10.overview of Marketing Mix Strategies

CEB Marketing Excellence Survey®
Overview of Marketing Mix

Strategies (Parts 1 and 2)
Course Workbook
This course is a two-part series. Part one provides an overview of the value of marketing
mix strategies. It reviews the four Ps of the marketing mix and their use in overall
marketing strategy. Part two takes a more in-depth look at the new product development
process and the use of communications and distribution channels.
To review this course, please visit: www.mes.executiveboard.com/Members/ResearchAndTools/AllTraining.aspx.
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MES5662013SYN
Table of Contents
Part 1 Part 2
Module 1: The Four Ps Module 1: The Innovation Process

•• Introduction.............................................................p. 1 •• Introduction.......................................................... p. 31
•• What Will You Learn............................................p. 2 •• What Will You Learn.......................................... p. 31
•• Marketing Mix and Product Strategy............p. 2 •• Innovation Definition........................................ p. 32
•• First of Four Ps: Product....................................p. 4 •• Incremental Innovation.................................... p. 32
•• Real-World Example: Sony Electronics........p. 4 •• Real-World Example: Microsoft Excel........ p. 33
•• Specific Product Strategies..............................p. 5 •• Overcoming Obstacles
•• Real-World Example: Starbucks......................p. 7 of Incremental Innovation............................... p. 33
•• Real-World Example: FedEx.............................p. 7 •• Role of the Customer....................................... p. 34
•• Successfully Launching •• Examples............................................................... p. 34

a Marketing Strategy...........................................p. 9 •• Review.................................................................... p. 35
•• Review.......................................................................p. 9 •• NPD Process........................................................ p. 36
•• Second of Four Ps: Price..................................p. 10 •• NPD Models.......................................................... p. 37
•• Real-World Example: •• The Stages of a Generic NPD Process....... p. 38
Toyota Motor Company..................................... p. 11 •• Review.................................................................... p. 39
•• The Product Lifecycle........................................ p. 11 •• Incorporating Customer Voice....................... p. 41
•• The Stages of the Product Lifecycle........... p. 12
•• Review..................................................................... p. 13
•• Third of Four Ps: Promotion........................... p. 14 Module 2: Distribution
•• Creating Strong Messages............................... p. 15 and Communication
•• Promotion Mix...................................................... p. 16 •• Introduction......................................................... p. 43
•• Review..................................................................... p. 17 •• What Will You Learn......................................... p. 43
•• Fourth of the Four Ps: Place........................... p. 17 •• Types of Distribution Channels.....................p. 44
•• Example: Fruit Juice Bottler........................... p. 18 •• Working with Channel Partners.................... p. 45
•• Selecting the Right Mix of Channels............ p. 19 •• How Can You Encourage Behaviors?.........p. 46
•• Example: High-Tech Company...................... p. 20 •• Review....................................................................p. 46
•• Who Wins?............................................................ p. 21 •• Channel Selection Strategies......................... p. 47
•• Factors of Distribution Channels.................. p. 21 •• Example: Lighting Distributor....................... p. 49
•• Review.................................................................... p. 24 •• Communications Strategies...........................p. 50
•• Action Item One................................................. p. 24 •• Customer Purchase Funnel............................. p. 51
•• Retention Quiz.................................................... p. 29 •• Push and Pull Communications.................... p. 52
•• Conclusion............................................................p. 30 •• Review.................................................................... p. 52
•• Retention Quiz.................................................... p. 53
•• Action Item Two................................................. p. 54
Course Review
Glossary of Terms.......................................... p. 55
MES5662013SYN
Part 1—Module 1: The Four Ps
Part 1
Introduction
• The marketing mix is a combination of
the tactics that the organization uses to let
the customer know what it has for sale and
the strategy for getting its offering into
the customers’ hands.
Part 2
• No matter how great your product is, if the
customer doesn’t know about it or can’t get
their hands on it, it will not sell. Marketing
mix strategy raises a customer’s awareness
about your product and creates a strategy
to distribute the product to the customer.
Course review
Notes
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Introduction (Continued)
• This overview course will provide you with
an understanding of some of the key activities
and concepts associated with marketing mix
strategy.
Notes
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MES5662013SYN overview of marketing mix strategies: Course Workbook 1
What You Will Learn
• This first course in this series on marketing
Part 1
mix strategies will cover “the four Ps” that
make up the marketing mix strategy: product,
price, promotion, and placement. We will cover
the basics for each of these four Ps and give
you an idea of how marketing can influence
the marketing mix.
• Module one will provide an overview of the
four Ps.
Part 2
• By the end of this module you should be able to:
– Recall what each of the four Ps are, and
– Understand how as marketers, you can use
the four Ps to better market your product
Notes or service.
Course review
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Marketing Mix and Product Strategy

• Every product an organization creates must
be positioned in a way that it is valuable for the
customer and profitable for the organization.
The more value you offer to the customer,
the more profit your organization earns.
When an organization is unprofitable or not
accomplishing its goals, it’s usually because
either 1) you are not offering enough value or 2)
your competition offers better value.
• You want to position your products in a
way that customers perceive the value as
1) a solution that satisfies their needs and
wants and 2) superior to the value offered by
competitors and other products. The value
extracted from the product must be higher
Notes than the cost of obtaining and using it.
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Marketing Mix and Product Strategy (Continued)
• Profit is created by offering value to the
Part 1
marketplace—and how you offer that value
is called positioning.
• This positioning of the product through
the four Ps must clearly demonstrate the
value being offered—usually through some
combination of cost, product features, service
features, and brand features.
Part 2
Notes
Course review
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Marketing Mix and Product Strategy (Continued)

• The marketing mix is the combination of
product, price, promotion and place designed
for a specific target market.
• The four Ps reflect the ingredients used to
make up a company’s position for a particular
product in the marketplace. The four Ps include
the product, which is what you are selling; the
price for which you are selling the product; the
place where you are selling the product; and,
finally, promotion, which are the ways you use
to communicate to your customers.
Notes
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First of Four Ps: Product
• The first P is product. For convenience, we’ll
Part 1
use the term product to include services too.
• Your product strategy is how you design and
create products. This is key, because if the
core value is not delivered to customers, then
how it’s promoted, placed, or distributed is
irrelevant.
• An effective product can still fail in the
marketplace if a competitor offers a worse
Part 2
product which has better distribution, pricing,
and promotion.
Notes
Course review
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Real-World Example: Sony Electronics

Situation
Sony invented both VHS and BETA formats for
videotape machines. Every person who has any
level of expertise in the topic will acknowledge
that BETA was the superior format.
Action
Television stations only used BETA format
because of the better quality. JVC (Japanese
Victor Corporation) licensed VHS from Sony,
after Sony essentially threw it in the trash,
and then beat Sony with its discarded, arguably
inferior product through superior promotion,
pricing, and placement decisions.
Notes
Result
______________________________________________ Superior products do not guarantee success,
especially if the inferior product is sufficient
______________________________________________ at satisfying fundamental needs and wants
of customers. An organization can try to maximize
______________________________________________ revenue by positioning its existing products in
new markets and being more effective in their
______________________________________________ its markets.
______________________________________________
______________________________________________
Specific Product Strategies
• One strategy is to begin with a core product
Part 1
in a core target market, and then expand to
adjacent or new market segments.
• This strategy is referred to as market
development. Expanding into international
markets with core products has become a key
strategy for many companies.
Part 2
Notes
Course review
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Specific Product Strategies (Continued)

