chapter objectives product development and distribution nidentify why product development decisions...
TRANSCRIPT
CHAPTER
OBJECTIVESOBJECTIVES
PRODUCT DEVELOPMENT AND DISTRIBUTION
Identify why product development decisions are important to consumers as well as businesses.
Describe the three levels of product development and the types of product selection.
Discuss how packaging and branding improve product sales and customer satisfaction.
Discuss the important factors to be considered when selecting channels of distribution.
Describe the characteristics of major forms of transportation used to distribute products.
Give examples of product-handling procedures that improve product distribution.
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Companies must carefully coordinate each of the mix elements
Prod. development decisions must be made carefully
Produce the wrong products in wrong quantities w/o features and services customers need results in a great deal of time and money with no chance to sell the prod. for profit
Businesses cannot ignore the needs/ wishes of consumers
Product Development Product design (1st step) - 3 levels
Basic - physical prod. in its simplest form; meets important consumer need Ex: basic computer
Enhanced - offers different features and options; Ex: computer with different screen or hard drive
size, etc.
Extended - additional features that are NOT part of the physical prod. but are still part of the product Ex: customer service, guarantees, rebates
Product Development Product selection - 2nd step
Product line - group of similar products with variations in design/quality to meet the needs of distinct groups SUVs -- small (Toyota RV4); mid (Blazer); large
(Escalade) Appliance - low-, mid-, and high priced based on
construction, quality of materials and available features
Product assortment - complete set of all products Ex: Bath and Body Works -- deep product
assortment ; large # of choices for each product
MANY PRODUCTS WITH LIMITED
VARIETY
LIMITED PRODUCT CHOICES AND
VARIETY
LARGEVARIETY IN
FEW PRODUCT CHOICES
BROADVARIETYOF MANY
PRODUCTS
PRODUCT BREADTHMore Less
PR
OD
UC
T D
EP
TH Mo
reL
ess
PRODUCTASSORTMENT
Product Development Packaging - 3rd step Branding - 4th step
Neither are related to the actual physical prod, but are an important influence on purchase decisions
Packaging - 4 different purposes Protects Provide important info Easier to use - pop in plastic bottle Promotional tool - attractive package
Product Development Branding - 4th step Name, symbol, word or design that
IDs a prod., service, or co. Plays a major role in buying decisions
LEVELS OF CONSUMER BRAND AWARENESS
Consumers are unable to identify the brand. Consumers can identify the brand but it has
limited influence on their purchase decision. Consumers can identify the brand but will not
purchase it because of the brand. Consumers easily recognize the brand and
will choose it if it is available. Consumers view the brand as the most
satisfying; will not purchase a different brand.
Purpose of Distribution Economic system relies on successful
exchange of prod. and services between businesses and consumers
Not easy Most problems occur during the exchange
process--distribution Economic discrepancies - pg 575
Differences between business’s offerings and consumer’s requirements
Type, quantity, location, time
Channels of Distribution Routes products follow while moving from
the producer to the consumer, including all related activities and participating organizations
Businesses that participate in activities that transfer goods/services from the producer to the user are called channel members Usually retailers/wholesalers
The larger the channel, the more complex and difficult to control, more cost too
CHANNELS OF DISTRIBUTION
Direct distribution - producers sell directly to the ultimate consumer
Indirect distribution - when distribution takes place through channel members Major difference is the the types of channel
members involved
Once channels are chosen, they can be changed--reassessed to address changes in economy.
Channels of Distribution Direct distribution - AKA direct marketing
Less channels, less cost
From producer to consumer Sales rep to call on users in person Use of mail--brochures; catalogs Telemarketing Internet
Ethical Issues - pg 578 Think critically - 1 to 4
Channels of Distribution Indirect distribution
Can simplify marketing operations by selling to retailers
Retailers - direct sales; advertising; storage; located near consumers; offer more than one product--do all shopping in one place
Retailers can range from large dept. stores to small retailers specializing in limited variety
Non-store retailers--vending machines; in-home parties; shopping channel; catalog
CHANNELS OF DISTRIBUTION
Integrated marketing channels Cooperation is difficult among businesses
that operate at different levels of a channel and have different responsibilities
Some large business attempt to solve this through channel integration--when one business owns the organizations at other levels of the channel
A manufacturer may purchase the bus. That provides wholesaling or retailing
DECIDING ON A CHANNEL OF DISTRIBUTION
Perishability of the product -- direct distrib. Geographic distance between producer
and consumer Need for special handling of the product Number of users Number of types of products manufactured Financial strength and interests of the
producer
TRANSPORTATION DECISIONS
Common transportation methods Railway - cheap but slow Trucks (truck tailers to train--piggyback) Airplanes - fast but expensive
Other transportation methods Waterways -- sloooooow Pipelines Containerization - less handling and damage
Product Handling Tracking products -- bar codes Product storage
Warehouse - simple storage Distribution center
Large bldg. designed to accumulate and redistribute products from many manufacturers efficiently
Replacing traditional warehouses
Order processing
Businesspeople (producers) do not have identical perceptions of a product--nor should they Producers think of their products as what they
have to offer Consumers think of products as a way to
satisfy their needs