4.5 The Four P's Product, Price, Promotion and Place

4.5 The Four P'sProduct, Price, Promotion and Place

Product

Product VocabularyProduct Vocabulary

ProductProduct The end result of the production process sold The end result of the production process sold

on the market to satisfy a customer need.on the market to satisfy a customer need.

Product VocabularyProduct Vocabulary

Consumer durablesConsumer durables Manufactured products Manufactured products

that can be re-used and are that can be re-used and are expected to have a expected to have a reasonably long life.reasonably long life.

Industrial goodsIndustrial goods Products that are Products that are

purchased by businesses purchased by businesses not final consumers.not final consumers.

Product Life CycleProduct Life Cycle

The pattern of sales recorded by a product The pattern of sales recorded by a product from launch to withdrawal from the market.from launch to withdrawal from the market.

A classic business error is failing to recognize A classic business error is failing to recognize when a product is in decline as other when a product is in decline as other competitors create new replacement products.competitors create new replacement products.

Product Life CycleProduct Life Cycle

IntroductionIntroduction

GrowthGrowth

Maturity or SaturationMaturity or Saturation

DeclineDecline

Characteristics of Product Life Characteristics of Product Life Cycle: IntroductionCycle: Introduction

IntroductionIntroduction The product has been launched after The product has been launched after

development and testing.development and testing. Sales are typically low and growing slowly.Sales are typically low and growing slowly. Advertising costs are high.Advertising costs are high. Profits not yet realized.Profits not yet realized.

Characteristics of Product Life Characteristics of Product Life Cycle: GrowthCycle: Growth

GrowthGrowth Sales grow significantly if the product is well Sales grow significantly if the product is well

received in the market place.received in the market place. This phase does not last forever!This phase does not last forever!

Characteristics of Product Life Characteristics of Product Life Cycle: MaturityCycle: Maturity

Maturity or SaturationMaturity or Saturation Sales fail to grow but they do not decline.Sales fail to grow but they do not decline.

Example: Coca-ColaExample: Coca-Cola Can you think of others?Can you think of others?

Saturation occurs when everyone has the Saturation occurs when everyone has the product that needs the productproduct that needs the product Example: cell phonesExample: cell phones Can you think of others?Can you think of others?

Characteristics of Product Life Characteristics of Product Life Cycle: DeclineCycle: Decline

DeclineDecline Sales fall steadily, extension strategies were not Sales fall steadily, extension strategies were not

tried or did not work.tried or did not work. Product obsolescenceProduct obsolescence Newer competitors products maybe availableNewer competitors products maybe available

Benefits/Limitations of Extension Benefits/Limitations of Extension Strategy Benefit LimitationAdd new features Developed and marketed quickly;

lower cost than new productOriginal product is still aging and customers may not be “buy into” revision

Repackage Product

Relatively cheap and quick Will realize the product hasn't changed and may feel misled

Discount the Price Lower-income consumers can now afford the product and may be offered to different market segments

Could affect the brand image negatively. Maybe better to develop a new product to avoid discounting

Rebrand Opens new markets, can be presented as a new product.

Expensive; is it worthwhile if the product is considered old and dated

Sell into new markets

Market development can increase sales if the product is not perceived as too old or outdated

Product and promotion may need to be redesigned to meet local laws and cultural norms

New advertising campaigns

Helps keep the product fresh and in front of customers

Customers will know that the product has remained unchanged

Create new uses May expand use of the product to existing customers or open new markets

Customers may not perceive the new use as viable and the product may not be accepted in new markets

Why be concerned with product Why be concerned with product life cycle?life cycle?

1. Assists with the planning of the marketing 1. Assists with the planning of the marketing mix decisions.mix decisions.

When do we raise/lower prices?When do we raise/lower prices? When should we advertise and how much?When should we advertise and how much? When should variations to the product be When should variations to the product be

introduced?introduced?