• Another strategy is to sell more of a product
to the same customers by expanding the use
of the product, like using baking soda
to deodorize your refrigerator. This strategy
is called market penetration.
Notes
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• A third way an organization can expand is by
Part 1
creating new products. Later, we will discuss
the process through which new product
innovation occurs. By creating new products
which serve the same market, an organization
can extend their product line vertically, a
strategy called product development.
Part 2
Notes
Course review
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• Lastly, an organization can expand into
new markets by offering modified products
that appeal to a new set of customers. These
horizontal strategies are referred to as
product diversification.
Notes
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Real-World Example: Starbucks
Situation
Part 1
Starbucks started out offering coffee at a store in
Seattle and now serves coffee at more than 15,000
stores in 43 countries.
Action
Starbucks expanded its coffee product into new
geographical markets to expand horizontally.
It also expanded vertically at the same time. It
Part 2
expanded its offerings to its current customers
by including things like music and sandwiches
for sale in its retail locations, which attracted
different customers.
Result
Some argue that Starbucks overextended its
Course review
vertical and horizontal expansions, which recently
resulted in store closures and dramatic reductions
Notes in stock price.
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Real-World Example: FedEx

• Your company probably has one or more core
products that they are well known for. This
core product can serve as an organization’s
umbrella brand—which is the personification
of the brand name. An umbrella brings
expectations based on your customers’ past
interactions with the brand.
• For example, when you think of FedEx, you
probably think of its core service, which is
express shipping. However, FedEx has a variety
of services available like logistics and supply
chain management.
• These all tie back to its umbrella brand, which
Notes is based on its core service. Its logistical
and supply chain management services are
______________________________________________ based on similar core attributes to its express
shipping.
______________________________________________ • If you want to get something somewhere fast
______________________________________________ you use FedEx logistics services, just like when
you need to ship something express you use
______________________________________________ FedEx overnight.
______________________________________________
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Real-World Example: FedEx (Continued)
• Organizations may create brand extensions,
Part 1
or extensions of their umbrella brand, to move
into new markets.
• A strong umbrella brand provides a solid
foundation to increase the effectiveness of
marketing programs for brand extensions.
• Through a halo effect, an umbrella brand may
also transfer brand awareness and perceptions
of quality from the umbrella brand to other
Part 2
products.
• This just means that the perception you have of
FedEx as a reliable and fast shipping company
Notes will affect your opinion of their new products.
Course review
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Real-World Example: FedEx (Continued)

• For example, when FedEx acquired Kinkos
and opened its FedEx Kinkos locations, you
may have been willing to give it a shot for
your printing needs because you had a good
experience with FedEx’s services in the past
and knew that it was reliable when you needed
to ship something to a customer quickly.
• FedEx’s brand equity of its umbrella brand
allowed it to venture into a new area.
Notes
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Successfully Launching a Marketing Strategy
• To successfully launch either a vertical or
Part 1
horizontal product using the brand equity that
your organization already has, you need to:
1. Establish a connection to the parent,
2. Emphasize category attributes, and
3. Build an image of product quality.
Reflection Questions
Part 2
Think about one of your company’s products
or services. What kinds of marketing strategies
are your company using currently?
Which strategies seem to be working better

than others?
Course review
Which strategies should your company think
Notes about adopting if they aren’t using them already?
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Review
• Products must be positioned in a way that
customers perceive superior value.
• The four Ps are controllable factors of the
marketing mix model.
• The four Ps are: product, price, promotion,
and place.
• The different types of product strategies are:
– Market development expands horizontally
into adjacent markets from a core market,
– Market penetration sells more of your
products to your current group of customers,
expanding vertically,
Notes
– Product development sells new products
to current and new customers, expanding
______________________________________________ vertically, and
______________________________________________ – Product diversification expands horizontally
by selling modified products to a new set
______________________________________________ of customers.
______________________________________________
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Second of Four Ps: Price
• As you begin to set your product strategy, you
Part 1
must also consider how pricing fits. Although
seemingly straightforward, pricing decisions
can be complex and extremely important.
• If an organization prices its products too
low, profits needed for expansion, new
product development, employee salaries, new
equipment, and shareholder dividends can be
left on the table.
Part 2
• Many firms operate with a net profit margin of
less than 5%, and a pricing error can destroy all
the net profits of the organization, while astute
decisions can effectively double the net profit.
Notes
Course review
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Second of Four Ps: Price (Continued)

• Conversely, if a firm prices its products too
high, especially for the value-add relative
to competitors, sales can drop precipitously,
revenue fail to materialize, profits erode, and
layoffs ensue.
• Pricing decisions must be made in the context
of their value-add to customers. If customers
perceive that the value offered is high, a high
price is expected. If customers perceive that
value-added is low, a low price is expected.
• The only time a firm should price differently
from perceived value is for an important
strategic reason, such as reactions to
Notes competition or building market share.
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Real-World Example: Toyota Motor Company
• For example, some experts think Toyota Motor
Part 1
Company has been selling its cars at prices
lower than market value. It does this to buy
market share at the expense of U.S. automotive
manufacturers, especially General Motors.
• By pricing automobiles lower than their normal
market value, Toyota has taken a huge piece of
General Motor’s market share.
Part 2
Notes
Course review
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The Product Lifecycle

• Another important consideration in pricing is
a concept known as the product lifecycle. Just
like it sounds, new products have a lifecycle
just like a living thing. There are different
stages within its development that will affect
your strategy.
• The driving force behind the product lifecycle
is the fact that over the life of a product, market
demand shifts. Market demand is the total
number of customers who purchase a product
at any given time over the product lifecycle.
• When a product is first introduced, growth can
occur through increases in market demand
Notes as more and more people start to desire the
new product. However, once a market starts
______________________________________________ to become saturated and it starts to near its
market potential, growth slows down and can
______________________________________________ only really be realized through increases in
market share.
______________________________________________
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The Stages of the Product Lifecycle
• The first stage is introduction. The main
Part 1
challenge is getting the word about your
product out to customers in the market.
• The second stage is growth. Early adopters
start using the product and it gains popularity
with more mainstream customers.
• The third stage is maturity. The market
reaches its potential for the product.
Part 2
• The fourth stage is decline. The product starts
to lose popularity and the organization has to
decide whether or not they should keep the
product for sale.
Notes
Course review
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The Stages of the Product Lifecycle (Continued)

