Marketing Concepts Chapter 3

Marketing Channel
consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumer or industrial users
3 Functions of Intermediaries
Transactional, Logistical, and Facilitating
Consumer Values through intermediaries
Time, Place, Form, and Possession
Direct Channel
Producer —> Consumer
Indirect Channel
Producer —> Intermediary —> Consumer
Internet marketing channels
which employ the Internet to make products and services available
Direct marketing channels
allow consumers to buy products by interacting with various advertising media
Multichannel marketing
(omnimarketing) is the blend of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop
Dual distribution
a firm reaches different buyers by employing two or more different types of channels for the same product
strategic channel alliance
one firms marketing channel is used to sell another firms products
Vertical marketing systems
professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximize marketing impact
Contractual vertical marketing
independent production and distribution firms intergrate efforts on a contractual basis to obtain greater functional economies
Administered vertical marketing
achieve coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership
number of stores in a geographical area
Intensive distribution
a firm places its products in as many outlets as possible
Exclusive distribution
only one retailer carries firms product
Selective distribution
selects few retailers to carry products
4 Categories of Interests in Channel Choice
Information, Convenience, Variety, and Pre-Post sale service
Channel Conflict
arises when one channel member believes another channel member is engaged in behavior that prevents it from acheiving its goals
vertical conflict
occurs between different levels in the marketing channels
horizontal conflict
occurs between intermediaries at the same level in marketing channels
channel conflict that occurs when a channel member bypasses another member and sells or buys products direct
Channel captain
a channel member that coordinates, directs, and supports other channel members
4 Forms of Influence
Reward, Expertise, Identification, Legitimate right
those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost
3 Elements of Logistics
Flow of products, Cost effective, Limits
Supply chain
various firms involved in performing the activities required to create and deliver a product or service to consumers
3 Steps in Supply Chain
1. Understand the customer
2. Understand the supply chain
3. Harmonize the supply chain with the marketing strategy
Total Logistics Cost
includes expenses associated with transportation, materials handling, and warehousing, inventory, stockouts, order processing, and return products handling.
customer service
the ability of logistic management to satifsy users in terms of time, depedability, communication, and convienence.
order cycle – time between ordering of an item and when it is received and ready to use
consistency of replenishment
two way link between buyer and seller that helps monitoring service
a min effort on the part of the buyer in doing business with the seller
Vendor Managed inventory
the supplier determines the product amount and assortment a customer needs and automatically delivers the items
Reverse logistics
process of reclaiming or recycling reusable materials
includes all activities involved in selling, renting, and providing products, and services to the ultimate consumer
Classification of Outlets
1. Form of ownership
2. Level of service
3. Type of merchandise
Forms of Ownership
1. Independent retailer
2. Corporate chain
3. Contractual systems
2 Types of franchises
1. Business format franchise
2. Distribution franchise
requires that customers perform many functions during the purchase process
Limited service
outlets provide some service such as credit and merchandise return but not others
Full service
provide many services to customers
Depth of product line
the store carries a large assortment of each item
Breadth of product line
variety of different items a store carries
scrambled merchandising
offering several unrelated product lines in a single store
serve customers when and where stores cannot
involves using the telephone to interact with and sell directly to consumers
Retailing mix
activities related to managing the store and the merchandise in the store
1. Pricing
2. Store Location
3. Retail communication
4. Merchandise
how much should be added to the cost the retailer paid for the product
original markup
the difference between retailer cost and initial selling price
discounting a product
4 Store Settings
1. Central business district
2. Regional Shopping centers
3. The Strip mall
4. Power Center
multichannel retailers
use a combo of traditional store formats and non-store formats
shopper marketing
the use of displays, coupons, and samples to influence shopping behavior
category management
approach to managing the assortment of merchandise to maximize sales and profits
Wheel of retailing
describes how new forms of retail outlets enter the market
Retail life cycle
process of growth and decline that retail outlets experience over time
merchant wholesalers
independently owned firms that take title to the merchandise they handle
Manufacturers agents
work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory.
independent firms whose principal function is to bring buyers and sellers together to make sales.
