MKTG Test 4

Specialty-Line Wholesalers

Full-service wholesalers that carry only a single product line or a few items within a product line

distribution ethical issues

involve relationships among producers and marketing intermediaries include manipulating a product's availability for purposes of exploitation and using coercion to force intermediaries to behave in a specific manner

Distribution System

involves "upstream" (e.g., suppliers) and "downstream" (e.g., wholesalers and retailers) that work to serve customers and generate competitive advantage Historically, marketing focused on only certain downstream supply-chain activities, but today marketing professionals are recognizing that they can secure marketplace advantages by effectively integrating activities along the entire length of the supply chain, including operations, logistics, sourcing, and marketing channels Integrating these activities requires marketing managers to work with other managers in operations, logistics, and supply

Freight Forwarders

Organizations that consolidate shipments from several firms into efficient lot sizes Freight forwarders help such firms by consolidating small loads from various organizations to allow them to qualify collectively for lower rates. Freight forwarders' profits come from the margin between the higher rates firms would have to pay and the lower carload rates the freight forwarder pays for full loads. Because large shipments also require less handling, freight forwarders can reduce delivery time and the likelihood of shipment damage. Freight forwarders also have the insight to determine the most efficient carriers and routes and are useful for shipping goods to foreign markets, including in foreign markets

Tensile pricing

involves making a broad statement about price reductions, as opposed to detailing specific price discounts. "20 to 50 percent off," "up to 75 percent off," and "save 10 percent or more."

supply chain mgmt.

Supply-chain management should begin with a focus on the customer, who is the ultimate consumer and whose satisfaction should be the goal of all the efforts of channel members Cooperation between channel members should improve customer satisfaction while also increasing coordination, reducing costs, and increasing profits Improving coordination between supply-chain members can help achieve fewer wasted resources and greater speed, and lead to increased environmental sustainability—which can improve a firm's image in the eyes of many consumers When the buyer, the seller, marketing intermediaries, and facilitating agencies work together, the cooperative relationship results in compromise and adjustments that meet customers' needs regarding delivery, scheduling, packaging, or other requirements.

technology

Technology has improved supply-chain management capabilities globally. Advances in information technology, in particular, have created an almost seamless distribution process for matching inventory needs to manufacturer requirements in the upstream portion of the supply chain and to customers' requirements in the downstream portion of the chain. With integrated information sharing among chain members, firms can reduce costs, improve services, and provide increased value to the end customer. Information is a crucial component in operating supply chains efficiently and effectively.

Periodic Discounting

Temporary reduction of prices on a patterned or systematic basis many retailers have annual holiday sales, and some apparel stores have regular seasonal sales Periodic discounting is less effective in an environment where many consumers shop online because they can more easily comparison shop for a better deal even during non-sale times.

Random Discounting

Temporary reduction of prices on an unsystematic basis Marketers also use random discounting to attract new customers. Random discounting can also be useful to draw attention to a relatively new product

pricing strategy

course of action designed to achieve pricing objectives, which are set to help marketers solve the practical problems of setting prices. depends on its pricing and marketing objectives, the markets for its products, the degree of product differentiation, the product's life-cycle stage, and other factors. pricing strategies help marketers solve the practical problems of establishing prices.

efficient physical distribution system

crucial to developing an effective marketing strategy because it can decrease costs and increase customer satisfaction. Speed of delivery, flexibility, and quality of service are often as important to customers as costs. Companies that offer the right goods, in the right place, at the right time, in the right quantity, and with the right support services are able to sell more than competitors that do not. physical distribution costs may be a minor consideration when compared with service, dependability, and timeliness. managers try to minimize the costs associated with order processing, inventory management, materials handling, warehousing, and transportation

Brokers

Intermediaries that bring buyers and sellers together temporarily supermarket goods and real estate

form utility

by assembling, preparing, or otherwise refining the product to suit individual customer needs.

birdyback

(using truck trailers and air carriers)

piggyback

(using truck trailers and railway flatcars)

fishyback

(using truck trailers and water carriers)

product quality

A company may have the objective of leading its industry in product quality. A high price may signal to customers that the product is of a high quality Attaining a high level of product quality is generally more expensive for the firm, as the costs of materials, research, and development may be greater The products and brands that customers perceive to be of high quality are more likely to survive in a competitive marketplace because they trust these products more, even if the prices are higher.

Electronic Data Interchange

A computerized means of integrating order processing with production, inventory, accounting, and transportation functions as an information system that links marketing channel members and outsourcing firms together. It reduces paperwork for all members of the supply chain and allows them to share information on invoices, orders, payments, inquiries, and scheduling. Many companies encourage suppliers to adopt EDI to reduce distribution costs and cycle times.

Television home shopping

A form of selling in which products are presented to television viewers, who can buy them by calling a toll-free number and paying with a credit card HSN, QVC

Marketing Channel channel of distribution or distribution channel

A group of individuals and organizations that direct the flow of products from producers to customers within the supply chain (right time, place, and quantities) make products available at the right time at the right place in the right quantities achieved by creating synergy among operations management, logistics management, and supply management Providing customer satisfaction should be the driving force behind marketing channel decisions. Buyers' needs and behavior are, therefore, important concerns of channel members.

vertical marketing system

A marketing channel managed by a single channel member to achieve efficient, low-cost distribution aimed at satisfying target market customers Vertical integration brings most or all stages of the marketing channel under common control or ownership. It can help speed the rate at which goods move through a marketing channel. VMSs account for a large share of retail sales in consumer goods.

General-merchandise Retailer

A retail establishment that offers a variety of product lines that are stocked in considerable depth department stores, discount stores, convenience stores, supermarkets, superstores, hypermarkets, warehouse clubs, and warehouse showrooms

Category Management

A retail strategy of managing groups of similar, often substitutable, products produced by different manufacturers

Supply Chain Management

A set of approaches used to integrate the functions of operations management, logistics management, supply management, and marketing channel management so products are produced and distributed in the right quantities, to the right locations, and at the right time manufacturing, research, sales, advertising, and shipping Supply-chain management involves all entities that facilitate product distribution and benefit from cooperative efforts, including suppliers of raw materials and other components to make goods and services, logistics and transportation firms, communication firms, and other firms that indirectly take part in marketing exchanges supply chain includes all entities that facilitate product distribution and benefit from cooperative efforts

Organizational (corporate) culture

A set of values, beliefs, goals, norms, and rituals that members of an organization share values also help shape employees' satisfaction with their employer, which may affect the quality of the service they provide to customers firm's culture may be expressed formally through codes of conduct, memos, manuals, dress codes, and ceremonies but it is also conveyed informally through work habits, extracurricular activities, and stories organization's culture gives its members meaning and suggests rules for how to behave and deal with problems within the organization.

Exclusive Dealing

A situation in which a manufacturer forbids an intermediary from carrying products of competing manufacturers Manufacturers receive considerable market protection in an exclusive-dealing arrangement and may cut off shipments to intermediaries that violate the agreement If the exclusive dealing blocks competitors from as much as 15 percent of the market, the sales volume is large, and the producer is considerably larger than the retailer, then the arrangement is considered anticompetitive If dealers and customers in a given market have access to similar products or if the exclusive-dealing contract strengthens an otherwise weak competitor, the arrangement is allowed.

Convenience Store

A small self-service store that is open long hours and carries a narrow assortment of products, usually convenience items

Direct-Response Marketing

A type of marketing in which a retailer advertises a product and makes it available through mail or telephone orders television commercial offering exercise machines, cosmetics, or household cleaning products available through a toll-free number, and a newspaper or magazine advertisement for a series of children's books available by filling out the form in the ad or calling a toll-free number sending letters, samples, brochures, or booklets to prospects on a mailing list and asking that they order the advertised products by mail or telephon

Catalog Marketing

A type of marketing in which an organization provides a catalog from which customers make selections and place orders by mail, telephone, or the Internet Land's End, Pottery Barn, and Crate & Barrel

Power shopping center

A type of shopping center that combines off-price stores with category killers Gap, Toys R Us, Petsmart, & Home Depot in same center

Lifestyle shopping center

A type of shopping center that is typically open air and features upscale specialty, dining, and entertainment stores fountains, benches, and other amenities that encourage "casual browsing."

Neighborhood shopping centers

A type of shopping center usually consisting of several small convenience and specialty stores small grocery stores, gas stations, and fast-food restaurants

Community shopping centers

A type of shopping center with one or two department stores, some specialty stores, and convenience stores coud include: Special events, such as art exhibits, automobile shows, and sidewalk sales, stimulate traffic

Regional shopping centers

A type of shopping center with the largest department stores, widest product mixes, and deepest product lines of all shopping centers national chains

Super regional shopping centers

A type of shopping center with the widest and deepest product mixes that attracts customers from many miles away (largest center) skating rinks, amusement centers, or upscale restaurants Mall of America

Category Killer

A very large specialty store that concentrates on a major product category and competes on the basis of low prices and product availability Home Depot, Office Depot, Barnes & Noble, PetSmart

Physical Distribution (logistics)

Activities used to move products from producers to consumers and other end users must meet the needs of both the supply chain and customers. Distribution activities are thus an important part of supply-chain planning and can require a high level of cooperation among partners. activities may be performed by a producer, wholesaler, or retailer, or they may be outsourced.

cost-based pricing

Adding a dollar amount or percentage to the cost of the product does not necessarily take into account the economic aspects of supply and demand, nor must it relate to just one pricing strategy or pricing objective. It is a straightforward and easy-to-implement method

cost-plus pricing

Adding a specified dollar amount or percentage to the seller's cost When production costs are difficult to predict, cost-plus pricing is appropriate. Projects involving custom-made equipment and commercial construction are often priced using this technique. The government also frequently expects cost-plus pricing from defense contractors. custom-made equipment and commercial construction defense contractors In periods of rapid inflation, cost-plus pricing is popular, especially when the producer must use raw materials that frequently fluctuate in price. In industries in which cost-plus pricing is common and sellers have similar costs, price competition will not be especially intense.

