Introduction to Business

1. Introduction to Business Marketing Mix

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

3. Product

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: • Convenience: inexpensive and requires minimum amount of effort on the part of the consumer. Examples: bread, pain reliever, power cords • Shopping: usually more expensive and are purchased occasionally. Examples: shoes, microwaves • 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 • Unsought products: products that the consumer never plans or hopes to buy. Exmaples: 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

15. Product Life Cycle

16. Common Characteristics Stages 0, 1, and 2

17. Common Characteristics Stages 3 and 4

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?

21. Promotion

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) is 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.

24. The Promotion Mix

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 is 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

38. Place

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 retailers 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 producers 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 • 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 • Negotiation flow: the institutions that are associated with the actual exchange processes • Ownership flow: the movement of title through the channel • Information flow: the individuals who participate in the flow of information either up or down the channel • Promotion flow: the flow of persuasive communication in the form of advertising, personal selling, sales promotion, and public relations

43. Five Flows

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.

45. Marketing Channels for Consumer Products

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 • Nonstore 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