INTRODUCTION TO MARKETING MANAGEMENT Review for Quiz 3

INTRODUCTION TO MARKETING MANAGEMENT Review for Quiz 3 Chapters: 12, 13 14, 15, and 17 Dr. Franck VIGNERON CSUN – College of Business & Economics 1

Chapter 13 Distribution Channels and Logistics Management 2

What is a Distribution Channel? • A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user. 3

Distribution Channel Functions Members of the marketing channel perform many key functions. They are: Risk Taking Financing Information Promotion Physical Distribution Negotiation Contact Matching 4

Number of Channel Levels Channel Level = Each Layer of Marketing Intermediaries that Perform Some Work in Bringing the Product and its Ownership Closer to the Final Buyer. Channel 1 Direct Channel M C Channel 2 Indirect Channel R C R M C R C 5 Channel 3 M W Channel 4 M W J

Channel Behavior & Conflict • For the channel to perform well, each channel member’s role must be specified and conflict must be managed. • When this doesn’t happen, conflict occurs: – Horizontal Conflict occurs among firms at the same level of the channel, i. e retailer to retailer. – Vertical Conflict occurs between different levels of the same channel, i. e. wholesaler to retailer. 6

Conventional Marketing Channel Vs. a Vertical Marketing System Manufacturer Wholesaler Retailer Consumer Vertical Marketing System Manufacturer Wholesaler Conventional Marketing Channel Retailer Consumer 7

Types of Vertical Marketing Systems (VMS) Contractual VMS Corporate VMS Wholesaler Sponsored Voluntary Chain 40% of Retail Sales Retailer Cooperatives Administered VMS Franchise Organizations Manufacturer. Sponsored Retailer Franchise System Manufacturer. Sponsored Wholesaler Franchise System Ford + dealers Coca-Cola Service-Firm. Sponsored Franchise System Hertz/Avis, Mc. Do/Bking, H/R Inn 8

Innovations in Marketing Systems Horizontal Marketing System Two or More Companies at One Channel Level Join Together to Follow a New Marketing Opportunity. Hybrid Marketing System Example: A Single Firm Sets Up Two or More Marketing Channels to Reach One or More Customer Segments. Banks in Grocery Stores Example: Competitors helping each other E. g. , Outside US Néstlé selling General Mills cereals Retailers, Catalogs, and Sales Force 9

Channel Design Decisions 1. Analyzing Consumer Service Needs 2. Setting Channel Objectives & Constraints 3. Identifying Major Alternatives Intensive Distribution Fast Moving C. G. Selective Distribution Exclusive Distribution Maytag Rolls-Royce 4. Evaluating the Major Alternatives Review Economic, Control, and Adaptive Criteria 5. Designing International Distribution Channels 10

Push and Pull Strategies Push Strategy Producer Wholesalers Retailers Customers Pull Strategy Producer Wholesalers Retailers Customers Push/Pull Strategies Producer Wholesalers Advertising and Promotion 11 Distribution Strategies

Major Logistics Functions Order Processing Costs Received Processed Shipped Minimize Costs of Attaining Logistics Objectives Logistics Transportation Rail, Truck, Water, Pipeline, Air, Intermodal Functions Warehousing Storage Distribution Automated Inventory When to order How much to order Just-in-time 12

Marketing Logistics • Involves planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at profit. • INBOUND + OUTBOUND = Market Logistics • Supply Chain + value chain management 13

Transportation Modes Rail Nation’s largest carrier, cost-effective for shipping bulk products, piggyback Truck Flexible in routing & time schedules, efficient for short-hauls of high value goods Water Low cost for shipping bulky, low-value, non perishable goods, slowest form Pipeline Ship petroleum, natural gas, and chemicals from sources to markets Air High cost, ideal when speed is needed or distance markets have to be reached 14

Choosing Transportation Modes Checklist for Choosing Transportation Modes 1. Speed (door-to-door time) 2. Dependability (meet schedules) 3. Availability (area served) 4. Costs (per ton-distance) 5. Flexibility(ability to handle various products) 15

INTRODUCTION TO MARKETING MANAGEMENT Chapter 14 Distribution Strategies Dr. Franck VIGNERON CSUN – School of Business & Economics 16

What is Retailing? Includes all the activities Involved in Selling Goods or Services Directly to Final Consumers for Their Personal, Nonbusiness Use. Retailers - those firms engaged primarily in wholesaling activity. 17

