Intro to Business (ch 11-13)

Full-Service Merchant Wholesalers

(about 80 percent of all merchant wholesalers) provide value-adding services, including credit, marketing advice, and merchandising services,

Classifying Goods and Services

1. Buyers of consumer products. 2. Buyers of organizational products.

Classifying Consumer Products

1. Convenience Goods and Services: (milk and newspaper/ fast-food) are consumed rapidly and regularly. they are inexpensive and are purchased often and with little input of time and effort. 2. Shopping Goods and Services: (appliances and mobile devices/ hotel and airlines) are more expensive and are purchased less often than convenience products. consumers often compare brands, sometimes in different stores and via Internet searches. they may also evaluate alternatives in terms of style performance, color, price, and other criteria. 3. Specialty Goods and Services: (wedding gowns/wedding receptions and healthcare insurance) are extremely important and expensive purchases. consumers usually decide on exactly what they want and will accept no substitutes. they often go from source to source, sometimes spending a great deal of money and time to get a specific product.

Why do they devote so many resources to exploring product possibilities, rejecting many seemingly good ideas along the way?

1. High Mortality Rates: for new ideas means that only a few new products reach the market. 2. Speed to Market (time compression): for many companies, with a product is as important as care in developing it. a firm's success in responding rapidly to customer demands or market changes.

Pricing Existing Products (3 options):

1. Pricing above prevailing market prices for similar products to take advantage of the common assumption that higher price means higher quality. 2. Pricing below market prices while offering a product of comparable quality to higher-priced competitors. 3. Pricing at or near market prices.

Pricing for E-Business Objectives

2 new tools include: 1. websites that search for lower-price drug alternatives 2. a Web portal that serves as a gateway for listing nationwide average retail prices for drugs.

Industrial Buyer

A company or other organization that buys products for use in producing other products (goods or services)

Behavioral Segmentation and Variables

Behavioral Segmentation uses Behavioral Variables to market items, such as heavy users (buy in bulk-Costco); situation buyers (Halloween); ore specific purpose (detergent for people with allergies).

E-Intermediaries

Internet-based channel members- wholesalers- who perform one or both of two functions: 1. They collect information about sellers and present it to consumers (kayak.com), or 2. They help deliver online products to buyers (amazon.com).

Possession Utility

Marketing creates possession utility by transferring product ownership to customers by setting selling prices, setting terms for customer credit payments, if needed, and providing ownership documents.

Marketing

The American Marketing Association defines marketings as "activities, a set of institutions, and process for creating, communicating, delivering, and exchanging offers that have value for customers, clients, partners, and society at large".

Viral Marketing

a form of marketing that relies on social networking and the Internet to spread information like a "virus" from person to person. the marketing purpose may be to increase brand awareness, to promote new product ideas, or to foster excitement for stimulating sales.

Product

a good, a service, or an idea designed to fill a customer's need or want.

Exclusive Distribution

a manufacturer grants the exclusive right to distribute or sell a product to a limited number of wholesalers or retailers, usually in a given geographic area. such agreements are most common for high-cost prestige products. Rolex watches are sold only by "Official Rolex Jewelers".

Relationship Marketing

a type of marketing that emphasizes building lasting relationships with customers and suppliers. strong relationships, including stronger economic and social ties, can result in greater long-term satisfaction, customer loyalty and customer retention.

Geographic Variables and Segmentation

Geographic Variables are the geographic units, from countries to neighborhoods, that researchers consider in a strategy of Geographic Segmentation.

Online Retailing

allows sellers to inform, sell to, and distribute to consumers via the web.

Sociocultural Environment

also impacts marketing. changing social values force companies to develop and promote new products, such as poultry and meat without antibiotics and growth hormones, for both individual consumers and industrial customers.

Customer Relationship Management (CRM)

an organized method that an enterprise uses to build better information connections with clients, so that management can develop stronger enterprise-client relationships.

Advertising

any form of paid nonpersonal communication used by an identified sponsor to persuade or inform potential buyers about a product.

"Buy" Decisions

are based on rational motives, emotional motives, or both.

Wholesalers

are intermediaries who sell products to other businesses for resale to final consumers.

Private Warehouses

are owned by a single manufacturer, wholesaler, or retailer that deals in mass quantities and needs regular storage. most are run by large firms that deal in mass quantities and need regular storage. JCPenny maintains its own warehouses to facilitate the movement of products to its retail stores.

Economic Environment

because economic conditions determine spending patterns by consumers, businesses, and governments, the economic environment influences marketing plans for product offerings, pricing, and promotional strategies. marketers are concerned with such economic variables as inflation, interest rates, and recession. thus, they monitor the general business cycle to anticipate trends in consumers and business spending.

Political-Legal Environment

both global and domestic, has profound effects on marketing. marketing managers try to maintain favorable political and legal environments in several ways. to gain public support for products and activities, marketers use ad campaigns to raise public awareness of important issues. companies contribute to political candidates and frequently support the activities of political action committees (PACs) maintained by their respective industries.

Cost-Oriented Pricing

considers a firm's desire to make a profit and its need to cover operating costs. selling price X seller's costs + profit.

Technological Environment

creates new goods and services. New products make existing products obsolete, and many products change our values and lifestyles. in turn, lifestyle changes often stimulate new products not directly related to the new technologies themselves. free up time for recreation and leisure.

Fixed Pricing

the most common option for cybershoppers.

Personal Selling

the oldest most expensive form of sales, a salesperson communicates one-on-one with potential customers to identify their needs and align them with the product. salespeople gain credibility by investing a lot of time getting acquainted with potential customers and answering their questions. this professional interaction is especially effective in relationship making.

Target Markets

the particular groups of people or organizations on which a firm's marketing efforts are focused. usually the first step in a marketing strategy.

