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Marketing Exam 3 Chapter 15: Marketing Channels

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Marketing Channel
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Consists of individuals and firms involved in the process of making a product or service available for use by individuals or industrial users.
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Terms used for Marketing Intermediaries
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-Middleman -Agent or Broker -Wholesaler -Retailer -Distributor -Dealer
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Why are intermediaries important?
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They are important because they have roles in creating value for buyers. Intermediaries make it possible for goods produced by a producer to flow to the ultimate consumer.
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3 Functions of Intermediaries
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The functions provided by intermediaries add value to buyers. (1) Transactional Functions (2) Logistical Functions (3) Facilitating Functions
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Intermediary Transactional Functions
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2 main functions (1) Selling (2) Risk Taking The Other functions buying
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Intermediary Logistical Functions
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2 main functions (1) Assorting (2) Transporting The other Functions sorting, storing
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Intermediary Facilitating Functions
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2 main functions (1) Financing (2) Market Research – the goal is to make transactions easier for the buyers The other Functions grading- inspecting, testing or judging products and assigning them quality grades
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Goal of Channel Strategy
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The goal of channel strategy is to provide both time and place utility. You want to provide both time and place utility to consumers in a profitable way
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2 Aspects of Time Utility (from lecture)
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(1) Convenience – i want to have access to the products that i want whenever the urge hits me ex coke. put the product where the customer wants it (2) Speed – i want to be able to purchase the goods that i want at the time that i want them. ex amazon drones.
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2 Aspects of Place Utility
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(1) Convenience – put the product where the consumer is going to be, the utility is provided because then the customer doesn’t have to search for the products they want. (2) Prestige – opposite of convenience- instead of having the products where consumers want them they are slightly out of reach this connotes prestige of the brand.
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How Do Consumers Benefit from Intermediaries
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The goal of a marketing channel is to have the products consumers want: where they want them, when they want them and in the form they want them in.
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Logistical Functions of Intermediaries (lecture)
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(1) Transportation- this is a major source of utility (2) Warehousing and Material Handling – cross docking (3) Order Processing – Electronic Data Interchange (EDI) (4) Inventory Management – Vendor Managed Inventory (VMI)
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2 Types of Marketing Channels
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(1) Direct (2) Indirect
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Direct Channels
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The manufacturer performs all of the channel functions (transactional, logistical, facilitating) . Here manufacturers communicate directly with the end consumer. EX) Dell
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Indirect Channels
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these occur when intermediaries are inserted in-between the manufacturer and the end consumer. a “typical” channel is manufacturer-> wholesaler -> retailer -> consumer. Here different intermediaries perform different channel functions.
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How are marketing channels for consumer products different from marketing channels for business products?
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Business Channels are usually shorter than consumer product channels and often rely on 1 or no intermediary. They don’t need intermediaries because business users are: -fewer in number – concentrated geographically – buy in larger quantities
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Internet Marketing Channels
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Internet Marketing Channels are made possible because of INTERACTIVE ELECTRONIC TECHNOLOGY these channels have provided new ways to add customer value. Internet Marketing channels employ the internet to make products and services available for consumption or use by both consumers and organizational buyers.
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Benefit of Electronic Intermediaries
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They perform transactional and facilitating functions more efficiently and at a lower cost than traditional intermediaries because of the efficiencies of the internet.
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Limit of Electronic Intermediaries
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While they are more efficient at transactional and facilitating functions they can’t perform all elements of the logistical functions especially for books and automobiles, traditional intermediates are used for this function.
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Direct Marketing Channel
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Allow consumers to buy products by interacting with various advertising media without face to face interaction with salespeople. Direct marketing includes: Mail order selling, Direct mail sales, Catalog sales, Telemarketing, Televised home shopping, interactive media
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Multichannel Marketing
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this is the blending of different communication and delivery channels that are mutually reinforcing in in attracting, retaining, and building relationships with consumers who buy and shop in traditional intermediaries and online. – this technique tries to integrate the firms electronic marketing and delivery channels.
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Dual Distribution
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a strategy where a firm reaches different buyers by employing 2 or more different types of channels for the same basic product. Ex: GE sells their products through builders and through Home Depot
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Strategic Alliance
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here one firms marketing channel is used to distribute and sell another firms products. This is popular in global markets where establishing marketing channel relationships is expensive and time consuming.
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Vertical Marketing Systems Defined
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Are professionally managed and centrally coordinated marketing channels designed to achieve channel economies of scale and maximize marketing impact. These exist to achieve greater marketing effectiveness and improve efficiency.
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3 Types of Vertical Marketing Systems
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(1) Corporate (2) Contractual (3) Administered
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Corporate Vertical Marketing System
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This is the combination of successive stages of production and distribution under a single ownership 2 types (1) Forward Integration (2) Backward Integration
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Advantage and Disadvantages of Corporate Vertical Marketing Systems
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Advantage: reduces distribution costs and increases control over supply or resale of their products Disadvantage: it is costly and requires a companies capital investment and increase in fixed costs
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Contractual Vertical Marketing Systems Defined
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Under contractual vertical marketing, independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies of scale and marketing impact than they could achieve on their own
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3 Types of Contractual Vertical Marketing Systems
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(1) Wholesaler-sponsored voluntary chains (2) Retail-sponsored cooperatives (3) Franchising
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4 Types of Franchising Agreements
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(1) manufacturer sponsored retail franchise (2) manufacturer sponsored wholesale franchise (3) service-sponsored retail franchise (4) service sponsored franchise system
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Administered Systems
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These systems achieve coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership. EX Walmart
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Factors Affecting Channel Choice 3 Questions to ask when choosing a channel
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(1) which has better target market coverage? (2) which channel satisfies the target markets buying requirements? (3) which channel will be most profitable
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Density
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achieving the best coverage of the target market requires attention to density which is the number of stores in a geographical location and type of intermediaries to be used at the retail level of distribution.
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3 Degrees of Density
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Intensive Exclusive Selective
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Buyers Requirements
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This is understanding what buyers might be interested in when they purchase a product or service: – information -convenience – variety – pre-or post sale service
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Profitability
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This is the final consideration when choosing a channel. Profitability refers to the revenue – cost of each channel member. channel cost is a critical dimension of profitability. Some channel costs: advertising and selling
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2 Types of Channel Conflict
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Horizontal Conflict Vertical Conflict
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Horizontal Conflict and Sources
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arrises between 2 intermediaries on same level. Sources: – when a manufacturer increases its distribution coverage in a geographical area – dual distribution causes conflict when diff types of retailers carry the same brands
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Vertical Conflict and Sources
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Vertical conflict arises between intermediaries on different levels. Sources – Disintermediation which is when 1 channel member bypasses another and buys or sells products directly – disagreements about profit margins – when manufacturer believe neither wholesaler or retailer is giving their products adequate attention.
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Channel Conflict
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arises when 1 channel member believes another member is engaged in behavior that prevents it from achieving its goals.
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Logistics
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the activities that focus on getting the right amount of the right products to the right place at the right time at the lowest cost possible.
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Logistics Management
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the practice of organizing the cost effective flow of raw materials, in process inventory, finished goods and related information from point of origin to point of consumption to satisfy customer requirements This shows that logistics management deals with the flow of the products. The role of logistics management is to see that customer needs are satisfied in the most cost effective manner.