Promotional mix
the combo of one of more of the communication tools used to inform, persuade, or remind prospective buyers
integrated marketing communications
the concept of designing marketing communications programs that coordinate all promotional activities to provide a consistent message across all audiences
the process of conveying a message to others
6 Elements of communication
1. source
2. message
3. channel of communication
4. receiver
5. process of encoding
6. process of decoding
process of having the sender transform an idea into a set of symbols
process of having the receiver take a set of symbols and transform them into an idea
sender’s interpretation of the response and indicates whether the message was decoded and understood as intended
includes extraneous factors that can work against effective communication
5 Promotional Alternatives
1. Advertising
2. personal selling
3. public relations
4. sales promotion
5. direct marketing
any paid form of nonpersonal communication about an organization, product, or idea
personal selling
the two way flow of communication between a buyer and a seller designed to influence a person’s or group’s purchase decision
Public relations
a form of communication management that seeks to influence the feelings, opinions, or beliefs held by customers
nonpersonal, indirectly paid presentation of an organization, product, or service
Sales promotion
a short term inducement of value offered to arouse interest in buying a product or service
Direct marketing
uses direct communication with consumers to generate a response in the form of an order
Product Life Cycle
Introduction stage – increase awareness
Growth Stage- persuade customer to buy
Maturity Stage – need to maintain existing buyers
Decline Stage – phase out of a product
Push strategy
directing the promotional mix to channel members to gainn their cooperation in ordering and stocking a product
Pull strategy
directing the promotional mix at ultimate consumers to encourage them to ask the retailer for a product
Strategic Marketing Process :
1. Developing
2. Executing
3. Assessing the promotion program
target audience
group of prospective buyers toward which a promotion program will be directed
behavioral targeting
collecting information about your web-browsing behavior to determine the banner and display ads that you will see
hierarchy of effects
the sequence of stages a prospective buyer goes through:
1. Awareness
2. Interest
3. Evaluation
4. Trial
5. Adoption
Promotion Budget Methods
Percentage of sales
Competitive parity
Objective and task
Direct orders
the result of offers that contain all the information necessary for a potential buyer to make a decision to purchase and complete the transaction
lead generation
the result of an offer designed to generate interest in a product or service and a request for additional information
traffic generation
the outcome of an offer designed to motivate people to visit a business
product advertisements
1. pioneering- tell what a product is
2. competitive- promotes features and benefits
3. reminder – reinforce previous knowledge
Institutional advertising
is to build goodwill or an image for an organization rather than promote a specific product or service
4 Forms of Institutional advertising
1. Advocacy
2. Pioneering institutional advertisements
3. Competitive institutional advertisements
4. Reminder institutional
Advertising Steps
1. developing
2. executing
3. evaluating
Fear appeal- avoid some negative experience
Sex appeal- increase attractiveness
Humorous appeal- fun and exciting
advertising media
the means by which the message is communicated to the target audience
number of different people or households exposed to an ad
percentage of households in a market that are tuned to a particular TV show or radio station
the average number of times a person in the target audience is exposed to a message
Major Advertising Media
Yellow Pages
wasted coverage
having people outside the market for the product se the ad
program length ads that take an educational approach to communication with potential customers
rich media
interactive ads on the internet
buyer turnover
how often new buyers enter the market to buy the product
purchase frequency
the more frequently a product is purchased the less repetition is required
Schedule of markets
1. continuous schedule
2. flighting
3. Pulse
conducted before an ad is placed to determine whether it communicates the intended message or to select among alternative versions
after it has been shown to the target audience to determine whether it accomplished its intended purpose
consumer-oriented sales promotions
sale tools such as coupons, sweepstakes, and samples used to support a companys ads
product placement
uses a brand name product in a movie, TV Show, video game, or commercial for another product
Trade oriented sales promotion
sale tools used to support a companys ads and personal selling directed to wholesalers, distributors
cooperative advertising
a manufacturer pays a percentage of the retailers local advertising expense for advertising the manufacturers product
publicity tools
methods of obtaining nonpersonal presentation of an organization, product, or service without direct cost
social media
online media where users submit comments, photos, and videos, to identify popular topics
contraction of “web-log” a web page that serves as a publicly accessible personal journal and online forum
User Generated Content (UGC)
