Chapter 8 - slide 1Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

Chapter Eight

Product, Services, and Brands: Building Customer Value

What Is a Product?Levels of Product and Services

Product and Service Decisions

Product attributes are the benefits of the product or service

Quality Features Style and design

Individual Product and Service Decisions

Product and Service Decisions

Product quality includes level and consistency Quality level is the level of quality that supports

the product’s positioning Conformance quality is the product’s freedom

from defects and consistency in delivering a targeted level of performance

Individual Product and Service Decisions

Chapter 10- slide 5Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

Chapter Ten & Eleven

Pricing:Understanding and Capturing

Customer Value

Factors to Consider When Setting Prices

Customer Perceptions of Value

Factors to Consider When Setting Prices

Value-based pricing

Good-value pricing

Value-added pricing

Customer Perceptions of Value

Factors to Consider When Setting Prices

Good-value pricing offers the right combination of quality and good service to fair price

Existing brands are being redesigned to offer more quality for a given price or the same quality for less price

Customer Perceptions of Value

Factors to Consider When Setting Prices

Fixed costs

Variable costs

Total costs

Company and Product CostsTypes of costs

Factors to Consider When Setting Prices

Fixed costs are the costs that do not vary with production or sales level

Rent Heat Interest Executive salaries

Company and Product Costs

Factors to Consider When Setting Prices

Variable costs are the costs that vary with the level of production

Packaging Raw materials

Company and Product Costs

Factors to Consider When Setting Prices

Total costs are the sum of the fixed and variable costs for any given level of production

Average cost is the cost associated with a given level of output

Company and Product Costs

Pricing StrategiesInclude any one or a few of the pricing strategies

that you’ll be following:

New-Product Pricing Strategies

Market-skimming pricing

Market- penetration pricing

Pricing Strategies

Product Mix Pricing StrategiesPricing Strategies

Product line pricing

Optional- product pricing

Captive- product pricing

By-product pricing

Product bundle pricing

Price-Adjustment StrategiesDiscount and

allowance pricing

Segmented pricing

Psychological pricing

Promotional pricing

Geographicpricing

Dynamic pricing

International pricing

IMC• Which tool would you use• Which media would you use• Why would you use these tools and

media• How would you use these tools and

media

The Promotion Mix

Advertising is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor

• Broadcast• Print• Internet• Outdoor

Major Promotion Tools

Key Characteristics of Tools

ADVERTISING• Non-personal mass communication• High reach• Impact• High cost• Low credibility?• Difficult to measure

The Promotion Mix

Sales promotion is the short-term incentives to encourage the purchase or sale of a product or service

• Discounts• Coupons• Displays• Demonstrations

Major Promotion Tools

Key Characteristics of Tools

SALES PROMOTION• Used tactically in short term• Aim is often to increase sales• High control and measurement• Moderate cost• Can be used throughout distribution

channel• Credibility may be questioned

The Promotion Mix

Public relations involves building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events

• Press releases• Sponsorships• Special events• Web pages

Major Promotion Tools

Key Characteristics of Tools

PUBLIC RELATIONS• Non-personal • Wide range of tools available• High credibility• Low cost

The Promotion Mix

Personal selling is the personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships

• Sales presentations• Trade shows• Incentive programs

Major Promotion Tools

Key Characteristics of Tools

PERSONAL SELLING• Interpersonal communications tool

(two way)• Instantaneous feedback possible • Message can be tailored• High cost• More suitable where message is

complex

The Promotion Mix

Direct marketing involves making direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships—through the use of direct mail, telephone, direct-response television, e-mail, and the Internet to communicate directly with specific consumers

• Catalog• Telemarketing• Kiosks

Major Promotion Tools

Key Characteristics of Tools

DIRECT MARKETING• Any form of direct response

communications• Targets individual customers (database)• Can deliver personalised message• Builds relationships• Facilitated by technological developments• Moderate absolute cost but cost per

contact high

Major communication toolsTool Use Examples

Advertising Efficiently gets message to large audience

Television and radio commercials and new paper ads; paid search engine links; product and company brochures; billboards; transit ads; ads delivered by cell phone and emails

Sales promotion Stimulate immediate purchase; reward repeat purchase

Samples, coupons, premiums, contests, games, incentives

Public relations Build positive image, strengthen ties with stakeholders

Event sponsorship, news release, briefings, speeches and blogs, public appearance

Direct marketing Reach target audience, encourage direct response

Mail, email, telemarketing campaigns, printed and online catalog, direct response tv and radio

Personal selling Reach customers one to one to make sales, strengthen relationships

Sales appointment, sales meetings and presentation, online sales chat help

New Tools, New Media

Broadcast advertising (TV/radio)

Point of purchase

Website/on-line advertising

Interactive/internet marketing

Mobile/Wap

Direct marketing

Sales promotion

Events & sponsorship

Product placement

Publicity/PR

Telemarketing

Word of mouth

Personal selling

Packaging

Outdoor/billboards

Print advertising (newspaper/magazine)

Chapter 8 - slide 31Copyright © 2009 Pearson Education, Inc.  Publishing as Prentice Hall

Chapter Twelve

Marketing Channels: Delivering Customer Value

Supply Chains and the Value Delivery Network

Upstream partners include raw material suppliers, components, parts, information, finances, and expertise to create a product or service

Downstream partners include the marketing channels or distribution channels that look toward the customer

Supply Chain Partners

The Nature and Importance of Marketing Channels

How Channel Members Add Value

Information Promotion Contact

Matching Negotiation Physical distribution

Financing Risk taking

Channel Design DecisionsIdentifying Major Alternatives

Intensive distribution• Candy and toothpaste

Exclusive distribution• Luxury automobiles and prestige

clothing

Selective distribution• Television and home appliance