INTRODUCTION TO MARKETING MANAGEMENT

1. Dr. Franck VIGNERON CSUN – College of Business & Economics Review for Quiz 3 Chapters 12, 13 14,15, part of 16 and 18 INTRODUCTION TO MARKETING MANAGEMENT 1

2. Chapter 13Distribution Channels and Logistics Management 2

3. What is a Distribution Channel? • A set of interdependent organizations (intermediaries) involved in the process of making a product or service available for use or consumption by the consumer or business user. 3

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

5. Number of Channel Levels W R R W M M M M R C C C C J Channel Level = Each Layer of Marketing Intermediaries that Perform Some Work in Bringing the Product and its Ownership Closer to the Final Buyer. Channel 1 Direct Channel Indirect Channel Channel 2 Channel 3 Channel 4 5

6. Channel Behavior & Conflict • For the channel to perform well, each channel member’s role must be specified and conflict must be managed. • When this doesn’t happen, conflict occurs: • Horizontal Conflict occurs among firms at the same level of the channel, i.e retailer to retailer. • Vertical Conflict occurs between different levels of the same channel, i.e. wholesaler to retailer. 6

7. Conventional Marketing Channel Vs. a Vertical Marketing System Retailer Wholesaler Manufacturer Consumer Consumer Conventional Marketing Channel Vertical Marketing System Manufacturer Retailer Wholesaler 7

8. Types of Vertical Marketing Systems Vertical Marketing Systems (VMS) Contractual VMS Corporate VMS Manufacturer- Sponsored Wholesaler Franchise System Manufacturer- Sponsored Retailer Franchise System Administered VMS Franchise Organizations Service-Firm- Sponsored Franchise System Retailer Cooperatives Wholesaler Sponsored Voluntary Chain 40% of Retail Sales Ford + dealers Coca-Cola Hertz/Avis, McDo/Bking, H/R Inn 8

9. Hybrid Marketing System • A Single Firm Sets Up Two or More Marketing Channels to Reach One or More Customer Segments. • Example: • Retailers, Catalogs, and Sales Force Innovations in Marketing Systems • Horizontal Marketing System • Two or More Companies at One Channel Level Join Together to Follow a New Marketing Opportunity. • Example: • Banks in Grocery Stores • Competitors helping each other • E.g., Outside US Néstlé selling General Mills cereals 9

10. Channel Design Decisions Selective Distribution Exclusive Distribution Intensive Distribution 2. Setting Channel Objectives & Constraints 3. Identifying Major Alternatives 1. Analyzing Consumer Service Needs 5. Designing International Distribution Channels 4. Evaluating the Major Alternatives Fast Moving C. G. Maytag Rolls-Royce Review Economic, Control, and Adaptive Criteria 10

11. Push and Pull Strategies Customers Wholesalers Wholesalers Customers Producer Producer Retailers Retailers Customers Wholesalers Producer Retailers Push Strategy Pull Strategy Push/Pull Strategies Advertising and Promotion 11 Distribution Strategies

12. Major Logistics Functions Warehousing Storage Distribution Automated Costs Minimize Costs of Attaining Logistics Objectives Inventory When to order How much to order Just-in-time Order Processing Received Processed Shipped Logistics Functions Transportation Rail, Truck, Water, Pipeline, Air, Intermodal 12

13. Marketing Logistics • Involves planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at profit. • INBOUND + OUTBOUND = Market Logistics • Supply Chain + value chain management 13

14. Truck Flexible in routing & time schedules, efficient for short-hauls of high value goods Pipeline Ship petroleum, natural gas, and chemicals from sources to markets Water Low cost for shipping bulky, low-value, non perishable goods, slowest form Rail Nation’s largest carrier, cost-effective for shipping bulk products, piggyback Transportation Modes Air High cost, ideal when speed is needed or distance markets have to be reached 14

15. Choosing Transportation Modes Checklist for Choosing Transportation Modes 1. Speed (door-to-door time) 2. Dependability (meet schedules) 3. Availability (area served) 4. Costs (per ton-distance) (ability to handle various products) 5. Flexibility 15

16. Dr. Franck VIGNERON CSUN – School of Business & Economics Chapter 14Distribution Strategies INTRODUCTION TO MARKETING MANAGEMENT 16

