GEB1011 MODULE 5
B2C Example
McDonald's selling you a hamburger
The Traditional Promotion Mix
Middle of circle: Product Outside of middle: Advertising, Personal selling, Sales promotion, Public relations
supply chain management is __ and __ because so many firms purchase from different sources in many countries
interfirm , international
_ tend to add value that is greater than the cost to incorporate them into supply chain
intermediaties
Publicity can affect a business or organization negatively because
it is not controlled by the organization, new organizations may choose not to use it, and it is more credible than an ad
interactive video has affected direct marketing by
making it easier for consumers to visualize the product
The goal of logistics is to manage the physical flow of materials and information from points of origin to points of consumption
meeting customer requirements at a profit
How are agents and brokers different from wholesalers?
most wholesalers take title
online retailers have had difficulty satisfying customers who
need to return purchases, have complaints, and require personal assistance
A good reason public relations is becoming more and more important today is:
newspapers have cut staff and need sources of information
Today, most Americans are active on at least _ social media platform
one
Select the store likely to use low price to create an attractive total product offering
outlet or warehouse
The reasons why many new products fail include:
poor packaging, poor positioning, too late to market
Questions like "which people in the company will use the product?" and "what is the customer looking for in this product?" are addressed during the _ phase
preapproach
How Intermediaries Create Exchange Efficiency
(PIC ON DESKTOP)
Steps in a Promotional Campaign
1. Identify a target market. 2. Define the objectives for each element of the promotion mix. 3. Determine a promotional budget. 4. Develop a unifying message. 5. Implement the plan. 6. Evaluate effectiveness.
Types of Social Commerce
1. Peer-to-peer sales platforms 2. Social network shops and shopping apps 3. Group buyings and daily deals 4. Peer recommendations 5. User-curated shopping 6. Crowdfunding/crowdsourcing 7. Social shopping
Sampling
A promotional tool in which a company lets consumers have a small sample of a product for no charge.
B2B Examples
A wholesaler selling to another wholesaler A wholesaler selling to a retailer, who eventually sells to the consumer Home Depot selling lumber to a contractor for a project at your college
Nonprice Competition
Competition on Attributes Other than Price • Product images • Comfort • Style • Convenience • Durability • Accompanying services
Advertising: Informing, Persuading, and Reminding
Advertising — Paid, nonpersonal communication through various media by organizations and individuals who are in some way identified in the advertising message. Impact of Advertising • Total advertising expenditures exceed $420 billion in 2016. • Consumers benefit because production costs of TV programs, radio programs, newspapers, and magazines are paid for by advertisers. • Marketers choose ad media that will reach the target market. Television Advertising • TV advertising is still the dominant media. • DVRs and OnDemand services challenge TV advertising because viewers can skip ads. Product Placement • Product placement - Putting products into TV shows and movies where they will be seen. Infomercials • Infomercial — A full-length TV program devoted exclusively to promoting goods or services. Online Advertising • Online ads are attempts to get potential customers to a website to learn about a product. • Interactive promotion — Promotion process that allows marketers to go beyond a monologue, where sellers try to persuade buyers to buy things, to a dialogue in which buyers and sellers work together to create mutually beneficial exchange relationships. Social Media Advertising • Companies can measure how many times a post is viewed or shared. • Social media allows marketers to test promotions before bringing them to traditional media. Global Advertising • Requires marketers to develop a single product and promotional strategy to implement worldwide • Problems can arise in global markets with using one advertising campaign in all countries—especially bad translations. • Many marketers are moving from globalism to regionalism.
Sales Promotion Techniques
B2B promotion techniques include trade shows, portfolios for salespeople, deals (price reductions), catalogs, and conventions. B2C promotion techniques include coupons, cents-off promotions, sampling, premiums, sweepstakes, contests, bonuses (buy one, get one free), catalogs, demonstrations, special events, lotteries, and in-store displays.