Markup Pricing

Adding to the cost of the product a predetermined percentage of that cost most supermarkets mark up prices by at least 25 percent, whereas warehouse clubs, like Costco and Sam's Club, have a lower average markup of around 14 percent. Markups can vary a great deal depending on the product and the situation. Using a rigid percentage markup for a specific product category reduces pricing to a routine task that can be performed quickly. Markups normally reflect expectations about operating costs, risks, and stock turnovers. Wholesalers and manufacturers often suggest standard retail markups that are considered profitable. To the extent that retailers use similar markups for the same product category, price competition is reduced.

Special-Event Pricing

Advertised sales or price cutting linked to a holiday, a season, or an event entails coordination of production, scheduling, storage, and physical distribution.

Commission Merchants

Agents that receive goods on consignment from local sellers and negotiate sales in large, central markets take possession of truckloads of commodities, arrange for necessary grading or storage, and transport the commodities to auction or markets where they are sold

market orientation

All functional areas of business (marketing, management, production, finance, and information systems) overlap with and are involved in executing a customer orientation and participate in supply-chain management If a firm has established a marketing strategy based on continuous customer-focused leadership, then supply-chain management will be driven by cooperation and strategic coordination to ensure customer satisfaction Managers should recognize that supply-chain management is critical to fulfilling customer expectations and that it requires coordination with all areas of the business. Associating a market orientation with supply-chain management should lead to increased firm performance and competitiveness.Footnote

Supply Chain

All the activities associated with the flow and transformation of products from raw materials through to the end customer think of the firms involved in a total distribution system as existing along a conceptual line, the combined impact of which results in an effective supply chain

Retailing

All transactions in which the buyer intends to consume the product through personal, family, or household use

Profit

Although a business may claim that its objective is to maximize profits for its owners, the objective of profit maximization is rarely operational because its achievement is difficult to measure. Therefore, profit objectives tend to be set at levels that the owners and top-level decision makers view as satisfactory and attainable. Specific profit objectives may be stated in terms of either actual dollar amounts or a percentage of sales revenues.

channel conflict

Although all channel members work toward the same general goal—distributing products profitably and efficiently—members sometimes may disagree about the best methods for attaining this goal. If self-interest creates misunderstanding about role expectations, the end result is frustration and conflict for the whole channel. For individual organizations to function together, each channel member must clearly communicate and understand role expectations. Communication difficulties are a potential form of channel conflict because ineffective communication leads to frustration, misunderstandings, and ill-coordinated strategies, jeopardizing further coordination. The Internet has increased the potential for conflict and resentment between manufacturers and intermediaries. When a manufacturer makes its products available through the Internet, it is employing a direct channel that competes with the retailers that also sell its products.

marketing channels

Although it is not necessary to make marketing channel decisions before other marketing decisions, they can have a strong influence on the other elements of the marketing mix (i.e., product, promotion, and pricing). decisions are critical because they determine a product's market presence and accessibility. Without marketing channel operations that reach the right customers at the right time, even the best goods and services will not be successful decisions have strategic significance because they generally entail long-term commitments among a variety of firms (e.g., suppliers, logistics providers, and operations firms). least flexible component of the marketing mix. Once a firm commits to a distribution channel, it is difficult to change. Marketing channels serve many functions, including creating utility and facilitating exchange efficiencies. Although some of these functions may be performed by a single channel member, most functions are accomplished through both independent and joint efforts of channel members. channel selection decisions are usually affected significantly by one or more of the following factors: customer characteristics, product attributes, type of organization, competition, marketing environmental forces, and characteristics of intermediaries

Tying Agreement

An agreement in which a supplier furnishes a product to a channel member with the stipulation that the channel member must purchase other products as well Suppliers may institute tying agreements as a means of getting rid of slow-moving inventory, or a franchisor may tie the purchase of equipment and supplies to the sale of franchises, justifying the policy as necessary for quality control and protection of the franchisor's reputation. The courts accept tying agreements when the supplier is the only firm able to provide products of a certain quality, when the intermediary is free to carry competing products as well, and when a company has just entered the market. Most other tying agreements are considered illegal.

Strategic Channel Alliance

An agreement whereby the products of one organization are distributed through the marketing channels of another the two firms are often similar with respect to target markets or uses, but they are not direct competitors Such alliances can provide benefits for both the organization that owns the marketing channel and the company whose brand is being distributed through the channel.

Franchising

An arrangement in which a supplier (franchisor) grants a dealer (franchisee) the right to sell products in exchange for some type of consideration

ethical issue

An identifiable problem, situation, or opportunity requiring a choice among several actions that must be evaluated as right or wrong, ethical or unethical Any time an activity causes marketing managers or customers in their target market to feel manipulated or cheated, a marketing ethical issue exists, regardless of the legality of that activity Research findings suggest that the greater the consequences associated with an issue, the more likely it will be recognized as an ethics issue and the more important it will be in making an ethical decision

Industrial Distributor

An independent business organization that takes title to industrial products and carries inventories usually sell standardized items, such as maintenance supplies, production tools, and small operating equipment. Some industrial distributors carry a wide variety of product lines. perform the needed selling activities in local markets at a relatively low cost to a manufacturer and reduce a producer's financial burden by providing customers with credit services industrial distributors usually maintain close relationships with their customers, they are aware of local needs and can pass on market information to producers. By holding adequate inventories in local markets, industrial distributors reduce producers' capital requirements. may be difficult to control because they are independent firms. They often stock competing brands, so a producer cannot depend on them to sell its brand aggressively. Furthermore, industrial distributors incur expenses from maintaining inventories and are less likely to handle bulky or slow-selling items, or items that need specialized facilities or extraordinary selling efforts. In some cases, industrial distributors lack the specialized knowledge necessary to sell and service technical products.

Wholesaler

An individual or organization that sells products that are bought for resale, for making other products, or for general business operations

Just in Time

An inventory-management approach in which supplies arrive just when needed for production or resale can maintain low inventory levels and purchase products and materials in small quantities only when needed. Usually there is no safety stock in a JIT system. Suppliers are expected to provide consistently high-quality products exactly when they are needed. JIT inventory management requires a high level of coordination between producers and suppliers, but it eliminates waste and reduces inventory costs. When a JIT approach is used in a supply chain, suppliers may move operations close to their major customers in order to provide goods as quickly as possible.

Retailer

An organization that purchases products for the purpose of reselling them to ultimate consumers

Social Responsibility

An organization's obligation to maximize its positive impact and minimize its negative impact on society deals with the total effect of all marketing decisions on society in marketing, social responsibility includes the managerial processes needed to monitor, satisfy, and even exceed stakeholder expectations and needs Johnson & Johnson - bad example IBM - good example attracting goodwill, publicity, and potential customers and employees

ethical officers

Are usually responsible for creating and distributing the code of conduct, enforcing the code and meeting with organizational members to discuss or provide advice about ethical issues It is important that companies enforce standards and impose penalties on those who violate codes of conduct The company must take steps in response to violations of standards and revise the compliance program to diminish future opportunities for misconduct Codifying ethical standards and implementing compliance programs and codes of conduct that incorporate both legal and ethical concerns is the best approach to preventing violations

Economic responsibilities

At the most basic level, all companies have an economic responsibility to be profitable so that they can provide a return on investment to their owners and investors, create jobs for the community, and contribute goods and services to the economy An organization's sense of economic responsibility is especially significant for employees, raising such issues as equal job opportunities, workplace diversity, job safety, health, and employee privacy. Economic responsibilities require finding a balance in stakeholder interests while recognizing that a firm must make a profit to be sustainable in the long run.

Producer --> retailer --> consumer

Channel B, which moves goods from the producer to a retailer and then to customers, is a frequent choice of large retailers because it allows them to buy in quantity from manufacturers. Retailers like Kmart and Walmart sell many items that were purchased directly from producers. New automobiles and new college textbooks are also sold through this type of marketing channel.

channel integration

Channel members can either combine and control activities or pass them to another channel member. Channel functions may be transferred between intermediaries and producers, even to customers. As mentioned earlier in the chapter, supply-chain functions cannot be eliminated. Unless buyers themselves perform the functions, they must pay for the labor and resources needed to perform them. Various channel stages may be combined, either horizontally or vertically, under the management of a channel captain. Such integration may stabilize supply, reduce costs, and increase channel member coordination.

Differential Pricing

Charging different prices to different buyers for the same quality and quantity of product vendors to use differential pricing by depending on the form of payment. For differential pricing to be effective, the market must consist of multiple segments with different price sensitivities

Price skimming

Charging the highest possible price that buyers who most desire the product will pay provides the most flexible introductory base price creates initial cash-flow at introductory period can be dangerous because they may make the product appear more lucrative than it actually is to potential competitors. A firm also risks misjudging demand and facing insufficient sales at the higher price. New-product prices should be based on both the value to the customer and competitive products.

