BMGT 350 Exam 2
Frequency marketing program
reward customers who buy frequently or in large amounts Creates customer loyalty
Trade promotions
sales promotion tools used to persuade resellers to carry a brand, give it shelf space, and promote it in advertising
Two dimensions of product quality
Level and consistency
Product line depth
Number of versions offered of each product in the line Ex) Colgate toothpaste product line includes various kinds including sensitive, whitening, etc
Multichannel Distribution System
Occurs when a single firm sets up multiple distribution channels Most companies do so Ex) John Deere sells products through retailers, online, and through premium retailers Expands company sales and market opportunities
Increasing service differentiation
One of three major tasks of service marketers Must differentiate offer to avoid commodity competition and price cuts Can differentiate in terms of the offer (features), delivery (more contact people), images (symbols and branding such as GEICO gecko)
Ways to motivate sales people
Organizational climate Sales quotas Positive incentives
Types of consumer promotions
Samples Coupons Rebates Price packs Premiums Promotional products Point of purchase promotions Contests/sweepstakes Event marketing
Maturity Stage PLC
Slowdown in sales growth of a product Acceptance of product by most potential buyers Profits level off or decrease Competition rises which is cause of leveled out profit Companies attempt to modify market or marketing mix to get back to growth stage
Market offering
Some combination of products, services, information, or experiences offered to a market to satisfy a need or want Includes both tangible goods and services and experience offered to customers
Licensing
Some companies license names or symbols previously created by other manufacturers, names of well known celebrities, or fictional characters to jump start brand Large royalties paid to do so
functional discount (trade discount)
a discount to wholesalers and retailers for performing channel functions
Brand
a name, term, symbol, design, or combination thereof that identifies a seller's products and differentiates them from competitors' products Extremely important for marketers to build and manage brand to sell products
5 promotional tools
advertising, personal selling, sales promotion, public relations, direct marketing
Fad PLC
Temporary period of unusually high sales due to consumer enthusiasm and brand popularity. Surge of sales then sudden fall
Madison & VIne
Term that represents the convergence of the entertainment and advertising fields Nowadays, to combat clutter, ads must be entertaining and engage the audience
Event Marketing
creating a brand-marketing event or serving as a sole or participating sponsor of events created by others Ex) Redbull sponsored sporting events
Salesperson owned loyalty
customers become loyal to salespeople as well as to the companies and products they represent
Outside salesforce
Sales team that travel to clients in order to sell
Inside salesforce
Sales teams that conduct business over the phone or from offices
Expense reports
Salespeople write for what they need to be reimbursed for
Persuasive Advertising
! objective of advertising Objective is to build selective demand Engage customers and creates brand preference Type if comparative advertising in which brand directly compares itself to another product to show superiority
Demand Chain
"sense and respond" view suggests that planning starts with the needs of the target customer Said to be a better term for supply chain Starts with identifying a need for target customers and organize chain to create value and satisfy need
Conventional Distribution Channels
- Consist of one or more independent channel members - Often result in poor performance - Each seeking to maximize its own profits
Three types of wholesalers
-Merchant wholesalers -Brokers and agents -Manufacturers' and retailers' branches and offices
Informative Advertising
1 objective for advertising Heavily utilized when introducing new product category Objective is to build demand and inform consumers of economic and performance benefits of new product
Steps in selecting advertising media
1) Determine reach (percentage of people in target market exposed), frequency (how many times target market sees message) and engagement (qualitative measure of an ad) 2) Select specific media vehicles 3) Determine media timing
Qualities for a brand name
1) Suggest something about benefits 2) Easy to pronounce 3) Distinctive 4) Extendable (Amazon began as book store but name did not stop growth) 5) Easily translatable 6) Capable of legal protection
Corporate Chain
2 or more outlets that are commonly owned and controlled
Idea screening
2nd stage in new product development process after idea generation Pushes potentially profitable ideas forward through process and filters out bad ideas Concept development is next stage
Business analytics stage
5th step of new product development After marketing strategy development stage Involves a review of sales, costs, and profit projections If these projections do not satisfy company objectives, gets tossed, if it does goes to product development stage Benchmark between idea and actual development of product Next is product development stage
Product development
6th step in new product development process After BA stage R&D and engineering develops physical product prototypes Huge jump in investment Consumers can be brought in at this stage to see reactions of prototypes Next stage is test marketing
Test marketing stage
7th and second to last stage in new product development After product development stage The product and the marketing plan gets tested in realistic marketing settings Costly and can take a long time if want to ensure that product and marketing concept will be received which has potential of missing opportunities Can skip this stage if fast moving market or utilize an alternative If passes this stage, goes to final step of commercialization
Services
A form of products that consists of activities, benefits, or satisfactions offered for sale that are intangible and do not result in ownership of anything
Retailer Cooperative
A group of independent retailers that band together to set up jointly owned, central wholesale operation and conduct marketing and promotion Ex) ACE Hardware
Product Line
A group of products that are closely related because they function in a similar manner, are sold to same customer groups, marketed through same outlets, or fall within given price ranges Product line length describes number of items in product line Ex) Nike has various product lines of athletic shoes and apparel
Good Value Pricing
A type of customer-value based pricing Offering just the right combination of quality and good service at a fair price Can also involve more value for same price (add ons) or same quality for less expensive Ex)Less expensive Mercedes Example is everyday low pricing (EDLP)
