Understanding business 11th by mchugh nickels chapter a14

CHAPTER A14

Managing the
Marketing Mix:
Product, Price, Place
and Promotion

McGraw-Hill/Irwin

Copyright © 2015 by the McGraw-Hill Companies, Inc. All rights reserved.


LEARNING OBJECTIVES
1. Explain the concept of a total product offer and
summarize the functions of packaging.
2. Contrast brand, brand name, and trademark, and
discuss the concept of brand equity.
3. Describe the product life cycle.
4. Identify various pricing objectives and strategies, and
explain why non-pricing strategies are growing in
importance.
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LEARNING OBJECTIVES
5. Explain the concept of marketing channels and the
value of marketing intermediaries.
6. Discuss the differences between wholesale and
retail intermediaries and explain the various kinds of
non-store retailing.
7. Define promotion and list the traditional tools that

make up the promotional mix.
8. Assess the effectiveness of various forms of sales
promotion.
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REED HASTINGS
Netflix

• Almost singlehandedly
ended the era of brick and
mortar video rentals.
• In college, Hastings spent
his summers training with
the Marines and joined the
Peace Corps.
• Was inspired to start Netflix
after racking up a $40 late
fee.
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NAME that COMPANY

This U.S. company is known for having low prices
all the time. One way it keeps prices low is by
eliminating as many wholesalers as possible and
doing all the wholesale function itself.
Name that company!

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DEVELOPING VALUE

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• Value -- Good quality at a fair price.
• What customers perceive as the best value
depends on many factors.
• Adapting products to new markets is an ongoing
challenge.
• Product development is a key activity in any
modern business.
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PRODUCTS CONSUMERS
WON’T GIVE UP

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• Internet service
• Cell phone service
• Cable television
• Discount apparel
• Haircuts and coloring
• Fast-food

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PRODUCTS “EXPENDABLE”
by SPENDING CUTS

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• Luxury handbags
• Satellite radio
• Specialty apparel
• High-end cosmetics
• Facials

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DEVELOPING a
TOTAL PRODUCT

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• Total Product Offer -- Everything consumers
evaluate when deciding whether to buy something.

• Products are evaluated on
many different dimensions,

both tangible and intangible.
• Marketers must think like and
talk to consumers to find out
what’s important.
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PRODUCT INNOVATION DURING
the GREAT DEPRESSION

Source: BusinessWeek Small Biz.

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ANYTHING YOU CAN DO…
Products Replacing Products

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POTENTIAL COMPONENTS
of a TOTAL PRODUCT OFFER

LO
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UNDERSTANDING
PRODUCT LINES

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• Product Line -- A group of products that are
physically similar or intended for a similar market.

• Product lines often include
competing brands like:
- Tide
- Era
- Downy
- Bold
Photo Courtesy of: Coca-Cola Art Gallery

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The PRODUCT MIX

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• Product Mix -- The combination of all product lines
offered by a manufacturer or service provider.

• Product mixes like Procter & Gamble’s can be
extensive:
- Toothpaste
- Cosmetics
- Diapers
- Batteries
- Bar soap

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SEALING the DEAL
• As a Navy Seal, Randy
Hetrick found keeping
his fitness levels up
while in the field was
difficult.
• He created the TRX
out of parachute
harnesses.
• While earning his MBA, he raised capital to
launch Fitness Anywhere. Now, a $50 million
company!

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DIFFERENTIATING PRODUCTS

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• Product Differentiation -- The creation of real or
perceived product differences.

• Marketers use a mix of pricing, advertising and
packaging to create different images. Examples
include:
- Bottled water
- Aspirin
- Fast-food
- Laundry detergent
- Shampoo

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USES of PACKAGING

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• Companies often use packaging to change and
improve their basic product. Examples include:
- Microwave popcorn
- Tuna pouches

- McDonald’s green packaging

• Good packaging can also make
a product more attractive to
retailers.
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SOME KEY FUNCTIONS of
PACKAGING

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1) To attract buyers’ attention
2) Protect the goods inside and be
tamperproof
3) Be easy to open
4) Describe and give information about the
product
5) Explain the product’s benefits
6) Provide warranty information and warnings
7) Give an indication of price, value, and
uses

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BUNDLING

• Bundling -- Grouping two or more products together
and pricing them as a unit.

• Virgin Airlines bundles
door-to-door limo
service and inflight
massage with some
tickets.
• Financial institutions
bundle advice with
purchases.

Photo Credit: Joey Day

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TEST PREP

• What value enhancers may be included in a total
product offer?
• What is the difference between a product line and
a product mix?
• What functions does packaging now perform?

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UNDERSTANDING BRANDING

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• Brand -- Name, symbol, or design that identifies the
goods or services and distinguishes them from
competitors’ offerings.

• Trademark -- A brand
that has exclusive legal
protection for both its
brand name and design.

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PLAYING the NAME GAME
• With a couple hundred countries
on the cyber-platform, choosing
the right name is a global issue.
• Every once in a while, a successful
name is created by accident.
Häagen-Dazs means nothing!
• What would you rename Very
Vegetarian if given the chance?
Would you want to ask an expert?
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The NAME GAME

Source: Bloomberg Businessweek, www.businessweek.com, accessed March 2015.

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ESTABLISHING BRAND EQUITY
and LOYALTY

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• Brand Equity – The value of the brand name and
associated symbols.

• Brand Loyalty -- The degree to which consumers
are satisfied and are committed to further purchases.

• Brand Awareness -- How quickly or easily a given
brand name comes to mind when someone mentions
a product category.

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MOST VALUABLE BRANDS

Source: Forbes, www.forbes.com, accessed March 2015.

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