306 Marketing Final Study Guide

Product form pricing

different versions of the product are priced differently but not according to difference in their costs. -round trip economy vs. business class

Product assortment should

differentiate the retailer while matching target shoppers expectations. Offers merchandise that no other competitor carries: -private or national brands -merchandising events -highly targets product assortment Services mix: should also serve to differentiate the retailer from the comp. with customer support. Store atmosphere: physical layout that makes moving around the store hard or easy.

benchmarking

evaluate or check by comparison with standard

Logistics information management

management of the flow of information including customer order, billing, inventory, leveling and customer data

Price policy

must fit the target market and positioning, product and service assortment, and competition -high markup on lower volume -low markup on higher volume

Segmented pricing

is used when a company sells a product at two or more prices even though the difference is not based on cost -allow for differences in customers, products, and locations

Franchise organization

links several stages in the productions distribution process -Manufacturer- sponsored retailer franchise system ex. ford and its network of independent franchise dealers -Manufacturer- sponsored wholesaler franchise system ex. Coca Cola -Service firm-sponsored retailer franchise system ex. burger king

Place decision Central business districts

located in cities and include department and special stores, banks, movie theaters

Value delivery

netwrok is the firm's suppliers, distributors, and ultimately customers who partner with each other to improve the performance of the entire system.

Horizontal conflict

occurs among firms at the same level of the channel. ex. Ford dealer in Chicago complain that other dealers in city steals sales from them by pricing too low

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Not whether these functions need to be performed, they must be. functions should be assigned to the channel members who can add the most value for the cost

Intermediaries

offer producers greater efficiency in making goods available to target markets. Through their contacts, experience, specialization, and scale of operations, intermediaries usually offer the firm more than it can achieve on its own.

Promotion mix

Public relations advertising sales promotion and personal selling

Retailer marketing decisions

Segmentation targeting, differentiation, and position involves the definition and profile of the market so the other retail marketing decisions can be made

Transportation

affects pricing of products, delivery performance, and condition of the goods when they arrive Truck rail water pipeline air internet

viral marketing

any marketing technique that induces websites or users to pass on a marketing message to other sites or users, creating a potentially exponential growth growth in the message's visibility and effect.

Retailers

are businesses whose sales come primarily from retailing

Third-party logistics

outsourcing of logistics functions to third party logistics providers

value delivery network

part of supply chain of a company and include all direct participants involved in production, distribution, marketing, customer service, etc.

planned obsolescence

policy producing consumer goods that rapidly become obsolete and so require replacing , achieved by frequent changes in design, termination of the supply of spare parts, and the use of nondurable materials.

Optional product pricing

takes into account optional or accessory products along with the main product -Companies decide which items to include in the base price

Product line pricing

takes into account the cost differences between products in the line, customer evaluation of their features , and competitors' prices

Intensive Distribution

they stock their products in as many outlets as possible. These products must be available where and when consumers want them. ex. toothpaste.

Customer segment pricing

different customers pay different prices for same product or services. Ex. Museums and movie theaters

Growth of non-store retailing

Direct Online Mobile

Channel level

Each layer of marketing intermediaries that perform some work in bringing the product and its ownership closer to the final buyers is a channel level

Supply chain

"make and sell" view includes the firms raw materials, productive inputs, and factory capacity should serve as the starting point

Demand chain

"sense and respond" view suggests that planning starts with the needs of the target customer, and the firm responds to these need by organizing a chain of resources and activities with the goal of creating customer value -customer is starting point

Marketing logistics

(physical distribution) involves planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption to meet consumer requirements at a profit

Price Mix Pricing Strategies

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What is the importance of logistics?

- competitive advantage by giving customers better service at lower prices. -cost savings to the company and its customers -product variety requires improved logistics -information technology has created opportunities for distribution efficiency.