Countries with lax labor laws

China and Russia, require even more diligent monitoring

Horizontal Channel Integration

Combining organizations at the same level of operation under one management The owner of a dry-cleaning firm, for example, might buy and combine several other existing dry-cleaning establishments. Although horizontal integration permits efficiencies and economies of scale in purchasing, marketing research, advertising, and specialized personnel, it is not always the most effective method of improving distribution. Problems that come with increased size often follow, resulting in decreased flexibility, difficulties coordinating among members, and the need for additional marketing research and large-scale planning. Unless distribution functions for the various units can be performed more efficiently under unified management than under the previously separate managements, horizontal integration will neither reduce costs nor improve the competitive position of the integrating firm.

Vertical Channel Integration

Combining two or more stages of the marketing channel under one management This may occur when one member of a marketing channel purchases the operations of another member or simply performs the functions of another member, eliminating the need for that intermediary. represents a more progressive approach to distribution, in which channel members become extensions of one another as they are combined under a single management. Vertically integrated channels can be more effective against competition because of increased bargaining power and the ease of sharing information and responsibilities. At one end of a vertically integrated channel, a manufacturer might provide advertising and training assistance. At the other end, the retailer might buy the manufacturer's products in large quantities and actively promote them.

stakeholder orientation

Companies that consider the diverse perspectives of stakeholders in their daily operations and strategic planning goes beyond customers, competitors, and regulators to include understanding and addressing the needs of all stakeholders, including communities and special-interest groups. As a result, organizations are now under pressure to undertake initiatives that demonstrate a balanced perspective on stakeholder interests

Private Warehouse

Company-operated facilities for storing and shipping products firm usually leases or purchases a private warehouse when its warehousing needs in a given geographic market are substantial and stable enough to warrant a long-term commitment to a fixed facility also appropriate for firms that require special handling and storage and that want control of warehouse design and operation. When sales volumes are fairly stable, ownership and control of a private warehouse may be most convenient and offer cost benefits. Private warehouses, however, face fixed costs, such as insurance, taxes, maintenance, and debt expense. limit firms' flexibility if they wish to move inventories to different locations. Many private warehouses are being eliminated by direct links between producers and customers, reduced cycle times, and outsourcing to public warehouses.

competition

Competition is another important factor for supply-chain managers to consider. The success or failure of a competitor's marketing channel may encourage or dissuade an organization from taking a similar approach. In a highly competitive market, it is important for a company to maintain low costs so it can offer lower prices than its competitors if necessary to maintain a competitive advantage.

Make environmentalism profitable

Consumers are beginning to recognize that competition in the marketplace should not occur between companies that are harming the environment and those that are trying to save it.

counterfeiting

Counterfeit products not only cost the firm, but they can also be dangerous to the consumer

dual distribution

Courts do not consider this practice illegal when it allows for competition. A manufacturer can also legally open its own retail outlets However, the courts view a manufacturer that uses company-owned outlets to dominate or drive out of business independent retailers or distributors that handle its products as a threat to competition. In such cases, dual distribution violates the law. To avoid this interpretation, producers should use outlet prices that do not severely undercut independent retailers' prices.

Managing supply chains responsibly is one of the greatest difficulties of marketing ethics and therefore needs some additional explanation. Supply chains require constant vigilance on the part of marketers as well as the need to anticipate unforeseen circumstance

Despite Apple's great reputation for quality products, human rights issues have emerged at Chinese suppliers that Apple uses to build and clean its products. Instances of forced overtime, underage workers, explosions, and improper disposal of waste have been recorded at Apple's supplier factories many stakeholders hold the firm responsible for all ethical conduct related to product availability

Inventory Management

Developing and maintaining adequate assortments of products to meet customers' needs Inventory decisions have a major impact on physical distribution costs and the level of customer service provided. When too few products are carried in inventory, the result is stockouts, or shortages of products. Stockouts can result in customer dissatisfaction that leads to lower sales, even loss of customers and brand switching On the other hand, when a firm maintains too many products (especially too many low-turnover products) in inventory, costs increase, as do risks of product obsolescence, pilferage, and damage objective of inventory management is to minimize inventory costs while maintaining an adequate supply of goods to satisfy customers. To achieve this objective, marketers focus on two major issues: when to order and how much to order.

Odd-Even Pricing

Ending the price with certain numbers to influence buyers' perceptions of the price or product aligns with the belief among many retailers that consumers respond more positively to odd-number prices, such as $4.99, than to whole-dollar prices, such as $5

environmental forces

Environmental forces can play a role in channel selection. Adverse economic conditions might force an organization to use a low-cost channel, even though it reduces customer satisfaction. In contrast, a growing economy may allow a company to choose a channel that previously had been too costly. New technology might allow an organization to add to or modify its channel strategy in beneficial ways, such as adding online retailing or dealing with intermediaries in more direct ways. The introduction of new technology might cause an organization to add or modify its channel strategy. For instance, many marketers in a variety of industries are finding that it is valuable to maintain online social networking accounts to keep customers up-to-date on new products, offers, and events. Government regulations can also affect channel selection. As labor and environmental regulations change, an organization may be forced to modify its existing distribution channel structure to comply with new laws. Firms might choose to enact the changes before they are mandated in order to appear proactive. International governmental regulations can complicate the supply chain a great deal, as laws vary from country to country and businesses must make sure they comply with local regulations. For smaller companies with fewer resources to devote to negotiating difficult international environments, the challenges can be even greater

Negotiated Pricing

Establishing a final price through bargaining between seller and customer Even when there is a predetermined stated price or a price list, manufacturers, wholesalers, and retailers still may negotiate to establish the final sales price Consumers commonly negotiate prices for houses, cars, and used equipment. The negotiation process can help build relationships and increase understanding between different parties in a supply-chain relationship.

Product-Line Pricing

Establishing and adjusting prices of multiple products within a product line goal is to maximize profits for an entire product line rather than to focus on the profitability of an individual product item provide marketers with pricing flexibility. Thus, marketers can set prices so that one product is profitable, whereas another is less profitable but increases market share by virtue of having a low price and, therefore, selling more units. When products in a line are complementary, sales increases in one item raise demand for other items

Organizational Relationships

Ethical choices in marketing are most often made jointly, in work groups and committees, or in conversations and discussions with coworkers Marketing employees resolve ethical issues based not only on what they learned from their own backgrounds but also on what they learn from others in the organization outcome of this learning process depends on the strength of each individual's personal values, opportunity for unethical behavior, and exposure to others who behave ethically or unethically Superiors, peers, and subordinates in the organization influence the ethical decision-making process. Although people outside the organization, such as family members and friends, also influence decision makers, organizational culture and structure operate through organizational relationships to influence ethical decisions

Make prices reflect the cost

Every product should reflect or at least approximate its actual cost—not only the direct cost of production but also the cost of air, water, and soil. To illustrate, the cost of a gallon of gasoline is higher when pollution, waste disposal, health effects, and defense expenditures are factored in. Major disasters like the BP oil leak in the Gulf of Mexico also impact the price of gas.

a good community citizen also means avoiding harmful actions

Examples include pollution, urban sprawl, and exploitation of the workforce For example, Cutco Corp. in Olean, New York, gives its employees gift certificates to local stores at Christmas. This supports local businesses and helps build good relationships with the community. From a positive perspective, a marketer can significantly improve its community's quality of life through employment opportunities, economic development, and financial contributions to educational, health, cultural, and recreational causes.

Professional Pricing

Fees set by people with great skill or experience in a particular field Some doctors' and lawyers' fees are prime examples, such as $75 for an office visit, $2,000 for an appendectomy, and $995 for a divorce professionals have costs associated with facilities, labor, insurance, equipment, and supplies.

refusal to deal

For nearly a century, courts have held that producers have the right to choose or reject the channel members with which they will do business Within existing distribution channels, however, suppliers may not legally refuse to deal with wholesalers or dealers merely because these wholesalers or dealers resist policies that are anticompetitive or in restraint of trade. Suppliers are further prohibited from organizing some channel members in refusal-to-deal actions against other members that choose not to comply with illegal policies.

Codes of Conduct (codes of ethics)

Formalized rules and standards that describe what the company expects of its employees Codes must be periodically revised to identify and eliminate weaknesses in the company's ethical standards and policies. Most codes address specific ethical risk areas in marketing Most large corporations have formal codes of conduct, but not all codes are effective if implemented improperly promote ethical behavior by reducing opportunities for unethical behavior; employees know both what is expected of them and what kind of punishment they face if they violate the rules deal with ethical issues or dilemmas that develop in daily operations by prescribing or limiting specific activities. do not have to be so detailed that they take every situation into account, but they should provide guidelines well-implemented ethics program and a strong corporate culture result in the greatest decrease in ethical risks for an organization

megacarriers

Freight transportation firms that provide several modes of shipment

Limited-Line Wholesalers

Full-service wholesalers that carry only a few product lines but many products within those lines groceries, lighting fixtures, or oil-well drilling equipment, but offer an extensive assortment of products within those lines

General-Merchandise Wholesaler

Full-service wholesalers with a wide product mix but limited depth within product lines drugs, nonperishable foods, cosmetics, detergents, and tobacco

Rack Jobbers

Full-service, specialty-line wholesalers that own and maintain display racks in stores set up displays, mark merchandise, stock shelves, and keep billing and inventory records. health and beauty aids, books, magazines, hosiery, and greeting cards.

superstores

Giant retail outlets that carry food and nonfood products found in supermarkets, as well as most routinely purchased consumer products