Person Marketing
Activities undertaken to create, maintain, or change attitudes or behavior toward particular people Ex) Companies giving specific athletes endorsement deals to benefit both organization and athlete
Place marketing
Activities undertaken to create, maintain, or change attitudes or behaviors towards particular places Ex) Cities, states, regions, countries all compete for tourists using a variety of campaigns and slogans Ex) "American's Greatest Comeback City" is Detroit's slogan
Organization Marketing
Activities undertaken to create, maintain, or change the attitudes and behaviors of target customers on the organization
4 ways a company can increase its business in terms of products
Add new product lines widening product mix' Lengthen product lines Add more versions of each product and deepen product mix Pursue more or less product consistency
Line filling and when to use and when is it overdone
Adding more items within present range of the line Many reasons such as -Reaching for extra profits -Satisfy dealers -Using excess capacity -Plugging holes to keep out competitors Overdone if results in cannibalization or the eating of sales of other products that already exist within the line
Online advertising
Advertising that builds brand sales or attracts visitors to their internet, mobile, and social media site Two main tools include display ads seen on related websites (sports equipment ads when on ESPN) and search related ads
Methods for advertising budget
Affordable method Percentage of sales method Competitive parity method Objective and task method
National Brand
Aka manufacturer's brands Big brand such as Coke, Kellogs "name brands"
Marketing Logistics
Aka physical distribution Describes planning, implementing, and controlling of physical flow of good and services Getting right product to right customer at right time profitably Include inbound, outbound, and reverse logistics
Wholesaling
All activities involved in selling goods and services to those buying for resale or business use Buy mostly from producers and sell mostly to retailers, industrial consumers, and other wholesalers
Upstream Supply Chain
All partners that supply firm with any goods
Product Life Cycle
All products have lifecycle which describes the course a product will take over lifetime While all products follow, product lifecycles will have different shapes and lengths of stages Stages include product development, introduction, growth, maturity, and decline Not all products go through all stages and products can backtrack to previos stages Lifecycles can change with different competition
Retailing
All the activities involved in selling products or services directly to the final consumer for personal, nonbusiness uses Most done by retailing but can be done by other institutions as well
Controlled test marketing
Alternative to test marketing stage of new product development process New products and tactics are tested against a controlled panel of shoppers and stores Utilize info on each purchase with demographics, company can assess in store and at home marketing efforts Reduces costs and speeds up process
Simulated test markets
Alternative to test marketing stage of new product development process Reserachers measure consumer responses to new products and marketing tactics in lab stores or simulated online shopping environments Reduces costs and speeds up process
Total Quality Management (TQM)
An approach in which all the company's employers are involved in consistently improving the quality of products, services, and business processes
Sales force management
Analyzing, planning, implementing, and controlling sales force activities Must design sales force strategy and structure, recruiting, selecting, training, compensating, motivating etc
Time and duty analysis
Another tool for salespeople in which companies look for ways to save time so salespeople can spend more time selling
Marketing websites
Designed to engage customers to move them closer to direct purchase or other marketing outcomes Ex) As soon as you open Toyota website, attempts to sell to you with promotions and newest models
Distribution Centers
Designed to move goods rather than store them Designed to receive goods from various places, take orders, and deliver efficiently
Product
Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need Can be tangible or intangible
Workload Approach
Approach to find sales force size since extremely expensive Company groups accounts into different classes according to size, status, or other factors and determines number of salespeople needed for each account after
Change in sales process
As consumers become more informed, sales process has been changing to mimic buying process More present online and on social media
Style (PLC)
Basic and distinctive mode of expression For this reason, style cycle can show renewed interest and keep going back into growth phase as time goes by due to renewed interest
How brands help buyers and sellers
Buyers: -Helps consumers identify products that might benefit them -Says something about product quality and consistency Sellers -Provides legal protection for unique features -Helps segment markets (Toyota has multiple brands such as Lexus and Toyota to position in various markets) -Tells a story to consumers -Helps differentiate when established
Marketing Channel Design
Calls for analyzing consumer needs, setting channel objectives, and evaluating major channel alternatives Channel cannot be cheapest, fastest, and most effective so must properly choose intermediaries based on position of products
Advantage of retailers over national brands
Capable of undercutting price Controls wheres store brand items are stocked vs national brand Controls promotions in store
Discount
Cash discounts for consumers that pay debt within x amount of days
Horizontal Marketing System
Channel development in which 2+ companies at one level join together to follow new market opportunity Can team up permanently or temporarily to do so Ex) Starbucks and target partnered to put starbucks in many Targets to bring in more customers to both
Multimodal Transportation and options
Combines 2+ modes of transportation Piggybacking- rail and trucks Fishyback- water and trucks Traineship- water and rail Airturck- air and trucks
Cross platform campaigns
Common for marketers in which advertisements are offered the stretch across multiple viewing platforms
Crowdsourcing and new product development
Companies invited broad communities of people into innovation process in order to get external info for new product development
Promotional Pricing
Companies temporarily price products below listing price and sometimes below cost to create buying excitement and emergency Offer discounts, limited time offers, flash sales, etc to increase demand Can have bad effects such as eroding brand value with too many sales
What sets the ceiling for product price?
