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Product and Distribution

Strategies

Chapter 13


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Explain marketing’s definition of a

product and list the components of

the product strategy.

Describe the classification system

for consumer and business goods

and services.

Distinguish between a product mix

and a product line.

Briefly describe each of the four

stages of the product life cycle.

List the stages of the new-product

development process.

Explain how firms identify theirproducts.

utline and briefly describe each

of the ma!or components of an

effective distribution strategy.

"dentify the various categories of

distribution channels and discus

the factors that influence

channel selection.

L e a r n i n g G o a l s

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# Product - bundle of physical$ service$ and symbolic

attributes.

# Convenience products - items the consumer seeks

to purchase fre%uently$ immediately$ and with little

effort.

# Shopping products - typically purchased only after

the buyer has compared competing products in

competing stores.

# Specialty products - items that a purchaser is willing

to make a special effort to obtain.

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P r o d u c t C l a s s i f i c a t i o n


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# Installations - ma!or capital items$ such as new factories$ heavy

e%uipment and machinery$ and custom-made e%uipment.

# Accessory equipment - includes less expensive and shorter-

lived capital items than installations and involves fewer decisionmakers.

# Component parts and materials - become part of a final

product.

# Raw materials - farm and natural products used in producing

other final products.

# Supplies - expense items used in a firm’s daily operation that

do not become part of the final product.

C l a s s i f y i n g B u s i n e s s

G o o d s


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"n B&B$ greater emphasis on personal selling for

installations and many component parts.

'ay involve customers in new-productdevelopment .

Advertising more commonly used to sell supplies

and accessory e%uipment.

(lso a greater emphasis on competitive pricing

strategies.

M a r k e t i n g S t r a t e g y

I m p l i c a t i o n s


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Product line - group of related products that arephysically similar or are intended for the same

market.

Product mix – a companys assortment of

product lines and indi!idual offerings.


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# Introduction stage – firm promotes demand for its new

offering$ informs the market about it$ gives free samples

to entice consumers to make a trial purchase$ and

explains its features$ uses$ and benefits.

# Growth stage - sales climb %uickly as new customers

!oin early users who are repurchasing the item. *ompany

begins to earn profits on the new product.

# aturity stage - industry sales eventually reach a

saturation level at which further expansion is difficult.

# !ecline stage - sales fall and profits decline.

S t a g e s o f t h e P r o d u c t

L i f e C y c l e


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# ar"eter#s o$%ective is to extend the life cycle as

long as product is profitable. 'arketers’ goals+

, "ncreasing customers’ fre%uency of use

, (dding customers

, inding new uses for product

,*hanging package sies$ labels$ and product designs

I m p l i c a t i o n s o f t h e

P r o d u c t L i f e C y c l e


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# Expensive$ time-consuming$

and risky.

# nly /01 of new products

become success stories.

# Each step re%uires a 2go or

no-go3 decision.

S t a g e s i n N e w

P r o d u c t e ! e l o p m e n t


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Stage 1" #enerating ideas for

ne$ offerings

Stage %" Screening

Stage 3" Concept de!elopment

and business analysis phase

Stage &" Product de!elopment

Stage '" (est marketing

Stage )" Commerciali*ation

P r o d u c t e ! e l o p m e n t

S t a g e s


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P r o d u c t " a i l u r e s


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# &rand - name$ term$ sign$ symbol$ design$ or some

combination that identifies the products of one firm

and differentiates them from competitors’ offerings.

# &rand name - part of the brand consisting of wordsor letters included in a name used to identify and

distinguish the firm’s offerings from those of

competitors.

# 'rademar" - brand that has been given legalprotection granted solely to the brand’s owner.

P r o d u c t

I d e n t i f i c a t i o n


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# +anufacturers brand - brand offered and promoted by a

manufacturer. Examples+ 4ide$ 5ockey$ 6atorade$ 7watch$ and

8eebok.

# Pri!ate or store brand - brand that is not linked to the

manufacturer but instead carries a wholesaler’s or retailer’slabel. Examples+ 7ears’ Die9ard batteries and :al-'art’s

l’8oy dog food ; 'ember’s 'ark brand

# ,amily branding strategy - a single brand name used for

several related products. Examples+


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B r a n d L o y a l t y

# Brand recognition - consumer is

aware of the brand but does not

have a preference for it over other

brands.

# Brand preference - consumer

chooses one firm’s

brand over a competitor’s.

