Fundamentals of Marketing Units 4-6 PDF

Fundamentals of Marketing Unit 4: Product © Professors of Fundamentals of Marketing Program 1. Concept and classification 2. Product dimensions 3. Brand, packaging and labeling 1. Concept and classification-Product concept Product is anything (goods, services or ideas) that can motivate and satisfy the needs of a buyer. Products, Services, and Experiences 1. Concept and classification-Product concept Every product is a Products are not bought combination of attributes for what they are, but for or characteristics the solutions they provide Different products can One product can satisfy satisfy the same need different needs 1. Concept and classification-Product concept Exercise Look at the backpack that appears in the picture. Try to apply the highlighted ideas in the definition to this example: Every product is a Products are not combination of bought for what they attributes or are, but for the characteristics solutions they provide Different products can One product can satisfy the same need satisfy different needs 1. Concept and classification: Product classification According to their: Market or type Nature Lifespan of user Good Consumer Durable products Services Industrial Nondurable products (also Ideas business products) 1. Concept and classification: Product classification It is not a precise classification as different degrees of tangibility exist Tangible: sensory perceptions Intangible Products or goods Services Ideas Bread, computer, car… Food in restaurants, repairs, Family planning, say no to drugs, banking services, vehicle warranty political programs … and maintenance… 1. Concept and classification: Product classification Products vs. services Imperishable Tangible Perishable Intangible It is given or Invariable Produced Variable provided Separable Inseparable 2. Product dimensions Attributes of a tangible product Technical qualities Style and Brand design Product Physical (goods) characteristics Packaging Additional services: installation, repairs, warranties 2. Product dimensions-Levels of product Basic level-Core customer value: functional, emotional, aesthetic, ethical, cultural/trends Actual Product: physical and visible, tangible and quantifiable attributes. This is the level that the consumer generally thinks about Augmented Product: additional services offered with the product. Commercial and technical services Source: Based on Kotler and Armstrong (2018) 2. Product dimensions-Levels of product AUTONOMOUS PASSENGER TRANSPORT Amplitude, Power, Comfort, Safety, Sporty Image, Environmental Protection 2. Product dimensions-Levels of product 2. Product dimensions-Levels of product BMW M2: 30-day return, 5-year warranty, replacement car, free comprehensive insurance for the first year 3. Brand, packaging and labeling “We make approximately 3,500 decisions a day, and more than 95% of them occur unconsciously. Often, we unconsciously seek a brand that we already know and that represents the quality and price standards we deem appropriate” (Macías, 2021). What do successful brands achieve? Source: Best Global Brands (2022) 3. Brand, packaging and labeling From a marketing perspective A brand is “a name, term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors”. Source: AMA-American Marketing Association (2018) They also represent consumers’ perceptions and feelings, emotions or intangibles. 3. Brand, packaging and labeling “All signs, especially words, including personal names, drawings, letters, figures, colors, the shape of the product or its packaging, or sounds, may be registered as trademarks, provided that such signs are suitable for distinguishing: The products or services of one company from those of other companies and Being represented in the Trademark Register in such a way that enables the competent authorities and the general public to determine the clear and precise scope of the protection granted to its owner”. Source: Article 1.2 of the Trademarks Act (2001), as amended by Royal Decree-Law 23/2018, of December 21 3. Brand, packaging and labeling Advantages of using a brand Differentiate Support the Freedom to Facilitate from commercial decide prices loyalty competitors strategy Warranty of Facilitate the Identify the homogeneous product or service brand quality identification It can create emotional connections 3. Brand, packaging and labeling Principal graphic elements of the brand Part that can be seen and Logo identified but not pronounced. Visual identification. Name Part that can be read and pronounced. Verbal identification. 3. Brand, packaging and labeling Desirable brand name characteristics  Short  Evocative  Suggests benefits and qualities  Easy to pronounce, recognize, and remember  Distinctive  Translatable for the global economy  Capable of registration and legal protection 3. Brand, packaging and labeling Desirable logo characteristics  Simplicity  Representative  Scalability  Pragnanz (prägnanz is a German term meaning “good figure”). Appeal, allure  Original  Registrable  Durable 3. Brand, packaging and labeling Brands can convey feelings, emotions, associations, etc., through the colors that are part of their brand design Source: The logo company 3. Brand, packaging and labeling Types of brands based on the elements that compose them Figurative Shape Position Word mark mark mark mark Pattern Color Sound Motion mark mark mark mark Multimedia Hologram mark mark 3. Brand, packaging and labeling Types of brands based on the elements that compose them 3. Brand, packaging and labeling Types of brands based on the elements that compose them 3. Brand, packaging and labeling Types of brands based on the elements that compose them 3. Brand, packaging and labeling Types of brands based on the elements that compose them 3. Brand, packaging and labeling Types of brands based on the elements that compose them 3. Brand, packaging and labeling Packaging Packaging Packaging: primary (contains the product), secondary (contains one or more primary packages). Labeling: contributes to the individualization of the product and creates its own identity. 3. Brand, packaging and labeling Packaging Silent salesman Facilitate Holds the Protection distribution User-friendly product and exhibition Promotes the Identification Information Classification Packaging brand Labeling 3. Brand, packaging and labeling Codification Standard world communication Unique identification Global Trade Item Number-GTIN 3. Brand, packaging and labeling Codification The code should be changed in the following circumstances: Change of attributes (color, smell, etc.) Change in size and/or weight Multipacks When the packaging changes When the formula or the composition change and it is perceived by the consumer For promotional changes 3. Brand, packaging and labeling Benefits of coding  Improves the effectiveness of the intermediary  Reduces the costs for manufacturers and intermediaries  Detailed sales information  Less time at cash register Gracias, Thanks Fundamentals of Marketing 2024-25 Gracias, Thanks Fundamentals of Marketing 2024-25 Fundamentals of Marketing Unit 5: Promotion © Professors of Fundamentals of Marketing Program 1. Concept of commercial communication 2. Owned media 3. Paid media 4. Earned media 1. Concept of commercial communication 1. Concept of commercial communication In general, communication in marketing is the transmission of messages to influence attitudes and behavior. The sender (the company, the organization, the brand) sends messages to reach the receivers (usually consumers, other organizations, etc.) with different purposes: Change the Build stable Inform behavior relationships 1. Concept of commercial communication Key questions in communication decisions  Who communicates and what is the objective?  What do you want to say?  Who do you want to communicate to?  How do you want to communicate?  What media and tools do you want to use? (Communication Mix)  Which media outlets? POEM Model 1. Concept of commercial communication Unilateral, impersonal, and controlled communication tools, ADVERTISING through which an advertiser, using paid messages, addresses a target audience with the aim of persuasion. Communication tools that allow direct interaction/engagement DIRECT MARKETING with the target audience, treated as individuals, with the goal of obtaining a measurable response. A commercial communication tool comprised of multiple techniques, aimed at both the distribution network and the final consumer, which allows for the SALES PROMOTION achievement of marketing and communication objectives by adding a promotional bonus to the product or service, temporarily defined, with a quantifiable end benefit in terms of sales increase. A communicative strategy presented predominantly in an informative manner with PUBLIC RELATIONS- the goal of achieving credibility, trust, and acceptance of an idea, a product, a PR service, an organization, or an individual or legal entity among the various internal and external public relations of an organization. A personal, direct, interactive communication tool with PERSONAL SELLING measurable and immediate responses. 