Resumos de Marketing PDF

Maria Chaves 2º ano Chapter 1 Marketing is an organizational function and a collection of processes designed to plan for, create, communicate, and deliver value to customer. Marketing also builds effective customer relationships in ways that benefit the organization and its stakeholders. “Mark...

Maria Chaves 2º ano Chapter 1 Marketing is an organizational function and a collection of processes designed to plan for, create, communicate, and deliver value to customer. Marketing also builds effective customer relationships in ways that benefit the organization and its stakeholders. “Marketing is engaging customers and managing profitable customer relationships.” “Today, marketing must be understood not in the old sense of making a sale—“telling and selling”—but in the new sense of satisfying customer needs. If the marketer engages consumers effectively, understands their needs, develops products that provide superior customer value, and prices, distributes, and promotes them well, these products will sell easily.” Five-step model of the marketing process:. In the first four steps, companies work to understand consum- ers, create customer value, and build strong customer relationships. In the final step, companies reap the rewards of creating superior customer value. By creating value for consumers, they in turn capture value from consumers in the form of sales, profits, and long-term customer equity. Understand the marketplace and customer needs and wants; Design a customer-driven marketing strategy; Construct an integrated marketing programme that delivers superior value; Build profitable relationships and create customer delight; Capture value from customers to create profits Products: Anything that can be offered to a market to satisfy a need or a want Persons Places Organizations Services: Activity or Benefit offered for sale that is essentially intangible and does not result in the ownership of anything Information Ideas Market segmentation: Divide the market into segments of customers Target Marketing: Select the segment to cultivate Needs: states of felt deprivation. Includes basic physical needs (food, clothing), social needs (belonging, affection) and individual needs (knowledge, self-expression); Wants: the form human needs take as they are shaped by culture and individual personality. Are described in terms of objects that will satisfy those needs; An American needs food but wants a Big Mac, french fries, and a soft drink. Market offerings some combination of products, services, information, or experiences offered to a market to satisfy a need or a want. Market offerings are not limited to physical products. They also include services— activities or benefits offered for sale that are essentially intangible and do not result in the ownership of anything. Examples include banking, airline, hotel, retailing, and home repair services. Demands: human wants that are backed by buying power; Consumers’ needs are fulfilled through marketing offerings – some combination of products, services, information or experiences offered to a market to satisfy a need or want; Marketing Myopia the mistake of paying more attention to the specific products a company offers than to the benefits and experiences produced by these products. Many sellers are so taken with their products that they focus only on existing wants and lose sight on underlying customer needs. Smart marketers look beyond the attributes of the products and services they sell- Exhange and Reationships Marketing occurs when people decide to satisfy needs and wants through exchange relationships. Exchange is the act of obtaining a desired object from someone by offering something in return. Marketing consists of actions taken to build and maintain desirable exchange relationships with target audiences. A political candidate, for instance, wants votes; a church wants membership; an orchestra wants an audience; and a social action group wants idea acceptance. Market set of all actual and potential buyers of a product or service. These buyers share a particular need or want that can be satisfied through exchange relationships. Marketers are no longer asking only “How can we influ- ence our customers?” but also “How can our customers influence us?” and even “How can our customers influence each other?” a company’s success at engaging customers and building profitable relationships depends not only on its own actions but also on how well the entire system serves the needs of final consumers. Walmart can- not fulfill its promise of low prices unless its suppliers provide merchandise at low costs. And Ford cannot deliver a high-quality car-ownership experience unless its dealers provide outstanding sales and service. Marketing management the art and science of choosing target markets and building profitable relationships with them. The aim is to find, attract, keep and grow target customers by crating, delivering and communicating superior customer value. What customers will we serve (what’s our target market)? and How can we serve these customers best (what’s our value proposition)? 1) Select customers to serve The company must first decide whom it will serve. It does this by dividing the market into segments of customers (market segmentation) and selecting which segments it will go after (target marketing). the company wants to select only customers that it can serve well and profitably. marketing managers must decide which customers they want to target and on the level, timing, and nature of their demand 2) Choosing a value proposition The company must also decide how it will serve targeted customers—how it will dif- ferentiate and position itself in the marketplace. A brand’s value proposition is the set of benefits or values it promises to deliver to consumers to satisfy their needs. JetBlue promises to put “You Above All” by bringing “humanity back to travel.” By contrast, Spirit Airlines gives you “Bare Fare” pricing: “Less Money. More Go.” Facebook helps you “connect and share with the people in your life,” whereas Twitter’s Vine app gives you “the best way to see and share life in motion” through “short, beautiful, 3) Marketing Management Orientation Marketing management wants to design strategies that will engage target customers and build profitable relationships with them. Demand management: Finding and increasing demand, also changing or reducing demand, such as in demarketing. Demarketing: Temporarily or permanently reducing the number of customers or shifting their demand. Customer value and customer satisfaction are key building blocks for developing and managing customer relationships. Marketing management orientations: Production concept – the idea that consumers will favour products that are available and highly affordable and that the organization should therefore focus on improving production and distribution efficiency; although useful in some situations, the production concept can lead to marketing myopia  Product concept – the idea that consumers will favour products that offer the most quality, performance, and features and that the organization should therefore devote its energy to making continuous product improvements; However, focusing only on the company’s products can also lead to marketing myopia. Selling concept - the idea that consumers will not buy enough of the firm’s product unless it undertakes a large-scale selling and promotion effort; Such aggressive selling, however, carries high risks. It focuses on creating sales trans- actions rather than on building long-term, profitable customer relationships Marketing concept – a philosophy that holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions better than competitors do; Social marketing concept – the idea that a company’s marketing decisions should consider consumers’ wants, he company’s requirements, and consumers’/society’s long- term interests. Preparing and integrated marketing plan and program To deliver on its value proposition, the firm must first create a need-satisfying market offering (product). It must then decide how much it will charge for the offering (price) and how it will make the offering available to target consumers (place). Finally, it must engage target consumers, communicate about the offering, and persuade consumers of the offer’s merits (promotion). Customer Relationship Management is the overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. relationship building blocks: customer Value and satisfaction The key to building lasting customer relationships is to create superior customer value and satisfaction. Satisfied customers are more likely to be loyal customers and give the com- pany a larger share of their business. Customer-perceived value – the customer’s evaluation of the difference between all the benefits and all the costs of a marketing offer relative to those of competing offers. To some consumers, value might mean sensible products at affordable prices. To other consumers, however, value might mean paying more to get more. Customer satisfaction – the extent to which a product’s perceived performance matches a buyer’s expectations.  