INTRODUCTION TO MARKETING MANAGEMENT

Review for Quiz 3 Chapters: 12, 13 14,15, and 17

Dr. Franck VIGNERON CSUN College of Business & Economics 1

Chapter 13

Distribution Channels and Logistics Management

What is a Distribution Channel?

A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user.

Distribution Channel Functions

Members of the marketing channel perform many key functions. They are: Risk Taking Financing Physical Distribution Negotiation Matching
4

Information Promotion

Contact

Number of Channel Levels

Channel Level
= Each Layer of Marketing Intermediaries that Perform Some Work in Bringing the Product and its Ownership Closer to the Final Buyer.
Channel 1
M

Direct Channel Indirect Channel

Channel 2
M

Channel 3
M W R C

Channel 4
M W J R C
5

Channel Behavior & Conflict

For the channel to perform well, each channel members role must be specified and conflict must be managed.
When this doesnt happen, conflict occurs:
Horizontal Conflict occurs among firms at the same level of the channel, i.e retailer to retailer. Vertical Conflict occurs between different levels of the same channel, i.e. wholesaler to retailer.
6

Conventional Marketing Channel Vs. a Vertical Marketing System

Conventional Marketing Channel
Manufacturer

Vertical Marketing System

Manufacturer Wholesaler

Wholesaler Retailer Consumer

Retailer
Consumer
7

Types of Vertical Marketing Systems

Vertical Marketing Systems (VMS)
Corporate VMS Contractual VMS Administered VMS

Wholesaler Sponsored Voluntary Chain

Retailer Cooperatives

Franchise Organizations

40% of Retail Sales

ManufacturerSponsored Retailer Franchise System

Ford + dealers

ManufacturerSponsored Wholesaler Franchise System

Coca-Cola

Service-FirmSponsored Franchise System

Hertz/Avis, McDo/Bking, H/R Inn

Innovations in Marketing Systems

Horizontal Marketing System
Two or More Companies at One Channel Level Join Together to Follow a New Marketing Opportunity. Example: Banks in Grocery Stores
Competitors helping each other E.g., Outside US Nstl selling General Mills cereals

Hybrid Marketing System

A Single Firm Sets Up Two or More Marketing Channels to Reach One or More Customer Segments. Example:

Retailers, Catalogs, and Sales Force

Channel Design Decisions

1. Analyzing Consumer Service Needs 2. Setting Channel Objectives & Constraints

3. Identifying Major Alternatives

Intensive Distribution
Fast Moving C. G.

Selective Distribution
Maytag

Exclusive Distribution
Rolls-Royce

4. Evaluating the Major Alternatives

Review Economic, Control, and Adaptive Criteria

5. Designing International Distribution Channels 10

Push and Pull Strategies

Push Strategy
Producer Wholesalers Retailers Customers

Pull Strategy
Producer Wholesalers Retailers Customers

Push/Pull Strategies
Producer Wholesalers
Advertising and Promotion
11
Distribution Strategies

Retailers

Customers

Major Logistics Functions

Costs
Order Processing
Received Processed Shipped

Minimize Costs of Attaining Logistics Objectives

Logistics
Rail, Truck, Water, Pipeline, Air, Intermodal

Transportation

Functions
Inventory

Warehousing
Storage Distribution Automated

When to order How much to order Just-in-time

12

Marketing Logistics
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 profit.
INBOUND + OUTBOUND = Market Logistics Supply Chain + value chain management
13

Transportation Modes
Nations largest carrier, cost-effective for shipping bulk products, piggyback

Rail

Flexible in routing & time schedules, efficient for short-hauls of high value goods
Low cost for shipping bulky, low-value, non perishable goods, slowest form Ship petroleum, natural gas, and chemicals from sources to markets High cost, ideal when speed is needed or distance markets have to be reached
14

Truck

Water

Pipeline

Air

Choosing Transportation Modes

Checklist for Choosing Transportation Modes 1. Speed (door-to-door time) 2. Dependability (meet schedules) 3. Availability (area served) 4. Costs (per ton-distance) 5. Flexibility(ability to handle various products)

15

INTRODUCTION TO MARKETING MANAGEMENT

Chapter 14

Distribution Strategies

Dr. Franck VIGNERON CSUN School of Business & Economics 16

What is Retailing?