1. Concept and process of commercial communication communication mix The promotion mix (also called marketing communications mix or communication mix) is the specific blend of promotion tools that the company uses to persuasively communicate customer value and build customer relationships. Integrated marketing communications (IMC) involves carefully integrating and coordinating the company’s many communications channels. Source: Kotler and Armstrong (2018) 1. Concept of commercial communication Owned media The POEM Model Websites and blogs, ecommerce, physical shop, A broadcasting model that apps, webinars, social groups the different networks, events channels a company can Earned media use to carry out a Paid media Media coverage communication campaign, Social ads, banners, resulting from press combining the mix of programmatic releases, mentions, online and offline advertising, TV ads, recommendations, radio or magazines, indirect marketing communication. outdoor advertising, actions that have a SEM, digital signage positive impact on the brand, PR in events 1. Concept of commercial communication WOM, Buzz, Viral, SEO, SEM, PPC, UGC, CPC, CPA, CTR, CPL… Source: Search Engine Journal (2018) 2. Owned media 2. Owned media Owned media are the communication channels/platforms that the company/brand owns and controls directly. They do not entail a payment for the broadcasting of messages, as they are managed by the company and can be used at any time. They only have a maintenance cost, content creation or generation, work time, etc. ONLINE DIRECT PUBLIC PERSONAL OWN SALES CHANNELS MARKETING RELATIONS SELLING POINT OF PROMOTION SALE (POS) 2. Owned media: own online channels Corporate website Microsite Company blogs Official Social Media accounts Digital catalogs App Electronic loyalty card Content created for social channels and websites (long-duration spots, advergaming, infographics, promotions, etc.) 2. Owned media: direct marketing Advertising emails Mobile advertising messages Letters with commercial content (mailings) 2. Owned media: public relations-PR “Public relations is a strategic communication process that builds mutually beneficial relationships between organizations and their publics”. Public Relations Society of America “That form of communication management that seeks to make use of publicity and other nonpaid forms of promotion and information(…)”. AMA 2. Owned media: public relations-PR Facility visit programs for groups or open house days Contests and prizes not linked to purchasing Congratulations and small gifts on special dates for being customers Organization of events within the company for groups of people with shared interests Corporate reports Letters and emails with non-advertising content Internal news magazines or newspapers Events and celebrations 2. Owned media: personal selling People who perform tasks associated with sales, customer acquisition, and retention Customer service centers Virtual chatbots 2. Owned media: own point of sale-POS LED screens with advertising projections Displays Audio communication Signage Bagging (bags) Brochures 2. Owned media: sales promotion Consists of short-term incentives to encourage the Characteristics purchase of a product or Communication Incentive service. It is designed to get an immediate response and improve sales figures. Invitation 2. Owned media: sales promotion Sometimes they are owned, and other times paid. They are considered owned actions when they do not require payment to third-party channels, but they could be considered actions in paid media if they require payment to retailers or wholesalers or to communication platforms (newspapers or magazines) for their execution. Directed at Directed at intermediaries or consumers dealers 2. Owned media: sales promotion to consumers Coupons or discount vouchers Immediate Price discounts Price discounts Coupons or discount vouchers Postponed Refunds Price pack Extra product Bonus pack Based on product Samples Upsell-upgraded product Contests, promotional games, loyalty programs Based on gifts or prizes Gifts Based on social causes Part of the price is donated to a social work or cause 2. Owned media: sales promotion to dealers Credit Price Coupons facilities discounts Sales contests, Gifts to games and Free goods dealers raffles Entertainment Special at point of assortments sale-POS 3. Paid media 3. Paid media  These are third-party channels that the company pays to communicate a specific message  It encompasses all those instruments that involve a cost, within both online and offline environments, whether it be using an advertising medium (television, internet), or hiring agents for the use of communication instruments (direct marketing, sales promotion, sponsorship) ADVERTISING SOME PR ACTIONS SOME PROMOTIONS Conventional mass media Sponsorship That require the Internet Events organized participation of Social networks outside the company channels external to the Point of Sale-POS company Direct marketing 3. Paid media: advertising Conventional mass media Television, film, cinema or movie theater Ads, product placement (active and passive), telepromotion, sponsorship (active and passive), infomercial… Radio Ads, sponsorship (active and passive)… Newspapers and magazines Advertisement, advertorial, inserts… Outdoor Billboard, street furniture, transportation. Guerrilla marketing… 3. Paid media: advertising Conventional mass media-TV advertising 3. Paid media: advertising Conventional mass media-cinema or movie theater Spot Filmlet Trailers Slides 3. Paid media: advertising Conventional mass media-Radio advertising Spot Flash or burst Program Mentions or Statements sponsorship Commercial Microspace or Bartering guide microprogram Mobile units 3. Paid media: advertising Conventional mass media-Newspapers and magazines advertising Advertisements Inserted on a page or part of a page, footer, Mid Page Unit (MPU), etc. Advertorials Shorts or classifieds Inserts 3. Paid media: advertising Conventional mass media-Outdoor advertising Digital Out-of- Public Static Billboard advertising Home (DOOH) transport/transit advertising advertising Mobile and Semi- Static advertising Mobile Vehicle Aerial advertising in venues advertising Urban Furniture Advertising Ambient marketing Street marketing (MUPI and OPI ), street furniture 3. Paid media: advertising Internet ADVERTISING SOCIAL WEBSITES IN SEARCH MEDIA ENGINES (SEM) Integrated formats Ad campaigns on: Search ads Floating formats Meta, Twitter-X, Shopping ads Expandable LinkedIn, YouTube, TikTok, etc. Maps ads formats Play Store ads Interstitial Paid collaborations with influencers Rich media 3. Paid media: advertising Point of sale (POS) Display Others (tablecloths, Stoppers napkin holders, etc.) Furniture with advertising Posters Promotional staff Automatic (promoters, machines hostesses) and counters Sound Audiovisual communication projections 3. Paid media: advertising Point of sale (POS) Displays, stoppers, shelf strips, countertops, brochures… 3. Paid media: advertising Direct marketing Telemarketing Handing out advertising (brochures, Fairs and small promotional exhibitions gifts, etc.) in public spaces Windshield advertising: Mailbox advertising on cars advertising or motorcycles To sum up… Source: Kerin, Hartley and Rudelius (2013) 4. Earned media 4. Earned media Earned media which are external to the brand that have been incorporated into communication through the actions of clients or followers on social networks. They do not involve actual payment and are not owned by the brand. INTERNET UNPAID PUBLIC RELATIONS 4. Earned media: on the internet User reviews Shared Unpaid hashtags influencer posts Actions on social networks: likes, retweets, eWOM shares, etc. Links shared by users A company’s multimedia to the brand’s content material displayed on users’ accounts (videos, photos, etc.) 4. Earn media: unpaid PR Press releases Press conference Press kit Publicity Factors to consider in the marketing mix design Source: Kerin, Hartley and Rudelius (2013) Gracias, Thanks Fundamentals of Marketing 2024-2025 Fundamentals of Marketing Unit 6: Place © Professors of Fundamentals of Marketing Program 1. Nature and importance of distribution channels 2. Channel design and management 3. Retailers and wholesalers 1. Nature and importance of distribution channels Concept of distribution A commercial function that involves making products available to the market 1. Nature and importance of distribution channels Why is distribution important? Influences all marketing decisions Can create competitive advantages Entails long-term commitments 1. Nature and importance of distribution channels Should we use intermediaries? No Yes Direct Marketing Indirect Marketing Channel Channel 1. Nature and importance of distribution channels Direct: producers sell directly to end-users 1. Nature and importance of distribution channels Indirect: producers sell through intermediaries 1. Nature and importance of distribution channels Retailers An intermediary that purchases products with the intention of selling them to end consumers 1. Nature and importance of distribution channels Wholesalers An intermediary that markets products and services for resale or institutional use. They sell to retailers and industrial, agricultural, or governmental companies. 