chapter-15-notes-ch-15

Chapter 15: Managing the Marketing Mix

Learning Objectives

  • LO1: Understand total product concept and packaging functions.

  • LO2: Describe the product life cycle.

  • LO3: Identify pricing objectives and strategies.

  • LO4: Explain marketing channels and retailing importance.

  • LO5: Define promotion and the traditional promotion mix tools.

LO1: Product Development and the Total Product Offer

  • Value Perception: Customers weigh benefits against costs to judge product value.

  • Total Product Offer: Encompasses pricing, brand, packaging, and convenience.

  • Product Line: A collection of similar items (e.g., Diet Coke variants).

  • Product Mix: The entirety of product lines within an organization.

Product Differentiation

  • Involves creating real or perceived differences using branding, pricing, advertising, and packaging.

Packaging Importance and Functions

  • Primary Functions of Packaging:

    • Attract buyers and protect contents.

    • Easy to open/use and informative about contents.

    • Indicate price, values, and uses.

  • Technology in Packaging: Use of UPCs and RFID chips for inventory and tracking.

Branding Insights

  • Brand Definition: Distinguishes products of one seller from competitors.

  • Brand Equity: Value derived from brand recognition and loyalty.

  • Brand Manager Role: Directly accountable for product branding and marketing mix management.

LO2: The Product Life Cycle

  • Stages: Introduction, Growth, Maturity, Decline.

  • Changing Dynamics: Not all products follow the same life cycle; some brands may stagnate or avoid decline.

  • Fad Products: Fast rise and fall in popularity.

LO3: Competitive Pricing

Pricing Objectives

  1. Target return on investment.

  2. Build customer traffic via loss leaders.

  3. Increase market share through pricing tactics.

  4. Establish a prestigious product image with high pricing.

  5. Achieve social goals, like affordability.

Pricing Strategies

  • Cost-Based Pricing: Prices based on production costs plus profit margin.

  • Demand-Based Pricing: Setting prices based on consumer willingness to pay (target costing).

  • Competition-Based Pricing: Price mimicking competitor strategies.

  • Break-Even Analysis: Determines the sales needed to cover costs.

Strategies for New Products

  • Skimming Price: High initial price to optimize profit.

  • Penetration Pricing: Low initial price to attract customers.

  • Psychological Pricing: Aiming at consumer perception of cost value.

LO4: Importance of Distribution Channels

  • Channel Definition: Systems that transport goods from producers to consumers through various intermediaries.

  • Key Intermediaries: Agents, brokers, wholesalers, and retailers.

Retail Distribution Strategy

  • Types:

    • Intensive Distribution: Maximum outlet presence (e.g., soft drinks).

    • Selective Distribution: Preferred retailers only (e.g., appliances).

    • Exclusive Distribution: Limited outlets per region (e.g., luxury goods).

Non-Store Retailing:

  • Online Selling: Growth due to convenience but requires effective inventory and service.

  • Direct Selling/Multi-Level Marketing: Personal sales tactics within homes or through networking.

LO5: Promotion and the Promotion Mix

  • Promotion Mix Components: Advertising, personal selling, sales promotion, publicity, and direct marketing.

  • Integrated Marketing Communication (IMC): Unifies all promotional efforts to maintain brand consistency.

Advertising Dynamics

  • Functions of Advertising: Informing and persuading consumers.

  • Global vs. Local Advertising: Adapt strategies based on regional preferences.

Personal Selling and PR

  • Personal Selling: Involves direct interaction and relationship building to fulfill customer wants.

  • Public Relations Role: Manages public perception and builds stakeholder relationships.

Sales Promotions

  • Tools: Coupons, discounts, samples, and trade shows to stimulate interest and engagement.

  • Direct Marketing: Engaging consumers directly through diverse channels.

Managing the Promotion Mix

  • Strategic Approaches: Push strategy (promoting through intermediaries) vs. pull strategy (creating consumer demand).

  • Promotion as Part of Total Systems Approach: Integrated into broader marketing and supply chain strategies.