Marketing Exam Three

Typical marketing channels for business products

- Direct channel is common. - Industrial distributor (facilitates exchanges) - Manufacturers' agent - Manufacturers' agent and industrial distributor

Typical marketing channels for consumer products

- Direct to consumer - Retailers (Target) - Producer to wholesaler to retailer. (Appliances) - Producer to agent to wholesaler to retailer. (Food)

Channel captain and channel power

The dominant leader of a marketing channel or a supply channel. Captain must possess channel power, the ability to influence another channel member's goal achievement.

Communications channel

The medium of transmission that carries the coded message from the source to the receiver or audience. - Includes newspapers, magazines, broadcast media, digital communications.

Atmospherics

The physical elements in a store's design that appeal to consumers' emotions and encourage buying, help to create an image and position a retailer. Music, color and complexity of layout and merchandise presentation to influence customer attention, mood, and shopping behavior.

Order processing

The receipt and transmission of sale order information. Three main tasks: Order entry, order handling, and order delivery.

Non-store retailing

The selling of products outside the confines of a retail facility. Form of a direct marketing that accounts for an increasing percentage of total retail sales, particularly as online retailing becomes more popular. - Can occur through online retailing, catalog marketing, direct-response marketing, telemarketing, and television home shopping.

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.

Operations management

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

Marketing channels create four types of utility:

Time, place, possession, and form.

Trade-offs are strategic decisions to combines resources for greatest cost-effectiveness.

Trade-off

Direct Marketing

Use of the telephone, internet, and non personal media to communicate product and organizational information to customers, who can then purchase products via mail, telephone, or the internet.

Electronic data interchange

Uses computer technology to integrate order processing with production, inventory, accounting, and transportation.

Reduce Sales Fluctuations

When promotional techniques reduce fluctuations by generating sales during slow periods, a firm can use its resources more efficiently.

Adv. of Industrial seller

low cost for selling actives, provide customers with credit services. Also because industrial distributors maintain close relationships with their customers, they are aware of local needs and can pass on market information to producers.

Lifestyle Shopping Center

A type of shopping center that is typically open air and features upscale specialty, dining, and entertainment stores. Near affluent neighborhoods. May have fountains or benches.

Administered VMS

Channel members are independent, but informal coordination achieves a high level of inter-organizational management.

Marketing channels can be classified as

Channels for consumer products and channels for business products.

Hypermarkets

Combine supermarket and discount store shopping in one location. 50 percent of space go to grocery products and the remainder go to general merchandise.

Corporate VMS

Combines all stages of the marketing channel, from producers to consumers, under a single owner.

Airplanes

High cost, fast, dependable, not flexible, average accessibility and frequency.

Supply management

In its broader form, refers to the processes that enable the progress of value from raw material to final customer and back to redesign and final disposition.

Vertical Marketing System

In which a single channel member coordinates or manages all activities to maximize efficiencies resulting in an effective and low-cost distribution system that does not duplicate services. - Most vertical marketing systems take one of three forms: corporate, administered, or contractual.

Manufacturers' agent and an industrial distributor

Necessary when the producer wishes to cover a larger geographic area, but maintains no sales for due to highly seasonal demand or because it cannot afford one.

Publicity - Component of Public Relations

Non personal communication in news-story form about an organization or its products, or both, transmitted through a mass medium at no charge. - Press release and conferences, feature articles.

Physical distribution activities

Order processing, inventory management, materials handling, warehousing, and transportation.

Word-of-mouth Communication

Personal, informal exchanges of communication that customers share with one another about products, brands, and companies.

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.

Factors effecting promotion mix

Products price, type of price, product life cycle, intensity of market coverage, use of product, availability for promotional techniques. Push policy - the producers promotes the product only to the next institution down the marketing channel.

Types of transportation:

Railroads, Trucks, Pipelines, Waterways, Airplanes.

Integrated Marketing Communications

Refer to the coordination of promotion and other marketing efforts to ensure maximum informational and persuasive impact on customers. - Major goal of integrated marketing communications is to send a consistent message to customers. - Enable synchronization of promotion elements and can improve the efficiency and effectiveness of promotion budg

Wholesaling

Refers to all transactions in which products are bought for resale, making other products, or general business operations. - Serve as an extension of the producer's sales force. - Often pay for transporting goods, reduce a producer's warehousing expenses and inventory, extend credit and assume losses from buyers who turn out to be poor credit risk, and can be a source of working capital when they buy a producer's output in cash.