1. Nature and importance of distribution channels Concept Distribution channel: a set of interdependent organizations, acting as intermediaries, that help make a product or service available for use or consumption by the consumer or business user 1. Nature and importance of distribution channels How do intermediaries add value? Intermediaries provide expertise, contacts, specialization, and operations on a larger scale. Reduce the number of contacts Adapt assortment to customer needs Overcome temporal, spatial, and transactional discrepancies 1. Nature and importance of distribution channels Economic efficiency of the intermediaries Producer 1 Producer 2 Producer 3 Retailer Retailer Retailer Retailer Retailer 1 2 3 4 5 15 transactions 1. Nature and importance of distribution channels Economic efficiency of the intermediaries Producer 1 Producer 2 Producer 3 Wholesaler Retailer Retailer Retailer Retailer Retailer 1 2 3 4 5 8 transactions 1. Nature and importance of distribution channels Functions Information Promotion Contact Matching Negotiation Physical Additional distribution Financing Risk taking services post Transport and store sale 1. Nature and importance of distribution channels Number of levels - Channel levels Channel level: each level of marketing intermediaries that performs some work in bringing the product closer to the final consumer Channel length: number of levels 1. Nature and importance of distribution channels Length of a channel Direct distribution Indirect distribution system system SHORT LONG CHANNEL CHANNEL MANUFACTURER MANUFACTURER MANUFACTURER WHOLESALER RETAILER RETAILER CONSUMERS CONSUMERS CONSUMERS 2. Channel design and management Decisions on channel design Evaluation of alternatives Identification of alternatives Definition of objectives Analysis of consumer needs 2. Channel design and management Decisions on channel design Analysis of consumer needs Proximity vs. Purchasing Range Service relocation in person/by breadth vs. demand with better phone/by product options mail/online specialization 2. Channel design and management Decisions on channel design Definition of Company structure objectives Products Competition Environment 2. Channel design and management Decisions on channel design Identification Intermediary types of alternatives Number of intermediaries: 3 strategies (target market coverage-density) Intensive distribution Selective distribution Exclusive distribution Responsibilities of channel members 2. Channel design and management Intensive distribution Aim Maximize coverage and ensure the product is available in as many points of sale as possible Features  Commonly used for mass consumer goods such as food, beverages, and hygiene products The products are available in a wide variety of stores, including supermarkets, convenience stores, and sometimes even vending machines Key benefit: greater visibility and convenience for the consumer, which can lead to an increase in sales Coca-Cola is a company that uses intensive distribution. Their products can be purchased in almost 200 countries worldwide. 2. Channel design and management Selective distribution Aim A balance between excessive availability and exclusivity. Selects certain points of sales but does not saturate all possible options Features  Used for products seeking specific market positioning, such as certain electronics or branded clothing  The products are found in selected stores that match the target market profile  Key benefit: helps to maintain the brand image and better control how the product is presented to the consumer L'Oréal offers products for sale in high-end department stores, rather than in mass-market retailers. 2. Channel design and management Exclusive distribution Aim Limit distribution to very few outlets, often only one per geographic area/location Features A common strategy in luxury or high-end products such as luxury cars, jewelry, and high fashion Outlets are carefully chosen to maintain brand exclusivity and prestige Key benefit: creates a sense of exclusivity and elitism, which can increase the brand's appeal to certain market segments Apple is known for its selective distribution strategy, especially with its high-end products like iPhones, iPads, and MacBooks. The company primarily sells these products through its own Apple Stores and its website. Although they are also available in select retail stores, Apple maintains strict control over how its products are presented and sold. 2. Channel design and management Decisions on channel design Evaluation of alternatives Economic criteria: Control criteria Ability to adapt sales, costs, profitability 2. Channel design and management Decisions on channel management Selection of channel members Management and motivation Sales Average inventory levels Delivery time Evaluation of members: Product handling Cooperation in training programs Customer service 3. Retailers and wholesalers Retailers An intermediary that buys products to sell them directly to Retailers end consumers for personal and non-business use Most retail sales are carried out by retailers 3. Retailers and wholesalers Retailers According to… Organizational Level of service Product line Price level approach Self-service Specialty stores Discount stores Corporate chain Limited service General merchandise Low-price retailers stores Full service stores o Factory outlets Voluntary chains (e.g. o Department stores o Independent IFA Group) o Supermarkets specialty price Retail cooperatives o Convenience stores stores Franchises o Big-box stores o Price club chains o Service retailers 3. Retailers and wholesalers Retailers - Trends Reduced Importance of consumer Growth of megaretailers technology in spending retail Growth of Omnichannel New forms of online sales presence retail distribution: Online sales (webs, apps, networks) Pop-up stores Ecological Global (temporary stores) considerations in expansion of retail Flash sales large retailers (sustainability) 3. Retailers and wholesalers Wholesalers An intermediary that buys products to resell them to Wholesaler the following members of the distribution channel. Wholesale trade is characterized by acquiring products from manufacturers and other wholesalers and distributing them to other wholesalers, distributors, retailers, and sometimes manufacturers, but not to end consumers. 3. Retailers and wholesalers Wholesalers Commercial Limited service Agents and brokers wholesalers wholesalers Full-service wholesalers: Cash & Carry Brokers o Wholesale businesses Delivery wholesalers Agents: o Industrial distributors Order Intermediaries o Manufacturer’s agents (drop-shippers) o Sales’ agents Shelf-stocking, sales o Purchasing agents agents (rack-jobbers) o Commission merchants Producer cooperatives Mail-order wholesaler 3. Retailers and wholesalers Wholesalers - Trends The distinction between large Increase in Continuous retailers and large services to improvement wholesalers is retailers blurring Seeking Downward efficiency pressure on through profit margins technology Virtual intermediaries Online Marketplaces Digital platforms whereby different sellers market their products and services. The Digi buyers can acquire them through an easy and safe transaction. Both sellers and buyers remain in the marketplace until the end of the transaction. Specific: Privalia. Global: Amazon, Alibaba, Ebay. Virtual intermediaries Comparators or Price Comparison Websites (PCW) Platforms specialized in searching and comparing products based on the requirements of the consumers. They identify the products that best fit consumer demands and facilitate the comparison between them. By clicking on the product you can see the product card in the online shop or in another online price comparison website (Shopbot). Virtual intermediaries Types of comparators or Price Comparison Websites (PCW)  Comparators: only show on the search the sellers website (insurance, financial products, etc.). Do not provide other comparator results. E.g. Rastreator, Confused.  Meta-search: provide other searchers (Booking, Expedia, Destinia) on the result list and hotels’ websites on the same site. E.g. Kayak, Trivago.  