Branding and Brand Equity
Brand — A name, symbol, or design (or combination thereof) that identifies the goods or services of one seller or group of sellers and distinguishes them from the goods and services of competitors. Trademark — A brand that has exclusive legal protection for both its brand name and its design. Brand Categories • Manufacturers' brands — The brand names of manufacturers that distribute products nationally. • Dealer (private-label) brands — Products that don't carry the manufacturer's name but carry a distributor's or retailer's name instead. • Generic goods — Nonbranded products that usually sell at a sizable discount compared to national or private-label brands. • Knockoff brands — Illegal copies of national brand-name goods. Generating Brand Equity and Loyalty • Brand equity — The value of the brand name and associated symbols. • Brand loyalty — The degree to which customers are satisfied, like the brand, and are committed to further purchases. • Brand awareness — How quickly or easily a given brand name comes to mind when a product category is mentioned. • Consumers reach a point of brand preference when they prefer one brand over another. • When consumers reach brand insistence, they will not accept substitute brands. Creating Brand Associations • Brand association — The linking of a brand to other favorable images. Brand Management • Brand manager — A manager who has direct responsibility for one brand or one product line; called a product manager in some firms. • The brand manager handles all the elements of the brand's marketing mix.
Packaging Changes the Product
Companies often use packaging to change and improve their basic product. Examples include: • Squeezable ketchup bottles • Square paint cans with screw tops • Single-use spice packets Good packaging can also make a product more attractive to retailers. Key Functions of Packaging 1. Attract buyers' attention 2. Protect the goods inside and be tamperproof 3. Be easy to open 4. Describe and give information about the product 5. Explain the product's benefits 6. Provide warranty information and warnings 7. Give an indication of price, value, and uses The Growing Importance of Packaging • Bundling — Grouping two or more products together and pricing them as a unit. • IcelandAir bundled layover tours with an IcelandAir employee "stopover buddy." • Financial institutions bundle advice with purchases.
Types of Retail Stores
Department store: Sears, JC Penney, Nordstrom Discount store: Wal-Mart, Target Supermarket: Safeway, Kroger, Albertsons Warehouse club: Costco, Sam's Club Convenience store: 7-Eleven Category killer: Bass Pro Shops, Office Depot/Office Max Outlet store: Nordstrom Rack, Liz Claiborne, Nike, TJ Maxx Specialty store: Jewelry stores, shoe stores, bicycle shops
Product Development and the Total Product Offer
Developing Value • According to the American Marketing Association, value is a foundation of marketing. • Value — Good quality at a fair price. When consumers calculate the value of a product, they look at the benefits and then subtract the cost to see if the benefits exceed the costs. • Adapting products to new markets is an ongoing challenge. • Product development is a key activity in any modern business. Distributed Product Development • Distributed product development — Handing off various parts of your innovation process—often to companies overseas. • The increase in outsourcing has resulted in using multiple organizations separated by cultural, geographic, and legal boundaries. • Developing a total product offer •• Total product offer — Everything that consumers evaluate when deciding whether to buy something; also called a value package. •• Products are evaluated on many different dimensions, both tangible and intangible. •• Marketers must think like and talk to consumers to find out what's important. Product Lines and the Product Mix • Product line — A group of products that are physically similar or intended for a similar market. • Product lines often include competing brands like: •• Coca-Cola •• Diet Coke •• Coke Zero •• Cherry Coke • Product mix — The combination of product lines offered by a manufacturer. • Product mixes like Procter & Gamble's can be extensive: •• Toothpaste •• Cosmetics •• Diapers •• Batteries •• Bar soap
Estimated U.S. Advertising Expenditure in 2016 by Medium (in Billions of Dollars)
From highest to lowest projected advertising spending: • TV: approximately 37 billion dollars • Digital: approximately 35 billion dollars • Radio: approximately 8 billion dollars • Newspapers: approximately 7.5 billion dollars • Magazines: approximately 7 billion dollars • Outdoor: approximately 4 billion dollars • Directories: approximately 2 billion dollars
Distribution's Effect on Your Food Dollar
From lowest to highest cost: Packaging: 2.5 cents Finance and insurance: 3.1 cents Transportation: 3.2 cents Other: 3.2 cents Energy: 5.1 cents Wholesale trade: 9.1 cents Farm production: 10.4 cents Retail trade: 12.9 cents Food processing: 15.3 cents Food services: 32.7 cents
Various Categories of Consumer and Industrial Goods and Services
Goods and services are of two types: consumer goods and services and industrial goods and services. Consumer goods and services consist of the following types: convenience, shopping, specialty, and unsought. Industrial goods and services consist of production goods and support goods. Production goods are made up of raw materials, component parts (engines), and production materials (nuts and bolts) Support goods are made up of installations (buildings, equipment, and capital rentals), accessory equipment (tools and office equipment), supplies (paper clips, stationery, and other office supplies), and service (maintenance and repair).