Includes all the activities Involved in Selling Goods or Services Directly to Final Consumers for Their Personal, Nonbusiness Use.
Retailers - those firms engaged primarily in wholesaling activity.
17

Product Assortment and Services Decisions

Width and Depth of Assortment

Product Assortment

Quality of Products Product Differentiation Strategies

Key Tool of Nonprice Competition for Setting One Store Apart From Another
Physical Layout

Services Mix

Stores Atmosphere
18

Feel That Suits the Target Market and Moves Customers to Buy

Classification of Retailing
Independent, Corporate, or Contractual Ownership Organization Self-Service, Limited-Service and Full-Service Retailer Depth/Length and Breadth of the Product Assortment Pricing Structure that is Used by the Retailer
19

Retail Organizations

Amount of Service

Product Line

Relative Prices

Breadth vs. Depth of Merchandise Lines

Breadth: Number of different product lines Mens Clothing Shoes Appliances CDs

Depth: Number of items within each product line

Nike running shoes Florsheim dress shoes Top Sider boat shoes Adidas tennis shoes

Amana refrigerator Sony TV sets JVC videocassette recorders General Electric dishwashers Sharp microwave ovens

Classical Rock Jazz Country Western

Suits Ties Jackets Overcoats Socks Shirts

20

Classification of Retailing: Product Line

E.g., + What is an Hypermarket?

Store
Specialty Stores Department Stores Supermarkets Convenience Stores Superstores Discount Stores Off-Price Retailers Warehouse Clubs

Description
Narrow Product Line, Deep Assortment i.e. The Limited or Athletes Foot Wide Variety of Product Lines i.e. Clothing, Home Furnishings, Saks Fifth Avenue Wide Variety of Food, Laundry, & Household Products i.e. Kroger Limited Line of High-Turnover Convenience Goods i.e. 7-Eleven Large Assortment of Routinely Purchased Food & Nonfood Products i.e. Toys R Us Standard Merchandise at Lower Prices i.e. Wal-Mart Changing Collection of Higher-Quality Goods at a Reduced Price i.e. T.J. Maxx Limited Selection of Brand-Name Grocery Items, Appliances, Etc. i.e. Sams Club 21

What is Wholesaling?

All the activities involved in selling goods and services to those buying for resale or business use. Wholesaler - those firms engaged primarily in wholesaling activity. Wholesalers buy mostly from producers and sell mostly to:
Retailers, Industrial consumers, and Other wholesalers.

22

Why are Wholesalers Used?

Wholesalers are Often Better at Performing One or More of the Following Channel Functions:
Management Services & Advice Market Information Risk Bearing Financing Transportation Selling and Promoting Buying and Assortment Building Bulk Breaking

Wholesaler Functions

Warehousing

23

Types of Wholesalers
Merchant Wholesaler

Independently Owned Business that Takes Title to the Merchandise it Handles.

Manufacturers Sales Branches and Offices

Wholesaling by Sellers or Buyers Themselves Rather Than Through Independent Wholesalers.

They Dont Take Title to the Goods, and They Perform Only a Few Functions.
24

Brokers/ Agents

Trends in Wholesaling
Consolidation within the Industry is Reducing # of Wholsalers

Distinction Between Large Retailers and Wholesalers Blurs

Wholesalers Will Continue to Increase the Services Provided

Wholesalers Are Beginning to Go Global

25

Chapter 15
Integrated Marketing Communication Strategy

26

The Promotional Mix

PR

Advertising Sales Promotion

Direct MKG Personal Selling

Product
Place Price
Advertising Strategies

Promotion
4Ps

(Distribution)

Place
27

Setting Advertising Objectives

Informative Advertising
Inform Consumers or Build Primary Demand i.e CD Players

Persuasive Advertising
Build Selective Demand i.e Sony CD Players

Specific Communication Task Accomplished with a Specific Target Audience During a Specific Period of Time

Advertising Objective

Comparison Advertising
Compares One Brand to Another i.e. Avis vs. Hertz

Reminder Advertising
Keeps Consumers Thinking About a Product i.e. Coca-Cola 28

Figure 9.3 Comprehensive Communication Model

Commercial Verbal vs. Nonverbal Non-Profit 1-sided vs. 2-sided Individual Factual vs. Emotional Formal vs. Informal Selective Exposure Individuals Target Audience Intermediary Audience Unintended Audiences

Sender (Source)
Symbols Pictures Words Images

Messag e

Channel (Medium )

Receiver (Consumer)

Mediated by: Involvement Mood Experience Personal Charac.