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

18. Product Assortment • Width and Depth of Assortment • Quality of Products • Product Differentiation Strategies Product Assortment and Services Decisions Services Mix Key Tool of Nonprice Competition for Setting One Store Apart From Another • Store’s Atmosphere • Physical Layout • “Feel” That Suits the Target Market • and Moves Customers to Buy 18

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

20. Breadth vs. Depth of Merchandise Lines Amana refrigerator Sony TV sets JVC videocassette recorders General Electric dishwashers Sharp microwave ovens Nike running shoes Florsheim dress shoes Top Sider boat shoes Adidas tennis shoes Classical Rock Jazz Country Western Suits Ties Jackets Overcoats Socks Shirts Breadth: Number of different product lines Shoes Appliances CDs Men’s Clothing Depth: Number of items within each product line 20

21. Wide Variety of Food, Laundry, & Household Products i.e. Kroger Changing Collection of Higher-Quality Goods at a Reduced Price i.e. T.J. Maxx Standard Merchandise at Lower Prices i.e. Wal-Mart Large Assortment of Routinely Purchased Food & Nonfood Products i.e. Toys R Us Limited Line of High-Turnover Convenience Goods i.e. 7-Eleven Narrow Product Line, Deep Assortment i.e. The Limited or Athlete’s Foot Wide Variety of Product Lines i.e. Clothing, Home Furnishings, Saks Fifth Avenue Limited Selection of Brand-Name Grocery Items, Appliances, Etc. i.e. Sam’s Club Classification of Retailing: Product Line Convenience Stores Department Stores Off-Price Retailers Warehouse Clubs Specialty Stores Discount Stores Superstores Supermarkets E.g., + What is an Hypermarket? Store Description 21

22. What is Wholesaling? Wholesaling • All the activities involved in selling goods and services to those buying for resale or business use. • Wholesaler - those firms engaged primarily in wholesaling activity. • Wholesalers buy mostly from producers and sell mostly to: • Retailers, • Industrial consumers, and • Other wholesalers. 22

23. Why are Wholesalers Used? Management Services & Advice Selling and Promoting Buying and Assortment Building Market Information Transportation Bulk Breaking Warehousing Risk Bearing Financing Wholesaler Functions Wholesalers are Often Better at Performing One or More of the Following Channel Functions: 23

24. Types of Wholesalers Merchant Wholesaler Independently Owned Business that Takes Title to the Merchandise it Handles. Manufacturers’ Sales Branches and Offices Wholesaling by Sellers or Buyers Themselves Rather Than Through Independent Wholesalers. Brokers/ Agents They Don’t Take Title to the Goods, and They Perform Only a Few Functions. 24

25. Trends in Wholesaling Consolidation within the Industry is Reducing # of Wholsalers Wholesalers Will Continue to Increase the Services Provided Distinction Between Large Retailers and Wholesalers Blurs Wholesalers Are Beginning to Go Global 25

26. Chapter 15 • Integrated Marketing Communication Strategy 26

27. The Promotional Mix 4P’s PR Direct MKG Advertising Personal Selling Sales Promotion Product Promotion Place (Distribution) Price Place 27 Advertising Strategies

28. Setting Advertising Objectives Comparison Advertising Compares One Brand to Another i.e. Avis vs. Hertz Reminder Advertising Keeps Consumers Thinking About a Product i.e. Coca-Cola Informative Advertising Inform Consumers or Build Primary Demand i.e CD Players Persuasive Advertising Build Selective Demand i.e Sony CD Players Advertising Objective Specific Communication Task Accomplished with a Specific Target Audience During a Specific Period of Time 28

29. Responds Appropriately? Miscomprehends? Sender (Source) Receiver (Consumer) Channel (Medium) Message Figure 9.3 Comprehensive Communication Model Commercial Non-Profit Individual Formal vs. Informal Verbal vs. Nonverbal 1-sided vs. 2-sided Factual vs. Emotional Selective Exposure Individuals Target Audience Intermediary Audience Unintended Audiences Mediated by: Involvement Mood Experience Personal Charac. Encodes Decodes Symbols Pictures Words Images Paid vs. Unpaid Print, Broadcast, Electronic Personal vs. Impersonal Yes No Yes Pretests to Ensure Message Will be Received Posttests to Ensure Message Was Received No Feedback 29

