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									> > > > > > > > Chapter 13
   Product and Distribution
1 Explain marketing’s definition of a    5
                                             List the stages of the new-product
    product and list the components of       development process.
    the product strategy.
                                             Explain how firms identify their
    Describe the classification system   6   products.
    for consumer and business goods
    and services.
                                             Outline and briefly describe each
                                         7   of the major components of an
    Distinguish between a product mix        effective distribution strategy.
    and a product line.
                                             Identify the various categories of
    Briefly describe each of the four
                                         8   distribution channels and discus
    stages of the product life cycle.        the factors that influence
                                             channel selection.
• Product - bundle of physical, service, and symbolic
• Convenience products - items the consumer seeks
  to purchase frequently, immediately, and with little
• 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.
• 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
• Component parts and materials - become part of a final
• 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.
 In B2B, greater emphasis on personal selling for
  installations and many component parts.
 May involve customers in new-product
 Advertising more commonly used to sell supplies
  and accessory equipment.
 Also a greater emphasis on competitive pricing
 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.
Product life - four basic stages—introduction, growth,
maturity, and decline—through which a successful
product progresses.
• 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.
• 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
• Expensive, time-consuming,
  and risky.
• Only 1/3 of new products
  become success stories.
• Each step requires a ―go or
  no-go‖ decision.
 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
• 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
• Trademark - brand that has been given legal
  protection granted solely to the brand’s owner.
• Manufacturer’s brand - brand offered and promoted by a
  manufacturer. Examples: Tide, Jockey, Gatorade, Swatch, and

• 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.
• Brand recognition - consumer is
  aware of the brand but does not
  have a preference for it over other
• 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.
• 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.
   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.
 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
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
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.
• 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
    – Sales office which takes orders but does not stock the product.
• 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.
• Direct response
• Internet retailing
• Automatic
• Direct selling
1)   Identifying a Target Market

2)   Selecting a Product Strategy

3)   Selecting a Customer Service Strategy

4)   Selecting a Pricing Strategy

5)   Choosing a Location

6)   Building a Promotional Strategy

7)   Creating a Store Atmosphere
   Planned Shopping Center
   Shopping Mall
   Regional Mall
   Lifestyle Mall
• 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
 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.
•   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.
•   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.
• 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

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