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Essential Concepts
Product
Product is the core of the marketing mix. Product defines what will be priced, promoted, and distributed. If you are able to create and deliver a product that provides exceptional value to your target customer, the rest of the marketing mix is easier to manage. A successful product makes every aspect of a marketer’s job more effective.
Brands are powerful and valuable assets that simplify consumer choices, make promises about products or companies, and create market perceptions. Organizations can employ various strategies to develop and extend their brands to stakeholders, including customers, retailers, supply chain partners, and the organization itself.
The product life cycle (PLC) starts with the product’s development and introduction, then moves toward maturity, withdrawal and eventual decline. The marketer needs to be aware of the characteristics that apply to a given product as it moves through the various stages.
Developing new products is a costly and risky process, with high failure rates, but companies can increase their chances of success by setting clear goals, generating new ideas through sources like focus groups and brainstorming, screening concepts, developing prototypes and marketing strategies, test-marketing the product, and finally introducing it to the market with logistical coordination and necessary adaptations for international markets.
Price
When businesses make decisions about pricing, they can adopt profit-oriented pricing, competitor-oriented pricing, or customer-oriented pricing. Customer-oriented pricing focuses on the price-value equation: Value = Perceived Benefits – Perceived Costs. In order to increase value, the business can either increase the perceived benefits or reduce the perceived costs. Today’s marketing tends to favor customer-oriented pricing because it prioritizes the customer and the customer’s perception of value.
Place
Distribution channels cover all the activities needed to transfer the ownership of goods and move them from the point of production to the point of consumption. These activities can be organized as five important channel flows: product flow, negotiation flow, ownership flow, information flow, and promotion flow. While channels can be very complex, there is a set of channel structures that can be identified in most transactions: the direct channel, the retail channel, the wholesale channel, and the agent channel.
Promotion
There are many different marketing communication methods that can be used in the promotion mix. Integrated marketing communication is the process of coordinating all the promotional activity across these different methods. There are also seven common types of marketing communication: advertising, public relations, personal selling, sales promotion, digital marketing, direct marketing, and guerrilla marketing, each with their own advantages and disadvantages.
Career Connection: Elevator Pitch
An elevator pitch is a brief introduction used in networking situations to present yourself professionally and make connections. It can be used in various contexts, such as job fairs, interviews, networking events, and starting conversations, and should consist of introducing yourself, stating your career interest, and highlighting relevant experience or personal attributes in just a few key sentences.
Glossary
advertising
any paid form of communication from an identified sponsor or source that draws attention to ideas, goods, services or the sponsor itself
agent channel
also called a broker channel; adds the addition of an agent or broker as an intermediary between the producer and the wholesaler
brainstorming
the members of a group think of as many ways to vary a product or solve a problem as possible
brand
all the features that distinguish the goods and services of one seller from another: name, term, design, style, symbols, customer touch points, etc
branded house strategy
a range of products are sold under one unifying brand
brand extension
moving an existing brand name into a new product category, with a new or somehow modified product
brand licensing
the process of leasing or renting the right to use a brand in association with a product or set of products for a defined period and within a defined market, geography, or territory
bundling
grouping two or more related products together and pricing them as a single product
business products
also called industrial products and B2B products; are purchased by other businesses and organizations to be used in production or to support their production process
cash discounts
reductions given to customers for paying cash or within some short time period
channel partners
the organizations that collectively support the distribution channel
co-branding
an arrangement in which two established brands collaborate to offer a single product or service that carries both brand names
competitor-oriented pricing
copies the competitor’s pricing strategy or seeks to use price as one of the features that differentiates the product
consumer products
those that are purchased by the final user of the product
convenience product
an inexpensive product that requires a minimum amount of effort on the part of the consumer in order to select and purchase it
customer-oriented pricing
also called value-oriented pricing; seeks to charge the highest price that supports the value received by the customer
digital marketing
an umbrella term for using digital tools to promote and market products, services, organizations and brands
