> > > > > > > > Chapter 13

Product and Distribution

Strategies
 ng G oa l s
Learni
1 Explain marketing’s definition of a
product and list the components of
the product strategy.
2 Describe the classification system
for consumer and business goods
and services.
3 Distinguish between a product mix
and a product line.
4 Briefly describe each of the four
stages of the product life cycle.
5
List the stages of the new-product
development process.
Explain how firms identify their
6
products.
Outline and briefly describe each
7 of the major components of an
effective distribution strategy.
Identify the various categories of
8
distribution channels and discus
the factors that influence
channel selection.
 t S t ra t e g y
Pro d u c
• Product - bundle of physical, service, and symbolic
attributes.
• Convenience products - items the consumer seeks
to purchase frequently, immediately, and with little
effort.
• Shopping products - typically purchased only after
the buyer has compared competing products in
competing stores.
• Specialty products - items that a purchaser is willing
to make a special effort to obtain.
 C l as si fi c at i on
Prod u c t
 g Bu s i n e ss
Classifyin
Goods
• Installations - major capital items, such as new factories, heavy
equipment and machinery, and custom-made equipment.
• Accessory equipment - includes less expensive and shorter-
lived capital items than installations and involves fewer decision
makers.
• Component parts and materials - become part of a final
product.
• Raw materials - farm and natural products used in producing
other final products.
• Supplies - expense items used in a firm’s daily operation that
do not become part of the final product.
 g S tr a t e gy
Marketin
Imp li c a ti o n s

 In B2B, greater emphasis on personal selling for

installations and many component parts.
 May involve customers in new-product
development.
 Advertising more commonly used to sell supplies
and accessory equipment.
 Also a greater emphasis on competitive pricing
strategies.
 L i n es a n d
Pro d u c t
u c t M i x
Prod

Product line - group of related products that

are physically similar or are intended for the
same market.

Product mix – a company’s assortment of

product lines and individual offerings.
 L i f e C yc l e
Product

Product life - four basic stages—introduction, growth,

maturity, and decline—through which a successful
product progresses.
 f t h e P ro d u ct
St a ges o
Life Cycle
• Introduction stage – firm promotes demand for its new
offering, informs the market about it, gives free samples
to entice consumers to make a trial purchase, and
explains its features, uses, and benefits.
• Growth stage - sales climb quickly as new customers
join early users who are repurchasing the item. Company
begins to earn profits on the new product.
• Maturity stage - industry sales eventually reach a
saturation level at which further expansion is difficult.
• Decline stage - sales fall and profits decline.
 i on s o f t h e
Implicat
if e C y c l e
Product L

• Marketer’s objective is to extend the life cycle as

long as product is profitable. Marketers’ goals:
– Increasing customers’ frequency of use
– Adding customers
– Finding new uses for product
– Changing package sizes, labels, and product designs
 St a ges i n N e w
v e l o p me n t
Product De

• Expensive, time-consuming,
and risky.
• Only 1/3 of new products
become success stories.
• Each step requires a “go or
no-go” decision.
 D ev e l op me n t
Pro d u c t
Stages
 Stage 1: Generating ideas for
new offerings
 Stage 2: Screening
 Stage 3: Concept development
and business analysis phase
 Stage 4: Product development
 Stage 5: Test marketing
 Stage 6: Commercialization
 F a i l u re s
Product
 Product
Iden t if ic a t io n

• Brand - name, term, sign, symbol, design, or some

combination that identifies the products of one firm
and differentiates them from competitors’ offerings.
• Brand name - part of the brand consisting of words
or letters included in a name used to identify and
distinguish the firm’s offerings from those of
competitors.
• Trademark - brand that has been given legal
protection granted solely to the brand’s owner.
 e g o r i e s
Brand Cat
• Manufacturer’s brand - brand offered and promoted by a
manufacturer. Examples: Tide, Jockey, Gatorade, Swatch, and
Reebok.