If the product’s performance falls short of expectations, the customer is dissatisfied. If performance matches expectations, the cus- tomer is satisfied. If performance exceeds expectations, the customer is highly satisfied or delighted. Customer-engagement marketing Making the brand a meaningful part of consumers’ conversations and lives by fostering direct and continuous customer involvement in shaping brand conversations, experiences, and community. Consumer-generated marketing brand exchanges created by consumers themselves – both invited and uninvited – by which consumers are playing an increasing role in shaping their own brand experiences and those of other consumers. Starbucks collects ideas from customers on new products, store changes, and just about anything else that might make their Starbucks experience better. “You know better than anyone else what you want from Starbucks,” says the company at the Web site. “So tell us. What’s your Starbucks idea? Revolutionary or simple—we want to hear it.” Customer relationship management (CRM) the overall process of building and maintain profitable costumer relationships by delivering superior customer value and satisfaction. Customer-managed relationships marketing relationships in which customers, empowered by today’s new technologies, interact with companies and with each other to shape their relationships with brands. Consumer-generated marketing brand exchanges created by consumers themselves – both invited and uninvited – by which consumers are playing an increasing role in shaping their own brand experiences and those of other consumers. Partner relationship management working closely with partners in other company departments and outside the company to jointly bring greater value to customers. Customer loyalty & Retention Good customer relationship management creates customer satisfaction. In turn, satisfied customers remain loyal and talk favorably to others about the company and its products. Studies show big differences in the loyalty of customers who are less satisfied, somewhat satisfied, and completely satisfied. Customer lifetime value – the value of the entire stream of purchases that the costumer would make over a lifetime of patronage. Share of customer – the portion of the customer purchasing that a company gets in its product categories. banks want to increase “share of wallet.” Supermarkets and restaurants want to get more “share of stomach.” Car companies want to increase “share of garage,” and airlines want greater “share of travel.” Customer equity – the total combiner customer lifetime values of all of the company’s customers. The more loyal the firm’s profitable customers, the higher its customer equity. Customer equity may be a better measure of a firm’s perfor- mance than current sales or market share. Customer relationship groups Strangers show low potential profitability and little projected loy- alty. There is little fit between the company’s offerings and their needs. The relationship management strategy for these customers is simple: Don’t invest anything in them; make money on every transaction. Butterflies are potentially profitable but not loyal. There is a good fit between the company’s offerings and their needs. However, like real butterflies, we can enjoy them for only a short while and then they’re gone. (the company should enjoy the butterflies for the moment) True friends are both profitable and loyal. There is a strong fit between their needs and the company’s offerings. The firm wants to make continuous relationship investments to delight these customers and nurture, retain, and grow them. (It wants to turn true friends into true believers,who come back regularly and tell others about their good experiences with the company) Barnacles are highly loyal but not very profitable. There is a limited fit between their needs and the company’s offerings. An example is smaller bank customers who bank regularly but do not generate enough returns to cover the costs of maintaining their ac- counts. The internet has been hailed as the technology behind a new economy Marketing applications includes: “Click-and-mortar” companies “Click-only” companies Business-to-business e-commerce The new digital age The recent technology boom has had a major impact on the ways marketers connect with and bring value to their customers. Chapter 2 Strategic planning - the process of developing and maintain a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities. Defining the company mission; Setting company objectives and goals; Designing the business portfolio; Planning marketing and other functional strategies. “An organization exists to accomplish something, and this purpose should be clear” “What is our business?” Who is the customer?” “What do consumers value?” Mission statement: a statement of the organization’s purpose – what it wants to accomplish in the larger environment. A clear mission statement acts as an “invisible hand” that guides people in the organization. For example, Google’s mission isn’t to be the world’s best search engine. It’s to give people a window into the world’s information, wherever it might be found. Starbucks story, a company’s mis- sion should not be stated as making more sales or profits; profits are only a reward for creating value for customers. Instead, the mission should focus on customers and the cus- tomer experience the firm seeks to create. Mission Statement should be…. Be realistic Be specific Fit the market environment Be based on distinctive competencies Be motivation Business models – combination of a business concept, a set of connected markets and a revenue model Business portfolio - the collection of businesses and products that make up the company. The company must: Analyze its current business portfolio or strategic business units (SBUs) Decide which SBUs should receive more, less, or no investment, Develop growth strategies for growth strategies for growth or downsizing. Portfolio analysis – the process by which management evaluates the products and businesses that make up the company. Identify SBUs; Assess SBUs’ attractiveness and decide on the level of support SBU deserves; Apply direct resources to the most profitable SBUs and phase down the weaker ones; Strategic Business Units (SBUs) – key businesses that make up the company. Can be company divisions, a product line within a division, single product or brand Portfolio-planning method: Boston Consulting Group (BCG) is a growth-share matrix – a portfolio-planning method that evaluates a company’s SBUs in terms of its market growth rate and relative market share. Four types of SBUs: Stars – high-growth, high-share businesses or products. Often need heavy investments to finance the rapid growth. Eventually, the growth slows and they will become cash cows; Cash Cows – low-growth, high-share businesses or products. Established and successful SBUs, need less investment to hold market share. Produce a lot of cash used to pay bills and support other SBUs. Question Marks – low-share business units in high-share markets. Require lot of cash to hold their share, let alone increase it. Management must decide in which to invest and which to phase out. Dogs – low-growth, low-share businesses or products. Generate enough to maintain themselves, don’t promise to be large sources of cash. Problems with BCG § Can be difficult, time consuming, costly to implement § Difficult to define SBUs & measure market share/growth § Focus on current business, not future planning § Can leal to poorly planne diversification § Can place too much emphasis on growth Downsizing – reducing the business portfolio by eliminating products or business units that are not profitable or that no longer fit the company’s overall strategy. Product/market expansion grid (EXAMPLE: Under Armour ) Market penetration – company growth by increasing sales of current products to current market segments without changing the product Market development – company growth by identifying and developing new market segments for current company products; Product development – company growth by offering modified or new products to current market segments; Diversification – company growth through starting up or acquiring businesses outside the company’s current products and markets. Marketing’s role in strategic planning § Provide a guiding philosophy § Provide inputs to strategic planners § Design strategy to reach objectives Value chain the series of internal department that carry out value-creating activities to design, produce, market, deliver and support firm’s products. The firm’s success depends not only on how well each department performs its work but also on how well the various departments coordinate their activities. Value delivering network the network composed of the company, its suppliers, its distributors, and, ultimately, its customers who partner with each other to improve the performance of the entire system. Consumers are in the center. The goal is to create value for customers and build profitable customer relationships. Next comes marketing strategy. Marketing strategy the marketing logic by which the company hopes to create customer value and achieve profitable customer relationships. Customer-driven marketing strategy - STP Market segmentation – Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors, and who might require separate products or marketing programmes; Consumers can be grouped and served in various ways based on geographic, demographic, psychographic, and behavioral factors. Market segment – a group of consumers who respond in a similar way to a given set of marketing efforts; Market targeting – the process of evaluating each market segment’s attractiveness and selecting one or more segments to enter; A company should target segments in which it can profitably generate the greatest customer value and sustain it over time. Most companies enter a new market by serving a single segment; if this proves successful, they add more segments. For example, Nike started with innovative running shoes for serious runners Market Differentiaion and Positioning After a company has decided which market segments to enter, it must determine how to differentiate its market offering for each targeted segment and what positions it wants to occupy in those segments. Positioning – arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumer; Differentiation – actually differentiating the market offering to create superior customer value; Customer-Driven Strategy involves defining: Which costumers to serve; How to serve them (value proposition) Guided by marketing strategy, the company designs an integrated marketing mix made up of factors under its control—product, price, place, and promotion (the four Ps). Marketing Mix – the set of tactical marketing tools – product, price, place and promotion – that the firm blends to produce the response it wants in the target market. Product – goods and services combination the company offers to the target market; Variety, quality, design, features, brand name, packaging, services Ford offers several Escape models and dozens of optional features. The car comes fully serviced and with a comprehensive warranty that is as much a part of the product as the tailpipe.  Price – the amount of money costumers must pay to obtain the product; List price, discounts, allowances, payment period, credit terms Ford calculates suggested retail prices that its dealers might charge for each Escape. But Ford dealers rarely charge the full sticker price. Instead, they negotiate the price with each customer, offering discounts, trade-in allowances, and credit terms. Place – company activities that make the product available to target consumers; Channels, coverage, assortments, locations, inventory, transportation, logistics Ford partners with a large body of independently owned dealerships that sell the company’s many different models. Ford selects its dealers carefully and strongly supports them. Promotion – activities that communicate the merits of the product and persuade target customers to buy it. Advertising, personal selling, sales promotion, public relations Ford and its dealers offer special promotions—sales, cash rebates, and low financing rates—as added purchase incentives. 