CHAPTER

OBJECTIVES
OBJECTIVES
PRODUCT
DEVELOPMENT AND
DISTRIBUTION

Identify why product dee!op"ent deci#ion# $re i"port$nt to
con#u"er# $# we!! $# %u#ine##e#&

De#cri%e the three !ee!# of product dee!op"ent $nd the
type# of product #e!ection&

Di#cu## how p$c'$(in( $nd %r$ndin( i"proe product #$!e#
$nd cu#to"er #$ti#f$ction&

Di#cu## the i"port$nt ) to %e con#idered when #e!ectin(
ch$nne!# of di#tri%ution&

De#cri%e the ch$r$cteri#tic# of "$*or for"# of tr$n#port$tion
u#ed to di#tri%ute product#&

+ie e,$"p!e# of product-h$nd!in( procedure# th$t i"proe
product di#tri%ution&
22
22

Companies must carefully coordinate
each of the mix elements

Prod. development decisions must be
made carefully

Produce the wrong products in wrong
quantities w/o features and services
customers need results in a great deal of
time and money with no chance to sell the
prod. for profit

Businesses cannot ignore the needs/
wishes of consumers
Product Dee!op"ent

Product design (1st step ! " levels

Basic ! physical prod. in its simplest form#
meets important consumer need

$x% basic computer

$nhanced ! offers different features and
options#

$x% computer with different screen or hard drive
si&e' etc.

$xtended ! additional features that are ()*
part of the physical prod. but are still part of
the product

$x% customer service' guarantees' rebates
Product Dee!op"ent

Product selection ! +nd step

Product line ! group of similar products with
variations in design/quality to meet the needs of
distinct groups

,-.s !! small (*oyota /.0# mid (Bla&er# large
($scalade

1ppliance ! low!' mid!' and high priced based on
construction' quality of materials and available
features

Product assortment ! complete set of all
products

$x% Bath and Body 2or3s !! deep product
assortment # large 4 of choices for each product
MAN. PRODUCTS
/IT0 LIMITED
VARIET.
LIMITED PRODUCT
C0OICES AND
VARIET.
LAR+E
VARIET. IN
1E/ PRODUCT
C0OICES
BROAD
VARIET.
O1 MAN.
PRODUCTS
PRODUCT BREADT0
More Le##
P
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PRODUCT
ASSORTMENT
Product Dee!op"ent

Pac3aging ! "rd step

Branding ! 0th step

(either are related to the actual physical
prod' but are an important influence on
purchase decisions

Pac3aging ! 0 different purposes

Protects

Provide important info

$asier to use ! pop in plastic bottle

Promotional tool ! attractive pac3age
Product Dee!op"ent

Branding ! 0th step

(ame' symbol' word or design that
56s a prod.' service' or co.

Plays a ma7or role in buying decisions
LEVELS O1 CONSUMER
BRAND A/ARENESS

Consumers are unable to identify the brand.

Consumers can identify the brand but it has
limited influence on their purchase decision.

Consumers can identify the brand but will not
purchase it because of the brand.

Consumers easily recogni&e the brand and
will choose it if it is available.

Consumers view the brand as the most
satisfying# will not purchase a different brand.
Purpo#e of Di#tri%ution

$conomic system relies on successful
exchange of prod. and services between
businesses and consumers

(ot easy

8ost problems occur during the exchange
process!!distribution

$conomic discrepancies ! pg 9:9

6ifferences between business;s offerings
and consumer;s requirements

*ype' quantity' location' time
Ch$nne!# of Di#tri%ution

/outes products follow while moving from
the producer to the consumer' including
all related activities and participating
organi&ations

Businesses that participate in activities
that transfer goods/services from the
producer to the user are called ch$nne!
"e"%er#

-sually retailers/wholesalers

*he larger the channel' the more complex
and difficult to control' more cost too
C0ANNELS
O1 DISTRIBUTION

6irect distribution ! producers sell directly
to the ultimate consumer

5ndirect distribution ! when distribution
ta3es place through channel members

8a7or difference is the the types of channel
members involved

)nce channels are chosen' they can be
changed!!reassessed to address changes
in economy.
Ch$nne!# of Di#tri%ution

6irect distribution ! 1<1 direct mar3eting

=ess channels' less cost

>rom producer to consumer

,ales rep to call on users in person

-se of mail!!brochures# catalogs

*elemar3eting

5nternet

$thical 5ssues ! pg 9:?

*hin3 critically ! 1 to 0
Direct Di#tri%ution
Producer
Consumer
Ch$nne!# of Di#tri%ution

5ndirect distribution

Can simplify mar3eting operations by selling
to retailers

/etailers ! direct sales# advertising# storage#
located near consumers# offer more than one
product!!do all shopping in one place

/etailers can range from large dept. stores
to small retailers speciali&ing in limited
variety

(on!store retailers!!vending machines# in!
home parties# shopping channel# catalog
Indirect Di#tri%ution
Producer
Retailer
Producer
Wholesaler
Retailer
Consumer
Consumer
C0ANNELS
O1 DISTRIBUTION

5ntegrated mar3eting channels

Cooperation is difficult among businesses
that operate at different levels of a channel
and have different responsibilities

,ome large business attempt to solve this
through channel integration!!when one
business owns the organi&ations at other
levels of the channel

1 manufacturer may purchase the bus. *hat
provides wholesaling or retailing
DECIDIN+ ON A
C0ANNEL O1 DISTRIBUTION

Perishability of the product !! direct distrib.

@eographic distance between producer
and consumer

(eed for special handling of the product

(umber of users

(umber of types of products
manufactured

>inancial strength and interests of the
producer
TRANSPORTATION
DECISIONS

Common transportation methods

/ailway ! cheap but slow

*ruc3s (truc3 tailers to train!!piggybac3

1irplanes ! fast but expensive

)ther transportation methods

2aterways !! sloooooow

Pipelines

Containeri&ation ! less handling and damage
Product 0$nd!in(

*rac3ing products !! bar codes

Product storage

2arehouse ! simple storage

6istribution center

=arge bldg. designed to accumulate and
redistribute products from many manufacturers
efficiently

/eplacing traditional warehouses

)rder processing

Businesspeople (producers do not have
identical perceptions of a product!!nor
should they

Producers thin3 of their products as what they
have to offer

Consumers thin3 of products as a way to
satisfy their needs
Chpt& 2ue#tion#

6iscussion ! pg 9??

+'"'0'A'1B

1naly&e ! pg 9?A

41 ! need groups of "

Cuestionnaire of 9 products due *hurs.

2ill be used over the brea3