BMGT 350 Exam 2

Frequency marketing program

reward customers who buy frequently or in large amounts Creates customer loyalty

Trade promotions

sales promotion tools used to persuade resellers to carry a brand, give it shelf space, and promote it in advertising

Two dimensions of product quality

Level and consistency

Product line depth

Number of versions offered of each product in the line Ex) Colgate toothpaste product line includes various kinds including sensitive, whitening, etc

Multichannel Distribution System

Occurs when a single firm sets up multiple distribution channels Most companies do so Ex) John Deere sells products through retailers, online, and through premium retailers Expands company sales and market opportunities

Increasing service differentiation

One of three major tasks of service marketers Must differentiate offer to avoid commodity competition and price cuts Can differentiate in terms of the offer (features), delivery (more contact people), images (symbols and branding such as GEICO gecko)

Ways to motivate sales people

Organizational climate Sales quotas Positive incentives

Types of consumer promotions

Samples Coupons Rebates Price packs Premiums Promotional products Point of purchase promotions Contests/sweepstakes Event marketing

Maturity Stage PLC

Slowdown in sales growth of a product Acceptance of product by most potential buyers Profits level off or decrease Competition rises which is cause of leveled out profit Companies attempt to modify market or marketing mix to get back to growth stage

Market offering

Some combination of products, services, information, or experiences offered to a market to satisfy a need or want Includes both tangible goods and services and experience offered to customers

Licensing

Some companies license names or symbols previously created by other manufacturers, names of well known celebrities, or fictional characters to jump start brand Large royalties paid to do so

functional discount (trade discount)

a discount to wholesalers and retailers for performing channel functions

Brand

a name, term, symbol, design, or combination thereof that identifies a seller's products and differentiates them from competitors' products Extremely important for marketers to build and manage brand to sell products

5 promotional tools

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

Fad PLC

Temporary period of unusually high sales due to consumer enthusiasm and brand popularity. Surge of sales then sudden fall

Madison & VIne

Term that represents the convergence of the entertainment and advertising fields Nowadays, to combat clutter, ads must be entertaining and engage the audience

Event Marketing

creating a brand-marketing event or serving as a sole or participating sponsor of events created by others Ex) Redbull sponsored sporting events

Salesperson owned loyalty

customers become loyal to salespeople as well as to the companies and products they represent

Outside salesforce

Sales team that travel to clients in order to sell

Inside salesforce

Sales teams that conduct business over the phone or from offices

Expense reports

Salespeople write for what they need to be reimbursed for

Persuasive Advertising

! objective of advertising Objective is to build selective demand Engage customers and creates brand preference Type if comparative advertising in which brand directly compares itself to another product to show superiority

Demand Chain

"sense and respond" view suggests that planning starts with the needs of the target customer Said to be a better term for supply chain Starts with identifying a need for target customers and organize chain to create value and satisfy need

Conventional Distribution Channels

- Consist of one or more independent channel members - Often result in poor performance - Each seeking to maximize its own profits

Three types of wholesalers

-Merchant wholesalers -Brokers and agents -Manufacturers' and retailers' branches and offices

Informative Advertising

1 objective for advertising Heavily utilized when introducing new product category Objective is to build demand and inform consumers of economic and performance benefits of new product

Steps in selecting advertising media

1) Determine reach (percentage of people in target market exposed), frequency (how many times target market sees message) and engagement (qualitative measure of an ad) 2) Select specific media vehicles 3) Determine media timing

Qualities for a brand name

1) Suggest something about benefits 2) Easy to pronounce 3) Distinctive 4) Extendable (Amazon began as book store but name did not stop growth) 5) Easily translatable 6) Capable of legal protection

Corporate Chain

2 or more outlets that are commonly owned and controlled

Idea screening

2nd stage in new product development process after idea generation Pushes potentially profitable ideas forward through process and filters out bad ideas Concept development is next stage

Business analytics stage

5th step of new product development After marketing strategy development stage Involves a review of sales, costs, and profit projections If these projections do not satisfy company objectives, gets tossed, if it does goes to product development stage Benchmark between idea and actual development of product Next is product development stage

Product development

6th step in new product development process After BA stage R&D and engineering develops physical product prototypes Huge jump in investment Consumers can be brought in at this stage to see reactions of prototypes Next stage is test marketing

Test marketing stage

7th and second to last stage in new product development After product development stage The product and the marketing plan gets tested in realistic marketing settings Costly and can take a long time if want to ensure that product and marketing concept will be received which has potential of missing opportunities Can skip this stage if fast moving market or utilize an alternative If passes this stage, goes to final step of commercialization

Services

A form of products that consists of activities, benefits, or satisfactions offered for sale that are intangible and do not result in ownership of anything

Retailer Cooperative

A group of independent retailers that band together to set up jointly owned, central wholesale operation and conduct marketing and promotion Ex) ACE Hardware

Product Line

A group of products that are closely related because they function in a similar manner, are sold to same customer groups, marketed through same outlets, or fall within given price ranges Product line length describes number of items in product line Ex) Nike has various product lines of athletic shoes and apparel

Good Value Pricing

A type of customer-value based pricing Offering just the right combination of quality and good service at a fair price Can also involve more value for same price (add ons) or same quality for less expensive Ex)Less expensive Mercedes Example is everyday low pricing (EDLP)

Person Marketing

Activities undertaken to create, maintain, or change attitudes or behavior toward particular people Ex) Companies giving specific athletes endorsement deals to benefit both organization and athlete

Place marketing

Activities undertaken to create, maintain, or change attitudes or behaviors towards particular places Ex) Cities, states, regions, countries all compete for tourists using a variety of campaigns and slogans Ex) "American's Greatest Comeback City" is Detroit's slogan

Organization Marketing

Activities undertaken to create, maintain, or change the attitudes and behaviors of target customers on the organization

4 ways a company can increase its business in terms of products

Add new product lines widening product mix' Lengthen product lines Add more versions of each product and deepen product mix Pursue more or less product consistency