Marketing Managers

the people responsible for planning, organizing, leading, and controlling the organization's marketing resources toward supporting and accomplishing the organization's overall mission. to meet these responsibilities, they rely on mapping out a clear strategy for planning and implementing all activities that result in the transfer of goods or services to customers.

Consumer Behavior

the process by which people buy and consume products. 4 influences: 1. Psychological 2. Personal 3. Social 4. Cultural

Product Features

the qualities, tangible and intangible, that a company build into its products. to attract buyers, features must also provide benefits;

Distribution Through Supply Chains as a Marketing Strategy

this approach means assessing, improving, and integrating the entire stream of activities- upstream suppliers, wholesaling, warehousing, transportation, delivery, and follow-up services- involved in getting products to customers. the industrial world has seen the rise of just-in-time (JIT) inventory systems. the past 30 years have seen dramatic improvements in supply chain technology and management and its adoption by the retail sector.

Interactive Marketing

today, retailers and B2C customers interact with multimedia sites using voice, graphics, animation, film clips, and access to live human advice. many e-tailers provide real-time sales and customer service that allow customers to enter a live chat room with a service operator who can answer their specific product questions.

Electronic Catalogs (E-Catalogs)

use online displays of products to give millions of retail and business customers instant access to product information. the seller avoids mail distribution and printing costs, and once an online catalog is in place, there is little cost in maintaining and accessing it. about 90 percent of all catalogs are now on the Internet, with sales via websites accounting for more than 50 percent of all catalog sales.

Variable Costs

using cost-oriented pricing, a firm will cover variable costs, costs that change with the number of units of a product produced and sold, such as raw materials, sales commissions, and shipping.

Licensed Brands

we have become used to companies (and even personalities) selling the rights to put their names on products. marketers exploit brands because of their public appeal due to the image and status that customers hope to gain by associating with them.

Drop Shippers

don't even carry inventory or handle products; they take orders from customers, negotiate with producers to supply goods, take title to them, and arrange for shipment. rack jobbers market consumer goods (mostly nonfood items) directly to retail stores, marking prices and setting up displays in a variety of stores.

Business-to-Business Brokers

e-commerce intermediaries provide online value-adding services for business customers. the pricing process between business-to-business (B2B) buyers and sellers of commodities and services can be outsourced to an online company.

Electronic Storefront (Virtual Storefront)

each seller's websites is this, from which shoppers collect information about products and buying opportunities, place orders, and pay for purchases.

Integrated Market Strategy

ensures that the 4 ps blend together so that they are compatible with one another and with the company's nonmarketing activities.

International Marketing Mix

foreign customers differ from domestic buyers in language, customs, business practices and consumer behavior. if they go global, marketers must reconsider each element of the marketing mix: product, pricing, place, and promotion.

Bundling Strategy

groups several products together to be sold as a single unit, rather than individually. (insurance package)

Marketing Plan

identifies the marketing objectives stating what marketing will accomplish in the future. it contains a strategy that identifies the specific activities and resources that will be used to meet the needs and desires for customers in the firm's chosen target markets, so as to accomplish the marketing objectives.

Marketing Strategy

identifies the planned marketing programs, all the marketing activities that a business will use to achieve its marketing goals, and when those activities will occur.

Breakeven Analysis

identifies the sales volume where total costs = total revenue by assessing costs vs. revenues for various sales volumes and showing, at any particular selling price, the amount of loss or profit for each volume of sales. breakeven point (in units) = total fixed cost / (price-variable cost). zero profitability at the breakeven point by using the profit equation: profit = total revenue - (total fixed cost + total variable cost)

Countervailing Duties

if found to be true, international law allows the United States to impose penalties called countervailing duties on shrimp coming from those countries, as a remedy to balance prices.

Public Relations

include all communication efforts directed at building goodwill. it seeks to build favorable attitudes in the minds of the public toward the organization and its products.

Psychological Influences

include an individual's motivations, perceptions, ability to learn, and attitudes.

Branding

industry observers regards brands as a company's most valuable assets. a process of using names and symbols, like Coca-Cola, McDs golden arches, to communicate the qualities of a particular product made by a particular producer. brands are designed to signal uniform quality; customers who try and like a product can return to it by remembering its name or its logo.

Corporate Blogs

marketers are using corporate blogs increasingly for public relations, branding, and otherwise spreading messages that stimulate chat about products to target markets.

Form Utility

marketing has a voice in designing products with features that customers want.

International Competition

matches the products of domestic marketers against those of foreign competitors. the intensity has heightened by the formation of alliances, such as the European Union and North American Free Trade Agreement (NAFTA).

Intensive Distribution

means distributing through as many channels and channel members as possible (both wholesalers and retailers). it is normally used for low-cost consumer goods with widespread appeal, such as candy and magazines. M&Ms candies enter the market though all suitable retail outlets- supermarkets, candy machines, drugstores, online, and so forth.

Syndicated Selling

occurs when one website offers another a commission for referring customers. (expedia.com and dollar rent-a-car illustrate syndicated selling perfectly. dollar pays expedia a fee for each booking that comes through this channel.

Services

products with intangible (nonphysical) features, such as professional advice, timely information for decisions, or arrangements for a vacation. consumer marketing and industrial marketing involve services as well as goods.

Limited-Function Merchant Wholesalers

provide fewer services, sometimes merely storage. customers are normally small operations that pay cash and pick up their own goods.

Retailers

sell products directly to consumers.

Utility

the ability if a product to satisfy a human want or need. marketing strives to provide 4 kinds of utility: -Form -Time -Place -Possession

4 Methods of Market Research

1. Observation: watching and recording consumer behavior. today, information technology systems, including live camera feeds and computer recordings, allow marketers to observe consumer preferences rapidly and with great accuracy. 2. Surveys: a method of collecting data in which the research interacts with people to gather facts, attitudes, or opinions, either by mailing or emailing questionnaires, by telephone calls or by conducting face-to-face interviews. 3. Focus Group: participants are gathered in one place, presented with an issue, and asked to discuss it. Research method using a group of people from a larger population who are asked their attitudes, opinions, and beliefs about a product in an open discussion. 4. Experimentation: compares the responses of the same or similar people under different circumstances.