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Supply Chain
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A supply chain consists of the various firms involved in performing the activities required to create and deliver a product or service to consumers or industrial users. A supply chain consists of the suppliers of raw materials and the retailers and wholesalers responsible for delivering products to consumers.
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Supply Chain Management
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Is the integration and organization of information and logistic activities across a firms supply chain for the purpose of creating and delivering goods and services that provide value to consumers.
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Supply Chain Management and Technology
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an important feature of supply chain management is its application of sophisticated information technology that allows companies to share and operate systems for processing, transporting, scheduling and inventory and facility management
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Examples of Logistic Activities
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transportation order processing inventory control materials handling information technology
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Logistical Aspects of the Marketing Channel
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Major Responsibilities Include: selection and oversight of external carriers (truck, plain ext) operation of distribution centers management of finished goods inventory order processing *supply chain manager also plays a rile in the marketing channel by ensuring the right marketing mix.
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3 Steps to Align Supply Chain w/ Marketing Strategy
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(1) Understand the Customer (2) Understand the Supply Chain (3) Harmonize the supply chain with marketing strategy
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Customer Service
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is the ability of logistics management to satisfy users in the terms of dependability, time, convenience and communication. A major task for logistics managers in a supply chain is to balance the 4 customer service factors against the logistics cost factors.
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Goal of Logistics Management in a Supply Chain
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the objective of logistics management in a supply chain is to minimize total logistics costs while delivering the appropriate level of customer service.
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Total Logistics Costs
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Transportation Costs Materials handling and Warehousing Cost Inventory Costs Order processing costs Return on products handling costs Stockouts
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Customer Service Factors
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Time Dependability Communication Convenience
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Customer Service Factor 1 :Time
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this refers to the order cycle or replenishment time, this is the time between the ordering of an item and when it is received and ready to use for sale.
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What makes up a typical order cycle?
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recognition of need to order order transmittal order processing documentation transportation
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3 Elements of Dependability
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Consistent lead time safe delivery complete delivery consistent service allows planning where inconsistencies create surprises.
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Reverse Logistics
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the process of reclaiming recyclable and reusable materials returns and reworks from the point of consumption or use to for repair, remanufacturing and redistribution or disposal. the use of reverse logistics can be seen in the reduced waste in landfills and lowered operating costs for companies.
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2 most Common Channel Members
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Wholesalers Retailers
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Types of Wholesalers
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Wholesalers sell to businesses Merchant Wholesalers – they are traditional wholesalers they take possession of products and distribute 2 types of Merchant Wholesalers: – Distributor (they do all functions) -Jobbers (used in commodities)
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Retailers: 4 Types of Retailers
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Retailers sell to consumers Specialty retail stores department stores power retailers discounters
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Manufacturer Sales Branch
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this is owned by the company and does hold inventory
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Manufacturer Sales Office
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is owned by the manufacturer but does not hold inventory.
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Cost vs Control
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when you insert intermediaries into a marketing channel there is a trade off between cost and control. Each middleman takes profits from the channel so insourcing using manufacturer sales branch or manufacturers sales office gives you more control. However though the intermediates cost more they are specialized in those areas
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Channel Captain
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a intermediary in the channel that has the most power, they might be the largest but not necessarily The job of the intermediary is to coordinate, direct and support the other channel members. a firm becomes a channel member through their ability to influence the behaviors of the other members
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Channel Captain: Sources of Influence
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(1) Economic influence- the intermediaries ability to reward other members given its strong financial position (2) The firms expertise (3) Identification with powerful channel members (4) legitimate right- this is the channel members direct control over the behavior of other members, this situation is likely to occur in contractual vertical marketing systems where a franchisor can directly influence how a franchisee behaves.
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Channel Dynamics
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Evolution of Channel Dynamics: Power/Conflict → Cooperation → Relationships there has been a shift from conflict arising from power and what intermediary would become the channel captain it then moved to cooperation where the channel members realized the importance of the other intermediaries now there is a focus on relationship- intermediaries and channel members want to create lasting relationships.
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Transactional VS Relationship Marketing
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Transaction Marketing • Short term • Price emphasis • Product quality • “arm’s length” Relationship Marketing • Long term • Mutual satisfaction • Interaction quality • Interdependent
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Viewing Channel as Value Added Chain
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Old view viewed the channel as a pipeline new view: sees the channel as a value added chain where each intermediary adds value.
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Retailing
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Includes all of the activities involved in selling, renting and providing products and services to ultimate consumers for personal, family or household use. Retailing is where exchange occurs which is a central aspect of marketing Retailing is where the customer meets the product for the first time.
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Retailing Value
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retailing has a significant impact on the economy and it creates value for the consumer through providing utilities (time, place, form, possession)
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4 Major Retailers
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Walmart Costco Home Depot Target
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3 Ways to Classify Retail Outlets
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(1) Form of Ownership (2) Degree of Service (3) Type of Merchandise line
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Form of Ownership
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This distinguishes retail outlets based on whether they are: Independent Retailers Corporate Chains Contractual Systems
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Independent Retailer
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one of the most common and is owned by an individual Advantage: is that the owner is the boss Advantage for Customers: is that independent retailers can offer convenience, personal service and lifestyle capability
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Corporate Chain
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Involves multiple retail outlets under common ownership Advantage: large chains can have and advantages when dealign with manufacturers and have an easier time bargaining and receiving discounts ex target Advantage for consumers: the buying power of corporate chains translates to lower prices compared to other stores
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Contractual Systems
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These are independent retailers that band together and act as a chain. Type of Contractual System (1) Wholesaler sponsored voluntary chain EX independent grocers alliance (2) Retail sponsored voluntary chain EX Associative Grocers They act as a chain to achieve volume discounts and give the impression they are a large chain (3) Franchise Business Format Franchise ex mcdonalds Product distribution franchise ex ford dealershop
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Business Format Franchiser
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here the franchisor provides a step by step procedure for most aspects of the business and guidelines
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Product Distribution Franchise
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the franchisor provides a few general guidelines, here the franchisee is much more independent.
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Level Of Service
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Self- Service Limited Service Full Service
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Type of Merchandise Line
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Breadth of a product line- is the variety of different items a store carries such as appliances and books Depth of a product line- is a store that carries a large assortment of each its. ex shoe store that offers athletic, causal and fancy shoes.
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Specialty Discount Outlets
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are outlets that focus on 1 type of product at very competitive prices these are called category killers
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Breadth of Product Line
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Breadth: Being broad in scope. Carrying items in many different product categories. Offering several different types of service under one roof. This means that you try to offer everything a customer might want, even if it’s only remotely related to your product or service offering. If you are a remodeling company you might do everything from adding a closet, to trimming out some cabinetry, to building a patio, up to a complete kitchen remodel.
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Depth of a Product Line
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Depth: Being intense in scope by immersing your business into an industry or product category. Stocking a focused product mix, a specialized service offering.
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General Merchandise Stores
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Stores that carry a broad product line (breadth) with limited depth ex Neimins
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Specialty Outlets
