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The Role of Marketing

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Class ObjectivesDescribe the role of marketing in creating satisfying exchanges

Explain the role of advertising in communicating a product’s utility

Explain the purpose and importance of branding

Describe the elements of the marketing mix and the role of advertising in the mix

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The Role of Marketing

Marketing

Product Marketplace(Price, product, promotion)

Photo: hubagency.co.uk

Packa

ge

Social Media

Brand

Slogan

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The Role of MarketingMarketing is the arm of an organization dedicated to finding and retaining customers willing to pay for their products.

Marketing facilitates satisfying exchanges, a transaction in which a person or organization trades something of value for something else of value.

Ford Photo: prsno.com

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The Marketing Mix

2. Use the 4Ps of the marketing mix to shape a product concept for the market

1. Select a target market (markets) from the market segments identified

Product Price Place Promotion

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The Product ElementThe product concept is the consumer’s perception of a product as utilitarian and symbolic values that satisfy needs and wants.

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The Product Life Cycle

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Introductory Stage1. Promote new product to early

adopters, consumers willing to try new things.

2. Stimulate primary demand for entire product category through marketing, advertising.

3. Growing demand pulls product from manufacturing to retail (pull strategy).

4. Give retailers incentives, promotions to push product (push strategy).

iPhone photo: iab.net Droid photo: androidauthority.com

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Growth Stage1. Sales volume increases

rapidly.

2. Period is characterized by market expansion as more consumers make more purchases.

3. Advertising expenditures decrease.

4. Competitors enter the market.

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Maturity Stage1. Marketplace is saturated with

competitors.2. New customers dwindle, and

sales plateau.3. Companies drive selective

demand to impress customers with advantages of their brand.

4. Market segmentation, product positioning, and price promotion become important.

Photo: orgcolonial.com

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Decline Stage

Oldsmobile photo: carreview.com Pontiac photo: autosguides.com

1. Obsolescence, new technology or changing customer tastes cause sales to decline.

2. Production of the brand ceases.

Oldsmobile Pontiac

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Product ClassificationsLife Cycle Classification

Positioning & Differentiation

Branding Packaging

• Introduction• Growth• Maturity• Decline

• By market• By rate of consumption• By tangibility• By buying habits• By physical description

• Perceptible• Hidden• Induced

• Individual• Family• National• Private Label• Licensed

• Identification• Containment• Protection• Convenience• Consumer appeal• Packaging can pay for itself

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Product Classifications

By Market

By Rate of Consumption,

TangibilityBy purchasing

habitsBy physical description

Consumer goods Durable goods Convenience goods Packaged goodsIndustrial goods Nondurable goods Shopping goods Hard goods

Services Specialty goods Soft goodsUnsought goods Services

Charmin photo: neenmachine.com sofa photo: pearlstreetdesign.com

See Exhibit 4-9 on p. 111 of your textbook for full details.

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Product PositioningLife Cycle Classification

Positioning & Differentiation

Branding Packaging

• Introduction• Growth• Maturity• Decline

• By market• By rate of consumption• By tangibility• By buying habits• By physical description

• Perceptible• Hidden• Induced

• Individual• Family• National• Private Label• Licensed

• Identification• Containment• Protection• Convenience• Consumer appeal• Packaging can pay for itself

Positioning: association of product with specific consumer needs

Differentiation: creating a product difference that appeals to a market segment

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Product PositioningEach of these national pizza chains positions itself as the best.

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Product Positioning

Papa John’s:http://www.youtube.com/watch?v=Y0Sn49S5Ins

Domino’s: http://www.youtube.com/watch?v=t23sgF4Bl7c

Pizza Hut:http://www.youtube.com/watch?v=hWZfb4V_bmA

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Product Differentiation

Ford Escape Hybrid

Nissan Juke

Cadillac Escalade

Car photos: automotive.com

Perceptible differences: those that are easily apparent to the consumer

Hidden differences: imperceptible variations that may enhance product desirability

Induced differences: Differences created by marketing and advertising

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BrandingLife Cycle Classification

Positioning & Differentiation

Branding Packaging

• Introduction• Growth• Maturity• Decline

• By market• By rate of consumption• By tangibility• By buying habits• By physical description