• Throughout a product’s lifecycle, changes must
be made in the product’s strategy. When a new
product is first introduced, customers called
early adopters will often pay a higher price for
a new offering. Early adopters are customers
who like to be the first one on the block to own
a new product.
• When the company wants to expand its new
product into a broader market, it will likely
need to lower its price to appeal to a wider
audience. As the market gains maturity, likely
the price for a product will continue to fall as
demand starts to fade.
Notes
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The Stages of the Product Lifecycle (Continued)
• For example, when plasma screen televisions
Part 1
first appeared several years ago, they cost tens
of thousands of dollars. Now, as plasma screen
TVs have been in the market for several years,
you can purchase a plasma screen TV for less
than $1,000.
Part 2
Notes
Course review
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Review
• Products should be priced to reflect value
except for strategic reasons.
• The product lifecycle affects pricing strategy
at each stage.
• The lifecycle stages are:
– introduction,
– growth,
– maturity, and
– decline.
Notes
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Third of Four Ps: Promotion
• The next P we are going to look at is
Part 1
promotion.
• Your promotion strategies are the
communication techniques you use to
communicate the value of the product to an
intended target market so that desired sales
goals can be achieved.
• The marketing communications that a
company uses to help attract customers might
Part 2
be the most commonly associated activity with
the marketing department.
Notes
Course review
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Third of Four Ps: Promotion (Continued)

• The foremost characteristic of an effective
communications strategy is to communicate
your value proposition to your target market.
• The overriding purpose of all marketing
communication is persuasion. An effective
marketing communication strategy will
persuade potential customers and reinforce
to existing customers that the organization’s
products and services satisfy needs and wants
better than any other competitor’s offerings.
Notes
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Creating Strong Messages
• Strong messages—ones that stick with your
Part 1
audience and change their attitudes and
behaviors—can be just as important as the
product you’re selling or the communication
channels you’re using. Creating this type
of a message is a challenging task that few
marketers have mastered.
• Any communications strategy that does not
speak clearly to your target customers with
Part 2
a differentiated message is a form of poor
marketing communications.
Notes
Course review
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Creating Strong Messages (Continued)

• As communication channels become
increasingly cluttered, creating a message
that connects with target customers becomes
an even more important piece of your
communications strategy.
• In today’s communications landscape, when
messages speak to the average customer,
they often have minimal impact on customer
behavior and are forgotten shortly after they
are seen.
• If your message isn’t clear, attention-grabbing,
and ultimately changing behaviors in a way
that reinforce your brand, you’re probably
Notes wasting money. Promotion budgets can
constitute a large percentage of the total
______________________________________________ revenue of organizations and are often more
than the profits earned by the organization.
______________________________________________
______________________________________________
Think about the kinds of product promotion
______________________________________________ communications you receive on a daily basis.
Which ones of these do you think work well
because of their targeted nature?
______________________________________________
Which ones work well because they effectively
______________________________________________ communicate the value of the product or service?
Promotion Mix
• A promotion strategy is set based on what is
Part 1
called the promotion mix, which is a subset
of the marketing mix.
• The promotion mix contains the following:
– Advertising: paid form of nonpersonal
presentation by an identified sponsor
– Personal selling: face-to-face interaction
with a potential customer
Part 2
– A sales promotion: short-term incentive
program to encourage a trial or purchase
– Public relations: communications designed
to promote or protect a company’s image
Notes
– Direct marketing: the use of nonpersonal
Course review
contact tools to influence or persuade specific
______________________________________________ customers or prospects
______________________________________________
______________________________________________
______________________________________________
______________________________________________
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Promotion Mix (Continued)

• Every organization must promote its products
and services. A decision must be made on how
much budget to place in the elements of the
promotion mix. The nature of the product, the
customers of the product, the lifecycle stage of
product, the competition, and the profitability
of the firm will dictate what promotional
resources are used.
• For example, expensive industrial products
are often sold by professional salespeople,
while inexpensive consumer products are sold
through advertising and direct marketing.
Notes Reflection Questions

Think about your company’s promotion mix for
a particular product or service. (Advertising,
______________________________________________ personal sales, sales promotion, public relations,
and direct marketing)
______________________________________________
Which of these kinds of promotion activities
______________________________________________ are most successfully reaching your target
customers?
______________________________________________ Which are effectively communicating the value
of the product or service?
______________________________________________
______________________________________________
Review
• Target promotion strategies to the correct
Part 1
target groups.
• Make messages sticky so customers
remember them.
• The promotion mix is a subset of the marketing
mix and includes the following activities:
– Advertising
– Personal selling
Part 2
– Public relations
– Sales promotion
– Direct marketing
Notes
Course review
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Fourth of the Four Ps: Place

• The final P to discuss is place or placement.
This P is the method you use to get your
product to your customers. Distribution
channels are the ways which a product
physically reaches the customer. A channel
of distribution contains all the organizations
involved from the obtaining of the raw
materials to manufacturers to wholesalers
to retailers to service organizations.
Notes
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Fourth of the Four Ps: Place (Continued)
• While many people may believe that channels
Part 1
add cost to products, making them more
expensive, in fact the opposite is often true.
• The effectiveness of a channel of distribution is
determined in large part by the extent to which
the collection of organizations in the channel
is able to close gaps between the consumer and
the production of the products.
Part 2
Course review
Notes
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Example: Fruit Juice Bottler

• For example, a maker of fruit juice does
not want to sell a gallon of papaya juice to
a consumer; instead, the maker wants to sell
a truckload of 55,000 gallons to a bottler who
will put the juice into a gallon jug, place
a label on it, put it on a store shelf, and sell
it to a consumer.
• The extent to which the bottler adds value
to the marketplace by making it easier for
consumers to purchase saves time and money.
Notes
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Example: Fruit Juice Bottler (Continued)
• It may seem like common sense that
Part 1
purchasing directly from the manufacturer
and getting rid of all distributors and retailers,
along with the associated competition, would
make for a more inexpensive marketplace,
when in fact the opposite is true.
• Virtually all totalitarian economic systems fail
because consumers are not able to obtain what
they want efficiently and are forced to spend
Part 2
inordinate amounts of time shopping.
• The more unregulated an economic system,
the more value offered to consumers and the
less expensive the products are in the long
run, because the channel that operates to the
greatest satisfaction of customers is allowed
Course review
Notes to win.
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Selecting the Right Mix of Channels

• An organization must select the appropriate
mix of channels to profitably get its product
into its customers’ hands.
• It is important to note that today, companies do
not compete with companies; rather, systems of
companies compete with systems of companies.
• The organization that has assembled the best
collection of companies to deliver value to the
marketplace wins. Today, these companies are
not restricted by political boundaries.
Notes
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Example: High-Tech Company
• For example, a high-tech company may design
Part 1
a prototype of a new product in Silicon Valley,
California. An engineering design firm in
Boston may create the aesthetically pleasing
case it goes into. A New York firm may design
an advertising campaign for product release.
A Japanese company may design the circuit
boards. The specifications for the components
may be sourced by a Malaysian company.
Part 2
The product may be assembled in Singapore,
shipped by a company in Hong Kong to
distributors in every region of the world,
and serviced by an Indian company.
Notes
Course review
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Example: High-Tech Company (Continued)

