Marketing Exam 4 Notes

Electronic Data Interchange (EDI)

A computerized means of integrating order processing with production, inventory, accounting, and transportation. - Functions as an information system that links marketing channel members and outsourcing firms together

Just-In-Time (JIT)

An inventory-management approach in which supplies arrive just when needed for production or resale. - Usually there is no safety stock - Requires a high level of coordination between producers and suppliers - Eliminates waste - Reduces inventory costs

Retailer

An organization that purchases products for the purpose of reselling them to ultimate consumers. - Retailers add value for customers by providing services and assisting in making product selections - Retailing - All transactions in which the buyer intends to consume the product through personal, family, or household use.

Combat Competitive Promotional Efforts

At times, a marketer's objective in using promotion is to offset or lessen the effect of a competitor's promotional or marketing programs - This type of promotional activity does not necessarily increase the organization's sales or market share, but it may prevent a sales or market share loss A combative promotional objective is used most often by firms in extremely competitive consumer markets

Buzz Marketing and Viral Marketing

Buzz marketing - An attempt to incite publicity and public excitement surrounding a product through a creative event Viral marketing - A strategy to get consumers to share a marketer's message, often through e-mail or online video, in a way that spreads dramatically and quickly

Superstore

Giant outlet offering all food and non-food products found in supermarkets, as well as most routinely purchased products. -Combine features of discount stores and supermarkets - Generally carry about four times as many items as supermarkets - Also offer additional services, including dry cleaning, automotive repair, check cashing, and bill paying - Use sophisticated operating techniques and often have tall shelving that displays entire assortments of products - Walmart Supercenters, SuperTarget

Institutional Advertising vs. Product Advertising

Institutional advertising - Advertising that promotes organizational images, ideas, and political issues - May deal with broad image issues, such as organizational strengths or the friendliness of employees - May aim to create a more favorable view of the organization in the eyes of noncustomer groups, such as shareholders, consumer advocacy groups, potential shareholders, or the general public - Advocacy advertising - Advertising that promotes a company's position on a public issue Product advertising - Advertising that promotes the uses, features, and benefits of products Two types of product advertising: Pioneer Advertising Competitive Advertising

Marketing Channel

Marketing channel (channel of distribution or distribution channel) - A group of individuals and organizations that direct the flow of products from producers to customers within the supply chain. - The major role of marketing channels is to make products available at the right time at the right place in the right quantities - Providing customer satisfaction should be the driving force behind marketing channel decisions

Primary Demand vs. Selective Demand

Primary demand - Demand for a product category rather than a specific brand Selective demand - Demand for a specific brand - Requires singling out attributes important to potential buyers - Can be stimulated by: - Differentiating the product from competing brands in the minds of potential buyers - Increasing the number of product uses and promoting them through advertising campaigns, as well as through price discounts, free samples, coupons, consumer contests and games, and sweepstakes - Encouraging existing customers to use more of the product

Product factors that influence which promotional element to use

Promotion resources, objectives, and policies Characteristics of the target market Push and pull channel policies Cost and availability of promotional methods Characteristics of the product

Stockouts

Shortage of products.

Channel Capacity

The limit on the volume of information a communication channel can handle effectively

Direct Selling

The marketing of products to ultimate consumers through face-to-face sales presentations at home or in the workplace. - Was once associated with door-to-door sales, but has evolved into a highly professional industry where most contacts with buyers are prearranged through electronic communication or another means of prior communication - Party Plan Format: A consumer acts as a host and invites friends and associates to view merchandise, often at someone's home. - Tupperware and Mary Kay were the pioneers of this selling technique and remain global leaders.