Line filling and when to use and when is it overdone

Adding more items within present range of the line Many reasons such as -Reaching for extra profits -Satisfy dealers -Using excess capacity -Plugging holes to keep out competitors Overdone if results in cannibalization or the eating of sales of other products that already exist within the line

Online advertising

Advertising that builds brand sales or attracts visitors to their internet, mobile, and social media site Two main tools include display ads seen on related websites (sports equipment ads when on ESPN) and search related ads

Methods for advertising budget

Affordable method Percentage of sales method Competitive parity method Objective and task method

National Brand

Aka manufacturer's brands Big brand such as Coke, Kellogs "name brands"

Marketing Logistics

Aka physical distribution Describes planning, implementing, and controlling of physical flow of good and services Getting right product to right customer at right time profitably Include inbound, outbound, and reverse logistics

Wholesaling

All activities involved in selling goods and services to those buying for resale or business use Buy mostly from producers and sell mostly to retailers, industrial consumers, and other wholesalers

Upstream Supply Chain

All partners that supply firm with any goods

Product Life Cycle

All products have lifecycle which describes the course a product will take over lifetime While all products follow, product lifecycles will have different shapes and lengths of stages Stages include product development, introduction, growth, maturity, and decline Not all products go through all stages and products can backtrack to previos stages Lifecycles can change with different competition

Retailing

All the activities involved in selling products or services directly to the final consumer for personal, nonbusiness uses Most done by retailing but can be done by other institutions as well

Controlled test marketing

Alternative to test marketing stage of new product development process New products and tactics are tested against a controlled panel of shoppers and stores Utilize info on each purchase with demographics, company can assess in store and at home marketing efforts Reduces costs and speeds up process

Simulated test markets

Alternative to test marketing stage of new product development process Reserachers measure consumer responses to new products and marketing tactics in lab stores or simulated online shopping environments Reduces costs and speeds up process

Total Quality Management (TQM)

An approach in which all the company's employers are involved in consistently improving the quality of products, services, and business processes

Sales force management

Analyzing, planning, implementing, and controlling sales force activities Must design sales force strategy and structure, recruiting, selecting, training, compensating, motivating etc

Time and duty analysis

Another tool for salespeople in which companies look for ways to save time so salespeople can spend more time selling

Marketing websites

Designed to engage customers to move them closer to direct purchase or other marketing outcomes Ex) As soon as you open Toyota website, attempts to sell to you with promotions and newest models

Distribution Centers

Designed to move goods rather than store them Designed to receive goods from various places, take orders, and deliver efficiently

Product

Anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need Can be tangible or intangible

Workload Approach

Approach to find sales force size since extremely expensive Company groups accounts into different classes according to size, status, or other factors and determines number of salespeople needed for each account after

Change in sales process

As consumers become more informed, sales process has been changing to mimic buying process More present online and on social media

Style (PLC)

Basic and distinctive mode of expression For this reason, style cycle can show renewed interest and keep going back into growth phase as time goes by due to renewed interest

How brands help buyers and sellers

Buyers: -Helps consumers identify products that might benefit them -Says something about product quality and consistency Sellers -Provides legal protection for unique features -Helps segment markets (Toyota has multiple brands such as Lexus and Toyota to position in various markets) -Tells a story to consumers -Helps differentiate when established

Marketing Channel Design

Calls for analyzing consumer needs, setting channel objectives, and evaluating major channel alternatives Channel cannot be cheapest, fastest, and most effective so must properly choose intermediaries based on position of products

Advantage of retailers over national brands

Capable of undercutting price Controls wheres store brand items are stocked vs national brand Controls promotions in store

Discount

Cash discounts for consumers that pay debt within x amount of days

Horizontal Marketing System

Channel development in which 2+ companies at one level join together to follow new market opportunity Can team up permanently or temporarily to do so Ex) Starbucks and target partnered to put starbucks in many Targets to bring in more customers to both

Multimodal Transportation and options

Combines 2+ modes of transportation Piggybacking- rail and trucks Fishyback- water and trucks Traineship- water and rail Airturck- air and trucks

Cross platform campaigns

Common for marketers in which advertisements are offered the stretch across multiple viewing platforms

Crowdsourcing and new product development

Companies invited broad communities of people into innovation process in order to get external info for new product development

Promotional Pricing

Companies temporarily price products below listing price and sometimes below cost to create buying excitement and emergency Offer discounts, limited time offers, flash sales, etc to increase demand Can have bad effects such as eroding brand value with too many sales

What sets the ceiling for product price?

Consumer perception Consumers must see price to be same as value (no more no less)

By Product Pricing

Companies utilize to find a market where it can sell byproducts of another one of its products Ex) Cheese making process creates brine. Cheese companies sell the brine to cities which is used to salt roads

Competition in elastic markets

Competitors will lower prices to try and produce greater revenue since demand rises

Vertical conflict

Conflict between different levels of the same channel

Product Mix

Consists of all the product lines and items that a particular seller offers to sell Ex) Colgate product mix includes toothpaste lines, oral care, personal care, home care, and pet nutrition

Contractual VMS

Consists of individual firms at different levels of distribution and production that join together through contract to obtain more profits Most common example is a franchise organization

Promotion Mix

Consists of the specific blend of advertising, public relations, personal selling, sales promotion, and direct and digital marketing tools that company uses to engage consumers, persuasively communicate value, and build relationships

Current changes to marketing communications

Consumers are better informed and more empowered due to internet Mass markets are more fragmented As a result marketers focus more for personalized marketing and relationship building strategies

service-firm-sponsored retailer franchise system

Contractual VMS and type of franchise All big chains falls under this category including fast food

Manufacturer sponsored wholesaler franchise system

Contractual VMS and type of franchise Ex) Coke licenses various bottlers (wholesalers) in various markets world wide who buy coke syrup, bottle coke and sell it

Manufacturer sponsored retailer franchise system

Contractual VMS and type of franchise Large company that owns a variety of independent franchise dealers Ex) Ford has many dealers around US

Alternatives to test marketing

Controlled test marketing and simulated test marketing

Tools for business promotions

Conventions and trade shows- Promotes products to vendors Sales contest- contest for salespeople or dealers to motivate them to increase sales performance over a given period