Psychographic Segmentation and Variables

Psychographic Variables are lifestyles, interest, personalities, and attitudes. this strategy calls for attracting a different type of customer- the top-of-the-line, fashion-conscious individual- who prefers shopping at high-end stores.

Retail Distribution (Channel 2)

producers distribute consumer products through retailers. Goodyear, for example, maintains its own system of retail outlets. Levi's has its own outlets but also produces jeans for other retailers. Large outlets, such as Walmart, buy merchandise directly from producers and then resell to customers online and at Walmart retail stores. consumers go online to buy popular products such as movie downloads and iTunes from online retailers. many industrial buyers, such as businesses buying office supplies from Staples, rely on this channel.

Marketing Mix (the 4 Ps)

-Product -Pricing -Place -Promotion that marketing managers use to satisfy customers in target markets

Personal Selling Process

-Prospecting and Qualifying: a salesperson must first have a potential customer, or prospect. Prospecting: the process of identifying potential customers. salespeople find prospects through company personnel records, from social networking on sites such as LinkedIn, and customers, friends, and business associates. in Qualifying: prospects must be assessed to determine whether they have the authority to buy and the ability to pay. -Approaching: the approach refers to the first few minutes of a salesperson's contact with a qualified prospect. because it affects the salesperson's credibility, the success of later stages depends on the prospect's first impression. a salesperson must, therefore, present a professional appearance and greet prospects in a manner that instills confidence. -Presenting and Demonstrating: next, the salesperson makes a presentation, a full explanation of the product, its features, and its uses. most important, the presentation links product benefits to the prospect's needs. a presentation may or may not include a demonstration. -Handling Objections: no matter what product is for sale, prospects will have objections. at the very least, they may angle for discounts by objecting to price. objections not only indicate that the buyer is interested but also pinpoint the parts of the presentation that trouble the buyer. -Closing: the most critical part of the selling process is the closing, in which the salesperson asks the prospect to buy the product. successful salespeople recognize the signs that a customer is ready to buy. indirect closes place the burden of rejecting the sale on the prospect, who may find it a little harder to say no. -Following Up: a key activity, especially in relationship marketing. for lasting relationships with buyers, good salespeople don't end the sales process with the closing. they want sales to be so successful that customers will buy from them again. include quick processing of customer orders, on-time delivery, speedy repair service, and timely answers to user questions.

Publicity and Public Relations

-Publicity: is information about a company, a product, or an event transmitted by the general mass media to attract public attention. although publicity is free, marketers have no control over the content media reporters and writer disseminate, and because it is presented in a news format, consumers often regard it as objective and credible. -Public Relations: is company-influenced information that seeks either to build good relations with the public by publicizing the company's charitable contributions or to deal with unfavorable events.

Promotional Strategies

-Pull Strategy: appeals directly to consumers who will demand the product from retailers. Pharmaceutical companies use direct-to-consumer advertising (DTC) to persuade consumers to aggressively request a product rather than to wait passively until the doctor suggests trying it. "Talk to your doctor about Allegra-D". the resulting demand by end users stimulates demand for the product from wholesalers and producers. -Push Strategy: a firm markets its product to wholesalers and retailers who then persuade customers to buy it. directs its promotions at dealers and persuades them to order more inventory. dealers are then responsible for stimulating demand among boaters at outdoor shows and through other promotions in their market districts. Many large firms combine pull and push strategies. at the same time, it pushed wholesalers and retailers to stock them.

Nonstore Retailing

-Vending Machines: global annual sales through vending were approaching $200 billion in 2015. -Direct-Response Retailing: in which firms contact customers directly to inform them about products and to receive sales orders. -Mail Order (Catalog Marketing): a popular form of direct-response retailing practiced by Crate & Barrel and Land's End. less popular in recent years because of do-not-call registries, outbound..... -Telemarketing: uses phone calls to sell directly to consumers. however, telemarketing also includes inbound too-free calls from customers, a service that most catalogs and other retail stores make available. -Direct Selling: more than 600 U.S. companies, including Mary Kay cosmetics, use direct selling to sell door-to-door or through home selling-parties. Avon products, one of the world's largest direct sellers, has more than 6 million door-to-door sales representatives in more than 100 countries.

Bargain retailers

-carry wide ranges of products at low prices. -Discount Houses: began by selling large numbers of items at substantial price reductions to cash-only customers. as name-brand items became more common, they offered better product assortments while still transacting cash-only sales in low-rent facilities. as they became firmly entrenched, they began moving to better locations, improving decor, selling better-quality merchandise at higher prices, and offering services such as credit plans and noncash sales. -Catalog Showrooms: mail catalogs to attract customers into showrooms to view display samples, place orders, and wait briefly while clerks retrieve orders from attached warehouses. -Factory Outlets: are manufacturer-owned stores that avoid wholesalers and retailers by selling merchandise directly from factory to consumer. -Wholesale Clubs: such as Costco, offer large discounts on a wide-range of brand-name merchandise to customers who pay annual membership fees.

Pros and Cons on Nondirect Distribution

-downfall is higher prices; the more members in the channel, the more intermediaries making a profit by charging a markup or commission, and the higher the final price. -intermediaries can provide added value by providing time-saving information and making the right quantities of products available where and when consumers need them.

Differences in Buyers

-industrial buyers usually buy in bulk or large quantities. -B2B buyers are trained in methods for negotiating purchase terms. once buyer-seller agreements have been reached, they also arrange formal contracts. - industrial buyers are company specialists in a line of items and are often experts about the products the buy. -consumer-seller relationships are often impersonal, short-lived, one-time interactions. -B2B situations often involve frequent and enduring buyer-seller relationships.

