Slide Notes Flashcards
Ethics
Accepted principles of right or wrong that govern
- the conduct of a person
- the members of a profession
- the actions of an organization
Business ethics
Accepted principles of right or wrong governing the conduct of business people
Ethial strategy
A strategy, or course of action, that does not volate these acepted principles
Why is customer satisfaction important in the U.S.?
Basic objective of our market-related economic system has been to satisfy consumer needs as they, the consumers, see them
Implies that political freedom and economic freedom go hand in hand and that citizens in a free society have the right to live as they choose
The majority of American consumers would be unwilling to give up the freedom of choice they now enjoy
Marketing Concept
Means that an organization aims all its efforts at satisfying its customers - at a profit
customer satisfacition, total comapny effort, profit (or another measure of long-term success) as an objective
Marketing strategy
Specifies a target market and a related marketing mix. It is a big picture of what a frim will do in some market
two parts: target market and marketing mix
Marketing program
Blends all of the firm’s marketing plans into one “big” plan
An integrated part of the whole-company strategic plan
Marketing plan
A written statement of a marketing strategy and the time-related details for carrying out the strategy
It should spell out the following: what marketing mix will be offered, to whom and for how long.
- what company resources will be needed at what rate
- what results are expected (sales and profits perhaps monthly or quarterly, customer satifaction levels, and the like)
SWOT analysis
Identifies and lists the firm’s strengths and weaknesses and its opportunities and threats
The name SWOT is simply an abbreviation for the first two letters of the words strengths weaknesess opportunties and threats
A good SWOT helps the manager focus on a strategy that takes advantage of the firm’s strengths and opportunities while avoiding its weaknesses and threats to its success
4 p’s
Product
Place
Promotion
Price
True or False: A marketing plan is a static document it should not change over the planning period
False
Which ethical issues are most relevant to business?
Employment practices
Human rights
Environmental regulations
Corruption
Moral obligation of companies
Product safety
Ethical dilemma
Situations in which none of the available alternatives seem ethically acceptable
Why do Managers behave unethically?
Personal ethics
Decision making processes
Organizational culture
Unrealistic performance expectations
Leadership
Societal culture
How can managers make ethical decisions?
- Hire and promote people with a well grounded sense of personal ethics
- Build an organizational culture that places a high value on ethical behavior
- Make sure that leaders within he business articulate the rhetoric of ethical behavior and act in a manner that is consistent with that rhetoric
- Put decision making processes in place that require people to consider the ethical dimensions of busniess decions
- Develop moral courage
The Marketing Concept guides:
ethics
Micro-Macro Dilemma
Group needs vs. individual needs
Social responsibility, should all needs be satisifeied? What if profits suffer?
Invest in customer satisfaction
Allow your customer to complain!
Train and empower your employees to act!
