Integrated Business Management 2024 PDF

INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 throughout the supply chain to the CHAPTER 3: MARKETING CHANNELS AND ultimat...

INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 throughout the supply chain to the CHAPTER 3: MARKETING CHANNELS AND ultimate consumer. SUPPLY CHAIN ○ Integrates operations, logistics, supply, and marketing channel ★ A distribution system involves firms that management, so products are are “upstream” in the supply chain (ex: produced and distributed in the wholesalers and retailers) working right quantities, to the right together to serve customers and generate locations, and at the right time. a competitive advantage. ○ Activities: manufacturing, research, sales, advertising, and shipping. Foundations of the Supply Chain ○ Involves all entities that facilitate product distribution and benefit ★ Distribution - decisions and activities that from cooperative efforts make products available to consumers ○ should begin with a focus on the when and where they want to purchase customer, who is the ultimate them. consumer and whose satisfaction ★ Supply Chain - involved with the flow and should be the goal of all efforts of transformation of products from raw channel members. materials through to the end customer. ○ When the buyer, the seller, ★ Procurement (supply management) - marketing intermediaries, and Processes to obtain resources to create facilitating agencies work value through sourcing, purchasing, and together, the cooperative recycling including materials and relationship results in compromise information. and adjustments that meet ★ Logistics Management - Planning, customers’ needs. implementing, and controlling the ○ Supply chain managers can use efficient and effective flow and storage of data available through improved products and information from the point information technology (improved of origin to consumption in order to meet SCM capabilities GLOBALLY) to customers’ needs and wants learn about a firm’s customers. ★ Operations Management - The total set ○ Blockchain & AI of managerial activities used by an ★ Blockchain - incorruptible digital organization to transform resource inputs recordkeeping system into goods, services, or both. ○ all organizations within a supply ★ Supply Chain Management (SCM) - The chain can record every movement coordination of all the activities involved of products and components from with the flow and transformation of where they are sourced, supplies, products, and information PAGE 1  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 processed, and stored, and when Marketing Channel (Channel of Distribution/ they expire, all the way to the final Distribution Channel) - group of individuals and consumer. organizations that direct the flow of products ★ AI - help firms with complex computing from producers to customers within the supply tasks to improve marketing analytics. chain ★ Goal is to make products available at the !!!* right time at the right place in the right quantities Supply chain management is crucial to ★ Driving force - Customer Satisfaction the accurate production, distribution, and timing of any product. Market Intermediaries - Middlemen that link To ensure quality and customer producers to other intermediaries or ultimate consumers through contractual arrangements or satisfaction, firms must be involved in through the purchase and resale of products the management of every aspect of ★ Key role in customer relationship their supply chain, in close partnership management with all involved upstream and ★ Maintaining databases and information downstream organizations. systems to maintain also effective As demand for innovative goods and customer relationships services has escalated, marketers have had to increase their flexibility and responsiveness to new products and Marketing Activities Sample Activities modify existing ones to meet the Performed by ever-changing needs of customers. Intermediaries Marketing Information ANALYZE Sales Data and Information. Perform or commission marketing research. Marketing Management ESTABLISH Strategic and Tactical plans for customer relationships and organizational productivity. The Role of Marketing Channels (MC) in Supply Chains Facilitating Exchanges CHOOSE product assortments that match the needs of customers. THE SIGNIFICANCE OF MARKETING CHANNELS Cooperate with channel  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 accomplished through both independent members to develop and joint efforts of channel members. partnerships. ★ MC Create Utility - TPPF Promotion SET promotional ○ Time - Making products available objectives. Advertising, when the consumer wants them personal selling, sales ○ Place - Making products available promotion, publicity, and in locations where customers wish packaging. to purchase them. ○ Possession - The customer has Price ESTABLISH pricing access to the product to use or to policies and terms of store for future use sales. ○ Form - Assembling, preparing, or Logistics MANAGE transportation, otherwise refining the product to warehousing, material suit individual customer needs. handling, inventory ★ MC Create Facilitates Exchange control, and Efficiencies (Marketing Intermediaries) communication. ○ can reduce the costs of exchanges by performing certain services or functions efficiently. THE SIGNIFICANCE OF MARKETING ○ Intermediaries - specialists in CHANNELS facilitating exchanges. ★ Have strong influence on other elements ○ *provide valuable assistance of the marketing mix. because of their access to and ★ Channel decisions are critical because control over important resources they determine a product’s market used in the proper functioning of presence and accessibility. marketing channels. ★ decisions have strategic significance ★ Critics accuse wholesalers of being because they generally entail long-term inefficient and adding to cost commitments among a variety of firms. ○ While