Extending Product Life: foreign markets offer 3 approaches:

1. Product Extension: an existing product is marked globally instead of just domestically (Coca-Cola, KFC, Levis). 2. Product Adaptation: the product is modified for greater appeal in different countries. (Germany McDs includes beer) because it involves product change, this approach is usually more costly than product extension. 3. Reintroduction: means reviving, for new markets, products that are becoming obsolete in older ones (Kodak reintroduced cameras in India).

Seven-Step Development Process for Products

1. Product Ideas: product development begins with a search for ideas for new products. ideas typically come from consumers, the sales force, R&D departments, suppliers, or engineering personnel. (a pill to prevent heart attacks) 2. Screening: designed to eliminate ideas that do not mesh with the firm's abilities or objectives. representatives from marketing, engineering, operations, and finance provide input at this stage. 3. Concept Testing: companies use market research to get consumers' input about benefits and prices. 4. Business Analysis: marketers compare production costs and benefits to see whether the product meets minimum profitability goals. 5. Prototype Development: engineering, R&D, or design groups produce a prototype. this can be extremely expensive, often requiring the use of 3D computer models followed with expensive equipment to produce the first physical product. 6. Product Testing and Testing Market: the company goes into limited production. it then tests the product to see if it meets performance requirements. if it does, it may be sold on a trial basis in limited areas to test consumer reactions. 7. Commercialization: if test marketing proves positive, the company beings full-scale production and marketing. because promotional and distribution channels must be established, this stage can be quite expensive. gradual commercialization, with the firm providing the product to more and more areas overtime, prevents undue strain on initial production capabilities. on the other hand, delays in commercialization give other firms the opportunity to bring out competing products.

Classifying Organizational Products

1. Production Items: goods or services used directly in the production process (tea processed into tea bags, information processing for real-time production, jet fuel used by airline services). 2. Expense Items: goods or services that are consumed within a year by firms producing other goods or supplying other services (oil and electricity for machines, building maintenance, legal services). 3. Capital Items: Expensive, long-lasting, infrequently purchased industrial products, such as a building, or industrial services, such as a long-term agreement for data warehousing services. permanent (expensive and long-lasting) goods and services. life expectancy of more than a year. purchased infrequently so transactions often involve decisions by high-level managers. (buildings-offices and factories, fixed equipment- water towers and baking ovens, accessory equipment- information systems and airplanes, financial advisory services).

Business marketing involves organizational or commercial markets that fall into 4 B2B categories:

1. Service Companies Market: encompasses that many firms that provide services to the purchasing public. 2. Industrial Market: includes businesses that buy goods to be converted into other products or that are used up during production. includes farmers, manufacturers, and some retailers. 3. Reseller Market: consisting of intermediaries, including wholesalers and retailers, that buy and resell finished goods. 4. Government and Institutional Markets: consist of nongovermental organizations, such as hospitals, churches, museums, and charities, that also use supplies and equipment as well as legal, accounting, and transportation services.

Research Process

1. Study the current situation: what is needed and what is being done to meet it? 2.Select a research method: in choosing from a wide range of methods, marketers must consider the effectiveness and costs of different options. 3. Collect data: -Secondary Data which is already available for previous research and can save time, money, and effort. -Primary Data: new data from newly performed research. 4. Analyze the data: data are of no use until organized into information. 5. Prepare a report: should sum up the study's methodology and findings. it should also identify solutions and, where appropriate, make recommendations on a course of action.

Promotional Mix

5 of marketing's most powerful promotional tools are advertising, personal selling, sales promotion, direct or interactive marketing, and publicity and public relations. the best combination of these tools (promotional mix) depends on many factors. the most important is the target audience. 5 stages in the buyer decision process: 1. When consumers first recognize the need to make a purchase, marketers use advertising and publicity, which can reach many people quickly, to make sure buyers are aware of their products. 2. As consumers search for information about available products, advertising and personal selling are important methods to educate them. 3. Personal selling can become vital as consumers compare competing products. sales representatives can demonstrate product quality, features, benefits, and performance in comparison with competitors' products. 4. When buyers are ready to purchase products, sales promotion can give consumers an incentive to buy. Personal selling can help by bringing products to convenient purchase locations. 5. After making purchases, consumers evaluate products and not (and remember) their strengths and deficiencies. at this stage, advertising and personal selling can remind customers that they made wise purchases.

Channel Leadership

Channel Captain: usually one channel member, can determine the roles and rewards of the others. often the channel captain is a manufacturer or an originator of a service. jewelry artisan Thomas Mann is in such demand that wholesalers and retailers wait years for the chance to distribute his Techno-Romantic creations. Mann selects channel members, sets prices, and determines product availability. in other industries, an influential wholesaler or a large retailer such as Walmart may be a channel captain because of large sale volumes.

Demographic Segmentation and Variables

Demographic Segmentation is a strategy used to separate consumers by demographic variables. Demographic Variables describe populations by identifying traits, such as age, income, gender, ethnic background, marital status, race, religion, and social class.

Direct Distribution (Channel 1)

Direct Channel: the product travels from the producer to the consumer or organizational buyer without intermediaries. (Avon, Dell, Geico, Tupperware) many online companies, use this channel. most business goods, especially those bought in large quantities, are sold directly by the manufacturer to the industrial buyer.

Place Utility

Marketing create place utility by making products easily assessable- by making products available where customers will want them.

Time Utility

Marketing creates time utility by providing products when customers will want them.

Types of Brick-and-Mortar Retail Outlets

U.S. retail operations vary widely by type as well as size. they can be classified by their pricing strategies, location, range of services, or range of product lines. 3 classifications: 1. Product-Line Retailers 2. Bargain Retailers 3. Convenience Stores.