4 P’s-sellr’s view 4C’s Buyer’s view § Product Customer solution § Price Customer cost § Place Convenience § Promotion Communication four As Acceptability: is the extent to which the product exceeds customer expectations Affordability: the extent to which customers are willing and able to pay the product’s price Accessibility: the extent to which customers can readily acquire the product Awareness: the extent to which customers are informed about the product’s features Managing the marketing effort: Analysis: § Planning (develop strategic plans, develop marketing plans) § Implementation (carry out the plans) § Control (measure results, evaluate results, take corrective action) Marketing control process: § What do we want to achieve? (Set goals) § What is happening? (measure performance) § Why is it happening? (evaluate performance) § What should we do about it? (take corrective action) Marketing Analysis – SWOT Analysis Marketing Planning Marketing planning involves choosing marketing strategies that will help the com- pany attain its overall strategic objectives. A detailed marketing plan is needed for each business, product, or brand. Marketing Implementation is the process that turns marketing plans into marketing actions to accomplish strategic marketing objectives. Whereas marketing planning addresses the what and why of marketing activities, implementation addresses the who, where, when, and how. Marketing control measuring and evaluating results and taking corrective action to ensure that the objectives are attained. Operating control involves checking ongoing performance against the annual plan and taking corrective action when necessary Strategic control involves looking at whether the company’s basic strategies are well matched to its opportunities. Marketing return on investment(or marketing roi) The net return from a marketing investment divided by the costs of the marketing investment. Chapter 3 Marketing environment – the actors and forces outside marketing that affect marketing management’s ability to build and maintain successful relationship with target customers; Environment offers both opportunities and threats Marketing intelligence and research are used to collect information about the environment Marketing environment includes….. Microenvironment The actors close to the company that affect its ability to engage and serve its customers—the company, suppliers, marketing intermediaries, customer markets, competitors, and publics. Macroenvironment The larger societal forces that affect the microenvironment—demographic, economic, natural, technological, political, and cultural forces. MICRO The company Top management sets the company’s mission, objec- tives, broad strategies, and policies. Marketing managers make decisions within these broader strategies and plans. Then, as we discussed in Chapter 2, marketing managers must work closely with other company departments. Suppliers form an important link in the company’s overall customer value delivery net- work. They provide the resources needed by the company to produce its goods and ser- vices. Supplier problems can seriously affect marketing. Marketing intermediaries help the company promote, sell, and distribute its products to final buyers. They include resellers, physical distribution firms, marketing services agen- cies, and financial intermediaries. Competetitors The marketing concept states that, to be successful, a company must provide greater cus- tomer value and satisfaction than its competitors do. Thus, marketers must do more than simply adapt to the needs of target consumers. They also must gain strategic advantage by positioning their offerings strongly against competitors’ offerings in the minds of consumers. No single competitive marketing strategy is best for all companies. Each firm should consider its own size and industry position compared with those of its competitors. Public is any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives. We can identify seven types of publics: Financial publics, Media publics, Government publics, Citizen-action publics, Local publics, General public , Internal publics. Customer Customers are the most important actors in the company’s microenvironment MACRO Demographic Economic Natural Technological Political Cultural Baby boomers § 78 milion born between 1946 and 1964 § Account for approximately ¼ of population § Earn more than half of all personal income § Almost 25% belong to racial or ethnic minority § Spend a lot of anti-aging products and services Generation X: Millenials/ Generation Y § 45 milion born between 1965 and 1976 72 million born between 1977 and 1994 § Increasing divorce rates Large amount of disposable income § Care about environment Tend to be impatient and “now-oriented” § Prize experience, not acquisition Many product lines target at Gen “y” Generation Z § People born after 2000 (although many analysts include people born after 1995) who make up the kids, tweens, and teens markets. Changing American family Household makeup § Married couples with children= about 1/4 , and falling § Married couples and people living with other relatives= about ¼ § Single persons and adult “live-togethers”= about 1/3 § Single parents= approximately 16% Geographic shifts in population § 14% of U.S. residents move each year § City to suburb migration continues § More people telecommute Increasing diversity § U.S. is a salad bowl Various groups mixed together, each retaining its ethnic and cultural differences Increase marketing to: Gay and lesbian consumers People with disabilities Economic environment Consists of factors that affect consumer purchasing power and spending patterns. Changes in Income – 1980’s – consumption frenzy – 1990’s – “squeezed consumer” – 2000’s – value marketing Income Distribution  – Upper class – Middle class – Working class – Underclass Political environment Includes Laws, Government Agencies, and Pressure Groups that Influence or Limit Various Organizations and Individuals In a Given Society Increasing Legislation Changing Government/ Agency Enforcement Increased Emphasis on Ethics & Socially Responsible Actions Cultural Environment Core beliefs and values are passed on from parents to children and are reinforced by schools, churches, business, and government. Secondary beliefs and values are more open to change. – Themselves – Others – Organizations – Society – Nature – The universe PESTEL – Environmental Analysis Political, Economic, Social, Technologic, Environmental, Legal Factors related to general society trends Chapter 4 To create value for customers and build meaningful relationships with them, marketers must first gain fresh, deep insights into what customers need and want. Such customer insights come from good marketing information. Companies use these customer insights to develop a competitive advantage. Marketing Information and Today’s big data The marketing world is filled to the brim with information from innumerable sources. Consumers themselves are now generating tons of marketing information. The term big data refers to the huge and complex data sets generated by today’s sophisticated information generation, collection, storage, and analysis technologies. Big data presents marketers with both big opportunities and big challenges. Companies that effectively tap this glut of big data can gain rich, timely customer insights. Marketing information system people and procedures for assessing information needs, developing the needed information, and helping decision makers to use the information to generate and validate actionable customer and market insights. Many companies build extensive internal databases, collections of consumer and market information obtained from data sources within the company’s network. Information in an internal database can come from many sources. Competitive marketing intelligence is the systematic monitoring, collection, and analy- sis of publicly available information about consumers, competitors, and developments in the marketplace. The goal of competitive marketing intelligence is to improve strategic decision making by understanding the consumer environment, assessing and tracking competitors’ actions, and providing early warnings of opportunities and threats. Marketing research is the systematic design, collection, analysis, and reporting of data relevant to a specific marketing situation facing an organization. Companies use marketing research in a wide variety of situations. For example, marketing research gives marketers insights into customer motivations, purchase behavior, and satisfaction. Define the problem and research objectives; Develop the research plan; Collect the information; Analyze the information; Present the findings; Make the decision; Research Objectives Exploratory research Marketing research to gather preliminary information that will help define problems and suggest hypotheses. Descriptive research Marketing research to better describe marketing problems, situations, or markets, such as the market potential for a product or the demographics and attitudes of consumers. Causal research Marketing research to test hypotheses about cause-and-effect relationships. Data sources Primary data – information collected for the specific purpose at hand; Sources: consumers in the market, competitor analysis, retailers, etc. Secondary data – information that already exists somewhere, having been collected for another purpose; Sources: company’s internal database, purchased from other suppliers, commercial online databases, internet search engines. Primary Data Collection Research Approaches Observational research – gathering primarily data by observing relevant people actions and situations; Ethnographic research – a form of observational research that involves sending trained observers to watch and interact with consumers in theirs “natural environments”; Survey research – gathering primarily data by asking people questions about their knowledge, attitudes, preferences and buying behavior; Experimental research – gathering primarily data by selecting matched groups of subjects,giving them different treatments, controlling related factors and checking for differences in group responses; Mail, telephone, and Personal interviewing. Focus group interviewing Personal interviewing