1. Pricing Objectives

Goals that describe what a firm wants to achieve through pricing form the basis for decisions for other stages of the pricing process. pricing objectives must be stated explicitly and in measurable terms should also include a time frame for accomplishing them consistent with the firm's marketing and overall objectives because pricing objectives influence decisions in many functional areas, including finance, accounting, and production. can use both short- and long-term pricing objectives and can employ one or multiple pricing objectives For instance, a firm may wish to increase market share by 18 percent over the next three years, achieve a 15 percent return on investment, and promote an image of quality in the marketplace

legal responsibilities

Government regulatory agencies often define the activities that constitute fair competition along with unethical issues such as price fixing, deceptive sales practices, false advertising, bribery, and questionable distribution practices

Retailing Positioning

Identifying an unserved or underserved market segment and serving it through a strategy that distinguishes the retailer from others in the minds of consumers in that segment H&M (upping prices to pay employees livable wages)

Supply Management

In its broadest form, refers to the processes that enable the progress of value from raw material to final customer and back to redesign and final disposition (e.g., purchasing, procurement, sourcing)

evaluation of competitor's price

In most cases, marketers are in a better position to establish prices when they know the prices charged for competing brands, which is the next step in establishing prices. Learning competitors' prices should be a regular part of marketing research. Some grocery and department stores even employ comparative shoppers who systematically collect data on prices at competitors' stores. Companies may also purchase price lists from syndicated marketing research services. Uncovering competitors' prices is not always an easy task, especially in producer and reseller markets, where prices are often closely guarded. Even if a marketer has access to competitors' price lists, they may not reflect the actual prices at which competitive products sell because negotiation is involved. Particularly in an industry in which price competition prevails, a marketer needs competitive price information to ensure that a firm's prices are the same as, or slightly lower than, competitors' prices.

status quo

In some cases, an organization is in a favorable position and desires nothing more than to maintain the status quo can focus on several dimensions, such as maintaining a certain market share, meeting (but not beating) competitors' prices, achieving price stability, and maintaining a favorable public image. can reduce a firm's risks by helping to stabilize demand for its products. A firm that chooses status quo pricing objectives risks minimizing pricing as a competitive tool, which could lead to a climate of nonprice competition. Professionals such as accountants and attorneys often operate in such an environment. toll-road example

competitive priorities

Increasingly, firms have become aware that supply chains can be a source of competitive advantage and a means of maintaining a strong market orientation because supply-chain decisions cut across all functional areas of business. Building the most effective and efficient supply chain can sustain a business and help it to use resources effectively and be more efficient. Many well-known firms, including Amazon, Dell, FedEx, Toyota, and Walmart, owe much of their success to outmaneuvering rivals with unique supply-chain capabilities. upply chains driven by firm-established goals focus on the "competitive priorities" of speed, quality, cost, or flexibility as the performance objective. Managers must remember, however, to keep a holistic view of the supply chain so that goals such as "speed" or "cost" do not result in dissatisfied or underpaid workers or other such abuses in factories. This should be a particular concern among firms that use international manufacturers because it can be more difficult to monitor working conditions internationally.

Manufacturers' Agents

Independent intermediaries that represent two or more sellers and usually offer customers complete product lines (account for more than half) apparel, machinery and equipment, steel, furniture, automotive products, electrical goods, and some food items.

Merchant Wholesalers

Independently owned businesses that take title to goods, assume ownership risks, and buy and resell products to other wholesalers, business customers, or retailers providing market coverage, making sales contacts, storing inventory, handling orders, collecting market information, and furnishing customer support.

Selling Agents

Intermediaries that market a whole product line or a manufacturer's entire output advertising, marketing research, and credit policies of the sellers they represent, at times even advising on product development and packaging.

Agents

Intermediaries that represent either buyers or sellers on a permanent basis

product characteristics that determine handling

Internal packaging is also an important consideration in materials handling. Goods must be packaged correctly to prevent damage or breakage during handling and transportation Many companies employ packaging consultants during the product design process to help them decide which packaging materials and methods will result in the most efficient handling Firms that produce food items or other goods that must remain cold may want to consider working with such an organization because they feature temperature-controlled warehouses and shipping. Such an operation can help a firm with inventory management by maximizing the shelf life of goods and minimizing loss.

Distribution Centers

Large, centralized warehouses that focus on moving rather than storing goods specially designed for rapid flow of products and are usually one-story buildings with access to transportation networks, such as major highways and/or railway lines. Many distribution centers are automated, with computer-directed robots, forklifts, and hoists that collect and move products to loading docks. Distribution over large geographic areas can be complicated but having strategically located distribution centers can help a company meet consumer demand. privately owned. They serve customers in regional markets and, in some cases, function as consolidation points for a company's branch warehouses.

Supermarkets

Large, self-service stores that carry a complete line of food products, along with some nonfood products

warehouse club

Large-scale, members-only establishments that combine features of cash-and-carry wholesaling with discount retailing

Mail-Order Wholesalers

Limited-service wholesalers that sell products through catalogs cosmetics, specialty foods, sporting goods, office supplies, and automotive parts

Drop Shippers

Limited-service wholesalers that take title to goods and negotiate sales but never actually take possession of products assume responsibility for products during the entire transaction, including the costs of any unsold goods

Truck Wholesalers

Limited-service wholesalers that transport products directly to customers for inspection and selection

Cash-And-Carry Wholesalers

Limited-service wholesalers whose customers pay cash and furnish transportation groceries, building materials, and electrical or office supplies.

Sales Branches

Manufacturer-owned intermediaries that sell products and provide support services to the manufacturer's sales force offer credit, deliver goods, give promotional assistance, and furnish other services Customers include retailers, business buyers, and other wholesalers. Manufacturers of electrical supplies, plumbing supplies, lumber, and automotive parts often have branch operations.

Sales Offices

Manufacturer-owned operations that provide services normally associated with agents

market share

Many firms establish pricing objectives to maintain or increase market share, which is a product's sales in relation to total industry sales. High relative market shares often translate into high profits for firms both market share and product quality influence profitability marketers often use an increase in market share as a primary pricing objective. Maintaining or increasing market share need not depend on growth in industry sales. An organization can increase its market share even if sales for the total industry are flat or decreasing. On the other hand, a firm's sales volume can increase while its market share decreases if the overall market grows.

channel leadership

Many marketing channel decisions are determined through channel member compromise with a better marketing channel as an end goal

basic for pricing

Marketers determine the appropriate pricing basis by analyzing the type of product, the market structure of the industry, the brand's market share position relative to competing brands, and customer characteristics. an organization generally considers at least two, or perhaps all three, dimensions cost is a factor in every pricing decision because it establishes a price minimum below which the firm will not be able to recoup its production and other costs Demand, likewise, sets an effective price maximum above which customers are unlikely to buy the product. Firms must weigh many different factors when setting prices, including costs, competition, customer buying behavior and price sensitivity, manufacturing capacity, and product life cycles.

Direct Selling

Marketing products to ultimate consumers through face-to-face sales presentations at home or in the workplace Amway, Avon, Herbalife, Vorwerk, and Natura Cosmeticos works best in other countries

Full-Service Wholesaler

Merchant wholesalers that perform the widest range of wholesaling product availability, suitable product assortments, breaking large quantities into smaller ones, financial assistance, and technical advice and service store design, site selection, personnel training, financing, merchandising, advertising, coupon redemption, and scanning

Limited-Service Wholesalers

Merchant wholesalers that provide some services and specialize in a few functions take title to merchandise but often do not deliver merchandise, grant credit, provide marketing information, store inventory, or plan ahead for customers' future needs. specialty foods, perishable items, construction materials, and coal.

Marketing Intermediaries most channels

Middlemen that link producers to other intermediaries or ultimate consumers through contractual arrangements or through the purchase and resale of products (wholesalers & retailers) play key roles in customer relationship management, not only through their distribution activities but also by maintaining databases and information systems to help all members of the marketing channel maintain effective customer relationships. works directly with shippers and third-party logistics companies and brokers to ensure that its customers have effective and efficient supply chains by using analytics and a robust information database pulled from its many clients Intermediaries are specialists in facilitating exchanges provide valuable assistance because of their access to and control over important resources used in the proper functioning of marketing channels Many firms exist to assist firms with creating supply-chain efficiencies Nevertheless, the press, consumers, public officials, and even other marketers freely criticize intermediaries, especially wholesalers Critics accuse wholesalers of being inefficient and adding to costs. Buyers often think that making the distribution channel as short as possible will decrease the prices for products, but this is not the case.

producer --> industrial distributor --> organizational buyer

Overall, these distributors can be most effective when a product has broad market appeal, is easily stocked and serviced, is sold in small quantities, and is needed on demand to avoid high losses.

Bundle Pricing

Packaging together two or more complementary products and selling them at a single price single price generally is markedly less than the sum of the prices of the individual products banking and travel services, computers, and automobiles with option packages bundle television, Internet, and phone service

Multiple-Unit Pricing

Packaging together two or more identical products and selling them at a single price two cans for 99 cents, rather than 50 cents per can Discount stores and especially warehouse clubs, like Sam's Club and Costco, are major users of multiple-unit pricing.

Materials Handling

Physical handling of tangible goods, supplies, and resources Efficient procedures and techniques for materials handling minimize inventory management costs, reduce the number of times a good is handled, improve customer service, and increase customer satisfaction. Systems for packaging, labeling, loading, and movement must be coordinated to maximize cost reduction and customer satisfaction.