• View a channel of distribution as a system
of companies servicing the customers.
Notes
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Who Wins?
• The determining factor of which collection of
Part 1
organizations wins in the marketplace is which
collection of companies provides the most
value.
• The systems of companies are becoming
increasingly dynamic, coming together for
one or two projects and then dissolving. Who
wins today may have little to do with who wins
tomorrow in the fickle and highly competitive
Part 2
marketplace.
Notes
Course review
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Factors of Distribution Channels

The mix of channels that an organization uses
determines the following different areas:
1. Customer Experience—Service can fluctuate
based on the channel that an organization
uses. If an organization distributes its products
through a third party, like Panasonic selling
TVs at Wal-Mart, it doesn’t have any control
over the service a customer gets while they
are shopping.
Notes
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Factors of Distribution Channels (Continued)
2. Number of Customers Reached—The channel
Part 1
can determine how many customers that an
organization can reach, which ultimately
impacts its revenue. This is because each
channel can reach a different amount of people.
Part 2
Notes
Course review
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3. Margins—The channel selected can affect the
margins from the product because the use of
a channel partner typically costs money.
Notes
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4. Competition—The intensity of competition
Part 1
will drive companies to use various types
of channels. With intensive, price-sensitive
competition, most organizations are drawn to
use many outlets, so that products are easily
accessible. In industries with little competition
and exclusive markets, a highly restricted
number of outlets will be used, so high service
levels can be supported with higher profit
Part 2
margins.
Notes
Course review
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5. Size of Order—Many organizations, especially
industrial distributors, will use different
channels of distribution based on the average
size of an order by a customer. That is, one
channel will be set up for customers who tend
to buy items one at a time, while another set of
outlets will be set up for those customers that
buy in bulk.
Distribution channels are the ways that a product
physically reaches the customer. The distribution
channels a company uses can affect things like
customer experience, the numbers of customers
Notes reached, profit margins, competition, and size of
the order. Think about the distribution channels
used for some of your company’s products or
______________________________________________ services.
______________________________________________ Which of these channels affect your customer’s

experience?
______________________________________________
Which are channels your company is using just
because your competitors do?
______________________________________________
What are some reasons why a company might
______________________________________________ choose to sacrifice high profit margins by using
a particular distribution channel?
______________________________________________
Review
• A distribution channel is the way the product
Part 1
physically reaches the customer.
• Distribution includes all organizations that
make a product possible from raw material
to sale.
• Channels make distribution less costly and
more efficient.
• Channels affect:
Part 2
– Customer experience,
– Number of customers reached,
– Competition,
– Size of order, and
Notes – Margins.
Course review
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Action Item One:

Analyze your company’s marketing mix for one of its products or services.
Product or Service:
What is the basic need of the target market for this product or service?
1. How well is this product or service meeting the needs of your customers?
End Users
Very Well
OK
Poorly
Distributors
Very Well
OK
Poorly
Action Item One (Continued):
Part 1
Retailers
Very Well
OK
Poorly
Partners
Part 2
Very Well
OK
Poorly
Course review
Other:
Very Well
OK
Poorly
2. What is the positioning statement and strategy for this product or service?
3. How well is this positioning satisfying the following criteria?
Fits Well with Our Company’s Overall Strategy

Very Well
OK
Poorly
Differentiates Us from Our Competitors

Very Well
OK
Poorly
Describes the Overall Product or Service Value

Very Well
OK
Poorly
Part 1
Price______________________________________________________________________________
1. What is your current pricing strategy for each stage in the product lifecycle?
Price at introductions _______________________________________________________________

__________________________________________________________________________________
Part 2
Price at growth ____________________________________________________________________
__________________________________________________________________________________
Price at maturity ___________________________________________________________________

__________________________________________________________________________________
Course review
Price at decline ____________________________________________________________________
__________________________________________________________________________________
2. Describe why you might offer special pricing to any of these groups.
Target accounts ____________________________________________________________________

__________________________________________________________________________________
Bulk orders________________________________________________________________________
__________________________________________________________________________________
Other ____________________________________________________________________________
__________________________________________________________________________________
Promotion
1. Describe the basic communication message.
2. How heavily are you relying on the following promotional activities:
Advertising
Heavily
Lightly
Personal Selling
Heavily
Lightly
Part 1
Sales Promotions
Heavily
Lightly
Public Relations
Heavily
Part 2
Lightly
Direct Marketing
Heavily
Course review
Lightly
3. What kinds of programs do you have to help mobilize the sales force?
Volume sales incentives
Product or service training
Sales training
CRM database
Intranet_______________________________________________________________________
Other sales resources:
_____________________________________________________________________________
_____________________________________________________________________________
Part 1
Placement
1. Analyze your top-three, most-used distribution channels:
Part 2
Number of
Distribution Customer Size of
Margins Customers Competition
Channel Experience Order
Reached
Example: Can’t control— Relatively mediocre High volumes of Our competitor uses Medium large
Course review
large retailer probably mediocre margins because of customers the same retailer
sales incentives
Retention Quiz
Please circle one answer per question.
Part 1
1. Your distribution channel selection strategy will not affect which of these?
a. Margins
b. Customer experience
c. Number of customers reached
d. Clutter
Part 2
2. You will probably be able to price your product or service higher during which stage of the product
lifecycle?
a. Growth
b. Decline
Course review
3. Messages that speak to the average customer are typically effective in today’s media landscape.
a. True
b. False
Note: To receive credit for this quiz and see an explanation of each correct answer,
take this quiz online on slide 15 of this course at www.mes.executiveboard.com.
Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Conclusion
• This is the end of the first part of this course
Part 1
on the four Ps. If you remember nothing else
about this module, remember that the four Ps
make up the marketing mix model and are all
controllable factors for a company. The four Ps
include product, price, promotion, and place.
Part 2
Notes
__________________________________________________________________________________________________
Course review
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Part 2—Module 1: The Innovation Process
Part 1
Introduction
• In the first module of this course we will
discuss innovation.
• In this module we will investigate why
marketers need to care about innovation
and what marketing is responsible for
Part 2
during the innovation process.
• We will also be discussing channels for
distribution and communications.
Course review
Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
What Will You Learn