Supply-chain management

Refers to the coordination of all the activities involved with the flow and transformation of supplies, products, and information throughout the supply chain to the ultimate customer.

Agents and Brokers

Represent either buyers or sellers on a permanent basis. Brokers are intermediaries that buyers or sellers employ temporarily.

Vertical integration cont.

Represents a more progressive approach to distribution in which channel members become extensions of one another

Warehouse showrooms

Retail facilities with five basic characteristics: Large, low-cost buildings, ware materials-handling technology, vertical merchandise displays, large on-premises intentions, and minimal services.

Category Management

Retail strategy of managing groups of similar, often substitutable products produced by different manufacturers. Successful category management involves collecting and analyzing data on sales and consumers and sharing the information between the retailer and manufacturers.

Role of marketing channel

Right time at right place in the right quantities. Buyers' needs and behavior are therefore important concerns of channel members.

Discount stores

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

Characteristics of the Target Market

Size, geographic distribution, and demographic characteristics.

Waterways

Slow costs, slow speed, average dependability, high flexibility, limited accessibility and low frequency.

Convenance store

Small, self-service store that is open long hours and caries a narrow assortment of products, usually convenience items such as soft drinks and other beverages, newspapers, etc.

Traditional specialty retailers

Stores that carry a narrow product mix with deep product lines.

Customer relationship management

System can help all channel members make better marketing strategy decisions that develop and sustain desirable customer relationships.

Supply chain driven by firm-established goals focus on

"Competitive priorities" of speed, quality, cost, or flexibility as the performance objective.

General-Merchandise retailer

A retail establishment that offers a variety of product lines that are stocked in considerable depth.

Manufacturers' agents

Account for more than half of all agents wholesalers, are independent intermediaries that represent two or more sellers and usually offer complete product lines to customers. On contract.Used in sales apparel, machinery and equipment, steel, furniture, automotive products, electrical goods.

Sales promotion

Activity or material that acts as a direct inducement, offering added value or incentive for the product to resellers, salespeople, or consumers. Ex: free samples, games, contests.

Interior Atmospheric Elements

Aesthetic considerations such as lighting, wall and floor coverings, dressing facilities, and store fixtures.

Supply chain

All the activities associated with the flow and transformation of products from raw materials through to the end of customer.

Tying agreement

An agreement in which a supplier furnished a product to a channel member with the stipulation that the channel member must purchase other products as well.

Retailer

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

Public Relation Tools

Annual reports, brochures, event sponsorship, sponsorship of socially responsible programs aimed at protecting the environment or helping disadvantaged individuals.

Noise

Anything that reduces the clarity and accuracy of communication; it has many sources and may affect any or all parts of the communication process.

Exterior Atmospheric Elements

Appearance of the storefront, display windows, store entrances, and degree of traffic congestion. Important to new customers.

Promotion Mix

Are advertising, personal selling, public relations, and sales promotion.

Off-Price Retailers

Are stores that buy manufacturers' seconds, overruns, returns, and off-season production runs at below-wholesale prices for resale to consumers at deep discounts.

Wholesaling continued

Assist in marketing strategy, especially with the distribution component. - Also help retailers select inventory. - Specialists on market conditions and experts at negotiating final purchases.

Public Relations - Promotion Mix

Broad set of communication efforts used to create and maintain favorable relationships between an organization and its stakeholders can affect a firm's current sales and profits, as well was its long-term survival.

Form Utility

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

Horizontal channel integration

Combining organizations at the same level of operation under one management. Offers efficiency and economies of scale in purchasing, marketing research, advertising, and specialized personnel it is not always the most effective method of improving distribution.

Vertical integration

Combining two or more stages of the marketing channel under one management. May occur when one member of marketing channel purchases the operations of another member or simply performs the actions of another member, eliminating the need for that intermediary.

Promotion

Communication that builds and maintains favorable relationships by informing and persuading one or more audiences to view an organization positively and accepts its products.

Advertising - Promotion Mix

Cost-efficient when reaching a vast number of people at a low cost per person. High frequency. Cons: Expensive, slow feedback, easily forgotten.

Role of promotion

Create awareness, Retain loyal customers, Stimulate demand, Facilitate reseller support, encourage product trial, identify prospects, reduce sale fluctuations.

Location of Retail Stores

Critical to business success. Least flexible of marketing mix. Citizen traffic and vehicular. Stores surrounding, size, shape, visibility.