Logistics Management

Planning, implementing, and controlling the efficient and effective flow and storage of products and information from the point of origin to consumption to meet customers' needs and wants

Reference Pricing

Pricing a product at a moderate level and displaying it next to a more expensive model or brand Hopes that they will view moderate price better than if it were on the shelf by itself

Bait Pricing

Pricing an item in a product line low with the intention of selling a higher-priced item in the line Producers of smartphones and tablets may engage in bait pricing, selling ultra-low-priced models that lure in customers but charging extra for the most desirable features.

Demand-Based Pricing

Pricing based on the level of demand for the product customers pay a higher price at times when demand for the product is strong and a lower price when demand is weak (HOTELS) Compared with cost-based pricing, demand-based pricing places a firm in a better position to reach high profit levels, as long as demand is strong at times and buyers value the product at levels sufficiently above the product's cost. To use this pricing basis, a marketer must be able to estimate the quantity of a product consumers will demand at different times and how demand will be affected by changes in the price. The marketer then chooses the price that generates the highest total revenue.

Competition-Based Pricing

Pricing influenced primarily by competitors' prices common method among producers of relatively homogeneous products, particularly when the target market considers price to be an important purchase consideration may choose to set their prices below competitors' or at the same level

Customary Pricing

Pricing on the basis of tradition An example would be the 25-cent gumballs sold in gumball machines—the price has remained at that level for probably as long as you can remember less common strategy today

Everyday Low Prices (EDLP)

Pricing products low on a consistent basis retailers, such as Walmart, and by manufacturers, such as Procter & Gamble benefits from reduced promotional costs, reduced losses from frequent markdowns, and more stable sale In some instances, customers believe that EDLPs are a marketing gimmick and not truly the good deal that they proclaim. Some retailers have encountered a backlash against EDLP from consumers who enjoy the thrill of hunting down the best sales

psychological Pricing

Pricing that attempts to influence a customer's perception of price to make a product's price more attractive consumer products

Captive Pricing

Pricing the basic product in a product line low, while pricing related items higher The printer is priced quite low to attract sales, but the printer ink replacement cartridges are very expensive.

Premium Pricing

Pricing the highest-quality or most versatile products higher than other models in the product line Other products in the line are priced to appeal to price-sensitive shoppers or to those who seek product-specific features. small kitchen appliances, beer, ice cream, and television cable service.

return on investment

Pricing to attain a specified rate of return on the company's investment is a profit-related pricing objective. generally requires some trial and error, as it is unusual for all data and inputs required to determine the necessary ROI to be available when first setting prices Many pharmaceutical companies use ROI pricing objectives because of the high level of investment in research and development required.

Marketing Ethics

Principles and standards that define acceptable marketing conduct as determined by various stakeholders including the public, government regulators, private-interest groups, consumers, industry, and the organization itself.

Price Leaders

Products priced near or even below cost supermarkets and restaurants

Reinvent the concept of a product.

Products should be reduced to only three types and eventually just two. The first type is consumables, which are eaten or, when placed in the ground, turn into soil with few harmful side effects. The second type is durable goods—such as cars, televisions, computers, and refrigerators—that should be made, used, and returned to the manufacturer within a closed-loop system. Such products should be designed for disassembly and recycling. The third category is unsalables and includes such products as radioactive materials, heavy metals, and toxins. These products should always belong to the original makers, who should be responsible for the products and their full life-cycle effects. Reclassifying products in this way encourages manufacturers to design products more efficiently.

RFID

RFID has greatly improved shipment tracking and reduced cycle times. Hundreds of RFID tags can be read at a time, which represents an advantage over barcodes. Firms are discovering that RFID technology has very broad applications, from tracking inventory to paying for goods and services, asset management, and data collection. disney world magic bands

Eliminate the concept of waste

Recognizing that pollution and waste usually stem from inefficiency, the question is not what to do with waste but how to make things without waste.

Warehouse Showrooms

Retail facilities in large, low-cost buildings with large on-premises inventories and minimal services large, low-cost buildings, warehouse materials-handling technology, vertical merchandise displays, large on-premises inventories, and minimal services

Online Retailing

Retailing that makes products available to buyers through computer connections

Discount Stores

Self-service, general-merchandise stores that offer brand-name and private-brand products at low prices

Price Lining

Setting a limited number of prices for selected groups or lines of merchandise For instance, a shop may sell men's ties only at $22 and $37

Comparison Discounting

Setting a price at a specific level and comparing it with a higher price higher price may be the product's previous price, the price of a competing brand, the product's price at another retail outlet, or a manufacturer's suggested retail price.

Secondary-Market Pricing

Setting one price for the primary target market and a different price for another market Often the price charged in the secondary market is lower geographically-isolated domestic market, a market in a foreign country, and a segment willing to purchase a product during off-peak times (early-bird specials) Secondary markets give an organization an opportunity to use excess capacity and stabilize the allocation of resources.

Prestige Pricing

Setting prices at an artificially high level to convey prestige or a quality image when buyers associate a higher price with higher quality perfumes, liquor, jewelry, cars, and some food items Upscale appliances or furniture

Penetration Pricing

Setting prices below those of competing brands to penetrate a market and gain a significant market share quickly more difficult to raise prices than drop them If the low price stimulates sales, the firm may be able to order longer production runs, increasing economies of scale and resulting in decreased production costs per unit

cash flow

Some companies set prices so they can recover cash as quickly as possible. Financial managers understandably want to recover quickly the capital spent to develop products. Choosing this pricing objective may have the support of a marketing manager if he or she anticipates a short product life cycle. the use of cash flow and recovery as an objective oversimplifies the contribution of price to profits. If this pricing objective results in high prices, competitors with lower prices may gain a large share of the market.

Direct

Some marketing channels are direct, meaning that the product goes directly from the producer to the customer. For instance, when you order pears online from Harry & David, the product is sent from the manufacturer to the customer

"bad apple-bad barrel"

Some people always do things in their own self-interest, regardless of organizational goals or accepted moral standards; they are sometimes called "bad apples." to eliminate unethical conduct, an organization must rid itself of bad apples through screening techniques and enforcement of the firm's ethical standards organizations sometimes become "bad barrels" themselves, not because the individuals within them are unethical but because the pressures to survive and succeed create conditions (opportunities) that reward unethical behavior One way to resolve the problem of the bad barrel is to redesign the organization's image and culture so that it conforms to industry and societal norms of ethical conduct.

Setting Prices

Stage 1 is the development of a pricing objective that is compatible with the organization's overall marketing objectives. Stage 2 entails assessing the target market's evaluation of price. Stage 3 involves evaluating competitors' prices, which helps determine the role of price in the marketing strategy. Stage 4 requires choosing a basis for setting prices. Stage 5 is the selection of a pricing strategy, or the guidelines for using price in the marketing mix. Stage 6, determining the final price, depends on environmental forces and marketers' understanding and use of a systematic approach to establishing prices. These stages are guidelines that provide a logical sequence for establishing prices, not rigid steps that must be followed in a particular order.

Economic and legal responsibilities are the most basic levels of social responsibility

Starbucks, Cummins, Johnson Controls, Adobe, and Juniper Networks are profitable and have excellent reputations with their customers.

Public Warehouse

Storage space and related physical distribution facilities that can be leased by companies . They sometimes provide distribution services, such as receiving, unloading, inspecting, filling orders, financing, displaying products, and coordinating shipments. useful to firms that have seasonal production or demand, low-volume storage needs, and inventories that must be maintained in many locations. They are also useful for firms that are testing or entering new markets or require additional storage space. Additionally, public warehouses serve as collection points during product-recall programs. Whereas private warehouses have fixed costs, public warehouses offer variable (and possibly lower) costs because users rent space and purchase warehousing services only as needed. furnish security for products that are used as collateral for loans, a service provided at either the warehouse or the site of the owner's inventory

Store Image Elements

Store environment, merchandise quality, and service quality

Off-Price Retailers

Stores that buy manufacturers' seconds, overruns, returns, and off-season merchandise for resale to consumers at deep discounts TJ Maxx, Marshalls

traditional specialty retailers

Stores that carry a narrow product mix with deep product lines Sunglass Hut, Footlocker

hypermarkets

Stores that combine supermarket and discount store shopping in one location

channel power

The ability of one channel member to influence another member's goal achievement The member that becomes the channel captain will accept the responsibilities and exercise the power associated with this role.

Marketing Citizenship

The adoption of a strategic focus for fulfilling the economic, legal, ethical, and philanthropic social responsibilities expected by stakeholders

Distribution

The decisions and activities that make products available to customers when and where they want to purchase them

Warehousing

The design and operation of facilities for storing and moving goods provides time utility by enabling firms to compensate for dissimilar production and consumption rates When mass production creates a greater stock of goods than can be sold immediately, companies warehouse the surplus until customers are ready to buy it. Warehousing also helps to stabilize prices and the availability of seasonal item

channel captain

The dominant leader of a marketing channel or a supply channel may be a producer, wholesaler, or retailer. Channel captains may establish channel policies and coordinate development of the marketing mix When a manufacturer is a channel captain and it determines that it must increase sales volume to achieve production efficiency, it may encourage growth through offering channel members financing, business advice, ordering assistance, advertising services, sales and service training, and support materials. These benefits usually come with requirements related to sales volume, service quality, training, and customer satisfaction. Retailers may also be channel captains. Walmart, for example, dominates the supply chain for its retail stores by virtue of the magnitude of its resources (especially information management) and a strong, nationwide customer base

transportation

The movement of products from where they are made to intermediaries and end users most expensive physical distribution function Because product availability and timely deliveries depend on transportation functions, transportation decisions directly affect customer service. In some cases, a firm may choose to build its distribution and marketing strategy around a unique transportation system if that system can ensure on-time deliveries and give the firm a competitive edge. Companies may build their own transportation fleets (private carriers) or outsource the transportation function to a common or contract carrier.