that involves inviting small groups of people to gather for a few hours with a trained interviewer to talk about a product, service, or organization. The interviewer “focuses” the group discussion on important issues. Online marketing research Collecting primary data online through Internet surveys, online focus groups, Web-based experiments, or tracking of consumers’ online behavior. Online focus groups Gathering a small group of people online with a trained moderator to chat about a product, service, or organization and gain qualitative insights about consumer attitudes and behavior. behavioral targeting Using online consumer tracking data to target advertisements and marketing offers to specific consumers. sample A segment of the population selected for marketing research to represent the population as a whole. Research Instruments Questionnaires. The questionnaire is by far the most common instrument, whether admin- istered in person, by phone, by email, or online. Questionnaires are very flexible—there are many ways to ask questions. Mechanical instruments. Although questionnaires are the most common research instru- ment, researchers also use mechanical instruments to monitor consumer behavior Implementing the Research Plan The researcher next puts the marketing research plan into action. This involves collect- ing, processing, and analyzing the information. Data collection can be carried out by the company’s marketing research staff or outside firms. Researchers should watch closely to make sure that the plan is implemented correctly. They must guard against problems with data collection techniques and technologies, data quality, and timeliness. Interpreting and Reporting Findings The market researcher must now interpret the findings, draw conclusions, and report them to management. The researcher should not try to overwhelm managers with numbers and fancy statistical techniques. Rather, the researcher should present important findings and insights that are useful in the major decisions faced by management. customer relationship management (CRM) Managing detailed information about individual customers and carefully managing customer touch points to maximize customer loyalty. Marketing analytics The analysis tools, technologies, and processes by which marketers dig out meaningful patterns in big data to gain customer insights and gauge marketing performance. Chapter 5 Consumer buyer behavior refers to the buying behavior of final consumers—individuals and households that buy goods and services for personal consumption. All of these final consumers combine to make up the consumer market. Consumers make many buying decisions every day, and the buying decision is the focal point of the marketer’s effort. Most large companies research consumer buying decisions in great detail to answer questions about what consumers buy, where they buy, how and how much they buy, when they buy, and why they buy consumer market All the individuals and households that buy or acquire goods and services for personal consumption. Characteristics Affecting Consumer Behavior Cultural Factors Culture The set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions. Subculture A group of people with shared value systems based on common life experiences and situations. total market strategy Integrating ethnic themes and cross- cultural perspectives within a brand’s mainstream marketing, appealing to consumer similarities across subcultural segments rather than differences. social class Relatively permanent and ordered divisions in a society whose members share similar values, interests, and behaviors. Social Fators Group Two or more people who interact to accomplish individual or mutual goals Word-of-mouth influence The impact of the personal words and recommendations of trusted friends, family, associates, and other consumers on buying behavior. opinion leader A person within a reference group who, because of special skills, knowledge, personality, or other characteristics, exerts social influence on others.  online social networks Online communities—blogs, social networking Web sites, and other online communities—where people socialize or exchange information and opinions. Family members can strongly influence buyer behavior Roles and status. A person belongs to many groups—family, clubs, organi- zations, online communities. The person’s position in each group can be de- fined in terms of both role and status. Personal Factors Occupation. A person’s occupation affects the goods and services bought. Blue-collar workers tend to buy more rugged work clothes, whereas executives buy more business suits. Marketers try to identify the occupational groups that have an above-average interest in their products and services. Age and life stage. People change the goods and services they buy over their lifetimes. Tastes in food, clothes, furniture, and recreation are often age related. Economic situation. A person’s economic situation will affect his or her store and product choices. Marketers watch trends in spending, personal income, savings, and interest rates. Lifestyle A person’s pattern of living as expressed in his or her activities, interests, and opinions. Personality The unique psychological characteristics that distinguish a person or group. Psychological Factors Motive (drive) A need that is sufficiently pressing to direct the person to seek satisfaction. Perception The process by which people select, organize, and interpret information to form a meaningful picture of the world. Learning Changes in an individual’s behavior arising from experience. Attitude A person’s relatively consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea. Consumer buying decision-making process Need Recognition The buying process starts with need recognition—the buyer recognizes a problem or need. Information search An interested consumer may or may not search for more information. If the consumer’s drive is strong and a satisfying product is near at hand, he or she is likely to buy it then. If not, the consumer may store the need in memory or undertake an information search related to the need. For example, once you’ve decided you need a new car, at the least, you will probably pay more attention to car ads, cars owned by friends, and car conversations. personal sources (family, friends, neighbors, acquaintances), commercial sources (adver- tising, salespeople, dealer and manufacturer Web and mobile sites, packaging, displays), public sources (mass media, consumer rating organizations, social media, online searches, and peer reviews), and experiential sources (examining and using the product). The rela- tive influence of these information sources varies with the product and the buyer. Evaluation of Alternatives We have seen how consumers use information to arrive at a set of final brand choices. Next, marketers need to know about alternative evaluation, that is, how consumers pro- cess information to choose among alternative brands. Marketers should study buyers to find out how they actually evaluate brand alterna- tives. If marketers know what evaluative processes go on, they can take steps to influence the buyer’s decision. Purchase Decision In the evaluation stage, the consumer ranks brands and forms purchase intentions. Generally, the consumer’s purchase decision will be to buy the most preferred brand, but two factors can come between the purchase intention and the purchase decision. The first factor is the attitudes of others. If someone important to you thinks that you should buy the lowest-priced car, then the chances of you buying a more expensive car are reduced. The second factor is unexpected situational factors. The consumer may form a pur- chase intention based on factors such as expected income, expected price, and expected product benefits. However, unexpected events may change the purchase intention. For example, the economy might take a turn for the worse, a close competitor might drop its price, or a friend might report being disappointed in your preferred car. Thus, prefer- ences and even purchase intentions do not always result in an actual purchase choice. Postpurchase Behavior The marketer’s job does not end when the product is bought. After purchasing the prod- uct, the consumer will either be satisfied or dissatisfied and will engage in postpurchase behavior of interest to the marketer. What determines whether the buyer is satisfied or dissatisfied with a purchase? The answer lies in the relationship between the consumer’s expectations and the product’s perceived performance. cognitive dissonance Buyer discomfort caused by postpurchase conflict. new product A good, service, or idea that is perceived by some potential customers as new. adoption process The mental process through which an individual passes from first hearing about an innovation to final adoptio Stages in the Adoption Process Awareness. The consumer becomes aware of the new product but lacks information about it. Interest The consumer seeks information about the new product. Evaluation. The consumer considers whether trying the new product makes sense. Trial. The consumer tries the new product on a small scale to improve his or her es- timate of its value. Adoption. The consumer decides to make full and regular use of the new product. Influence of Product characteristics on rate of adoption Five characteristics are especially important in influencing an innovation’s rate of adoption. Relative advantage. The degree to which the innovation appears superior to existing products. Compatibility. The degree to which the innovation fits the values and experiences of potential consumers Complexity. The degree to which the innovation is difficult to understand or use. Divisibility. The degree to which the innovation may be tried on a limited basis. Communicability. The degree to which the results of using the innovation can be observed or described to others. To the extent that electric cars lend themselves to demonstration and description, their use will spread faster among consumers. business buyer behavior The buying behavior of organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others. business buying process The process by which business buyers determine which products and services their organizations need to purchase and then find, evaluate, and choose among alternative suppliers and brands. Market structure and Demand Derived demand Business demand that ultimately comes from (derives from) the demand for consumer goods. Types of Decisions and the Decision Process supplier development