• Private or store brand - brand that is not linked to the

manufacturer but instead carries a wholesaler’s or retailer’s
label. Examples: Sears’ DieHard batteries and Wal-Mart’s
Ol’Roy dog food & Member’s Mark brand

• Family branding strategy - a single brand name used for

several related products. Examples: KitchenAid, Johnson &
Johnson, Hewlett-Packard, and Dole

• Individual branding strategy - giving each product within a line

a different name. Examples: Procter & Gamble products Tide,
Cheer, and Dash.
 Bran d L o y a l ty

• Brand recognition - consumer is

aware of the brand but does not
have a preference for it over other
brands.
• Brand preference - consumer
chooses one firm’s
brand over a competitor’s.
• Brand insistence - consumer will
seek out preferred brand and
accept no substitute for it.
Bra n d Eq u i ty

• Brand equity - added value that a

respected and successful name
gives to a product.
• Brand awareness - product is the
first one that comes to mind when
a product category is mentioned.
 e B ra n d s
Valuabl
 es a n d L a b el s
P a c ka g

 Important in product identification

and play an important role in a firm’s
overall product strategy.
 Choosing right package is especially
important in international marketing.
 Must meet legal requirements of all
countries in which product is sold.
 Universal Product Code - bar code
read by optical scanner.
 t i o n S t ra te gy
D is t ri b u

Distribution channel -
path through which
products—and legal
ownership of them—flow
from producer to Physical distribution
consumers or business -actual movement of
users. products from producer to
consumers or business
users.
Di st ri b u t i on
Channels
 an n e l s u s in g
tr ib u t ion Ch
Dis ed i ar ie s
t er m
Marketing In
Direct Distribution
• Direct contact between producer and customer.
• Most common in B2B markets.
• Often found in the marketing of relatively expensive, complex
products that may require demonstrations.
• Internet is helping companies distribute directly to consumer
market.
Distribution Channels Using Marketing Intermediaries
• Producers distribute products through wholesalers and retailers.
• Inexpensive products sold to thousands of consumers in widely
scattered locations.
• Lowers costs of goods to consumers by creating market utility.
 Marketing
m ed ia rie s
Inter
 Wh ol e s a l i n g

• Wholesaler - distribution channel member that sells primarily to

retailers, other wholesalers, or business users.
• Manufacturer-Owned Wholesaling Intermediaries
– Owned by the manufacturer of the good.
– Sales branch which stocks products and fills orders from
inventories.
– Sales office which takes orders but does not stock the product.
 Retailers

• Retailer - channel member that sells goods and

services to individuals for their own use rather than
for resale.
• Final link of the distribution channel.
• Two types: store and non-store.
 re R et a i lin g
Non - Sto

• Direct response
retailing
• Internet retailing
• Automatic
merchandising
• Direct selling
Re t a i l St o r e s
 R et a i l i n g
Wheel of
 l e rs C om p et e
H ow R et a i

1)
1) Identifying
IdentifyingaaTarget
Target Market
Market
2)
2) Selecting
Selecting aaProduct
Product Strategy
Strategy
3)
3) Selecting
Selecting aaCustomer
Customer Service
ServiceStrategy
Strategy
4)
4) Selecting
Selecting aaPricing
Pricing Strategy
Strategy
5)
5) Choosing
Choosing aaLocation
Location
6)
6) Building
Building aaPromotional
Promotional Strategy
Strategy
7)
7) Creating
Creating aaStore
StoreAtmosphere
Atmosphere
 o c a ti o n s
Retail L

 Planned Shopping Center

 Shopping Mall
 Regional Mall
 Lifestyle Mall
 n Ch a n n e l
Distributio tic s
on s a n d Lo g is
Dec i s i

• What specific channel will it use?

• What will be the level of distribution intensity?

Selecting Distribution Channels

 Complex, expensive, custom-made, or perishable products
move through shorter distribution channels involving few—or no
—intermediaries.
 Standardized products or items with low unit values usually
pass
through relatively long distribution channels.
 Start-up companies often use direct channels because they
can’t persuade intermediaries to carry their products.
 n In t en s i t y
Di s t r i b u t i o

• Intensive distribution - firm’s products in nearly

every available outlet. Requires cooperation of
many intermediaries.
• Selective distribution - limited number of retailers
to distribute its product lines.
• Exclusive distribution - limits market coverage in
a specific geographical region.
 a n d P h y s i ca l
Lo g i s ti c s
D is t ri b u t i o n
• Supply chain – complete sequence of suppliers that
contribute to creating a good or service and delivering it to
business users and final consumers.
• Logistics – the activities involved in controlling the flow of
goods, services, and information among members of the
supply chain.
• Physical Distribution – the activities aimed at efficiently
moving finished goods from the production line to the
consumer or business buyer.
 r is on o f
Compa
t i on M o d e s
Transporta
 er S er v i ce
Custom

• Customer service standards measure the quality of

service a firm provides for its customers.

• Warranties are a firm’s promises to repair a

defective product, refund money paid, or replace a
product if it proves unsatisfactory.

• Internet retailers have worked to humanize their

customer interactions and deal with complaints more
effectively.