Consumer perception Consumers must see price to be same as value (no more no less)
By Product Pricing
Companies utilize to find a market where it can sell byproducts of another one of its products Ex) Cheese making process creates brine. Cheese companies sell the brine to cities which is used to salt roads
Competition in elastic markets
Competitors will lower prices to try and produce greater revenue since demand rises
Vertical conflict
Conflict between different levels of the same channel
Product Mix
Consists of all the product lines and items that a particular seller offers to sell Ex) Colgate product mix includes toothpaste lines, oral care, personal care, home care, and pet nutrition
Contractual VMS
Consists of individual firms at different levels of distribution and production that join together through contract to obtain more profits Most common example is a franchise organization
Promotion Mix
Consists of the specific blend of advertising, public relations, personal selling, sales promotion, and direct and digital marketing tools that company uses to engage consumers, persuasively communicate value, and build relationships
Current changes to marketing communications
Consumers are better informed and more empowered due to internet Mass markets are more fragmented As a result marketers focus more for personalized marketing and relationship building strategies
service-firm-sponsored retailer franchise system
Contractual VMS and type of franchise All big chains falls under this category including fast food
Manufacturer sponsored wholesaler franchise system
Contractual VMS and type of franchise Ex) Coke licenses various bottlers (wholesalers) in various markets world wide who buy coke syrup, bottle coke and sell it
Manufacturer sponsored retailer franchise system
Contractual VMS and type of franchise Large company that owns a variety of independent franchise dealers Ex) Ford has many dealers around US
Alternatives to test marketing
Controlled test marketing and simulated test marketing
Tools for business promotions
Conventions and trade shows- Promotes products to vendors Sales contest- contest for salespeople or dealers to motivate them to increase sales performance over a given period
Two main advantages of creating innovative manager
Creates innovation oriented company culture Yields larger number of new product ideas
Importance of product support services
Customer service is imperative in product strategy to ensure that after sales, customers get right resources and will buy again Huge in overall brand experience Must survey customers periodically to assess value of current services and obtain ideas fr new ones Should sue mix of phone, email, online, media, mobile, etc as services
Brand Integration and methods
Defined as making a brand an inseparable part of some other form of entertainment content Two ways of doing so is product placement and native advertising
Price elasticity
Describes how responsive demand will be to change of prices If demand barely changes when price changes, inelastic and vice versa for elastic
Product concept
Detailed version of idea stated in meaningful consumer terms
New Product Development and process
Developing original products, product improvements, modifications, or adding new brands Idea generation- search for new product ideas with both internal and external information Idea screening- Filter out bad ideas and push forward good ideas Concept developing and testing Marketing strategy development Business analysis Product development Test marketing Commercialization
Four consumer perception dimensions of brand strength
Differentiation-what makes brand stand out Relevance- How consumers feel it meets their needs Knowledge- How much consumer know about brand Esteem- respect of brand
Selling process
Displays the steps sales people must follow when getting new customers and making sales 1) Prospecting and qualifying- identifying qualified potential customers and screening out bad ones 2) Preapproach- learning as much as possible about customer and organization they are part of 3) Approach- meeting and greeting buyer 4)Presentation and demonstration 5) Planning 6) Handling objections- salesperson must use positive approach to turn objections into reasons for buying 7) Closing- must know how to close 8) Follow up- must schedule follow up after meeting to make long term customers
Main difference between consumer and industrial products
Distinction is based on purpose for which product is purchased Ex) Lawnmower bought for home use it is consumer product but if bought for use in a landscaping business it is an industrial product
Brokers and Agents
Do not take title of goods and only perform a few functions Brokers bring buyers and sellers together to assist negotiation Agents represents buyers or sellers on more permanent basis
Retail Convergence and effect
Due to price transparency of internet, retailers have began selling similar goods for similar prices Makes retailers seem more like commodities Must differentiate using strategies above to get out of this trap (experience retailing, product assortment, services)
Importance of idea screening in new product development
Each level of new product development process is more expensive than last so company must drop ideas they do not think will be profitable.
Alternatives Criteria for distribution channels
Economic criteria- costs and profitability of other channels Control issues- Must understand how much control each intermediary would possess Adaptability criteria- Must ensure channel remains flexible even in the long run
Advertising Agency
Employ specialists who can perform advertising and brand content tasks better than company's own staff
Execution Style
Execution of advertising message Include: Slice of life- 1+ typical people using product in normal life setting Lifestyle- Show how products fit within a particular lifestyle Fantasy- create a fantasy about a product or its use Mood or image- Style build a mood or image around product or service such as beauty, love, pride, etc Musical- show characters singing about product Personality symbol- create character that represents the product (Flow from progressive) Technical expertise- style shows company's expertise at making product Scientific evidence- present scientific evidence that brand is better than others Testimonial evidence or endorsement- highly believable or likable source endorsing product
Forms of direct and digital marketing
Face to face selling Direct mail marketing Catalog marketing Telemarketing Direct response television marketing Kiosk marketing Online marketing Social media marketing Mobile marketing
Commercialization
Final step of new product development process coming after test marketing Decision of company to release product to the market High cost such as building manufacturing facilities, raw products, employees, etc
Competition Pricing
Firms make prices based on those of their competitors Must understand how consumers value own products vs competitors and make price based on that Must also understand market Ex) If market is made up of a bunch of small companies with expensive value added products, makes sense to make a low cost product to differentiate
Consumer products
First of 2 classes of products and services Products and services bought by final consumers for personal use Include convenience products, shopping products, specialty products, and unsought products
Quality level
First of 2 dimensions of quality of a product Means performance quality of a product and its ability to perform its functions Companies must choose a quality level that matches target market needs Ex) Not all companies should offer top quality like Rolex, all about positioning and offering a valuable quality that consistent with positioning of product
Shopper Marketing
Focuses the entire marketing process toward turning shoppers into buyers as they move along toward point of sale Focuses on first few moments a shopper considers product known as moment of truth
Selective Distribution
Form of distribution in which more than one but fewer than all intermediaries are given product to carry Between intensive and exclusive Include products such as electronics, furniture, and home appliances
