Chp 6 – The Marketing Program

Convenience Products
Inexpensive, routinely purchases products that consumers spend little time and effort in acquiring; EX: Soft Drinks, Candy & Gum
Shopping Products
Products that consumers will spend time and effort to obtain. Consumers shop different options to compare prices, features, and service; EX: Appliances, Furniture, Clothing, Vacations
Specialty Products
Unique, one of a kind products that consumers will spend considerable time, effort, and money to acquire. EX: Antiques, Plastic Surgery
Unsought Products
Products that consumers are unaware of or a product that consumers do not consider purchasing until a need arises; EX: True Innovations, Repair Services
Raw Materials
Iron Ore, chemicals, agricultural products, wood pulp
Component Parts
Spark Plugs, computer chips, Pane Glass, Hard Drives
Process Materials
Food additives, wood sealants, paint colorings; become unidentifiable upon their inclusion in the finished products
Maintenance, Repair, and Operating Products
Office supplies, janitorial services, building security, bathroom supplies
Accessory Equipment
Tools, Office Equipment, Computers,
Enterprise Software, Buildings, Heat and Air Systems
Business Services
Legal, accounting, consulting, research
Product Line
consists of a group of closely related products items
Benefits of Large Product Portfolio
Economics of Scale
Package Uniformity
Sales and Distribution Efficiency
Equivalent Quality Benefits
Unique Characteristics of Services
Simultaneous Production and Consumption
Client-Based Relationship
New Product Development Process
Idea Generation
Screening and Evaluation
Test Marketing
Pricing Strategy
considered to be the only real means of differentiation in highly commoditized markets — A better strategy is to build value into the product offering at the same (or even higher) price.
Breakeven in Units
Total Fixed Costs/ Unit Price – Unit Variable Costs
Selling Price
Average Unit Cost/ 1- Markup Percent (decimal)
Perceived Value
Value is a customer’s subjective evaluation of benefits relative to costs to determine the worth of a firm’s product offering relative to other product
Designed to maximize price relative to competitors’ prices, the product’s percieved value, the firm’s cost structure, and production efficiency. Profit objectivesare typically based on a target return, rather than simple profit maximization
Volume Oriented
Sets prices in order to maximize dollar or unit sales volume. The objective sacrifices profit margin in favor of high product turnover.
Market Demand
Set prices in accordance with customer expectations and specific buying situations. The objective is often known as “charging what the market will bear”
Market Share
Designed to increase or maintain market share regardless of fluctuations in industry sales. Market share objectives are often used in the maturity stage of the product life cycle
Cash Flow
Designed to match or beat competitors’ prices.
Competitive Matching
The goal is to maintain the perception of good value relative to the competition
Sets high prices that are consistent with a prestige or high status product. Prices are set with little regard for the firms cost structure or the competition
Status Quo
Maintains current prices in an effort to sustain a position relative to the competition
Situations that Increase Price Sensitivity
Availability of Substitute Products
Higher Total Expenditure
Noticeable Price Differences
Easy Price Comparisons
Situations that Decrease Price Sensitivity
Base Price Strategies
Price Skimming
Price Penetration
Prestige Pricing
Value-Based Pricing (EDLP)
Competitive Matching
Non-Price Strategies
Supply Chain Integration
Factors in Successful Supply Chain Integration
Stability, Interdependence, Cooperation, Mutual Benefit, TRUST
Exclusive Distribution
Giving one merchant or outlet the sole right to sell a product within a defined geographic region
Selective Distribution
Giving several merchants or outlets the right to sell a product within a defined geographic region
Intensive Distribution
Making a product available in the maximum number of merchants or outlets to gain as much exposure and sales opportunities as possible
Integrated Marketing Communications
Public Relations
Sales Promotion
Personal Selling
AIDA Model
Attention, Interest, Desire, Action
Promotional Goals Regarding the Supply Chain
Pull Strategy – focus promotional efforts towards consumers
Push Strategy – focus promotional efforts toward the supply chain
Sales Management Process
Developing sales force objectives
Determining sales force size
Recruiting and training salespeople
Controlling and evaluating the sales force
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