Decodes
Paid vs. Unpaid Print, Broadcast, Electronic Personal vs. Impersonal

Responds Appropriately ? No Miscomprehends ? No

Yes

Yes

Pretests to Ensure Message Will be Received Posttests to Ensure Message Was Received

Feedback

29

Steps in Developing Effective Communication

Step 1. Identifying the Target Audience Step 2. Determining the Communication Objectives
Buyer Readiness Stages
Awareness Knowledge Liking Preference Conviction Purchase
30

Steps in Developing Effective Communication

Step 3. Designing a Message
Message Content
Rational Appeals Emotional Appeals Moral Appeals

Message Structure
Draw Conclusions Argument Type Argument Order Headline, Illustration, Copy, & Color Body Language

Message Format

AIDA model.
1). Get attention 3). Arouse desire 2). Hold interest 4). Obtain action
31

Appeals
Appeal - the creative attempt to motivate consumers toward some form of activity, or to influence attitudes toward a product or service
Rational appeal a focus toward the consumers practical utility oriented needs

Emotional appeal a focus on psychological rather than utility needs

(all appeals can be positive or negative and should be meaningful, distinctive, and believable to be effective)
Ego Oriented 32

Humor
Advertising Strategies

Fear

Sex

Comparative

+ Morale Appeal: Social causes & Human Rights

Structure & Format

The marketing communicator needs a strong structure and format for the message. 1). Three structure issues must be addressed:
a). Whether to draw a conclusion or leave it to the audience. b). Whether to present a one-sided argument or a two-sided argument. c). Whether to present the strongest arguments first or last.
33

Structure & Format (continuous)

2). The message format decides on the headline, illustration, copy, and color. 3). To attract attention the advertiser can use:
a). b). c). d). e). Novelty and contrast. Eye-catching pictures and headlines. Distinctive formats. Message size and position. Color, shape, and movement.
34

Steps in Developing Effective Communication

Step 4. Choosing Media

Personal Communication Channels Nonpersonal Communication Channels

35

Issues in Credibility
Credibility of Informal Sources
E.g., Word-of-mouth

Credibility of Formal Sources

Differ. Between for profit vs nfp Org.

Credibility of Spokespersons and Endorsers

Importance of perceived competency and expertise

Message Credibility
Past experience with organization

CREDIBILITY OF THE MEDIA CHANNELS SPONSORING

VERSUS

ADVERTISING

+
CREDIBILITY OF THE SOURCES

FOR-PROFIT Org.

VERSUS

NOT FOR PROFIT Org.

+
37

CREDIBILITY OF THE MEDIA CHANNELS IN RELATION WITH THE SOURCES

FOR-PROFIT Org.

VERSUS

NOT FOR PROFIT Org.

SPONSORING

++

VERSUS
ADVERTISING

--

38

Campaign Evaluation
Advertising Program Evaluation

Communication Effects
Is the Ad Communicating Well?

Sales Effects
Is the Ad Increasing Sales?

Setting the Total Promotion Budget One of the Hardest Marketing Decisions Facing a Company is How Much to Spend on Promotion.
Affordable Percentage of Sales

Based on What the Company Can Afford

Based on a Certain Percentage of Current or Forecasted Sales

Objective-and-Task

Based on Determining Objectives & Tasks, Then Estimating Costs

Based on the Competitors Promotion Budget

Competitive-Parity

40

Dr. Franck Vigneron

Chapter 16

Sales Promotion + PR + Advertising

41

What is Sales Promotion ?

Sales Promotion is a Mass Communication Technique That Offers Short-Term Incentives to Encourage Purchase or Sales of a Product or Service. Offers Reasons to Buy Now. Stimulate earlier or stronger market response.

42

Major Consumer Sales Promotion Tools/1

Sample Coupons
Trial amount of a product Savings when purchasing specified products Refund of part of the purchase price Reduced prices marked on the label or package Goods offered free or low cost as an incentive to buy a product Articles imprinted with an advertisers name given as gifts
43

Cash Refunds Price Packs

Premiums Advertising Specialties

Major Consumer Sales Promotion Tools/2

Patronage Rewards
Point-of-Purchase Contests Sweepstakes Game
Cash or other rewards for the use of a certain product Displays and demonstrations that take place at the point of sale Consumers submit an entry to be judged Consumers submit their names for a drawing Presents consumers with something every time they buy
44

Major Trade Sales Promotion Tools/1

Trade-Promotion Objectives
Persuade Retailers or Wholesalers to Carry a Brand Give a Brand Shelf Space Promote a Brand in Advertising Push a Brand to Consumers

45

Major Trade Sales Promotion Tools/2

Trade-Promotion Tools
a straight reduction in price on purchases during a stated period of time. Can be called priceoff, off-invoice, or off-list.