direct channel
the producer sells directly to the consumer
distribution channel
a set of interdependent organizations involved in the process of making a product or service available for use or consumption, as well as providing a payment mechanism for the provider
elevator pitch
a brief introduction that you use when you meet someone while networking
focus groups
eight to twelve participants led by a moderator in an in-depth discussion on one particular topic or concept
heterogeneous shopping products
unique products where the consumer’s decision can be influenced by variations in features
homogeneous shopping products
similar products where the consumer’s decision is more likely to be influenced by price
house of brands strategy
a company invests in building out a variety of individual brands
Integrated Marketing Communications (IMC)
coordinating all promotional activities—advertising (including direct marketing), sales promotion, personal selling, public relations, social media and e-commerce, packaging, and other forms of promotion—to produce a consistent, unified message that is customer focused
leader pricing
pricing products below the normal markup or even below cost to attract customers to a store where they wouldn’t otherwise shop
line extension
introducing a new variety of offering within the same product category
loss leader
a product priced below cost
no-brand branding
a type of branding whose feature is the absence of a brand name
odd-even pricing
also called psychological pricing; setting a price at an odd number to connote a bargain and at an even number to imply quality
organizational branding
strategies for developing a brand image and marketing engine around an organization, promoting the mission, goals, and/or work of the organization
penetration pricing
offering new products at the lowest price possible in the hope of capturing as many customers as possible
personal allowance
an offer to pay expenses if an intermediary will aggressively promote a product or service
personal branding
strategies for developing a brand image and marketing engine around an individual, treating persons and their careers as products to be branded and sold to target audiences
personal selling
uses in-person interaction to sell products and services
place (nation) branding
cities, regions, and nations brand and promote places to compete for people, investment, tourism, economic development, and other resources
prestige pricing
raising the price of a product so consumers will perceive it as being of higher quality, status, or value
price orientation
the relative importance of one factor compared to the others in pricing a product
price skimming
the practice of introducing a new product on the market with a high price and then lowering the price over time
price-valuation equation
Value = Perceived Benefits – Perceived Costs
private label branding
brands created by retailers
production goods
raw materials or component parts used in the production of the final product
product life cycle
starts with the product’s development and introduction, then moves toward maturity, withdrawal and eventual decline
profit-oriented pricing
the price per product is set higher than the total cost of producing and selling each product to ensure that the company makes a profit on each sale
promotional mix
the combination of communication methods used to promote a product
public relations (PR)
the process of maintaining a favorable image and building beneficial relationships between an organization and the public communities, groups, and people it serves
quantity discounts
reductions in base price given as the result of a buyer purchasing some predetermined quantity of merchandise
retail channel
the retailer markets and sells the goods on behalf of the producer
Retailing
all activities required to market consumer goods and services to ultimate consumers who are purchasing for individual or family needs
rollout
a new product’s introduction to the market
sales promotions
activities that go on for a limited period of time with the goal of stimulating sales
seasonal discounts
price reductions given for out-of-season merchandise
shopping product
products that are purchased occasionally and are more expensive compared to convenience products; consumers want to be able to compare before making a decision
specialty products
products are so unique that it’s worth it to go to great lengths to find and purchase them
supply chain
the system through which an organization acquires raw material, produces products, and delivers the products and services to its customers
support goods
machinery, fixed equipment, software systems, and other tools that assist in the production process
test-market
selling a product for a limited time and in limited places to reach potential users
trade discounts
price reductions given to middlemen (e.g., wholesalers, industrial distributors, retailers) to encourage them to stock and give preferred treatment to an organization’s products
trade-in allowance
a reduction in price of the buyer trades in the old model of product that they are replacing with a purchase
unsought products
products the consumer never plans or hopes to buy
value-added
increasing the perceived benefits of a product
wholesale channel
wholesaler is primarily engaged in buying and usually storing and physically handling goods in large quantities, which are then resold (usually in smaller quantities) to retailers or to industrial or business users and then finally sold to customers