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Identify a product offered by a manufacturer using a dual-distribution approach (ex: brick and mortar, physical location versus online). Are there differences between the customers targeted by each approach? How do the purchase experiences differ? Do you think online sales will eventually cause brink and mortar businesses to cease to exist?Why? Support your post with scholarly RESEARCH on dual distribution.
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The Marketing
Program
CHAPTER
6
C
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INTRODUCTION
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With a clearly defined target market in hand, the organization
turns its attention
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toward developing a marketing program that will fulfill the target’s needs and wants
R , we are referring to the
better than the competition. When we say marketing program
strategic combination of the four basic marketing mixTelements: product, price, distribution, and promotion. Although each element is vitally important to the success
of the marketing strategy, the product usually receives, the most attention because it
is most responsible for fulfilling the customers’ needs and wants. However, since
customers’ needs and wants are multifaceted, we prefer to think of the outcome of
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the marketing program as a complete “offering” that consists of an array of physical
(tangible), service (intangible), and symbolic (perceptual)
E attributes designed to satisfy customers’ needs and wants. In other words, the best marketing strategy is likely
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to be one that combines the product, price, distribution, and promotion elements in a
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way that maximizes the tangible, intangible, and perceptual
attributes of the complete offering.
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Good marketing strategy considers all four elements of the marketing program
N We have noted throughout
and the offering rather than emphasizing a single element.
this text how most firms today compete in rather mature
C markets characterized by
commoditization. In these cases, the core product (the element that satisfies the
E differentiating the offering
basic customer need) typically becomes incapable of
from those of the competition. Consequently, most organizations work to enhance
the service and symbolic elements of their offerings by changing price, distribution,
or promotion in order to stand out from the crowd.1As described in Beyond the
Pages 6.1, this makes marketing strategy even more challenging
for the firm. It also
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requires that the marketing program be considered holistically rather than sequentially. This means that products must be designed with5an eye toward how they will
be priced, distributed, and promoted. It does a company
9 no good to develop a standout product that is not price competitive, difficult to ship or store, and hard to conT
vey in promotional messages. All four elements of the marketing program must be
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developed simultaneously.
In this chapter, we examine the four elements of the marketing program in
more detail. Issues such as product design, affordability, distribution convenience,
and product awareness are major considerations in developing an effective marketing program. Problems in any one area can create obstacles that customers may
be unwilling to overlook as they search for the best offering that will fulfill their
needs.
153
9781337669078, Marketing Strategy: Text and Cases, Seventh Edition, O.C. Ferrell – © Cengage Learning.
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154
Chapter 6 • The Marketing Program
BEYOND THE PAGES 6.1
Can Physical Books Save Barnes &
Noble?1
Like many companies in the Internet economy,
Barnes & Noble is at a crossroads. The largest
U.S. bookstore chain made retailing history
when it opened the first category–killer bookstore in the late 1980s. At that time, the store
was five times the size of a typical bookstore.
Customers flocked to the spacious and comfortable stores that offered a comprehensive inventory of books, music, and DVDs. Most of the
stores also included a café where customers
could have coffee, a snack, and enjoy a good
book. Barnes & Noble had successfully converted the small, mall-based bookstore to a
true destination for book-loving customers.
But that was in the 1980s and 1990s. As the
Internet economy took off in the late 1990s and
into the 2000s, Barnes & Noble was forced to
move online. At the launch of Barnesandnoble.
com in 1997, the company offered a staggering
1 million titles for immediate delivery, plus access
to a nationwide network offering over 30 million
listings from out-of-print, rare, and used book dealers. This move came at roughly the same time as
the launch of an unusual online bookstore called
Amazon.com. Amazon offered a limited selection
and was a pure Internet-based company, so few
people gave the company any chance of succeeding. Plus, Amazon was losing money. At the time,
Barnes & Noble wasn’t worried about Amazon
because their book superstore concept was a
huge success. And, everyone knew that book
lovers preferred to browse in the store, sit in comfortable chairs, and enjoy a coffee. Didn’t they?
Fast-forward to today and we all know that
Amazon has been remarkably successful. So
much so that other book retailers, namely
Borders and Waldenbooks, have since closed.