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Single line stores- are stores that carry tremendous depth in on primary line of merchandise ex victoria secret. Limited line Stores- carry considerable assortment (depth) of a related line of items. Both single line and limited line are specialty outlets
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Scrambled Merchandising
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Offering several unrelated product lines in a single store
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Hypermarket
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this is a form of scrambled merchandising. Hypermarkets are large stores based on the concept ” everything under one roof” eliminating the need to stop at more than one store. They provide variety, quality, and low prices
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Supercenters
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US citizens aren’t comfortable with the large size of hypermarkets, so we have super centers supercenters combine fulls service grocery with typical merchandise store.
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Downside to Scrambled Merchandising
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is that retailers that traditionally weren’t in competition with one another now are this is called INTERTYPE COMPETITION this makes it harder to be a retailer.
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Types of Non-store Retailing
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this type of retailing occurs outside of the retail outlets they include: automatic venting direct mail and catalogs televised home shopping telemarketing direct selling
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Automatic Vending
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make it possible to serve customers when stores can’t. machine maintenance, operating costs, location lease can add to the cost of products so products sold though V machines (v commerce) are often higher
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Direct Mail and Catalog Selling
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“Store that comes to the door” 2 reasons Direct Mail and Catalog selling is attractive: (1) can eliminate cost of store clerks (2) DM and catalog selling improve marketing efficiency through SEGMENTATION and TARGETING they create customer value by providing a fast and convenient means of making a purchase
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Televised Home Shopping
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3 largest home shopping networks – QVC (quality, value, convenience) – HSN (home shopping network) -Shop NBC
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Online Retailing
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allows consumers to search for an evaluate and order products online
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Telemarketing
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using the phone to interact with and sell directly to the consumer compared with direct mail and catalog selling telemarketing is viewed as a more efficient means of targeting customers
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Direct Selling
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“door to door selling” this is the selling of products and service to consumers through interactions and demonstrations in their homes.
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2 Trends Causing Direct Selling GROWTH
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many direct selling non store retailers are expanding outside the United States More companies are using direct selling to reach consumers who prefer one one on one interaction
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Where will Direct Selling continue to grow?
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DS is likely to grown in markets that lack effective and efficient distribution channels. And where lack of knowledge about products and brands increases the need for face to face interaction.
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Retailing Strategy
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Factors such as competition and the market influence the type of retail strategy a firm might choose. Retail strategy is related to store positioning and the retailing mix.
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Positioning a Retail Store Overview
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Retail Positioning Matrix- this is a matrix developed by the MAC group that positions retailers based on (1) the breadth of their product lines (2) value added
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Retail Positioning Matrix 2 Dimensions
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(1) breadth of a product line- range of products sole (2) value added- includes elements such as location, product reliability, or prestige POSITIONING STRATEGIES FOR RETAILERS ARE BASED ON BREADTH OF PRODUCT LINE AND VALUE ADDED
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Retailing Mix & Components of the Retail Mix
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to develop a retiling strategy managers work with the retiling mix which includes activities related to managing the store and the merchandise in the store. The retail mix is similar to the marketing mix and includes: Retail pricing store location retail communication merchandise
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Retail Price
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in setting the price for merchandise the retailers must decode on the : markup markdown timing for markdowns
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Markup
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refers to how much should be added to the cost the retailer paid for a product to reach the final selling price
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Original markup
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retailers decide on the original markup the original markup is the difference between the retailer cost to purchase a product and the selling price
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Maintained markup
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difference between the final selling price and the retailer cost this is also called gross margin
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Markdowns (discounts)
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this is discounting a product and occurs when the product does not sell at the original price discounts can also be used to increase demand of complementary products ex discount price of cake mix to increase sale of frosting
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Timing of Markdowns
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most retailers discount right when sales start to drop to free up space and other stores delay markdowns to discourage bargain hunters and maintain brand image quality
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Every Day Low Prices (EDLP)
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tool to eliminate markdowns
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Every Day Fair Prices
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is used by retailers that might not have the lowest prices but they try to create value for customers through service and the total buying experience
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Benchmark or Singpost
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consumers often use prices of benchmark items such as a can of coke to form to form an overall impression of the stores prices
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Shrinkage
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a special issue of retailers trying to keep low prices is shrinkage or breakage or theft and fraud by consumers and employees
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Off Price Retailing
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involves selling brand name merchandise at lower than regular prices. Off price merchandise is bought by the retailer from manufacturers with excess inventory at prices below wholesale price selection at off price retailers in unpredictable
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Off Price Retailing Vs Discount store
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discount retailers buy the products at full wholesale but takes less of a markup than traditional retailers where off price the products are purchase below wholesale
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Type of Off Price Retailers
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Warehouse Club Outlet Store Single-price or extreme value retailers
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Warehouse Club
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lack elaborate displays, customer service or home delivery. They require annual fee ex costco sams club
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Outlet Store
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offer products 25-75% off suggested retail price manufacturers use outlets to clear merchandise while maintaining the image of their quality at full price stores
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Single price or Extreme value retailers
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ex dollar general. These are stores that attract customers who want corner store value rather than large super center.
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Store Location
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2nd aspect of the retail mix involves choosing a location and deciding how many stores to operate
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5 Store Location Settings
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Central Business District Regional Center Community Shopping Center Strip Mall Power Center
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Central Business District
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oldest retail setting. consumers often find this to be less convenient because of lack of parking higher crime rates and exposure to weather
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Regional Shopping Center
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consist of 50-150 stores attract consumers that live within 5 to 10 miles. often contain 2 anchor stores which are well known national stores.
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Community Shopping Center
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more limited approach to retail location usually has 1 primary store and 20-40 smaller outlets
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Strip Mall
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used to serve people within 5-10 minute drive strip malls are a cluster of stores thats composition is usually unplanned have things like grocery stores, pharmacy, laundry, hardware
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Power Centers
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variation of a strip mall power centers combine the convenience of location provided by a strip mall with the power of national stores these large strip malls usually have 2 to 5 anchor stores and contain a supermarket which bring shoppers to the center on a weekly basis.
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Retail Communication
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3rd aspect of retailing mix A retailers communication activities can play an important role in positioning a store and creating its image. Image – “the way in which the store is define in the shoppers mind” partly by its functional qualities and partially by its psychological attributes.
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Functional aspects of retail image
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the functional aspects as defined by Pierre Martnineau ar the mix elements such as price range, store layout, and breadth and depth of merchandise lines
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Psychological attributes of retail image
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these are intangible attributes such as a sense of belonging, excitement, style or warmth.
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Retailer Image
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Image has been found to include impressions of the corporation that operates the store, the category or type of store, the product categories in the store, the brands in each category, merchandise and service quality, and the marketing activities of the store
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Shopper Marketing
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the use of displays, coupons, product samples, and other brand communications to influence shopping behavior in a store. in creating the right image the store is tying to attract target audience and fortify beliefs about the store its products, shopping experience
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Shopping experience and perceptions