various forms of online media content that are publicly available and created by end users
Classification system for marketers
1. Media richness- degree of visual, etc contact
2. Self-disclosure -make a positive impression
a website where users may create a personal profile, add other users, and exchange photos, comments etc
a website that enables users to send and receive tweets. based on principle of followers
a business-oriented website that lets users post their professional profiles to connect to a network of businesspeople
a video-sharing website in which users can upload, view, and comment on videos
small, downloadable software programs that run on smartphones and tablet devices
mobile marketing
any marketing activity conducted through several Internet networks to which consumers are continuously connected using a personal mobile device
sales management
planning the selling program and implementing and evaluating the personal selling effort of the firm
relationship selling
the practice of building ties to customers based on a salesperson’s attention and commitment to customer needs over time
order taker
processes routine orders or reorders for products that were already sold by the company
2 types of order takers:
1. Outside order takers- visit customers and replenish inventory stocks
2. Inside order takers – answer simple questions, take orders, complete transactions
inbound telemarketing
the use of toll free telephone numbers that customers can call to obtain info about products
order getter
sells in a conventional sense and identifies prospective customers, provides customers with info, persuades customers to buy, closes sales, and follows up on customers
outbound telemarketing
practice of using the telephone rather than personal visits to contact current and prospective customers
personal selling process
activities occuring before and after the sale itself
6 stages of personal selling process
1. prospecting
2. preapproach
3. approach
4. presentation
5. close
6. follow up
adaptive selling
involves adjusting the presentation to fit the selling situation
consultative selling
focuses on problem identification, where the salesperson serves as an expert on problem recognition and resolution
excuses for not making a purchase commitment or decision
6 Techniques in dealing with objections
1. Acknowledge and convert the objection
2. postpone
3. agree and neutralize
4. accept the objection
5. denial
6. ignore the objection
sales plan
a statement describing what is to be achieved and where and how the selling effort of salespeople is to be deployed
1. Setting objectives
2. organizing the salesforce
3. developing account management policies
major account management
(key account management) the practice of using team selling to focus on important customers so as to build mutually beneficial, long-term, cooperative relationships
account management policies
specifying whom salespeople should contact, what kinds of selling and customer service activities should be engaged in, and how these activities should be carried out.
Implementing a sales plan
1. salesforce recruitment and selection
2. salesforce training
3. salesforce motivation and compensation
job analysis
a study of a particular sales position
sales quota
contains specific goals assigned to a salesperson, sales team, branch sales office, or sales district for a stated period of time.
salesforce automation (SFA)
the use of these technologies to make the sales function more effective and efficient
interactive marketing
involves two-way buyer seller electronic communication in a computer mediated environment in which the buyer controls the kind and amount of information received from the seller
an interactive, Internet enabled system that allows individual customers to design their own products and services by answering a few questions
collaborative filtering
a process that automatically groups people with similar buying intentions, preferences, and behaviors, and predicts future purchases
the consumer initiated practice of generating content on a marketers website that is custom tailored to an individuals specific needs and preferences
permission marketing
the solicitation of a consumer’s consent to receive e-mail and advertising based on personal date supplied by the consumer
Design Elements
electronic shopping agents or robots that comb websites to compare prices and product or service features
eight-second rule
customers will abandon their efforts the enter and navigate a website if download time exceeds 8 seconds.
web communities
websites that allow people to congregate online and exchange views on topics of common interest
electronic junk mail or unsolicited e-mail
viral marketing
an Internet-enabled promotional strategy that encourages individuals to forward marketer-initiated messages to others via e-mail
occurs when a shopper visits a retail store to inspect merchandise but then goes online to compare prices from other retail and online sellers to attempt to make the best purchase
dynamic pricing
the practice of changing prices for products and services in real time in response to supply and demand conditions
computer files that a marketer can download onto the computer and mobile phone on an online shopper who visits the marketers website
cross-channel shopper
an online consumer who researches products online and the purchases them at a retail store
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