How Sales, Profits, and Competition Vary over the Product Life Cycle
Introduction Stage: • Low sales • Losses may occur • Few competitors Growth Stage: • Rapidly rising sales • Very high profits • Growing number of competitors Maturity Stage: • Sales reach maturity • Declining profits • Competitors reach a stable number then begin to decline Decline Stage: • Falling sales • Profits may fall to become losses • Declining number of competitors
Sample Strategies Followed during the Product Life Cycle
Introduction Stage: • Product characteristics: offer market tested product; keep mix small • Price characteristics: go after innovators with high introductory price (skimming strategy) or use penetration pricing • Place characteristics: use wholesalers, selective distribution • Promotion characteristics: Dealer promotion and heavy investment in primary demand advertising and sales promotion to get stores to carry the product and consumers to try it Growth Stage: • Product characteristics: improve product; keep product mix limited • Price characteristics: adjust price to meet competition • Place characteristics: increase distribution • Promotion characteristics: heavy competitive advertising Maturity Stage: • Product characteristics: differentiate product to satisfy different market segments • Price characteristics: further reduce price • Place characteristics: take over wholesaling function and intensify distribution • Promotion characteristics: emphasize brand name as well as product benefits and differences Decline Stage: • Product characteristics: cut product mix; develop new product ideas • Price characteristics: consider price increase • Place characteristics: consolidate distribution; drop some outlets • Promotion characteristics: reduce advertising to only loyal customers
match each example to the appropriate step it exemplifies in a good public relations program
Listen to the public- when dominos pizza solicited feedback about its pizza Inform people you're responsive to their needs- when coca cola reverted to classical coke Change policies and procedures- when starkist changed its tuna finishing methods
Logistics: Getting Goods to Consumers Efficiently
Logistics — The marketing activity that involves planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit. Logistics Applications • Inbound logistics — The area of logistics that involves bringing raw materials, packaging, other goods and services, and information from suppliers to producers. • Materials handling — The movement of goods within a warehouse, from warehouses to the factory floor, and from the factory floor to various workstations. • Outbound logistics — The area of logistics that involves managing the flow of finished products and information to business buyers and ultimate consumers (people like you and me). • Reverse logistics — The area of logistics that involves bringing goods back to the manufacturer because of defects or for recycling materials. Logistics Specialists • Freight forwarder — An organization that puts many small shipments together to create a single large shipment that can be transported cost-effectively to the final destination. • Intermodal shipping — The use of multiple modes of transportation to complete a single long-distance movement of freight. Tracking Goods • Storage warehouses hold products for a relatively long period of time. • Distribution warehouses are used to gather and redistribute products such as package deliveries.
The Emergence of Marketing Intermediaries
Marketing intermediaries — Organizations that assist in moving goods and services from producers to businesses (B2B) and from businesses to consumers (B2C). They are called intermediaries because they're in the middle of a series of firms that distribute goods. Channel of distribution — A whole set of marketing intermediaries, such as agents, brokers, wholesalers, and retailers, that join together to transport and store goods in their path (or channel) from producers to consumers. Part of the overall supply chain. Types of Marketing Intermediaries • Agents and brokers — Marketing intermediaries who bring buyers and sellers together and assist in negotiating an exchange but do not take title to the goods. • Wholesaler — A marketing intermediary that sells to other organizations. • Retailer — An organization that sells to ultimate consumers. A firm that purchases goods from a manufacturer and then sells those goods or products to final consumers. Why Marketing Needs Intermediaries • Intermediaries perform marketing tasks faster and cheaper than most manufacturers could provide them. • Intermediaries make the exchange process easier and more efficient and profitable. The Value versus the Cost of Intermediaries • Three key facts about marketing intermediaries 1. Marketing intermediaries can be eliminated but their activities cannot. 2. Intermediaries perform marketing functions faster and cheaper than other organizations can. 3. Marketing intermediaries add costs to products, but these costs are generally offset by the values they provide.