Two main advantages of creating innovative manager

Creates innovation oriented company culture Yields larger number of new product ideas

Importance of product support services

Customer service is imperative in product strategy to ensure that after sales, customers get right resources and will buy again Huge in overall brand experience Must survey customers periodically to assess value of current services and obtain ideas fr new ones Should sue mix of phone, email, online, media, mobile, etc as services

Brand Integration and methods

Defined as making a brand an inseparable part of some other form of entertainment content Two ways of doing so is product placement and native advertising

Price elasticity

Describes how responsive demand will be to change of prices If demand barely changes when price changes, inelastic and vice versa for elastic

Product concept

Detailed version of idea stated in meaningful consumer terms

New Product Development and process

Developing original products, product improvements, modifications, or adding new brands Idea generation- search for new product ideas with both internal and external information Idea screening- Filter out bad ideas and push forward good ideas Concept developing and testing Marketing strategy development Business analysis Product development Test marketing Commercialization

Four consumer perception dimensions of brand strength

Differentiation-what makes brand stand out Relevance- How consumers feel it meets their needs Knowledge- How much consumer know about brand Esteem- respect of brand

Selling process

Displays the steps sales people must follow when getting new customers and making sales 1) Prospecting and qualifying- identifying qualified potential customers and screening out bad ones 2) Preapproach- learning as much as possible about customer and organization they are part of 3) Approach- meeting and greeting buyer 4)Presentation and demonstration 5) Planning 6) Handling objections- salesperson must use positive approach to turn objections into reasons for buying 7) Closing- must know how to close 8) Follow up- must schedule follow up after meeting to make long term customers

Main difference between consumer and industrial products

Distinction is based on purpose for which product is purchased Ex) Lawnmower bought for home use it is consumer product but if bought for use in a landscaping business it is an industrial product

Brokers and Agents

Do not take title of goods and only perform a few functions Brokers bring buyers and sellers together to assist negotiation Agents represents buyers or sellers on more permanent basis

Retail Convergence and effect

Due to price transparency of internet, retailers have began selling similar goods for similar prices Makes retailers seem more like commodities Must differentiate using strategies above to get out of this trap (experience retailing, product assortment, services)

Importance of idea screening in new product development

Each level of new product development process is more expensive than last so company must drop ideas they do not think will be profitable.

Alternatives Criteria for distribution channels

Economic criteria- costs and profitability of other channels Control issues- Must understand how much control each intermediary would possess Adaptability criteria- Must ensure channel remains flexible even in the long run

Advertising Agency

Employ specialists who can perform advertising and brand content tasks better than company's own staff

Execution Style

Execution of advertising message Include: Slice of life- 1+ typical people using product in normal life setting Lifestyle- Show how products fit within a particular lifestyle Fantasy- create a fantasy about a product or its use Mood or image- Style build a mood or image around product or service such as beauty, love, pride, etc Musical- show characters singing about product Personality symbol- create character that represents the product (Flow from progressive) Technical expertise- style shows company's expertise at making product Scientific evidence- present scientific evidence that brand is better than others Testimonial evidence or endorsement- highly believable or likable source endorsing product

Forms of direct and digital marketing

Face to face selling Direct mail marketing Catalog marketing Telemarketing Direct response television marketing Kiosk marketing Online marketing Social media marketing Mobile marketing

Commercialization

Final step of new product development process coming after test marketing Decision of company to release product to the market High cost such as building manufacturing facilities, raw products, employees, etc

Competition Pricing

Firms make prices based on those of their competitors Must understand how consumers value own products vs competitors and make price based on that Must also understand market Ex) If market is made up of a bunch of small companies with expensive value added products, makes sense to make a low cost product to differentiate

Consumer products

First of 2 classes of products and services Products and services bought by final consumers for personal use Include convenience products, shopping products, specialty products, and unsought products

Quality level

First of 2 dimensions of quality of a product Means performance quality of a product and its ability to perform its functions Companies must choose a quality level that matches target market needs Ex) Not all companies should offer top quality like Rolex, all about positioning and offering a valuable quality that consistent with positioning of product

Shopper Marketing

Focuses the entire marketing process toward turning shoppers into buyers as they move along toward point of sale Focuses on first few moments a shopper considers product known as moment of truth

Selective Distribution

Form of distribution in which more than one but fewer than all intermediaries are given product to carry Between intensive and exclusive Include products such as electronics, furniture, and home appliances

Marketing Strategy development

Fourth step of the new product development process After concept development stage Three parts -Describe target market, plan value proposition, establish sales, market share, and profit goals -Outline products planned price, distribution, and marketing budget -Plan long run sales, profit goals, and marketing mix BA stage is next step

Horizontal conflict

In a channel, conflict that occurs among intermediaries of same level of channel Ex) Ford dealers in same area may have tension

Partner relationship management

Important to have good relationship with intermediaries in order to create long term partnerships More profitable working together than butting heads Enterprise systems across channel partners is more common

Pure competition and affect on marketing

In market with pure competition, many buyers and sellers trading a uniform commodity such as wheat, copper, financial securities No single buyer or seller has effect on market price and marketing plays little role Compete by undercutting price

Problem with high commission sales plans

Incentivizes sales people to make short term sales instead of building relationships with consumers

Compensation of salespeople

Includes fixed amount, variable amount based on sales, expenses (whatever salespeople bought for company), and fringe benefits

Three major marketing tasks of service companies

Increase service differentiation, service quality, and service productivity

Added value of intermediaries

Information- gather and distribute info about consumers, producers, and other forces Promotion- Developing and spreading persuasive communications about an offer Contact- Finding and engaging customers and prospective buyers Matching- Shaping offers to meet buyer's needs (manufacturing, packaging) Negotiation Physical distribution

Most common type of sales force in B2B markets

Inside sales force

Corporate VMS

Integrates successive stages of production and distribution under a single ownership Limits conflict and increases coordination

Exclusive Distribution

Intentionally limiting the number of intermediaries handling products and only giving limited number of dealers exclusive distribution rights Utilized for luxury brands such as watches and cars