Google Shopping: lets consumers search for, view and compare products. It redirects you to other comparators or the shop’s website. Gracias, Thanks Fundamentals of Marketing 2023-2024 Fundamentals of Marketing Unit 7: Price © Professors of Fundamentals of Marketing Program 1. Price concept and the factors that influence pricing 2. Pricing methods 1. Price concept and the factors that influence pricing Concept The price is the monetary value given to the set of satisfactions received at the time of purchasing a product Non-monetary costs? 1. Price concept and the factors that influence pricing External Members Competitors Environment: Internal of the economic, political distribution and legal channel Demand of end Marketing users strategies Business objectives Pricing Costs 2. Pricing methods Based on demand Methods Based on Based on cost competition 2. Pricing methods-The role of costs Based on cost Costs + margin Company Product specifications Design Estimated sales-quantity? Cost Margin Price 2. Pricing methods-The role of costs Based on cost Costs + margin Production capacity: 180,000 units Invested capital (K): 1,440,000 euros Expected rate of return (r): 10% Unit variable cost (VC): 6.31 euros. Fixed costs (FC): 540,000 € per year Sales (Q): o Expected: 120,000 units o Pessimistic scenario: 90,000 units o Optimistic scenario: 150,000 units Calculate the selling price in each scenario (expected, pessimistic, optimistic). 2. Pricing methods-The role of costs Based on demand Consumer psychology Demand elasticity Perceived value 2. Pricing methods Costs + margin Target price Company Market Product specifications Product specifications Design Price and acceptable quantity Estimated sales-quantity? Cost Margin Margin Cost (Can the company produce at this Price cost?) Product design 2. Pricing methods rK Target price C  P E (Q) Invested capital (K): 1,440,000 euros Expected rate of return (r): 10% Market research shows that at a price of 11€, the company would sell 100,000 units. What is the maximum unitary cost at which the company could operate? 2. Pricing methods-The role of costs Based on competition Higher than Parity competitors Lower than competitors 2. Pricing methods-Setting retail prices Direct distribution Selling price (without taxes) = Pmanufacturer/producer (price customer sees) Indirect Selling price (without taxes) = Pmanufacturer/producer distribution + Distribution margin Distribution margin = intermediary margin 1 + …+ intermediary margin “n” 2. Pricing methods-Intermediary margins Distributor’s percentage (%) margin Markup or margin refers to the amount added to the cost of goods sold to arrive at the selling price (€/$ or %) M* Selling price – cost price (cost of goods sold-COGS) Markup on selling price (%) = X 100 Selling price M° Selling price – cost price (cost of goods sold-COGS) Markup on cost (%) = X 100 Cost price Gracias, Thanks Fundamentals of Marketing 2023-2024 THEORETICAL NOTES ON COMMUNICATION Fundamentals of Marketing LOYOLA ANDALUCÍA UNIVERSITY Text adapted from: Martín, J. D. (2019). Management of Communication: An Integral Approach. ESIC Business & Marketing School. 1. Concept of Communication In general, communication in marketing refers to the sending of messages aimed at influencing attitudes and behavior. It can be understood that the sender (the company, organization, brand) sends messages to reach receivers (usually consumers, other organizations, etc.) with different purposes: To inform about new products, new sales points, activities of the organization, events they sponsor or organize, etc. To remind receivers of the value of their brand and encourage continued use of their products. To persuade them to choose the company's products over competitors or to value them more. To build stable and long-lasting relationships with target audiences. There are many places to insert content and many ways to do it. With so many available communication options, both offline and online, and so many ways to combine these options, marketing specialists must be able to make decisions to optimize the communication mix. Next, we present the different instruments that make up the communication mix based on a conceptualization that establishes their distinguishing characteristics: Advertising: A unilateral, impersonal, and controlled communication tool, through which an advertiser, via paid messages, addresses a target audience with a persuasive goal. Sales Promotion: A commercial communication tool composed of multiple techniques aimed at both the distribution network and the final consumer. It allows achieving marketing and communication objectives by adding a promotional bonus to the product or service, for a determined period, with a previously established communicative intent and a quantifiable final benefit in terms of increased sales (demand). Direct Advertising: A communication tool that enables direct interaction with the target audience, managed as individuals, with the aim of obtaining a measurable response. Public Relations: A managerial philosophy that permeates the way an organization understands and acts, translating into a communication strategy presented in a predominantly informative manner. Its goal is to achieve credibility, trust, and acceptance of an idea, product, service, organization, or individual (legal or natural person) among the various internal and external audiences of an organization. Sales Force: A personal, direct, interactive communication tool with a measurable and immediate response, whose main objective is to attempt to sell products or services by tailoring the message to the customer. Due to all the changes brought about by the digital era in integrated marketing communication, the traditional division between above the line (related to mass or conventional media) and below the line (related to unconventional media) has given way to the through the line approach ("across the line"), where each communication tool must be combined with others to maximize its strengths and minimize its weaknesses, regardless of whether it is online or offline. In this course, we will work with a through the line approach, which defines the fundamental pillars for any integrated communication strategy in the digital era as POEM, an acronym for Paid, Owned, Earned Media: paid media, owned media, and earned media. It is a diffusion model that groups the different channels a company can use to carry out a communication campaign. These three pillars encompass the various online and offline communication tools that any organization can utilize jointly to extract the full potential of the brand or product and focus efforts on building a close relationship with the consumer in the medium and long term. The organization should focus on the media it has the most direct control over: paid media and owned media, but without neglecting earned media, as the consideration of the latter can greatly influence the success of brand building and sales. 1. Paid Media Paid media are defined as third-party channels to which the company pays to communicate a specific message. Within paid media, there are all those tools that incur a cost for the organization, both in the online and offline environments, whether it is by using an advertising medium (television, Internet) or by hiring agents for the use of communication tools (direct advertising, sales promotion). Examples of paid media include AdWords campaigns, display ads, social ads, banners, pop-ups, remarketing, email marketing, and advertising spaces on television, radio, or print media. Paid media are advisable during the product introduction stage and when the target audiences are broad, because due to their paid nature, there is often a need for control in the execution of the tool, which is necessary for the communication strategy. Additionally, they manage to attract consumers due to the immediacy of communication and the substantial initial impact, guaranteeing, over a specific period, high coverage, visibility, audience numbers, visits, impressions, etc. However, when the commercial intent of the messages is identified, it can lead to distrust and a lack of credibility, resulting in lower consumer engagement. Also, due to saturation, messages are often avoided through practices like zapping on television or using ad blockers on the Internet, which reduces message recall. Paid media correspond to the most common commercial communication tools: offline/online advertising, point-of-sale advertising (POS), direct advertising, and sales promotion. Depending on how they are executed, public relations can be considered as paid media, owned media, or earned media. 