We also know that Amazon sells more e-books
than physical books. E-readers such as
Amazon’s Kindle and Barnes & Noble’s Nook
(plus a variety of tablets like the iPad and Kindle
Fire) are wildly popular among a variety of target customers, old and young. In addition, other
competitors have entered the market. Apple, for
example, offers e-books through its iBooks app
on the iPad and iPhone. Google now offers free
access to millions of public domain books. The
rapid changes in the book retailing market have
forced Barnes & Noble to adapt, and these
changes now threaten the future of the oncedominant book retailer.
What can Barnes & Noble do to remain relevant and viable in this market? To answer that
question, we need to look at the company’s
current marketing program:

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Products. Barnes & Noble competes in
a highly commoditized product market.
Books, whether offered in print or as ebooks, are the same no matter where they
are purchased. Barnes & Noble does have
an advantage in the textbook market, but
the differences between its selection and
the selection at Amazon are disappearing
fast. Amazon, on the other hand, offers a
very broad selection of products ranging
from electronics to beauty supplies. Barnes
& Noble offers a much narrower variety of
books, music, movies, and some toys. Both
companies’ e-readers are competitively
matched in terms of features and benefits.
Pricing. Given the commoditized nature
of the market, price would be one logical
place to compete against Amazon and other
competitors. However, there is very little
price differentiation in the book market.
This is especially true with respect to ebooks, where prices are roughly the same
across multiple competitors.
Distribution. Barnes & Noble has invested a
lot of resources into its distribution system.
However, Amazon is also no slouch at supply
chain management. One area where Barnes
& Noble has a distinct advantage is on college campuses. The company operates over
717 college bookstores serving over 4 million
students and 250,000 faculty in all 50 states.
The company’s physical footprint also
includes roughly 650 traditional Barnes &
Noble stores that draw millions of customers
annually. These stores are still destinations
for true book lovers, something that Amazon
cannot copy.
Promotion. It is very hard to build a competitive advantage based on promotion alone, and
neither Barnes & Noble nor Amazon stand out
per se. Both have strong brands and positioning. Both also offer membership programs.
However,
Amazon’s
program—Amazon
9781337669078, Marketing Strategy: Text and Cases, Seventh Edition, O.C. Ferrell – © Cengage Learning.
All Rights Reserved. No distribution allowed without express authorization. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-240
Chapter 6 • The Marketing Program
Prime—beats Barnes & Noble by a wide margin. For a $99 per year fee, Prime members get
free two-day shipping on millions of products,
free instant streaming of thousands of movies
and television programs, and the ability to borrow one Kindle e-book each month. By contrast, Barnes & Noble’s members get free
shipping and small discounts on books and
Nook e-readers.
It is clear that carving out a strong competitive advantage is difficult for any book retailer.
Barnes & Noble has an edge in college campus
distribution and a loyal customer following. Amazon, however, has an edge in terms of the total
digital ecosystem and a loyal following of priceconscious customers. In some ways the two companies compete using different paradigms.
Although the company continues to lose
ground in the digital book market to Amazon,
Barnes & Noble’s saving grace is likely to be
its retail footprint, especially on college campuses. In the college market, Follett leads the
way with 940 campus stores (to 717 for Barnes
& Noble). However, since 53 percent of colleges
and universities still operate their own stores,
the market growth potential in the college market is very large. Barnes & Noble is partnering
with these universities to create academic
superstores that are much larger than a traditional Barnes & Noble store. These superstores
include larger cafes, more clothing, and
C often
stores-within-a-store such as Clinique or Apple.
A The college store side of Barnes & Noble is so
that the company plans to spin it off
L successful
into a separate business in late 2015.