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While store image perceptions can exist independently of shopping experience, consumers shopping experience influence the perception of the store.
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Merchandise
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the final element of retail mix managing the breadth and depth of the product lines requires retail buyers who are familiar with the needs of the target market and the alternative products available
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Category Management
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a popular approach to managing assortment of merchandise category management assigns a manager the responsibility of selecting a products that consumers in a market segment might view as substitutes for one another with the objective of maximizing sales and profits
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2 popular measures of effectiveness or store retail
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sales per square foot sames store sales growth
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Changing Nature or Retailing
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2 concepts can explain the continual change: – wheel of retailing – retail life cycle
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The Wheel of Retailing
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describes how new forms of retail outlets enter the market. they usually enter as low status, low margin stores, gradually they add embellishments to increase attractiveness for customers with these additions prices rise and status rise as time passes prices continue to rise then they face a new form of retail outlet.
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The Retail Life Cycle Concept
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the process of growth and decline that products experience is also experienced by retailers:
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Stages of Retail Life Cycle
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Early Growth Accelerated Development Maturity Stage Decline
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2 Future Changes in Retailing
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(1) Multichannel Retailing (2) Increased focus on customer experience management
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Multi Channel retailing
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utilize and integrate a combination of traditional store formats and non store formats such as catalogs, television, home shopping, and online retailing. Omni channel retailing multi channel retailers benefit from the synergy of sharing info among the different channel operations.
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Merchant Wholesalers
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are independently owned firms that take the title of merchandise they handle.
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Merchant Wholesaler Classification
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Full service Limited service
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2 Types of Full Service Merchant Wholesalers
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General Merchandise Wholesalers (full line) Specialty Merchandise (limited line)
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General Merchandise Wholesalers (full line)
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General Merchandise Wholesalers (full line) they carry a large assortment of merchandise and perform all channel functions. Typical in hardware, drug, and clothing industries they do not maintain a lot of depth within specific product lines
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Specialty Merchandise Wholesalers (limited line)
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offer a narrow range of products but have an extensive assortment within the product lines carried they perform all channel functions and are found in health foods, automotive parts and seafood industries
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4 Types of Limited Service Wholesalers
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Rack Jobbers Cash and Carry Wholesalers Drop Shippers or Desk Jobbers Truck Jobbers
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Rack jobbers
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furnish racks or shelves that display merchandise in retail stores they perform all channel functions and sell on consignment to retailers they take title of products displayed common for products such as health and beauty, house are, toys
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Cash and Carry wholesalers
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take title of merchandise but only sell to buyers who call them and pay cash for merchandise and furnish their own transportation for merchandise they carry a limited product assortment and do no make deliveries, extend credit or supply market information common in office supplies, grocers and electric products and hardware
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drop shippers or desk jobbers
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wholesalers that the merchandise they sell but do not physically handle, display or delve it. they simply solicit orders from retailers and other wholesalers and have merchandise shipped used for products such as coal, limber, chemicals which are sold in large quantities
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Truck jobbers
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small wholesaler that have a small warehouse where they stock their trucks for distribution to retailers they usually handle an assortment of highly perusable products and fast moving items.
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Agents and Brokers
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they do not take title of merchandise and perform fewer channel functions they make profit from commission and from the sale of merchandise they own
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Agents 2 major types
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manufacturer agents selling agents
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manufacturer agents
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they work for several producers and carry non competitive complementary merchandise in exclusive territory. they act as the arm of a manufacturer and are responsible for the transactional channel functions
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selling agents and functions
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represent a single producer and are responsible for the entire marketing function of that producer. they design promotional plans, set prices, determine distribution policies and make recommendations on product strategy.
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Brokers
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they are independent firms or individuals whose principle function is to buyers and sellers together unlike agents they usually don’t have a continued relationship with manufacturers
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Food Broker
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differ from traditional brokers because they work on a permanent basis with producers and receive a commission they occur in the grocery industry.
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Manufacturers Branches and Office
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these are owned by the manufacturer unlike wholesalers agents and brokers
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When do Producers assume wholesaling functions
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when there are no intermediaries, customers are few in number, geographically concentrated or when orders are large and require special attention.
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Price
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Is the money or other considerations (including other products and services) exchanged for ownership or use of a product or service
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Barter
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The practice of exchanging products and services for other products and services rather than for money
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Price Equation
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Final Price = list price – [( incentives) +(allowances)] +extra fees
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Price Transparency
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A consumers near instantaneous access to competitors prices for the same products and services.
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What are the effects of Price Transparency
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It has reduced barriers to entry helped launch online startups
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Value
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the ratio of perceived benefits to price Value= Perceived Benefits/Price
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Value Pricing
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the practice of simultaneously increasing product and service benefit while maintaining or decreasing price.
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Reference Value
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emerges when a consumer compares the cost and benefits of substitute items.
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Profit Equation
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Profit = Total Revenue – Total Cost
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6 Steps to Setting Price
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(1) Identify Pricing Objectives and Constraints (2) Estimate Demand and Revenue (3) Determine Cost, Volume and Profit relationships (4) Select and an appropriate price level (5) set list or quoted price (6) make special adjustments to list or quoted price
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Pricing Objectives
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involve specifying the role of price in an organizations marketing and strategic plans. pricing objectives reflect corporate goals
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6 Pricing Objectives
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Profit Sales Market Share Unit Volume Survival Social Responsibly
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Profit as a Pricing Objective
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3 Profit Objectives (1) Managing for long run profits (2) Maximizing current profit (3) Target ROIm
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Managing for long run profits
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– here companies give up immediate profit by developing quality products to penetrate the competitive market over the long term – Products under this objective are priced relatively low compared to their cost to develop but the firm expects to make greater profits later because of high market share.
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Maximizing Current Profit
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Is a common approach for many companies because targets can be set and performance can be measured quickly
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target ROI
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occurs when a company sets a profit goal of x% return on investment and is usually set by the board of directors
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Sales
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increasing sales revenue is an objective that can lead to increases in market share and profit. an advantage is objectives in sales rev are easily translated into targets by managers
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Market Share
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the ratio of firms revenue or unit sales to those in the industry (including the company) companies often strive to gain market share when the industry sales are relatively flat or declining
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Unit Volume
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The quantity produced or sold can be counteractive because until volume objective could be achieved as a result of slashing prices
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Survival
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Some companies just want to survive
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Social Responsibility
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a firm may forgo higher profit on sales and follow a pricing objective that recognizes obligations to customers and society in genera.
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Pricing Constraints
answer