1.1 Advertising 2.1.1. Printed Newspapers and Magazines According to the Audit Bureau of Circulations (OJD), this group includes newspapers, magazines, supplements, and free press. The most common formats are: Advertisements: This is the most widely used type in both printed media. These are messages made up of text and/or images (photographs or illustrations) that are inserted on a full page or part of a page, either horizontally or vertically. Common formats include banner ads, half-page ads, and in-page ads. Short or Classified Ads: These are advertising spaces grouped alphabetically or by activity in specific sections with pages reserved for this purpose. These sections can be quite varied, covering topics such as employment and training, automotive, services and business, opportunities, charity and volunteering, personal relationships, and real estate. Inserts: These are special format advertising communications (e.g., brochures) placed inside the publication and can be detached and kept. Their major advantage is their high print quality and significant geographic selectivity. They can be attached to newspapers or magazines using staples, sewn, glued, or left loose, with the latter being the most common form in newspapers. Advertorials: These ads have a format very similar to an article in the publication itself. To ensure readers' rights, publishing companies are required to explicitly indicate that it is an advertisement. 2.1.2. Radio The most common forms of radio advertising used by advertisers are as follows: Spot Ad: This is the most conventional advertising format, consisting of a short, pre-recorded commercial message lasting between 10 and 30 seconds. It is broadcast either during a program or between two consecutive programs. Since these are pre-recorded spots, advertisers can make full use of radio language, technological resources, and editing possibilities. Flash or Burst: This is a short phrase, typically lasting between 5 and 10 seconds, that usually directs the listener to a longer spot or a broader campaign. The purpose of these bursts is often to create intrigue for the listener, which is then resolved in a full spot. They also serve an important role in reinforcing brand recall. Mentions or Announcements: These occur when the host delivers a commercial message live, in an apparently spontaneous manner, with a variable duration ranging from 1 to 60 seconds during a program produced by the radio station. Program Sponsorship: In this format, a specific brand finances a segment produced by the station in exchange for its name or product being mentioned. The goal of sponsorship is to associate the brand with the characteristics of the sponsored program. Various sponsorship formats exist, such as program or section sponsorship and program bumper mentions. Commercial Guide: This involves the announcers reading a commercial message alternately. Essentially, it is an advertising message provided by the advertiser for the station to read verbatim. It does not have a traditional radio format, as its purpose is purely commercial. The price is usually based on the number of words included. Micro-Space or Micro-Program: This is a long-format advertisement, lasting between 60 and 180 seconds, integrated into the station's programming as part of its content. It provides commercial and informative content exclusively related to a brand or product. It can include interviews, promote special offers, run contests, etc. It follows a structure, form, and frequency similar to any non- commercial radio format. Bartering: This is a non-commercial radio segment produced by an advertiser and tailored to their preferences. During the broadcast of this program, only the advertiser's brand is promoted. The listener perceives it as a regular show within the radio schedule, with the unique feature that the only ads presented are for a single brand. Mobile Units: These are micro-programs, either recorded or live, that broadcast an event from the advertiser's own location. 2.1.3. Television/Cinema A) Television Spot Ad: A short video clip lasting about 20 seconds, usually inserted into commercial breaks between programs or segments of the same program. Passive TV Sponsorship: Brief pre-rolls that introduce a program or series that will follow. These are very short, typically around 10 seconds. Active TV Sponsorship: To avoid prolonging the end of a program before transitioning to another, the names or logos of sponsoring companies appear superimposed at the bottom of the screen. Telepromotion: A form of advertising where the presenter or any key figure in a program, using familiar settings or situations from the show, presents the features of a product or service for a duration longer than a typical ad. The message cannot be broadcast independently of the corresponding program. During its broadcast, a clear and legible overlay stating "advertisement" must be shown to prevent viewer confusion about its promotional nature. Internal Moments: Segments within the program where a member briefly discusses the advertiser's attributes and benefits. It is usually accompanied by a graphic banner on the screen, or even by a spot in a split-screen or lower window. Bartering: A program produced by the advertiser that includes advertising for its products and brands, broadcast by the TV channel as part of its regular programming. Product Placement: The inclusion, display, or reference to a product or brand as part of the production of a TV series or program. This does not alter the characters' roles or the storyline. Product placement is integrated into the script and can be: o Passive: The product appears visibly within the shot but does not take center stage. It is part of the set and completes the scene. o Active: The product is closely associated with the characters, who may refer to it or even handle it. o Note: Spanish regulations prohibit product placement in children's programs. Overlays: These are on-screen insertions of the brand, slogan, or any other advertising element that the viewer sees while watching a program. Sometimes, they include movement to increase visibility. Interactive Advertising: This format allows viewers to access additional information via their Smart TV remote, such as details from the spot, overlays, or the sponsored program. Split Screen: The screen is divided to display both the program and the advertisement simultaneously. During commercial spots (usually conventional ads), part of the screen continues to show the ongoing program, although without sound. Static Advertising: Includes ads displayed at locations where sporting, musical, or cultural events are broadcast on TV. Particularly important are the billboards in football stadiums or the advertisements at car and motorcycle racing circuits. Technological advancements have led to the proliferation of digital billboards with motion and sound. Telemarketing or Infomercial: Long-form advertisements with a duration similar to a TV program, usually broadcast outside prime hours (from 2:00 AM to 6:00 AM). This format aims for a direct response from the user, displaying the product's price and a contact phone number for purchase, as these items are generally not available in stores. There are also dedicated channels exclusively for telemarketing, where direct sales content is organized into uninterrupted programs lasting at least 15 minutes. Advertorial: Short films, typically 3 to 6 minutes long, that provide descriptive and informative content about a product or company. B) Cinema Spot Ad: This is the most common format and generally originates from the advertisement created for television. Its duration typically ranges from 10 to 60 seconds, where the advertiser uses various creative elements and arguments to hold the viewer's attention. They can also be in 3D. Filmlet: These are short films or brief advertising movies designed to create a significant impact by utilizing the medium's potential through entertainment, while still promoting the product. Trailers: These are promotional spots that preview upcoming movies from the production company or films that will soon be shown in the theater. Slides: These are static photos with text and/or accompanied by a voice-over, projected in cinemas before the main movie starts. 2.1.4. Outdoor Advertising Static Billboards: Standard sizes are 3x4 meters and 3x8 meters. Types of billboards include: o Fixed billboards with paper support. o Fixed billboards painted on wood or metal. o Animated fixed billboards or illuminated signs. Digital Out of Home (DOOH): A set of supports that offer digital advertising content aimed at impacting users outside their homes. Advertising on Public Transport: Ads displayed on the exterior and interior of buses, subways, and trains. Mobile and Semi-Mobile Vehicle Advertising: Mobile billboards transported by vehicles moving around a city. Semi-mobile when a vehicle parks and remains at specific locations in a city. Aerial Advertising: Includes banners towed by airplanes, zeppelins, and balloons. Static Advertising in Venues: Billboards or posters placed within venues with large audiences, such as airports, stations, platforms, or sports venues. Street Furniture (MUPI and OPI): o MUPI stands for "Mobiliario Urbano como Punto de Información" (Urban Furniture as an Information Point). It includes municipal urban furniture used as advertising space like bus shelters, public toilets, benches, etc. o OPI stands for "Objetivos Publicitarios Iluminados" (Illuminated Advertising Objectives), which are outdoor advertising elements used exclusively for advertising purposes. Many guerrilla marketing actions are encompassed within outdoor advertising. These are creative and surprising marketing activities, often limited by time and location, taking place in areas like shopping centers, busy streets, metro stations, building façades, or urban furniture (e.g., bus stops). The success of these actions relies on their potential for virality. The most common practices are: Ambient Advertising: Utilizes any element of the environment (e.g., sidewalks, crosswalks, streetlights) as an advertising medium. Creativity is key to its success, and sometimes it is linked to art. Street Marketing: Usually employs very visual communication and encourages public interaction. It involves not only using street elements but also creating unique props for this type of tactic. Techniques include 3D mapping projections, flash mobs, street art, spontaneous concerts, among others. 