ENVIRONMENT)
• Channels all include both business-to-business and
direct-to-customer selling.
• Over-the-counter selling Personal selling conducted
in retail and some wholesale locations in which customers
come to the seller’s place of business.
• Field selling Sales presentations made at prospective
customers’ locations on a face-to-face basis.
• Telemarketing Promotional presentation involving the use of the
telephone on an outbound basis by salespeople or on an inbound basis by
customers who initiate calls to obtain information and place orders.
• Inside selling Selling by phone, mail, and electronic commerce.
• Firms generally blend sales channels in their sales organization.

63. 4 MAJOR TRENDS IN PERSONAL SELLING
• Companies rely on three major personal selling approaches
to meet customer needs.
• Relationship selling Regular contacts between sales
representatives and customers over an extended period to
establish a sustained buyer-seller relationship.
• Consultative selling Meeting customer needs by listening
to them, understanding their problems, paying attention to
details, and following through after the sale.
• Team selling Selling situation in which several sales associates or other
members of the organization are recruited to help the lead sales
representative reach all those who influence the purchase decision.

64. SALES TASKS
• Ensuring that buyer’s purchases are in his or her best interest aids the
development of long-term relationships.
• Selling involves three basic tasks:
• Order processing Selling, mostly at the wholesale and retail levels, that
involves identifying customer needs, pointing them out to customers, and
completing orders.
• Creative selling Personal selling that involves situations in which a
considerable degree of analytical decision making on the buyer’s part results
in the need for skillful proposals of solutions for the customer’s needs.
• Missionary selling Indirect type of selling in which specialized
salespeople promote the firm’s goodwill among indirect customers, often by
helping customers use products.

65. CREATIVE SELLING
• Creative selling Personal selling that involves situations in
which a considerable degree of analytical decision making on
the buyer’s part results in the need for skillful proposals of
solutions for the customer’s needs.
• Generally used to develop new business with either new
customers of new products for existing customers.
MISSIONARY SELLING
• Missionary selling Indirect type of selling in which
specialized salespeople promote the firm’s goodwill among
indirect customers, often by helping customers use products.
• Example: Pharmaceutical companies that use free samples,
educational seminars to court doctors.
• May involve both field selling and telemarketing.

66. THE 7 STEPS IN SELLING PROCESS
• Steps follow the AIDA concept.
Attention
Interest
Desire
Action

67. 1. PROSPECTING AND QUALIFYING
•  Prospecting—identifying potential customers.
• Qualifying—determining that the prospect really is a potential customer.
2. APPROACH
• Initial contact with prospective customer.
• Use precall planning research to identify how your products might
best meet customer’s needs.
3. PRESENTATION
• Conveying marketing message to the customer.
• Features-benefits framework focuses on the good or service in terms that
are meaningful to the buyer.

68. 4. DEMONSTRATION
• Buyer has a chance to try a product or see how it works.
5. HANDLING OBJECTIONS
• Expressions of resistance, such as stalling or indecision, by the prospect
are an opportunity to reassure the buyer or offer suitable alternatives.
6. CLOSING
• Point at which salesperson asks the prospect for an order.
• Let buyer know you are ready to be of service in the future.
7. FOLLOW-UP
• Successful sales people turn today’s customers into tomorrow’s by
reinforcing the purchase decision.
• Ensure that customer service needs are met.

69. MANAGING THE SALES EFFORT
• Sales managers mix sales and management skills to manage the overall
direction and control of the personal selling effort.
RECRUITMENT AND SELECTION
•  Important because of company investment in the hiring process and the
potential damage to customer relationships and overall performance.
TRAINING
• Primary methods are on-the-job training, individual instruction, how-to
classes, and external seminars; often ongoing for experienced salespeople.
ORGANIZATION
• National accounts organization—assigning senior sales personnel or sales
teams to major accounts in each market.

70. SUPERVISION
• Span of control—number of sales representatives who report to first-level
sales managers.
MOTIVATION
• Tools include information sharing, recognition, bonuses, and benefits.
• Expectancy theory—motivation depends on the expectations an individual
has of his or her ability to perform the job and on how performance relates
to attaining rewards that the individual values.
COMPENSATION
• Commission—compensation tied directly to the sales or profits the
salesperson achieves.
• Salary—fixed payment made periodically to an employee.
• Many firms combine the features of both commission and salary in their
compensation programs.

71. EVALUATION AND CONTROL
• Managers must set standards and choose the best methods for measuring
sales performance.
• Sales quotas—specified sales or profit targets that the firm expects
salespeople to achieve.
• Other measures include customer satisfaction, profit contribution, share of
product-category sales, and customer retention.
• Evaluations should motivate improved performance.

72. ETHICAL ISSUES IN SALES
• Long-term success requires strong code of ethics.
• Honesty and ethical behavior is encouraged when:
• Employees understand what is expected of them.
• Open communication is encouraged.
• Managers lead by example.

73. © Prentice Hall, 2004 Business In Action 2e Chapter 12 - 73
Thank You