Marketing Strategy development
Fourth step of the new product development process After concept development stage Three parts -Describe target market, plan value proposition, establish sales, market share, and profit goals -Outline products planned price, distribution, and marketing budget -Plan long run sales, profit goals, and marketing mix BA stage is next step
Horizontal conflict
In a channel, conflict that occurs among intermediaries of same level of channel Ex) Ford dealers in same area may have tension
Partner relationship management
Important to have good relationship with intermediaries in order to create long term partnerships More profitable working together than butting heads Enterprise systems across channel partners is more common
Pure competition and affect on marketing
In market with pure competition, many buyers and sellers trading a uniform commodity such as wheat, copper, financial securities No single buyer or seller has effect on market price and marketing plays little role Compete by undercutting price
Problem with high commission sales plans
Incentivizes sales people to make short term sales instead of building relationships with consumers
Compensation of salespeople
Includes fixed amount, variable amount based on sales, expenses (whatever salespeople bought for company), and fringe benefits
Three major marketing tasks of service companies
Increase service differentiation, service quality, and service productivity
Added value of intermediaries
Information- gather and distribute info about consumers, producers, and other forces Promotion- Developing and spreading persuasive communications about an offer Contact- Finding and engaging customers and prospective buyers Matching- Shaping offers to meet buyer's needs (manufacturing, packaging) Negotiation Physical distribution
Most common type of sales force in B2B markets
Inside sales force
Corporate VMS
Integrates successive stages of production and distribution under a single ownership Limits conflict and increases coordination
Exclusive Distribution
Intentionally limiting the number of intermediaries handling products and only giving limited number of dealers exclusive distribution rights Utilized for luxury brands such as watches and cars
Roles of sales people
Interpersonal arm of promotion mix Critical link between company and its customers Represent company to customers
Packaging
Involves the designing and producing the container or wrapper for a product Packaging has recently become strong marketing tool Best and last chance to influence buyer as all sees packaging Distinctive packaging can become part of brand identity and be a differentiator Must be lean and efficient--> overpackaging creates more waste and more costs of supplies Green should be a thought as well in packaging
Premiums
Items offered for free or at a low cost as an incentive to buy product Ex) Toys within happy meals
Warehouse Clubs
Large retailers with an irregular assortment, low service levels, and low prices that often require membership for shoppers. Usually operate in warehouses so low operating costs allowing for low prices (Costco)
Augmented product and value added
Last level of creating a product or service is creating add ons, services, and other addition consumer benefits for the products Adds value to product
Administered VMS
Leadership in the channel is assumed through size and power of one or a few of dominant channel members Ex) Apple can get unusual cooperation from channel members due to its capital and power Walmart pushes prices down of suppliers for same reason
Cash and carry wholesalers
Limited-service wholesalers who carry limited line of fast moving goods and sell to small retailers for cash Usually do not deliver
How can companies expand product line
Line filling or line stretching
Service Profit Chain and its links
Links service firms profits with employees and customer satisfaction Five links include: -Internal service quality: superior employee selection and training results in... -Satisfied and productive service employees: more satisfied, loyal and hardworking employees results in... -Greater service value: more effective and efficient customer value creation results in... -Satisfied and loyal customers who make repeat purchases leads to... Healthy service profits and growth
Pull Promotion Strategy
Mainly advertising, consumer promotion, direct and digital media Producer directs marketing activities towards consumers to induce them to buy product Utilized more for B2C markets
Product Line Pricing
Management determines price steps between various products in a line based on value to consumer Ex) Quicken sells different software versions ranging from beginner to business Costs quicken no more to provide the more wholesome program, consumers will pay more due to added features
Return on quality approach
Many companies are now taking this approach on quality View quality as an investment and holding quality efforts accountable for bottom line results Aka, certain quality should always be achieved and is an investment in creating customer satisfaction
Oligopolistic Competition and affect on marketing
Market consists of a few large sellers such as in phone provider market Competitor pricing very important due to few suppliers Main marketing tool will be promotions
Monopolistic competition and affect on marketing
Market consists of many buyers and sellers with range of prices other than market price Differentiation plays huge role Branding and marketing extremely important
Conditions for successful segmented pricing
Market must be segmentable and segments must have different degrees of demand Cost of segmenting must be less than revenue added from segmenting Legal Reflect real differences in customer perceived value
Product quality
Marketers define quality in terms of creating customer value and meeting customer expectations on a product to create satisfaction Two dimensions of quality, level and consistency
Which is typically best, developing price before marketing strategy or vice versa
Marketing strategy should be set before price Company must understand how they will position themselves in the market prior to creating a price
Online marketing
Marketing via the internet using company websites, online ad promotions, email marketing, online videos, and blogs
Types of industrial products
Materials and parts Capital items Supplies and services
Affordable method
Method for advertising budget in which promotional budget is set at a level the company believes it can afford Used by small businesses Makes long range marketing difficult
Native Advertising
Method for brand integration Produce content that appears to be native to web or social media when placed Ex) Article on reputable media outlets that are written and paid for by the advertiser
Product Placement
Method for brand integration Placing advertisements within programming such as movies or tv shows Ex) Characters drinking out of starbucks cups on tv
Objective and task method
Method for creating advertising budget Most logical in that company sets budget based on goals to accomplish with promotions Must define promotional objectives, determine tasks needed to achieve these, and estimate costs of performing these tasks Most difficult to use but best method
Competitive Parity Method
Method for making advertising budget Sets promotional budget to match that of competitors Argument is competition budget is supported by industry wisdom however no hard evidence to back this up
Supermarkets
Most frequently visited retail store Slow sales growth and higher competition leading supermarkets to have to differentiate, cut costs, etc to stay profitable
Team Based New Product Development
Most popular new product development approach Company departments work closely together in cross functional teams, overlapping insteps to save time and increase effectiveness Team from various departments stick with product from start to finish much faster and more efficient than other approaches Limitation includes creating more organizational tensions and confusion than sequential approach
Cost Plus Pricing (Markup pricing)