Sources of Marketing Inefficiency
Lack of interest in customers
Improper blending of the 4P’s
Lack of understand of the enviornment
Criticisms of Macro-marketing
Advertising wastes resources
Consumers are too easily controlled - consumers are not puppets, needs and wants change
Marketing Objectives SMART
Specific
Measurable
Attainable
Relevant to the target
Timely
Combiner
Aims at 2 or more submarkets with the same marketing mix
Legal and Ethical Concerns
Consumer Privacy
Legal vs. ethical
Supply chain
targeting & deception
Pricing
Pricing directly affets the bottom line
Your pricing policy addresses:
- brand/company objectives
- image/positioning
- behavior of channel and end-user
One-Price Policy
The same for everyone
Frequently purchased items
Convenient
Low cost
Maintains goodwill
Flexible Price Policy
Different customers, different prices
Databases make it easier
Salepeople can adjust prices
Too much cutting can hurt profits
Discount price policies are designed to:
Elicit a specific action from the consumer or channel member
Satisfy a specific business requirement
Discount Policies
Discounts are reductions from list price that are given by a seller to a buyer who either gives up some marketing function or provides the function himself
Quantity discounts - cumulative quantity discounts encourage repeat purchase and relationships, noncumulative ecnourage large orders
Seasonal discounts smooth out demand
Cash discounts encourage early payment
Trade (functional) discounts go to middlemen
Allowance policies
Designed to get the channel to perform specific duties or take on certain responsibilities
Common Types of Allowances
Advertising
Trade-ins
Stocking
Push money
Common geographic policies
FOB
Zone
Freight Absorpotion
Uniform Delivered
Zone pricing
An average freight charge to all buyers within specific geographic areas
Uniform Delivered pricing
The same (average) freight charge to all buyers
Freight Absorption Pricing
Seller pays freight cost so delivered price matches competition
Key issues with price discrimination
Robinson-patman act
proportionatley equal basis
like grade and quality
cost differences
Robinson-Patman Act
Regulates price discrimation - selling the same products to different buyers at different prices
Cost differences can justify price differences - analysis must habe been done in advance
You can match a competitor’s prices
Functional discounts are usually ok
Does not apply to sales to final customers
Cost Based end-user strategies
Cover cost
Achieve a specific profit/market share objetive
Does not consider demand/external environment
Demand based end user strategy
What does the customer value?
What are they willing to pay?
Skimming price policy
Tries to sell at the top of the market at a high price before aiming at more price-sensitive customers
Skimming policy graph
More vertical than penetration
Penetration pricing
Firm tries to sell the whole market at one low price
Legality of Pricing Policies Key Issues
Unfair Trade Practice Acts
Price Fixing
Dumping
Phony List Prices
Price
The amount of money that is charged for something of value
Sales oriented objective
Seeks some level of unit sales, dollar sales, or share of the market without referring to profit
Status-quo objectives
Managers satisfied with their current market share and profits sometimes adpot status quo objectives
Managers may say the want to stabailize prices, or meet competition, or even avoid competition
Profit-oriented objective
Seeks to get as much profit as possible
It might be stated as a desire to earn a rapid return on investment
One-price policy
Adv: conveneience and goodwill among customer
Dis. this can be a price competitors can undercut especially is if the price is somewhat high
Flexible-pricing policy
Frequent changes to price are easier
Most common in the channels
Skimming price policy
Tries to sell the top at a high price before aiming at more price-sensitive customers
*used if there are few substitutes or if some customers are not price sensitive
**also useful when you dont know very much about the shape of the demand curbe
Penetration Pricing Policy
Tries to sell the whole market at one low price
*when the elite market is small
**when the whole demand curve is fairly elastic
***more attractive if selling larger quantities resulsts in lower costs because of economies of scale
Also wise if the firm expects strong ompetition very soon after introduction
Rebates
Refunds paid to consumers ater purchase
Geographic Pricing Policies
FOB
Zone pricing
Uniform delivered pricing
Freight-absorption pricing
Value pricing
Means setting a fair price level for a marketing mix that really gives the target market superior customer value
Unfair trade practice acts
Puts a lower limit on prices, especially at the wholesale and retail levels
Dumping
Pricing a product sold in a foreign market below the cost of producing it or at a price lower than its domestic market
These laws are usually designed to protect the country’s domestic producers and jobs.