2.1.5. Paid Internet Advertising Platforms and formats for paid online advertisements: A) Website: Websites or pages that accept advertising, such as digital newspaper sites, offer various options for ad placements. The most common are: Integrated Formats: Advertising formats shown in designated spaces on a publisher's page, such as banners, skyscrapers, and buttons. Floating Formats: Ads that appear over the main browser window above the website content, giving the impression of "floating" over the page. Expandable/Dropdown Formats: Ads that expand or drop down when the user hovers over or clicks on them. Interstitial Ads: Full-screen banners that occupy the entire browser window. They typically appear between a user's click on a link and the loading of the target content, or before the first page download. Rich Media: A term used in digital advertising to describe ads with advanced features like video, sound, or interactive elements that engage viewers and encourage interaction with the content. B) Social Media: Social networks (Facebook, Instagram, Twitter, TikTok, YouTube, LinkedIn, etc.) allow advertising, with different formats depending on the platform. These ads are commonly referred to as Social Ads. Examples include: META Ads (Facebook and Instagram): o Image-Only Ads: Clicking on the ad takes the user to the advertiser's page. o Video Ads: Similar to image ads, but with added motion, making them more eye-catching in the feed. o Carousel Ads: These showcase up to ten images or videos within a single ad, each with its own link. o Instant Experience: A full-screen ad experience that opens when a user taps the ad on a mobile device, designed to visually highlight your brand, products, or services. o Collection Ads: Display multiple products and open as an instant experience when someone interacts with them. Customers can discover, explore, and buy products from their devices in an immersive, visual format. Twitter Ads When a brand or company wants to advertise through Twitter Ads, they can choose from three main ad types: 1. Promoted Tweets: Regular tweets that an advertiser pays to promote to a wider audience. These appear in users' timelines, search results, and profiles. 2. Promoted Accounts: Ads aimed at increasing followers. The promoted account is shown to users who do not yet follow the brand, suggesting they follow it. 3. Promoted Trends: Ads that promote a hashtag or trend to appear at the top of the trending topics list, increasing visibility and engagement. LinkedIn Ads 1. Text Ads: The most basic option in LinkedIn Ads. These ads consist of a small image, a title, and a description. They can be shown in various placements across the platform. 2. Sponsored Content: These appear directly in the feed and allow companies to share content from their LinkedIn page or company profile, increasing visibility among followers and potential clients. 3. Video Ads: Dynamic video ads tailored based on users' activity and profile information. These videos appear in the LinkedIn feed. 4. Direct Message Ads: Direct messages sent to potential clients that have been pre-segmented based on LinkedIn's targeting options. TikTok Ads 1. In-Feed Ads: Ads that appear in the users' feed as they scroll through TikTok. They blend into the native content but are clearly marked as sponsored. 2. TopView Ads: Full-screen video ads that appear when the user first opens the app, maximizing visibility and engagement. 3. Shopping Ads: Ads designed to drive direct sales, often linked to TikTok Shopping features. 4. Branded Hashtag Challenge: A campaign where brands create a specific hashtag challenge to encourage user participation and content creation, increasing brand engagement and virality. 5. Branded Effect: Allows brands to create customized effects, such as stickers, filters, or augmented reality (AR) effects. These branded effects can be used by TikTok users, enhancing brand visibility and engagement. YouTube Ads 1. Skippable In-Stream Ads: Video ads that play before, during, or after another video. They can be of any length, but viewers can skip them after 5 seconds. 2. Non-Skippable In-Stream Ads: These ads have a maximum duration of 15 seconds and play before, during, or after another video. Users cannot skip these ads. 3. In-Feed Video Ads: Thumbnail video ads that promote video content in places where users discover videos, such as YouTube search results, next to related videos, or on the mobile YouTube homepage. 4. Bumper Ads: Short video ads of up to 6 seconds in length. They play before, during, or after another video, and users cannot skip them. Paid Collaborations with Influencers C) Search Engine Marketing (SEM) Search Campaigns: Shows ads when users search for products or services offered by a company. The first and last results typically appear on the first page of search results. Shopping Campaigns: Ads in a carousel format that appear when users search for a related keyword. Map Ads: Ads displayed on maps when users search for locations or businesses. Play Store Ads: Ads shown in the Play Store for relevant apps based on user searches. D) On-Demand TV Advertising 2.1.6. Point of Sale Advertising Display Units: Shelving units of different shapes that hold products and their advertising. They are placed at the entrance or exit of establishments. Stoppers: Elements that protrude from shelves or at the beginning of aisles. Posters: Located on walls, display cases, or suspended from the ceiling. Vending Machines: Product dispensers or refrigerators that contain advertising panels. Sound Communication: Advertisements about promotions, either recorded or continuously broadcast by a person. Audiovisual Projections: Videos with explanations on how to use a nearby product. Hostesses and Counters: Sometimes, a counter and/or person are hired at the point of sale to show the product and provide information about it. 2.1.7. Paid Direct Advertising This section includes actions that require hiring external channels, such as telemarketing companies, distribution of advertising, or paying for a stand. Telemarketing: Involves initiating contact with a potential customer by phone and closing the sale through the same medium. This type of direct advertising is very effective when the product or service doesn't require the user to see it. Door-to-Door Distribution: Distribution of advertising materials to households. Hand Delivery of Advertising Materials: Items such as brochures, small promotional gifts, etc., handed out in public spaces (mainly on the street). Windshield Advertising: Placing advertising on cars or motorcycles. Attendance at Fairs and Exhibitions 2.2. Paid Public Relations Sponsorship: A marketing strategy in which an organization (sponsor) commits to providing financial support to a third party (sponsee) in exchange for having its brand or product presented. Sponsorship can take many forms, but generally, it refers to financial or other types of support provided to a person or entity for advertising or tax purposes to help organize sports, cultural, or social events, etc. The goal of sponsorship is for the sponsor's brand to be seen and recognized by the target audience, associating it with an activity or person that embodies values or qualities that attract customers. Event Organization Outside the Company 3. Own Media Own media refers to all official channels that belong to the brand/company, both digital and offline, directly controlled by the organization, and created to interact with customers, users, or other stakeholders. Its primary objective is to increase brand presence and create platforms that strengthen relationships with consumers in the medium and long term. Interaction with the brand turns users into potential customers, and even into clients and brand advocates, generating earned media that helps achieve the organization's communication goals. The initial impact of communications through own media is small; however, if engagement increases in relation to paid media, consumer recall and brand recommendation grow, as consumers themselves seek out, inform themselves, and gain trust in the brand. 