Most simple pricing method in which it adds a standard markup to cost of production The goal is to create own margins however completely ignores supply and demand so does not make much sense
Inbound logistics
Moving products and materials from suppliers to factories
Outbound logistics
Moving products from the factory to resellers and ultimately consumers
Content marketing managers
New view of marketers as they create, inspire, and share messages and conversations Utilize, paid, owned, earned, and shared channels of marketing
Goal of logistics and limitation
No logistics system can perform the best customer service at lowest cost Goal of logistics is to perform optimal level of both
Omnichannel Buyers
Nowadays consumers make little distinctions between online and in store buying
Product line length
Number of items in a product line
Low cost producers
Perform cost based pricing Create a lean production line to make low costs and make low prices Low margins
Three levels of brand position (worst to best)
Position based on product attributes such as quality, selection, or style Associating name with desirable benefit such as Whirlpool saying home appliances take hassle out of cooking and better energy savings Strongest is positioning on beliefs and values engaging customers on emotional level -Marketing with some sort of family value in commercials
Dynamic Pricing
Prices are adjusted to continually meet characteristics and needs of individual customers and situations
Customer value based pricing
Pricing strategy Uses buyers' perceptions of value as the key to pricing Price is considered before marketing program is set Opposite of cost based. Firm finds a problem and sets target price based on how much consumers value solving this problem After price is made based on value, all other decisions made after is based on this price and value Find value by analyzing customer needs Two types include good-value pricing and value added pricing
Push Promotion Strategy
Primarily personal selling and trade promotion Focuses on pushing product through marketing channel to final consumers Directed to channel members to carry product and push to consumers Typically utilized for B2B markets Ex) John Deere does very little promotions to consumers itself. Instead, pushes product to stores such as Lowes and they promote it
Broad community websites
Primary purpose is to present brand content that engages consumers and creates a customer-brand community Ex) Cannot actually buy anything on ESPN, forum and community for sports news
Common channels in consumer market
Producer--> consumer Producer-->retailer--> consumer Producer-->Wholesaer-->retailer-->consumer
Exclusive Territorial Agreements
Producers agree to not sell products to other dealers in territory
Common B2B channels
Producer→ business customer Producer→ Business distributor→ Business customer Producer→ manufacturer representative/sales branch→ business distributor→ business customer
How retailers can differentiate themselves when commodities are becoming more common
Product assortment -Can offer highly specialized assortment or assortment no other retailers offer Service mixes -Can have good service -Can have add ons such as how to classes like Home Depot Store Atmosphere -Create unique store experience
Three things PLC concept can describe and differences in trends
Product class such as gas powered vehicles. Longest life cycle since most broad. Stays in mature stage for longer periods. Product forms such as SUVs usually have standard PLC shape as they go through phases Brand which lifecycle can change quickly due to outside factors such as competition
How are benefits of a product delivered
Product quality Product features Product styles and design
Decline Stage PLC
Product sales fall off and profit decreases Companies must decide whether to maintain (reposition in hopes of getting back to growth), harvest (reduce costs and hope sales hold up, or drop product
Disintermediation
Products or service players cut out intermediaries and go directly to the final buyers Presents opportunities and problems
Industrial products
Products purchases for further processing or for use in conducting a business Three groups of industrial products are material and parts, capital items, and supplies and services
Pure services
Products that do not include any goods and only consists of a service Ex) Financial services
Sales force automation system
Put in place to save time of salespeople Digitizes sales force operations and lets salespeople work more effectively
Service Variability
Quality of service depends on who provides them as well as when, where, and how they are provided Ex) Mariott may have good reputation with customer service but one employee with bad quality of service can ruin experience
Growth Stage PLC
Rapid market acceptance and increasing profits and sales of a product Competitors join market which expands market with more distribution channels causing sales to continue to grow Sustain growth as long as possible with added features
Call reports
Records of salespeople's meetings or contacts with customers Written up by salespeople to keep track of sales
product mix consistency
Refers to how closely related the various product lines are in terms of end use, production requirements, distribution channels, or another way Ex) Colgate product lines are consistent in that all are consumer products but different in that they have different functions
Superstores
Retailers larger than supermarkets that offer large assortments of routinely purchased products such as food, nonfood items, etc Ex) Target and walmart Category killer type of super store within certain category such as bass pro shop
Omnichannel Retailing
Retailers must create a seamless cross channel buying experience that integrates stores, online, and mobile shopping
Department Stores
Retailers that carry a wide variety of product lines Squeezed between specialty stores and discounters so offers promotions to meet threat
Specialty Stores
Retailers that carry narrow product lines with deep assortments in those lines
Off Price Retailers
Retailers that sell as low as possible by buying at less than regular wholesale price and selling below retail price independant off price retailers are independantly owned or owned by larger retailer company such as Marshalls, TJmaxx both owned by TJX
Discount Stores
Retailers that sell standard merchandise at lower prices by accepting lower margins with lean operations
Service Retailers
Retailers with product line as services including hotels, banks, airlines, restaurants, etc
Experiential Retailing
Retailing approach that encompasses all contemporary methods used to engage customers at emotional, sensory, and participatory levels as they shop Since retailers are becoming more commodity like, must utilize store experience and environment to differentiate Ranges from scent, to music, to layout, etc
Business promotions
Sales promotion tool used to generate business leads, stimulate purchases, reward customers, and motivate sales people
Consistency (conformance quality)
Second dimension of quality Means that products are free from defects and are consistently delivering a target level of performance In this sense, Rolls Royce and Chevy can have same conformance quality if both consistently perform at par with promises of quality level
Product Features
Second way benefits of a product are delivered Product features are a competitive tools for differentiating company product vs competitors Company should periodically survey buyers who have used product to see what they want added in order to see value added for each feature vs cost added to company
3 types of services for retailers and definitions
Self service- Serve customers who are willing to perform locate-compare-select process on own. Less assistance since goods do not need help with such as convenience goods. Usually seen in super markets Limited Service Retailers- Include stores such as JCPenney which provide more sales assistance since more shopping goods carried. Higher operating cost leads to higher prices Full service retailers- Examples include high end specialty stores in which employees assist customers in every phase of shopping process.