Systematic development of networks of supplier-partners to ensure a dependable supply of products and materials for use in making products or reselling them to others. Business Buyer Behavior Modified rebuy A business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers. New task A business buying situation in which the buyer purchases a product or service for the first time. Systems selling (or solutions selling) Buying a complete solution to a problem from a single seller, thus avoiding all the separate decisions involved in a complex buying situation. Participants in the business buying Process buying center All the individuals and units that play a role in the purchase decision-making process. Problem recognition. The buying process begins when someone in the company recognizes a problem or need that can be met by acquiring a specific product or service. general need Description. Having recognized a need, the buyer next prepares a general need description that describes the characteristics and quantity of the needed item. Product specification. The buying organization next develops the item’s technical product specifications, often with the help of a value analysis engineering team supplier search. The buyer now conducts a supplier search to find the best vendors. The buyer can compile a small list of qualified suppliers by reviewing trade directories, doing online searches, or phoning other companies for recommendations Proposal solicitation. In the proposal solicitation stage of the business buying process, the buyer invites qualified suppliers to submit proposals. In response, some suppliers will refer the buyer to its Web site or promotional materials or send a salesperson to call on the prospect. supplier selection. The members of the buying center now review the proposals and select a supplier or suppliers. order-routine specification. The buyer now prepares an order-routine specification. It in- cludes the final order with the chosen supplier or suppliers and lists items such as technical specifications, quantity needed, expected delivery time, return policies, and warranties. Performance review. In this stage, the buyer reviews supplier performance. The buyer may contact users and ask them to rate their satisfaction. The performance review may lead the buyer to continue, modify, or drop the arrangement. engaging business buyers with Digital and social Marketing e-procurement Purchasing through electronic connections between buyers and sellers—usually online. Chapter 6 Market segmentation Dividing a market into distinct groups of buyers who have different needs, characteristics, or behaviors and who might require separate marketing strategies or mixes. Market targeting (targeting) Evaluating each market segment’s attractiveness and selecting one or more segments to serve. Differentiation Actually differentiating the market offering to create superior customer value. Positioning Arranging for a market offering to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. segmenting consumer Markets geographic segmentation Dividing a market into different geographical units, such as nations, states, regions, counties, cities, or even neighborhoods. Demographic segmentation Dividing the market into segments based on variables such as age, life-cycle stage, gender, income, occupation, education, religion, ethnicity, and generation. gender segmentation Dividing a market into different segments based on gender. Income segmentation Dividing a market into different income segments. Psychographic segmentation Dividing a market into different segments based on social class, lifestyle, or personality characteristics behavioral segmentation Dividing a market into segments based on consumer knowledge, attitudes, uses of a product, or responses to a product. occasion segmentation Dividing the market into segments according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item. benefit segmentation Dividing the market into segments according to the different benefits that consumers seek from the product. intermarket (cross-market) segmentation Forming segments of consumers who have similar needs and buying behaviors even though they are located in different countries. requirements for effective segmentation Measurable; Accessible; Substantial; Differentiable;. Actionable. Selecting target Market segments target market A set of buyers sharing common needs or characteristics that the company decides to serve. Targeting strategies: Undifferentiated (mass) marketing A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer. Differentiated (segmented) marketing A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each. Concentrated (niche) marketing A market-coverage strategy in which a firm goes after a large share of one or a few segments or niches. Micromarketing Tailoring products and marketing programs to the needs and wants of specific individuals and local customer segments; it includes local marketing and individual marketing. Local marketing Tailoring brands and marketing to the needs and wants of local customer segments—cities, neighborhoods, and even specific stores. Individual marketing Tailoring products and marketing programs to the needs and preferences of individual customers. Positioning – arranging for a market offering to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers; The goal of positioning is to locate the brand in the mind of consumers to maximize the potential benefit to the firm. 1. Identify set of possible competitive advantages on whice to build a position 2. Choose the right competitive advantages 3. Select an overall positioning strategy A good positioning helps guide marketing strategy by clarifying the value the product/service is delivering, identifying the goals it helps the consumer achieve, and showing how it does so in a unique way. Positioning statement – summarizes company or brand positioning. Takes the form To (target segment and need) our (brand) is (concept) that (point of difference). Competitive advantage – advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices. Develop a unique selling proposition (USP) for each product offer; Positioning one more than one differentiator; Value proposition – the full positioning of a brand – the full mix of benefits on which it is positioned; Differentiation – differentiating the market offering to create superior customer value; Product differentiation (eg: Consistency, durability, reliability, repairability) Service differentiation (eg: speed, convenience, careful delivery Channel differentiation People differentiation (eg:hiring, training better people than competitors) Image differentiation (eg:convey, benefits and positioning) Which differences to promote? Important – the difference delivers a highly valued benefit to target buyers; Distinctive – competitors don’t offer the difference/ the company can offer it in a more distinctive way; Superior – the difference is superior to other ways that customer might obtain the same benefit; Communicable – the difference is communicable and visible to buyers; Preemptive – competitors cannot easily copy the difference; Affordable – buyers can afford to pay the difference; Profitable – the company can introduce the difference profability; Value proposition The full positioning of a brand—the full mix of benefits on which it is differentiated and positioned. Possible Value Propositions More for More. More-for-more positioning involves providing the most upscale prod- uct or service and charging a higher price to cover the higher costs. A more-for-more market offering not only offers higher quality, it also gives prestige to the buyer. More for the same. A company can attack a competitor’s value proposition by positioning its brand as offering more for the same price. For example, Target positions itself as the “upscale discounter.” the same for less. Offering the same for less can be a powerful value proposition—everyone likes a good deal. Discount stores such as Walmart and “category killers” such as Best Buy, PetSmart, David’s Bridal, and DSW Shoes use this positioning. less for Much less. A market almost always exists for products that offer less and therefore cost less. Few people need, want, or can afford “the very best” in everything they buy. In many cases, consumers will gladly settle for less-than- optimal performance or give up some of the bells and whistles in exchange for a lower price. More for less. Of course, the winning value proposition would be to offer more for less. Many companies claim to do this. And, in the short run, some companies can actually achieve such lofty positions. Chapter 7 What is a Product? Anything that can be offered to a market for attention, acquisition, use, or consumption and that might satisfy a want or need. – Includes: physical objects, services, events, persons, places, organizations, ideas, or some combination thereof. What is a Service? A form of product that consists of activities, benefits, or satisfactions offered for sale that are essentially intangible and do not result in the ownership of anything. – Examples: banking, hotel, airline, retail, tax preparation, home repairs. Levels of a Product Product Classifications: Consumer Industrial Products A product bought by individuals and organizations for further processing or for use in conducting a business. Organizations, Persons, Places, and ideas social marketing Using traditional business marketing concepts and tools to create behaviors that will create individual and societal well-being. individual Product and service Decisions Product and service attributes Product quality The characteristics of a product or service that bear on its ability to satisfy stated or implied customer needs; Product features; Product style and Design. Branding A name, term, sign, symbol, or design or a combination of these that identifies the products or services of one seller or group of sellers and differentiates them from those of competitors. Branding Advantages-Buyers Advantages to buyers: – Communicate about the self – Socialization needs – Product identification – Product quality – After purchase assurance Advantages to sellers: – Basis for product’s story – Provides legal protection – Helps to segment markets – Help create and strengthen other brands – Intangible value – withstand challenging periods – Smooths partnerships and negotiations – Allow for abstraction Four Brand Strategies Line Extension Multibrands Brand Extension New Brands Packaging The activities of designing and producing the container or wrapper for a product. Labeling