3.1. Own Channels on the Internet Corporate website Microsites Blogs Official social media accounts Digital catalogs Mobile Apps Electronic loyalty cards 3.2 Direct Advertising Advertising Email: This technique involves the mass sending of emails to a contact list to encourage a response from the recipients. It usually includes a button or link, called a Call to Action (CTA), which directs you to the advertiser's website. Mobile Advertising Messages: These are mainly text messages (SMS) with advertising content that reach the mobile phone and include an interactive link to the advertiser's page. They can also be multimedia messages (MMS) or messages received via Bluetooth. Postal Advertising Mail: This involves sending sales letters, brochures, catalogs, or product samples to potential customers via personalized postal mail, with the additional feature of including an "order form" so that the interested person can make a purchase, either by sending the form by mail, making a phone call, or visiting a website to place the order. 3.3 Sales Force Customer service centers and individuals involved in sales activities are part of the Own Media. This also includes virtual assistants (such as chatbots) that appear on some company websites. 3.4 Unpaid Public Relations Facility tour programs for groups or open house days Contests and prizes not linked to a purchase Greetings and small gifts on special occasions for being customers Organizing events within the company for groups of people with shared interests Corporate reports and other documents Internal news magazines or newspapers 3.5 Advertising at Own Points of Sale LED screens with advertising projections Displays Sound communication Signage Bagging (bags) Brochures 3.6 Promotion Promotions can be internal actions, but they could involve a paid component if they require payment to intermediaries for their execution. A): TYPES INCENTIVES Examples In newspapers and magazines Sent by direct marketing Flyer distribution Price based Discount coupon Hand outs Adjoined to receipt Included in another products packaging Included in the product More product at the same price (2x1l, 3x2l) Extra product Extrainamount Give within the point the packaging of sale Product based Given outside the point of sale Samples Given with other products Superior product Improved product Similar added services Gifts Immediate handout Promotional cofinanced gifts Postponed delivery Complimentary products Gift or prize based Cross promotions Contests, draws and games Loyalty-based promotional activities Based on social causes Part of the money paid goes towards a social cause B) Promotional Actions Directed at Intermediaries The main promotional actions with the channel are as follows: Discounts: The manufacturer negotiates economic terms with the intermediary (discounts on price lists, based on purchase volume or tiered discounts, or cross- selling combinations with discounts on a product in a bundle, etc.) for a specific promotional period, usually not exceeding three months. Limited-time Economic or Financial Concessions: These include incentives such as stock allowances at the start of a promotion or for introducing new product references into the market, providing goods on consignment, extending payment deadlines, and incentives for quotas and/or results. Merchandising Material and Point-of-Sale Support: Promotional incentives can range from oversized novelty items to signage, displays, shelves, or dispensers, which remain the property of the retailer once the promotion ends. For example, to introduce a soft drink into the hospitality channel, a distributor might provide a fridge decorated with the corporate image, which not only promotes the product but also serves a useful purpose for the business. Point-of-Sale Animation: Promotional actions like sending a team of professional window dressers to specially decorate stores, conducting demonstrations or tastings at the point of sale, or installing an attraction island at the establishment, such as the temporary Heineken terrace in a nightclub. Economic Agreements for Advertising Collaboration in Cooperative or Joint Campaigns: It is common for promotional catalogs and brochures at the point of sale to be produced with the contributions of manufacturers. Training Programs for the Distribution Channel: These programs are highly valued by intermediaries and commercial prescribers, as they provide positive results by reinforcing the qualities of the brand and/or product. 4. Earned Media Earned media refers to media channels that are not owned by the brand but have been incorporated into the communication through the actions of customers or followers on social media. When we talk about earned media, we refer to those that are obtained thanks to the behavior of the brand, meaning those that result from efforts and resources dedicated to owned and paid media in both virtual and physical environments. Therefore, these are media that do not involve direct payment and are not owned by the brand, although they help achieve its objectives. Earned media is closely related to best practices in public relations, communication, and marketing. The generic objective is that with the investment and development of owned and paid media, users or customers are motivated to become a channel for the brand, creating content, communicating, and sharing it without incurring additional costs. This leads to a reduction in investment in paid media and maximizes the impact on social networks, thanks to the boost in credibility and trust, as the messages come from an external source. The increase in brand awareness and reputation, along with the potential for virality in earned media, creates a scalable benefit that positively affects sales, visits, and other conversion objectives, all in a free and organic way. This grants the organization additional benefits beyond what is generated by its own or paid resources. However, since earned media is external to the company, the messages are uncontrollable and may not be part of the communication strategy’s anticipated management. Sometimes, they can even become counterproductive or harmful if they are misinterpreted or used by third parties to damage the brand’s image. 4.1. Internet Reviews: Product reviews made by users. Influencer posts: Influencers posting about the company or its products (when not paid). Viral content through electronic word of mouth (eWOM). Multimedia content from the company shared on user accounts (videos, photos, etc.). Links shared by users to brand content. Actions on social media such as likes, retweets, shares, etc. Shared hashtags. Testimonials from satisfied customers. 4.2 Public Relations The goal is especially for the media to pick up on news about the company or its brands/products without paying for it. Publicity: A media outlet talks about the company without the company controlling the message that reaches users in a "news" format, which can be more credible than paid actions. The issue is that the company doesn't control the message being sent, which could be either positive or negative. UNIT 6_TYPES OF INTERMEDIARIES Fundamentals of Marketing Universidad Loyola Andalucía (Summary translated text from: Kotler y Armstrong (2018), Principios de Marketing, ed. Pearson Educación, capítulo 13 Minoristas y Mayoristas, pp. 366-397) _____________________________________________________________________________________ Retail Distribution Retail distribution encompasses all activities involved in the direct sale of products or services to final consumers for personal, non-business use. Most retail sales are conducted by retailers. Retailers play a crucial role in connecting brands with consumers during the final stages of the purchase process and at the moment of purchase. Many marketing executives are embracing the concept of shopper marketing, which focuses the entire marketing process—from product and brand development to logistics, promotion, and sales—on potential buyers, aiming to convert them into actual customers. This concept uniquely coordinates all marketing efforts around the purchasing process itself. The shopper marketing strategy centres on turning potential buyers into real purchasers as they approach the point of sale, whether through physical stores, online shopping, or mobile platforms. Types of Retailers Retail formats constantly evolve, driven by the need to adapt to changes in supply and demand and the continuous emergence of technological innovations. Retailers can be classified based on various characteristics: level of service, product line variety and depth, pricing, and organizational approach. 