2. How is cash flow affected?2. How is cash flow affected? Cash flow is negative during development and costs are Cash flow is negative during development and costs are

high – nothing sold yet!high – nothing sold yet! At the introduction phase, development costs are over At the introduction phase, development costs are over

but promotional expenses are high. Factory capacity is but promotional expenses are high. Factory capacity is not fully utilized.not fully utilized.

At maturity, cash flow is likely at its best: sales are At maturity, cash flow is likely at its best: sales are high, promotional costs are low, factory capacity is high, promotional costs are low, factory capacity is fully utilized.fully utilized.

At decline, cash flow declines due to falling prices and At decline, cash flow declines due to falling prices and falling sales.falling sales.


3. How is profit and investment affected?3. How is profit and investment affected? Investment:Investment: Capital spending is likely to be extensive Capital spending is likely to be extensive

towards the end of the product life cycle as new towards the end of the product life cycle as new replacements products must be developed. This replacements products must be developed. This timeline will depend upon R&D required for timeline will depend upon R&D required for replacement products.replacement products.

Profit:Profit: High profits will most likely occur during High profits will most likely occur during growth and maturity. Profits are likely to fall during growth and maturity. Profits are likely to fall during decline due to likely pricing pressures from decline due to likely pricing pressures from competitors. However, low advertising costs and competitors. However, low advertising costs and manufacturing equipment used to produce the product manufacturing equipment used to produce the product are likely paid for allowing the product to yield some are likely paid for allowing the product to yield some profit.profit.

Product Life Product Life Cycle PhaseCycle Phase

PricePrice PromotionPromotion PlacePlace ProductProduct

IntroductionIntroduction May be high May be high compared to compared to competitors competitors (skimming) or low (skimming) or low (penetration)(penetration)

High levels of High levels of informative advertising informative advertising to make consumers to make consumers aware of the product’s aware of the product’s arrival to marketarrival to market

Restricted outlets – Restricted outlets – possibly high-class possibly high-class outlets if a outlets if a skimming strategy skimming strategy is adoptedis adopted

Basic modelBasic model

GrowthGrowth If successful, initial If successful, initial penetration pricing penetration pricing strategy could now strategy could now lead to rising priceslead to rising prices

Consumers need to be Consumers need to be convinced to make convinced to make repeat purchases – repeat purchases – brand identification brand identification will help to establish will help to establish consumer loyaltyconsumer loyalty

Growing numbers Growing numbers of outlets in areas of outlets in areas indicated by indicated by strength of strength of consumer demandconsumer demand

Planning of Planning of product product improvements and improvements and developments to developments to maintain consumer maintain consumer appealappeal

MaturityMaturity Competitors likely to Competitors likely to be entering market – be entering market – there will be a need to there will be a need to keep prices at keep prices at competitive levelscompetitive levels

Brand imaging Brand imaging continues – growing continues – growing need to stress the need to stress the positive differences positive differences with competitor’s with competitor’s productsproducts

Highest Highest geographical range geographical range of outlets as of outlets as possible – possible – developing new developing new types of outlets types of outlets where possiblewhere possible

New models, New models, colors, accessories, colors, accessories, etc… as part of etc… as part of extension strategiesextension strategies

DeclineDecline Lower prices to sell Lower prices to sell off stock – or if the off stock – or if the product has a small product has a small “cult” following, “cult” following, prices could even riseprices could even rise

Advertising likely to be Advertising likely to be very limited – may just very limited – may just be used to inform of be used to inform of lower priceslower prices

Eliminate Eliminate unprofitable unprofitable outlets for the outlets for the productproduct

Prepare to replace Prepare to replace with other products with other products – slowly withdraw – slowly withdraw from certain from certain marketsmarkets

Product Life Cycle GraphProduct Life Cycle Graph

Sales

Time

Introduction Growth Maturity Decline

Product Life Cycle GraphProduct Life Cycle Graph

Sales

Time

Introduction Growth Maturity Decline

Cash

Sales

Boston MatrixBoston Matrix

A method of analyzing a product portfolio in terms A method of analyzing a product portfolio in terms of market share and market growth. of market share and market growth. The size of the circle indicates market share sizeThe size of the circle indicates market share size..