Product Assortment and Services Decisions Product Assortment • Width and Depth of Assortment • Quality of Products • Product Differentiation Strategies Services Mix Key Tool of Nonprice Competition for Setting One Store Apart From Another Store’s Atmosphere • Physical Layout • “Feel” That Suits the Target Market and Moves Customers to Buy 18

Classification of Retailing Retail Organizations Independent, Corporate, or Contractual Ownership Organization Amount of Service Self-Service, Limited-Service and Full-Service Retailer Product Line Depth/Length and Breadth of the Product Assortment Relative Prices Pricing Structure that is Used by the Retailer 19

Breadth vs. Depth of Merchandise Lines Breadth: Number of different product lines Shoes Depth: Number of items within each product line Nike running shoes Florsheim dress shoes Top Sider boat shoes Adidas tennis shoes Appliances Amana refrigerator Sony TV sets JVC videocassette recorders General Electric dishwashers Sharp microwave ovens CDs Classical Rock Jazz Country Western Men’s Clothing Suits Ties Jackets Overcoats Socks Shirts 20

Classification of Retailing: Product Line E. g. , + What is an Hypermarket? Hypermarket Store Specialty Stores Department Stores Supermarkets Convenience Stores Superstores Discount Stores Off-Price Retailers Warehouse Clubs Description Narrow Product Line, Deep Assortment i. e. The Limited or Athlete’s Foot Wide Variety of Product Lines i. e. Clothing, Home Furnishings, Saks Fifth Avenue Wide Variety of Food, Laundry, & Household Products i. e. Kroger Limited Line of High-Turnover Convenience Goods i. e. 7 -Eleven Large Assortment of Routinely Purchased Food & Nonfood Products i. e. Toys R Us Standard Merchandise at Lower Prices i. e. Wal-Mart Changing Collection of Higher-Quality Goods at a Reduced Price i. e. T. J. Maxx Limited Selection of Brand-Name Grocery Items, Appliances, Etc. i. e. Sam’s Club 21

What is Wholesaling? All the activities involved in selling goods and services to those buying for resale or business use. • Wholesaler - those firms engaged primarily in wholesaling activity. • Wholesalers buy mostly from producers and sell mostly to: –Retailers, –Industrial consumers, and –Other wholesalers. 22

Why are Wholesalers Used? Wholesalers are Often Better at Performing One or More of the Following Channel Functions: Management Services & Advice Market Information Risk Bearing Selling and Promoting Wholesaler Functions Financing Buying and Assortment Building Bulk Breaking Warehousing Transportation 23

Types of Wholesalers Merchant Wholesaler Independently Owned Business that Takes Title to the Merchandise it Handles. Manufacturers’ Sales Branches and Offices Wholesaling by Sellers or Buyers Themselves Rather Than Through Independent Wholesalers. Brokers/ Agents They Don’t Take Title to the Goods, and They Perform Only a Few Functions. 24

Trends in Wholesaling Consolidation within the Industry is R Distinction Between Large Retailers a Wholesalers Will Continue to Increas Wholesalers Are Beginning to Go Glob 25

Chapter 15 Integrated Marketing Communication Strategy 26

nal Mix RP gnisitrevd. A lanosre. P gnille. S Promotion s ecal. P Place )noitubirtsi. D( 27

Setting Advertising Objectives Informative Advertising Inform Consumers or Build Primary Demand i. e CD Players Persuasive Advertising Build Selective Demand i. e Sony CD Players Advertising Objective Specific Communication Task Accomplished with a Specific Target Audience During a Specific Period of Time Comparison Advertising Compares One Brand to Another i. e. Avis vs. Hertz Reminder Advertising Keeps Consumers Thinking About a Product i. e. Coca-Cola 28

Figure 9. 3 Comprehensive Communication Model Sender (Source) Encodes Commercial Verbal vs. Nonverbal Non-Profit 1 -sided vs. 2 -sided Individual Factual vs. Emotional Formal vs. Informal Symbols Pictures Words Images Messag e Selective Exposure Individuals Target Audience Intermediary Audience Unintended Audiences Channel (Medium ) Paid vs. Unpaid Print, Broadcast, Electronic Personal vs. Impersonal Pretests to Ensure Message Will be Received Posttests to Ensure Message Was Received Feedback Receiver (Consumer) Mediated by: Involvement Mood Experience Personal Charac. Decodes Responds Appropriately ? No Miscomprehends ? Yes No 29

