Product Price Promotion Place. Product area is concerned with developing the ”right” product for the

Product area is concerned with developing the ”right” product for the

target market. This offering may involve a physical good, a service, or a

blend of both. Merchandise generally similar in appearance, that is, in

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style or design, but varying in such elements as size, price, and quality

is collectively known as a product line. Product lines must be intimately

correlated with consumer needs and wants.

In order to develop a line effectively, marketing research is conducted

to study consumer behaviour. Changing attitudes and modes of living

directly affect the salability of products. For example, the trend to in-

formal dress has changed clothing styles drastically. Also, a high-income

economy triggers a demand for products very different from those se-

lected in a declining business cycle. The availability or lack of disposable

income, meaning income over and above that spent for basic necessities

such as food, shelter, and clothing, affects the buying pattern for so-

called luxury products. Similarly, the purchase of durable or long-lived

goods, such as refrigerators, cars, and houses, may be deferred when the

economy is declining and may increase rapidly in periods of prosperity.

Staple goods, such as food and clothing, tend not to be seriously affected

by the business cycle.

Consumers today expect product innovations and tend to react fa-

vourably to new features. This has an important bearing on the usable

life deliberately designed into a product, which in turn has a significant

effect on the costs to the manufacturer and ultimately on the price to

the consumer. Competition between manufacturers of similar products

naturally accelerates the speed of changes made in those products.

Price. The two basic components that affect product pricing are costs

of manufacture and competition in selling. It is unprofitable to sell a

product below the manufacturer’s production costs and unfeasible to

sell it at a price higher than that at which comparable merchandise is

being offered. Other variables also affect pricing. A company policy may

require a minimum profit on new product lines or a specified return on

investments, or discounts may be offered on purchases in quantity.

Attempts to maintain resale prices were facilitated for many years

under federal and state fair-trade laws. These have now been nullified,

prohibiting manufacturers from controlling the prices set by wholesalers

and retailers. Such control can be still maintained if the manufacturers

wish to market directly through their own outlets. Attempts have also

been made to maintain product-price competition in order to minimize

the danger of injuring small businesses.

Promotion is concerned with telling the target market about the “right”

product. Promotion includes personal selling, mass selling, and sales

promotion. It is the marketing manager’s job to blend these methods.

Personal selling involves direct communication between sellers and

potential customers. Personal selling usually happens face-to-face, but

sometimes the communication occurs over the telephone. Personal sell-

ing lets the salesperson adapt the firm’s marketing mix to each potential

customer. But this individual attention comes at a price; personal selling

can be very expensive. Often this personal effort has to be blended with

mass selling and sales promotion.

Mass selling is communicating with large numbers of customers at

the same time. The main from of mass selling is advertising – any paid

form of nonpersonal presentation of ideas, goods, or services by an iden-

tified sponsor. Publicity – any unpaid form of nonpersonal presentation

of ideas, goods, or services – is another important form of mass selling.

Sales promotion refers to those promotion activities – other than ad-

vertising, publicity, and personal selling – that stimulate interest, trial,

or purchase by final customers or others in the channel. This can involve

use of coupons, point-of-purchase materials, samples, signs, catalogues,

novelties, and circulars. Sales promotion specialists work with the per-

sonal selling and mass selling people.

Place is concerned with all the decisions involved in getting the

“right” product to the target market’s place. A product isn’t much good

to a customer if it isn’t available when and where it’s wanted. A product

reaches customers through a channel of distribution. A channel of distri-

bution is any series of firms (or individuals) from producer to final user

or consumer.

Some products are marketed most effectively by direct sale from manu-

facturer to consumer. Among these are durable equipment, for example,

computers, office equipment, industrial machinery and supplies, and

consumer specialties, such as vacuum cleaners and life insurance. The

direct marketing of products such as cosmetics and household needs is

very important. Formerly common “door-to-door products”, these are

now usually sold by the more sophisticated “house party” technique.

Most consumer products, however, move from the manufacturer

through agents to wholesalers and then to retailers, ultimately reaching

the consumer. Determining how products should move through whole-

sale and retail organizations is another major marketing decision.

Wholesalers distribute goods in large quantities, usually to retailers,

for resale. Some retail businesses have grown so large, however, that they

have found it more profitable to bypass the wholesaler and deal directly

with the manufacturers or their agents.

Retailing has undergone even more change. Intensive preselling by

manufacturers and the development of minimum-service operations,

for example, self-service in department stores, have drastically changed

the retailer’s way of doing business. More recently, warehouse retailing

has become a major means of retailing higher-priced consumer goods

such as furniture, appliances, and electronic equipment.

Transporting and warehousing merchandise are also technically with-

in the purview of marketing. Products are often moved several times as

they go from producer to consumer. Products are carried by rail, truck,

ship, airplane, and pipeline. Efficient traffic management determines

the best method and timetable of shipment for any particular product.

Sometimes a channel system is quite short. It may run directly from a

producer to a final user or consumer. This is especially common in busi-

ness markets and in the marketing of services. Often the system is more

complex – involving many different kinds of intermediaries and special-

ists. And if a marketing manager has several different target markets,

several different channels of distribution might be needed.

Text 5

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