producing and distributing goods and services 4p: product and placement chapter course: bus 101...

Producing and Distributing Goods and Services4P: Product and Placement

Chapter

12

Course: BUS 101Lecturer: NNA

Classifying Goods and Services

Consumer products are products and services for personal consumption.

Classifications:Convenience productsShopping productsSpecialty products

Ch 8 -2 Copyright © 2011 Pearson Education

Consumer products

Convenience products are consumer products and services that the customer usually buys frequently, immediately, and with a minimum comparison and buying effort.• Newspapers• Candy• Fast food


Shopping products are consumer products and services that the customer compares carefully on suitability, quality, price, and style.• Furniture• Used cars• Appliances


Consumer products

Specialty products are consumer products and services with unique characteristics or brand identification for which a significant group of buyers is willing to make a special purchase effort.• Specialist medical services• Designer clothes• High-end electronics• Expensive cars


Consumer products

Classifying Business Goods

Business products are products purchased for further processing or for use in conducting a business.

Classification:installations, accessory equipment, Component parts and materials, raw materials, supplies.



Installations are Major capital items. Expensive and often involve buyer and seller negotiations that may last for more than a year before a purchase actually is made.factories, offices, heavy machinery



Accessory equipmentalso includes capital items, Less expensive and Shorter lived than installationsInvolve fewer decision makers. Examples : fax machines.


Materials and component parts are finished business goods that become part of a final product•small motors, tires

Raw materials are farm and natural products used in producing other final products• milk, iron ore, leather, and soybeans.


Supplies and services Supplies are items used in a firm’s daily operation that do not become part of the final product.

Operating supplies: paper, pencilRepair and maintenance items: paint, nailsBusiness services: window cleaning, computer repair

Classifying Services

B2B: Business to Business serviceB2C: Business to Consumer service

services can also be convenience (Maid), shopping (Dentist), or specialty (Lawyer)Characteristics of Services• Intangible: Can’t be touched or physically felt• Inseparable: the service provider is the service; the two

are inseparable in the buyer’s mind• Perishable: firms cannot stockpile service in inventory• Difficult to standardize: must meet individual

customers’ needs

Product Lines and Product Mix

Product line group of related products that are physically similar or are intended for the same market.Product mix company’s assortment of product lines and individual offerings

Baby Gap is just one of the product lines offered by the Gap clothing chain. The retail group also offers traditional Gap casual clothing, Old Navy’s stylish but low-priced line, and Banana Republic’s upscale clothing.

Product Mix and Product line

Product Mix (Samsung)

Product Line Samsung TV

LED LCD Flat

Product line Samsung Mobile

Galaxy Guru Metr

o

Product Life Cycle PLC)

Product Life-Cycle Strategies

2. Introduction Stage• Slow sales growth• Little or no profit• High distribution and

promotion expense


Dreyer’s, the largest ice cream maker in the United States, promoted an essay contest as a first step to giving away 1,500 free ice cream parties to get people to try its lower-fat ice cream called Slow Churned


3. Growth Stage• Sales increase• New customers• New competitors enter the

market with similar offerings• Price stability or decline to

increase sales• Profits increase



4. Maturity Stage• Sales slows down• Increase product

availability• Weaker competitors

leave the market• Price reduces• Firms concentrate on

capturing competitors’ customers

• Aggressive promotionCh 9 -18 Copyright © 2011 Pearson Education

Cell phone network companies in Bangladesh are continuously promoting their product to capture competitors’ customers


5. Decline Stage• Competitors gradually

exit• Decline stage is caused

by• Product innovation • shift in consumer

preferences• Technological change


Due to technological change, vcr and floppy became extinct and cd ‘s product life cycle became in the declined position

Stages in New-Product Development

The New-Product Development Process

i) Generate new product ideas is the systematic search for new-product ideas.• Sources of new-product ideas:

a. Internal: Gathering new product ideas by-- Own employees- Research scientists

b. External: Gathering new product ideas from-- Distributors- Suppliers- Inventors outside the firm- Customers (most successful source)



ii) Idea Screening Screening new-product ideas to spot good ideas and drop poor ones as soon as possible

iii) Concept Development and Business analysis: further screening occurs•Concept testing—marketing research designed to solicit initial consumer reaction to new-product ideas•Focus groups are formal sessions in which consumers meet with marketers to discuss what they like or dislike about current products and perhaps test or sample a new offering to provide some immediate feedback.


iv) Product development involves the creation and testing of one or more physical versions by the R&D or engineering departments.

v) vii) Test marketing provides the marketer with experience in testing the product and entire marketing program before full introduction.