Geo-Demographic Segmentation and Variables

a combination strategy. Geo-Demographic Variables are a combination of geographic and demographic traits and are becoming the most common segmentation tools.

Product Line

a group of products that are closely related because they function in a similar manner (flavored coffees) or are sold to the same group of customers (stop-in coffee drinkers) who will use them in similar ways.

Video Retailing

a long-established form of interactive marketing, lets viewers shop at home from channels on their TVs. displays and demonstrates products and allows viewers to phone in or e-mail orders and is available on Facebook, Youtube, and Twitter.

Price Lining

a price tactic offering all items in certain categories at a limited number of prices. (department store might predetermine price points for clothing)

Selective Distribution

a producer selects only wholesalers and retailers that will give a product special attention in sales effort, display and promotion advantage, and so forth. selective distribution is used most often for consumer products such as furniture and appliances. frigidaire and whirlpool use selective distribution for appliances to cement relationships with wholesalers who will market frigidaire and whirlpool over other brands.

Product Pacement

a promotional tactic for bran exposure in which characters in television, film, music, magazines, or video games use a real product with a brand visible to viewers. they are effective because the message is delivered in an attractive setting that holds the customer's interest. when used in successful films and TV shows, the brand's association with famous performers is an implied celebrity endorsement.

Promotion

a set of techniques for communicating information about products. the most important promotional tools include advertising, personal selling, sales promotions, publicity/public relations, and direct or interactive marketing.

National Brands

are produced by, widely distributed by, and carry the name of the manufacturer. these brands (ex. Direct TV, Progressive Insurance, Scotch tape) are often widely recognized by customers because of national advertising campaigns, and they are, therefore, valuable assets. because the cost of developing a national brand are high, some companies use a national brand on several related products. although cost efficient, doing this can sometimes dilute the original brand's effectiveness.

Sales Promotions

are short-term promotional activities designed to encourage consumer buying , industrial sales, or cooperation from distributors. they can increase the likelihood that buyers will try products, enhance product recognition, and increase purchase size and sales revenues. successful sales promotions provide potential customers with convenience and accessibility when the decision to by occurs. such as free samples (giveaway), which let customers try products without risk, and -Coupon promotions, which use certificates entitling buyers to discounts to encourage customers to try new products, lure them away from competitors, or induce them to repurchase (buy more of a product). -Premiums: are free or reduced-price items, such as pencils, coffee mugs, and six-month low-interest credit cards, given to consumers in return for buying a specified product. -Contests: can boost sales by rewarding high-producing distributors and sales representatives with vacation trips to Hawaii or Paris. -Loyalty Programs: reward frequent buyers for making repeat purchases. -Point-of-Sale (POS) Displays: to grab customers' attention in stores, companies use POS Displays at the end of aisles or near checkout counters to ease finding products and to eliminate competitors from consideration. in addition to physical goods, POS pedestals also provide services, namely information for consumers. bank lobbies and physicians' waiting rooms have computer-interactive kiosks inviting clients to learn more about bank products and educational information about available treatments on consumer-friendly touch-screen displays. -Trade Shows: for B2B promotions, industries sponsor trade shows in which companies rent booths to display and demonstrate products to customers who have a specific interest or who are ready to buy.

Pricing Objectives

are the goals that sellers hope to achieve in pricing products for sale. some companies have profit-maximizing pricing objectives, others have market share pricing objectives, and still others are concerned with pricing for e-business objectives.

Social Networking

as used by marketers today refers to communications that flow among people and organizations interacting through an online platform that facilitates building social relations among its users. Social Networking Media are the websites or access channels (such as facebook, twitter) to which millions of consumers go for information and discussions before making their purchase decisions.

Data Mining

automates the massive analysis of data by using computers to sift, sort, and search for previous undiscovered clues about what customers look at and react to and how they might be influenced. marketers use these tools to get a clearer picture of hot knowing a client's preferences can satisfy those particular needs, thereby building closer, stronger relationships with customers.

Variations in the Process for Services

differences in steps 1 &5:(others are the same^) 1. Services Ideas: includes defining the Service Value Package, identifying the tangible and intangible features that characterize the service, and stating service specifications. 2. Service Process Design: instead of prototype development, services require a three-part service process design: (1) Process Selection: identifies each step in the service, including sequencing and timing. (2) Worker Requirements: state employee behaviors, skills, capabilities, and interactions with customers during the service encounter. (3) Facility Requirements designate all the equipment that supports service delivery.

Shopping Agents (E-agents)

help online consumers by gathering and sorting information. although they don't take possession of products, they know which websites and stores to visit, give accurate comparison prices, identify product features, and help consumers complete transactions by presenting information in a usable format- all in an instant.

Intermediaries (middlemen)

help to distribute goods, either by moving them or by providing information that stimulates their movement from sellers to customers.

Market Share (Market Penetration)

in the long run, a business must make a profit to survive. because they are willing to accept minimal profits, even losses, to get buyers to try products, companies may initially set low prices for new products to establish market share, a company's percentage of the total industry sales for a specific product type. even when established products, market share leadership may outweigh profits as a pricing objective. market domination means continuous sales of more units and higher profits, even at lower unit prices.

Cultural Influences

include culture (the way of living that distinguishes one large group from another), subculture (smaller groups with shared values), and social class (the cultural ranking of groups according to such criteria such as background, occupation, and income).

Social Influences

include family, opinion leaders (people whose opinions are sought by others), and such reference groups as friends, coworkers, and professional associates.

Personal Influences

includes lifestyle, personality, and economic status.

Agents and Brokers

including online e-agents, serve as independent sales representatives for many companies' products. they work on commission, usually about 4 to 5 percent of net sales. unlike wholesalers, agents and brokers do not own their merchandise. rather, they serve as sales and merchandising arms for producers or sellers who do not have their own sales forces. the value of agents and brokers lies in their knowledge of markets and their merchandising expertise. they show sale items to potential buyers and, for retail stores, they provide such services as shelf and display merchandising and advertising layout. they remove open, torn, or dirty packages arrange products neatly; and generally keep goods attractively displayed. many supermarket products are handled through brokers.