these are factors that limit the range of prices a firm may set
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8 Pricing Constraints
answer

(1) Demand for the product class, product and brand (2) Newness of the product: the stage in the PLC (3) Cost of Producing and Marketing the Product (4) Cost of changing prices and time period they apply (5) Single Product vs Product Line (6)Type of Competitive market (7)competitors prices and consumers awareness of them (8)Legal and ethical considerations
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Types of Competition
answer

the sellers price is constrained by the type of market in which it competes – Pure competition – Monopolistic competition – Oligopoly – Pure monopoly
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Type of competition and price
answer

Pure competition- price is set by marketplace, advertising only informs the buyer that the seller has the product. Monopolistic- many brands, they compete on price and non price competition Oligopoly- few competitors, try to avoid price competition because it can lead to disastrous price wars where everyone loses. avoid advertising on head to head price competition Monopoly- sole seller sets price look pg 333
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Consumer Driven Pricing Actions
answer

with customers able to compare prices on the internet they can make more informed and efficient buying decisions.
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Seller/Retailer Driven Pricing Actions
answer

Dynamic pricing where a seller changes the price in response to existing inventory and the prices of competitors.
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Demand Curve
answer

is a graph that relates the quantity sold and price showing the maximum number of units that will be sold at a given price
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3 Factors that Influence Demand
answer

Consumer Taste Price and availability of similar products Consumer income
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Demand Factors
answer

factors that determine consumers willingness and ability to pay for products and services.
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Movement along Demand Curve
answer

this assumes that consumer tastes, price and availability of similar products and consumer income remain unchanged
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Sales Revenue
answer

Money received from selling a product
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Total Revenue
answer

the total money received from the sale of a product TR= P X Q
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Average Revenue
answer

is the average amount of money received from selling one unit of a product, or simply the price of that unit. AR= TR/Q
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Marginal Revenue
answer

change in total revenue that results from producing and marketing one additional unit of a product MR= change in TR / 1 unit increase in Q = slope of TR curve.
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Price Elasticity
answer

the % change in quantity demanded relative to the % change in price Price elasticity = % change in Q demanded/ % change in price
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Elastic Demand
answer

exists when a 1% decrease in price produces more than a 1% increase in quantity demanded slight change in price leads to big increase in demand when something is price elastic marketers might cut price to increase consumer demand, units sold, and total revenue
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Inelastic Demand
answer

exists when a 1% decrease in price results in a less than 1% increase in quantity demanded actually reducing total revenue.
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5 Cost Concepts
answer

Total cost fixed cost variable cost unit variable cost marginal cost
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Total cost
answer

is the total expense incurred by a firm in producing and marketing a product. TC= FC + VC
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Fixed Costs
answer

is the sum of the expenses of the firm that are stable and don’t change with a change in quantity produced or sold. ex insurance, salaries, rent
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Variable Costs
answer

the sum of the expenses of the firm that vary directly with quantity produced. so if quantity produced doubles so does variable costs
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Unit variable costs
answer

the variable cost expressed on a per unit basis UVC= VC/ Q
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Marginal Cost
answer

is the change in total cost that results from producing and marketing 1 additional unit MC= change in TC/ 1 increase in Q this is the slope of the total cost curve
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Marginal Analysis
answer

the continuing trade off between incremental cost and incremental revenue people will continue to do something as long as incremental revenue > incremental cost as long as marginal revenue > marginal cost continue marginal analysis message= operate up to the quantity and price where marginal rev = marginal cost
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Break even analysis
answer

is a technique that analyzes the relationship between total revenue and total cost to determine profitability at various levels of output
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Break Even Point
answer

is the quantity where total revenue and total cost are = anything beyond the BEP contributes to profit
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Break Even Point Formula
answer

BEP quantity = Fixed costs / Unit Price – Unit variable Cost BEP quantity = FC / P – UVC
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Break Even Chart
answer

a graphic representation of the break even analysis.
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5 Pricing Models
answer

Cost Based Pricing Profit Based Pricing Demand Based Pricing Competition Base Pricing Value Based Pricing
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Demand Based Pricing
answer

Skimming Penetration Prestige Bundle Pricing Demand- Minus Chain Markup
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Skimming Pricing
answer

a demand strategy to pricing where you set the highest initial price that customers who really desire the product will pay
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Penetration Pricing
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setting a low initial price on a new product to appeal immediately to the mass markets
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Prestige Pricing
answer

involves setting a high price so that the quality of status conscious consumers will be attracted to the product to buy it.
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Prine Lining
answer

when a firm sells a line or products rather than a single product they will often price them at a number of different price points
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Odd Even Pricing
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involves setting prices a few dollars bellow or cents bellow an even number so 5.99 instead of 6
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Target Pricing
answer

a practice where manufacturers will estimate the price they believe the ultimate consumer is willing to spend and then they work backwards through the markups taken by retailers and wholesalers to determine what price they can charge the wholesaler of the product. manufacturers deliberately adjusting the composition and features of a product to achieve the target price to consumers
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Bundle Pricing
answer

the marketing of 2 or more products in a singe price package
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Yield Management
answer

the charging of different prices to maximize revenue for a set amount of capacity at a given time. Yield management is a complex approach that continually matches demand and supply to customize the price for a service
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Cost Based Pricing Class Calculations
answer

(1) Break-even Analysis – break-even price = total fc / total vc (2) Markup Pricing – P= COGS / (100-%markup)
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Cost-Oriented Pricing (Book)
answer

Standard markup pricing cost plus pricing experience cure pricing
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Standard Markup Pricing
answer

entails adding a fixed % to the cost of all items in a specific class
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Cost- Plus Pricing
answer

involves summing the total unit cost of providing the product or service and adding a specific amount to the cost to arrive at a price. 2 Types: – cost plus % of cost pricing – a fixed % is added to total unit cost. – cost plus fixed fee pricing – a supplier is reimbursed for all costs regardless of what they turn out to be, but is only allowed a fixed fee as profit that is independent on final costs of the project.
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Experience Curve Pricing
answer

is based on the learning effect which holds that the unit cost of many products and services declines by 10% to 30% each time a firms experience at selling them doubles.
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Profit Based Pricing
answer

Target Profit Pricing – P = TFC + TVC + PROFIT / # UNITS Target Return on Investment – P = TFC + TVC + ( INVESTMENT X ROI) / STD # UNITS
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Target Profit Pricing
answer

an approach where firm sets an annual target of a specific dollar volume of profit
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Target Return on Sales Pricing
answer

used to set a price to give the firm a specific % of sales volume
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Customary Pricing
answer

a price that is set by customs
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Above at or below market pricing
answer

based on competition in the market they get a feel for competitors prices and set their firms prices, at below or above competitors
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Loss Leader Pricing
answer

for a special promotion retail stores deliberately sell products below its customary price to attract attention. The purpose of loss leader pricing is not to increase sales but to attract customers in hopes they will buy other products as well particularly items with large markups.
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Price Policy 2 Types
answer