Telemarketing

The performance of marketing-related activities by telephone generate sales leads, improve customer service, speed up payments on past-due accounts, raise funds for nonprofit organizations, and gather marketing data.

Atmospherics

The physical elements in a store's design that appeal to consumers' emotions and encourage buying music, color, and complexity of layout and merchandise presentation display windows, store entrances, and degree of traffic congestion

Sustainability

The potential for the long-term well-being of the natural environment, including all biological entities, as well as the interaction among nature and individuals, organizations, and business strategies includes the assessment and improvement of business strategies, economic sectors, work practices, technologies, and lifestyles—all while maintaining the natural environment Many companies are making contributions to sustainability by adopting more eco-friendly business practices and/or supporting environmental initiatives Lumber products at Home Depot, for instance, may carry a seal from the Forest Stewardship Council to indicate that they were harvested from sustainable forests using environmentally-friendly method

Cause-related marketing

The practice of linking products to a particular social cause on an ongoing or short-term basis Bank of America Merrill Lynch has partnered with the nonprofit organization Water.org in its quest to develop clean water solutions for communities worldwide Such cause-related programs tend to appeal to consumers because they provide an additional reason to "feel good" about a particular purchase

Order Processing

The receipt and transmission of sales order information Computerized order processing provides a platform for information management, allowing all supply-chain members to increase their productivity. When carried out quickly and accurately, order processing contributes to customer satisfaction, decreased costs and cycle time, and increased profits. entails three main tasks: order entry, order handling, and order delivery

Non-Store Retailing

The selling of products outside the confines of a retail facility

Strategic Philanthropy

The synergistic use of organizational core competencies and resources to address key stakeholders' interests and achieve both organizational and social benefits involves employees, organizational resources and expertise, and the ability to link those assets to the concerns of key stakeholders, including employees, customers, suppliers, and social needs involves both financial and nonfinancial contributions to stakeholders (employee time, goods and services, company technology and equipment, etc.), while also benefiting the company

Cycle Time

The time needed to complete a process reducing cycle time while maintaining or reducing costs and/or maintaining or increasing customer service is a winning combination in supply chains and ultimately leads to greater end-customer satisfaction. Firms should aim to find ways to reduce cycle time while maintaining or reducing costs and maintaining or improving customer service

Operations Management

The total set of managerial activities used by an organization to transform resource inputs into products, services, or both

Automatic Vending

The use of machines to dispense products impersonal

Direct Marketing

The use of the telephone, Internet, and nonpersonal media to introduce products to customers, who can then purchase them via mail, telephone, or the Internet non-store retailing catalog marketing, direct-response marketing, telemarketing, television home shopping, and online retailing.

Dual Distribution

The use of two or more marketing channels to distribute the same products to the same target market

Wholesaling

Transactions in which products are bought for resale, for making other products, or for general business operations

Intermodal Transportation

Two or more transportation modes used in combination flexibility of trucking with the low cost or speed of other forms of transport.

Exclusive Distribution

Using a single outlet in a fairly large geographic area to distribute a product suitable for products purchased infrequently, consumed over a long period of time, or that require a high level of customer service or information. It is also used for expensive, high-quality products with high profit margins, such as Porsche, BMW, and other luxury automobiles. It is not appropriate for convenience products and many shopping products because an insufficient number of units would be sold to generate an acceptable level of profits on account of those products' lower profit margins. used as an incentive to sellers when only a limited market is available for products. Consider Patek Philippe watches that may sell for $10,000 or more. These watches, like luxury automobiles, are available in only a few select locations Some products are appropriate for exclusive distribution when first introduced, but as competitors enter the market and the product moves through its life cycle, other types of market coverage and distribution channels become necessary. A problem that can arise with exclusive (and selective) distribution is that unauthorized resellers acquire and sell products or counterfeits, violating the agreement between a manufacturer and its exclusive authorized dealers.

Intensive Distribution

Using all available outlets to distribute a product appropriate for products that have a high replacement rate, require almost no service, and are bought based on price cues. Most convenience products like bread, chewing gum, soft drinks, and newspapers are marketed through intensive distribution. Multiple channels may be used to sell through all possible outlets. For example, goods such as soft drinks, snacks, laundry detergent, and pain relievers are available at convenience stores, service stations, supermarkets, discount stores, and other types of retailers. Consumers want to be able to buy these products wherever it is most convenient to them at the lowest price possible while maintaining a reliable level of quality. Companies like Procter & Gamble that produce consumer packaged items rely on intensive distribution for many of their products (e.g., soaps, detergents, food and juice products, and personal-care products) because consumers want ready availability. (low cost items and product availability)

Selective Distribution

Using only some available outlets in an area to distribute a product appropriate for shopping products, which include durable goods like televisions or computers. Shopping products are more expensive than convenience goods, and consumers are willing to spend more time and possibly visit several retail outlets to compare prices, designs, styles, and other features. desirable when a special effort, such as customer service from a channel member, is important to customers. Shopping products require differentiation at the point of purchase. Selective distribution is often used to motivate retailers to provide adequate service. Dealers can offer higher-quality customer service when products are distributed selectively. Most perfumes and colognes and some cosmetics are marketed using selective distribution in order to maintain a particular image.

Individual Factors

When people need to resolve ethical conflicts in their daily lives, they often base their decisions on their own values and principles of right or wrong People learn values and principles through socialization by family members, social groups, religion, and formal education different levels of personal ethics in any organization, there will be significant ethical diversity among employees firms do not attempt to change an individual's personal ethics but try to hire employees with good character shared ethical values and compliance standards are required to prevent deviation from desired ethical conduct In the workplace, however, recent researchers have established that an organization's culture often has more influence on marketing decisions than an individual's own values

order delivery

When the order has been assembled and packed for shipment, the warehouse schedules delivery with an appropriate carrier. If the customer pays for rush service, overnight delivery by an overnight carrier is used. The customer is sent an invoice, inventory records are adjusted, and the order is delivered.

full-line forcing

a supplier requires that channel members purchase the supplier's entire line to obtain any of the supplier's products ensure that intermediaries accept new products and that a suitable range of products is available to customers.

safety stock

amount of extra inventory a firm keeps to guard against stockouts resulting from above-average usage rates and/or longer-than-expected lead times

Manufacturer's Agent

an independent businessperson who sells complementary products of several producers in assigned territories and is compensated through commission does not acquire title to the products and usually does not take possession Acting as a salesperson on behalf of the producers, a manufacturers' agent has little or no latitude in negotiating prices or sales terms. They usually possess considerable technical and market information and have an established set of customers. For an organizational seller with highly seasonal demand, a manufacturers' agent can be an asset because the seller does not have to support a year-round sales force. The fact that manufacturers' agents are typically paid on a commission basis may also be an economical alternative for a firm that has highly limited resources and cannot afford a full-time sales force. seller has little control over the actions of manufacturers' agents. Because they work on commission, manufacturers' agents prefer to concentrate on larger accounts. They are often reluctant to spend time following up with customers after the sale, putting forth special selling efforts, or providing sellers with market information because they are not compensated for these activities and they reduce the amount of productive selling time. Because they rarely maintain inventories, manufacturers' agents have a limited ability to provide customers with parts or repair services quickly.

Product-related ethical issues

arise when marketers fail to disclose risks associated with a product or information regarding the function, value, or use of a product Ethical issues also arise when marketers fail to inform customers about existing conditions or changes in product quality; such failure is a form of dishonesty about the nature of the product

product attributes

attributes of the product can have a strong influence on the choice of marketing channels. Marketers of complex and expensive products (like automobiles) will likely employ short channels, as will marketers of perishable products (such as dairy and produce). Less-expensive standardized products with long shelf lives, like soft drinks and canned goods, can go through longer channels with many intermediaries. Fragile products that require special handling are likely to be distributed through short channels to minimize the amount of handling and risk of damage. Firms that desire to convey an exclusive image for their products may wish to limit the number of outlets available.