• Perceptible• Hidden• Induced

• Individual• Family• National• Private Label• Licensed

• Identification• Containment• Protection• Convenience• Consumer appeal• Packaging can pay for itself

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BrandingWorld’s most valuable brands, 2010

Rank Brand Value ($Billions)1 Coca-Cola 70.452 IBM 64.723 MicroSoft 60.864 Google 43.565 General Electric 42.816 McDonald's 367 Intel 328 Nokia 29.59 Walt Disney Co. 28.73

10 Hewlett-Packard 26.87

Source: Interbrand “Best Global Brands,” September 2010

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BrandingBrand: the combination of name, words, symbols, or design that identifies the product (and its source) and distinguishes it from competing products.

Great Value photo: brandkillers.com Unilever photo: badlani.com

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BrandingIndividual brand: Each product, even of the same product type, has a different brand

Unilever photo: badlani.com

National brand: Individual brands manufactured and sold nationally, such as these Unilever brands

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Branding

Private label brand: Products manufactured nationally and sold to resellers who put their own brand name on the product.

Great Value photo: brandkillers.com Heinz photo: images.businessweek.com

Family brand: Multiple products sold under a single brand name

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BrandingLicensed brand: a brand that can be used by another company if the company pays a fee to do so

Caterpillar: cat.com Coca-Cola: amazon.co.uk Dexter: findamug.com Visa: businessweek.com

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Branding’s Goal

The goal of creating a brand is brand equity, the totality of what consumers, retailers, and competitors feel & think about a brand over time.

Brandt & Johnson Brand Equity Model

Source: Brandchannel.com

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The Product ElementLife Cycle Classification

Positioning & Differentiation

Branding Packaging

• Introduction• Growth• Maturity• Decline

• By market• By rate of consumption• By tangibility• By buying habits• By physical description

• Perceptible• Hidden• Induced

• Individual• Family• National• Private Label• Licensed

• Identification• Containment• Protection• Convenience• Consumer appeal• Packaging can pay for itself

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Packaging

Source: Packagingdigest.com

Packaging is the chance to communicate a brand at the point of sale. The 4 considerations are:

• Identification• Containment, protection, convenience• Consumer appeal• Economy

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Packaging: Good or Bad?

Banana: good.is Terror: chicagonow.com Excedrin: underconsideration.com

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The Price ElementPrice Factor:

Demand

Graphic Source: Masterclassmanagement.com

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The Price Element

LGTV: Amazon.com, Haagen-Dazs: bloomingtonneeds.com, Escalade: automotive.com

Price Factor: Corporate Goals & Strategies

Price Factor: Production & Distribution

Price Factor: Competition

Psychological pricing: setting a product’s price based

on the perceived value of a product

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The Place (Distribution) Element

Chart source: static.flatworldknowledge.com

As is true for price, the distribution model of a product must be consistent with its brand image.

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The Place (Distribution) ElementDirect distribution is when companies sell directly to end users.

The internet has become the ultimate direct distribution channel.

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The Place (Distribution) ElementIndirect distribution is when companies market their products through a distribution channel, made up of all the firms and individuals responsible for a product between the producer to the consumer.

Photo: brickelsracing.com

Resellers are companies who operates between the producer and the consumer or purchaser. Resellers can be retailers or wholesalers.

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The Place (Distribution) ElementIntensive distribution is placement of a product in a large number of retail locations where consumers can purchase it with minimal effort. These items are usually high volume, low profit.

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The Place (Distribution) ElementSelective distribution is placement of a product in a limited number of retail locations to save distribution and promotion costs.

Exclusive distribution is when a producer gives rights to just one wholesaler or retailer in a geographic region.

Ryobi: oneprojectcloser.com

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The Promotion Element

DirectMarketing

SalesPromotion

ProductAdvertising

PersonalSelling

PublicRelations

MarketingCommunication

Types

Advertising is just one type of promotion (communication) companies can use in marketing.

It communicates a product’s utility to drive satisfying exchanges.

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The Promotion ElementFor advertising to be successful, the following factors are important:

• Strong primary demand for the product class

• Chance for significant product differentiation

• Hidden qualities highly important to consumers

• Opportunity for strong emotional appeals

• Substantial budget available for advertising