Warehouse Club

(buying clubs): Large-scale, members-only establishments combining cash-and-carry wholesaling with discount retailing. - Offer the same types of products as discount stores but in a limited range of sizes and styles - Offer a broad product mix - Offer few services in order to keep prices lower than those of supermarkets and discount stores - Keep advertising to a minimum - Merchandise is stacked on pallets or displayed on pipe racks - Sam's Club, Costco

Product Attributes

- Marketers of complex and expensive products, perishable products, and fragile products that require special handling will likely employ short channels - Less-expensive standardized products with long shelf lives can go through longer channels with many intermediaries

Significance of Marketing Channels

- Marketing channel decisions can have a strong influence on the other elements of the marketing mix - Channel decisions are critical because they determine a product's market presence and accessibility - Marketing channel decisions have strategic significance because they generally entail long-term commitments among a variety of firms - It is the least flexible component of the marketing mix - Once a firm commits to a distribution channel, it is difficult to change - Marketing channels serve many functions, including: - Creating utility - Facilitating exchange efficiencies - Although some of these functions may be performed by a single channel member, most functions are accomplished through both independent and joint efforts of channel members

Advantages and Disadvantages of Major Media Classes

- Newspapers Advantages: Reach large audience; purchased to be read; geographic flexibility; short lead time; frequent publication; favorable for cooperative advertising; merchandising services Disadvantages: Not selective for socioeconomic groups or target market; short life; limited reproduction capabilities; large advertising volume limits exposure to any one advertisement - Magazines Advantages: Demographic selectivity; good reproduction; long life; prestige; geographic selectivity when regional issues are available; read in leisurely manner Disadvantages: High costs; 30- to 90-day average lead time; high level of competition; limited reach; communicates less frequently - Direct Mail Advantages: Little wasted circulation; highly selective; circulation controlled by advertiser; few distractions; personal; stimulates actions; use of novelty; relatively easy to measure performance; hidden from competitors Disadvantages: Very expensive; lacks editorial content to attract readers; often thrown away unread as junk mail; criticized as invasion of privacy; consumers must choose to read the ad - Radio Advantages: Reaches 93 percent of U.S. adults; highly mobile and flexible; very low relative costs; ad can be changed quickly; high level of geographic and demographic selectivity; encourages use of imagination Disadvantages:Lacks visual imagery; short life of message; listeners' attention limited because of other activities; market fragmentation; difficult buying procedures; limited media and audience research - Television Advantages: Reaches large audiences; high frequency available; dual impact of audio and video; highly visible; high prestige; geographic and demographic selectivity; difficult to ignore; on demand capabilities Disadvantages: Very expensive; highly perishable message; size of audience not guaranteed; amount of prime time limited; lack of selectivity in target market - Digital Media Advantages: Immediate response; potential to reach a precisely targeted audience; ability to track customers and build databases; highly interactive medium; real-time analytics Disadvantages: Costs of precise targeting are high; inappropriate ad placement; effects difficult to measure; concerns about security and privacy - Outdoor Advantages: Allows for frequent repetition; low cost; message can be placed close to point of sale; geographic selectivity; operable 24 hours a day; high creativity and effectiveness Disadvantages: Message must be short and simple; no demographic selectivity; seldom attracts readers' full attention; criticized as traffic hazard and blight on countryside; much wasted coverage; limited capabilities

Supply Chain Members

- Procurement - (Sometimes called supply management) involves the processes to obtain resources to create value through sourcing, purchasing, and recycling, including materials and information. - Sourcing - The process of determining what materials a firm needs, where those materials come from, and how they impact marketing integrity. - Purchasing - The act of negotiating and executing transactions to buy and sell goods, materials and purchasing. - Recycling - Converting waste into reusable material, reprocessing, reclaiming, or reusing supplies and final products - Logistics management - Planning, implementing, and controlling the efficient and effective flow and storage of products and information from the point of origin to consumption to meet customers' needs and wants - Operations management - Managing activities from production to final delivery through system-wide coordination

Supply Chain Management (SCM)

- Supply chain management (SCM) - The coordination of all the activities involved with the flow and transformation of supplies, products, and information throughout the supply chain to the ultimate consumer. - Integrates the functions of operations management, logistics management, supply management, and marketing channel management so that products are produced and distributed in the right quantities, to the right locations, and at the right times - Includes activities such as manufacturing, research, sales, advertising, and shipping - Involves all entities that facilitate product distribution and benefit from cooperative efforts. - Logistics management - Planning, implementing, and controlling the efficient and effective flow and storage of products and information from the point of origin to consumption to meet customers' needs and wants. - Operations management - Managing activities from production to final delivery through system-wide coordination - Procurement - Processes to obtain resources to create value through sourcing, purchasing, and recycling including materials and information - Channel Management - Directing the flow of products

