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Developing New
Products
Chapter 8: Developing New Products
LEARNING OBJECTIVES
LO1 Identify the reasons firms create new products
LO2 Describe the diffusion of innovation theory and
how managers can use it to make product line
decisions
LO3 List the stages involved in developing new
products and services
LO4 Describe the product life cycle and summarize
how it is used to make product line decisions
LO1
Market saturation
opportunities
LO1
Adoption of innovation
LO2
observability
IDEA GENERATION
Internal
R&D
Customer
Licensing
Input
Source
of Ideas
Competitors
Brainstorming
Products
LO3
High product
development costs
Often the source of
technological products
Often the source of
breakthrough products
LO3
LICENSING
BRAINSTORMING
IDEO Website
LO3
COMPETITORS PRODUCTS
Reverse engineering
CUSTOMER INPUT
As much as 85% of new business to
business (B2B) products come from
customers
Lead users modify existing products
according to their own specific
needs
LO3
Concept testing
Product development
Prototype
Alpha testing
Beta testing
LO3
Market testing
Premarket Test
tests marketing
More expensive
Customers
than premarket
surveyed
tests
Product launch
Promotion
New
Timing Place
Product
Price
LO3
Evaluation of results
Customer acceptance
Product, Branding,
and Packaging
Decisions
Chapter 9: Product, Branding, and
Packaging Decisions
LEARNING OBJECTIVES
LO1 Describe the components of a product
LO2 Identify the types of consumer products
LO3 Explain the difference between a product mixs breadth
and a product lines depth
LO4 Identify the advantages that brands provide firms and
consumers
LO5 Summarize the components of brand equity
LO6 Describe the types of branding strategies used by firms
LO7 State how a products packaging and label contribute to a
firms overall strategy
LO1
Specialty Shopping
Convenience Unsought
LO3
Breadth Depth
Number of products within
Number of product lines
a product line
LO3
Increase Breadth
Add new product
lines
Decrease Breadth
Delete entire
product lines
LO3
Addition or
deletion of SKUs
in existing
categories
Designed to
stimulate sales or
react to consumer
demand
LO4
branding
Oscar Meyer
Commercial
LO4
Value of branding
LO5
Brand overview
LO5
Perceived value
Discussion question
Choosing a name
Brand dilution
Evaluate consumer
Evaluate the fit between
perceptions of the
the product class
attributes of the core brand
of the core brand
and seek out extensions
and the extension.
with similar attributes.
cobranding
Brand licensing
Lacoste
Founded in 1933 by David
Lacoste
Still sold in stores today
Harley Davidson
ConAgra recently introduced Harley Davidson Beef Jerky into
the $2.7 billion per year beef snack category
The product will be sold in convenience stores and in Harley
Davidson dealerships
Canadian Tire/Nascar
official automotive retailer of NASCAR in Canada
LO7
packaging
labelling
LO7
Services: The
Intangible Product
Chapter 10: Services: The Intangible
Product
LEARNING OBJECTIVES
LO1 Describe how marketing a service differs from
marketing a product by applying the principles of
intangibility, inseparability, inconsistency, and
inventory
LO2 Outline the four gaps in the Gaps model used to
understand and manage customer expectations
LO3 Describe strategies that firms can use to help
employees provide better service
LO4 Identify three service recovery strategies
LO1
service
By providing good
customer service, firms
add value to their
products and services.
LO1
High value
Production was
placed on
cheaper in
convenience
other countries
and leisure
LO1
intangible
Cannot be touched,
tasted or seen
Requires using cues to
aid customers
Atmosphere is
important to convey
value
Images are used to
convey benefit of
value
LO1
FedEx Commercial
LO1
inconsistent
Training & standardization
Customized services to
meet specific needs
Bundled packages
Replace people with
machines
Self-service technology
The Internet
LO1
inventory
Understanding
Evaluating service
customer
quality
expectations
LO2
How does a
college increase
successful
outcomes for its
students?