V
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PRODUCT STRATEGY
R
Of all the strategic decisions to be made in the marketing
T plan, the design, development, branding, and positioning of the product are perhaps the most critical. At the
heart of every organization lies one or more products ,that define what the organiza-
tion does and why it exists. As we stated in Chapter 1, the term “product” refers to
something that buyers can acquire via exchange to satisfy a need or a want. This is a
very broad definition that allows us to classify manyTdifferent things as products:
food, entertainment, information, people, places, ideas,
E etc. An organization’s product offering is typically composed of many different elements—usually some combination of tangible goods, services, ideas, image, or R
even people. As we consider
product decisions here, it is important to remember that
R product offerings in and of
themselves have little value to customers. Rather, an offering’s real value comes
E
from its ability to deliver benefits that enhance a customer’s situation or solve a customer’s problems. For example, customers don’t buyN
pest control; they buy a bugfree environment. Lexus customers don’t buy a car; they buy luxury, status, comfort,
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and social appeal. Students who frequent a local nightclub are not thirsty; they want
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to fulfill their need for social interaction. Likewise, companies
do not need computers; they need to store, retrieve, distribute, network, and analyze data and information. Marketers who keep their sights set on developing product offerings that truly
meet the needs of the target market are more likely to1be successful.
8
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Strategic Issues in the Product Portfolio
Products fall into two general categories. Products used
9 for personal use and enjoyment are called consumer products, while those purchased for resale, to make other proT
ducts, or for use in a firm’s operations are called business products. Exhibit 6.1
illustrates examples of each type of product category.SAlthough the distinction may
seem simplistic, it is important in a strategic sense because the type of product in question can influence its pricing, distribution, or promotion. For example, marketing strategy for consumer convenience products must maximize availability and ease of
purchase—both important distribution considerations. The strategy associated with
consumer shopping products often focuses more on differentiation through image
and symbolic attributes—both important branding and promotion issues. Marketing
strategies for raw materials are especially challenging because these products are
9781337669078, Marketing Strategy: Text and Cases, Seventh Edition, O.C. Ferrell – © Cengage Learning.
All Rights Reserved. No distribution allowed without express authorization. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-240
155
156
Chapter 6 • The Marketing Program
EXHIBIT 6.1
Types of Consumer and Business Products.
Consumer Products
Type of Product
Convenience Products
Inexpensive, routinely purchased products that consumers spend little time
and effort in acquiring.
Shopping Products
Products that consumers will spend time and effort to obtain. Consumers
shop different options to compare prices, features, and service.
Specialty Products
Unique, one-of-a-kind products that consumers will spend considerable
time, effort, and money to acquire.
Business Products
C
Unsought Products
A
Products that consumers are unaware of or a product that consumers do not
L
consider purchasing until a need arises.
V
Raw Materials
E of a finished product. They are
Basic natural materials that become part
purchased in very large quantities based
R on specifications or grades.
T
Component Parts
Finished items that become part of a ,larger finished product.
They are purchased based on specifications or industry standards.
Process Materials
T
Finished products that become unidentifiable upon their inclusion in the
E
finished product.
Maintenance, Repair, and OperatingRProducts
Products that are used in business processes or operations but do not
become part of the finished product. R
E
Accessory Equipment
Products that help facilitate productionN
or operations but do not become part
of the finished product.
C
E
Installations
Major purchases, typically of a physical nature, that are based on
customized solutions including installation/construction, training, financing,
1
maintenance, and repair.
Business Services
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Intangible products that support business operations. These purchases often
5
occur as a part of outsourcing decisions.
Examples
Soft drinks
Candy and gum
Gasoline
Dry cleaning
Appliances
Furniture
Clothing
Vacations
Sports memorabilia
Antiques
Plastic surgery
Luxury items
True innovations
Repair services
Emergency medicine
Insurance
Iron ore
Chemicals
Agricultural products
Wood pulp
Spark plugs
Computer chips
Pane glass
Hard drives
Food additives
Wood sealants
Paint colorings
Office supplies
Janitorial services
Building security
Bathroom supplies
Tools
Office equipment
Computers
Furniture
Enterprise software
Buildings
Heat and air systems
Legal services
Accounting services
Consulting
Research services
9
T (Mason, OH: Cengage Learning, 2010), pp. 285–289.
SOURCE: This material is adapted from William M. Pride and O.C. Ferrell, Marketing
S
commodities by definition. Here, conformance to exacting product specifications and
low acquisition costs are the keys to effective strategy. Many business products are
also characterized by derived demand, where the demand for the product is derived
from, or dependent upon, the demand for other business or consumer products. For
example, the demand for business products such as glass, steel, rubber, chrome,
leather, and carpeting is dependent upon the demand for automobiles.