*illegal
Phony list prices
Prices customers areshown to suggest that the price has been discounted from list
Unethical
Wheeler Lea Amendement
Bans unfair or deceptive acts in commerce
Price fixing
Competitors getting together to raise, lower, or stabilize prices- completely illegal in the US
Robinson-Patman Act makes illegal any price discrimination -
selling the same products to different buyers at different prices if it injures competiotion
Does permit some price differences but they must be based on:
- cost differences
- the need to meet competition
**Both buyers and sellers are considered guilty if they know they’re entering into discriminatory agreements
______________________________ regulates price discrimination
Robinson-Patman ACt of 1936
Target return objective
Sets a specific level of profit as an objective
Often stated as a percentage of sales or of capital investment
Nonprice discrimination
Agressive action on one or more of the Ps other than price
Adminstered prices
Price policies usually lead to administered prices - consciously set prices
Instead of letting market decide, most firms set their own prices
Introductory price dealing
Temporary price cuts to speed new products into a market and get customers to try them
Raise prices as soon as the introductory offer is over
Basic list prices
The prices final customers or users are normally asked to pay for products
Discounts
Reductions from list price given by a seller to buyers who either give up some marketing function or provide the function thesselves
Quanitity discounts
Discounts offered to encourage customers to buy in larger amounts
Cumulative quantity discounts
Apply to purchases over a given period- and the discount usually increases as the amount purchased increases
Encourage repeat buying by reducing the customer’s cost for addtional purchases
Noncumulative quantity discounts
Apply only to individual orders
Encourage large orders but do not tie a buyer to the seller after that one purchase
Seasonal discounts
Discounts offered to enocurage buyers to buy earlier than present demand requires
Net
Means that payment for the face value of the invoice is due immediatley. These terms are sometimes changed to net 10 or net 30 which means payment is due within 10 or 30 days
Cash discounts
Reductions in price to encourage buyers to pay their bills quickly
2/10 net 30
Buyer can take a 2 percent discount off the face value if the invoice is paid within 10 days. Otherwise, the full face is due within 30 days
Sale price
Temporary discount from the list price
Everyday low pricing
Setting a low list price rather than relying on frequent sales, discounts, or allowances
Many supermarkets
Allowances
Like discounts, are given to inal consumers, coustomers, or channel members for doing something or accepting less of something
Advertising allowances
Price reductions given to firms in the channel to encourage them to advertise or otherwise promote the suppier’s products locally
Stocking allowances
Slotting allowances*
Given to an itermediary to get shelf space for a product
Push money (prize money) allowances
PMs or spiffs
Given to retaliers by manufacturers or wholesalers to pass on to the retailers salesclersk for aggresively selling certain items
Trade-in allowance
A price reduction given for used products when similar new products are bought
Give the marketing manager an easy way to lower the effective price without reducig list price
FOB
Means free on board
Typically FOB names the place
Uniform delivered pricing
Making an average freight charge to all buyers
Freigh absorpotion pricing
Abosorbing frieght cost so that a firm’s delivered price meets that of the nearest competitor
Value pricing
Setting a fair price level for a marketing mix that really gives the target market superior customer value
Wheeler-Lea Amendment
Bans unfair or deceptive acts in commerce
Markups
Dollar amount added to the cost of the products to get the selling price
Markup percent: Two methods to calculate
Based on selling price: the percentage of selling price that is added to the cost to get the selling price
- percent of selling price unless otherwise noted
Based on cost: the percentage of cost that is added to the cost to get the selling price
Mark-ups and profit
Products may be marked up several times through the channel
- the sequence of markups is the markup chain
High markups dont always mean high profits - depends on the stockturn rate
High markups dont always mean:
big profits
Average-cost Pricing
Adds a reasonable markup to the average cost of a product
Simplifies pricing
Quite common, especially among middlement
Usually based on estimates or past records
- actual average cost depends on quantity sold!
- quantity sold depends on price
The Marketing Manager must consider various kinds of costs
Total Variable cost
total cost
average cost
average fixed cost
average variable cost
total fixed cost
Break-even analysis
Used to evaluate whether the firm will be able to cover costs at a particular price
indicates the break-vevn point (units or dollars) needdd to break even
Problems with break even analysis
Assumes any quantity can be sold at at a given price
Total cost curve is assumed to be a straight line
Cost based
What it costs you to make and deliver to the customer + margin
Value based
What the customer is willing to pay
Types of demand-oriented pricing
Value-in-use
Auctions
Sequetial reductions
reference
Leader & Bait
Can you buy the advertised brand?