Roles of sales people

Interpersonal arm of promotion mix Critical link between company and its customers Represent company to customers

Packaging

Involves the designing and producing the container or wrapper for a product Packaging has recently become strong marketing tool Best and last chance to influence buyer as all sees packaging Distinctive packaging can become part of brand identity and be a differentiator Must be lean and efficient--> overpackaging creates more waste and more costs of supplies Green should be a thought as well in packaging

Premiums

Items offered for free or at a low cost as an incentive to buy product Ex) Toys within happy meals

Warehouse Clubs

Large retailers with an irregular assortment, low service levels, and low prices that often require membership for shoppers. Usually operate in warehouses so low operating costs allowing for low prices (Costco)

Augmented product and value added

Last level of creating a product or service is creating add ons, services, and other addition consumer benefits for the products Adds value to product

Administered VMS

Leadership in the channel is assumed through size and power of one or a few of dominant channel members Ex) Apple can get unusual cooperation from channel members due to its capital and power Walmart pushes prices down of suppliers for same reason

Cash and carry wholesalers

Limited-service wholesalers who carry limited line of fast moving goods and sell to small retailers for cash Usually do not deliver

How can companies expand product line

Line filling or line stretching

Service Profit Chain and its links

Links service firms profits with employees and customer satisfaction Five links include: -Internal service quality: superior employee selection and training results in... -Satisfied and productive service employees: more satisfied, loyal and hardworking employees results in... -Greater service value: more effective and efficient customer value creation results in... -Satisfied and loyal customers who make repeat purchases leads to... Healthy service profits and growth

Pull Promotion Strategy

Mainly advertising, consumer promotion, direct and digital media Producer directs marketing activities towards consumers to induce them to buy product Utilized more for B2C markets

Product Line Pricing

Management determines price steps between various products in a line based on value to consumer Ex) Quicken sells different software versions ranging from beginner to business Costs quicken no more to provide the more wholesome program, consumers will pay more due to added features

Return on quality approach

Many companies are now taking this approach on quality View quality as an investment and holding quality efforts accountable for bottom line results Aka, certain quality should always be achieved and is an investment in creating customer satisfaction

Oligopolistic Competition and affect on marketing

Market consists of a few large sellers such as in phone provider market Competitor pricing very important due to few suppliers Main marketing tool will be promotions

Monopolistic competition and affect on marketing

Market consists of many buyers and sellers with range of prices other than market price Differentiation plays huge role Branding and marketing extremely important

Conditions for successful segmented pricing

Market must be segmentable and segments must have different degrees of demand Cost of segmenting must be less than revenue added from segmenting Legal Reflect real differences in customer perceived value

Product quality

Marketers define quality in terms of creating customer value and meeting customer expectations on a product to create satisfaction Two dimensions of quality, level and consistency

Which is typically best, developing price before marketing strategy or vice versa

Marketing strategy should be set before price Company must understand how they will position themselves in the market prior to creating a price

Online marketing

Marketing via the internet using company websites, online ad promotions, email marketing, online videos, and blogs

Types of industrial products

Materials and parts Capital items Supplies and services

Affordable method

Method for advertising budget in which promotional budget is set at a level the company believes it can afford Used by small businesses Makes long range marketing difficult

Native Advertising

Method for brand integration Produce content that appears to be native to web or social media when placed Ex) Article on reputable media outlets that are written and paid for by the advertiser

Product Placement

Method for brand integration Placing advertisements within programming such as movies or tv shows Ex) Characters drinking out of starbucks cups on tv

Objective and task method

Method for creating advertising budget Most logical in that company sets budget based on goals to accomplish with promotions Must define promotional objectives, determine tasks needed to achieve these, and estimate costs of performing these tasks Most difficult to use but best method

Competitive Parity Method

Method for making advertising budget Sets promotional budget to match that of competitors Argument is competition budget is supported by industry wisdom however no hard evidence to back this up

Supermarkets

Most frequently visited retail store Slow sales growth and higher competition leading supermarkets to have to differentiate, cut costs, etc to stay profitable

Team Based New Product Development

Most popular new product development approach Company departments work closely together in cross functional teams, overlapping insteps to save time and increase effectiveness Team from various departments stick with product from start to finish much faster and more efficient than other approaches Limitation includes creating more organizational tensions and confusion than sequential approach

Cost Plus Pricing (Markup pricing)

Most simple pricing method in which it adds a standard markup to cost of production The goal is to create own margins however completely ignores supply and demand so does not make much sense

Inbound logistics

Moving products and materials from suppliers to factories

Outbound logistics

Moving products from the factory to resellers and ultimately consumers

Content marketing managers

New view of marketers as they create, inspire, and share messages and conversations Utilize, paid, owned, earned, and shared channels of marketing

Goal of logistics and limitation

No logistics system can perform the best customer service at lowest cost Goal of logistics is to perform optimal level of both

Omnichannel Buyers

Nowadays consumers make little distinctions between online and in store buying

Product line length

Number of items in a product line

Low cost producers

Perform cost based pricing Create a lean production line to make low costs and make low prices Low margins

Three levels of brand position (worst to best)

Position based on product attributes such as quality, selection, or style Associating name with desirable benefit such as Whirlpool saying home appliances take hassle out of cooking and better energy savings Strongest is positioning on beliefs and values engaging customers on emotional level -Marketing with some sort of family value in commercials

Dynamic Pricing

Prices are adjusted to continually meet characteristics and needs of individual customers and situations

Customer value based pricing

Pricing strategy Uses buyers' perceptions of value as the key to pricing Price is considered before marketing program is set Opposite of cost based. Firm finds a problem and sets target price based on how much consumers value solving this problem After price is made based on value, all other decisions made after is based on this price and value Find value by analyzing customer needs Two types include good-value pricing and value added pricing

Push Promotion Strategy

Primarily personal selling and trade promotion Focuses on pushing product through marketing channel to final consumers Directed to channel members to carry product and push to consumers Typically utilized for B2B markets Ex) John Deere does very little promotions to consumers itself. Instead, pushes product to stores such as Lowes and they promote it