Discounts

46

Major Trade Sales Promotion Tools/3

Trade-Promotion Tools
Promotional money paid by manufacturers to retailers who agree to feature the manufacturers products in some way. Forms include:

a). An advertising allowance compensates retailers for advertising a product.

Allowances

b). A display allowance compensates them for using displays.

c). Manufacturers may offer free goods, which are extra cases of merchandise, to resellers who buy a certain quantity or who feature a certain flavor or size.

d). Manufacturers may give retailers free specialty advertising items that carry the companys name (such as pens).

47

Major Business Sales Promotion Tools

Business-Promotion Objectives Generate Business Leads Stimulate Purchases Reward Customers Motivate Salespeople Business-Promotion Tools Conventions

Trade Shows
Sales Contests

48

Developing the Sales Promotion Program

Decide on the Size of the Incentive Set Conditions for Participation Determine How to Promote and Distribute the Promotion Program Determine the Length of the Program Evaluate the Program
49

What is Public Relations?

Public Relations Involves Building Good Relations With the Companys Various Publics by Obtaining Favorable Publicity, Building Up a Good Corporate Image, and Handling or Heading Off Unfavorable Rumors, Stories, and Events.
50

Major Public Relations Functions

Press Relations Product Publicity Public Affairs Lobbying

Public Relations Departments May Perform Any of All of the Following Functions:

Investor Relations
Development

51

Major Public Relations Tools

News Web Site Public Service Activities Corporate Identity Materials Written Materials
52

Speeches Special Events

Audiovisual Materials

Major Public Relations Decisions

Setting Public Relations Objectives Choosing the Public Relations Messages and Vehicles

Implementing the Public Relations Plan

Evaluating Public Relations Results

53

What is Advertising?

Advertising is Any Paid Form of Nonpersonal Presentation and Promotion of Ideas, Goods, or Services by an Identified Sponsor.

54

Media Selection
Deciding on reach, frequency, and impact. a). Reach is the percentage of people in the target market exposed to an ad campaign during a given period. b). Frequency is the number of times the average person in the target market is exposed to an advertising message during a given period. c). Media impact is the qualitative value of an exposure through a given medium.

55

6 major advertising media

Television Radio Magazines Newspaper Internet And Outdoor (e.g., billboards)

56

Copy and Message Direction

Motivational
Source
Motivation = Product Performance Motivation = Association with Product Universe

Perf. Is representation of product

Perf. is + than representation product Copy of Message Centered on Psyco -socio of Product

Copy of Message Centered on Product

Copy of Message Centered on Results from Product

1. Message on Product

2. Message on Resultats

3. Message on 57 Universe

Chapter 18
Competitive Strategies: Attracting, Retaining, and Growing Customers

58

Customer Relationship Marketing

Traditional marketing theory and practice have focused on attracting new customers rather than retaining existing ones. 1). The move today, however, is toward relationship marketing-creating,maintaining, and enhancing strong relationships with customers and other stakeholders. 2). Beyond designing strategies to attract new customers and create transactions with them, companies are going all out to retain current customers and build profitable, long-term relationships with them. 3). This new view is that marketing is the science and art of finding, retaining, and growing profitable customers.
59

Satisfaying the Needs

Create the Product Identify The needs to Satisfy

STAGES

NEEDS

PRODUCTS

Retain Customer By Maintaining Satisfaction

Adapt and Deliver the Products to The Right Target

60

Customer Delivered Value

61

Customer Satisfaction
Expectations are Based on Customers Past Buying Experiences, the Opinions of Friends, & Marketer and Competitor Information and Promises.
Product Falls Short of Expectations Customer is Dissatisfied Product Matches Expectations Customer is Satisfied

Product Exceeds Expectations Customer is Highly Satisfied or Delighted!

62

Steps in Analyzing Competitors

Identifying the companys competitors = BENCHMARKING

Assessing competitors objectives, strategies, strengths and weaknesses, and reaction patterns
Selecting which competitors to attack or avoid
63

Basic Competitive Strategies

Overall Cost Leadership

Focus

Differentiation

Middle of the Road

64

Competitive Strategies: Value Disciplines

Companies Gain Leadership Positions by Delivering Superior Value to their Customers Through These Strategies:
Product Leadership
intel
65

Operational Excellence
Alaska Airlines

Customer Intimacy
Ikea

Competitive Marketing Strategies

Firms Competing in a Given Target Market Differ in their Objectives and Resources so May Choose the Following Forms:

66