Comparing Transportation Modes
Mode: Cost, Speed, On-time Dependability, Products, Shipments, Reach Railroads: Medium, Slow, Medium, High, Low, High Trucks: High, Fast, High, Medium, High, Highest Pipelines: Low, Medium, Highest, Lowest, Highest, Lowest Ships (water): Lowest, Slowest, Lowest, Highest, Lowest, Low Airplanes: Highest, Fastest, Low, Low, Medium, Medium
Online Retailing and Other Nonstore Retailing
Online Retailing • Online retailing — Selling goods and services to ultimate customers over the Internet. • Social commerce — A form of electronic commerce that involves using social media, online media that supports social interaction, and user contributions to assist in the online buying and selling of products and services. Telemarketing • Telemarketing — The sale of goods and services by telephone. Vending Machine, Kiosks, Carts, and Pop-Ups • Vending machines dispense convenience goods when consumers deposit sufficient money. • Carts and kiosks have lower overhead than stores, so they can offer lower prices on items. • Pop-ups are temporary outlets that remain open for a short amount of time in small spaces. Direct Selling • Direct selling — Selling to consumers in their homes or where they work. Multilevel Marketing • Multilevel marketing uses salespeople who work as independent contractors. Direct Marketing • Direct marketing — Any activity that directly links manufacturers or intermediaries with the ultimate consumer. (like direct mail)
Personal Selling: Providing Personal Attention
Personal selling — The face-to-face presentation and promotion of goods and services. Salespeople need to listen to customer needs, help reach a solution, and do everything possible to make the transaction as simple as possible. Steps in the Selling Process 1. Prospect and qualify 2. Preapproach 3. Approach 4. Make a presentation 5. Answer objections 6. Close the sale • Trial close — A question or statement that moves the selling process toward the actual close. 7. Follow up (Steps in the Selling Process continued) • Prospecting and Qualifying: • Prospecting — Researching potential buyers and choosing those most likely to buy. • Qualifying — Making sure that people have a need for the product, the authority to buy, and the willingness to listen to a sales message. • Prospect — A person with the means to buy a product, the authority to buy, and the willingness to listen to a sales message. The Business-to-Consumer Sales Process • Most of these sales take place in retail stores. • The salesperson does not have to do much prospecting or qualifying. • Retail salespeople don't usually need a preapproach step. • Follow up if the product is to be delivered or installed.
Competitive Pricing
Pricing Objectives 1. Achieving a target return on investment or profit 2. Building traffic 3. Achieving greater market share 4. Creating an image 5. Furthering social objectives, both short-run and long-run Cost-Based Pricing • Cost-based pricing measures cost of producing a product including materials, labor, and overhead. Demand-Based Pricing • Target costing — Designing a product so that it satisfies customers and meets the profit margins desired by the firm. Competition-Based Pricing • Competition-based pricing — A pricing strategy based on what all the other competitors are doing. The price can be set at, above, or below competitors' prices. • Price leadership — The strategy by which one or more dominant firms set the pricing practices that all competitors in an industry follow. Break-Even Analysis • Break-even analysis — The process used to determine profitability at various levels of sales. • The break-even point is where revenues equals cost. • Total fixed costs — All the expenses that remain the same no matter how many products are made or sold. • Variable costs — Costs that change according to the level of production. Break−even point (BEP) = Total fixed costs (FC) over the (divided by) Price of one unit (P) minus Variable costs (VC) of one unit •If you have a fixed cost of $200,000, a variable cost of $2 per item, and you sell your product for $4 each, what would be your BEP? Other Pricing Strategies • Skimming price strategy — Strategy in which a new product is priced high to make optimum profit while there's little competition. • Penetration strategy — Strategy in which a product is priced low to attract many customers and discourage competition. • Everyday low pricing (EDLP) — Setting prices lower than competitors and then not having any special sales. • High-low pricing strategy — Setting prices that are higher than EDLP stores, but having many special sales where the prices are lower than competitors. • Psychological pricing — Pricing goods and services at price points that make the product appear less expensive than it is.