Personal Selling

many products (such as insurance, custom-designed clothing, and real estate) are best promoted through this, person-to-person sales. industrial goods and services rely significantly on this. when companies buy from other companies, purchasing agents and others who need technical and detailed information are often referred to the selling company's sales representative.

Public Warehouses

independently owned and operated public warehouses, which rent to companies only the space they need, are popular with firms needing storage only during peak periods and with manufacturers who need multiple storage locations to get products to multiple markets. the digital age brings with it massive quantities of data that need to be safely stored, preserved, organized, and accessible to users. many companies, to protect their valuable data resources, rely on remote off-site digital storage services such as ZipCloud for Business as a safety net. home users use daily online backup services to protect against losing data when their computers crash. in the event of any physical catastrophe- floods, fired, earthquakes- at the client's facility, data can be restored online from the backup system.

Emotional Motives

involve nonobjective factors and include sociability, imitation of others, and aesthetics.

Rational Motives

involve the logical evaluation of product attributes: cost, quality, and usefulness.

Product development

is a long and expensive process, many firms have research and development (R&D) departments for exploring new product possibilities.

Direct (or Interactive) Marketing

is one-on-one nonpersonal selling that tries to get consumers to make purchases away from retail stores and, instead, to purchase from home, at work, or by using a mobile device while traveling. this fast-growing selling method includes nonstore retailers (catalogs, telemarketing, home video shopping), direct mail, direct response advertising (infomercials and direct response magazines and newspaper ads), and most important, the Internet. when used by B2B businesses, direct marketing is primarily lead generation so a salesperson can close the sale where interest has been shown. in B2C businesses, it has primarily a selling goal. the advantage of direct marketing is that you can target the message to the individual and you can measure the results. the Internet has enhanced traditional direct marketing methods, especially direct mail. by using permission marketing, a form of e-mail where the consumer gives a company permission to contact them, a list of customers' e-mails is complied and they are regularly contacted with special offers and deals based on their past purchases.

Advertising

is paid, nonpersonal communication by an identified sponsor informs an audience about a product. -Advertising Media: consumers tend to ignore the bulk of advertising messages that bombard them; they pay attention to what interest them. the advertising process is dynamic, reflecting the changing interests and preferences of both customers and advertisers. mail ads are rated as most irritating and boring. newspaper and magazine ads are least annoying. newspaper ads are rated as more informative and useful than some other media, advertisers continue to shift away, using instead more online, cellphone, and PDA advertising because newsprint readership (the audience) is dwindling. -Real-Time Ad Tracking: advertisers always want better information about who looks at ads and for how long. which target audiences and demographics are more attracted to various ad contents?

Distribution Channel

is the path a product follows from producer to end user. 4 distribution channels can be identified according to the channel members involved in getting products to buyers. 1. Direct Channel (Distribution) 2. Retail Distribution 3.Wholesale Distribution 4. Distribution by Agents or Brokers

Positioning

is the process of establishing an easily identifiable product image in the minds of consumers by fixing, adapting, and communicating the nature of the product itself. first, a firm must identify which market segments are likely to purchase its product and how its product measures up against competitors. then, it can focus on promotional choices for differentiating its product and positioning it in the minds of the target audience. "Ketchup and Heinz". promotional mixes are often designed to communicate a product's value-added benefits to distinguish it from the competition.

Dynamic Pricing

like Ebay's auction bidding, uses flexibility between buyers and sellers in setting a price and uses the Web to instantly notify millions of buyers of product availability and price changes. the reverse auction, allows sellers to alter prices privately on an individual basis.

Competitive Environment

marketers must convince buyers that they should purchase one company's product rather than another's. because both consumers and commercial buyers have limited resources, every dollar spent on one product is no longer available for other purchases. each marketing program seeks to make its product the most attractive. a failed program loses the buyer's dollar forever (or at least until its time for the next purchase decision). 3 types: 1. Substitute Products 2. Brand Competition 3. International Competition

Substitute Products

may not look alike or they may seem different from one another, but they can fulfill the same need.

Brand Competition

occurs between similar products and and is based on buyers' perceptions of the benefit of products offered by particular companies. based on users' perceptions of the benefits offered by each product. Competitive marketing that appeals to consumer perceptions of benefits of products offered by particular companies.

Channel Conflict

occurs when members of the channel disagree over roles or rewards. John Deere and State Farm Insurance would object to its dealers distributing tractors and insurance products of competing brands. Likewise, a manufacturer-owned outlet store runs the risk of alienating other retailers of its products when it discounts the company's products. Conflict may arise if one channel member has more power or is perceived as getting preferential treatment. such conflicts can defeat the purpose of the system by distributing the flow of goods.

Value

of a product compares its benefits with its costs (v=b/c). benefits include not only the functions of the product but also the emotional satisfaction associated with owning, experiencing, or possessing it. every product has cost, including sales price, the expenditure of the buyer's time, and even the emotional cost of making a purchase decision.

Product Positioning

once marketers identify a target segment, they can begin marketing products for that segment. the process of fixing, adapting, and communicating the nature of the product itself.

Wholesale Distribution (Channel 3)

once the most widely used method of nondirect distribution, Channel 3 requires a large and costly amount of floor space for storing and displaying merchandise at brick-and-mortar facilities. wholesalers relieve the space problem by storing merchandise and restocking store displays frequently. with approximately 90 percent of its space used to display merchandise and only 10 percent left for storage and office facilities, the combination convenience store and gas station's use of wholesalers is an example of Channel 3.

Industrial Goods

physical items used by companies to produce other products. (ex. surgical equipment and bulldozers). firms that sell these goods to other companies are engaged in industrial marketing, also known as business-to-business (B2B) marketing.