Organizational Pressure

because of pressure to meet a schedule, a superior may ask a salesperson to lie to a customer over the phone about a late product shipment pressure to meet a sales quota may result in overly aggressive sales tactics superiors and coworkers can generate organizational pressure Nearly all marketers face difficult issues whose solutions are not obvious or that present conflicts between organizational objectives and personal ethics.

order entry

begins when customers or salespeople place purchase orders via telephone, regular mail, e-mail, or website. Electronic ordering has become the most common. It is less time-consuming than a paper-based ordering system and reduces costs. In some companies, sales representatives receive and enter orders personally and also handle complaints, prepare progress reports, and forward sales order information.

wholesalers

buy and resell products to other wholesalers, retailers, and industrial customers

need to prioritize stakeholders, deal with conflicting demands, and respond with a marketing strategy to provide balance

car auction company Barrett-Jackson incorporates customer satisfaction into its business model. The company provides its buyers with access to insurance, undergoes extensive background checks to vouch for the authenticity of the classic and custom cars that it auctions, and has hired independent auditors to ensure the fairness and transparency of its business operations balanced the needs of its stakeholders and developed a solid reputation of trust actions should be grounded in social responsibility and marketing ethics. The results should be positive relationships with customers and increased financial performance

railroads

carry heavy, bulky freight that must be shipped long distances over land. Railroads commonly haul minerals, sand, lumber, chemicals, and farm products, as well as low-value manufactured goods and automobiles. Railroads are especially efficient for transporting full carloads, which can be shipped at lower rates than smaller quantities, because they require less handling. Many companies locate factories or warehouses near rail lines for convenient loading and unloading.

administered VMS

channel members are independent, but informal coordination achieves a high level of inter-organizational management Members of an administered VMS may adopt uniform accounting and ordering procedures and cooperate in promotional activities for the benefit of all partners. Although individual channel members maintain autonomy, as in conventional marketing channels, one channel member (such as a producer or large retailer) dominates the administered VMS so that distribution decisions take the whole system into account.

types of organization

characteristics of the organization will have a great impact on the distribution channels chosen. Owing to their size, larger firms are in a better position to deal with vendors or other channel members. They are also likely to have more distribution centers, which reduce delivery times to customers. Large companies can also use an extensive product mix as a competitive tool. A smaller company that uses regional or local channel members, on the other hand, might be in a strong position to cater its marketing mix to serve customers in that particular area, compared with a larger and less-flexible organization. However, smaller firms may not have the resources to develop their own sales force, ship their products long distances, maintain a large inventory, or extend credit. In such cases, they might consider including other channel members that have the resources to provide these services to customers.

waterways

cheapest method of shipping heavy, low-value, nonperishable goods. Water carriers offer considerable capacity. Powered by tugboats and towboats, barges that travel along intra-coastal canals, inland rivers, and navigation systems can haul at least 10 times the weight of one rail car, and oceangoing vessels can haul thousands of containers. The vast majority of international cargo is transported by water at least part of the way. However, many markets are inaccessible by water transportation and must be supplemented by rail or truck. Droughts and floods also may create difficulties for users of inland waterway transportation. Nevertheless, the growing need to transport goods long distances across the globe will likely increase its use in the future.

Corporate VMS

combines all stages of the marketing channel, from producers to consumers, under a single owner . Because it has control over all stages of the supply chain, Inditex can maintain an advantage through speed and keeping prices low.

producer --> wholesaler --> retailer --> consumer

common distribution channel for consumer products. It takes goods from the producer to a wholesaler, then to a retailer, and finally to consumers. It is a practical option for producers that sell to hundreds of thousands of customers through thousands of retailers. Some home appliances, hardware, and many convenience goods are marketed through this type of channel. Consider the number of retailers marketing KitchenAid appliances. It would be extremely difficult, if not impossible, for KitchenAid to deal directly with each retailer that sells its brand.

good supply-chain ethics

company has instituted a vendor grievance and feedback system allows vendors to report potential problems before they reach the next level of the supply chain, which reduces the damage such problems will cause if the products continue down the supply chain unchecked.

opportunity

conditions that limit barriers or provide rewards employee who takes advantage of an opportunity to act unethically and is rewarded or suffers no penalty may repeat such acts as other opportunities arise salesperson who receives a raise after using a deceptive sales presentation to increase sales is being rewarded and thus will probably continue the behavior opportunity to engage in unethical conduct is often a better predictor of unethical activities than are personal values Professional codes of conduct and ethics-related corporate policy also influence opportunity by prescribing what behaviors are acceptable. The larger the rewards and the milder the punishment for unethical conduct, the greater is the likelihood that unethical behavior will occur. most refrain from taking advantage of such opportunities

outsourcing

contracting of physical distribution tasks to third parties Most physical distribution activities can be outsourced to outside firms that have special expertise in areas such as warehousing, transportation, inventory management, and information technology. Outsourcing distribution may allow a firm to leverage the expertise of another firm while focusing on its core competencies and freeing up resources to develop value-added capabilities to better serve customers.Footnote

Direct (business product)

contrast to consumer goods, business products, especially expensive equipment, are most likely to be sold through direct channels Business customers prefer to communicate directly with producers, especially when expensive or technically complex products are involved. For instance, business buyers of Xerox products not only receive devices and equipment, but ongoing maintenance, technical support, and data analytics. Xerox has moved from being a company known for its copiers to a creative powerhouse that delivers a variety of solutions to its clients. Service through direct channels is a big part of Xerox's success. It digitally collects ongoing information from many of the products it sells to companies and performs preemptive repairs on machines it senses are about to malfunction. This level of service would be impossible through an intermediary

social responsibility

deals with the total effect of marketing decisions on society relates to doing what is economically sound, legal, ethical, and socially conscious.

Common Unethical Practices

deceptive sales practices, bribery, price discrimination, deceptive advertising, misleading packaging, and marketing defective products Deceptive advertising in particular causes consumers to become defensive toward all promotional messages and distrustful of all advertising, so it hurts not only consumers but marketers as well

Coworker influence on individual ethics

depends on the person's exposure to unethical behavior the more a person is exposed to unethical activity by others in the organizational environment, the more likely he or she is to behave unethically employees take their cues from coworkers in learning how to solve problems, including ethical problems employees who perceive their work environment as ethical experience less role conflict and ambiguity, are more satisfied with their jobs, and are more committed to their employer

Channel Decisions

determine a product's market presence and accessibility (Moto X example) (least flexible component)

Strategic Issues

developing channel leadership, fostering cooperation between channel members, managing channel conflict, and possibly consolidating marketing channels through channel integration.

Factory outlet malls

discount and factory outlet stores carrying traditional manufacturer brands, such as Polo Ralph Lauren, Nike, and Guess.

American Marketing Association Code of Ethics

does not cover every possible ethical issue, but it provides a useful overview of what marketers believe are sound principles for guiding marketing activities. This code serves as a helpful model for structuring an organization's code of conduct preamble, general norms, ethical values, & implementation a company's ethical culture is the greatest determinant of future misconduct

supply chain managers

encourage cooperation between organizations in the supply chain and understand the trade-offs required to achieve optimal levels of efficiency and service

right to be heard

ensures that consumers' interests will receive full and sympathetic consideration in the formulation of government policy also promises consumers fair treatment when they complain to marketers about products This right benefits marketers, too, because when consumers complain about a product, the manufacturer can use this information to modify the product and make it more satisfying.

field public warehouse

established by public warehouses at the owner's inventory location. The warehouser becomes custodian of the products and issues a receipt that can be used as collateral for a loan

challenges of ethical conduct

evidence indicates that being socially responsible and ethical results in increased profits a relationship exists between a stakeholder orientation and an organizational climate that supports marketing ethics and social responsibility Marketing is often the most visible interaction that consumers have with a firm stakeholders observe marketing activities such as promotion and learn about their activities through the mass media (product recall, unethical practices) OR (trustworthy, ethical, and not in headlines)

society's demands

example, society wants a cleaner environment and the preservation of wildlife and their habitats, but it also wants low-priced products companies must carefully balance the costs of providing low-priced products against the costs of manufacturing, packaging, and distributing their products in an environmentally responsible manner.

Organizational Structure

experts agree that the chief executive officer or vice president of marketing sets the ethical tone for the entire marketing organization. Lower-level managers obtain their cues from top managers, but they too impose some of their personal values on the company. Top-performing sales representatives may influence the conduct of other salespersons as they serve as role models for success interaction between corporate culture and executive leadership helps determine the firm's ethical value system.

Customer Relationship Management (CRM)

exploit the information in supply-chain partners' information systems and make it available for easy reference. CRM systems can help all channel members make better marketing strategy decisions that develop and sustain desirable customer relationships. Companies now offer online programs that integrate business data into a social networking site format. Tibbr and Yammer are two such programs. By inputting all data into a single, easy-to-use online system, businesses can achieve greater efficiencies and improve their CRM.

air transportation

fastest but most expensive form of shipping. It is used most often for perishable goods, for high-value and/or low-bulk items, and for products that require quick delivery over long distances. Some air carriers transport combinations of passengers, freight, and mail. Despite its expense, air transit can reduce warehousing and packaging costs and losses from theft and damage, thus helping the aggregate cost of the mode. Although air transport accounts for a small minority of total cargo carried, it is an important form of transportation in an increasingly time-sensitive business environment.

producer --> agent --> wholesaler --> retailer --> consumer

frequently for products intended for mass distribution, such as processed foods. Consequently, to place its Wheat Thins crackers in specific retail outlets, supply-chain managers at Nabisco may hire an agent (or a food broker) to sell the crackers to wholesalers. Wholesalers then sell the Wheat Thins to supermarkets, vending-machine operators, and convenience stores.

Philanthropic Responsibilities

go beyond marketing ethics, are not required of a company, but they promote human welfare or goodwill, as do the economic, legal, and ethical dimensions of social responsibility. (helping Red Cross or United Way)

time utility

having products available when the customer wants them NETFLIX

stakeholder orientation

helps to broaden and redefine marketing beyond a market orientation that focuses on customers and competitors by considering primary stakeholders such as employees, suppliers, regulators, shareholders, customers, and the community

location factors

including position of the firm's target market within the trading area, kinds of products being sold, availability of public transportation, customer characteristics, and placement of competitors' stores.