Labels range from simple tags attached to products to complex graphics that are part of the packaging. – Identifies product or brand – Describes several things about the product – Promotes the product through attractive graphics Product support services Customer service is another element of product strategy. A company’s offer usually includes some support services, which can be a minor part or a major part of the total offering. Product line Decisions Product line A group of products that are closely related because they function in a similar manner, are sold to the same customer groups, are marketed through the same types of outlets, or fall within given price ranges. Product mix (or product portfolio) The set of all product lines and items that a particular seller offers for sale. the nature and characteristics of a service intangibility: services cannot be seeen tasted, felt, heard or smelled before purchase Variability: perishability quality of : services cannot be stored for service services depends on who provides late sale or use them and when, where and how insperability : services cannot be separated from their providers Service profit chain The chain that links service firm profits with employee and customer satisfaction. Internal service quality. Superior employee selection and training, a quality work environment, and strong support for those dealing with customers, which results in... Satisfied and productive service employees. More satisfied, loyal, and hardwork- ing employees, which results in... Greater service value. More effective and efficient customer value creation, en- gagement, and service delivery, which results in...  Satisfied and loyal customers. Satisfied customers who remain loyal, make repeat purchases, and refer other customers, which results in... Healthy service profits and growth. Superior service firm performance. Internal marketing Orienting and motivating customer- contact employees and supporting service employees to work as a team to provide customer satisfaction. brand equity and brand Value brand equity The differential effect that knowing the brand name has on customer response to the product and its marketing. brand value The total financial value of a brand. Brand Positioning Store brand (or private brand) A brand created and owned by a reseller of a product or service. Co-branding The practice of using the established brand names of two different companies on the same product. Line extension Extending an existing brand name to new forms, colors, sizes, ingredients, or flavors of an existing product category Brand extension Extending an existing brand name to new product categories. Multibranding offers a way to establish different features that appeal to different customer segments, lock up more reseller shelf space, and capture a larger market share. New brands. A company might believe that the power of its existing brand name is waning, so a new brand name is needed. Chapter 8 new product development The development of original products, product improvements, product modifications, and new brands through the firm’s own product development efforts. Strategies for obtaining new-product ideas: Acquisition of companies, patents, licenses New products: original products, improvements, modifications Only 10% of new products are still on the market and profitable after 3 years. Why? – Overestimation of market size – Design problems – Incorrectly positioned, priced, or advertised – Pushed despite poor marketing research findings (Sunk Cost) – Development costs – Competition Ideas generation The systematic search for new product ideas. Company employees Customer Competitors Distributors Suppliers crowdsourcing Inviting broad communities of people—customers, employees, independent scientists and researchers, and even the public at large—into the new product innovation process. Idea screening Process to spot good ideas and drop poor ones. Develop system to estimate market size, product price, development time and costs, manufacturing costs, and rate of return. Evaluate these findings against set of company criteria for new products. Concept development and testing Product Idea: idea for a possible product that the company can see itself offering. Product Concept: detailed version of the idea stated in meaningful consumer terms. Product Image: the way consumers perceive an actual or potential product. Marketing Strategy Development Part One Describes: The Target Market Planned Product Positioning Market Share & Profit Goals Part Two Outlines the First-Year’s: Product’s Planned Price Distribution Marketing Budget Part Three Describes Long-Run: Sales & Profit Goals Marketing Mix Strategy Business Analysis Involves a review of the sales, costs, and profit projections to assess fit with company objectives. How to arrive at these projections? If yes, move to the product development phase. Product Development Develop concept into physical product Calls for large jump in investment Prototypes are made- Prototype must have correct physical features and convey psychological characteristics Test Marketing Product and program introduced in more realistic market setting. Not needed for all products. Can be expensive and time consuming, but better than making major marketing mistake. Commercialization Must decide on timing (i.e., when to introduce the product). Must decide on where to introduce the product (e.g., single location, state, region, nationally, internationally). Must develop a market rollout plan. Organizing New-Product Development Sequential Approach: each stage completed before moving to next phase of the project. Simultaneous Approach: cross-functional teams work through overlapping steps to save time and increase effectiveness. Product Life Cycle The course of a product’s sales and profits over its lifetime. Product development begins when the company finds and develops a new prod- uct idea. During product development, sales are zero, and the company’s invest- ment costs mount. Introduction is a period of slow sales growth as the product is introduced in the market. Profits are nonexistent in this stage because of the heavy expenses of product introduction. Growth is a period of rapid market acceptance and increasing profits. Maturity is a period of slowdown in sales growth because the product has achieved acceptance by most potential buyers. Profits level off or decline because of increased marketing outlays to defend the product against competition. Decline is the period when sales fall off and profits drop. Alternative PLC Shapes E.g formal clothing. E.g business casual. E.g Tamagotchi. style A basic and distinctive mode of expression. fashion A currently accepted or popular style in a given field. fad A temporary period of unusually high sales driven by consumer enthusiasm and immediate product or brand popularity. Practical Problems of PLC 1. Hard to identify which stage of the PLC the product is in 2. Hard to pinpoint when the product moves to next stage 3. Hard to forecast sales level, length of each stage, and shape of PLC 4. Hard to identify factors that affect product’s movement through stages 5. Strategy is both a cause and result of the PLC Chapter 9 Price The amount charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service. Customer value-based pricing Setting price based on buyers’ perceptions of value rather than on the seller’s cost. good-value pricing Offering just the right combination of quality and good service at a fair price. Competition-Based Pricing Sealed-Bid Going-Rate Company Sets Prices Based on Company Sets Prices Based on What What They Think Competitors Competitors Are Charging Will Charge Value-added pricing Attaching value-added features and services to differentiate a company’s offers and charging higher prices. cost-based pricing Setting prices based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk. types of costs fixed costs (overhead) Costs that do not vary with production or sales level. + Variable costs Costs that vary directly with the level of production. = Total costs The sum of the fixed and variable costs for any given level of production. cost-plus pricing (markup pricing) Adding a standard markup to the cost of the product. break-even pricing (target return pricing) Setting price to break even on the costs of making and marketing a product or setting price to make a target return. External Factors Affecting Pricing Decisions Ø Market and Demand Ø Competitors’ Costs, Prices, and Offers Ø Other External Factors, Economic Conditions, Reseller Reactions, Government Actions and Social Concerns Pricing in Different Types of Markets Pure Competition: Monopolistic Many buyers and Competition: sellers Many buyers and sellers where each has little who trade over a effect range of prices on the going market Oligopolistic price Competition: Pure Monopoly: Few sellers who are Market consists of a sensitive to each single seller other’s pricing/marketing strategies Major Considerations in Setting Price Competition-based pricing Setting prices based on competitors’ strategies, prices, costs, and market offerings. target costing Pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met. Demand curve A curve that shows the number of units the market will buy in a given time period at different prices that might be charged. Price elasticity A measure of the sensitivity of demand to changes in price. New Product Pricing strategies Market-skimming pricing(price skimming) Setting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales. Set a high price for a new product to “skim” revenues layer by layer from the market. Company makes fewer, but more profitable sales. When to use: Product’s quality and image must support its higher price. Costs of smaller volume cannot be so high that they cancel the advantage of charging more. Competitors should not be able to enter market easily and undercut the high price. Market-penetration pricing Setting a low price for a new product in order to attract a large number of buyers and a large market share. Set a low initial price in order to “penetrate” the market quickly and deeply. Can attract a large number of buyers quickly and win a large market share. When to use: Market must be highly price sensitive so a low price produces more market growth. Production and distribution costs must fall as sales volume increases. Must keep out competition and maintain low price or effects are only temporary Product Mix Pricing strategies Price adjustment strategies Price changes Initiating Price cuts Several situations may lead a firm to