Power Shopping Center

A type of shopping center that combines off-price stores with category killers - Bypasses the traditional department store anchor and instead anchors with stores such as the Gap, T.J. Maxx, PetSmart, and Home Depot

Lifestyle Shopping Center

A type of shopping center that is typically open air and features upscale specialty, dining, and entertainment stores. - Are often located near affluent neighborhoods and may have fountains, benches, and other amenities that encourage "casual browsing" - Appealing architectural design is an important aspect of these "mini-cities" and is intended to encourage consumer loyalty by creating a sense of place

Developing Advertising Budget (Appropriation)

Advertising Appropriation - The advertising budget for a specific time period. Four Methods: Objective-and-Task Approach - Budgeting for an advertising campaign by first determining its objectives and then calculating the cost of all the tasks needed to attain them Percent-of-Sales Approach - Budgeting for an advertising campaign by multiplying the firm's past and expected sales by a standard percentage Competition-Matching Approach - Determining an advertising budget by trying to match competitors' advertising outlays Arbitrary Approach - Budgeting for an advertising campaign as specified by a high-level executive in the firm

Evaluating Advertising Effectiveness

Advertising can be evaluated before, during, and after the campaign. Pretest - Evaluation of advertisements performed before a campaign begins - Consumer jury - A panel of a product's existing or potential buyers who pretest ads Post Test - Evaluation of advertising effectiveness after the campaign - Post Test methods based on memory include recognition and recall tests. - Recognition test - A posttest in which respondents are shown the actual ad and asked if they recognize it - Unaided recall test - A post test in which respondents are asked to identify advertisements they have seen recently but are not given any recall clues - Aided recall test - A post test that asks respondents to identify recent ads and provides clues to jog their memories

Suppy Chain

All the organizations and activities involved with the flow and transformation of products from raw materials through to the end consumer. - A distribution system involves firms that are "upstream" in the supply chain (e.g., producers and suppliers) and "downstream" (e.g., wholesalers and retailers) working together to serve customers and generate competitive advantage

Commincations Process Module

Communication - A sharing of meaning through the transmission of information Source - A person, group, or organization with a meaning it tries to share with a receiver or an audience Receiver - The individual, group, or organization that decodes a coded message Audience - Two or more receivers Coding process (encoding) - Converting meaning into a series of signs or symbols - When coding meaning into a message, the source must consider certain characteristics of the receiver or audience - When coding a meaning, a source needs to use signs or symbols that the receiver or audience uses to refer to the concepts the source intends to convey Communications channel - The medium of transmission that carries coded message from the source to the receiver - Transmission media include printed words (newspapers and magazines), broadcast media (television and radio), and digital communication Decoding process - Converting signs and symbols into concepts and ideas Noise - Anything that reduces a communication's clarity and accuracy Feedback - The receiver's response to a decoded message - Can be verbal and nonverbal - In interpersonal communication, feedback occurs through talking, teaching, smiling, nodding, eye movements, and other body movements and postures

Integrated Marketing Communications

Coordination of promotion and other marketing efforts for maximum informational and persuasive impact on customers. - A major goal of integrated marketing communications is to send a consistent message to customers - Integrated marketing communications also enable synchronization of promotion elements and can improve the efficiency and effectiveness of promotion budgets - The concept of integrated marketing communications is increasingly effective for several reasons - Because mass media advertising is used less frequently today because of its high cost and lower effectiveness in reaching some target markets, marketers can now take advantage of more precisely targeted promotional tools, such as TV, direct mail, the internet, special-interest magazines, smartphones, mobile applications, social media, sales calls, and outdoor boards.