Broad community websites

Primary purpose is to present brand content that engages consumers and creates a customer-brand community Ex) Cannot actually buy anything on ESPN, forum and community for sports news

Common channels in consumer market

Producer--> consumer Producer-->retailer--> consumer Producer-->Wholesaer-->retailer-->consumer

Exclusive Territorial Agreements

Producers agree to not sell products to other dealers in territory

Common B2B channels

Producer→ business customer Producer→ Business distributor→ Business customer Producer→ manufacturer representative/sales branch→ business distributor→ business customer

How retailers can differentiate themselves when commodities are becoming more common

Product assortment -Can offer highly specialized assortment or assortment no other retailers offer Service mixes -Can have good service -Can have add ons such as how to classes like Home Depot Store Atmosphere -Create unique store experience

Three things PLC concept can describe and differences in trends

Product class such as gas powered vehicles. Longest life cycle since most broad. Stays in mature stage for longer periods. Product forms such as SUVs usually have standard PLC shape as they go through phases Brand which lifecycle can change quickly due to outside factors such as competition

How are benefits of a product delivered

Product quality Product features Product styles and design

Decline Stage PLC

Product sales fall off and profit decreases Companies must decide whether to maintain (reposition in hopes of getting back to growth), harvest (reduce costs and hope sales hold up, or drop product

Disintermediation

Products or service players cut out intermediaries and go directly to the final buyers Presents opportunities and problems

Industrial products

Products purchases for further processing or for use in conducting a business Three groups of industrial products are material and parts, capital items, and supplies and services

Pure services

Products that do not include any goods and only consists of a service Ex) Financial services

Sales force automation system

Put in place to save time of salespeople Digitizes sales force operations and lets salespeople work more effectively

Service Variability

Quality of service depends on who provides them as well as when, where, and how they are provided Ex) Mariott may have good reputation with customer service but one employee with bad quality of service can ruin experience

Growth Stage PLC

Rapid market acceptance and increasing profits and sales of a product Competitors join market which expands market with more distribution channels causing sales to continue to grow Sustain growth as long as possible with added features

Call reports

Records of salespeople's meetings or contacts with customers Written up by salespeople to keep track of sales

product mix consistency

Refers to how closely related the various product lines are in terms of end use, production requirements, distribution channels, or another way Ex) Colgate product lines are consistent in that all are consumer products but different in that they have different functions

Superstores

Retailers larger than supermarkets that offer large assortments of routinely purchased products such as food, nonfood items, etc Ex) Target and walmart Category killer type of super store within certain category such as bass pro shop

Omnichannel Retailing

Retailers must create a seamless cross channel buying experience that integrates stores, online, and mobile shopping

Department Stores

Retailers that carry a wide variety of product lines Squeezed between specialty stores and discounters so offers promotions to meet threat

Specialty Stores

Retailers that carry narrow product lines with deep assortments in those lines

Off Price Retailers

Retailers that sell as low as possible by buying at less than regular wholesale price and selling below retail price independant off price retailers are independantly owned or owned by larger retailer company such as Marshalls, TJmaxx both owned by TJX

Discount Stores

Retailers that sell standard merchandise at lower prices by accepting lower margins with lean operations

Service Retailers

Retailers with product line as services including hotels, banks, airlines, restaurants, etc

Experiential Retailing

Retailing approach that encompasses all contemporary methods used to engage customers at emotional, sensory, and participatory levels as they shop Since retailers are becoming more commodity like, must utilize store experience and environment to differentiate Ranges from scent, to music, to layout, etc

Business promotions

Sales promotion tool used to generate business leads, stimulate purchases, reward customers, and motivate sales people

Consistency (conformance quality)

Second dimension of quality Means that products are free from defects and are consistently delivering a target level of performance In this sense, Rolls Royce and Chevy can have same conformance quality if both consistently perform at par with promises of quality level

Product Features

Second way benefits of a product are delivered Product features are a competitive tools for differentiating company product vs competitors Company should periodically survey buyers who have used product to see what they want added in order to see value added for each feature vs cost added to company

3 types of services for retailers and definitions

Self service- Serve customers who are willing to perform locate-compare-select process on own. Less assistance since goods do not need help with such as convenience goods. Usually seen in super markets Limited Service Retailers- Include stores such as JCPenney which provide more sales assistance since more shopping goods carried. Higher operating cost leads to higher prices Full service retailers- Examples include high end specialty stores in which employees assist customers in every phase of shopping process.

Product bundle pricing

Sellers combine several products and offer the bundle at a reduced price Ex) Combo meals

Psychological Pricing

Sellers consider psychology of prices Ex) Consumers usually see higher prices products having higher value Ex) Who is a better lawyer, one that charges 50/hr or 500/hr Ex) Reference pricing Ex).99 instead of $1

Wholesalers can add value by

Selling and promoting- help manufacturers reach small customers at low cost. Has more contacts and more trusted by buyer Buying and assortment building- Can select items and build assortment needed by their customers saving work Bulk breaking- Wholesalers save customers money by buying in carload lots and breaking large lots into smaller quantities Warehousing- wholesalers hold inventories, reducing inventory cost and risk of retailers Transportation- can provide quicker delivery to buyers because closer to buyers than producers are Financing- finance customers by giving credit and finance suppliers by ordering early and paying bills on time Risk bearing- absorb risk by taking title and bearing cost of theft damage, etc Market info- give info to supplier and customers about competitors, new products, prince developments, etc Management services and advice- Hep retailers train salesclerk, improve store layouts, set up accounting and inventory systems

Predatory Pricing

Selling below cost with intention of punishing competition or gaining long run profits by putting competition out of business illegal practice

Interactive Marketing

Service quality depends heavily on quality of buyer-seller interaction during service encounter Important in service marketing since half the value is the delivery

service intangibility

Services cannot be seen, tasted, felt, heard, etc before they are bought Ex) Airline passengers have nothing but a ticket and a promise that they will arrive to a destination prior to actual service being performed