1. Level of Service Retailers can be categorized into three levels of customer service: Self-service: These retailers cater to customers willing to carry out the process of locating, comparing, and selecting products independently to save money. This model forms the basis of all discount activities. Limited service: Retailers provide more assistance in the sales process, offering more products that require customer information. The higher operating costs result in higher prices. Full service: Found in specialty stores or high-end department stores, where sales staff assist customers at every stage of the buying process. These stores often offer products for which customers need or want advice. The extensive services lead to higher operating costs, which are passed on to consumers through higher prices. 2. Product Line Specialty Stores: Offer a narrow range of products with a deep assortment in those categories. Examples include clothing stores, sporting goods stores, furniture stores, florists, and bookstores. General Merchandisers: These retailers aim to complement the offerings of specialty stores without focusing on a single product category: o Department Stores: Feature a wide variety of product lines. Each line is managed in separate departments led by specialized buyers or managers. Service is a key differentiator. Examples: El Corte Inglés, Harrods, Galeries Lafayette. o Supermarkets: Relatively large, low-cost, low-margin, high-volume self-service outlets designed to meet consumers’ total needs for groceries and household products. Examples: Mercadona, Carrefour Market, Eroski Center, Caprabo. o Convenience Stores: Small stores located near residential areas, open 24/7, offering a limited line of high-turnover convenience products at slightly higher prices. Examples: Carrefour Express, gas station shops, 7- Eleven, 24-hour stores, Supercor Express. o Big-Box Stores: Large stores aimed at fulfilling consumers' routine shopping needs for groceries and other items, including hypermarkets, shopping centres, or category killers (stores that offer an extensive assortment of a specific category). Examples: Walmart, Carrefour, Alcampo, IKEA (category killer), Media Markt (category killer). o Service Retailers: Stores whose product line is actually a service, such as hotels, airlines, banks, schools, beauty salons, and dry cleaners. 3. Pricing Levels Retailers can be classified by their pricing strategies: Discount Stores: Retail operations that sell standard merchandise at lower prices by accepting lower margins and selling higher volumes. Early discount stores kept costs down by offering limited services and operating in low-rent warehouse-like locations. Modern discount stores have improved store environments and expanded services while maintaining low prices through efficient operations. Examples: Lidl, Aldi, DIA. Low price Retailers: Sell goods at prices lower than typical retail prices, often due to excess inventory, closeouts, or irregular items purchased at reduced prices from manufacturers or other retailers. These include factory outlets owned and operated by manufacturers, independent specialty low price stores managed by entrepreneurs or divisions of large retail chains, and price clubs chains that offer a limited selection of branded goods at significant discounts to members who pay a membership fee. 4. Organizational Approach While many retail stores are independently owned, an increasing number of businesses are organizing into some type of corporate or contractual arrangement. Corporate Chain Stores: Two or more outlets commonly owned and controlled, featuring centralized buying and merchandising, selling similar products. Their size enables them to buy in bulk at lower prices and achieve promotional savings. They are found in many retail operations but are strongest in department stores, hypermarkets, discount stores, grocery stores, and restaurant chains. Voluntary Chains: Groups of independent retailers, promoted by a wholesaler, who coordinate their purchasing and merchandising activities (e.g., Grupo IFA). Retailer Cooperatives: Groups of independent retailers that band together to form a jointly owned central wholesale operation and conduct joint promotional and merchandising efforts (e.g., Covirán, Grupo Alsara). Franchises: Contractual association between a franchisor (a manufacturer, wholesaler, or service organization) and franchisees (independent business owners who buy the right to own and operate one or more units of the franchise system). Examples: McDonald’s, 7-Eleven. Wholesale Distribution Wholesalers are intermediaries that primarily purchase from producers and sell mainly to retailers, industrial buyers, and other wholesalers. Wholesalers add value by performing one or more of the following channel functions: Sales and Promotion: Wholesaler sales teams help manufacturers reach numerous small customers at low cost. Wholesalers have more customer contacts and often build more trust than distant producers. Buying and Assortment Building: Wholesalers select items and build assortments needed by their customers, saving consumers considerable work. Bulk Breaking: Wholesalers save their customers money by buying in large quantities and breaking them into smaller lots. Warehousing: Wholesalers hold inventories, reducing inventory costs and risks for suppliers and customers. Transportation: Wholesalers can provide quicker delivery to buyers because they are closer than the manufacturers. Financing: Wholesalers finance customers by extending credit and suppliers by ordering early and paying bills on time. Risk Bearing: Wholesalers absorb risk by taking ownership and bearing the costs associated with theft, damage, spoilage, and obsolescence. Market Information: Wholesalers supply information to suppliers and customers about competitors, new products, and pricing. Management and Consulting Services: Wholesalers can assist retailers in training sales staff, improving store displays, and logistics, as well as establishing accounting and inventory control systems. Types of Wholesalers Wholesalers can be grouped into three major categories: 1. Commercial Wholesalers: o Full-service Wholesalers: Provide a full range of services (inventory management, sales force, credit, deliveries, and management assistance). ▪ Wholesale Business: Sell primarily to retailers, offering various product lines. ▪ Industrial Distributors: Sell primarily to manufacturers. o Limited-service Wholesalers: Offer fewer services: ▪ Cash-and-carry Wholesalers: Sell to small retailers for immediate payment and typically do not deliver. ▪ Delivery Wholesalers: Focus on selling and delivering, providing a limited assortment of semi-perishable goods. ▪ Order Intermediaries (Drop Shippers): Do not carry inventory or deliver products. Instead, they take orders and pass them to manufacturers for direct delivery. ▪ Shelf-stocking/Sales agents (Rack Jobbers): Serve grocery and drug stores with non-food items, maintaining stock and setting prices. ▪ Producer Cooperatives: Owned by farmers, these groups aggregate produce for local market sales. ▪ Mail-order Wholesalers: Send catalogues to retail, industrial, and institutional customers, offering items like jewellery, cosmetics, and specialty foods. 2. Agents and Brokers Agents and brokers do not assume ownership of goods. Their primary role is to facilitate the buying and selling process and, in return, they earn a commission on the sale price. They often specialize in specific product lines or types of clients. o Brokers The main function of brokers is to act as intermediaries between buyers and sellers and assist in negotiations. They are paid by the party that hires them and do not hold inventory, provide financing, or assume risk. Examples include brokers in the food industry, real estate, insurance, and securities. o Agents: Agents represent either buyers or sellers more permanently compared to brokers. Manufacturer’s Agents: Represent two or more manufacturers of complementary product lines. Each manufacturer has a formal written agreement with the agent that outlines pricing policies, territories, order management, delivery services, guarantees, and commission rates. These agents are often used in industries such as clothing, furniture, and electrical products. Sales Agents: Hold contractual authority to sell the entire output of a manufacturer. The manufacturer may prefer this arrangement if they do not wish to handle sales themselves or feel they lack the expertise. Sales agents are common in sectors like textiles, machinery, industrial equipment, coal and fuel, chemicals, and metals. Purchasing Agents: Maintain a long-term relationship with clients and make purchases on their behalf, often handling receiving, inspection, storage, and shipment of goods. Commission Merchants: Take physical possession of products and negotiate their sale but usually do not engage in long-term contracts. They are frequently utilized in agricultural marketing.

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