• During the two modules of this course we will
accomplish the following:
– Define innovation and its strategic
importance.
– Discover common challenges for innovation
efforts.
– Review a generic new product development
process.
– Review the two types of distribution
channels.
– See how to craft a resonate marketing
message.
Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Innovation Definition
• For the purpose of this first module, we will
Part 1
define innovation as the introduction of a new
product, idea, or service into the marketplace
that customers perceive as markedly different
from current product offerings in the category.
• Peter Drucker once said, “A business has two
and only two basic functions—marketing and
innovation.”
• Drucker’s thought was that marketing and
Part 2
innovation both create results, while the rest
of the functions in the organization are costs.
• Now, not everyone might agree with that
Notes sentiment. However, Drucker does make an
important point: innovation is an important
Course review
part of companies that want to grow in the
______________________________________________ long term.
______________________________________________ • You have probably heard the saying, “If you are
not growing, you are dying.” For companies
______________________________________________ who don’t innovate to create opportunities
for new growth, their futures do not look
______________________________________________ very bright. Today, change is happening at
______________________________________________ an increasingly accelerated rate. The rule is
simple: change or die.
______________________________________________
Incremental Innovation
• Innovation is a common characteristic of
companies who experience long-term success.
In fact, The Corporate Executive Board
recently published a study which examined
more than 600 companies across a 50-year
time span to determine the causes of growth
stalls.
• One of the outputs of this study was that
“innovation management breakdown”
can contribute to company growth stalls.
Innovation management breakdowns occur
when companies choose to make small,
incremental changes to existing products
instead of investing in creating new
breakthrough innovation which can
Notes contribute to major stalls in company growth.
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Real-World Example: Microsoft Excel
Situation
Part 1
Incremental changes are classic in the software
industry. For example, Microsoft first released its
Excel program in 1985.
Action
Since then, Microsoft has released an updated
version about every two years or so. While the
2007 version has many more features than its first
version did, the new releases every couple years
Part 2
usually offer incremental changes in the features
available from the older versions.
Result
These small innovations are an example of
incremental innovation on an existing product. In
Course review
this case, they have worked out well for Microsoft,
however using this strategy it is not very likely to
Notes yield breakthrough growth ideas any time soon.
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Overcoming Obstacles of Incremental Innovation

• In the past, new product introductions
guaranteed growth for companies. However,
marketers today find themselves in a
hyper-competitive landscape where speedy
competitors can replicate innovations that
leads to commoditization.
• To overcome the obstacles of incremental
innovation and ferocious competition,
Marketing must drive their innovation on
customer insights if they truly differentiate
want from their competitors.
Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Role of the Customer
• No new product can be successful without
Part 1
meeting the needs and wants of customers.
Customers are typically not a good source of
radically new product ideas.
• Usually, customers are complacent with
the current offerings of the marketplace.
Customers were perfectly happy with gas
lights before electric lights were introduced.
Customers were perfectly happy with vinyl
Part 2
platters and cassette tapes before CDs were
finally accepted in the marketplace.
• Many innovations are soundly rejected before
obtaining acceptance in the marketplace,
especially when that innovation requires
accepting risks and making a substantial
Course review
investment, such as purchasing new
Notes equipment.
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Examples
• Conversely, customers are very good at
suggesting small incremental improvements
to existing products. For example, Arm &
Hammer Baking Soda increased its revenue
tremendously when investigating how
customers actually used baking soda, which,
as it turns out, was not really for cooking.
Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Examples (Continued)
• Radical innovation is realized when a new
Part 1
approach to satisfying a fundamental need
is developed. For example, an iPod, which
revolutionized music listening, came from the
marriage of micro-storage technology and the
digital software management of music.
• Music, a fundamental aesthetic need, found
a method that has made most other forms of
sound reproduction virtually obsolete. Cassette
Part 2
tapes cannot be found any longer and CD sales
have plummeted every year, threatening the
existence of record companies, who rejected
the new mechanisms for transferring music.
Notes
Course review
______________________________________________ Innovation is crucial to a company’s continued
growth. Although incremental innovations
______________________________________________ (small changes to your company’s products or
services) will not lead to long-term growth, they
______________________________________________ often come from customer suggestions. Do you
think that your company focuses on incremental
innovations or radical innovations?
______________________________________________
What companies do you think have had great
______________________________________________ product or service innovations in the past year?
______________________________________________
Review
• Innovation is a characteristic of business
success.
• Relying on incremental changes can result
in innovation management breakdown.
• Customers are not a good source for radically
new product ideas.
• Customers are good at recommending
incremental product changes.
• Radical innovation comes when a company
finds a new approach to satisfy a need.
Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
NPD Process
• To pursue a strategy to develop radical,
Part 1
breakthrough innovations, you must follow a
structured process. If you build a product for
every new idea that an employee has, you will
be overrun with 1,000 mediocre new products
and services.
• A market-oriented company pays attention to
the customer, the competition, and the market
at all times, including during the innovation
Part 2
process.
Notes
Course review
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
NPD Process (Continued)

• Several common lessons that have been learned
by many companies over the years can help
shape this process.
– First, it is fundamental to design new
products and services based on basic
customer needs rather than product features.
– Second, an effective screening process must
be designed to eliminate innovations that
are destined to fail early on, before massive
amounts of money are spent in development.
A company cannot pursue every manager’s
pet project, but it cannot completely squash
all new ideas either. The trick is finding the
balance.
Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
NPD Process (Continued)
– Finally, merely emphasizing a new product
Part 1
just because it is new is not effective.
Change strictly for the sake of change is not
meaningful to most customers. In fact, most
people are perfectly happy with the current
offerings and must be convinced that the
improvements of the new product are worth
the costs associated with change. Marketers
sometimes make the mistake of promoting
Part 2
their new product without telling their
customers why it is important.
Notes
__________________________________________________________________________________________________
Course review
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
NPD Models
• There are a few well-known New Product
Development (NPD) models (e.g., “Stage-
Gate”); none is perfect for every company.
Companies typically tailor the NPD process
for best results depending on a wide range of
factors: the industry, the customers it serves,
its internal infrastructure, and the specific
product being developed, to list just
a few.
• While there are many recommended
approaches for developing new products,
companies typically mold its processes to the
customers it serves and its company culture
and infrastructure. In this context, we will
review the NPD process at a generic level to
serve as a starting point to show you how a
Notes basic NPD process could work.
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
The Stages of a Generic NPD Process
• Ideation is the first stage. The key output of
Part 1
this stage is to screen and prioritize new ideas.
• The second stage is concept. The key outputs
from this stage are to create an initial
business case and the technical specifications
of the product and project management
plan, including definition of roles and
responsibilities.
• The third stage is design and development.
Part 2
The key outputs are rigorous testing of
product concept against physical, technical,
market, and financial criteria and monitoring
process compliance with business and
Notes management plans.
__________________________________________________________________________________________________
Course review
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
The Stages of a Generic NPD Process (Continued)

• The fourth stage is validation. In this stage
the validated, preproduction product is almost
ready for the marketplace. Test marketing is
often conducted to make small changes to suit
the needs of the marketplace.
• The fifth stage is production and distribution.
In this stage the product is ready for mass
distribution.
• The sixth and last stage is launch. In this stage
the product is ready for full-scale production
and sales.
Notes There are many new product development
processes. What is the general process your
______________________________________________ company uses to launch a new product or
service?
______________________________________________ How does your company’s process differ from
the generic one discussed in this course?
______________________________________________
______________________________________________
______________________________________________
______________________________________________
Review
Part 1
Stage Key Output Key Players
Ideation New product ideas screened and prioritized R&D