Service Inseperability

Services cannot be separated from providers, whether providers are people or machines employees who deliver a service are an active part of it and customers play an active role in service delivery

Two part pricing

Services version of captive pricing Consumer pays a fixed fee plus a variable usage rate Ex) Tickets to an event may be relatively cheap but food extremely expensive

Percentage of sales method

Sets promotional budget as a percentage of current or forecasted sales Easy to use Downside is has little to justify budget (views sales as cause of promotion rather than a result) Also no basis for choosing amount of percentage

Cost based pricing

Setting prices based on costs of production and distribution Makes a price floor based on costs rather than a price ceiling based on customer value Ex) Low cost producers

Vendor Managed Inventory Systems

Shares real time data on sales and current inventory with suppliers

intrapreneurial programs

Source for companies to get new product development ideas internally promoting employees to develop product ideas

Advertising Objectives

Specific communication task to be accomplished within a specific target audience during a specific period of time Can be to inform, persuade, or to remind

Levels of products and services that add customer value

Step 1 is figuring out problem solving benefits that would lead consumers to buy Create an actual product Build augmented product by offering additional consumer benefits and services

Customer solution approach

Strategy for the presentation portion of the selling process in which seller hears clients needs and responds with how product adds value

Intensive distribution

Strategy in which products are stocked in as many outlets as possible Utilized mostly for convenience items

Target Costing

Strategy that reverses usual process of finding price Starts with ideal selling price based on customer value than targets costs to achieve that price is met

Innovative Management System

Strategy to make new product development more efficient Company appoints a senior manager who collects, reviews, evaluated and manage new product ideas The overwatch makes new product development more holistic and collaborative Creates innovation oriented company culture Yield larger number of new product ideas

Territorial Slaes Force Structure

Structure of sales force in which each salesperson is assigned to a specific geographic area and sells the full line of products and services to customers within that territory Increases desire of salespeople making relationships Lowers travel costs

Real time marketing

The creation and execution of marketing that links the brand to important moments/trends in ones life Ex) Dunkin engages people who search coffee near me by putting ad that says find fastest coffee in response

Message Strategy

The general message that will be communicated to consumers Should be plain, straightforward, and outline benefits and positioning points that need to be stressed Develop creative concept (big idea) that brings message to life (the actual campaign) Must choose an execution style to do so Choose tone for advertisement

Promotion clutter

The growing use of sales promotion has resulted in this. Consumers are increasingly tuning out promotions, weakening their ability to trigger immediate purchase.

Advertising Strategy

The strategy by which the company accomplishes its advertising objectives. Two major elements: creating advertising messages and selecting advertising media.

Concept development

Third step of new product development process After idea screening stage Testing new product concepts with groups of target consumers Marketing strategy development is next stage

Product style and design

Third way benefits of a product are delivered Style describes the appearance of a product, can grab attention from public but does not necessarily make product perform better Design contributes to both how product looks and its usefulness

What is new with advertisements?

Today, due to high amount of commercials, large amount of clutter in advertisements Consumers more hostile to these promotions As a result, ads now have to be engaging or entertaining for consumers Ex) Madison & Vine strategies

Call plan

Tool for sales people which shows which consumers and prospects to call on and which activities to carry out every x amount of days

Advertising

Tool of promotional mix Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by a sponsor

Direct and Digital Marketing

Tool of promotional mix Engaging directly with carefully targeted individual consumers and customer communities to build customer relationships Ex) Direct emails, catalogs, social media, etc

Public Relations

Tool of promotional mix Build good relations and obtaining favorable publicity, good corporate image, and handling unfavorable events in the public eye Ex) Press release, sponsorships, etc

Personal Selling

Tool of promotional mix Personal consumer interactions by firm's sales force to engage customers, make sales, and build relationships Ex) Trade shows, sales presentations, incentive programs

Sales promotion

Tool of promotional mix Short term incentives to encourage the purchase or sale of a product or service

Brand value

Total financial value of a brand Hard to measure exact value

Allowances

Trade allowances offer price reduction for trading old item in Promotional allowances are reductions that reward dealers for participating in advertising/ sale support programs

Direct mail marketing

Traditional direct marketing form Firms send an offer, announcement, reminder, or other item to a person by mail Highly selective, personal, and flexible Costs more than mass media

Types of transportation

Trucks -Majority delivery method -Flexible -Faster than railroads -Efficient for short halls of high value merchandise Railroads -2nd most delivery method -Cost effective model for shipping large amounts of bulk products such as coal and sand Water Carriers -3rd most -Low cost and for bulky, low value, non perishables -Slowest mode Air carriers -Least common -More expensive but ideal when speed is needed -Common for perishables

Co-branding

Two established brand names of different companies are used on same product Combined brand creates larger customer appeals and greater brand equity Ex) Doritos locos tacos

Shopping products

Type of consumer product Less frequently purchased consumer products that customers compare price, quality, and style Consumers gather info on lower price and higher quality Distributed in fewer outlets and sales created to push consumers to buy Ex) Furniture, clothing, appliances, hotel services etc

Convenience products

Type of consumer product Consumers buy frequently with minimal comparison and buying effort Low priced and placed in many locations so readily available Ex) Magazines, deodorant, etc

Unsought Products

Type of consumer product Consumers do not know about or know about but does not normally consider buying Usually unsought until consumers become aware of product through marketing Ex) Life insurance, funeral services, blood donations

Specialty Products

Type of consumer product Unique characteristics or brand that leads buyers to make special purchase effort High priced and include specialty brands Do not compare specialty products Ex) Designer clothes, specific car brands, gourmet food, etc

Advertising specialties

Type of consumer promotion Aka promotional products Articled imprinted with advertiser name/logo that are given as gifts to customers Ex) Labeled pens in banks/hotels

Coupons

Type of consumer promotion Certificates that save buyers money when specific products are purchased

Rebates

Type of consumer promotion Coupons whee price reduction occurs after purchase is made

Contests, sweepstakes, and games

Type of consumer promotion Give customers the chance to win something Contests calls for consumers to submit an entry Sweepstakes call for consumers to submit names for drawing Game pushes consumers to buy product and everytime, helps win a prize