The Product Life Cycle
Product Life Cycle — A theoretical model of what happens to sales and profits for a product class over time. Product Life Cycle Stages: • Introduction • Growth • Maturity • Decline
Product Differentiation
Product differentiation — The creation of real or perceived product differences. Marketers use a mix of branding, pricing, advertising, and packaging to create different images. Marketing Different Classes of Consumer Goods and Services • Convenience goods and services — Products that the consumer wants to purchase frequently and with a minimum of effort. • These include: •• Candy and snacks •• Gas •• Milk • Shopping goods and services — Those products that the consumer buys only after comparing value, quality, price, and style from a variety of sellers. • Specialty goods and services — Consumer products with unique characteristics and brand identity. Because these products are perceived as having no reasonable substitute, the consumer puts forth a special effort to purchase them. • These include: •• Fine watches •• Expensive wine •• Designer clothes •• Jewelry •• Services provided by medical specialists • Unsought goods and services — Products that consumers are unaware of, haven't necessarily thought of buying, or find that they need to solve an unexpected problem. • These include: •• Car-towing services •• Burial services •• Insurance Marketing Industrial Goods and Services • Industrial goods — Products used in the production of other products; sometimes called B2B goods or business goods. • Industrial goods include: •• Installations •• Capital items •• Accessory equipment
The New-Product Development Process
Product screening — A process designed to reduce the number of new-product ideas being worked on at any one time. Product analysis — Making cost estimates and sales forecasts to get a feeling for profitability of new-product ideas. Product Development and Testing • Concept testing takes a product idea to consumers to test reactions. • Crowdsourcing platforms allow the public to give their opinions of potential products. Commercialization • Commercialization — Promoting a product to distributors and retailers to get wide distribution, and developing strong advertising and sales campaigns to generate and maintain interest in the product among distributors and consumers.
Promotion and the Promotion Mix
Promotion mix — The combination of promotional tools an organization uses. Integrated marketing communication (IMC) — A technique that combines all the promotional tools into one comprehensive and unified promotional strategy. IMC is used to: • Create a positive brand image • Meet the needs of consumers • Meet the strategic marketing and promotional goals of the firm
Managing the Promotion Mix: Putting It All Together
Promotional Strategies • Push strategy — The producer uses advertising, personal selling, sales promotion, and all other promotional tools to convince wholesalers and retailers to stock and sell merchandise. • Pull strategy — Heavy advertising and sales promotion efforts are directed toward consumers so that they'll request the products from retailers.
Packaging can make a product more attractive to retailers by
bundling products and services, reducing theft, tracking inventory
Public Relations: Building Relationships
Public relations (PR) — The management function that evaluates public attitudes, changes policies and procedures in response to the public's requests, and executes a program of action and information to earn public understanding and acceptance. Three steps of a good PR program: • Listen to the public. • Change policies and procedures. • Inform people you're responsive to their needs. Publicity: The Talking Arm of PR • Publicity — Any information about an individual, product, or organization that's distributed to the public through the media and that's not paid for or controlled by the seller. • Advantages of publicity: • Free • Reaches people who would not look at an advertisement • More believable than advertising • Disadvantages of publicity: • No control over whether the media will use a story or when they may release it. • It can be good or bad. • Once a story has been run, it is not likely to run again
Major Categories of Advertising
Retail advertising —to consumers by various retail stores Trade advertising —to wholesalers and retailers by manufacturers Business-to-business advertising —from manufacturers to other manufacturers Institutional advertising — to create attractive image for organization rather than for product Product advertising — to create interest among consumer, commercial, and industrial buyers Advocacy advertising — supports particular view of issue Comparison advertising — compares competitive products Interactive advertising — enables customers to choose the information they receive Online advertising — appear on computers as people visit different websites Mobile advertising — reaches people on their smartphones
Retail Intermediaries
Retailing in the United States • Retailers in the U.S. employ about 42 million people and operate under many different structures. • There are over 3.7 million retail stores in the U.S. (are major employers of marketing graduates and employ more than 40 million people). Retail Distribution Strategy • Intensive distribution — Puts products into as many retail outlets as possible. • Selective distribution — Sends products only to a preferred group of retailers in an area. • Exclusive distribution — Sends products to only one retail outlet in a given geographic area.