Marketing
Management
Part 2
Concept Initial business case, technical specifications of product R&D
and project management plan (including definition of Marketing
roles and responsibilities) Management
Finance
Legal
Design/ Rigorous testing of product concept against physical, R&D
Course review

Development technical, market, and financial criteria; monitoring of Marketing
process compliance with business and management Management
plans Production
Validation Validated, preproduction product almost ready for Marketing

the marketplace Management
Finance
Legal
Production
Production/ Product ready for mass distribution Production

Distribution Distribution
Management
Launch Full-scale production and sales Marketing

Management
Sales
Review (Continued)
• Innovation is the introduction of a new
Part 1
product, idea, or service into the marketplace
that customers perceive as markedly different
from current product offerings in the category.
• A common challenge of the innovation
process is overly focusing on small,
incremental innovations.
• A structured NPD process can help avoid
some of the common mistakes marketers
Part 2
make in this process.
Notes
Course review
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Review (Continued)
• Innovation is the introduction of a new
product, idea, or service into the market that
customers perceive as markedly different from
current product offerings.
• A common challenge of innovation is overly
focusing on incremental changes.
• A structured NPD process can help avoid
some common problems.
• NPD processes have the following generic
stages:
– Ideation
– Concept
Notes
– Design and development
– Validation
______________________________________________
– Product and distribution
______________________________________________ – Launch
______________________________________________
______________________________________________
______________________________________________
______________________________________________
Incorporating Customer Voice
Use this checklist to ensure you fully understand customer needs for your new product or service.
Part 1
Focus Group Data: Incorporating Customer Voice
Key Questions Customer or Market
1 2 3 4
E.g., New Product
Part 2
What are your
primary needs?
Course review
How well do you
perceive that this
product meets
these needs?
What do you
consider as the
primary benefits
of this product?
What aspect of this

product could use
improvement?
What solutions do
you recommend to
enhance the quality,
effectiveness, and
relevance of this
product?
Incorporating Customer Voice
• One of the common mistakes that companies
Part 1
make when introducing a new product is to not
fully understand its customers’ needs when it
creates and launches it.
• The tool from this module may help you catch
some of these mistakes earlier in the process.
Part 2
Notes
__________________________________________________________________________________________________
Course review
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Incorporating Customer Voice (Continued)

• Marketing may use this tool during the
preliminary stages of the product launch
process to ensure the product appropriately
aligns with customer needs.
• You can use this tool in focus groups with key
customers (or a broader sampling from the
target market) to determine the likelihood of
success or failure of the product launch in its
current state.
• Also, you could use these focus groups as an
opportunity to uncover ideas and solutions
to maximize the effectiveness of the product
design and launch strategy.
Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Part 2—Module 2: Distribution and Communication
Part 1
Introduction
• In this module, we will be discussing on
distribution and communication channels.
• Distribution channels are the paths that
products take from the company that creates
them to the end customer who will ultimately
Part 2
use them. Communications channels are the
methods you use to send marketing messages
to your customers.
Course review
Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
What Will You Learn

• We are going to review the different types of
distribution channels that you can use to get
your product into the hands of your customer.
• Then we are going to examine how your
marketing communications can be used to
communicate your message effectively to your
customers.
• By the end of this module you should be able to:
– Distinguish between the two main types
of distribution channels, and
– Understand the key components of
successfully crafted message.
Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Types of Distribution Channels
• We begin with a look at distribution channels.
Part 1
There are two types of channel strategies:
direct and indirect.
• Direct channel strategies includes channels
such as a direct sales force, telemarketing,
online marketing, or catalogues. For direct
sales there is no intermediary between the
company that makes the product and the
customer that buys the product.
Part 2
• Direct sales allows an organization to have
more direct control over its interactions
with the customer (which affects the service),
and it may maintain higher financial margins
Notes because it does not have to pay an intermediary
to sell its products.
Course review
______________________________________________ • However it could also ultimately hurt its
overall revenue because it might not be able
______________________________________________ to reach as many target customers by itself as
it can through a channel partner.
______________________________________________
______________________________________________
______________________________________________
______________________________________________
Types of Distribution Channels (Continued)

• Indirect channel strategies include the use
of third parties like retailers, commercial
distributors, and wholesalers.
• Many companies that use an indirect sales
force will call the people they work with,
“channel partners.” Using a channel partner
might decrease your margins because you have
to pay an intermediary, but it may ultimately
increase revenues by increasing the reach to
target customers. It may also affect the service
quality because an organization typically does
not have as much control over the interactions
between its end customers and the channel
Notes partners.
• There are pros and cons for each of these
______________________________________________ distribution channels. To optimize all of the
pros and cons of the two types of strategies, an
______________________________________________ organization may use a combination of direct
and indirect channel strategies.
______________________________________________
______________________________________________
______________________________________________
______________________________________________
Working with Channel Partners
• A company considers its priorities on certain
Part 1
strategies when selecting its combination of
channels, like the cost of acquiring and serving
customers, the help it needs securing complex
solutions deals, and how it would like to
penetrate new segments and geographies.
• For a majority of marketers, channel partners
may be a vital cog in these growth strategies.
However, your channel partners’ top priorities
Part 2
could be very different than yours.
Notes
Course review
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Working with Channel Partners (Continued)

• Unless you own or maintain exclusivity
with your channels, there will likely be a
fundamental tension between your priorities
and those of your partners.
• Marketers have tried for years to design
incentive structures to influence desired
behaviors in their channel partners, but these
arrangements rarely deliver satisfactory end
results. In fact, the simplest and most common
of these incentives—volume-based discounts
granted to encourage supplier preference—are
easy to manipulate and may even encourage
undesirable behaviors (like lower-margin sales
Notes to reach volume targets).
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
How Can You Encourage Behaviors?
• Some successful organizations structure
Part 1
channel relationships that strike a balance,
focusing incentives on driving value-
creating behaviors such as sharing customer
information and investing in training and
development programs.
• This more strategic approach to influencing
channel partners not only results in short-term
performance gains but also lays the foundation
Part 2
for more productive long-term relationships.
Notes A company considers its priorities on certain
strategies when selecting its combination of
Course review
channels, like the cost of acquiring and serving
______________________________________________ customers, the help it needs securing complex
solutions deals, and how it would like to penetrate
______________________________________________ new segments and geographies. Based on your
company’s priorities for its products or services,
______________________________________________ which kinds of distribution channels work best,
indirect or direct?
______________________________________________
If your company uses channel partners, how
______________________________________________ do you think your company’s top priorities
differ from theirs?
______________________________________________
Review
• The two types of distribution channel
strategies are:
– Direct, or
– Indirect.
• Channel partners typically reduce margins
but can increase reach to target market and
therefore revenue.
• Channel partners may have different priorities
than your company, which may lead to
conflicting activities.
• Volume-based discounts are a common
incentive but don’t necessarily provide
good results.
• Some innovative incentives are based on value-
Notes driven behaviors like sharing customer data.
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Channel Selection Strategies
• Regardless of what type of a distribution
Part 1
channel model you decide to use, you will have
to formulate your communications strategy.
• Remember, distribution channels and
communications channels are different. The
distribution channel is the method that you
physically get your product to your customer.
The communications channel is the method
that you communicate your message to your
Part 2
customer.
• Your communications channel selection
strategy is based on creating a message which
provides a maximum value for the customer,
and benefits the organization using the
Notes channel.
Course review
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Channel Selection Strategies (Continued)

