product range lays

Chapter Thirteen

Dimensions ofMarketing Strategy

The Marketing Mix: Product, Price, Promotion, and Distribution

Target MarketPromotion Price

Distribution

Product

A Marketing Mix and the Marketing Environment

CustomerPromotion Price

Distribution

Product

SocialForces

Competitiveand EconomicForces

TechnologicalForces

Political, Legal, andRegulatoryForces

Marketing Environment

The Key to Successful Marketing Strategy

• The Right Marketing Mix to Satisfy the Customer:– The Right Product– The Right Promotion– The Right Price– The Right Distribution

The Product Mix or Strategy

A company’s product mix or strategy includes:

all products and product linesfrom idea development to phaseout.

The Right Product Mix or Strategy

• To satisfy the target market

• To create long-term relationships with customers

FAST FACT:Domino’s is the largest privately held restaurant chain in the world.In one year in the US, Domino’s used 25.5 million pounds of pepperoni and 146 million pounds of mozzarella cheese.

Source: Domino’s Web site, http://www.dominos.com/About/PR98Usage.cfm (accessed August 24, 2001).

http://www.dominos.com/About/PR98Usage.cfm

What is a Product?

Distinguish between a Product Line and Product Mix.

Product Line and Product Mix

• Product Line– Closely related

products that are treated as a unit because of similar marketing strategy, production, or end-use considerations.

• Product Line– Closely related

products that are treated as a unit because of similar marketing strategy, production, or end-use considerations.

• Product Mix– All of the

products offered by an organization

• Product Mix– All of the

products offered by an organization

What is a Product?

Kleenex—9 kinds

Colgate toothpaste—19 varieties

Eggo waffles—16 flavors

PepsiCo Product Mix

Soft Drink Line

Snack Food Line

Restaurant Line

Pepsi Cola

Slice

Mountain Dew

Fritos corn chips

Ruffles potato chips

Doritos tortilla chips

Pizza Hut

Taco Bell

Kentucky Fried Chicken

Frito-Lay BrandsLay's Potato ChipsBaked Lay's Potato CrispsRuffles Potato ChipsBaked Ruffles Potato ChipsDoritos Tortilla Chips3D's SnacksTostitos Tortilla ChipsBaked Tostitos Tortilla ChipsSantitas Tortilla ChipsFritos Corn ChipsCheetos Cheese Flavored SnacksRold Gold PretzelsFunyuns Onion Flavored RingsSunchips Multigrain SnacksCracker Jack Candy Coated PopcornChester's PopcornGrandma's CookiesMunchos Potato CrispsSmartfood PopcornBaken-ets Fried Pork SkinsObertos Meat SnacksFrito-Lay Dips & SalsasOutside the U.S.Bocabits Wheat SnacksCrujitos Corn Snacks Fandangos Corn SnacksHamkas Snacks

Nibb-It Sticks and RingsNiknaks Cheese SticksQuavers Potato SnacksSabritas Potato ChipsTwisties Cheese SnacksWalkers Potato CrispsJack's SnacksSimba Snacks Pepsi-Cola BrandsPepsi-ColaDiet PepsiPepsi OneMountain DewWild Cherry PepsiSliceMug Sierra MistFruitworksAll SportLipton Brisk (Partnership)Lipton's Iced Tea (Partnership)Aquafina Frappuccino (Partnership)SoBeOutside the U.S.Mirinda 7UPPepsi Max

Tropicana BrandsTropicana Pure PremiumTropicana Season's BestTropicana TwisterDole (Under license)Pure TropicsOutside the U.S.LoózaCopella Fruvita

PepsiCo Product Mix

PepsiCo Product Mix

• Tropicana Pure Premium Juices

• Tropicana Season’s Best Juices

• Tropicana Pure Tropics Juices

• Tropicana Twister Juice Beverages

• Dole Juices

• Fruit Smoothies and Healthy Shakes

Tropicana Brands

• Tropicana 100% Pure Juices

• Copella Juices

• Fruvita Juices

• Hitchcock Juices

• Kirin-Tropicana Juices

• Looza Juices

• Looza Nectars

• Juice Bowl Juices

• Juice Bowl Nectars

PepsiCo Product Mix

• Baked Lay’s Brand Potato Crisps• Baked Tostitos Brand Tortilla Chips• Cheetos Brand Cheese flavored Snacks• Chester’s Brand Popcorn• Doritos Brand Crackers• Doritos Brand Dips• Doritos Brand Tortilla Chips• Fritos Brand Corn Chips• Funyons Brand Onion flavored Rings• Grandma’s Brand Cookies• Lay’s Brand Potato Chips

Frito-Lay Brands• Munchos Brand Potato Chips

• Rold Gold Brand Pretzels

• Ruffles Brand Potato Chips

• Santitas Brand Tortilla Chips

• Smartfood Brand Popcorn

• Sunchips Brand Multigrain Snacks

• Tostitos Brand Crackers

• Tostitos Brand Dip

• Tostitos Brand Tortilla Chips

• Baken-ets Brand Fried Pork Skins

PepsiCo Product Mix

• Pepsi-Cola• Diet Pepsi• Mountain Dew• Slice• Mug Root Beer• Mug Crème

• All Sport• Lipton (Partnership)• Aquafina• Josta• Frappuccino

Pepsi-Cola Brands

Product Mix

Where do product ideas come from?