Channel Leadership

Each channel member holds certain expectations of other channel members. - Channel captain (channel leader) - The dominant leader of a marketing channel or a supply channel - May be a producer, wholesaler, or retailer - To attain desired objectives, the captain must possess channel power. - Channel power - The ability of one channel member to influence another member's goal achievement

Multichannel Retailing

Employing multiple distribution channels that complement their brick-and-mortar stores with websites, catalogs, and apps where consumers can research products, read other buyers' reviews, and make actual purchases. - Many retailers see significant growth potential in international markets

Create Awareness

For an organization that is introducing a new product or a line extension, making customers aware of the product is crucial to initiating the product adoption process For existing products, promotional efforts may aim to increase awareness of: - Brands - Product features - Image-related issues (such as organizational size or socially responsive behavior) - Operational characteristics (such as store hours, locations, and credit availability)

Encourage Product Trial

If customers stall during the evaluation stage, marketers can use certain types of promotion—such as free samples, coupons, test drives, or limited free-use offers, contests, and games—to encourage product trial in order to move them through the product adoption process

Specialty Retailers

In contrast to general-merchandise retailers with their broad product mixes, specialty retailers emphasize narrow and deep assortments Despite the name, they do not sell specialty items but instead offer substantial assortments in a few product lines Three types of specialty retailers: - Traditional specialty retailers: Stores that carry a narrow product mix with deep product lines - Sometimes called limited-line retailers and may be referred to as single-line retailers if they carry unusual depth in one product category - Commonly sell such shopping products as apparel, jewelry, sporting goods, fabrics, computers, and pet supplies. - Category Killers: A very large specialty store that concentrates on a major product category and competes on the basis of low prices and product availability. - Expand rapidly and gain sizable market shares, taking business away from smaller, high-cost retail outlets. - Off-price retailers: Stores that buy manufacturers' seconds, overruns, returns, and off-season merchandise for resale to consumers at deep discounts - Offer limited lines of national-brand and designer merchandise, usually clothing, shoes, or housewares - Often do not take returns or allow exchanges - Charge 20 to 50 percent less than department stores for comparable merchandise but offer few customer services

Supermarket

Large self-service store offering complete line of food products and some non-food products - Are arranged by department for maximum efficiency in stocking and handling products - Have central checkout facilities -Offer lower prices than smaller neighborhood grocery stores - Usually provide free parking - May also provide services such as check cashing, pharmacies, and curbside pickup of groceries - Kroger, Safeway, Publix

Marketing Intermediaries

Marketing intermediaries - Middlemen that link producers to other intermediaries or ultimate consumers through contractual arrangements or through the purchase and resale of products. - Play key roles in customer relationship management through distribution activities and by maintaining databases and information systems to help all members of the marketing channel maintain effective customer relationships Marketing Activities Performed by Intermediaries Marketing information: Analyze sales data and other information in databases and Information systems. Perform or commission marketing research. Marketing management: Establish strategic and tactical plans for developing customer relationships and organizational productivity. Facilitating exchanges: Choose product assortments that match the needs of customers. Cooperate with channel members to develop partnerships. Promotion: Set promotional objectives. Coordinate advertising, personal selling, sales promotion, publicity, and packaging. Price: Establish pricing policies and terms of sales. Logistics: Manage transportation, warehousing, materials handling, inventory control, and communication.

Pioneer Advertising vs. Competitive Advertising

Pioneer advertising - Advertising that tries to stimulate demand for a product category rather than a specific brand by informing potential buyers about the product - Used most often for products before they hit the market and for products in the introductory stage of the product life cycle Competitive advertising - Tries to stimulate demand for a specific brand by promoting its features, uses, and advantages relative to competing brands Three types of competitive advertising: Comparative advertising Reminder advertising Reinforcement advertising

Promotion Mix (Elements)