Test marketing: KFC test marketed its new Kentucky Grilled Chicken product for three years before rolling it out nationally.


vi) Commercialization: the product is made generally available in the marketplace• Sometimes this stage is referred to as a product

launch

Product Identification

A major aspect of developing a successful new product involves methods used for identifying a product and distinguishing it from competing offerings.Both tangible goods and intangible services are identified by brands, brand names, and trademarks

Product Identification

brand is a name, term, sign, symbol, design, or some combination thereof used to identify the products of one firm and to differentiate them from competitive offerings.A brand name is that part of the brand consisting of words or letters included in a name used to identify and distinguish the firm’s offerings from those of competitors

Selecting an Effective Brand Name

Brand name must be-Easy to pronounce, recognize and remember (advertising campaign of EZ (easy) failed coz in Britain Z is pronounced as Zed)Convey the right image to the buyer (Dove soap gives an impression of mildness)Legally protectable (brand names cannot contain words in general use, such as television or automobile)

Brand Categories

manufacturer’s (or national) brand: A brand offered and promoted by a manufacturer. E.g. Tide, ReebokA private (or store) brand identifies a product that is not linked to the manufacturer but instead carries a wholesaler’s or retailer’s label. E.g. Wal-Mart chicken

Brand Categories

A family brand is a single brand name used for several related products. E.g. Johnson & Johnsonan individual branding strategy by giving each product within a line a different name. e.g. Procter & Gamble has individual brand names for its different laundry detergents, including Tide, Cheer, and Dash

Brand Loyalty

Brand Loyalty Marketers measure brand loyalty in three stages:

Brand recognition is brand acceptance strong enough that the consumer is aware of the brand, but not strong enough to cause a preference over other brands.Brand preference occurs when a consumer chooses one firm’s brand over a competitor’sBrand insistence is the ultimate degree of brand loyalty, in which the consumer will accept no substitute for a preferred brand

Brand Equity

Brand Equity the added value that a respected and successful name gives to a product.

Brand awareness means the product is the first one that comes to mind when a product category is mentioned.

MARKETING CHANNELS

Distribution Strategy: Distribution Channels

direct distribution channel which carries goods directly from producer to consumer or business userDistribution Channels Using Marketing Intermediaries: distribution channels that involve several different marketing intermediaries. A marketing intermediary (also called a middleman) is a business firm that moves goods between producers and consumers or business users.

Wholesaling

Wholesaler distribution channel member that sells primarily to retailers, other wholesalers, or business users.

Manufacturer-Owned Wholesaling Intermediaries: A manufacturer’s marketing manager may decide to distribute goods directly through company owned facilities to control distribution or customer service.

Wholesaling

Independent Wholesaling IntermediariesMerchant wholesalers, like apparel wholesaler WholesaleSarong.com, are independently owned wholesaling intermediaries that take title to the goods they handle• full-function merchant wholesaler provides a complete

assortment of services for retailers or industrial buyers, such as warehousing, shipping, and even financing

• A limited-function merchant wholesaler also takes legal title to the products it handles, but it provides fewer services to the retailers to which it sells.

agents and brokers: They may or may not take possession of the goods they handle, but they never take title, working mainly to bring buyers and sellers together

Retailing

Retailer: channel member that sells goods and services to individuals for their own use rather than for resale.

Non-store Retailers Store retailers

Types of Store Retailers

• Specialty store: – Sells complete set of

narrow line of merchandise

• Convenience store:– Only staple products– Long hours– Easy to access locations


• Warehouse club:– Warehouse style stores– Discount for

membership card holders

• Discount store:– Products sold in discount

prices


• Supermarket– Large self service retailer

• Factory outlet:– Manufacturer owned shops– sell overproduced products– sell for inventory clearance

at discounted price

Types of Store Retailers• Department stores:– Offers a wide variety of products in

different department

• Supercenter– Giant stores selling

foods and general merchandise

How retailers compete

Identifying a Target MarketSelecting a Product StrategyShaping a Customer Service StrategySelecting a Pricing StrategyChoosing a LocationBuilding a Promotional StrategyCreating a Store Atmosphere

Distribution Intensity

Intensive distribution involves placing a firm’s products in nearly every available outlet.

suits low-priced convenience goods such as milk, newspapers, and soft drinks. requires cooperation by many intermediaries, including wholesalers and retailers, to achieve maximum coverage.

Selective distribution is a market-coverage strategy in which a manufacturer selects only a limited number of retailers to distribute its product lines.

can reduce total marketing costs establish strong working relationships within the channel.

Distribution Intensity

Exclusive distribution, at the other end of the continuum from intensive distribution, limits market coverage in a specific geographical region.

suits relatively expensive specialty products such as Rolex watchesRetailers are carefully selected to enhance the product’s image to the market and to ensure that well-trained personnel will contribute to customer satisfaction.

producing and distributing goods and services 4p: product and placement chapter course: bus 101...

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