9781337669078, Marketing Strategy: Text and Cases, Seventh Edition, O.C. Ferrell – © Cengage Learning.
All Rights Reserved. No distribution allowed without express authorization. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-240
Chapter 6 • The Marketing Program
It is very rare for a company to sell only one product. Most firms sell a variety
of products to fulfill a variety of different needs. In general terms, the products sold
by a firm can be described with respect to product lines and product mixes. A product
line consists of a group of closely related product items. As shown in Exhibit 6.2,
Procter & Gamble sells a number of famous brands in its Fabric and Home Care
line, including Tide, Dawn, and Cascade. Most companies sell a variety of different
product lines. The different product lines at General Motors carry well-known
brand names like Corvette, Chevrolet, Cadillac, and Buick. Likewise, FedEx offers a
number of logistics and supply chain services in its family of brands, such as FedEx
Express, FedEx Ground, and FedEx Freight. A firm’s product mix or portfolio is the total
group of products offered by the company. For example, Procter & Gamble’s entire
product portfolio consists of Beauty, Hair, and Personal Care products; Baby, Feminine, and Family Care products; and Health and Grooming products in addition to
the products in its Fabric and Home Care line.
C
Decisions regarding product lines and product mixes are important strategic
considerations for most firms. One of these important
A decisions is the number of
product lines to offer, referred to as the width or variety of the product mix. By offerL
ing a wide variety of product lines, the firm can diversify its risk across a portfolio of
V to capitalize on the strength
product offerings. Also, a wide product mix can be used
and reputation of the firm. Sony, for example, enjoysEthis advantage as it uses its
name to stake out a strong position in electronics, music, and movies. The second
important decision involves the depth of each productRline. Sometimes called assortment, product line depth is an important marketing tool.
T Firms can attract a wide
range of customers and market segments by offering a deep assortment of products
,
in a specific line. Each brand or product in the assortment
can be used to fulfill
different customer needs. For example, Hilton, Inc. offers 12 different lodging
brands—including Hilton, Hilton Garden Inn, Hampton Inn, Conrad, and Embassy
T market.
Suites—that cater to different segments of the hospitality
Although offering a large portfolio of products can
E make the coordination of
marketing activities more challenging and expensive, it also creates a number of
R
important benefits:

R
Economies of Scale. Offering many different product lines can create economies
of scale in production, bulk buying, and promotion.EMany firms advertise using an
umbrella theme for all products in the line. Nike’s “Just Do It” and Maxwell
N
House’s “Good to the Last Drop” are examples of this. The single theme covering
C
the entire product line saves considerably on promotional
expenses.
EXHIBIT 6.2
Product
Mix
Depth
(Assortment)
E
Procter & Gamble’s Portfolio of Fabric and Home Care Products.
Dish Washing
Ariel
Dawn
Cascade
Product Mix Width (Variety)
1
Household
Laundry and
Cleaners
Fabric Care
8
Batteries
Mr. Clean
Duracell*
Tide
5
Swiffer
Cheer
9
Bounce
Gain
T
Downy
S Dreft
Era
Febreze
Bold
Ace
Paper
Products
Charmin
*At the time of publication, P&G planned to sell Duracell to Berkshire Hathaway for $4.7 billion.
SOURCE: From the Procter & Gamble website (http://www.pg.com/en_US/brands/global_fabric_home_care/index.shtml),
accessed March 29, 2015.
9781337669078, Marketing Strategy: Text and Cases, Seventh Edition, O.C. Ferrell – © Cengage Learning.
All Rights Reserved. No distribution allowed without express authorization. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-240
157
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Chapter 6 • The Marketing Program




Package Uniformity. When all packages in a product line have the same look
and feel, customers can locate the firm’s products more quickly. It also becomes
easier for the firm to coordinate and integrate promotion and distribution. For
example, Duracell batteries all have the same copper look with black and copper
packaging.
Standardization. Product lines often use the same component parts. For example, GM often shares components across its Buick, GM, and Chevrolet product
lines. This greatly reduces GM’s manufacturing and inventory handling costs.
Sales and Distribution Efficiency. When a firm offers many different product
lines, sales personnel can offer a full range of choices and options to customers …
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