High

MarketGrowth%

Low

High Low

Market Share %

AD

BC

Low market growth-Low market growth-High market shareHigh market share

Product AProduct A CASH COWCASH COW Well established product in a mature market.Well established product in a mature market.

Sales are high; promotional costs low. Sales are high; promotional costs low. Cash is “milked” from this product.Cash is “milked” from this product.

High

MarketGrowth%

Low

High Low

Market Share %

AD

BC

High market growth-High market growth-High market shareHigh market share

Product BProduct B STARSTAR Successful product in a growing market.Successful product in a growing market.

Sales are high; promotional costs high to reinforce brand.Sales are high; promotional costs high to reinforce brand.Could become a CASH COW.Could become a CASH COW.

High

MarketGrowth%

Low

High Low

Market Share %

AD

BC

High market growth-High market growth-Low market shareLow market share

Product CProduct C PROBLEM CHILDPROBLEM CHILD Consuming resources without much return.Consuming resources without much return.

If new product, it will need heavy promotion.If new product, it will need heavy promotion.PositivePositive – it is in a growing market; N – it is in a growing market; Negativeegative – product may need – product may need to be dropped to be dropped

High

MarketGrowth%

Low

High Low

Market Share %

AD

BC

Low market growth-Low market growth-Low market shareLow market share

Product DProduct D DOGDOG Consuming resources without much return.Consuming resources without much return.

If new product, it will need heavy promotion.If new product, it will need heavy promotion.PositivePositive – it is in a growing market; N – it is in a growing market; Negativeegative – product may need – product may need to be dropped to be dropped

High

MarketGrowth%

Low

High Low

Market Share %

AD

BC

Analyzing the Boston MatrixAnalyzing the Boston Matrix

Building:Building: Support problem child products; finance Support problem child products; finance can be obtained from the cash cows.can be obtained from the cash cows.Holding:Holding: Continue support of stars so high sales Continue support of stars so high sales growth and market position can be maintained.growth and market position can be maintained.Milking:Milking: Take the cash generated from cash cows to Take the cash generated from cash cows to invest in other products in the portfolio.invest in other products in the portfolio.Divesting:Divesting: Identify the dogs and stop production; Identify the dogs and stop production; carefully evaluate the impact of this decision.carefully evaluate the impact of this decision.

Pros & Cons of the Boston MatrixPros & Cons of the Boston Matrix

On its own, it cannot predict product success or On its own, it cannot predict product success or failure.failure.

It is only a planning tool and criticized for its It is only a planning tool and criticized for its simplicity.simplicity.

It assumes higher rates of profit are related to It assumes higher rates of profit are related to high market shares – this may not be true!high market shares – this may not be true!

Product VS BrandingProduct VS Branding

Product is a general term used to describe what Product is a general term used to describe what is being sold – is being sold –

a computer. a computer.Branding is the name or symbol that Branding is the name or symbol that distinguishes one manufacturers product from distinguishes one manufacturers product from another –another –

MacintoshMacintosh CompaqCompaqHewlett-PackardHewlett-PackardDellDellGatewayGateway

Branding can…Branding can…

Influence marketingInfluence marketing Create a perception in customers minds – Create a perception in customers minds –

positive or negativepositive or negative Give products a unique identityGive products a unique identity If successful, charge premium pricesIf successful, charge premium prices Be EXPENSIVE and take years to developBe EXPENSIVE and take years to develop Not be guaranteed to be successfulNot be guaranteed to be successful

Branding VocabularyBranding Vocabulary

BrandBrandAn identifying symbol, name, image or trademark that An identifying symbol, name, image or trademark that distinguishes a product from its competitorsdistinguishes a product from its competitors

Brand awarenessBrand awarenessThe extent to which a brand is recognized by potential The extent to which a brand is recognized by potential customers and is associated with a particular product.customers and is associated with a particular product.

