Product Distribution in Marketing Mix

Lesson 1 - Managing Growth 

Driving Growth in Competitive Markets

Importance of Growth

• Essential for firm success and market leadership.

• Requires reformulation of strategies due to evolving economic conditions, competitive pressures, and changing consumer needs.

Assessing Growth Opportunities

Key Considerations

• Focus on specific product-market types.

• Manage product-market growth strategies

over time.

Product–Market Growth Strategies

(Ansoff Matrix)

1. Market Penetration - Increase market share with existing products in current markets. Encourage higher usage, identify new applications.

2. Market Development - Enter new markets with existing products. Target new user groups, use additional channels, expand geographically.

3. Product Development - Create new products for current markets. Innovate features, offer diverse pricing tiers, adopt alternative technologies.

4. Diversification - Explore new products and markets.

• Concentric Strategy: Synergistic products targeting different customer groups.

• Horizontal Strategy: Complementary but unrelated products.

• Conglomerate Strategy: Unrelated products and markets.

Growth Through Mergers and Acquisitions (M&A)

Growth Paths

• Organic Growth - Internal expansion through market

penetration or development.

• M&A - External growth involving acquisitions or mergers.

• Backward Integration - Acquiring suppliers.

• Forward Integration- Acquiring wholesalers/retailers.

• Horizontal Integration - Acquiring competitors.

Case Studies

▪ Successful - Merck's strategic partnerships and acquisitions.

▪ Unsuccessful- Sears-Kmart and Sprint-Nextel due to incompatibility and execution issues.

▪ Divestiture - Release resources by pruning

underperforming businesses (e.g., GE’s asset sales).

Growth Through Innovation and Imitation

Innovative Imitation

• Innovators bear high costs and risks, while imitators profit by improving or replicating products.

Follower Strategies

1. Cloner: Copies leader’s product with slight variations.

Example: Ralston Foods mimics General Mills cereals.

2. Imitator: Differentiates on packaging, pricing, or distribution.

Example: Telepizza in Spain modeled after Domino’s.

3. Adapter: Improves or adapts the leader’s product.

Example: Japanese firms improving foreign products to compete globally.

Counterfeit Concerns

• Illegal duplication harming brands like Apple and Rolex.

• Pharmaceutical counterfeiting poses significant health risks.

Gaining Market Position

Dimensions of Market Position

1. Share of Market- Proportion of total sales

revenue or units sold.

2. Share of Mind- Percentage of customers

who think of the company first in the industry.

3. Share of Heart- Percentage of customers

who prefer buying from the company.

Strategies to Grow Market Position

A.Growing Sales to Current Customers

B.Creating New Markets

C.Expanding Existing Markets

Strategies to Grow Market Position

A. Growing Sales to Current Customers

1.Increasing Amount, Level, or Frequency of Consumption

o Packaging/Redesign: Larger sizes or smaller packages to suit consumption patterns.

o Convenience: Make impulse products more available (e.g., snacks, drinks).

2.Identifying New Usage Occasions

o Associate products with specific events or needs (e.g., Pepto-Bismol with celebrations).

o Tie product replacement to events or holidays (e.g., changing batteries during daylight savings).

3.Identifying New Uses

o Promote alternative applications (e.g., baking soda as a deodorant).

o Introduce complementary product categories to build on existing usage.

B. Creating New Markets

1.Pioneering Advantages

• First-mover advantages include brand recall, customer loyalty, and economies of scale.

• Successful pioneers emphasize innovation, strategic assets, and financial commitment.

2. Risks and Challenges

• Early products may fail due to poor timing, high costs, or competition from later entrants.

3. Alternatives to Market Leadership

• Focus on niche markets by targeting smaller, underserved segments.

• Specialize in specific customer groups or product lines to meet unique needs effectively.

Strategies to Grow Market Position

C. Expanding Existing Markets

1. New Customer Segments

o Identify those who have never used the

product or expand geographically.

2. Increasing Usage by Existing Customers

o Convince users to consume more or find

additional uses for the product.

Defending Market Position

Strategies

1.Continuous Innovation

• Lead in product development, customer service, distribution effectiveness, and cost cutting.

2. Proactive vs. Reactive Marketing

• Responsive Marketing - Meets existing customer needs.

• Anticipative Marketing - Addresses emerging customer needs.

• Creative Marketing - Uncovers new, unexpected needs.

3. Defensive Marketing Strategies

• Position Defense- Occupy a strong position in consumer minds (e.g., Tide for cleaning).

• Flank Defense- Protect weak areas or support counterattacks.

• Preemptive Defense- Launch new products aggressively or announce future developments.

• Counteroffensive Defense- Respond directly to attacks (e.g., Apple vs. Samsung legal actions).

• Repositioning Defense - Expand into new markets or redefine the company’s mission.

• Contraction Defense- Withdraw strategically from weaker markets to focus on stronger areas.

Product Life Cycle

Marketing Strategies

Key Principles

1. Limited Product Life - Products have a finite lifespan.

2. Distinct Stages - Introduction, growth, maturity, and decline.

3. Fluctuating Profits- Profitability varies across stages.

4. Stage-Specific Strategies- Adapt tactics for each stage.

Stages of the Product Life Cycle

1. Introduction Stage

• Build awareness, stimulate demand, encourage trials.

• Strategies- Informative advertising, selective

distribution, high or penetration pricing.

2. Growth Stage

• Maximize market share, strengthen brand loyalty.

• Strategies- Enhanced features, aggressive

advertising, strategic pricing.

3. Maturity Stage

• Maximize profitability, extend product life.

• Strategies- Market and product modifications, cost management.

4. Decline Stage

• Optimize remaining sales, rejuvenate, or discontinue.

• Strategies- Product rejuvenation, harvesting, exit

strategies.

Alternative Product Life

Cycle Patterns

1. Growth–Slump–Maturity: Typical for

small kitchen appliances.

2. Cycle–Recycle: Common in pharmaceuticals.

3. Scalloped Pattern: Successive waves of innovation (e.g., nylon).

Special Categories

1.Fads- Short-lived trends (e.g., Crocs,

Pokémon).

2.Trends- Longer-lasting societal

shifts (e.g., health and wellness).

Market Evolution and Innovation

• Markets evolve through emergence, growth, maturity, and decline.

• Example: Paper towels evolving to address specialized uses.

Explore the concept of product distribution in marketing, which involves making products available for consumers through direct or indirect means with intermediaries. Learn about channels of distribution and the role of intermediaries in moving products from production to consumers.