consider cutting its price. One such circumstance is excess capacity. Another is falling demand in the face of strong price competition or a weakened economy. Excess Capacity Falling MarketShare Dominate Market Through Lower Costs Initiating Price increases A successful price increase can greatly improve profits. For example, if the company’s profit margin is 3 percent of sales, a 1 percent price increase will boost profits by 33 percent if sales volume is unaffected. A major factor in price increases is cost inflation. Rising costs squeeze profit margins and lead companies to pass cost increases along to customers. Another factor leading to price increases is over-demand: When a company cannot supply all that its customers need, it may raise its prices, ration products to custom- ers, or both—consider today’s worldwide oil and gas industry. Cost Inflation Overdemand:Cannot Supply All Customers’Needs Chapter 10 Value delivery network A network composed of the company, suppliers, distributors, and, ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value. Marketing channel (distribution channel)A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user. How Channel Members Add Value The use of intermediaries results from their greater efficiency in making goods available to target markets. Offers the firm more than it can achieve on its own through the intermediaries: – Contacts – Experience – Specialization – Scale of operation – Reduction in number of transactions Channel Functions These functions should be assigned to the channel member who can add the most value for the cost Ø Information Ø Promotion Ø Contact Ø Matching Ø Negotiation Ø Physical Distribution Ø Financing Ø Risk taking channel level A layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer. Direct marketing channel A marketing channel that has no intermediary levels. indirect marketing channel A marketing channel containing one or more intermediary levels. Consumer and Business Channels Channel Behavior Disagreements among marketing channel members on goals, roles, and rewards—who should do what and for what rewards. The channel will be most effective when: – each member is assigned tasks it can do best. – all members cooperate to attain overall channel goals. If this does not happen, conflict occurs: – Horizontal Conflict occurs among firms at the same level of the channel (e.g., retailer to retailer). – Vertical Conflict occurs between different levels of the same channel (e.g., wholesaler to retailer). Some conflict can be healthy competition. Conventional vs. Vertical Marketing System Conventional distribution channel A channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole. Vertical marketing system (VMs) A channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate. Types of Vertical Marketing Systems corporate VMs A vertical marketing system that combines successive stages of production and distribution under single ownership—channel leadership is established through common ownership. contractual VMs A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts. franchise organization A contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process. administered VMs A vertical marketing system that coordinates successive stages of production and distribution through the size and power of one of the parties. horizontal marketing system A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity. Multichannel Distribution systems A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments. Changing Channel Organization Marketing channel design Designing effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives. Disintermediation The cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries. Channel Design Decisions Analyzing Consumer Need Setting Channel Objectives Identifying Major Alternatives – Types of intermediaries – Number of intermediaries – Responsibilities of intermediaries Types of intermediaries intensive distribution Stocking the product in as many outlets as possible. exclusive distribution Giving a limited number of dealers the exclusive right to distribute the company’s products in their territories. selective distribution The use of more than one but fewer than all of the intermediaries that are willing to carry the company’s products. Evaluating the Major Alternatives Economic Criteria: – A company compares the likely sales, costs, and profitability of different channel alternatives. Control Issues: – How and to whom should control be given? Adaptive Criteria: – Consider long-term commitment vs. flexibility. Marketing channel management Selecting, managing, and motivating individual channel members and evaluating their performance over time. Marketing logistics (physical distribution) Planning, implementing, and controlling the physical flow of goods, services, and related information from points of origin to points of consumption to meet customer requirements at a profit. Supply chain management Managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers. Distribution center A large, highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible. Multimodal transportation Combining two or more modes of transportation. integrated logistics management The logistics concept that emphasizes teamwork—both inside the company and among all the marketing channel organizations—to maximize the performance of the entire distribution system. third-party logistics (3Pl) provider An independent logistics provider that performs any or all of the functions required to get a client’s product to market. Chapter 11 What is Retailing? Retailing includes all the activities involved in selling products or services directly to final consumers for their personal, non-business use. retailer A business whose sales come primarily from retailing. shopper marketing Focusing the entire marketing process on turning shoppers into buyers as they approach the point of sale, whether during in-store, online, or mobile shopping. omni-channel retailing Creating a seamless cross-channel buying experience that integrates in- store, online, and mobile shopping. Types of Retailers Retailers are classified based on: Ø Amount of Service They Offer Ø Breadth & Depth of Product Lines Ø Relative Prices Charged Ø How They Are Organized Amount of Service Self-Service Retailers: – Serve customers who are willing to perform their own “locate-compare-select” process to save money. Limited-Service Retailers:  – Provide more sales assistance because they carry more shopping goods about which customers need information. Full-Service Retailers: – Usually carry more specialty goods for which customers like to be “waited on.” Classification of Retailing: Product Line Store Specialty Stores: Narrow Product Line, Deep Assortment i.e. Athlete’s Foot Department Stores: Wide Variety of Product Lines i.e. Clothing, Home Furnishings i.e. Saks Fifth Avenue Supermarkets: Wide Variety of Food, Laundry, and Household Products i.e. Jumbo Convenience Stores: Limited Line of High-Turnover Convenience Goods i.e. 7-Eleven Superstores: Large Assortment of Routinely Purchased Food, Nonfood Products i.e. Target Discount Stores: Standard Merchandise at Lower Prices i.e. 1-2-3 Dollar Off-Price Retailers: Changing Collection of Higher-Quality Goods at a Reduced Price i.e. T.J. Maxx Relative Prices Classification Discount Store: A retail institution that sells standard merchandise at lower prices by accepting lower margins and selling at higher volume. Off-Price Retailer: Retailer that buys at less-than-regular wholesale prices and sells at less than retail. Examples are factory outlets, independents, and warehouse clubs. Factory Outlet: Off-price retailing operation that is owned and operated by a manufacturer and that normally carries the manufacturer’s surplus, discontinued,or irregular goods. Independent Off-Price Retailer: Off-price retailer that is either owned and run by entrepreneurs or is a division of a larger retail operation. Warehouse Club: Off-price retailer that sells a limited selection of brand-name grocery items, appliances, clothing, and other goods at deep discounts to members who pay annual membership fees. Organizational approach Retailer Marketing Decisions Product Assortment and Services Decisions Product Assortment Brand of Merchandise Merchandising Events Product Differentiation Strategies Services Mix Key Tool of Non-price Competition for Setting One Store Apart from Another Store’s Atmosphere Physical Layout “Feel” That Suits the Target Market and Moves Customers to Buy Retailer’s Price, Promotion, and Place Decisions Price Decisions Target Market; Product & Service Assortment; Competition Promotion Decisions Using Advertising, Personal Selling, Sales Promotion, Public Relations, & Direct Marketing to Reach Customers Place Decisions Shopping Centers, Central Business Districts, Power Centers, or Online Shopping The Future of Retailing 1. New Retail Forms and Shortening Retail Life Cycles 2. Growth of Nonstore Retailing 3. Retail Convergence 4. Rise of the Megaretailers 5. Global Expansion of Major Retailers 6. Growing Importance of Retail Technology 7. Retail Stores as “Communities” or “Hangouts” Showrooming The shopping practice of coming into retail store showrooms to check out merchandise and prices but instead buying from an online-only rival, sometimes while in the store. Wholesaling Wholesaling All the activities involved in selling goods and services to those buying for resale or business use. Wholesaler A firm engaged primarily in wholesaling activities. Functions Provided by Wholesalers Selling & Promoting: Wholesalers’ sales forces help manufactur- ers reach many small customers at a low cost. The wholesaler has more contacts and is often more trusted by the buyer than the distant manufacturer. Buying & Assortment Building: Wholesalers can select items and build assortments needed by their customers, thereby saving much work. Bulk-Breaking: Wholesalers save their customers money by buying in carload lots and breaking bulk (breaking large lots into small quantities). Warehousing: Wholesalers hold inventories, thereby reducing the inventory costs and risks of suppliers and customers. Transportation. Wholesalers can provide quicker delivery to buyers because they are closer to buyers than are producers. Financing. Wholesalers finance their customers by giving credit, and they finance their suppliers by ordering early and paying bills on time. Risk bearing. Wholesalers absorb risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence. Market information. Wholesalers give information to suppliers and customers about competitors, new products, and price developments. Management services and advice. Wholesalers often help retailers train their salesclerks, improve store layouts and displays, and set up accounting and inven- tory control systems. 