# Brand insistence - consumer will

seek out preferred brand and

accept no substitute for it.


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# &rand equity - added value that a

respected and successful name

gives to a product.# &rand awareness - product is the

first one that comes to mind when

a product category is mentioned.

B r a n d # $ u i t y


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% a l u a & l e B r a n d s


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"mportant in product identification

and play an important role in a firm’s

overall product strategy.

*hoosing right package is especially

important in international marketing.

'ust meet legal re%uirements of all

countries in which product is sold.

Universal Product Code - bar code

read by optical scanner.

P a c k a g e s a n d L a & e l s


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!istri$ution channel -

path through whichproducts)and legal

ownership of them)flow

from producer to

consumers or business

users.

i s t r i & u t i o n S t r a t e g y

Physical distri$ution

- actual movement of

products from producer toconsumers or business

users.


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i s t r i & u t i o n

C h a n n e l s


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!irect !istri$ution

# Direct contact between producer and customer.

# 'ost common in B&B markets.

# ften found in the marketing of relatively expensive$ complex

products that may re%uire demonstrations.

# "nternet is helping companies distribute directly to consumer

market.

!istri$ution Channels (sing ar"eting Intermediaries

# =roducers distribute products through wholesalers and retailers.# "nexpensive products sold to thousands of consumers in widely

scattered locations.

# Lowers costs of goods to consumers by creating market utility.

i s t r i & u t i o n C h a n n e l s u s

i n g

M a r k e t i n g I n t e r m e d i a r i e s


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M a r k e t i n g

I n t e r m e d i a r i e s


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# )holesaler - distribution channel member that sells primarily to

retailers$ other wholesalers$ or business users.

# anufacturer-*wned )holesaling Intermediaries

, wned by the manufacturer of the good.

, Sales branch which stocks products and fills orders from

inventories.

, Sales office which takes orders but does not stock the product.

' h o l e s a l i n g


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# Retailer - channel member that sells goods andservices to individuals for their own use rather than

for resale.

# inal link of the distribution channel.

# 4wo types+ store and non-store.

( e t a i l e r s


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# Direct response

retailing

# "nternet retailing

# (utomatic

merchandising# Direct selling


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( e t a i l S t o r e s


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' h e e l o f ( e t a i l i n g


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1 dentifying a (arget +arket

% Selecting a Product Strategy

3 Selecting a Customer Ser!ice Strategy

& Selecting a Pricing Strategy

' Choosing a /ocation

) 0uilding a Promotional Strategy

Creating a Store 2tmosphere

* o w ( e t a i l e r s C o m p e t e


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=lanned 7hopping *enter

7hopping 'all 8egional 'all

Lifestyle 'all

Ch nnel


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# hat specific channel $ill it use4

# hat $ill be the le!el of distribution intensity4

Selecting !istri$ution Channels

*omplex$ expensive$ custom-made$ or perishable products

move through shorter distribution channels involving few)or no

)intermediaries.

7tandardied products or items with low unit values usually

pass

through relatively long distribution channels.

7tart-up companies often use direct channels because they

can’t persuade intermediaries to carry their products.

i s t r i & u t i o n C h a n n e l

e c i s i o n s a n d L o g i s t i c s


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# Intensive distri$ution - firm’s products in nearly

every available outlet. 8e%uires cooperation of

many intermediaries.# Selective distri$ution - limited number of retailers

to distribute its product lines.

# +,clusive distri$ution - limits market coverage in

a specific geographical region.

i s t r i & u t i o n I n t e n s i t y

Physical


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L o g i s t i c s a n d P h y s i c a l

i s t r i & u t i o n

# Supply chain complete se%uence of suppliers that

contribute to creating a good or service and delivering it to

business users and final consumers.

# ogistics the activities involved in controlling the flow of

goods$ services$ and information among members of thesupply chain.

# Physical !istri$ution , the activities aimed at efficiently

moving finished goods from the production line to the

consumer or business buyer.

of


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C o m p a r i s o n o f

+ r a n s p o r t a t i o n M o d e s


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# Customer service standards measure the %uality of

service a firm provides for its customers.

# )arranties are a firm’s promises to repair a defectiveproduct$ refund money paid$ or replace a product if it

proves unsatisfactory.

# "nternet retailers have worked to humanie their

customer interactions and deal with complaints moreeffectively.

C u s t o m e r S e r ! i c e

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