Core Marketing Concepts: Product, Distribution, and Promotion

Product Classification Types

• Consumer Products

  Products sold directly to families and individuals for personal use, not to companies.

• Business Products

  Products sold to organizations, including small and large businesses.

Specific Product Categories

• Convenience Products

  Inexpensive items requiring minimal purchasing effort (e.g., toothpaste, basic groceries).

• Shopping Products

  Items for which consumers are willing to spend more money and effort comparing options (e.g., jeans, electronics).

• Component Parts

  Finished items that become part of a larger product.

• Process Materials

  Materials used directly in the production of other items (e.g., glue, chemicals).

The Four Stages of the Product Life Cycle

Industry profit changes significantly as a product moves through these four stages:

1. Introduction

   The product generates initial, often low, revenue.

2. Growth

   Sales and profit begin to increase rapidly.

3. Maturity

   Profit reaches its peak before leveling off or starting a slow decline.

4. Decline

   Sales fall rapidly, leading to a decline in profit.

Reasons for New Product Failure

Major factors contributing to new product failure include:

• Failure to match product needs to market demand.
• Sending the wrong marketing message.
• Technical or design problems.
• Poor timing of the launch.
• Overestimating the market size.
• Ineffective promotion strategies.
• Insufficient distribution coverage.

Three Approaches to Product Modification

1. Quality Modification

   Changes related to the product's durability, reliability, or overall quality.

2. Functional Modification

   Changes affecting the product's versatility, effectiveness, convenience, or safety.

3. Aesthetic Modification

   Changes to the sensory characteristics, such as texture, taste, sound, or appearance.

Test Marketing: Benefits and Drawbacks

Benefits of Test Marketing

• Assessing sales performance by exposing the product to a real market.
• Identifying product weaknesses before a full launch.
• Reducing the overall risk of product failure.

Disadvantages of Test Marketing

• It is often expensive to execute.
• The test market itself typically generates no profit.
• Competitor organizations can potentially steal or copy the idea.

Three Degrees of Brand Loyalty

1. Recognition

   The customer is aware the brand exists and views it as an acceptable alternative (e.g., Applebee's).

2. Preference

   The customer prefers the brand over competitive offerings (e.g., Chili's).

3. Insistence

   The customer strongly prefers the brand and will accept no substitute.

Marketing Channel Strategy

The Role of Intermediaries

Shorter channels are not always the best option for direct distribution. Wholesalers or middlemen often offer a wider range of products from a single source, handle delivery, and manage promotion, potentially making the overall distribution process more cost-effective for the producer.

Dual Distribution

Dual distribution occurs when an organization uses two or more marketing channels to distribute the same product to the same target market.

Factors Influencing Channel Selection

Key factors that influence the decision regarding marketing channel selection include:

• Product Type (Consumer vs. Business)
• Cost (Expensive vs. Standardized)
• Physical Characteristics (Durable vs. Fragile; Large vs. Small)
• Market Characteristics (High vs. Low density)
• Environmental Forces (e.g., economic conditions, legal constraints)
• Characteristics of Intermediaries (e.g., capabilities, reach)

Promotion Strategy and Methods

Four Objectives of Promotion

1. Create awareness.
2. Stimulate demand.
3. Retain loyal customers.
4. Encourage product trial.

Importance of Issue Awareness

Organizations must ensure consumers are aware of potential product issues to avoid lawsuits stemming from consumer ignorance or misuse.

The Four Promotional Methods (The Promotion Mix)

• Advertising

  A paid, non-personal communication transmitted to a target audience through mass media.

• Personal Selling

  Paid, personal communication designed to inform and persuade potential buyers.

• Public Relations (PR)

  A broad set of communication efforts used to create and maintain favorable relationships between an organization and its stakeholders.

• Sales Promotion

  Activities or materials that act as direct inducements, offering added value or incentive for the product (e.g., free samples, coupons, contests).

Forms of Interpersonal Communication in Personal Selling

Effective personal selling relies on various forms of nonverbal communication:

• Kinesic Communication

  Body movement, including head, eye, and hand gestures.

• Proxemic Communication

  The physical distance maintained between individuals during face-to-face interaction.

• Tactile Communication

  Communication through touching.

Ethical Considerations in Promotion

Organizations should generally avoid promoting offensive or violent products. Such advertisements often carry misleading or inappropriate messages regarding the product's intended purpose or use, leading to negative public perception and ethical concerns.