Transportation Operations

physically moving a product creates the highest cost many companies face. firms must consider the nature of the product, the distance it must travel, the speed with which it must be received, and customer wants and needs. difference in cost among the major transportation modes- trucks, railroads, planes, digital transmission, water carriers, and pipelines- are usually most directly related to delivery speed. -Trucks:haul more than 2/3rds of all tonnage carried by all modes of U.S. freight transportation. advantages: flexibility for any-distance distribution, fast service, and dependability. increasing truck traffic is raising safety and courtesy concerns. -Air: fastest and most expensive mode of transportation for physical goods. benefit from lower inventory costs by eliminating the need to store items that might deteriorate. -Online Transmission: for downloads of music, software, books, movies, and other digital products. it is newer, faster, and less expensive than all other modes. restricted to products that exist as digital bits that can be transmitted over communication channels. -Water: the least expensive and slowest mode. mostly for moving bulky products(oil, grain, gravel). -Railroads: can economically transport high-volume, heavy, bulky items, such as cars, steel, and coal. the delivery routes are limited by fixed, immovable rail tracks. -Pipelines: are slow and lack flexibility and adaptability, but for specialized products, such as liquids and gases, they provide economical and reliable delivery.

Data Warehousing

provides the raw materials from which marketers can extract information that enables them to find new clients and identify their best customers.

Promotion

refers to techniques for communication information about products and is part of the communication mix, the total message any company sends to customers about its product. promotional techniques, especially advertising, must communicate the uses, features, and benefits of products, and marketers use an array of tools for this purpose. the ultimate objective of any promotion is to increase sales. in addition, marketers may use promotion to communicate information, position products, add value, and control sales volume.

Physical Distribution

refers to the activities needed to move products from an intermediary or a manufacturer to customers and includes warehousing and transportation operations. its purpose is to make goods available when and where customers want them, keep costs low, and provide services to satisfy customers. because of its importance for customer satisfaction, some firms have adopted distribution as their marketing strategy of choice.

Place (or Distribution)

refers to where and how customers get access to the products they buy. when products are created, they must become available to customers at some location (place) such as a retail store, on the Internet, or by directly delivering to the customer. Distribution is the set of activities that moves products from producers to consumers. decisions about warehousing and inventory control are distribution decisions, as are decisions about transportation options. firms must also make decisions about channels through which they distribute products.

Sales Promotions

relatively inexpensive items have often been marketed through this, which involves one-time direct inducements to buyers. premiums (usually free gifts), coupons, and package inserts are all these and meant to tempt customers to buy products.

Product-Line Retailers

retailers featuring broad product lines include -Department Stores: which are organized into specialized departments; shoes, furniture, women's petite sizes, and so on. stores are usually large, handle a wide range of goods, and offer a variety of services, such as credit plans and delivery. -Supermarkets: are divided into departments of related products: food products, household products, and so forth. they stress low prices, self-service, and wide selection. -Specialty Store: such as Lids, a retailer with more than 1,000 stores selling athletic fashion headwear, are small, serve specific market segments with full product lines in narrow product fields, and often knowledgeable sales personnel.

Profit-Maximizing Objectives

revenue= selling price X units sold. want to set the selling price to sell the number of units that will generate the highest possible total profits. if a company sets prices too low, it will probably sell many units but may miss out on additional profits on each unit (and may even lose money on each exchange). if a company sets prices too high, it will make a large profit on each item but will sell fewer units. again, the firm loses money, and it may also be left with excess inventory. in calculating profits, managers weigh sales revenue against costs for materials and labor, as well as capital resources (plant and equipment) and marketing costs (such as maintaining a large sales staff). to use these resources efficiently, many firms set prices to cover costs and achieve a targeted level of return for owners.

Distribution by Agents or Brokers (Channel 4)

sales agents or brokers represent producers and receive commissions on the goods they sell to consumers or industrial users. -Sales Agent: including many online travel agents, generally deal in the related product lines of a few producers, such as tour companies, to meet the needs of many customers. -Brokers: in some industries as real estate and stock exchange, match numerous sellers and buyers as needed to sell properties, often without knowing in advance who they will be.

Personal Selling Task

salespeople must be adept at performing three basic tasks of personal selling. -Order Processing: a salesperson receives an order and sees to its handling and delivery. route salespeople, who call on regular customers to check inventories, are often order processors. with the customer's consent, they may decide on the sizes of reorders, fill them directly from their trucks, and even stock shelves. -Creative Selling: when potential customers are not aware that they need or want a product, creative selling involves providing information and demonstrating product benefits to persuade buyers to complete a purchase. creative selling is crucial for industrial products and high-priced consumer products, such as cars, for which buyers comparison shop. -Missionary Selling: a salesperson may use missionary selling to promote a company and its products rather than simply close a sale. pharmaceutical companies often use this method to make doctors aware of the company and its products so they will recommend the company's products to others, or so the doctor will prescribe the products to patients. the goal may be to promote the company's long-term image as much as any given product. another activity in missionary selling is after-sale technical assistance for complex products.

Cybermalls

search engines such as Yahoo! serve as cybermalls, collections of virtual storefronts representing diverse products and offering speed, convenience, 24-hour access, and efficient searching. after entering a cybermall, shoppers can navigate by choosing from a list of stores (Lids, Macy's), product listings (sporting goods, ladies fashions), or departments (apparel, bath/beauty).

Distribution Strategies

selecting an appropriate distribution network is a strategic decision; it determines both the amount and cost of market coverage that a product gets, or how many of any kind of intermediary will be used. strategy depends on the type of product and the degree of market coverage that is most effective in getting it the greatest number of customers. marketers strive to make a product accessible in just enough locations to satisfy customers' needs. 3 strategies: 1. Intensive Distribution 2. Exclusive Distribution 3. Selective Distribution

Pricing

selecting the best price at which to sell it, if often a balancing act. prices must support a variety of costs, such as operating, administrative, research, and marketing. prices can't be so high that customers turn to competitors. successful pricing means finding a profitable middle ground between these two requirements.