Point of purchase promotions

Type of consumer promotion Include displays and demonstrations that take place at point of sale

Samples

Type of consumer promotion Offers a trial amount of a product Most effective but most expensive way to introduce new product or create buzz for existing one

Franchise

Type of contractual VMS that links several stages of production and distribution process Three types: -Manufacturer sponsored retailer franchise system -Manufacturer sponsored wholesaler franchise system -Service firm sponsored retailer franchise system

Value added pricing

Type of customer value based pricing Company attempts to differentiate their products in order to get consumers to pay a premium Ex) Luxury brands

Kiosks Marketing

Type of direct marketing Point-of-purchase displays that are stand-alone structures Can have various functions including capability of taking orders or providing info

Capital items

Type of industrial product Aid in buyer's production or operations including installations and accessory equipment Include major purchases such as buildings and equipment

Supplies and Services

Type of industrial product Include operating supplies (paper, pencils, coal), and repair and maintenance items (paint, brooms, etc) Also include business services such as maintenance and repair services and advisory services such as legal, management, consulting, etc

Materials and Parts

Type of industrial products Include raw materials as well as manufactured materials and parts Consist of farm products (wheat, cotton, fruit, vegetables) natural products (fish, lumber, etc), component materials (iron, cement), component parts (small motors, tires, etc) Most sold directly to industrial users Usually sold directly to industrial users Price service main marketing factors (advertisements way less)

producers' cooperative

Type of limited service wholesaler Farmer owned members that assemble farm produce for sale in local markets Improve quality and usually have a co-op

truck wholesaler (truck jobber)

Type of limited service wholesaler Mainly selling and delivery function Usually sells and delivers semi perishable goods for cash

Mail-order/web wholesalers

Type of limited service wholesaler Sends catalogs or maintains websites for customers featuring jewelry, foods, or other small items

Drop Shippers

Type of limited service wholesaler Usually service grocery and drug retailers in mainly non food items

Limited Service Wholesalers

Type of merchant wholesaler Offer few services to suppliers and customers Include: Cash and carry wholesalers Truck jobbers Drop shippers Producers' Cooperatives Mail order

Full service wholesalers

Type of merchant wholesaler Provide a full line of services including carrying stock, maintaining sales force, offering credit, making deliveries, providing management assistance Include wholesale merchants and who sell to retailers and industrial distributors who sell to manufacturers

Customer-centered new product development

Type of new product development approach Companies focus on finding new ways to solve customer problems and create more customer satisfying experiences Most successful new product are those that are differentiated, solve problems, and offer compelling value propositions

Sequential Product Development Approach

Type of new product development approach One company department works individually to complete its stages of the process before passing the product along to the next department and stage Helps bring control to complex projects Dangerously slow

Comparative Advertising

Type of persuasive advertising Firm compares product directly to another of a different business in order to show superiority Aka attack advertising Can create controversy and invites competitors to respond

Reference Pricing

Type of psychological pricing Utilizing prices buyers may carry in their mind or refer to when making a decision of buying Ex) Grocery retailers will put store brand cereal next to private brand cereal since private brand is more expensive, leading people to buy store brand

Customer Segment Pricing

Type of segment pricing Different customers pay different prices for same product or service Ex) Child discount

Product Form Pricing

Type of segment pricing Different versions of a product are priced differently but not according to costs ex) Difference between economy and first class cost airplane close to nothing

Location based pricing

Type of segment pricing Price changes based on location of consumer Ex) In state vs out of state tuition

Time Based Pricing

Type of segment pricing Price differs based on time purchased Ex) Off season sales

Catalog marketing

Type of traditional direct marketing Sending catalogs (printed, bounds piece of at least 8 pages, selling products and offering direct order mechanisms) Switching more to digital catalogs

Telemarketing

Type of traditional direct marketing involves using telephones to sell directly to consumers and business customers Heavily utilized in B2B markets Outbound-> sell directly to customers Inbound- receive orders referred by advertisements

Social Selling

Use of online, mobile, and social media to engage customers, build stronger relationships, and augment sales performance Saves time, builds relationships, and saves travel costs

Captive Product Pricing

Used for products that must be used along with a main product Companies usually make price of main product low while making supplies more expensive Must be careful to price both aspects right because if supplies to expensive, consumers may begin to resent the brand Ex) Video games, coffee pods, e-books, etc

Public relations functions

Used to promote, build good relations, and support newsworthy company events Press relations- create newsworthy info Product and brand publicity- publicizing specific products and brands Public affairs- building and maintaining relational or community relationships Lobbying- building and maintaining relationships with legislators Investor relations Development- working with non profit or donors to gain support

Social Marketing

Using traditional business marketing concepts and tools to encourage behaviors that create societal and individual wellbeing Many organizations utilize this to promote causes they believe in and increase reputation of brand Ex) Microsoft promotes women to join STEM field

Product image

Way consumers perceive an actual product

Vertical Marketing System

Way for channels to have some sort of leadership and be more efficient Either one channel member owns the rest or has so much power that others must cooperate Three types are corporate, contractual, and administered VMS

Sales quotas

Way to motivate sales people Describes amount that should be sold of each product in given amount of time

Organizational climate

Way to motivate sales people Describes the feeling that salespeople have about opportunities, values, and rewards for good performance

Sales reports

Weekly or monthly work plans and longer term territory marketing plans that salespeople provide management

Product Line Stretching and each type

When a company lengthens its product line beyond its current range Stretch downwards- Companies located at upper end of market can stretch line downwards to expand market to lower cost Ex) Mercedes making affordable car for first time drivers Stretch upwards- Add prestige to current products to reach higher margins Ex) Cascade dishwashing detergent created a premium dish soap for higher prices

Exclusive Dealing

When a seller requires dealers to not handle any competitor products Legal as long as they do not substantially lessen competition by doing so

Market Skimming Pricing

When new products are initially set at high prices to obtain initial high revenues Should only be done when product image is supported by high quality. Competitors should not be able to enter market easily and undercut price Ex) With each new generation of iPhone released, apple raises starting prices and lowers prices of past generations Since such a large brand, people will still pay the premiums for apple products at release

