Chapter 10

Marketing and Product

Development: Creating and
Positioning Goods and Services
McGraw-Hill/Irwin
Introduction to Business

2007 The McGraw-Hill Companies, Inc., All Rights

Reserved.

What is Marketing?
Marketing
- an organizational function and a set of
processes for creating, communicating, and
delivering value to customers and for
managing customer relationships in ways
that benefit the organization and its
stakeholders

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Marketing, Product Development,

and Sales
Customer needs
- consumer needs that can be satisfied by
the qualities and features of a good or
service

Product development
- the set of technical, scientific, and
engineering processes involved in creating
new or improved products to better satisfy
customer needs
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Marketing, Product Development,

and Sales
Sales
- the development and use of techniques to
inform customers about the value of a
companys products
in order to persuade
them to buy them

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Marketing, Product Development,

and Sales
Customer relationship management
- the process of tracking the demand and
satisfaction of customers in an effort to
develop products they will want to buy on
an ongoing basis

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How Marketing, Product Development, and Sales

Cooperate to Get Products to Customers

Figure 10.1
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Marketing and the Business Vision,

or Mission
Business vision (business mission)
- a brief statement of a companys business
model that tells stakeholders why the firm is
in business, how it intends to satisfy
customer needs, and why it will satisfy their
needs better than its competitors

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The Product Life Cycle

Product life cycle
- the typical sequence of changes in demand
for a product that occur over time

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A Product Life Cycle

Figure 10.2
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Marketing Research
Marketing research
- the systematic search for information that
uncovers met and unmet customer needs,
the different needs of different customer
groups, and whether or not a products
marketing mix appeals to customers

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Identifying Customer Needs

through Marketing Research

Figure 10.3

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Use Focus Groups

Focus group
- a group of people brought together to share
their thoughts and feelings about a
particular product
and why it may or
may not meet their
needs

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Adopt a Customer-Oriented
Approach
Focus on why existing products failed to
meet customer needs as well as how
future products should be designed

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Identifying Customer Groups and

Segments
Customer groups
- groups of people who have a similar need
for a particular product because the product
satisfies several different kinds of needs

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How Customer Groups and Market

Segments Are Identified
Primary product need
Price range
Other differentiating characteristics

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Identifying Customer Groups

Figure 10.4
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Choosing Markets to Serve

Mass marketing
- selling of a mass-produced product to all
customers

Multiple-segment marketing
- different models of a product are made and
sold to different customer groups

Focused marketing
- developing products for customers in one
or two targeted market segments
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Three Approaches to Market

Segmentation

Figure 10.6
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Dells Main Customer Groups

Figure 10.7
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Differentiating Products via the

Marketing Mix
Product differentiation
- the process of setting a product apart from
its competitors by designing and marketing
it to better satisfy customers needs

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Differentiating Products via the

Marketing Mix
Marketing mix
- the combination of a products qualities and
features, its price, the way it is promoted
and sold, and the places at which it is sold

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Components of the Marketing Mix

Figure 10.8
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Product Branding and the

Marketing Message
Product branding
- using a unique name, design, symbol, or
other element to differentiate a product
from its competitors

Brand name
- the specific name, sign, or symbol a
company uses to distinguish and legally
protect the identity of its products
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Product Branding and the

Marketing Message
Brand loyalty
- the tendency of customers to consistently
purchase a particular product over time
because they believe it can best satisfy
their needs

Product positioning
- the process of customizing or tailoring a
product to a specific market segment
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Products
Creating real product differences
Creating perceived product differences
Packaging

What products are available at the

Homestar-runner store
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Price
Target price
- the price a typical customer will be willing to
pay for a product with a particular set of
qualities and features

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Promotion
Advertising
Sales promotions
Public relations
Personal selling

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Promotion
Promotion
- the way in which a company advertises,
announces, publicizes, and pushes its
products

Promotional mix
- the combination of advertising, sales
promotions, public relations, and personal
selling used to reach and persuade
customers to buy a product
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Promotion
Advertising
- the paid, nonpersonal promotion of a
companys goods and services using mass
media to influence consumers

Sales promotion
- nonpersonal, persuasive efforts designed
to boost a companys sales immediately

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Promotion
Public relations
- the practice of conveying messages to the
public through the media to influence
peoples opinions about the company and
its products

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Promotion
Personal selling
- direct, face-to-face communication by
salespeople with existing and potential
customers to promote a companys
products

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Place
Place
- the distribution and sales channels used to
get both a product and its marketing
message to the customer

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Different Types of Marketing

Channels

Figure 10.9

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