Sales Promotion: Giving Buyers Incentives
Sales Promotion — The promotional tool that stimulates consumer purchasing and dealer interest by means of short-term activities. Categories of Sales Promotions: • B2B sales promotions • Consumer sales promotions Key Consumer Promotions • Samples • Coupons • Contests and prizes
The New-Product Development Process
Stage 1: Idea generation (based on consumer wants and needs) Stage 2: Product screening Stage 3: Product analysis Stage 4: Development (including building prototypes) Stage 5: Testing Stage 6: Commercialization (bringing the product to market)
Steps in the Business-to-Consumer (B2C) Selling Process
Start: Approach Ask questions Make presentation Close sale Follow up (steps leading up to end)
The Supply Chain
The supply chain sequence is as follows: 1. Suppliers' plants 2. Manufacturers 3. Wholesalers 4. Retailers 5. Consumers The channel of distribution begins with manufacturers and goes to consumers.
Building Cooperation in Channel Systems
The Four Systems of Channel Relationships 1. Corporate distribution systems 2. Contractual distribution systems 3. Administered distribution systems 4. Supply chains. Corporate Distribution Systems • Corporate distribution system — A distribution system in which all of the organizations in a channel of distribution are owned by one firm. • Example: Sherwin Williams Contractual Distribution Systems • Contractual distribution system — A distribution system in which members are bound to cooperate through contractual agreements. • Forms of contractual systems: • Franchise systems: McDonald's, Baskin-Robbins • Wholesale-sponsored chains: IGA, Ace Hardware • Retail cooperatives: Associated Grocers Administered Distribution Systems • Administered distribution system — A distribution system in which producers manage all of the marketing functions at the retail level. • Examples: • Kraft • Scotts Supply Chains • Supply chain (value chain) — The sequence of linked activities that must be performed by various organizations to move goods from the sources of raw materials to ultimate consumers. • Supply-chain management — The process of managing the movement of raw materials, parts, work in progress, finished goods, and related information through all the organizations involved in the supply chain; managing the return of such goods, if necessary; and recycling materials when appropriate.
Sales and Profits during the Product Life Cycle
The horizontal axis illustrates the four stages of the product life cycle: introduction, growth, maturity, and decline. The vertical axis represents sales. The sales line illustrates that all-electric cars are in the introduction stage of the product life cycle, hybrid cars are in the growth stage of the product life cycle, smartphones are in the maturity stage, and videocassette recorders are in the decline stage of the product life cycle. During the introduction stage, sales and profit are increasing and closely correlated. During the growth stage, the profit is still on the rise, but its distance from the sales line begins to increase. Sales are still increasing during the maturity stage, but profits are decreasing. At the beginning of the decline stage, both sales and profits are decreasing, and the profit line is no longer closely correlated with the sales line.
Potential Components of a Total Product Offer
The outermost level: brand name, convenience, package, and price The middle level: service, internet access, buyer's past experience, and store surroundings The innermost level: speed of delivery, image created by advertising, reputation of producer, and guarantee
Selected Channels of Distribution
There are six channels of distribution for consumer goods. Channel 1: The manufacturer sells directly to consumers. This channel is used by craftspeople and small farmers. Channel 2: The manufacturer sells to a retailer who then sells to consumers. This channel is used for cars, furniture, and clothing. Channel 3: The manufacturer sells to a wholesaler, who then sells to a retailer, who then sells to consumers. This channel is the most common channel for consumer goods such as groceries, drugs, and cosmetics. Channel 4: A farmer sells to a broker who then sells to a wholesaler, who then sells to a retailer, who then sells to consumers. This is a common channel for food items such as produce. Channel 5: A service organization sells to a broker who then sells to consumers. This is a common channel for consumer services such as real estate, stocks and bonds, insurance, and nonprofit theater groups. Channel 6: A nonprofit organization sells to a store who then sells to consumers. This is a common channel for nonprofit organizations that want to raise funds. Included are museums, government services, and zoos. There are two channels of distribution for industrial goods. Channel 1: The manufacturer sells directly to industrial users. This is the common channel for industrial products such as glass, tires, and paint for automobiles. Channel 2: The manufacturer sells to a wholesaler who then sells to industrial users. This is the way that lowercost items such as supplies are distributed. The wholesaler is called an industrial distributor.