Steps in Developing Effective Communication Step 1. Identifying the Target Audience Step 2. Determining the Communication Objectives Buyer Readiness Stages Awareness Knowledge Liking Preference Conviction Purchase 30

Steps in Developing Effective Communication Step 3. Designing a Message Content Rational Appeals Emotional Appeals Moral Appeals Message Structure Draw Conclusions Argument Type Argument Order Message Format Headline, Illustration, Copy, & Color Body Language • AIDA model. 1). Get attention 3). Arouse desire 2). Hold interest 4). Obtain action 31

Appeals Appeal - the creative attempt to motivate consumers toward some form of activity, or to influence attitudes toward a product or service Rational appeal - Emotional appeal - a focus toward the consumer’s practical utility oriented needs a focus on psychological rather than utility needs (all appeals can be positive or negative and should be meaningful, distinctive, and believable to be effective) Humor Fear Sex Comparative + Morale Appeal: Social causes & Human Rights Advertising Strategies Ego Oriented 32

Structure & Format • The marketing communicator needs a strong structure and format for the message. • 1). Three structure issues must be addressed: – a). Whether to draw a conclusion or leave it to the audience. – b). Whether to present a one-sided argument or a two-sided argument. – c). Whether to present the strongest arguments first or last. 33

Structure & Format (continuous) • 2). The message format decides on the headline, illustration, copy, and color. • 3). To attract attention the advertiser can use: – – – a). b). c). d). e). Novelty and contrast. Eye-catching pictures and headlines. Distinctive formats. Message size and position. Color, shape, and movement. 34

Steps in Developing Effective Communication Step 4. Choosing Media Personal Communication Channels Nonpersonal Communication Channels 35

Issues in Credibility • Credibility of Informal Sources – E. g. , Word-of-mouth • Credibility of Formal Sources – Differ. Between for profit vs nfp Org. • Credibility of Spokespersons and Endorsers – Importance of perceived competency and expertise • Message Credibility – Past experience with organization 36

CREDIBILITY OF THE MEDIA CHANNELS SPONSORING VERSUS ADVERTISING + - CREDIBILITY OF THE SOURCES FOR-PROFIT Org. VERSUS NOT FOR PROFIT Org. - + 37

CREDIBILITY OF THE MEDIA CHANNELS IN RELATION WITH THE SOURCES FOR-PROFIT Org. VERSUS NOT FOR PROFIT Org. SPONSORING + ++ VERSUS -- - ADVERTISING 38

Campaign Evaluation Advertising Program Evaluation Communication Effects Sales Effects Is the Ad Communicating Well? Is the Ad Increasing Sales? 39

Setting the Total Promotion Budget One of the Hardest Marketing Decisions Facing a Company is How Much to Spend on Promotion. Affordable Percentage of Sales Based on What the Company Can Afford Based on a Certain Percentage of Current or Forecasted Sales Objective-and-Task Competitive-Parity Based on Determining Objectives & Tasks, Then Estimating Costs Based on the Competitor’s Promotion Budget 40

Dr. Franck Vigneron Chapter 16 Sales Promotion + PR + Advertising 41

What is Sales Promotion ? Sales Promotion is a Mass Communication Technique That Offers Short-Term Incentives to Encourage Purchase or Sales of a Product or Service. n Offers Reasons to Buy Now. n Stimulate earlier or stronger market response. n 42

Major Consumer Sales Promotion Tools/1 Sample Trial amount of a product Coupons Savings when purchasing specified products Cash Refunds Refund of part of the purchase price Packs Reduced prices marked on the label or package Premiums Goods offered free or low cost as an incentive to buy a product Advertising Specialties Articles imprinted with an advertiser’s name given as gifts 43

Major Consumer Sales Promotion Tools/2 Patronage Rewards Cash or other rewards for the use of a certain product Point-of-Purchase Displays and demonstrations that take place at the point of sale Contests Consumers submit an entry to be judged Sweepstakes Consumers submit their names for a drawing Game Presents consumers with something every time they buy 44

Major Trade Sales Promotion Tools/1 Trade-Promotion Objectives Persuade Retailers or Wholesalers to Carry a Brand Give a Brand Shelf Space Promote a Brand in Advertising Push a Brand to Consumers 45

Major Trade Sales Promotion Tools/2 Trade-Promotion Tools Discounts a straight reduction in price on purchases during a stated period of time. Can be called priceoff, off-invoice, or off-list. 46