Product bundle pricing
Sellers combine several products and offer the bundle at a reduced price Ex) Combo meals
Psychological Pricing
Sellers consider psychology of prices Ex) Consumers usually see higher prices products having higher value Ex) Who is a better lawyer, one that charges 50/hr or 500/hr Ex) Reference pricing Ex).99 instead of $1
Wholesalers can add value by
Selling and promoting- help manufacturers reach small customers at low cost. Has more contacts and more trusted by buyer Buying and assortment building- Can select items and build assortment needed by their customers saving work Bulk breaking- Wholesalers save customers money by buying in carload lots and breaking large lots into smaller quantities Warehousing- wholesalers hold inventories, reducing inventory cost and risk of retailers Transportation- can provide quicker delivery to buyers because closer to buyers than producers are Financing- finance customers by giving credit and finance suppliers by ordering early and paying bills on time Risk bearing- absorb risk by taking title and bearing cost of theft damage, etc Market info- give info to supplier and customers about competitors, new products, prince developments, etc Management services and advice- Hep retailers train salesclerk, improve store layouts, set up accounting and inventory systems
Predatory Pricing
Selling below cost with intention of punishing competition or gaining long run profits by putting competition out of business illegal practice
Interactive Marketing
Service quality depends heavily on quality of buyer-seller interaction during service encounter Important in service marketing since half the value is the delivery
service intangibility
Services cannot be seen, tasted, felt, heard, etc before they are bought Ex) Airline passengers have nothing but a ticket and a promise that they will arrive to a destination prior to actual service being performed
Service Inseperability
Services cannot be separated from providers, whether providers are people or machines employees who deliver a service are an active part of it and customers play an active role in service delivery
Two part pricing
Services version of captive pricing Consumer pays a fixed fee plus a variable usage rate Ex) Tickets to an event may be relatively cheap but food extremely expensive
Percentage of sales method
Sets promotional budget as a percentage of current or forecasted sales Easy to use Downside is has little to justify budget (views sales as cause of promotion rather than a result) Also no basis for choosing amount of percentage
Cost based pricing
Setting prices based on costs of production and distribution Makes a price floor based on costs rather than a price ceiling based on customer value Ex) Low cost producers
Vendor Managed Inventory Systems
Shares real time data on sales and current inventory with suppliers
intrapreneurial programs
Source for companies to get new product development ideas internally promoting employees to develop product ideas
Advertising Objectives
Specific communication task to be accomplished within a specific target audience during a specific period of time Can be to inform, persuade, or to remind
Levels of products and services that add customer value
Step 1 is figuring out problem solving benefits that would lead consumers to buy Create an actual product Build augmented product by offering additional consumer benefits and services
Customer solution approach
Strategy for the presentation portion of the selling process in which seller hears clients needs and responds with how product adds value
Intensive distribution
Strategy in which products are stocked in as many outlets as possible Utilized mostly for convenience items
Target Costing
Strategy that reverses usual process of finding price Starts with ideal selling price based on customer value than targets costs to achieve that price is met
Innovative Management System
Strategy to make new product development more efficient Company appoints a senior manager who collects, reviews, evaluated and manage new product ideas The overwatch makes new product development more holistic and collaborative Creates innovation oriented company culture Yield larger number of new product ideas
Territorial Slaes Force Structure
Structure of sales force in which each salesperson is assigned to a specific geographic area and sells the full line of products and services to customers within that territory Increases desire of salespeople making relationships Lowers travel costs
Real time marketing
The creation and execution of marketing that links the brand to important moments/trends in ones life Ex) Dunkin engages people who search coffee near me by putting ad that says find fastest coffee in response
Message Strategy
The general message that will be communicated to consumers Should be plain, straightforward, and outline benefits and positioning points that need to be stressed Develop creative concept (big idea) that brings message to life (the actual campaign) Must choose an execution style to do so Choose tone for advertisement
Promotion clutter
The growing use of sales promotion has resulted in this. Consumers are increasingly tuning out promotions, weakening their ability to trigger immediate purchase.
Advertising Strategy
The strategy by which the company accomplishes its advertising objectives. Two major elements: creating advertising messages and selecting advertising media.
Concept development
Third step of new product development process After idea screening stage Testing new product concepts with groups of target consumers Marketing strategy development is next stage
Product style and design
Third way benefits of a product are delivered Style describes the appearance of a product, can grab attention from public but does not necessarily make product perform better Design contributes to both how product looks and its usefulness
What is new with advertisements?
Today, due to high amount of commercials, large amount of clutter in advertisements Consumers more hostile to these promotions As a result, ads now have to be engaging or entertaining for consumers Ex) Madison & Vine strategies
Call plan
Tool for sales people which shows which consumers and prospects to call on and which activities to carry out every x amount of days
Advertising
Tool of promotional mix Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by a sponsor
Direct and Digital Marketing
Tool of promotional mix Engaging directly with carefully targeted individual consumers and customer communities to build customer relationships Ex) Direct emails, catalogs, social media, etc
Public Relations
Tool of promotional mix Build good relations and obtaining favorable publicity, good corporate image, and handling unfavorable events in the public eye Ex) Press release, sponsorships, etc
Personal Selling
Tool of promotional mix Personal consumer interactions by firm's sales force to engage customers, make sales, and build relationships Ex) Trade shows, sales presentations, incentive programs
Sales promotion
Tool of promotional mix Short term incentives to encourage the purchase or sale of a product or service
Brand value
Total financial value of a brand Hard to measure exact value
Allowances
Trade allowances offer price reduction for trading old item in Promotional allowances are reductions that reward dealers for participating in advertising/ sale support programs
Direct mail marketing
Traditional direct marketing form Firms send an offer, announcement, reminder, or other item to a person by mail Highly selective, personal, and flexible Costs more than mass media
Types of transportation
Trucks -Majority delivery method -Flexible -Faster than railroads -Efficient for short halls of high value merchandise Railroads -2nd most delivery method -Cost effective model for shipping large amounts of bulk products such as coal and sand Water Carriers -3rd most -Low cost and for bulky, low value, non perishables -Slowest mode Air carriers -Least common -More expensive but ideal when speed is needed -Common for perishables
Co-branding
Two established brand names of different companies are used on same product Combined brand creates larger customer appeals and greater brand equity Ex) Doritos locos tacos
Shopping products
Type of consumer product Less frequently purchased consumer products that customers compare price, quality, and style Consumers gather info on lower price and higher quality Distributed in fewer outlets and sales created to push consumers to buy Ex) Furniture, clothing, appliances, hotel services etc
Convenience products
Type of consumer product Consumers buy frequently with minimal comparison and buying effort Low priced and placed in many locations so readily available Ex) Magazines, deodorant, etc