Pipelines are a useful means of transporting oil because they
are fast, cheap, and never fail to deliver?
The Utilities Created by Intermediaries
Utility — The want-satisfying ability, or value, that organizations add to goods and services when the products are made more useful or accessible to consumers than they were before. Six types of utilities: 1. Form 2. Time 3. Place 4. Possession 5. Information 6. Service Form Utility • Producers provide form utility by changing raw materials into useful products. • Example: Starbucks makes coffee the way the customers want it. Time Utility • Time utility — Adding value to products by making them available when they're needed. • Example: Some grocery stores are open 24 hours. Place Utility • Place utility — Adding value to products by having them where people want them. • Example: 7-Eleven stores are found in easy-to-reach locations. Possession Utility • Possession utility — Doing whatever is necessary to transfer ownership from one party to another, including providing credit, delivery, installation, guarantees, and follow-up service. • Example: A real estate broker and a savings and loan office provide possession utility. Information Utility • Information utility — Adding value to products by opening two-way flows of information between marketing participants. • Example: Newspapers, salespeople, libraries, and websites all act as intermediaries. Service Utility • Service utility — Adding value by providing fast, friendly service during and after the sale and by teaching customers how to best use products over time. • Example: The Apple Genius Bar helps during and after a purchase.
LOGISTICS and DISTRIBUTION
What is Logistics -Logistics is the management of the flow of goods between the point of origin and the point of consumption in order to meet some requirements, for example, of customers or corporations. -Distribution channels are the methods that companies use to enter the consumer market with their product. -While many methods exist, they have changed over the years because of the Internet and global sales. -Distribution strategies help identify sales channels that can maximize sales and profits. Distribution is one of the "4-Ps" of marketing --the first three are product, promotion and price. -Logistics automation is the application of computer software and/or automatedmachinery to improve the efficiency of logistics operations. Typically this refers to operations within a warehouse or distribution center, with broader tasks undertaken by supply chain management systems and enterprise resource planning systems. Logistics Outsourcing -Logistics outsourcing involves a relationship between a company and an LSP (logistic service provider), which, compared with basic logistics services, has more customized offerings, encompasses a broad number of service activities, is characterized by a long-term orientation, and thus has a strategic nature. Logistics as a Profession -A logistician is a professional logistics practitioner, often certified by professional associations. One can either work in a pure logistics company, such as a shipping line, airport, or freight forwarder, or within the logistics department of a company. However, logistics is a broad field, encompassing procurement, production, distribution, and disposal activities.
Wholesale Intermediaries
Wholesalers normally make B2B sales; however, stores like Staples and Costco also have retail functions. • Retail sales are sales of goods and services to consumers for their own use. • Wholesale sales are sales of goods and services to other businesses for use in the business or resale. Consumers are more familiar with retailers than wholesalers. Merchant Wholesalers • Merchant wholesalers — Independently owned firms that take title to the goods they handle. • There are two types: 1. Full-service wholesalers perform all distribution functions. 2. Limited-function wholesalers perform only selected distribution functions. • Types of limited-function wholesalers: • Rack jobbers — Furnish racks or shelves full of merchandise to retailers, display products, and sell on consignment. • Cash-and-carry wholesalers — Serve mostly smaller retailers with a limited assortment of products. • Drop shippers — Solicit orders from retailers and other wholesalers and have the merchandise shipped directly from a producer to a buyer. Agents and Brokers • Agents generally maintain long-term relationships with the clients they represent. • Manufacturer's agents represent several manufacturers in a specific territory. • Sales agents represent a single client in a larger territory. • Brokers usually represent clients on a temporary basis.