Ethics

individual and group decisions—judgments about what is right or wrong in a particular decision-making situation thics is one dimension of social responsibility

ethical decision-making process

individual factors, organizational relationships, and opportunity interact to determine ethical decisions in marketing.

consumer purchases

influenced by social and psychological factors

order handling

involves several tasks. Once an order is entered, it is transmitted to a warehouse to verify product availability and to the credit department to set terms and prices and to check the customer's credit rating. If the credit department approves the purchase, warehouse personnel assemble the order. In many warehouses, automated machines carry out this step. If the requested product is not in stock, a production order is sent to the factory, or the customer is offered a substitute.

channel stuffing

involves shipping surplus inventory to wholesalers and retailers at an excessive rate, typically before the end of a quarter practice may conceal declining demand for a product or inflate financial statement earnings, which misleads investors

Survival

involves temporarily setting prices low, at times below costs, in order to attract more sales. most fundamental pricing objectives Because price is a flexible ingredient in the marketing mix, survival strategy can be useful in keeping a company afloat by increasing sales volume. Most organizations will tolerate setbacks, such as short-run losses and internal upheaval, if necessary for survival.

Global Supplier Code of Conduct

it is essential for all companies that work with global suppliers to adopt a Global Supplier Code of Conduct and ensure that it is effectively communicated to suppliers companies should encourage compliance and procurement employees to work together to find ethical suppliers at reasonable cost Marketers must also work to make certain that their company's supply chains are diverse This can be difficult because sometimes the best product manufacturers are located in a single country. Yet although it is expensive to diversify a company's supply chain, disasters can incapacitate a country most importantly, companies must perform regular audits on its suppliers and, if necessary, discipline those found to be in violation of company standards

place utility

making products available in locations where customers wish to purchase them ZAPPOS

restricted sales territories

manufacturer may try to prohibit intermediaries from selling outside of designated sales territories. Intermediaries often favor this practice because it provides them with exclusive territories where they can minimize competition. Over the years, the courts have adopted conflicting positions in regard to restricted sales territories Although the courts have deemed restricted sales territories a restraint of trade among intermediaries handling the same brands (except for small or newly established companies), they have also held that exclusive territories can actually promote competition among dealers handling different brands. At present, the producer's intent in establishing restricted territories and the overall effect of doing so on the market must be evaluated for each individual case.

intensity of market coverage

marketers must determine the appropriate intensity of coverage—that is, the number and kinds of outlets in which a product will be sold. decision depends on the characteristics of the product and the target market. To achieve the desired intensity of market coverage, distribution must correspond to behavior patterns of buyers convenience, shopping, specialty, and unsought—according to how consumers make purchases. In considering products for purchase, consumers take into account such factors as replacement rate, product adjustment (services), duration of consumption, and time required to find the product.Footnote These variables directly affect the intensity of market coverage.

markup as percentage of cost

markup / cost

markup as percentage of selling cost

markup / selling price

Producer --> agent --> industrial distributor --> organizational buyer

may be appropriate when the producer wishes to cover a large geographic area, but maintains no sales force due to highly seasonal demand or because it cannot afford one. This channel can also be useful for a business marketer that wants to enter a new geographic market without expanding its sales force.

right to choose

means consumers should have access to a variety of products and services at competitive prices They should also be assured of satisfactory quality and service at a fair price. Activities that reduce competition among businesses in an industry might jeopardize this right.

right to be informed

means consumers should have access to and the opportunity to review all relevant information about a product before buying it. Many laws require specific labeling on product packaging to satisfy this right. In addition, labels on alcoholic and tobacco products must inform consumers that these products may cause illness and other problems.

right to safety

means marketers are obligated not to market a product that they know could harm consumers can be extended to imply that all products must be safe for their intended use, include thorough and explicit instructions for proper and safe use, and have been tested to ensure reliability and quality

possession utility

means that the customer has access to the product to use or to store for future use LEASE or RENTALS

pipelines

most automated transportation mode, usually belong to the shipper and carry the shipper's products. Most pipelines carry petroleum products or chemicals. Slurry pipelines carry pulverized coal, grain, or wood chips suspended in water. Pipelines move products slowly but continuously and at relatively low cost. They are dependable and minimize the problems of product damage and theft. However, contents are subject to as much as 1 percent shrinkage, usually from evaporation—which can result in profit losses. Pipelines also have been a concern to environmentalists, who fear installation and leaks could harm plants and animals.

trucks

most flexible schedules and routes of all major transportation modes in the United States because they can go almost anywhere. Because trucks do not have to conform to a set schedule and can move goods from factory or warehouse to customer, wherever there are roads, they are often used in conjunction with other forms of transport that cannot provide door-to-door deliveries, such as waterways and railroads. Trucks are more expensive and somewhat more vulnerable to bad weather than trains. They are also subject to size and weight restrictions on the loads they carry. Trucks are sometimes criticized for high levels of loss and damage to freight and for delays caused by the re-handling of small shipments.

Contractual VMS

most popular type of vertical marketing system. Channel members are linked by legal agreements spelling out each member's rights and obligations Franchise organizations, such as McDonald's and KFC, are contractual VMSs. Other contractual VMSs include wholesaler-sponsored groups, such as IGA stores, in which independent retailers band together under the contractual leadership of a wholesaler. Retailer-sponsored cooperatives, which own and operate their own wholesalers, are a third type of contractual VMS.

greenwashing

occurs when products are promoted as being more environmentally friendly than they really are there are no formal criteria for what constitutes a green product, so it is hard to determine whether a company's product is truly green

bait and switch

occurs when retailers have no intention of selling the bait product. They use the low price merely to entice customers into the store to sell them higher-priced products. Unethical and in some states, illegal

unit loading

one or more boxes are placed on a pallet or skid. These units can then be loaded efficiently by mechanical means, such as forklifts, trucks, or conveyer systems

Pricing ethical issues

price fixing, predatory pricing, and failure to disclose the full price of a purchase Marketers have the right to price their products to earn a reasonable profit, but ethical issues may crop up when a company seeks to earn high profits at the expense of its customers Another issue relates to quantity surcharges that occur when consumers are effectively overcharged for buying a larger package size of the same grocery product bait and switching

price gouging

pricing products at exorbitant levels, and taking advantage of customers who must purchase the medicine to survive or to maintain their quality of life.

retailers

purchase products and resell them to end consumers

usage rate

rate at which a product's inventory is used or sold during a specific time period

channel cooperation / coordination

reduces wasted resources, such as time, energy, or materials. A coordinated supply chain can also be more environmentally friendly, a consideration that is increasingly important to many organizations and their stakeholders. enables retailers, wholesalers, suppliers, and logistics providers to speed up inventory replenishment, improve customer service, and cut the costs of bringing products to the consumer Because the supply chain is an interrelated system, the success of one firm in the channel depends in part on other member firms. Without cooperation, neither overall channel goals nor individual member goals can be realized. Thus, marketing channel members should make a coordinated effort to satisfy market requirements. Channel cooperation leads to greater trust among channel members and improves the overall functioning of the channel. Cooperation also leads to more satisfying relationships among channel members. If a marketing channel is viewed as a unified supply chain competing with other systems, individual members will be less likely to take actions that create disadvantages for other members. Channel members should agree to direct efforts toward common objectives. To achieve these objectives efficiently, channel members' roles should be defined precisely. Starting from a common basis allows channel members to set benchmarks for reviewing intermediaries' performance and helps to reduce conflicts as each channel member knows what is expected of it.

order lead time

refers to the average time lapse between placing the order and receiving it

supply chain members

requires information from other channel members. For instance, suppliers need order and forecast information from the manufacturer. They may also need availability information from their own suppliers.

trade-offs

strategic decisions to combine (and recombine) resources for greatest cost-effectiveness. The goal is not always to find the lowest cost, but rather to find the right balance of costs.

containerization

the consolidation of many items into a single, large container that is sealed at its point of origin and opened at its destination. Containers are usually 8 feet wide, 8 feet high, and 10 to 40 feet long. Their uniform size means they can be stacked and shipped via train, barge, or ship. Once containers reach their destinations, wheel assemblies can be added to make them suitable for ground transportation by truck. Because individual items are not handled in transit, containerization greatly increases efficiency and security in shipping.

Consumerism

the efforts of independent individuals, groups, and organizations to protect the rights of consumers interest groups and individuals have taken action against companies they consider irresponsible by lobbying government officials and agencies, engaging in letter-writing campaigns and boycotts, and making public-service announcements Can leave reviews online

reorder point

the inventory level that signals the need to place a new order. To calculate the reorder point, the marketer must know the order lead time, the usage rate, and the amount of safety stock required reorder point = (order lead time X usage rate) + safety stock

Also of great importance to the consumer movement are four basic rights

the right to safety, the right to be informed, the right to choose, and the right to be heard.

Promotion ethical issues

variety of ways, among them false or misleading advertising and manipulative or deceptive sales promotions, tactics, and publicity promoting products that might be construed as harmful, such as violent video games or fatty foods, to children sales promotion activities such as games, contests, and other sales attempts must be communicated accurately and transparently.

bonded storage

warehousing arrangement in which imported or taxable products are not released until the products' owners pay U.S. customs duties, taxes, or other fees. Bonded warehouses enable firms to defer tax payments on such items until they are delivered to customers.

Bribery

when an incentive (usually money or expensive gifts) is offered in exchange for an illicit advantage bribery in personal selling situations even a bribe that is offered to benefit the organization is usually considered unethical

Product recalls

when companies ask customers to return products found to be defective Companies that issue product recalls are often criticized for not having adequate quality controls to catch the defective product before it was released

pop-up retailer

which are only located in a space for a short time

direct association exists between corporate social responsibility and customer satisfaction, profits, and market value

young adults aged 18 to 25 are especially likely to take a company's citizenship efforts into account when making not only purchasing but also employment and investment decisions