Types of retail organizations

- corporate chains -voluntary chains -retailer cooperatives -franchise organizations -merchandising conglomerates

Inventory management

- just in time systems -RFID - knowing exact product location -smart shelves -placing order automatically

Types of retailers Relative rices

-Discount stores- Dollar General -off-price retailers - Marshalls -factory outlets - Gap -warehouse clubs- costco

How Channel Members add value

-From an economic view, intermediaries transform the assortment of products into assortments wanted by consumers -they add value by bridging the major time, place, and possession gaps that separate goods and services from users -They offer there firm more than it can achieve

Channels perform the following functions

-Information: gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange -Promotion: Developing and spreading persuasive communications about an offer -Contact: Finding and communicating with prospective buyers -Matching: Shaping and fitting the offer to the buyer's needs, including activities such a manufacturing, grading, assembling, and packaging -Negotiation: Reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred. -Physical Distribution: Transporting and storing goods -Financing: Acquiring and using funds to cover the costs of the channel work -Risk taking: Assuming the risks carrying out the channel work

Market penetration pricing

-Sets a low initial price in order to penetrate the market quickly and deeply to attract a large number of buyers quickly to gain market share -Price sensitive market -Inverse relationship of production and distribution cost to sales growth -Low prices must keep competition out of market **IKEA in China

Market-skimming pricing

-Strategy with high initial prices to "skim" revenue layers from market -Product quality and image must support the price -Buyers must want the product at the price -Costs of producing the product in small volume should not cancel the advantage of higher prices -Competitors should not be able to enter the market easily -Like apple with iPhones

Retailer marketing decisions Promotion decision

-advertising -personal selling -sales promotion -public relations -direct marketing

Types of retailers are classified by:

-amount of service -self-service -limited service -full service

Channel design decisions

-analyzing consumer needs -setting channel objectives -identifying major channel alternatives -evaluation

Public policy and distribution decisions

-exclusive distribution: is when the seller allows only certain outlets to carry its products -exclusive dealing: is when the seller requires that sellers not handle competitor's products -exclusive territorial agreements: producer or seller limit territory -tying agreements: dealer must take most or all of the line

Direct marketing channel

-has no intermediary levels -company sells directly to consumers

Warehouse decisions

-how many -what types -where to locate -warehouses -distribution centers

Number of channel levels Connected by types of flows:

-physical flow of products -flow of ownership -payment flow -information flow -promotion flow

Product assortment and service decisions include:

-product assortment -services mix store atmosphere

Channel Management decisions

-selecting management decisions -managing channel members -motivating channel members -evaluating channel members

Environmentally sustainable practices

-store design, construction, operations -product assortment -recycling made easier -package and distribution

Major logistics functions

-warehousing -inventory management -transportation -logistics information management

Corporate chains

2 or more outlets that are commonly owned and controlled size allows them to buy in large quantities at lower prices and gain promotion economies sears, cvs

Product line

Speciality stores: narrow product line with deep assortment Department stores: wide variety of product lines Convenience stores: limited line of high-turnover goods Superstores: food and non-food goods Category killers: deep in category with sales staff

sense of mission marketing

a company should define its missing in broad social terms rather than narrow product terms

Horizontal marketing systems

are when two or more companies at one level join together to follow a new marketing opportunity. Companies combine financial, production, or marketing resources to accomplish more than any one company could alone.

Franchise organizations

based on some unique product or service, on a method of doing business, or on the trade name, good will, or patent that the franchisor developed

Buying assortment

building involves the selection of items and building of assortment needed by their customers, saving the customers work

buzz and viral marketing

buzz marketing is a viral marketing that is focused on maximizing the word-of-mouth potential of a particular campaign or product. Growing awareness

Everyday low price

charging constant low prices with few sales

Product bundle pricing

combines several products at a reduced price -fast food

Location based pricing

company charges different prices for different locations, even though the cost of offering each location is the same. -State universities charge more for out of state

Vertical conflict

conflict between different levels of the same channel, is even more common. KFC and its franchises came into conflict over company emphasize grilled chicken and sandwiches over the brands traditional fried chicken.

Conventional distribution systems

consist of one or more independent producers, wholesalers, and retailers. Each seeks to maximize its own profits, and there is little control over the other members and no formal means for assigning roles and resolving conflict.

Marketing channel

consists of firms that have partnered for their common good with each member playing a specialized role

Contractual vertical marketing system

consists of independent firms at different levels of productions and distribution who join together through contracts to obtain more economies or sales impact than each could achieve alone. The most common form is the franchise organization

Indirect marketing channels

containing one or more intermediaries

Environmental marketing

green products presumed to be environmental safe.