Fixed price policy Dynamic Price Policy
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Fixed price policy
answer

this is also called a one price policy, here one price is set for all buyers
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Dynamic Price Policy
answer

also called flexible price policy, involves setting different prices for products and services in real tim response to supply and demand conditions. Yield management pricing is a form of a dynamic price policy
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Clickstream
answer

a way online retailers can use dynamic pricing here the way a person navigates through the website is analyzed and whether they seem price sensitive or not dictates what price they receive.
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Company, Customer, Competitive effects on Pricing
answer

when determining the final price the manager must assess the company, customer and competitive effects of pricing
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Company Effects on Pricing
answer

product line pricing which is the setting of prices for all items in a product line, when pricing the manager seeks to cover the overall costs and want to generate a profit not just for a single product but for the entire line.
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What does Product Line Pricing Involve
answer

(1) determine the lowest priced product and price (2) determine the highest priced product and price (3) determine price differentials for all other products in the line The highest and lowest priced items play an important role The highest is positioned as a premium the lowest is a traffic builder to get attention price differential should make sense to a customer and reflect perceived differences in perceived value.
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Customer Effects on Pricing
answer

in setting a price marketers pay close attention to factors that satisfy the perceptions or expectations of ultimate consumer such as customary process for a variety of consumer products
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Competitive Effects on Pricing
answer

when a manager sets a price it is visible to all competitors which may retaliate. price war- is a successive price cutting by competitors to maintain their unit sales or market share.
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Balance Incremental Cost and Revenue
answer

when a price is changed or new selling programs are considered the firm needs to pay attention to incremental costs and revenues this is called marginal analysis.
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Adjustments to Sales Price
answer

Discounts Allowances Geographical Adjustments
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Discounts
answer

are reductions from the list price that a seller gives a buyer as a reward for some activity of the buyer that is favorable to the seller
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Types of Discounts
answer

Quantity (Cumulative and noncumulative) Seasonal Trade (functional) Cash
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Allowances
answer

like discounts allowances are reductions from the list or quoted price to buyers fro performing some activity
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Types of Allowances
answer

Trade in allowances Promotional allowances
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Geographical Adjustments
answer

are adjustments made to the list or quoted price made by the manufacturer to reflect the cost of transportation of the products from seller to buyer
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Types of Geographical Adjustments
answer

FOB Origin Pricing Uniform Delivered Pricing
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FOB Origin Pricing
answer

“Free on board” means that the seller pays the loading cost , once the goods are on the means of transportation the title of ownership passes to the buyer who in turn is responsible for the transportation costs. * buyers farthest away from the manufacturer face the biggest disadvantage of paying higher transportation costs
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Uniform Delivered Pricing
answer

here the sellers price includes the cost of transportation
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4 types of uniformed delivered pricing
answer

Single zone pricing Multiple zone pricing FOB with freight allowed pricing basing point pricing
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Single Zone pricing
answer

all buyers pay same delivered price for the product regardless of their distance from the seller.
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Multiple Zone pricing
answer

a firm divides its selling territory into geographic areas or zones. the delivered price is the same for everyone within that zone but vary amongst zones.
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FOB with freight allowed
answer

also called freight absorption pricing the price is quoted by the seller as “FOB plant-freight allowed” the buyer is allowed to deduct freight expenses from the list price of goods so the seller agrees to pay or absurd the transportation cost
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Basing-point pricing
answer

involves selecting one or more geographic locations (basing points) from which the list price for products plus freight expenses are charged to the buyer commonly used with undifferentiated products and where freight expense is exp ex steel cement lumber industries.
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Pricing Practices that Receive most legal scrutiny
answer

price fixing price discrimination deceptive pricing geographical pricing predatory pricing
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Price Fixing
answer

per se illegal under Sherman horizontal price fixing- 2 or more companies explicitly fix prices Vertical Price fixing- agreements that don’t allow retailers to sell products below a certain price this is called resale price maintenance and is illegal under the consumer goods pricing act
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Price Discrimination
answer

practice of charging different prices to different buyers for goods of like grade and quantity. illegal under robinson patman act
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When is Price Discrimination Ok
answer

when there is a justification defense which is when the price differences charged to different customers do not exceed the differences in cost of manufacturer, sale of delivery resulting from different methods or quantities in which such goods are sold and delivered When price differences result form changing market when they are made in good faith to meet competitors prices and are not intended to injure competition this is called meet the competition defense
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Deceptive Pricing
answer

prices that mislead consumer illegal under Federal Trade Commission
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5 Common Deceptive Pricing Practices
answer

bait and switch bargains conditional on other purchases comparable value comparisons comparisons with suggested prices former price comparisons
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Geographical Pricing
answer

basing point pricing can be viewed as illegal if there is a clear cut evidence of a conspiracy to set prices Robinson patman and federal trade commison make this illegal
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Predatory Pricing
answer

is illegal under sherman and federal trade commission this is illegal if company comes in sets very low prices to drive out competition then raise prices once there is no competition.
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Demand Minus Pricing
answer

WP = RP X 100 – %MARKUP/100
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Chain Markup Pricing
answer

MP = RP X (100-%RMU)/100 X (100-% DMU)/100 MP = manufacturer price RP= retail price % RMU = retail markup % DMU = distributor markup
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Competition Based Price
answer

Price Leader / Follower Competitive Bid
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Value Based Pricing
answer

Understand Use Analyze Benefits Analyze costs Cost/benefit Tradeoff
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3 Kinds of Organizations
answer

For Profit nonprofit government agency
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Profit
answer

the money left over after a for profit subtracts out its total expenses from its total revenue
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Industry
answer

is developed as a result of organizations that develop similar offerings ex the automobile industry.
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Strategy
answer

is an organizations long term course of action designed to deliver a unique customer experience while achieving its goals. all organizations set a strategic direction and marketing helps to both set the direction and move the organization there
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3 Levels of Strategy in a Organization
answer

Corporate Level Strategic Business Unit Level Functional Level
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Corporate Level Strategy
answer

where top management directs overall strategy for the entire organization
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Strategic Business Unit Defined
answer

What is an sub? a subsidiary, or division of an organization that markets a set of related offerings to a clearly defined target market Strategic Business Unit Level- managers
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Strategic Business Unit Level Strategy
answer

Strategic Business Unit Level- managers set a more specific strategic direction for their business to exploit value creating opportunities
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Functional Level Strategy
answer

where groups of specialists actually create value fro the organization. The term department usually refers to these specialized functions such as marketing or finance departments
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Key Role in Marketing Departments
answer

Is to look outward by listening to customers, developing offerings, implementing marketing program actions and then evaluating whether these actions are achieving the organizations goals. Cross functional teams- are used to evaluate the new offerings or altered offerings of a company.
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Organizational Foundation “Why do we Exist” What are the components of Org Foundation
answer

this is the organizations philosophical reason fore being (1) Core Values (2) Mission (vision) (3) Organizational Culture
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Core Values
answer

these are the fundamental, passionate, and enduring principles that guide conduct over time often out in place by founders and top managers
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Mission
answer