• As communication channels become
increasingly cluttered, creating a message that
speaks to your target segment becomes an even
more critical piece of any communications
strategy. You need to create messages that
resonate with your target base. Too many
marketers create their messages without a
narrowly defined target in mind.
• Creating your messaging strategy is just like
any other facet of the marketing process. You
as a marketer are trying to convince your
customer to purchase your product or service
because of the value that it will provide to
them.
• Your communications strategy is the way that
you articulate the benefits that your customers
will receive from your product or service,
Notes which will deliver this value.
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
• At a higher level, your communications
Part 1
strategies will bring benefits back to your
company by increasing sales. At a more tactical
level, an appropriate communications strategy
will benefit your company by decreasing costs
you spend on communications or by increasing
the number of customers reached by using the
most applicable, efficient channels.
• For example, you are probably not going to
Part 2
get a great return on the dollars you invest on
an online marketing campaign if your target
customers are all 90 years old. Just like you
will not receive a good return on your e-mail
Notes marketing campaign if the businesses you are
targeting blocks all of your e-mails with their
Course review
spam blockers. You need to select the most
______________________________________________
appropriate channels to reach your target
______________________________________________ market.
• Creating a good message is dependent on
______________________________________________ selecting channels that are appropriate for
______________________________________________ your target customers. In addition, you need
to create a message that will resonate with
______________________________________________ your customers.
______________________________________________

Here are several rules guide your message
creation process.
1. Your message needs to be based on a customer
insight.
• An insight is a deep understanding of what
your customer believes, and the behavior
that goes along with this belief. To resonate
with your customers, your message has to be
based on an insight and needs a goal in mind
for changing a customer behavior based on
this insight.
Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Example: Lighting Distributor
Situation
Part 1
You have been trying to upsell your customers
a pricier type of lighting system without much
success.
Action
The customer insight that you discover based
on customer interviews is that certain types
of lighting can damage some of the sensitive
Part 2
components that your target customers
manufacture. This insight explains your customers’
resistance to purchasing the new lighting system.
Result
You change your sales collateral to emphasize the
fact that your new lighting is actually safer on the
Course review
components than the old lighting systems were.
You realize an immediate uptick in your sales as
Notes a result.
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________

2. The second rule to follow is that your message
needs to be consistent with your positioning.
• This means that it should not conflict with
any of your core brand principles and it
should emphasize the advantage of your
product over your competition. It should
communicate how your customers will
receive value out of buying your product.
Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
3. Lastly, your messaging should be clear and
Part 1
in a language that your customers understand.
• You shouldn’t be using jargon to get your
message across unless it is jargon that your
customers use.
Part 2
Notes
Course review
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Communications Strategies
• Just creating a message that resonates
with your customers is not enough. You
need to set an end goal for your marketing
communications.
• The goal of marketing communications is
typically to create customer demand to help
reach an organization’s desired level of sales
in the market.
• Marketing communications can achieve this
demand level by building awareness, then
moving the customer from just knowing about
the product, to acting and purchasing it.
Notes
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Customer Purchase Funnel
• Creating awareness among everyone is not
Part 1
the goal of the communications process; it
is creating awareness among your target
customers.
• This process that a customer goes through
from when he or she first becomes aware about
the product to when he or she actually makes
the product purchase is called the customer
purchase funnel.
Part 2
• An organization can use this consideration
process to estimate the demand for its product.
Notes
Course review
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Customer Purchase Funnel (Continued)

• Market share is the product of the percentage
of customers who fall into each of the
categories along the purchase funnel. The
categories of the purchase funnel are:
– Aware of product,
– Consider purchasing product,
– Positive opinion of product,
– Intend to purchase product, and
– Purchase product.
• Reaching your target customers to raise
awareness and move them down the purchase
funnel is done through using channels that will
most effectively reach those target customers.
The different combination of media that an
organization uses is based on the information
Notes that it has have about its target segment.
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Push and Pull Communications
• There are two basic types of communications
Part 1
strategy that organizations use to increase
the awareness and purchase decisions of their
customers: push and pull communications.
1. Pull communications are targeted
at customers to create awareness,
consideration, and positive opinions.
These communications persuade customer
to request specific products or brands.
Part 2
2. Push communications are designated to
persuade channel partners like a wholesaler
or a retailer to stock and promote certain
products or brands.
Notes
Course review
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Review
• There are two types of distribution channels,
direct and indirect.
• You can use either or a combination of the
two to get your product into the hands of your
customers.
• To create a marketing message that really
connects with your customer, you should
follow these three rules:
1. Base your message on a customer insight
and make sure that you know which
customer behavior you are trying to
change.
2. Keep your message consistent with your
positioning so you do not confuse your
customers.
3. Keep the message clear and use your
Notes customers’ language.
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Review (Continued)
• Distribution channel delivers physical product.
Part 1
• Communication channel delivers message.
• Communication messages should be created
to resonate with target customers.
• Good communications are:
– Based on a customer insight,
– Consistent with your positioning, and
Part 2
– Clear and understandable.
• Purchase funnel categories are:
– Aware,
– Consider purchasing,
– Positive opinion,
Course review
– Intend to purchase, and
Notes – Purchase.
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
__________________________________________________________________________________________________
Retention Quiz
Please circle one answer per question.
1. Which type of distribution strategy allows your company to have more control over the customer
experience?
a. Direct
b. Indirect
2. What is a good strategy to get your channel partners to help you achieve your goals?
a. Provide volume discounts
b. Sharing investments on training and development
c. Threatening lawsuits
d. Acquiring your channel partners’ business
3. A customer insight contains what two parts? A customer __________________ and a customer________________ .
a. belief/behavior
b. knowledge/attitude
c. attitude/belief
d. insight/behavior
Note: To receive credit for this quiz and see an explanation of each correct answer,
take this quiz online in slide 20 of this course at www.mes.executiveboard.com.
Action Item Two:
Use the three basic rules outlined in the course to examine the communication message of one of your
Part 1
company’s products or services. The end goal of your communication message is usually to increase the
demand for your product or service. As part of this course we outlined three basic rules that guide the
effective creation of your communication messages: your message needs to be based on a customer
insight, your message needs to be consistent with your positioning, and your messaging should be clear
and in a language that our customers understand. Use the sheet below to evaluate one of your messages
using these three rules.
Part 2
Name of Product or Service:
Message (Take this from the content of an ad or a promotion: (e.g.,Coke’s message is “open
Course review
happiness” on its coke.com Web site)
1. Is this message based on a particular customer insight (e.g., these light bulbs are much safer
for your engineering components)?
Yes
No
2. Is this message consistent with the positioning for this product or service (e.g., positioning an
automobile’s exterior customization features when the target customer wants low gas mileage)?
Yes
No
3. Is this message clear and in a language your customers understand (e.g., a user manual for a
nonprofessional photo management software that contains highly technical jargon)?
Yes
No
3. Based on this examination, what would you do to improve this message?