Leader= legal
bait = unethical
bait and switch = illegal
Pricing a Full Line
Full=line pricing
Costs are complicated
Complentary product pricing
Product-Bundle Pricing
Bundle pricing is a “win-win”
- the customer pays less for the total bundl than they would buyig the items individually
- the custoemrs buys more for a higher ticket value on a given purchase
Producer must keep an eye on margins to make bundles profitable
Consumers must perceive a value
Markup (percent)
Percentage of sellibg price that is added to the cost to get the selling price
1.20 markup on the 3.60 selling price is a 33.33% markup
Markup
A dollar amount added to the cost products to the cost of products to get the selling price
Markup chain
The sequence of markups firms use at different levels in a channel
Stockturn rate
The number of times the average invnetory is sold in a year
Average-cost pricing
Means adding a reasonable markup to the average cost of a product
Total fixed cost
The sumn of those costs that are fixed in total
Total variable cost
The sum of those changing expenses that are closely related to output
Total cost
Sum of total fixed and total variable costs
Average cost per unit
Obtained by dividing total cost by the related quaniyty
Average fixed cost (per unit(
Dividing total fixed cost by quantity
Average variable cost
Dividing total variable cost by the related quantity
Break even point
The quantity wherethe firm’s total cost will just equal its total revenue
Marginal analysis
Focuses on the changes in total revenue and total cost from selling one more unit to find the most profitable price
Value in use pricing
Setting prices that wil capture some of what customers will save by substituting the firm’s product for the oe currently being used
reference price
the price they expect to pay
bait pricing
Setting some very low prices to attract customers but trying to sell more expensive models or brands once the customer is in the store
Psychological pricing
setting prices that have special appeal to target customers.
Whole range of prices that potential customers see the same
Odd-even pricing
Setting prices that end in certain numbers
price lining
Setting a few price levels for a product line and then marking all items at these prices
Assumes that customers have a certain reference price in mind that they expect to pay for a product
Demand=backward pricing
Setting an acceptable final consumer price and working backward to what a producer can charge
Consumer products
Prestige pricing
Setting a rather highe price to suggest high quality or high status
Full-lie pricing
Settibng prices for a whole line of products
Complentary product pricing
Setting prices on several products as a group
Product bundle pricing
Settig one price for a set of products
Bid pricing
Offering a specific price for each possible job rather than setting a price that applies for all customers
Negotiated price
Price set based on bargaining between buyer and seller
Surge pricing
Let supply and demand determine the price
Price promotion
It is all about the $$ and the behavior desired
A disciplined, measured approach is required
Easy to make costly mistakes
Focus should be long term but is often short term
Consumer promotion
Complex
designed to attract the desired target while reinforcing the product image
ofte paird with a price promoiton
both costs are factored into margin
Key problems with sales promotion
Erodes brand loyalty
not for amateurs
hard to manage
need for aleternatives
What is supply chain?
The complete set of firms, facilities, and logistics activities involved in procuring materials, transforming them into entermediate and finished products, and distributing the to customers
Focus on information flows
Goal of Supply Chain
Right product. Right Quantity Right place right time
Supply chain managment is all about tradeoffs
Cost - speed- quality
Retailing
Activities involved in the sale of products to final consumers
consumers buy about 4.5 trillion a year from retailers
retailers must develop their own strategy to survive
wholesaling and retailing are changing rapidly
Key features affecting consumers retail choice
Convenience
Product selection
Fairness in dealings
Helpful information
Prices
Social image
Shopping atmosphere
Retailing on the Internet
Moving information
New meaning of convenience
amount of information
online costs for retailers & customers
Brick & mortar stores add online capabilities
Some Trends in retailing
Growth of interent merchants and online retailing
electronic retailing
more price competition
vertical integration
more chains and franchises - chains becoming larger, more powerful
more and better information
What a wholesaler might do for producer-suppliers
Provide part of the selling function
Store inventory
Supply capital
Reduce credit risks
Provide marketing infrmation
Types of Agent Wholesalers
Auction companies
selling agents
brokers
manufactuer’s agents
Manufacturers’ agents
Sell similar products for several noncompeting producers
work on a commission basis