Once the organization set core values a mission can be formed. This is a statement of the organizations function in society that often identifies its customers, markets, products, and technologies Usually interchanged with vision or mission statement. The mission should be clear, concise, meaningful, inspirational and longterm.
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Organizational Culture
answer

the set of values, ideas and attitudes and norms of behavior that is learned and shared among the members of an organization
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Organizational Direction ” What will we do?”
answer

The direction is set in terms of the business and the organizations specific goals
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Business : Organizational Direction
answer

describes a clear, broad, underlying industry or market sector of the organizations offerings. Business model- the strategies and organization develops to provide value to the customers they serve
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Goals : Organizational Direction
answer

Goals or objectives are the statements of an accomplishment of a task to be achieved often by a specific time. Different Types of Goals profit sales market share quality customer satisfaction employee welfare social responsibility
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Organizational Strategies: How will we do it
answer

The strategies are concerned with the how. 2 variations of strategies: variation by level – moving down the levels of the organization the strategies get increasingly detailed and specific Variation by Product- the strategy for marketing tangible products vs intangible determine the marketing strategy
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Marketing Plan
answer

is a road map of marketing actions of an organization for a specific future period of time the marketing planing phase in the strategic marketing process usually results in marketing plan that directs the marketing actions of an organization
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Marketing Dashboards
answer

is a visual computer display of the essential information related to achieving a marketing objective
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Marketing Metrics
answer

is a measure of the quantitative value or trend of a marketing action or result. choosing a marketing metrics to display is critical for a business manager who can be overwhelmed by irrelevant data
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Data Visualization
answer

presents information about an organizations marketing metrics so managers can quickly spot deviations form the plan during the evaluation phase and take corrective action
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2 Imp Q’s when Setting Strategic Direction
answer

where are we now where do we want to go
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Where are we now? 2 things to identify
answer

Customers Competitors
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Growth Strategy: Where Do we want to go? 2 strategies
answer

Business Portfolio Analysis Diversification Analysis
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Business Portfolio Analysis
answer

a way for managers to quantify performance measures an growth targets to analyze their firms strategic business units as through they were separate investments the purpose of business portfolio analysis is to determine which SBUs are generating cash and which requires cash to fund the organizations growth opportunities
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Groth Share Matrix
answer

the tool that the company uses in business portfolio management to identify where each SBU falls. it has market growth rate on the Y axis Relative Unit Market share on X
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Relative Market Share
answer

the sales of the SBU / Sales of leader
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Growth Share Matrix Classifications
answer

Cash Cow Stars Question marks Dogs
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Cash Cows
answer

are SBUS that generate a lot of money they have a dominant market share but are in slow growth markets
question

Stars
answer

SBUs high market share in high growth markets have rapid growth when growth slows they are likely to become cash cows
question

Question Marks
answer

SBUS with low market share in high growth markets they require lots of cash to maintain they maker share
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Dogs
answer

SBUS that have low share of slow growth markets
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Diversification Analysis
answer

is a technique that helps a firm search for new growth opportunities from among current and new markets as well as current and new products.
question

Strategies of Diversification Analysis
answer

Market Penetration Market Development Product Development Diversification
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Market Penetration
answer

marketing strategy used to increase sales of current products in current markets there is no change in either the basic product line of the markets served increased sales are generated through either selling more or selling same amount at higher $
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Market Development
answer

marketing strategy to sell current products to new markets
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Product Development
answer

marketing strategy of selling new products to current markets
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Diversification
answer

marketing strategy of developing new products and selling them in new markets
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The Strategic Marketing Process
answer

where an organization allocates its marketing mix resources to reach its target market. What ? does it answer? how do we allocate our resources to get where we want to go? how do we convert plans to actions how do our results compare to our plan
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The Planning Phase of Strategic Marketing Process 3 Phases
answer

Situation Analysis (SWOT) Market-product focus and goal setting marketing program
question

Step 1: Situation Analysis
answer

SWOT (strengths, weaknesses, opportunities, threats) this takes stock of where the company is now and where it wants to be in terms of the organizations marketing plan steps Identify trends in the environment analyze organizations competitiors assess the organization research the organizations present and prospective customers.
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Critical Strategy
answer

The ultimate goal of SWOT analysis is to identify the critical strategy-related factors that impact the firm and then build on vital strengths, correct glaring weaknesses, exploit significant opportunities, avoid disaster laden threats.
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SWOT Analysis 4 Basic Actions
answer

Build on strengths correct weakness exploit an opportunity avoid disaster laden threats
question

Step 2 of the planning phase of the strategic marketing process: Market-Product Focus and Goal Setting
answer

determining which products will be directed towards what customers in the planning phase is essential for developing an effective marketing program.
question

Market Segmentation
answer

used in stage 2 of the planning process market segmentation involves aggregating prospective buyers into groups or segments that (1) have similar needs (2) will respond similar to a marketing action. this enables an organization to focus specific marketing programs on their target market * THIS PHASE OF THE STRATEGIC MARKETING PROCESS DECIDES WHICH PRODUCTS WILL BE DIRECTED TOWARD WHICH CUSTOMERS
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Step 2 in Strategic Marketing Process planning stage: Develop the marketing program
answer

this stage builds on stage 2 which identified the who of the marketing plan stage 3 in the planning process focuses on the how Developing the Marketing Plan involves developing the marketing mix (4 ps) and its budget Product Strategy Price Strategy Place Promotion
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Implementation of Strategic Marketing Process
answer

implementation involves carrying out the marketing plan that is developed in step 3 of the planning phase.
question

4 Components of the Implementation Phase
answer

Obtaining Resources Designing the Marketing Organization Defining Precise Tasks, Responsibilities and Deadlines Executing the Marketing Program
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Marketing strategy
answer

the means by which a marketing goal is to be achieved usually characterized by a specific target market and a marketing program to reach it.
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Marketing Tactics
answer

are the detailed day to day operational marketing actions for each element of the marketing mix that contribute to the overall success of marketing strategies
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The Evaluation Stage of the Strategic Marketing Process
answer

seeks to keep the marketing program moving in the right direction
question

Steps to Evaluating the Success of a Marketing Program
answer

Compare results with plans to identify deviations acting on deviations – exploiting positive deviations – correcting negative deviations
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Competitive Advantage
answer

a unique strength relative to competitors that provide superior returns, often based on time, quality, cost or innovation.
question

Exploiting a Competitive Advantage
answer

(1) find and use what works for their organization or industry (2) allocating resources effectively
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4 Basic Business and Management Practices that Improve Business Performance
answer

Strategy Execution Culture Structure Firms that excelled in these 4 areas are likely to achieve a superior business performance
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Sales Response Function
answer

relates the expenses of the marketing effort to the marketing results obtained.
question

Allocating Resources Effectively using a Sales Response Strategy
answer

Maximizing Incremental Revenue Minus Incremental cost-put incremental resources where incremental returns are greatest
question