_________________________________________________________________________________
_________________________________________________________________________________
_________________________________________________________________________________
Glossary of Terms
Part 1
Brand and Product Line Strategies—Use an umbrella brand to create brand extensions/flanker brands
and build vertical and horizontal product lines that maximize brand equity.
Channels of Distribution—Contains all the organizations involved from the obtaining of the raw
materials to manufacturers to wholesalers to retailers to service organizations
Part 2
Customer Value—Perceived value (benefits–cost) of your company’s product or service to the customer
Direct Sales—Includes channels like a direct sales force, telemarketing, online marketing, or catalogues;
for direct sales there is no intermediary between the company that makes the product and the customer
who buys the product.
Course review
Early Adopter—Customers who like to be the first one on the block to own a new product
Four Ps—The marketing mix that makes up a product’s positioning including product, price, promotion,
and placement
Indirect Sales—Include the use of third parties like retailers, commercial distributors, and wholesalers;
many companies that use an indirect sales force will call the people they work with “channel partners”.
Market Development—Begin with a core product in a core target market and then expand to adjacent
or new market segments.
Market Growth Rate—The rate at which a market is expanding in size (the rate of growth of demand
for a particular product or service)
Market Penetration—Sell more of a product to the same customers by expanding the use of the product.
Market Share—The percentage of a total market demand owned by one business
Marketing Metrics and Profitability—Measures of key performance indicators such as customer metrics,
competitiveness and market metrics, and marketing profitability.
Marketing Mix and Product Line Strategies—Includes Marketing mix strategies, multi-segment
strategies, brand and product line strategies
Marketing Mix Strategies—Building a strategy using a combination of the four Ps (product, price,
promotion, and place) to achieve marketing objectives such as satisfying customers or increasing revenue
in a target market
Multi-Segment Strategies—Creating different marketing plans with distinct value propositions for
different segments within the same market
Glossary of Terms (Continued)
Part 1
Price Positioning Strategies—Determining the price to sell products or services and how to differentiate
them from other offerings
Pricing Strategies—Determining the amount to charge for the product or service; understanding how
price is discounted, from the end-user price to the manufacturer’s pocket price, helps gain critical insights
into revenue and margin opportunities.
Part 2
Product Development—Creating new products which serve the same market
Product Diversification—Expand into new markets by offering modified products that appeal to a new
set of customers.
Course review
Product Lifecycle Positioning—The various pricing strategies that can be used at different stages of the
product lifecycle to affect positioning, volume, sales, and profits
Product Positioning—Creating a product or service with specific brand characteristics that clearly
differentiates it from competitors; positioning attributes are value drivers that shape the product’s
value proposition.
Promotion Strategy—The communication techniques you use to communicate the value of the product
to an intended target market so that desired sales goals can be achieved
Promotion and Place Strategies—Strategies geared toward where to sell (place) and how to communicate
messages (promotion)
Pull Communications—Targeted at customers to create awareness, consideration, and positive opinions;

these types of communications are designed to persuade customer to request specific products or brands.
Purchase Funnel—Process that a customer goes through from when he or she first becomes aware about
the product to when he or she actually makes the product purchase
Push Communications—Designated to persuade channel partners like a wholesaler or a retailer to stock

and promote certain products or brands
Umbrella Brand—The personification of the brand name as it applies to the company
Promotion Mix—A subset of the marketing mix that contains advertising, personal selling, public relations,
sales promotion and direct marketing
Congratulations! You have finished this training course. Now head back to the MES Web site listed
below and look for more courses to grow your marketing knowledge:
www.mes.executiveboard.com/Members/ResearchAndTools/AllTraining.aspx.
CEB marketing Excellence Survey®

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CEB Marketing Excellence Survey®

Overview of Marketing Mix

To review this course, please visit: www.mes.executiveboard.com/Members/ResearchAndTools/AllTraining.aspx.

Module 1: The Four Ps Module 1: The Innovation Process

•• Real-World Example: FedEx.............................p. 7 •• Role of the Customer....................................... p. 34

•• Successfully Launching •• Examples............................................................... p. 34

Marketing Mix and Product Strategy

Marketing Mix and Product Strategy (Continued)

Real-World Example: Sony Electronics

Specific Product Strategies (Continued)

Specific Product Strategies (Continued)

Real-World Example: FedEx

Real-World Example: FedEx (Continued)

Which strategies seem to be working better

Second of Four Ps: Price (Continued)

The Product Lifecycle

The Stages of the Product Lifecycle (Continued)

Third of Four Ps: Promotion (Continued)

Creating Strong Messages (Continued)

Promotion Mix (Continued)

Notes Reflection Questions

Fourth of the Four Ps: Place

Example: Fruit Juice Bottler

Selecting the Right Mix of Channels

Example: High-Tech Company (Continued)

Factors of Distribution Channels

Factors of Distribution Channels (Continued)

Factors of Distribution Channels (Continued)

______________________________________________ Which of these channels affect your customer’s

Action Item One:

3. How well is this positioning satisfying the following criteria?

Fits Well with Our Company’s Overall Strategy

Differentiates Us from Our Competitors

Describes the Overall Product or Service Value

Price at introductions _______________________________________________________________

Price at maturity ___________________________________________________________________

Target accounts ____________________________________________________________________

1. Describe the basic communication message.

2. How heavily are you relying on the following promotional activities:

Volume sales incentives

Product or service training

Other sales resources:

1. Analyze your top-three, most-used distribution channels:

What Will You Learn

Overcoming Obstacles of Incremental Innovation

NPD Process (Continued)

The Stages of a Generic NPD Process (Continued)

Ideation New product ideas screened and prioritized  R&D

Design/ Rigorous testing of product concept against physical, R&D

Validation Validated, pre­production product almost ready for  Marketing

Production/ Product ready for mass distribution  Production

Launch Full-scale production and sales  Marketing

Key Questions Customer or Market

What aspect of this

Incorporating Customer Voice (Continued)

What Will You Learn

Types of Distribution Channels (Continued)

Working with Channel Partners (Continued)

Channel Selection Strategies (Continued)

Channel Selection Strategies (Continued)

Channel Selection Strategies (Continued)

Customer Purchase Funnel (Continued)

Ideation New product ideas screened and prioritized R&D

Validation Validated, preproduction product almost ready for Marketing

Production/ Product ready for mass distribution Production

Launch Full-scale production and sales Marketing