basically are independent, aggressive sales reps
Especially helpful to small producers and producers whose customers are very spread out
Brokers
Main purpose is to bring buyers and sellers together
Usually have a temporary relationship with buyer and seller while the deal is negotiated
Earn a commission - from either the buyer or seller - dpeending on who hired them
Retailing
Covers all of the activies involved in the sale of products to final consumers
General sstores
Carried anything they could sell in reasonable volume
Single line stores
Stores that specialize in certain lines of related products rather than a wide assortment
Specialty shop
Type of conventional limited line store - suaually small and has a distinct personality
Department stores
Largest stores that are organized into many seperate departments and offere many product lines
Mass merchandising concept
Says that retailers should offer low prices to get faster turnover and greater sales volumes
supermarkets
Large stores specialzing in groceries with self-service and wide assortments
Discount houses
Offered “hard goods” at sbustantial price cuts to customers who would go the discounter’s low rent store, pay cash, and take care of any service problems themselves
Mass-merchandisers
Large, self-service stores with many dpeartments that emphasize soft goods but still follow the discount houses’ emphasis on lower margins and fast turnover
Supercenters
Very large stores that try to carry not only food and drug but all goods and services that conumser purchases routinely
Convenience food stores
Convenience oriented varaionat of the conventiaonal limited line food store
Automatic vending
Selling and delivering products through vending machines
Wheel of retailing theory
Says that new types of retaliers enter the market as low-status, low-margin, low-price operators and then evolve into more conventional retailers offering more services with higher operating costs and higher prices
Scrambled merchandising
Carrying any product lines they think they can sell profitably
Corpporate chain
A firm that owns and managers more than one store
Cooperative chains
Retailer-sponsored groups that run their own buying organizations
Voluntary chains
Wholesaler-sponsored groups that work with independent retailers
Franchise operation
Franchisor develos a good marketing strategy and the retail franchise holders carry out the srategy in their onw units
Wolesaling
Concerned with the activities of those persons or establishments that sell to retailers and other merchants but that do not sell in large amounts to final consumers
Wholesalers
Firms whose main function is providing wholesaling activities
Manufactuerers’ sales branches
Warehouyses that producers set up at seperate locations away from their factories
Merchant wholesalers
Own the products they sell
Service wholesaler
Merchant wholesalers that provide all the wholesaling functions:
- general merchandise
- single line
- specialty
Single line wholesalers
Service wholesalers that carry a wide variety of nonperishable items
Specialty wholesalesr
Service wholesalers that carry a very narrow range of products and offer more information and service than other service wholesalers
Limited function wholesalers
Provide only some wholesaling functions
Cash and carry wholesalers
Operate like service wholesalers - except that the customer must pay cash
Drop shippers
Own the products they sell- but they do not actually handle, stock, or deliver them
Truck wholesalers
Specialize in delivering products that they stock in their own trucks
Rack jobbers
Speialize in hard-to-handle assortments of products that a retailer doesnt want to manager
Catalog wholesalers
Sell out of cataglos that may be distributed widely to smaller industrial customers or retailers that might not be called on by other wholesalers
Agent wholesalers
Wholesalers who do not own the products they sell
Manufacuter’s agent
Sells similar products for several noncompeting producers - for a commission on what is actually sold
Export or import agents
Basically manufactuerers agents who specialize in international trade
Brokers
Bring buyers and sellers togehter
Export and import brokers
Operate like other borkers, but they specialize in brining together buyers and sellers from differenty countries
Selling agents
Take over the whole marketing job of producers not just the selling function
Combination export manager
A blend of manufactuerers’ agent and selling agent - handling the entire eport function for several producers of similar but noncompeting lines
Auction companies
Provide a place where buyers and sellers can come together and bid to complete a transaction
____________ is the more accepted method of markup
cost-based
Marketers like the markup method based on selling price
It makes it look better because it is often lower
Average-cost pricing
Adds a reasonable markup to the average cost of a product
simpliifies priincing
quite common, middle men
Usually based on estimates or past recors
- actual average cost depends on quantity sold!