Marketing during economic downturn

While may seem like a quick fix cutting costs, lowers value of brand in customer eyes instead, differentiate and redefine value in propositions

Store Brands (private brands)

a brand created and owned by a reseller of a product or service Used to be called generic brands but gaining a lot of traction due to greater selection and cheaper prices Ex) Trader Joe brand

Fashion (PLC)

a currently accepted or popular style in a given field Ex) Business attire has changed throughout years As a result, grow slowly, remain popular for a while, than decline slowly

Channel Level

a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer Number of channel levels indicate the length of the channel

Direct marketing channel

a marketing channel that has no intermediary levels Company sells straight to buyers

value delivery network

a network composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value

Quantity Discount

a price reduction offered to buyers buying in multiple units or above a specified dollar amount

High Low Pricing

a pricing strategy that relies on the promotion of sales, during which prices are temporarily reduced to encourage purchases

Reverse Logistics

a process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistribution, or disposal

Product sales force structure

a sales force organization in which salespeople specialize in selling only a portion of the company's products or lines Best for company with numerous and complex products

Customer (or market) sales force structure

a sales force organization in which salespeople specialize in selling only to certain customers or industries

Complex Sales force structure

a wide variety of products is sold to many types of customers over a broad geographic area, and it combines several types of sales force structures

Market Penetration Pricing

companies set a low initial price to penetrate the market quickly and deeply- to attract a large number of buyers quickly and win a large market share High sales volume leads to falling costs (economies of scale) allowing company to further cut prices Can only be done in markets that are highly price sensitive, costs must decrease as sales volume increases, and low price must keep out competition

Two classes of products and services

consumer products and industrial products

Types of consumer products

convenience products, shopping products, specialty products, and unsought products

Value selling

demonstrating and delivering superior customer value and capturing a return on that value that is fair for both the customer and the company

Direct Response Television Marketing

direct marketing via television, including direct-response television advertising and interactive television advertising Air spots describe product and give customer a number or site to order

Channel Conflict

disagreements among marketing channel members on goals, roles, and rewards - who should do what and for what rewards Both horizontal and vertical conflicts

Direct and digital marketing

engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships Fastest growing form of marketing and allows businesses to target specific groups of people

Four characteristics of a service

intangibility, inseparability, variability, perishability

Supply Chain Management

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

Trade promotion

marketing activities designed to persuade retailers to carry a brand, give an item shelf space, promote using advertising, and push to consumers Tools include contests, premiums, and displays

Downstream Supply Chain

marketing channel partners that link the firm to the customer Include wholesalers, retailers

Mobile marketing

marketing messages, promotions, and other content delivered to on-the-go consumers through mobile phones, smartphones, tablets, and other mobile devices Anytime anywhere marketing Can stimulate immediate buying, make shopping easier, and/or enrich brand experience

Brand sponsorship options

national brands, store brands, licensing, co-branding

Introduction stage PLC

new product is first distributed and made available for purchase No profits due to heavy expenses of intro

Just in time logistics

producers and retailers carry only small inventories of parts or merchandise, often enough for only a few days of operations Limits costs and ensures inventory remains good if perishable Requires accurate forecasting and management

Full line forcing

producers of a strong brand sometimes sell product to dealers only if the dealers will take some or all of the rest of its line

Pop up stores

retail stores, such as Halloween costume stores, that "pop up" one day and then disappear after a period of one day to a few months Utilized to create buzz of buying Flash sales are service equivalent

Consumer promotions

sales strategies that encourage customers and prospects to buy a product or service Short term solution to increased revenue

Marketing Channel Management

selecting, managing, and motivating individual channel members and evaluating their performance over time Must continuously be motivated

permission-based email marketing

sending email pitches only to customers who "opt in" Way to limit customer feeling of spam emials

Email Marketing

sending highly targeted, highly personalized, relationship-building marketing messages via email Important B2B tool Can lead customers to view company as spam related

Service Perishability

services cannot be stored for later sale or use. Ex) Some doctors charge patients for missed appointments because the service value existed only at that point and disappeared when the patient did not show up. Ex) Fluctuation of demand for a service requires organization to plan -hotels lower price in off seasons

Convenience Stores

small retailers that carry a limited line of high-turnover convenience goods Growth in recent years due to rebranding from gross truck stops to clean sites for all people

Pure tangible good

such as soap, toothpaste, or salt - no services accompany the product

Acquisition

the buying of a whole company, a patent, or a license to produce someone else's product

Segmented Pricing

the company sells a product or service at two or more prices, even though the difference in prices is not based on differences in costs Include customer segment pricing, product form pricing, location based pricing, and time based pricing

Electronic Data Interchange (EDI)

the computer-to-computer exchange of business documents

Brand equity

the differential effect that knowing the brand name has on customer response to the product or its marketing Measure of brand's ability to capture customer preferences and loyalty Ex) More brand equity when seeing one brand makes consumer more likely to buy given a generic brand

Viral marketing

the digital version of word-of-mouth marketing: videos, ads, and other marketing content that is so infectious that customers will seek it out or pass it along to friends

Integrated Marketing Communications

the intentional coordination of every communication from a firm to a target customer to convey a consistent and complete message

Merchant Wholesalers

the largest group of wholesalers and include both full service wholesalers and limited service wholesalers

Integrated Logistics Management

the logistics concept that emphasizes teamwork - both inside the company and among all the marketing channel organizations - to maximize the performance of the entire distribution system

Internal Marketing

the service firm must orient and motivate its customer-contact employees and supporting service people to work as a team to provide customer satisfaction Everyone in organization must be customer centered Internal marketing must precede external marketing in service industry

Product mix length

total number of items a company carries within its product lines Ex) Number of brands company carries within each line

Team selling

using teams of people from sales, marketing, engineering, finance, technical support, and even upper management to service large, complex accounts

Voluntary Chain

wholesaler-sponsored group of independent retailers engaged in group buying and merchandising Ex) Independent grocer alliance