Unsought Products
Type of consumer product Consumers do not know about or know about but does not normally consider buying Usually unsought until consumers become aware of product through marketing Ex) Life insurance, funeral services, blood donations
Specialty Products
Type of consumer product Unique characteristics or brand that leads buyers to make special purchase effort High priced and include specialty brands Do not compare specialty products Ex) Designer clothes, specific car brands, gourmet food, etc
Advertising specialties
Type of consumer promotion Aka promotional products Articled imprinted with advertiser name/logo that are given as gifts to customers Ex) Labeled pens in banks/hotels
Coupons
Type of consumer promotion Certificates that save buyers money when specific products are purchased
Rebates
Type of consumer promotion Coupons whee price reduction occurs after purchase is made
Contests, sweepstakes, and games
Type of consumer promotion Give customers the chance to win something Contests calls for consumers to submit an entry Sweepstakes call for consumers to submit names for drawing Game pushes consumers to buy product and everytime, helps win a prize
Point of purchase promotions
Type of consumer promotion Include displays and demonstrations that take place at point of sale
Samples
Type of consumer promotion Offers a trial amount of a product Most effective but most expensive way to introduce new product or create buzz for existing one
Franchise
Type of contractual VMS that links several stages of production and distribution process Three types: -Manufacturer sponsored retailer franchise system -Manufacturer sponsored wholesaler franchise system -Service firm sponsored retailer franchise system
Value added pricing
Type of customer value based pricing Company attempts to differentiate their products in order to get consumers to pay a premium Ex) Luxury brands
Kiosks Marketing
Type of direct marketing Point-of-purchase displays that are stand-alone structures Can have various functions including capability of taking orders or providing info
Capital items
Type of industrial product Aid in buyer's production or operations including installations and accessory equipment Include major purchases such as buildings and equipment
Supplies and Services
Type of industrial product Include operating supplies (paper, pencils, coal), and repair and maintenance items (paint, brooms, etc) Also include business services such as maintenance and repair services and advisory services such as legal, management, consulting, etc
Materials and Parts
Type of industrial products Include raw materials as well as manufactured materials and parts Consist of farm products (wheat, cotton, fruit, vegetables) natural products (fish, lumber, etc), component materials (iron, cement), component parts (small motors, tires, etc) Most sold directly to industrial users Usually sold directly to industrial users Price service main marketing factors (advertisements way less)
producers' cooperative
Type of limited service wholesaler Farmer owned members that assemble farm produce for sale in local markets Improve quality and usually have a co-op
truck wholesaler (truck jobber)
Type of limited service wholesaler Mainly selling and delivery function Usually sells and delivers semi perishable goods for cash
Mail-order/web wholesalers
Type of limited service wholesaler Sends catalogs or maintains websites for customers featuring jewelry, foods, or other small items
Drop Shippers
Type of limited service wholesaler Usually service grocery and drug retailers in mainly non food items
Limited Service Wholesalers
Type of merchant wholesaler Offer few services to suppliers and customers Include: Cash and carry wholesalers Truck jobbers Drop shippers Producers' Cooperatives Mail order
Full service wholesalers
Type of merchant wholesaler Provide a full line of services including carrying stock, maintaining sales force, offering credit, making deliveries, providing management assistance Include wholesale merchants and who sell to retailers and industrial distributors who sell to manufacturers
Customer-centered new product development
Type of new product development approach Companies focus on finding new ways to solve customer problems and create more customer satisfying experiences Most successful new product are those that are differentiated, solve problems, and offer compelling value propositions
Sequential Product Development Approach
Type of new product development approach One company department works individually to complete its stages of the process before passing the product along to the next department and stage Helps bring control to complex projects Dangerously slow
Comparative Advertising
Type of persuasive advertising Firm compares product directly to another of a different business in order to show superiority Aka attack advertising Can create controversy and invites competitors to respond
Reference Pricing
Type of psychological pricing Utilizing prices buyers may carry in their mind or refer to when making a decision of buying Ex) Grocery retailers will put store brand cereal next to private brand cereal since private brand is more expensive, leading people to buy store brand
Customer Segment Pricing
Type of segment pricing Different customers pay different prices for same product or service Ex) Child discount
Product Form Pricing
Type of segment pricing Different versions of a product are priced differently but not according to costs ex) Difference between economy and first class cost airplane close to nothing
Location based pricing
Type of segment pricing Price changes based on location of consumer Ex) In state vs out of state tuition
Time Based Pricing
Type of segment pricing Price differs based on time purchased Ex) Off season sales
Catalog marketing
Type of traditional direct marketing Sending catalogs (printed, bounds piece of at least 8 pages, selling products and offering direct order mechanisms) Switching more to digital catalogs
Telemarketing
Type of traditional direct marketing involves using telephones to sell directly to consumers and business customers Heavily utilized in B2B markets Outbound-> sell directly to customers Inbound- receive orders referred by advertisements
Social Selling
Use of online, mobile, and social media to engage customers, build stronger relationships, and augment sales performance Saves time, builds relationships, and saves travel costs
Captive Product Pricing
Used for products that must be used along with a main product Companies usually make price of main product low while making supplies more expensive Must be careful to price both aspects right because if supplies to expensive, consumers may begin to resent the brand Ex) Video games, coffee pods, e-books, etc
Public relations functions
Used to promote, build good relations, and support newsworthy company events Press relations- create newsworthy info Product and brand publicity- publicizing specific products and brands Public affairs- building and maintaining relational or community relationships Lobbying- building and maintaining relationships with legislators Investor relations Development- working with non profit or donors to gain support
Social Marketing
Using traditional business marketing concepts and tools to encourage behaviors that create societal and individual wellbeing Many organizations utilize this to promote causes they believe in and increase reputation of brand Ex) Microsoft promotes women to join STEM field
Product image
Way consumers perceive an actual product
Vertical Marketing System
Way for channels to have some sort of leadership and be more efficient Either one channel member owns the rest or has so much power that others must cooperate Three types are corporate, contractual, and administered VMS
Sales quotas
Way to motivate sales people Describes amount that should be sold of each product in given amount of time
Organizational climate
Way to motivate sales people Describes the feeling that salespeople have about opportunities, values, and rewards for good performance
Sales reports
Weekly or monthly work plans and longer term territory marketing plans that salespeople provide management
Product Line Stretching and each type
When a company lengthens its product line beyond its current range Stretch downwards- Companies located at upper end of market can stretch line downwards to expand market to lower cost Ex) Mercedes making affordable car for first time drivers Stretch upwards- Add prestige to current products to reach higher margins Ex) Cascade dishwashing detergent created a premium dish soap for higher prices
Exclusive Dealing