Problems with break even analysis
Assumes any quantity can be sold at a ggiven price
Total cost curve is assumed to be a straight line
Fixed cost contribution per unit
Price - variable cost
Contribution margin per unit
Value-in use example
Buying a copy machine
we will charge you more up front but overtime you will incurr less costs
Sequential Reductions
Going out of business sales
Continue to markdown to get more and more groups in
Reference price
Something that the consumers expect to pay for the product
If it is too low, they may see it as something that is not worth it
Leader & Bait
Leader - prices product very low to attract customers
ex. run a 1 day discount on milk and increase foot traffic
LEGAL
Bait - you set a price unusually low for an item
- when the customer comes in you try to get them to buy something else
ex. looking for 10 dollar mp3 and they are like nahh you should buy the 100 dollar mp3 player
not illegal
Bait and Switch
Illegal
We are bringing you in a fake advertisement
Psychological Pricing
Discover range a customer is willing to pay for a product
If you go below psychological barrier they will notice and buy
Odd-even pricing
Seen in gas stations
end in some number
Price Lining
Group their items in a good, better, best
neck ties 15, 20, and 25 dollars
Demand-Backward
Get an idea of what your price could be and then roll that price back
prestige pricing
set a high price to indicate quality
*common in luxury products
Harry Winston Watches are an example of:
prestige pricing
Bundle pricing
You see it in the fast food industry
idea: win win for restaraunt and consumer
- consumer spends more
- additional items are added in at savings
Bundle pricing
Counsumers have to perceve a value
Producer must keep an eye on the margin
Wholesalers sell to:
Other wholesalers or other businesses
3 basic types of wholesalers
Merchant wholesalers - majority
Agent wholesalers - popular option for companies who cannot afford their own sales force
Manufacturere sales branches
What a wholesaler might do for producer-suppliers
Provide part of the selling function
Store inventory (cut producers’s warehousing costs)
Supply capital (by purchasing producers’s put before it is sold to final custmoers)
reduce credit risks
provide marketing information
Merchant wholsealers
Take title to the product
Limited function merchant wholesaler
Cash and carry wholesaler
Drop shipper
Truck wholesalers
Rack jobbers
catalog wholesalers
Agent wholesalers
Deal brokers
Do not take title to the goods
Make the deal and take a commission
Cash and Carry
Buy inventory from supplier - when customer comes in they do not offer any credit
Drop-shippers
Take title but they dont handle the product
No physical handling of the product
Truck wholesalers
deliver products that they stock in their own trucks
fill gaps in a distribution channel
Rack Jobber
Take title to goods
Service oriented
They bring in a display rack of greeting cards and keep it stocked and monitor inventory - sell products to the store whatever it sells
Understand their customer and market
Catalog wholesalers
Send out a catalog to their customers
Being replaced by the interent
Agent Wholesalers
Do not take title to the goods
manufacuterers’ agents - independent agents that take on a number of noncompleting lines and they represent those lines to retailers
- save cost of full time sales force
brokers - bring buyers and sellers together - their relationship with people tends to be temporary.