Retailer cooperatives

group of independent retailers that band together to set up a joint owned, central wholesale operation and conduct joint merchandising and promotion effort ace hardware

shopping center

group of retail businesses planned, developed, owned, and managed as a unit

Administered vertical marketing

has a few dominant channel members without common ownership. Leadership comes from size and power.

Retailing

includes all activities in selling products or services directly to final consumers for their personal, non-business use

Wholesaling

includes all activities involved in selling goods and services to those buying for resale or business use: -selling and promoting -buying assortment building -bulk breaking -warehousing -transportation -financing -risk bearing -market info -management services and advice

Corporate vertical marketing system

integrates successive stages of production and distribution under single ownership -coordination and conflict management are attained through regular organizational channels

High-low pricing

involves charging higher prices on everyday basis, coupled with frequent sales and other price promotion

Captive-product pricing

involves products that must be used along with the main product -razor blades -cartridges -video games

Retail convergence

involves the merging consumer, producers, prices, and retailers, creating greater competition for retailers and greater difficulty differentiating offerings

Retailing Convergence

involves the merging of consumers, producers, prices, and retailers, creating greater competition for retailers and greater difficulty differentiating offerings

The rise of mega-retailers

involves the rise of mass merchandisers and specialty superstores, the formation of of vertical marketing systems, and a rash of retail mergers and acquisitions -superior information systems -buying power -large selection

Bulk breaking

involves the wholesaler buying in larger quantity and breaking into smaller lots for its customers

warehousing

involves the wholesaler holding inventory, reducing its customers inventory cost and risk

Wholesaling transportation

involves the wholesaler providing quick delivery due to its proximity to the buyer

Selling and promoting

involves the wholesalers sales force helping the manufacture reach many smaller customers at lower cost

Show rooming

practice of visiting a store or stores in order to examine a product before buying it online at a lower price

Supply chain management

process of managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, company, resellers, and final consumers

Exclusive distribution

producer gives only a limited number of dealers the exclusive right to distribute its products in their territories. Luxury brands

Cradle to cradle

products that are waste free. All material inputs and outputs are seen either as technical or biological nutrients. Can be recycled or reused with no loss of quality and biological nutrients.

Vertical Marketing Systems (VMSs)

provide channel leadership and consist of producers, wholesalers, and retailers acting as a unified system and consist of: -corporate marketing systems -contractual marketing systems -administered marketing systems ** One channel systems owns the others ** For channel as a whole to perform well, each channel member's role must be specified and channel conflict must be managed

Growing importance of retail technology

provides better forecasts, inventory control, electronic ordering, transfer of information, canning, online transaction processing, improved merchandise handling systems, and the ability to connect the customers

Integrated logistics management

recognition that providing customer service and trimming distribution cots requires teamwork internally and externally

Discount and allowance pricing

reduces prices to reared customer responses such as paying early or promoting the product Discounts- cash, quantity, trade, seasonal Allowances- trade in, promotional

Channel conflict

refers to the disagreement over goals, roles, and rewards by channel members

By-product pricing

refers to the products with little or no value produced as a result of the main product. Producers will seek little or no profit other than the cost to cover storage and delivery.

Category killer

retailer that specializes in and carries a deep product assortment within a given category and through selection, pricing and market penetration obtain a massive competitive advantage

Marketing ethics

seeks to promote honesty, fairness, and responsibility

Wheel-of-retailing concept

states that many new types of retailing forms begin as low-margins, low-price, low-status operations, and challenge established retailers. As they succeed, they upgrade their facilities and offer more services, increasing their costs and forcing them to increase prices, eventually becoming the retailers they replaced

Shopper marketing

understanding how one's target consumers behave as shoppers, in different channels and formats, and leveraging this intelligence to the benefit of all stakeholders

Selective distribution

use of more than one but fewer than all of the intermediaries who are wiling to carry a company's products. Most television, furniture, and home appliance brands do this.

Time based pricing

varies price by season, the month, the day, and the hour. -movie theaters

Multi channel distribution systems Hybrid marketing channels

when a single firm sets up two or more marketing channels to reach one or more customer segments

Disintermediation

when product or service producers cut out intermediaries and go directly to final buyers, or when radically new types of channel intermediaries displace traditional ones. Airlines selling tickets directly to end customers cutting out travel agencies

Voluntary chains

wholesale-sponsored groups of independent retailers that engage in group buying and common merchandising IGA Western auto