Allocating Marketing Resources in Practice Share Points
answer

share of point- or $ point of market share as the common basis of comparison to allocate marketing resources effectively for different product lines within the same firm. this analysis enables managers to make resource allocation trade offs between different SBUs in a company.
question

To make resource allocation decisions what must managers estimate?
answer

(1) the market share for the product (2) the revenues associated with each point of market share (3) the contribution to overhead and profit of each share point (4) possible cannibalization effects on other products in the line
question

Resource Allocation and Strategic Marketing Process
answer

company resources are allocated effectively in the strategic marketing process by converting marketing information into marketing actions
question

3 Stages of the Strategic Marketing Process
answer

Planning – define goals and marketing mix needed to achieve them Implementation – action memos that tell who is to do what by when Evaluation – corrective action memos, compare results with goals usually by looking at the marketing metrics or dashboards.
question

The Use of Marketing Metics in Marketing Planning
answer

in marketing plans the “roads” chosen are the quantitative goal plus the quantitative metric used to measure whether the goal is to be achieved
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2 Types of Metrics used in Planning Phase of Marketing plan
answer

output metrics- measure results Input metrics- measure efforts going into developing new products
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Long Range Marketing Plans
answer

usually from 2 to 5 yrs in future these are usually directed at senior level executives and board of directs
question

Annual Marketing Plans
answer

usually developed by a marketing manager or product manager these plans detail marketing goal and strategies for a product, product line, or entire firm for a year.
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2 Marketing Planning Frameworks
answer

Porters generic business strategy Synergy Analysis
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Porters Generic Business Strategies
answer

involve a combination of 1) competitive scope or the breadth of the target markets 2) a stress on lower cost vs product differentiation
question

Generic Business Strategy
answer

is a strategy that can be adopted by any firm regardless of the product or industry involved to achieve a competitive advantage.
question

Porters 4 Generic Strategies
answer

Cost leadership strategy differentiation strategy cost focus strategy differentiation focus strategy
question

Cost Leadership Strategy
answer

focuses on reducing expenses and in turn lowers product prices while targeting a broad array of market segments can be done by securing less expensive raw materials, or investing in new production equipment to reduce unit cost and improve quality.
question

Differentiation Strategy
answer

requires products to have significant points of difference in product offerings, brand image, higher quality, advanced technology or superior service to charge a higher price while targeting a broad array of market segments. This strategy allows firms to charge a price premium
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Customer Focus Strategy
answer

involves controlling expenses and in turn lowering product prices targeted at a narrow range of market segments
question

Differentiation Focus Strategy
answer

requires products to have significant points of difference in order to target one or only a few market segments
question

Synergy Analysis
answer

seeks market product opportunities by finding an optimum balance between marketing efficiencies vs r&d manufacturing efficiencies
question

2 Synergies critical to developing corporate and marketing strategies
answer

Marketing Synergy R & D manufacturing synergy
question

Market Product Concentration Synergy Analysis
answer

firm benefits from focus on a single product line or segment loses opportunities for significant synergies in both marketing and R&D
question

Market Specialization Synergy Analysis
answer

firm gains marketing synergy through providing a complete product line for the city market segment but R&D might have trouble pro ducting the variety
question

Product Specialization Synergy Analysis
answer

firm gins R&D through specializing in one product but gaining market distribution is tough
question

Selective Specialization Synergy Analysis
answer

firm doesn’t gain either marketing or R&D because of uniqueness
question

Full Coverage Synergy Analysis
answer

receives maximum potential synergies in both marketing an r&d
question

Guidelines for an Effective Marketing Plan
answer

set measurable and achievable goals use a base of facts and valid assumptions use a simple but clear and specific plan have a complete and feasible plan make plans controllable and flexible find the right person to implement your plans work toward census building
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Problems in Marketing Planning and Strategy
answer

plans may be based on very poor assumptions about environmental forces planners and their plans may have lost sight of consumers needs too much time and effort may be spent on data collection and written place that are too complex to implement Line operating managers often feel no sense of ownership in implementing the plans
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Value based planning
answer

combines marketing planning ideas and financial planning techniques to assess how much a division or SBU contributes to the price of a companies stock , Value is created when financial return of a strategic activity exceeds the cost of the resources allocated to the activity
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Value Driven Strategy
answer

incorporate concerns for ethics integrity employee health and safety and environmental safeguards with more common corporate values such as growth, profitability, customer service, and faulty.
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Disruptive Innovations
answer

they create a new market by initially reaching new customers through displacing an existing market’s low end product.
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Implantation Phase of the Strategic Marketing Process
answer

this step involves moving many planning activities from planners to the line managers responsible for implementing the plan.
question

Improving Implementation of Marketing Programs
answer

Take action and avoid paralysis by analysis surface problems with open communication communicate goals and the means of achieving them have a responsible program champion willing to act reward success don’t punish failure Schedule precise tasks, responsibilities and deadlines
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Program Champion
answer

a person who is willing and able to “cut the red tape” and move a product forward
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Time Based Agenda
answer

a meeting agenda that shows the running time allocated to each agenda item
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action list item
answer

an aid to implementing a plan that consists of 4 columns: the task the person responsible for completing the task the date to finish the task what is to be delivered
question

Program Schedules
answer

related to action lists they show the relationships through the time of various program tasks. scheduling an action program involves 1) identifying the main tasks 2) determining the time require to complete each task 3) arranging the activities to meet the deadline 4) assigning responsibility for completing each task the most widely used is the Gannt chart
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Organizing for Marketing
answer

marketing organization is needed to implement the firms marketing plan. marketing organizations understand: the evolving role of the CMO how line versus staff positioning and divisional groups interrelate to form a cohesive marketing organization the role of the product manager
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Line positions
answer

they have the authority to and responsibility to issue orders to people who report to them
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Staff Positions
answer

have authority and responsibility to advise people in line positions but cannot issue direct orders to them
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Divisional Groupings
answer

most companies use divisional groupings such as : to implement plans and achieve objectives product line functional geographic market based
question

Product Line Groupings
answer

a unit is responsible fro specific products
question

Functional Groupings
answer

such as manufacturing, marketing, and finance that represent the different departments or business activities within the firm
question

Geographical Groupings
answer

sales territories are subdivided according to geographical location
question

Market based groupings
answer

utilize specific customer segments
question

Matrix organization
answer

when maker based grouping is combined with product grouping
question

category manager
answer

they are responsible for an entire product lien
question

Role of Product Manager
answer

the head of a brand group or product group. these product and brand groups are the basic building blocks in the marketing department off most consumer and business product firms.
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Function of a product manager
answer

is to plan, implement, and evaluate the annual and long range plans for product for which they are responsible
question

Benefits and Dangers of product manager systems
answer

possitive: brand manager become a strong advocate for assigned products. negatice : though they have major responsibilities they also have little direct authority so they must purseaude people above them rather than issue direct orders.
question

Evaluation Phase of Strategic Marketing Process
answer

compare results with planned goals and identify deviations take corrective action
question

Marketing ROI
answer

the application of modern measurement technologies to undertand quantify and optimize market spending