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. Agents & Brokers They Don’t Take Title to the Goods, and They Perform Only a Few Functions. Wholesaler Marketing Decisions Trends in Wholesaling Ø Must Constantly Improve Services and Reduce Costs Ø Will Continue to Increase the Services Provided to Retailers Ø Wholesalers Are Now Going Global Ø Distinction Between Large Retailers & Wholesalers is Blurry Chapter 12 Promotion mix (marketing communications mix)The specific blend of promotion tools that the company uses to engage customers, persuasively communicate customer value, and build customer relationships. Advertising Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Sales promotion Short-term incentives to encourage the purchase or sale of a product or a service. Personal selling Personal customer interactions by the firm’s sales force for the purpose of engaging customers, making sales, and building customer relationships. Public relations (Pr) 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. Direct and digital marketing Engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships. content marketing Creating, inspiring, and sharing brand messages and conversations with and among consumers across a fluid mix of paid, owned, earned, and shared channels. The Need for IMC Using IMC, the company carefully integrates and coordinates its many communication channels to deliver a clear, consistent, and compelling message about the organization and its brands. Integrated Marketing Communication Setting the Overall Communication Mix Ø Advertising: Reaches Many Buyers, Repeats Message Many Times, Impersonal, Expensive Ø Personal Selling: Personal Interaction, Relationship Building, Most Expensive Promo Tool Ø Sales Promotion: Wide Assortment of Tools, Rewards, Quick Response, Efforts Short- Lived Ø Public Relations: Very Believable, Dramatize a Company or Product, Underutilized Ø Direct Marketing: Nonpublic, Immediate, Customized, Interactive Integrated marketing communications (iMc)Carefully integrating and coordinating the company’s many communications channels to deliver a clear, consistent, and compelling message about the organization and its brands. Push vs. Pull Strategy Push strategy A promotion strategy that callsfor using the sales force and trade promotion to push the product through channels. The producer promotes the product to channel members who in turn promote it to final consumers. Pull strategy A promotion strategy that calls for spending a lot on consumer advertising and promotion to induce final consumers to buy the product, creating a demand vacuum that “pulls” the product through the channel. Advertising A specific communication task to be accomplished with a specific target audience during a specific period of time. Advertising has been used for centuries. Advertising is used by: – Business firms – Nonprofit organizations – Professionals – Social agencies  – Government Setting Advertising Objectives Informative Advertising Inform Consumers or Build Primary Demand Persuasive Advertising Build Selective Demand Comparative Advertising Compares One Brand to Another Reminder Advertising Keeps Consumers Thinking About a Product Setting the Advertising Budget Affordable Setting the promotion budget at the level management thinks the company can afford. Percentage-of-Sales Setting the promotion budget at a certain percentage of current or forecasted sales or as a percentage of the unit sales price. Competitive-Parity Setting the promotion budget to match competitors’ outlays. Objective-and-Task Developing the promotion budget by (1) defining specific promotion objectives, (2) determining the tasks needed to achieve these objectives, and (3) estimating the costs of performing these tasks. The sum of these costs is the proposed promotion budget. advertising strategy The strategy by which the company accomplishes its advertising objectives. It consists of two major elements: creating advertising messages and selecting advertising media. Creating the Advertising Message: Message Strategy Develop a Message Focus on Customer Benefits Creative Concept “Big Idea” Visualization or Phrase Advertising Appeals Meaningful, Believable& Distinctive Message Execution – Typical Approaches Ø Slice of Life Ø Fantasy Ø Technical Expertise Ø Lifestyle Ø Testimonial Evidence or Endorsement Selecting Advertising Media advertising media The vehicles through which advertising messages are delivered to their intended audiences. Reach: Percentage of people exposed to ad Frequency: Number of times a person is exposed to ad  Media Impact: The qualitative value of a message exposure through a given medium Choosing Media Type Factors to consider: – Media habits of target consumers – Nature of the product – Type of message – Cost (examples) – Media vehicles Specific media within each general media type Deciding on Media Timing Must decide how to schedule the advertising over the course of a year – Follow seasonal pattern – Oppose seasonal pattern – Same coverage all year Choose the pattern of the ads – Continuity – Pulsing Evaluating Advertising return on advertising investment The net return on advertising investment divided by the costs of the advertising investment. Measure the communication effects of an ad. “Copy Testing” Measure the sales effects of an ad.Is the ad increasing sales? Consider other variables Advertising agency A marketing services firm that assists companies in planning, preparing, implementing, and evaluating all or portions of their advertising programs. Sales Promotion Sales promotion consists of short-term incentives to encourage the purchase or sales of a product or service. The idea behind sales promotion is to generate immediate sales. Consumer Sales Promotion Tools Ø Sample: offers a trial amount of a product) Ø Coupons: Savings when purchasing specified products Ø Cash Refunds “Rebates” Refund of part of the purchase price by mail Ø Price Packs “Cents-Off Deals” Reduced prices marked on the label or package by producer Ø Premiums Goods offered free or low cost as an incentive to buy a product Ø Advertising Specialties Articles imprinted with an advertiser’s name given as gifts Ø Patronage Rewards Cash or other award offered for regular use of a product or service  Ø Point-of-Purchase Promotions Displays or demonstrations at the point of purchase or sale Ø Contest Consumers submit an entry to be judged by a panel Ø Sweepstakes Consumers submit their names for a drawing Ø Games Consumers receive something each time they buy which may help them win a prize Developing the Sales Promotion Program Ø Decide on the Size of the Incentive Ø Set Conditions for Participation Ø Decide How to Promote and Distribute the Promotion Program Ø Decide on the Length of the Program Ø Evaluate the Program 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. Major public relations functions Press relations or press agency. Creating and placing newsworthy information in the news media to attract attention to a person, product, or service. Product publicity. Publicizing specific products. Public affairs. Building and maintaining national or local community relationships. Lobbying. Building and maintaining relationships with legislators and government officials to influence legislation and regulation. Investor relations. Maintaining relationships with shareholders and others in the financial community. Development. Working with donors or members of nonprofit organizations to gain financial or volunteer support. The Consumer What is Happiness? A sense of subjective well-being. An overall sense that life is good (Myers, 1992) and that life contains many positive situations and emotions (Ahuvia, 2008). Hedonism - Pleasure vs. Pain (Epicurus, 341 b.C.; Diener, Sapyta, and Suh, 1998) Eudaimonism - Self-realization and fulfillment of one’s functions (Ryff and Keyes, 1995) - Aristotle’s criticism of ‘followers of desire’ Happiness Relevance “Life, Liberty and the Pursuit of Happiness” (US Declaration of Independence - 1776) Gauging happiness can be as important for measuring economic progress as determining whether inflation is low or unemployment is high (Ben Bernanke, August 6, 2012—The Washington Post) Positive Psychology movement started by Seligman in 1998 Is happiness hot in Marketing? What Is Happiness For? Positive emotions add value to people’s lives. Broaden-and-Build Theory (Fredrickson, 1998) - Lower vigilance (vs. unstoppable concern). - Broaden thought-action repertoire. - Allow the building of personal resources (intellectual, physical, and social). Are We Happy? Among 43 nations, 86% above neutral (Diener and Diener, 1996) Possible reasons: - Positivity bias/Set point on the positive range Maximum information from negative events Approach tendencies must prevail Sources of Happiness Genetic Personality traits Life circumstances Behavioral factors Sources of Happiness – Genetics Composition of a person’s genes – 40% of her happiness (Tellegen, Lykken, Bouchard, Wilcox, Segal, and Rich, 1988) Danish twins – 27% (McGue and Christense, 1997) Sources of Happiness – Personality Extraverts are happier because of participation in social events (Argyle and Lu, 1990) Extraverts are happier even when alone (Pavot, Diener, and Fujita, 1990) Extraverts are more sensitive to positive stimuli (Rusting and Larsen, 1997) Self-esteem and Happiness (Peterson, 1975; Reid and Ziegler, 1980) Only among individualistic people (Suh, 1998) Sources of Happiness – Life Circumstances Demographics (e.g., age, gender), and life status variables (e.g., income, health) “such factors as income, beauty, and even marital status are particularly prone to adaptation and people generally don’t dwell on them. Instead, these circumstantial factors tend to exist in the background of your emotional life.” (Lyubomirsky, 2008) Lottery winners vs. paraplegics (Brickman, Coates, and Janoff-Bulman, 1978) We adapt to some things (e.g., some types of foods) but not to others (e.g., loud noise, loss of a kid, unemployment). Sources of Happiness – Behaviors Expression of gratitude – Thank you letters (Seligman, Steen, Park, and Peterson, 2005). - Bring to forefront of one’s attention (i.e., avoid adaptation) - Strength social ties Altruism and Prosocial Behaviors Spend money on others vs. oneself (Dunn, Aknin, and Norton, 2008)