Branding VocabularyBranding Vocabulary

Brand developmentBrand development Measures the infiltration of a product’s sales usually expressed Measures the infiltration of a product’s sales usually expressed

per thousand peopleper thousand people If 100 people in 1000 buy a product, it has a brand If 100 people in 1000 buy a product, it has a brand

development of 10development of 10

Brand loyaltyBrand loyalty

The faithfulness of consumers to a particular brand as shown by The faithfulness of consumers to a particular brand as shown by their repeat purchases irrespective of the marketing pressure from their repeat purchases irrespective of the marketing pressure from competing brands.competing brands.

Brand value (or Brand equity)Brand value (or Brand equity)

The premium that a brand has because customers are willing to pay The premium that a brand has because customers are willing to pay more for it than they would for a non-branded generic product.more for it than they would for a non-branded generic product.

Branding is important because....Branding is important because.... Promotes instant recognition of the company and product.Promotes instant recognition of the company and product. Differentiates the company and its products from rivals Differentiates the company and its products from rivals

particularly when products when products are difficult to particularly when products when products are difficult to differentiate like milk or gasoline.differentiate like milk or gasoline.

Aids in employee motivation.Aids in employee motivation. Generates referrals from customers.Generates referrals from customers. Customers know what to expect from the company and its Customers know what to expect from the company and its

products.products. An emotional attachment can develop between the brand and An emotional attachment can develop between the brand and

customers increasing loyalty.customers increasing loyalty. Increases the value of the business above the value of its physical Increases the value of the business above the value of its physical

assets (brand equity).assets (brand equity).

Types of BrandsTypes of Brands

Types of Brands include:Types of Brands include: Family BrandingFamily Branding Product BrandingProduct Branding Company or corporate brandingCompany or corporate branding Own-label BrandingOwn-label Branding Manufacturer's BrandsManufacturer's Brands

Types of Brands - Types of Brands - FamilyFamily

Selling several related products under one Selling several related products under one brand name – aka brand name – aka umbrella brandingumbrella branding

• Examples: Mars BarExamples: Mars Bar

• The original product has been joined with Mars ice The original product has been joined with Mars ice cream, Mars muffins, and Mars energy drinkcream, Mars muffins, and Mars energy drink

• Benefits: Benefits: Marketing economies of scale; makes new Marketing economies of scale; makes new product launches easierproduct launches easier

• Limitations:Limitations: Poor quality of one product under the Poor quality of one product under the brand may damage them all.brand may damage them all.

Types of Brands - Types of Brands - ProductProduct

Each individual product has its own unique Each individual product has its own unique identify and brand image- identify and brand image- aka aka individual brandingindividual branding

• Examples: Proctor & GambleExamples: Proctor & Gamble

• Head & Shoulders, PampersHead & Shoulders, Pampersand Duracell are all separate brandsand Duracell are all separate brands

• Benefits: Benefits: Each product is perceived on its own and is Each product is perceived on its own and is unconnected with the parent company.unconnected with the parent company.

• Limitations:Limitations: Loses the positive image of a strong Loses the positive image of a strong company brand.company brand.

Types of Brands - Types of Brands - CompanyCompany

The company name is applied to the products The company name is applied to the products and the becomes the brand- and the becomes the brand- aka aka corporate brandingcorporate branding

• Examples: Disney ProductsExamples: Disney Products

• Movies, clothing, and toysMovies, clothing, and toys

• Benefits: Benefits: Like family branding – but now applies to Like family branding – but now applies to ALLALL products produced under the company's brand products produced under the company's brand name.name.

• Limitations:Limitations: Poor quality of one product may Poor quality of one product may damage image of the company.damage image of the company.

Types of Brands – Types of Brands – Own LabelOwn Label

Retailers create their own brand name and Retailers create their own brand name and identify for a range of products- identify for a range of products- aka aka store brandsstore brands

• Examples: WalmartExamples: Walmart

• Sam's Choice, Faded Glory, Metro 7Sam's Choice, Faded Glory, Metro 7

• Benefits: Benefits: Often cheaper than name-brand, each label Often cheaper than name-brand, each label appeals to a different customer, little spent on appeals to a different customer, little spent on advertising.advertising.