LO2
Understanding customer
expectations
Expectations are based on knowledge and experience
versus
LO2
ZONE OF TOLERANCE
Allowing employees
to make decisions
about how service is
provided to
customers
LO3
Reducing
delivery gap
Using technology
Communicate service
expectations
Service recovery
Resolve
problems
quickly
Listen to Provide a
the fair
customer solution
Increase
Service
Recovery
LO4
Customers can
become very
emotional about
service failure
Customers want to be
heard
LO4
Distributive
fairness
Procedural
fairness
LO3
Pricing Concepts
and Strategies:
Establishing Value
Chapter 11: Pricing Concepts and
Strategies: Establishing Value
LEARNING OBJECTIVES
LO1 Explain what price is and its importance in establishing
value in marketing
LO2 Illustrate how the 5 Cs company objectives, customers,
costs, competition, and channel members influence
pricing decisions
LO3 Describe various pricing methods and strategies that are
used in marketing
LO4 Identify pricing tactics targeted to channel members and
consumers
LO5 Summarize the legal and ethical issues involved in pricing
LO1, LO3, LO4
A strategic opportunity
to create value
Not an after thought to
the rest of the
marketing mix
Pricing signals quality or
a lack of quality
LO1
Profit Orientation
- Maximize profits
- Target return pricing
- Target profit pricing
Sales Orientation
Competitor Orientation
Customer Orientation
LO2
2ND C: CUSTOMERS
*complementary products
LO2
3rd C: costs
Variable Costs
Vary with production volume
Fixed Costs
Unaffected by production volume
Total Cost
Sum of variable and fixed costs
LO2
Break-even point
Fixed Costs
Break-Even Point (units) =
Contribution per unit
LO2
4th C: competition
LO2
Manufacturers, wholesalers
and retailers can have
different perspectives on
pricing strategies
Manufactures must protect
against grey market
transactions
LO2
Economic Factors
LO3
COST-BASED COMPETITOR-BASED
PRICING STRATEGIES
VALUE-BASED
LO3
Cost-based methods
Competitor-based methods
Premium pricing
LO3
Value-based methods
Consumer perceptions
LO3
Price skimming
Market penetration
pricing
LO3
Odd prices
LO3
Reference prices
ODD PRICES
versus
High-low pricing
RELIES ON THE
PROMOTION OF SALES,
DURING WHICH PRICES
ARE TEMPORARILY
REDUCED TO ENCOURAGE
PURCHASES
LO4
Price lining
Marketers establish a price floor & a
price ceiling & set prices in between
Allows for easy comparison
LO4
Price bundling
Leader pricing
Enticing consumers
into the store with the
popular aggressively
priced item and hoping
they will pick up other
items while shopping
LO4
Markdowns
Quantity
Coupons &
discounts for
rebates
consumers
LO4
markdowns
Coupons
Retailer handles
Rebate
Manufacturer issues
LO4
Business-to-business pricing
tactics & discounts
LO4
Seasonal discounts
Cash discounts
allowances
Quantity discounts
Cumulative
quantity
discount
Noncumulative
quantity
discount
LO4
Distribution
Channels
Chapter 12: Distribution Channels
LEARNING OBJECTIVES
LO1 Explain the importance of distribution and the
interrelationships among distribution channels, supply
chain management, and logistics management
LO2 Describe distribution channel design and
management decisions and strategies
LO3 Identify how distribution channels add value to
businesses and consumers
LO4 Explain how logistics management affects
distribution strategy
LO1, LO3
Walmart innovators in
distribution!
Walmarts success stems
directly from their channel
innovations
Close co-operation with
supplier partners is key
Extensive information
systems
Constantly fine-tuning
efficiencies
LO1
The importance of
distribution
The third P!
Good distribution is critical to
marketing success
Royal Canadian Mint released
worlds first coloured
circulation coin through Tim
Hortons (due to huge reach and speed to
distribute coins)
Logistics management
Distribution components
LO2
Channel Structure
Direct distribution
Indirect distribution
Multichannel distribution
Multichannel distribution
LO2
Distribution intensity
LO3
Functions performed by
intermediaries
LO3
LOGISTICS MANAGEMENT:
MAKING INFORMATION FLOW
LO4
Data warehouse
LO4
Computer-to-computer
exchange of business
documents from retailer to
vendor and back
Advanced shipping notice
Reduces cycle time
Communication is improved
Easy data analysis
LO4
Open
Common Goals
Communication
Credible
Mutual Trust
Commitments
Strategic
Relationships
LO4
Inbound transportation
Radio
Frequency
Receiving Checking
Distribution
(RFID) Tags
Container
Arrival receipt Undamaged computer
chips
Ordered =
received
LO4
Types of distribution
centres:
Traditional
Cross-docking
Combination
LO4
Inventory management
through just-in-time systems
Increased product
availability and lower
inventory investment
Chapter 13
Retailing and
Multichannel
Marketing
Chapter 13: Retailing and
Multichannel Marketing
LEARNING OBJECTIVES
retailing
Sits at the end of the
supply chain
Marketing meets the
consumer
Fulfilling customer
expectations
Set of business activities