Product Mix

Where do product ideas come from?

31,000 new consumer products each year.

Developing New Products

Idea DevelopmentIdea Development

Screening New Ideas Screening New Ideas

CommercializationCommercialization

Business AnalysisBusiness Analysis

Product DevelopmentProduct Development

Test MarketingTest MarketingFAST FACT:In 2001, Microsoft planned to spend $4 billion on R&D.

Source: Rebecca Buckman, “Window into the future,” Wall Street Journal, June 25, 2001, p. R19.

Classifying Products

• Consumer Products

• Industrial Products

Classifications of Consumer Products

•Convenience products--Products bought frequently without a lengthy search and bought for immediate consumption.


•Convenience products--Products bought frequently without a lengthy search and bought for immediate consumption.

•Requires a long distribution channel

Types of Market Coverage

Intensive Makes a product available inDistribution as many outlets as possible.


Convenience Products bought frequently without a products lengthy search and bought for

immediate consumption.

Shopping Products purchased after buyer has products compared competitive products.


Selective Uses only a small proportion distribution of all available outlets to expose products


Convenience Products bought frequently without a products lengthy search and bought for

immediate consumption.

Shopping Products purchased after buyer has products compared competitive products.

Specialty Products which consumers products will go out of their way to find and will accept no substitute.


Exclusive Exists when a manufacturer gives

distribution a middleman the sole right to sell

a product in a defined geographic territory.


Intensive Makes a product available in as many outlets as possible.

Selective Uses only a small proportion of all distribution available outlets to expose products.

Exclusive Exists when a manufacturer gives a distribution middleman the sole right to sell a

product in a defined geographic territory.

Classifications of Industrial Products

• Raw Materials

• Major Equipment

• Accessory Equipment

• Component Parts

• Processed Materials

• Supplies

• Industrial Services

• Raw Materials

• Major Equipment

• Accessory Equipment

• Component Parts

• Processed Materials

• Supplies

• Industrial Services

The Life Cycle of a Product

Introduction Growth DeclineMaturitySalesVolume

Profit

Time

0

Sales $

Identifying Products

• Branding– The process of naming and identifying products. Can

use a brand mark or trademark

• Packaging– The external container that holds and describes the

product.

• Labeling– The presentation of important information on a package.

The 10 Most Valuable Brands in the World

Rank: Brand: 2001 Brand Value ($billions)1 Coca-Cola 68.92 Microsoft 65.13 IBM 52.84 GE 42.45 Nokia 35.06 Intel 34.77 Disney 32.68 Ford 30.19 McDonald’s 25.310 AT&T 22.8

Source: Gerry Khermouch, Stanley Holmes, and Moon Ihlawn, “The Best Global Brands,” Business Week, August 6, 2001, p. 50.

Categories of Brands

• Manufacturer Brands– Kellogg’s, Ford, Sony

• Private Distributor Brands– Kenmore appliances (Sears)

• Generic Brands– Peanut Butter, Dog Food, Kitty

Litter

Packaging

Packaging

• The external container that holds and describes the product inside.

• Packaging Functions:– Protection– Economy– Convenience– Promotion

FAST FACT:While shopping, the average time a consumer looks at a package is 2.5 seconds.

Labeling

Labeling

• The presentation of important information on a package:– Product content information may be

required by law

– Useful information – manufacturer’s toll-free number and address

– Directions and suggestions for use

Product Quality

• The degree to which a good, service, or idea meets the demands and requirements of customers.

• In the global marketplace, product quality is a key means of differentiating products and positioning them above the competition in the consumer’s mind.

The Product* Mix

• Questions on the first “P”?

* Total Product Concept



Distribution

Product

Pricing Strategies

Pricing Strategies

• Pricing Objectives

• Pricing Strategies

Pricing Objectives

Four Common Pricing Objectives:

1. Maximize Profits and Sales

2. Boost Market Share

3. Maintain the Status Quo

4. Survival

Pricing Strategies

• New-product strategiesPrice skimming Penetration pricing

• Psychological pricing strategiesOdd/EvenPrestige pricing

• Price DiscountingQuantity discountsSeasonal discountsPromotional discounts

ImplementPricingStrategies



Distribution

Product

Distribution Strategy


• Marketing Channels– Retailers (Wal-Mart, Sears)

– Wholesalers (food brokers to restaurants)

– E-tailers (Amazon.com)

• Supply Chain Management– Long-term partnerships among channel

members to reduce costs, waste, and unnecessary movement through the channel to satisfy customers.