• Limitations:Limitations: Customers often perceive products to Customers often perceive products to have a lower quality image.have a lower quality image.

Types of Brands – Types of Brands – Manufacturer'sManufacturer's

Producers of the product establish the brand Producers of the product establish the brand image for the products, often under the image for the products, often under the company name.company name.

Examples: Levi'sExamples: Levi's

Benefits: Benefits: Successful branding establishes Successful branding establishes a unique personality for the product; a unique personality for the product; often customers will pay a premium priceoften customers will pay a premium price

Limitations:Limitations: The brand has to be The brand has to be constantly promoted and defended.constantly promoted and defended.

Packaging....Why is it important?Packaging....Why is it important?

ProtectionProtection – The main purpose of packaging is to protect the – The main purpose of packaging is to protect the product from damage.product from damage.

Attracting customersAttracting customers – The package must attract the consumer in – The package must attract the consumer in the store....lots of research is completed to determine what is the store....lots of research is completed to determine what is appealing to customers.appealing to customers.

Promotion and informationPromotion and information – The package may contain – The package may contain directions, nutritional information, warnings, or special offers.directions, nutritional information, warnings, or special offers.

Differentiation and brand supportDifferentiation and brand support – Helps distinguish your – Helps distinguish your product from others within a display. It may contain the color product from others within a display. It may contain the color scheme of your brand.scheme of your brand.

Evaluation:Evaluation: Packaging needs to be integrated into your marketing mix. Packaging needs to be integrated into your marketing mix. Product packaging contributes substantially to the waste disposal problem.Product packaging contributes substantially to the waste disposal problem.

Price

Price

Price is the amount paid by consumers for a product.

What else does PRICE say?

Determines the degree of value added to “bought-in” components.

• Bought-In Pieces purchased from othermanufacturers to create a wholeproduct.

Influences the revenue and profit of a business due to impacting demand for a product.

Reflects the marketing objectives of the business. Establishes the psychological image and identify of a

product.

Factors in determining price

1. Costs of production

2. Competitive conditions in the market

3. Competitors’ prices

4. Marketing objectives5. Price elasticity of demand What?

(Measures the responsiveness of demand following a change in price.)

6. Whether it is a new or existing product

Pricing Strategies

Cost-Based Pricing• Firms determine the costs of producing and supplying a

product and then ADD money on top of this calculated costs to determine the selling price.

• Cost-Plus Pricing Adding a fixed mark-up for profit to the cost of the item.

• This method is popular with retailers. They take the cost of the item and add a mark up percentage to determine selling price.

Cost of bought-in materials: $40

50% markup on cost = $20 Selling price= $60

Pricing Strategies

Market-Based Pricing• Pricing set based upon the marketing objectives of the

company.• Penetration Pricing Setting a low price

supported by strongpromotion in order toachieve high volume in sales.

• This occurs when firms are trying to obtain market share. If successful, the price can increase later.

• Examples: Snack foods

Pricing Strategies(Market-Based Continued)

• Market Skimming A high price is charged for a newproduct that has little or nocompetition.

• This strategy is used to maximize short-term profits until competitors enter the market and to project an exclusive image.

• Examples: Pharmaceuticals, Technology products


• Psychological Pricing Setting prices that take advantage of a customer's perception of value of the product.

Common for prices to be set below the key price to make the product appear cheaper than it is: $999 instead of $1001; $1.99 instead of $2.01

Prices are set to coincide with market perception of the product even if the product has a low production cost. Setting the price too low would create a perception of a cheap product. Setting the price too high could alienate buyers.

• Examples: Can you give an example?


• Loss Leader Product sold at a very low price to encourage consumers to buy other products.

Commonly done in the grocery industry. Examples: Milk, bread, soda, or chips are sold at a

very low price – perhaps at a loss – to entice buyers into the store

– Selling computer printers below cost or givingthem away for free so expensive inkcartridges can be sold.