that add value
Stores, catalogues,
Internet
LO1
Channel member
characteristics
Larger firms
Identifying types of
retailers
General Merchandise
Food Retailers Retailers
FOOD RETAILERS
LO2
General merchandise
retailers
Discount: a broad variety, limited service, low prices
Specialty: limited number of complementary merchandise in a
relatively small store
Category: a narrow variety but a deep assortment of
merchandise
Department store: broad variety, deep assortment, some
customer service, organized into separate departments
Drugstores: specialty store, health & personal grooming
products, pharmaceuticals
Off-Price retailer: inconsistent assortment of merchandise,
low prices
Extreme-value retailer: general merchandise discount store
Services retailer: primarily sell services rather than
merchandise
LO2
Product
(merchandise assortment)
price
promotion
Presentation
(store design & display)
personnel
place
Convenience is a key
ingredient to success
LO4
Managing multichannel
options
Store/Retailer Internet
Kiosk Catalogue
LO4
More information to
evaluate merchandise
Personalization
Personalized customer
service
Benefits Provided by
Different Channels
Kiosk
Catalogue
LO4
Benefits Provided by
Different Channels
LO4
Effective multichannel
retailing
Role of Brands
Using Technology
Increasing Share of
Wallet
Gaining Insight into
customer shopping
behaviours
Chapter 14
Integrated
Marketing
Communications
Chapter 14: Integrated Marketing
Communications
LEARNING OBJECTIVES
LO1 Outline the process that firms use to communicate with
consumers
LO2 List the steps in planning an integrated marketing
communications campaign
LO3 Describe what appeals advertisers use to get customers
attention
LO4 Identify how firms determine which media to use
LO5 Summarize how firms measure integrated marketing
communications success
LO6 Explain the six tools of integrated marketing communications
campaigns
LO1
Integrated marketing
communications (IMC)
IMC is the promotion dimension of the four Ps
Uses a variety of communication methods:
General advertising
Personal selling
Sales promotion
Public relations
Direct marketing
Digital media
All done in combination!
LO1
Receivers decode
messages differently
Senders adjust
messages according to
the medium &
receivers traits
LO1
Is It Deception to Disguise
the Message Sender?
2. Set objectives
3. Determine budget
Considerations
Budgeting methods
LO2
4. Convey message
Differentiate a product by
communicating its unique
attributes
Often becomes the common
theme or slogan of the entire
campaign
LO3
The appeal
Media planning
Media mix
Media buy
LO4
Continuous
Flighting
Pulsing
LO4
6. Create communication
Creative elements
What to do if creative
elements dont deliver
the selling message?
LO5
Pretesting
Tracking
Post-testing
LO6
INTEGRATED MARKETING
COMMUNICATIONS TOOLS
LO6
ADVERTISING
PERSONAL SELLING
SALES PROMOTIONS
DIRECT MARKETING
LO6
Targeted
Motivates an action
Is measurable
Provides information
LO6
A targeted form of
communication
distributed to a
prospective customers
mailbox or inbox
Elements of a pr toolkit
LO6
Digital media
Websites
Blogs
Social media
Mobile apps
Chapter 15
Advertising, Sales
Promotions, and
Personal Selling
Chapter 15: Advertising, Sales
Promotions, and Personal Selling
LEARNING OBJECTIVES
LO1 Describe advertising and three objectives of
advertising
LO2 Summarize the regulatory and ethical issues of
concern to advertisers
LO3 Explain how sales promotions supplement a firms
IMC strategy
LO4 Describe personal selling and how it adds value for
customers
LO5 Identify the steps in the personal selling process
LO1
attention
interest
desire
LO1
action
LAGGED EFFECT
advertising
A paid form of
communication
From an identifiable source
Delivered through a
communication channel
Designed to persuade to take
action
LO1
Advertising Objectives
Inform
Persuade
Remind
LO1
Informative advertising
Persuasive advertising
REMINDER ADVERTISING
FOCUS OF ADVERTISEMENTS
Product-focused Institutional
LO1
PRODUCT PLACEMENT
Product is included in
non-traditional
situations
Example: a scene in a
movie, music videos
LO1
PUBLIC SERVICE
ANNOUNCEMENTS
A special class of
demand advertising
Focus is on public
welfare
Sponsored by non-profit
organizations
A form of social
marketing
LO2
puffery
LO2
Sales promotion
Long-term impact
Face to Face
Video Conferencing
Telephone
Internet
LO4
Professional selling as a
career
People love the lifestyle
There is a lot of flexibility
There is a lot of variety in
the job
Can be very lucrative, among
the highestpaying careers for
college graduates
Very visible to management,
good for promotions
Build relationships
STEP 2: PREAPPROACH
The Presentation
Person-to-person
Ask questions, listen
carefully
Handling Objections
Usually occurs during
the presentation
Anticipate in advance
Relax, listen, ask
questions
LO5
STEP 5: FOLLOW-UP
Five Service Quality Dimensions
Reliability
Responsiveness
Assurance
Empathy
Tangibles