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

31. Message Structure Draw Conclusions Argument Type Argument Order Message Content Rational Appeals Emotional Appeals Moral Appeals Message Format Headline, Illustration, Copy, & Color Body Language Interest Action Attention Steps in Developing Effective Communication Desire Step 3. Designing a Message • AIDA model. • 1). Get attention 2). Hold interest • 3). Arouse desire 4). Obtain action 31

32. Rational appeal - a focus toward the consumer’s practical utility oriented needs Emotional appeal - a focus on psychological rather than utility needs Appeals Ego Oriented Humor Fear Sex Comparative (all appeals can be positive or negative and should be meaningful, distinctive, and believable to be effective) Appeal - the creative attempt to motivate consumers toward some form of activity, or to influence attitudes toward a product or service 32 + Morale Appeal:Social causes & Human Rights Advertising Strategies

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

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

35. Personal Communication Channels Nonpersonal Communication Channels Steps in Developing Effective Communication Step 4. Choosing Media 35

36. Issues in Credibility • Credibility of Informal Sources • E.g., Word-of-mouth • Credibility of Formal Sources • Differ. Between for profit vs nfp Org. • Credibility of Spokespersons and Endorsers • Importance of perceived competency and expertise • Message Credibility • Past experience with organization

37. SPONSORING VERSUS + FOR-PROFIT Org. VERSUS - ADVERTISING - NOT FOR PROFIT Org. + CREDIBILITY OF THE MEDIA CHANNELS CREDIBILITY OF THE SOURCES

38. FOR-PROFIT Org. NOT FOR PROFIT Org. SPONSORING + ++ VERSUS ADVERTISING -- - VERSUS CREDIBILITY OF THE MEDIA CHANNELS IN RELATION WITH THE SOURCES

39. Sales Effects Is the Ad Increasing Sales? Communication Effects Is the Ad Communicating Well? Advertising Program Evaluation Campaign Evaluation

40. Setting the Total Promotion Budget Objective-and-Task Based on Determining Objectives & Tasks, Then Estimating Costs Percentage of Sales Based on a Certain Percentage of Current or Forecasted Sales Competitive-Parity Based on the Competitor’s Promotion Budget Affordable Based on What the Company Can Afford One of the Hardest Marketing Decisions Facing a Company is How Much to Spend on Promotion. 40

41. Sales Promotion + PR + Advertising Dr. Franck Vigneron Chapter 16 41

42. What is Sales Promotion ? • Sales Promotion is a Mass Communication Technique That Offers Short-Term Incentives to Encourage Purchase or Sales of a Product or Service. • Offers Reasons to Buy Now. • Stimulate earlier or stronger market response. 42

43. Savings when purchasing specified products Reduced prices marked on the label or package Goods offered free or low cost as an incentive to buy a product Articles imprinted with an advertiser’s name given as gifts Advertising Specialties Major Consumer Sales Promotion Tools/1 Price Packs Premiums Coupons Sample Cash Refunds Trial amount of a product Refund of part of the purchase price 43

44. Major Consumer Sales Promotion Tools/2 Consumers submit their names for a drawing Cash or other rewards for the use of a certain product Displays and demonstrations that take place at the point of sale Presents consumers with something every time they buy Sweepstakes Patronage Rewards Point-of-Purchase Game Contests Consumers submit an entry to be judged 44

45. Persuade Retailers or Wholesalers to Carry a Brand Promote a Brand in Advertising Major Trade Sales Promotion Tools/1 Push a Brand to Consumers Give a Brand Shelf Space Trade-Promotion Objectives 45

46. Major Trade Sales Promotion Tools/2 Discounts Trade-Promotion Tools a straight reduction in price on purchases during a stated period of time. Can be called price-off, off-invoice, or off-list. 46

47. Major Trade Sales Promotion Tools/3 Allowances • Promotional money paid by manufacturers to retailers who agree to feature the manufacturer’s products in some way. Forms include: • a). An advertising allowance compensates retailers for advertising a product. • b). A display allowance compensates them for using displays. • c). Manufacturers may offer free goods, which are extra cases of merchandise, to resellers who buy a certain quantity or who feature a certain flavor or size. • d). Manufacturers may give retailers free specialty advertising items that carry the company’s name (such as pens). Trade-Promotion Tools 47

48. Business-Promotion Tools Major Business Sales Promotion Tools Generate Business Leads Motivate Salespeople Reward Customers Stimulate Purchases Sales Contests Trade Shows Conventions Business-Promotion Objectives 48

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

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