Price Discrimination Charging different groups of consumers different prices for

the same goods or services. Examples:

Airline tickets, bus fare, train tickets, movie theatre tickets, restaurant meals, grocery discounts.

Senior citizen discounts, children’s prices vs adult prices

Promotional Pricing Special low prices used to gain market share or sell off

excess stock – includes “buy one get one free” offers.

Widely used pricing strategy to stimulate sales for limited periods of time usually during low product demand periods or to promote the opening of a new store.


Predatory Pricing Deliberately setting prices so low that competitors are

forced out of the market.

This pricing strategy is typically illegal in most countries but difficult to prove.


Promotion

Promotion The use of advertising, sales promotion, personal

selling, direct mail, trade fairs, sponsorship and public relations to inform consumers and persuade consumers to buy.

• Advertising – TV ads, print ads, billboards

• Sales promotion – sales, coupons, loyalty programs

• Direct mail – mass mailings

• Trade fairs – booths at trade fairs (Southern Home Show)

• Sponsorship – NASCAR, tennis players, golfers, TV shows paid to display or promote a particular product

• Public relations – controlled publicity and advertising

Why do we PROMOTE? Increase sales by increasing consumer demand Remind consumer of exiting products and why they are special Attract new buyers (Dominos try something new) http://www.youtube.com/watch?v=sADwVQuu6LA

Demonstrate the superior quality of product as compared to its competitors – often occurs after a product has been updated (I’m a Mac advertising campaign) http://www.youtube.com/watch?v=C5z0Ia5jDt4

Create or reinforce the brand image (Coke adds life) http://www.youtube.com/watch?v=t4-li4wch90

Correct misleading reports about the product or the business and reassure consumers after a “scare” or “accident”bp oil spill http://www.youtube.com/watch?v=_AwD_7yNzKo

Develop or adapt the public image rather than the product (Proud Sponsor of Moms) http://www.youtube.com/watch?v=IzOdLE4n8AA

Encourage stocking by retailers

Promotion Types Above-the-line promotion

Purchasing communication with the consumer – AKA – advertising

Below-the-line promotion Short-term incentives to

encourage consumers to purchase the product

Ab

ove-th

e-lin

eB

elow

-the-

line

Promotions that are visual & auditory

TV Ads, billboards,radio, print ads

Promotions that are tactile

Samples, coupons, loyalty programs, games, price deals

Above-the-line Promotion Advertising

Communicating information about a product or business through the media such as radio, TV, newspapers, magazines, or billboards.

Informative Provide information to potential customers like, price, features, technical specifications, or where to purchase NCAA Athletes class action http://www.youtube.com/watch?v=6sMo_shyuVM

Persuasive Trying to create a distinct image or brand identity Anti-Smoking Campaign

Which media to use? Cost

TV and radio can be expensive to purchase and produce. Print media can be less expensive

Profile of the target audience What is the best media to reach your audience?

Type of product message to deliver Written forms are best for detailed information about a product

Link between the marketing mix and advertising media. Are they consistent and sending a similar message?

The law and other barriers Are there bans on certain types of advertising? (Tobacco, alcohol,

adult imagery or language) Volkswagen Commercial – Bollocks (language) Banned in UK https://www.youtube.com/watch?v=Ow0a06gsiF4

Below-the-line Promotion Sales promotions are used to generate short-term

gains in sales.– Sales or price deals – a temporary reduction in price– Loyalty programs – airline miles, points earned to redeem

for other products and gifts– Coupons– Point-of-sale displays – aisle interrupters, dump-bins– BOGOF – buy one, get one free offers– Games and competitions McDonalds http://www.youtube.com/watch?v=O024RSoPeJA

– Public relations Dawn http://www.youtube.com/watch?v=1JRE8dlmUxs

– Sponsorships Coke & Special Olympics Coke & Special Olympics http://www.youtube.com/watch?v=jKdIfp9_04s

What could be a LIMITATION of each strategy?