Penetration Pricing

setting an initial low price to establish a new products in the market, seeks to create customer interest and stimulate trial purchases. penetration strategy is the best strategy when introducing a product that has or expects to have competitors quickly.

Brand Awareness

several benefits result from successful brand naming, including brand loyalty and brand awareness, the brand name that first comes to mind when you consider a particular product category.

Advertising Media

specific communication devices for carrying a seller's message to potential customers.

Warehousing

storing, or warehousing, is a major part of distribution management. in selecting a strategy, manager must keep in mind both the different characteristics and costs of warehousing operations.

Convenience Store chains

such as 7-Eleven and Circle K stores, stress easily accessible locations, extended store hours, and speedy service. they differ from most bargain retailers in that they do not feature low prices.

Fixed Costs

such as rent, insurance, and utilities, that must be paid regardless of the number of units produced and sold.

Psychological Pricing

takes advantage of the fact that customers are not completely rational when making buying decisions. types: -Odd-Even Pricing: based on the theory that customers prefer prices that are not stated in even dollar amounts. -Discount: auto dealers, vacation resorts, airlines and hotels offer discount prices to stimulate demand during off-peak seasons.

Consumer Goods

tangible goods that you, the consumer, may buy for personal use. firms that sell goods to consumers for personal consumption are engaged in consumer marketing, also known as business-to-consumer (B2C) marketing.

Market segmentation

target marketing requires market segmentation, dividing a market into categories of customer types or "segments" having similar wants and needs and who can be expected to show interest in the same products.

Markup

the amount added to an item's purchase cost to sell it at a profit. determines what percent of every dollar of revenue is gross profit: markup percentage= markup/sales price x 100%

Distribution Mix

the combination of distribution channels by which a firm gets products to end users.

Media Mix

the combination of media through which a company advertises

Product Differentiation

the creation of a feature or image that makes a product differ enough from existing products to attract customers.

Personal Selling

the difference between consumer and industrial products: -Retail Selling: is selling a consumer product for the buyer's personal or household use. the buyer usually comes to the seller. consumers in retail stores may actually be intimidated by salespeople. -Industrial Selling: is selling products to other businesses, either for the purpose of manufacturing or for resale. typically calls on the prospective buyer. an industrial decision usually takes longer than a retail decision because it involved more money, decision makers, and weighing of alternatives.

Marketing Objectives

the goals the marketing plan intends to accomplish, are the foundation that guides all the detailed activities in the plan. however, they exist solely to support the company's overall business mission and typically focus on maintaining or enhancing the organization's future competitive position in its chosen markets.

Product Mix

the group of products that a company makes available for sale, whether consumer, industrial, or both.

Merchant Wholesalers

the largest group, buys products from manufacturers and sells them to other businesses. they own the goods that they resell and usually provide storage and delivery.

Stages in the Product Life Cycle (PLC)

the life cycle for both goods and services is a natural process in which products are born, grow in stature, mature, and finally decline and die. 1. Introduction: this stage begins when the product reaches the marketplace. marketers focus on making potential customers of aware of the product and its benefits. extensive development, production, and sales cost erase all profits. 2. Growth: if the new product attract enough customers, sales start to climb rapidly. Marketers lower price slightly and continue promotional expenditures to increase sales. the product starts to show a profit of revenues surpass costs, and other firms move rapidly to introduce their own versions. 3. Maturity: this is typically the longest stage in the PLC for many products. sales growths peak and then starts to slow. although the product earns its highest profit level early in this stage, increased competition eventually forces price-cutting, increasing the cost of advertising and promotional expenditures, and lower profits. toward the end of this stage, sales start to fall. 4. Decline: sales and profits continue to fall as new products in the introduction stage take away sales. firms end or reduce promotional support (ads and salespeople), but may let the product linger to provide some profits.

Pricing

the second major component of the marketing mix is pricing, determining what the customer pays and the seller receives in exchange for a product. setting prices involves understanding how they contribute to achieving the firm's sales objectives.

Marketing Research

the study of what customers need and want and how best to meet those needs and wants, is a powerful tool for gaining decision-making information. its role is to increase competitiveness by clarifying the interactions among a firm's stakeholders (including customers), marketing variables, environmental factors, and marketing decisions.

Brand Loyalty

they regularly purchase products because they they are satisfied with their performance. such people are less subject to influence and and stick with preferred brands.

Value Package

today's customer regard a product as a bundle of attributes, benefits, and features, which, taken together, marketers call this. whether its a physical good, a service, or some combination of the two, customers get value from the various benefits, features, and rewards associated with the product.

Product Life Cycle (PLC)

when a product reaches the market, it enters this, a series of stages through which it passes during its commercial life. depending on the products ability to attract and keep customers, its PLC may be a matter of months, years, or decades. strong mature products (Clorox) have had long productive lives.

Private Brands (Private Label)

when a wholesaler or retailer develops a brand mane and has a manufacturer put it on a product, the resulting name is a private blend (private label).

Price Skimming

when introducing new products, companies must often choose between high prices or low prices. setting an initial high price to cover development and introduction costs and generate a large profit on each item sold, works only if marketers can convince customers that a new product is truly different from existing products and there is no foreseeable major competition on the horizon.

Evoked Set (or Consideration Set)

which is the group of products they will consider buying.

Packaging

with a few exceptions, products need some form of packaging to reduce the risk of damage, breakage, or spoilage, and to increase the difficulty of stealing small products. a package also serves as an in-store advertisement that makes the product attractive, displays the brand name, and identifies features and benefits. also, packaging features, such as no-drip bottles of Clorox bleach, ass utility for consumers.