Promotion mix - A combination of promotional methods used to promote a specific product The four possible elements of a promotion mix are: - Advertising: A paid nonpersonal communication about an organization and its products transmitted to a target audience through mass media. Advantages: - Is extremely cost-efficient when it reaches a vast number of people at a low cost per person - Lets the source repeat the message several times - Visibility gained from advertising can enhance an organization's image Disadvantages: - Absolute dollar outlay can be high - Rarely provides rapid feedback - Often difficult to measure its effect on sales - Less persuasive than personal selling - Has a limited time exposure - Personal Selling: A paid personal communication that seeks to inform customers and persuade them to purchase products in an exchange situation. Advantages: - Involves more specific communication than advertising - Has greater impact on customers - Provides immediate feedback Limitation: - Is expensive - Public Relations: A broad set of communication efforts used to create and maintain favorable relationships between an organization and its stakeholders. - A component of public relations is publicity - Publicity is nonpersonal communication in news-story form about an organization or its products, or both Is transmitted through a mass medium at no charge - Public relations should be viewed as an ongoing program rather than a set of tools to be used only during crises Annual reports Brochures Event sponsorships Sponsorship of socially responsible programs Publicity News releases Press conferences Feature articles Sales Promotion: An activity or material that acts as a direct inducement, offering added value or incentive for the product to resellers, salespeople, or customers - Examples include: Free samples Games Rebates Sweepstakes Contests Premiums Coupons

Push Policy vs. Pull Policy

Push policy - Promoting a product only to the next institution down the marketing channel - Normally stresses personal selling Pull policy - Promoting a product directly to consumers to develop strong consumer demand that pulls products through the marketing channel - Done primarily through advertising and sales promotion Push and pull policies are not mutually exclusive; at times, an organization uses both simultaneously

Intensity of Market Coverage

The number and kinds of outlets in which a product will be sold. Variables that affect the intensity of market coverage: - Replacement rate - Product adjustment (services) - Duration of consumption - Time required to find the product Levels of market coverage: - Intensive Distribution: Using all available outlets to distribute a product -Have a high replacement rate - Require almost no service - Are bought based on price cues - To satisfy consumers seeking to buy these products, they must be available at a store nearby and be obtained with minimal search time. - Selective Distribution - Using only some available outlets in an area to distribute a product. - Is appropriate for shopping products - Is desirable when a special effort, such as customer service from a channel member, is important to customers - Is often used to motivate retailers to provide adequate service - Exclusive Distribution - Using a single outlet in a fairly large geographic area to distribute a product Is suitable for products: - Purchased infrequently - Consumed over a long period of time - That require a high level of customer service or information - Is used for expensive, high-quality products with high profit margins - Is not appropriate for convenience products and many shopping products - Is often used as an incentive to sellers when only a limited market is available for products

Advertising Schedules

There are three general types of media schedules: - Continuous: Advertising runs at a constant level with little variation throughout the campaign period - Flighting: Advertisements run for set periods of time, alternating with periods in which no ads run - Pulsing: Combines continuous and flighting schedules; during the entire campaign, a portion of advertising runs continuously, and during specific time periods of the campaign, additional advertising is used to intensify the level of communication with the target audience

Types of Competitive Advertising

Three types of competitive advertising: Comparative advertising - Compares the sponsored brand with one or more identified brands on the basis of one or more product characteristics Reminder advertising - Advertising used to remind consumers about an established brand's uses, characteristics, and benefits Reinforcement advertising - Advertising that assures users they chose the right brand and tells them how to get the most satisfaction from it

Channel Integration

Various channel stages may be combined, either horizontally or vertically, under the management of a channel captain. Such integration may: - Stabilize supply - Reduce costs - Increase channel member coordination Vertical channel integration - Combining two or more stages of the marketing channel under one management. - Vertical marketing system (VMS) - A marketing channel managed by a single channel member to achieve efficient, low-cost distribution aimed at satisfying target market customers Takes on one of three forms: - Corporate VMS - Combines all stages of the marketing channel, from producers to consumers, under a single owner - Administered VMS - Channel members are independent, but informal coordination achieves a high level of inter-organizational management - Contractual VMS - Channel members are linked by legal agreements spelling out each member's rights and obligations Horizontal channel integration - Combining organizations at the same level of operation under one management