Factors effecting selection of marketing channels

Customer characteristics, characteristics of intermediaries, product attributes, marketing environmental forces, competition, type of organization.

Cost of each physical distribution function

Customer service, administration, transportation, warehousing, inventory carrying.

Selective Demand

Demand for a specific brand, a marketer employs promotional efforts that point out the strengths and benefits of a specific brand.

Primary types of general-merchandise retailers

Department stores, discount stores, convenience stores, supermarkets, superstores, hypermarkets, warehouse clubs and warehouse showrooms.

Marketing channel decisions can:

Determine the other parts of the marketing mix. Generally entail long-term commitments among a variety of firms. Least flexile.

Disadvantages of industrial producers

Difficult to manage, stock competing brands, don't handle slow selling items, and lack knowledge to sell and service technical products.

Multichannel retailing

Employing multiple distribution channels that complement their brick-and-mortary stores with websites, catalogs, and apps where consumers can research products, read other buyers' reviews, and make actual purchases.

Strategic Channel Alliance

Exists when the products of one firm are distributed through the marketing channels of another.

Extreme-value stores

Fraction of the size of conventional discount stores and typically offer very low prices-generally 1 dollar to 10 dollars.

Rack Jobbers

Full-service, specialty-line wholesalers that own and maintain display racks in supermarkets, drugstores, and discount and variety stores. - Specialize in non-food items with high profit margins.

Marketing Channel

Group of individuals and organizations that direct the flow of products from producers to customer within the supply chain.

Time utility

Having products available when the customers wants them.

Trucks

High cost, Fast speed, High dependability, Average load flexibility, very accessible, high frequency.

Manufacturers' agent

Independent business person who sells complementary products of several producers in assigned territories and is compensated through commissions. Does not take title to products or possession. Acts as a sales person.

Merchant Wholesalers

Independently owned businesses that take title to goods, assume risk associated with ownership, and generally buy and resell products to other wholesalers, business customers, or retailers. - Producer is likely to rely on merchant wholesalers when selling directly to customers would be economically unfeasible.

Industrial distributor is an independent business that take title to products and carries inventories. Sell standardized items such as maintenance supplies, production tools, and small operating equipment.

Industrial distributor

Intensity of Market Coverage

Intensive: Convenience products. Exclusive: Speciality products. Selective: Shopping products.

Digital Distribution

Involves delivering content through the internet to a computer or other device.

Inventory management

Involves developing and maintain adequate assortments of products to meet customers' needs. It is a key component of any effective physical distribution system. - 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.

Physical Distribution

Known as logistics, referee to the activities used to move products from producers to consumers and other end users. - Activities include order processing, inventory management, materials handling, warehousing, and transportation.

Department store

Large retail organization with at least 25 employees with wide product mixes. Large percent of sales come from apparel, accessories, and cosmetics.

Supermarkets

Large, self-service stores that carry a complete line of food products and some non-food products such as cosmetics and nonprescription drugs.

Pipelines

Low cost, slow, dependable, not flexible or accessible, high frequency.

Technology in the distribution process

Made it much more efficient. With integrated information sharing among chain members, firms can reduce costs, improve services, and provide increased value to the end customer.

Reducing cycle time can be done by:

Maintaining high customer satisfaction and quality.

Online retailing

Makes products available to buyers through internet connections. Now seen as vital to their businesses. - Satisfies increasing expectation among consumers to have multiple channels available to obtain the goods and services they desire at their convenience.

Place utility

Making products available in locations where customers wish to purchase them.

Usefulness for Merchant wholesaler

Market coverage, making sales contacts, storing inventory, handing orders, collecting market information, furnishing customer support.

Selling agents

Market either all of a specified product line or a manufacturer's entire output. Perform every wholesaling activity except taking title to products.

Intermedaries duties

Marketing information and management, facilitating exchanges, promotion, price, and physical distribution.

Possession Utility

Means that the customer has access to the product to use or to store for future use. Can occur through ownership or through arrangements that give the customer the right to use the product such as lease or rental agreement.

Railroads

Moderately expensive, average speed, average dependability, load flexible, accessibility is high, frequency is low.

Contractual VMS

Most popular type of vertical of marketing system. Channel members are linked by legal agreements spelling out each member's rights and obligations. McDonalds and KFC. Wholesalers, independent retailers, retailer-sponsored cooperatives.

Personal selling - Promotion Mix

Most used in B2B and Business to consumer. - More specific communication directed at individuals. Often have strong impacts on consumers. Immediate feedback.