Promotional Mix The promotional mix is the combination of

promotional techniques that a firm uses to communicate the benefits of its product to customers.– They must send a consistent message to be

successful.

Promotional Mix The combination of promotional techniques that are

used to communicate the benefits of the product to the consumer Decide on the image of the product Develop a profile of the target market Decide on the messages to communicate Set an appropriate budget Decide how the messages should be communicated Establish how the success of the promotional mix is to be

assessed Execute the promotional plan Measure its success

Promotional Mix How would you address the promotional mix for a

product at each of the stages in the Product Life Cycle?

– Introduction

– Growth

– Maturity

– Decline (assuming no extension strategy)

Promotional Mix – Social Media Technology has transformed the ways business promote their

products. Benefits LimitationsImproved audience reach- per unit cost of reaching customers has been reduced.

Lack of Skill- large businesses have dedicated teams monitoring social media. Small firms may have inexperienced personnel.

Targeted marketing – Social networking sites enable “smart” marketing....reaching your target market by monitoring site users personal interests.

Time investment – Setting up a social media account is quick and easy. Updating the site is an investment of time a company may not have which could lead to unresponsiveness to customers.

Interactivity – Businesses can use social networking to interact with their customers.

Negative Feedback – Customers can use social media to provide negative feedback in a public forum.

Performance metrics – Promotional services can measure demographic information and site traffic providing information for promotional decisions.

Performance metrics – Social media does not lend itself to measurability as some other forms of electronic tracking.

Speed of transmission – Feedback to customers can be accomplished quickly, live updates, product recalls, etc... can make the company feel responsive and attract more customers.

Security Issues – Not everyone is comfortable with social media and customers may be concerned with protection of private information. This cannot be your only form of contact with customers.

Promotional Mix Viral Marketing

– The use of social media sites or text messages to increase brand awareness or sell products.

A customer pass on a positiveword mouth message about a product they like 3 times

But a product they don't like – 11 times!

Social marketers try to “influencers” who will pass on a positive message.

Promotional Mix Guerrilla Marketing

– An conventional way of performing marketingactivities on a very low budget.

RISKS: – Unconventional advertising techniques may

not appeal to conventional customers. – Not done well, it may not get noticed at all.– It could tarnish or damage the brand.

Graffiti and your next step could be jail.

Place

(Distribution)

PLACE How should products pass from the

manufacturer to the final customer?

Channel of distribution: the chain of intermediaries a product passes through from producer to final consumer

Distribution Channel is Important Consumers need easy access to the firm’s

product where they can see it, touch it, buy it, return it.

Manufacturers need distribution that provides a wide market coverage.

Retailers need to mark-up the product to cover the costs of sales.

Developing a Channel strategy Should the product be sold directly to the consumer? Should the product be sold through retailers? How many intermediaries? Where should the product be sold? Should electronic distribution be used? How much will it cost to stock products on store or

warehouse shelves? How well the distribution channel support other

components of the marketing mix?

Factors influencing the channel Industrial products tend to be sold more directly to its

customers than durable goods. Geographic area of target market – where are my customers?

The wider area, the more likely intermediaries will be needed.

Level of service expected from customers. Technical complexity of the product. Unit value of the product (the more expensive the more likely

to be sold as individual units and direct sales)….think airplanes

Number of customers (the more customers the larger the need for wide distribution and intermediaries)… think toilet paper

Direct Selling Manufacturer to Consumer

Note: The customer is not considered part of the supply chain.

Manufacturer Consumer (Or Service provider)

Product/Service

Single-Intermediary Channel Manufacturer to a Retailer to a Customer


Manufacturer Retailer Consumer

Two-Intermediary Channel Manufacturer to Wholesaler to Retailer to a Customer


Manufacturer Warehouse Retailer Consumer

Benefits & Drawbacks Give an example of each type and discuss

benefits and drawbacks:

Direct-Selling Single-Intermediary Two-Intermediaries

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4.5 The Four P's Product, Price, Promotion and Place