Major Trade Sales Promotion Tools/3 Trade-Promotion Tools • Promotional money paid by manufacturers to retailers who agree to feature the manufacturer’s products in some way. Forms include: a). An advertising allowance compensates retailers for advertising a product. Allowances b). A display allowance compensates them for using displays. c). Manufacturers may offer free goods, which are extra cases of merchandise, to resellers who buy a certain quantity or who feature a certain flavor or size. d). Manufacturers may give retailers free specialty advertising items that carry the company’s name (such as pens). 47

Major Business Sales Promotion Tools Business-Promotion Objectives Business-Promotion Tools Generate Business Leads Conventions Stimulate Purchases Trade Shows Reward Customers Sales Contests Motivate Salespeople 48

Developing the Sales Promotion Program Decide on the Size of the Incentive Set Conditions for Participation Determine How to Promote and Distribute the Promotion Program Determine the Length of the Program Evaluate the Program 49

What is Public Relations? Public Relations Involves Building Good Relations With the Company’s Various Publics by Obtaining Favorable Publicity, Building Up a Good Corporate Image, and Handling or Heading Off Unfavorable Rumors, Stories, and Events. 50

Major Public Relations Functions Press Relations Product Publicity Public Affairs Public Relations Departments May Perform Any of All of the Following Functions: Lobbying Investor Relations Development 51

Major Public Relations Tools News Web Site Speeches Public Service Activities Special Events Corporate Identity Materials Audiovisual Materials Written Materials 52

Major Public Relations Decisions Setting Public Relations Objectives Choosing the Public Relations Messages and Vehicles Implementing the Public Relations Plan Evaluating Public Relations Results 53

What is Advertising? Advertising is Any Paid Form of Nonpersonal Presentation and Promotion of Ideas, Goods, or Services by an Identified Sponsor. 54

Media Selection Deciding on reach, frequency, and impact. • a). Reach is the percentage of people in the target market exposed to an ad campaign during a given period. • b). Frequency is the number of times the average person in the target market is exposed to an advertising message during a given period. • c). Media impact is the qualitative value of an exposure through a given medium. 55

6 major advertising media • • • Television Radio Magazines Newspaper Internet And Outdoor (e. g. , billboards) 56

Copy and Message Direction Motivational Source Motivation = Association with Product Universe Motivation = Product Performance Perf. Is representation of product Copy of Message Perf. is + than representation product Centered on Product Copy of Message Centered on Results from Product 1. Message on Product 2. Message on Resultats Copy of Message Centered on Psyco -socio of Product 3. Message on Univers 57

Chapter 18 Competitive Strategies: Attracting, Retaining, and Growing Customers 58

Customer Relationship Marketing • Traditional marketing theory and practice have focused on attracting new customers rather than retaining existing ones. 1). The move today, however, is toward relationship marketing-creating, maintaining, and enhancing strong relationships with customers and other stakeholders. 2). Beyond designing strategies to attract new customers and create transactions with them, companies are going all out to retain current customers and build profitable, long-term relationships with them. 3). This new view is that marketing is the science and art of finding, retaining, and growing profitable customers. 59

Satisfaying the Needs Identify The needs to Satisfy STAGES NEEDS Retain Customer By Maintaining Satisfaction Create the Product PRODUCTS Adapt and Deliver the Products to The Right Target 60

Customer Delivered Value 61

Customer Satisfaction Expectations are Based on Customer’s Past Buying Experiences, the Opinions of Friends, & Marketer and Competitor Information and Promises. Product Falls Short of Expectations Product Matches Expectations Customer is Dissatisfied Customer is Satisfied Product Exceeds Expectations Customer is Highly Satisfied or Delighted! 62

Steps in Analyzing Competitors Identifying the company’s competitors = BENCHMARKING Assessing competitor’s objectives, strategies, strengths and weaknesses, and reaction patterns Selecting which competitors to attack or avoid 63

Basic Competitive Strategies Overall Cost Leadership Focus Differentiation Middle of the Road 64

Competitive Strategies: Value Disciplines Companies Gain Leadership Positions by Delivering Superior Value to their Customers Through These Strategies: Operational Excellence Alaska Airlines Customer Intimacy Ikea Product Leadership intel 65

Competitive Marketing Strategies Firms Competing in a Given Target Market Differ in their Objectives and Resources so May Choose the Following Forms: 66