When a seller requires dealers to not handle any competitor products Legal as long as they do not substantially lessen competition by doing so
Market Skimming Pricing
When new products are initially set at high prices to obtain initial high revenues Should only be done when product image is supported by high quality. Competitors should not be able to enter market easily and undercut price Ex) With each new generation of iPhone released, apple raises starting prices and lowers prices of past generations Since such a large brand, people will still pay the premiums for apple products at release
Marketing during economic downturn
While may seem like a quick fix cutting costs, lowers value of brand in customer eyes instead, differentiate and redefine value in propositions
Store Brands (private brands)
a brand created and owned by a reseller of a product or service Used to be called generic brands but gaining a lot of traction due to greater selection and cheaper prices Ex) Trader Joe brand
Fashion (PLC)
a currently accepted or popular style in a given field Ex) Business attire has changed throughout years As a result, grow slowly, remain popular for a while, than decline slowly
Channel Level
a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer Number of channel levels indicate the length of the channel
Direct marketing channel
a marketing channel that has no intermediary levels Company sells straight to buyers
value delivery network
a network composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value
Quantity Discount
a price reduction offered to buyers buying in multiple units or above a specified dollar amount
High Low Pricing
a pricing strategy that relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases
Reverse Logistics
a process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistribution, or disposal
Product sales force structure
a sales force organization in which salespeople specialize in selling only a portion of the company's products or lines Best for company with numerous and complex products
Customer (or market) sales force structure
a sales force organization in which salespeople specialize in selling only to certain customers or industries
Complex Sales force structure
a wide variety of products is sold to many types of customers over a broad geographic area, and it combines several types of sales force structures
Market Penetration Pricing
companies set a low initial price to penetrate the market quickly and deeply- to attract a large number of buyers quickly and win a large market share High sales volume leads to falling costs (economies of scale) allowing company to further cut prices Can only be done in markets that are highly price sensitive, costs must decrease as sales volume increases, and low price must keep out competition
Two classes of products and services
consumer products and industrial products
Types of consumer products
convenience products, shopping products, specialty products, and unsought products
Value selling
demonstrating and delivering superior customer value and capturing a return on that value that is fair for both the customer and the company
Direct Response Television Marketing
direct marketing via television, including direct-response television advertising and interactive television advertising Air spots describe product and give customer a number or site to order
Channel Conflict
disagreements among marketing channel members on goals, roles, and rewards - who should do what and for what rewards Both horizontal and vertical conflicts
Direct and digital marketing
engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships Fastest growing form of marketing and allows businesses to target specific groups of people
Four characteristics of a service
intangibility, inseparability, variability, perishability
Supply Chain Management
managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers
Trade promotion
marketing activities designed to persuade retailers to carry a brand, give an item shelf space, promote using advertising, and push to consumers Tools include contests, premiums, and displays
Downstream Supply Chain
marketing channel partners that link the firm to the customer Include wholesalers, retailers
Mobile marketing
marketing messages, promotions, and other content delivered to on-the-go consumers through mobile phones, smartphones, tablets, and other mobile devices Anytime anywhere marketing Can stimulate immediate buying, make shopping easier, and/or enrich brand experience
Brand sponsorship options
national brands, store brands, licensing, co-branding
Introduction stage PLC
new product is first distributed and made available for purchase No profits due to heavy expenses of intro
Just in time logistics
producers and retailers carry only small inventories of parts or merchandise, often enough for only a few days of operations Limits costs and ensures inventory remains good if perishable Requires accurate forecasting and management
Full line forcing
producers of a strong brand sometimes sell product to dealers only if the dealers will take some or all of the rest of its line
Pop up stores
retail stores, such as Halloween costume stores, that "pop up" one day and then disappear after a period of one day to a few months Utilized to create buzz of buying Flash sales are service equivalent
Consumer promotions
sales strategies that encourage customers and prospects to buy a product or service Short term solution to increased revenue
Marketing Channel Management
selecting, managing, and motivating individual channel members and evaluating their performance over time Must continuously be motivated
permission-based email marketing
sending email pitches only to customers who "opt in" Way to limit customer feeling of spam emials
Email Marketing
sending highly targeted, highly personalized, relationship-building marketing messages via email Important B2B tool Can lead customers to view company as spam related
Service Perishability
services cannot be stored for later sale or use. Ex) Some doctors charge patients for missed appointments because the service value existed only at that point and disappeared when the patient did not show up. Ex) Fluctuation of demand for a service requires organization to plan -hotels lower price in off seasons
Convenience Stores
small retailers that carry a limited line of high-turnover convenience goods Growth in recent years due to rebranding from gross truck stops to clean sites for all people
Pure tangible good
such as soap, toothpaste, or salt - no services accompany the product
Acquisition
the buying of a whole company, a patent, or a license to produce someone else's product
Segmented Pricing
the company sells a product or service at two or more prices, even though the difference in prices is not based on differences in costs Include customer segment pricing, product form pricing, location based pricing, and time based pricing
Electronic Data Interchange (EDI)
the computer-to-computer exchange of business documents
Brand equity
the differential effect that knowing the brand name has on customer response to the product or its marketing Measure of brand's ability to capture customer preferences and loyalty Ex) More brand equity when seeing one brand makes consumer more likely to buy given a generic brand
Viral marketing
the digital version of word-of-mouth marketing: videos, ads, and other marketing content that is so infectious that customers will seek it out or pass it along to friends
Integrated Marketing Communications
the intentional coordination of every communication from a firm to a target customer to convey a consistent and complete message
Merchant Wholesalers
the largest group of wholesalers and include both full service wholesalers and limited service wholesalers
Integrated Logistics Management
the logistics concept that emphasizes teamwork - both inside the company and among all the marketing channel organizations - to maximize the performance of the entire distribution system
Internal Marketing
the service firm must orient and motivate its customer-contact employees and supporting service people to work as a team to provide customer satisfaction Everyone in organization must be customer centered Internal marketing must precede external marketing in service industry
Product mix length
total number of items a company carries within its product lines Ex) Number of brands company carries within each line
Team selling
using teams of people from sales, marketing, engineering, finance, technical support, and even upper management to service large, complex accounts
Voluntary Chain
wholesaler-sponsored group of independent retailers engaged in group buying and merchandising Ex) Independent grocer alliance