• Channels of distribution

• Intermediary involvement

Marketing Channels forConsumer Products

Producer

Agents(Middlemen)

Wholesalers(Middlemen)

Retailers(Middlemen)

Consumers

Producer Producer Producer

Wholesalers(Middlemen)



Consumers Consumers Consumers

Physical Distribution

Materials Handling

Transportation

Warehousing

Consumer

Producer

Inventory Planning & Control

Distribution Decisions are the Least Flexible

Marketing Decisions

• Distribution decisions:– Use committed resources– Establish contractual relationships– Are bound by time

• Distribution decisions:– Use committed resources– Establish contractual relationships– Are bound by time



Distribution

Product

The Promotion Mix

Publicity

PersonalSelling

SalesPromotion

Advertising

Objectives of Promotions

• Stimulate demand

• Stabilize sales

• Inform, remind, and reinforcecustomers

Promotional Positioning

The use of promotion to create and maintain an image of a product in the buyer’s mind.

A natural result of market segmentation.

Assists in product differentiation.

Push and Pull Strategies

Producer

Producer

Wholesalers

Wholesalers

Retailers

Retailers

Consumers

Consumers

Pushing Strategy

Pulling Strategy

Flow of Communications

The Promotion Mix

Publicity

PersonalSelling

SalesPromotion

Advertising

Advertising

A paid form of non-personal communication transmitted through a mass medium, such as television commercials or magazine advertisements.

Advertising Media

Print media

Electronic media

• Newspapers• Magazines• Direct mail• Outdoor advertising

• Television• Radio• Cyberads

Ad Spending per American

$303$370

$229$304

$74$94

$69$89

$25

$104

$246 $241

Newspaper Television Magazines Radio On-line All others

U.S. ad spending per capita this year is $946 and is expectedto be $1,202 by 2003. Per-capita spending in leading mediaand expected spending in 2003:

1998

2003

Who’s Watching Commercials

1-30

31-50 51-100

101-300

300 or more

Men Women

25%

25%27%

15%

9%15%

20%

30%

18%

17%

Americans are exposed to about 270 ads a day1 inall media, but few seem to notice. How many ads aday they thing they saw/heard:

1McKinsey & Co.

Internet Advertising

Total revenues from advertising, paid content, and e-commerce on mobile devices in the U.S. is projected to grow from $100 million today to $3.3 billion in 2005.

Source: “E-MONEY,” American Demographics, June, 2001, p. 32.

Internet Advertising

‘95 ‘96‘98‘97‘96 ‘98‘97

$0.03$0.2

$0.5

$1.3

7351,050

1,345

Internet advertisingspending($billions)

Web sites thataccept advertising

The Promotion Mix

Publicity

PersonalSelling

SalesPromotion

Advertising

Personal Selling

• Direct, two-way communication with buyers and potential buyers.

FAST FACT:A typical sales call on an industrial customer can cost between $200 and $300 per call.

Personal Selling

Three Categories of Salespersons:

1. Order Takers

2. Creative Salespersons

3. Support Salespersons

Personal Selling is a Six Step Process

1. Prospecting2. Approaching3. Presenting4. Handling Objections5. Closing – Asking for the Order6. Following Up

In Personal Selling, Appearance Sells

• Sales managers tell what personal attributes they feel work against a salesperson’s ability to sell:– Sloppy dresser 94%– Unstylish dresser 75%– Physically unattractive 59%– Overweight 54%– Heavy accent 54%– Young looking 32%

Source: “Appearance sells,” USA Today Snapshots, October 9, 2001, p. B1.

The Promotion Mix

Publicity

PersonalSelling

SalesPromotion

Advertising

Publicity

• Non-personal communication transmitted through mass media but not paid for directly by the firm.

• May be done by the Public Relations Department or an outside PR firm.

Principal Publicity Mechanisms

• News releases

• Feature articles

• Captioned photographs

• Press conferences

• Interviews

The Promotion Mix

Publicity

PersonalSelling

SalesPromotion

Advertising

Major Tools of Sales Promotion

• Point-of-purchase displays• Premiums• Sampling and demonstrations• Coupons• Consumer contests and sweepstakes• Refunds• Trade shows

Coupon Clippers

Less than $15,000 79%

$15,000-$24,999 91%

$25,000-$49,000 78%

$50,000 or more 83%

Source: NCH NuWorld 1998 Consumer Behavior Study,American Coupon Council from USA Today Snapshot, October 28, 1998.

Income % that Clip Coupons

Per Contact Cost

ad in specialized business publication $0.32

the Internet $0.98

direct mail $1.68

business letters $13.60

telemarketing $31.16

trade shows $162.00

industrial sales calls $277.00

Source: Matthew J. Cravatta, “Goodwill Targeting,” Marketing Tools,June 1998.

Method Cost



Distribution

Product

Chapter ThirteenDimensions of

Marketing Strategy

Next Class–Exam 5

Comparison of Transportation Modes

Type of Carrier

Total

Expend.

Intercity Volume Speed Cost

Truck 74% 28% Fast High

Rail 13% 37% Average Medium

Water 6% 15% Very Slow Very Low

Air 4% 1% Very Fast Very High

Pipeline 3% 19% Slow Low back

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