selling agents - take over the whole marketing job. when a company wants to liquidate seasonal items. or liquidate an obsolescent ish product
Auction companies - ebay cristies. They take a percentage on the total selling price
Manufactuerer’s agents
Sells similar products for several nonocompeting producers
work on commission basis
independent, agressive sales reps
helpful to small producers and producers whose customers are very spread out and small
Brokers
Bring buyers and sellers together
temporary relationshisp
earn a commisssion
Takes title =>
merchant wholesaler
Promotion objectives
Linked to the marketing objectives which are derived from business objetives
When promotion objevtives become unhinged from the marketing objectives the liklihood of failiure increases
Advertising objectives should be specific
Specific
Measurable
Attainable
Relevant to the target
Timely
Link to marketing strategy
link to promotion
Nature of the media
Different media have different costs and advantages
Who it reaches
with what frequency
at what impact
at what cost
Ad agencies
Specialists in planning and handling mass selling details for advertisers
make monehy on percentage of media they buy
15% is not required, but still common
Personal selling
Often the single largest operating expense
1 or 10 people in sales work
Order Getter
Responsible for brining in new business and closing deals
Order takers
work in support of order getters
once business is in house, they service that business
Supporting staff
Support order takers and getters
Missionary salespeople - pave way for order getter to come in and close business
technical specialists - a team selling expert
Missionary salesperson
Not actually selling accounts - she is supporting them
Sales manager responsibilities
Estimate hwo much work can be done by any one prson in a given time period
Use that info to estimate who many people are needed in total
Sales Selection and Training
Written job description
Multiple interviews
personnel and psycholgical tests
background checks
initial and ongoing training
Key steps in the personal selling process
Prospect for new customers => set effort priorities => select target
Selling formula approach
Used for mid-range products
Read same sales script to every potentail customer
prepared sales presentation
Setting the Promotion Budget
Percentage of sales - most popular to set marketing budget, not the best, easy, take a fixed percentage of last years sales
problem: incorrectly assumes sales drives marketing
Task method - zero based budgeting
Adoption process
Diagrams how people understand a product category
Innovators
First people to adopt product
risk takers
Early adopters
Get information from sales people and innovators
Not necessarily viewing advertising
Early majority are:
most influenced by advertisement
Market introduction
Innovators jump on board
Not making any money
Heres why this new idea is better than your old solution
Market growth
When the early adopters come in as well as some of the early majority
Marketing strategy changes from explaining the category to here is why my brand is best
Market maturity
You get the late majority entering in and sales peakY
You have to add a lot more features and benefits
Say your brand is better than everybody elses
Sales decline
Could still be profitable
Marketing expenses could go down
They could pay more
Wicks Hot Chili
For manly men chili
Two regulatory agencies for labeling
CTC ACT of 1914 held that flase misleading labels lables constitute unfair competition
Both federal and state laws regulate labelign
FDA regulates:
food and drug labels
The importance of packaging
PAckaging can enhance the product
UPC Codes speed handling
Packaging can lower distribution costs
Packaging sends a message
Promote
Cleanex package in the shape of a watermellon
Display packaging
Difficult to open
Pros and Cons to the skippy type of packaging
They dont have to change their production line
New ketchup bottle does what?
Enhance product usage
What have we learned?
Product incorporates many attributes
A well thought out product will addresss the needs of the company, the consuer and will oprimize the mix
Individual product
A particular product within a product line
A stock keeping unit (sku)
Product line
set of individual products that are closely relatd
Depth and breadth
Breadth impies number of product lines
Depth concerns choice within product lines
Product assortment
The set of all product lines and individual products thta firm sells
Warranty policies
Regulated by magnuson-moss act - producers must often a clearly written warranty if they offer one
Service guarantee
May improve marketing mix
Promises in writing
Consumer Product Classes
Convenience products - inexpensive, buy them a lot
ex. staples, impulses, emergency
Shopping products - homogeneous and heterogeneous
Unsought products - new unsought, regularly unsought
Shopping products
Homogeneous - considers brands but price is the decider
Heterogeeous - considers brands, effort made, something other than price decides
Specialty products
Brand insistence - you will accept no substitutes for
One product may be seen in:
several ways
Jack buying a shirt
Homogenous shopping product - thought all the shirts were the same so selected based on price
Business products are different
Derived demand - a business is not going to buy something that they cant turn around and resell
Inelastic industry demand
Tax treatments differ
Business product classes
Installations - one time or very infrequent large expensive purchases
professional services
accessories - can be expensive but bought more often
component parts and materials - you are buying radios if you are making cars
Mro supplies
Raw materials