Word of Mouth and Other Promotional Tools
Word-of-mouth promotion — People tell others about products they have purchased. Viral marketing — Paying customers to say positive things on the Internet or setting up multiple multilevel selling schemes whereby consumers get commissions for directing friends to specific websites. • Many viral marketing programs give away free products or services in exchange for e-mail addresses. Social Networking • Steps to launch a successful promotional campaign: 1. Know your customer base. 2. Post something new every day. 3. Develop fun, suitable hashtags. 4. Use a publishing calendar. 5. Engage with customers through contests and entertainment. 6. Follow back and reply to commenters. 7. Familiarize yourself with new site features. 8. Measure the effectiveness of posts. Blogging • Blogs are a great way to interact with customers and improve the company's website ranking. Podcasting • Podcasting — A means of distributing audio and video programs via the Internet that lets users subscribe to a number of files, also known as feeds, and then hear or view the material at the time they choose. E-Mail Promotions • E-mail promotions increase brand awareness among commercial suppliers. Mobile Marketing • Marketers make use of smartphones to text customers about product offers and other company information.
Which of the following qualifies as advertising?
a paid television informercial and e-mail from starbucks about its new store in the area?
Asante is the marketing manager of a Fortune 500 company. While planning the next year promotional mix, he decides to pay for a few videos that present the company's products and place them on the internet as well as sending them to possible buyers on a DVD. Asante is planning the next year's campaign
advertising
staples and office depot are examples of the type of retailer known as
category killer
drop shippers typically handle products such as
coal, lumber, chemicals.
retailers can compete with online retailers by using which of the following distribution systems to be more efficient
corporate, contractual, administered
A drop shipper does not
deliver the merchandise, stock the merchandise, or handle the merchandise.
traditional store retailers were used to shipping from manufacturers to warehouses to the retail store, except for large purchases such as furniture. they have had to
develop systems to deliver directly to customers' homes, and outsource distribution functions to specialists such as FedEx and UPS
_ is a technology that has made TV less attractive to advertisers
digital video recording
which of the following are examples of shopping goods
dishwashers and automobiles
Small businesses can use nonstore retailing to open new channels of distribution to consumer through
electroninc retailing, direct marketing, direct selling at home or work
the least expensive way to ship goods overseas is usually _
fishyback
in business-to-consumer sales the _ step is important but is often neglected
follow-up
Sellers are now able to commercialize new products more quickly through interactive websites that enable them to reach
global markets
This personal selling step is described as: countering reasons for not buying the product
handing objections
A wholesaler sells to
hospitals, retailers, producers of goods and services (manufacturers).
some products such as personal development seminars, real estate programs, and workout tapes require lengthy explanations on television. They are best promoted through
infomercials
a university develops a promotional strategy that includes, among many others, advertising in newspapers and over the internet, personal selling through recruiters, highlight recent news stories about its campus on youtube, and offering all expenses paid trips to visit the campus. what type of marketing technique is the university likely to be engaged in
integrated marketing communication
Direct mail of static paper catalogs has experienced increased competition caused by the use of _ online
interactive video
While newspapers continue to cut reporting staff, an alternate source of news information has been _ to help make up for this reduction in staff.
publicity releases
The use of _ _ advertising such as that on Google or Bing, brings together marketers and those they would most like to reach
search engine
If a push stage is successful, then consumers are more likely to find out about a new product after:
seeing a TV ad, seeing it in stores, and recognizing it in a movie
retailers who offer updates and training to use complex products develop a competitive advantage over direct markets because
service after the sale adds value to the product, and they can build customer relationships over time
Profit-making and nonprofit organizations use _ promotional techniques to communicate with people in their target markets
similar
An advantage of __ __ is that it offers easier two-way communication between businesses and customers
social media
Event Marketing Examples
sponsoring a rock concert, sponsoring a high school basketball tournament
Activities included in direct marketing include
telemarketing, online sales, catalog sales
When an individual goes to a supermarket and selects a box of cereal from several choices of type, brand, and size, it is an example of:
the value of marketing intermediaries who provide an assortment
companies who use organizations such as SAP or peoplesoft to manage complex supply chains recognize that they are actually value chains because
their goal is to provide consumers with the best possible value at the lowest cost to the company
Using the chart in your text, which method of transportation would you use to move a small load of automobile parts from the manufacturer in north carolina to an assembly plant in tennessee that uses just-in-time inventory control?
trucks
a(n) ___ exists when marketers agree to use the same name and joint promotions while also cooperating as a unified system fo stores
wholesaler-sponsored