eliminating wholesalers may ★ the least flexible component of the lower prices for customers, it marketing mix; once a firm commits to a would not eliminate the need for distribution channel, it is difficult to the services the wholesalers change. provide ★ creating utility and facilitating exchange ○ Other channel members would efficiencies. have to perform those functions, - *May performed by a single channel perhaps not as efficiently, and member, but most functions are customers still would have to pay for them. PAGE 3  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 value to customers and reduced costs throughout the distribution channel) ★ 4 buyers > products > four producers = 16 separate transactions are possible. ★ If one intermediary serves both producers ★ CHANNELS FOR BUSINESS PRODUCTS and buyers, the number of possible ★ Industrial Distributor - An independent transactions is cut in half. business organization that takes title to industrial products and carries inventories. ○ Usually sells standardized items, some wide variety of product lines. ○ Can be most effective when a product: Broad market appeal Easily stacked and serviced Explanation: Sold in small quantities Needed on demand to avoid high losses Types of Marketing Channels * ADVANTAGES DISADVANTAGES ★ CHANNELS FOR CONSUMER PRODUCTS - long channel is efficient for some consumer goods - perform the needed - difficult to manage ○ Cost Lower = SEVERAL channel selling activities in local because they are intermediaries perform THAN markets at a relatively independent firms ONE channel member perform. low cost to a - Often stock competing ○ Firms specialize in certain manufacturer brands, so a producer elements of producing or moving - reduce a producer’s cannot depend on them ARE MORE EFFECTIVE than the financial burden by to sell its brand manufacturer. (results in added providing credit aggressively  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 services - Incur expenses from economical alternative because they are not - aware of local needs maintaining inventories for a firm that has compensated for these and pass on market - less to handle bulky or highly limited resources activities and they information to slow-selling items, or and cannot afford a reduce the amount of producers due to their items full-time sales force productive selling time that need close relationships with specialized facilities or - limited ability to their customers extraordinary selling provide customers with - Reduce producers’ efforts parts or repair services capital requirements quickly because they - May lack the by holding adequate rarely maintain knowledge necessary to inventories in local inventories sell and service technical markets products ★ MULTIPLE MARKETING CHANNELS AND CHANNEL ALLIANCES ★ Manufacturers’ agent - An independent ○ Strategic Channel Alliance - businessperson who sells agreement of one organization to complementary products of several distribute products through the producers in assigned territories and is marketing channels of another. compensated through commissions. (products of 2 firms are similar but ADVANTAGES DISADVANTAGES nor direct competitors) Ex: Yves Saint Laurent can - possess considerable - The seller has little be purchased directly from technical and market control over the actions YSLbeauty.com, in information and have of manufacturers’ agents brick-and-mortar stores, an established set of and also from Amazon.com. - Prefer to concentrate customers ○ Multichannel Distribution - use of a on larger accounts variety of marketing channels to - asset to an because they work on ensure maximum distribution. organizational seller commission ○ Digital Distribution - delivering with highly seasonal - reluctant to spend time through the internet to a computer demand because the following up with to another. seller does not have to customers after the sale, support a year-round putting forth special Selecting Marketing Channels sales force selling efforts, or - paid on a commission providing sellers with basis, which can be an market information PAGE 5  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 ★ Customer Characteristics - variations in ★ Environmental Forces - Economic product use, product complexity, conditions, technology, and government consumption levels, and need for services. regulations ○ Business Consumers - deal ★ Characteristics of Intermediaries - directly with produces and buy Organizations reconsider channel choices large quantities when they believe an intermediary does ○ Consumers - buy limited not promote its product adequately and quantities, purchase from retailers, not offer the correct mix of services. don’t mind limited customer service. Intensity of Market Coverage ★ Product Attributes - complex, fragile, perishable, and expensive products ★ Variables that affect the intensity of require special handling and employ market coverage include:* short channels. ○ Replacement rate ○ Less expensive = longer channels ○ Product adjustment (services) ★ Type of Organization ○ Duration of consumption ○ LARGER FIRMS ○ Time required to find the product Deal with vendors or other channel members ★ INTENSIVE DISTRIBUTION - using all More distribution centers, available outlets reduce delivery times ○ Appropriate for products that have Use extensive product mix high replacement rate, require no as a competitive tool. service, or bought based on price ○ SMALLER FIRMS cues. (CONVENIENCE PRODUCT) Serve local or regional ○ MUST be available at a store needs NEARBY and be obtained with Consider other channel MINIMAL search time. members that have ○ Ex: grocery products and clothing resources to provide services (shipping products long distances and ★ SELECTIVE DISTRIBUTION - using only extending credit to some available outlets in an area customers) ○ Appropriate for shopping products ★ Competition - maintain low costs so it can ○ Desirable when a special effort, offer lower prices than its competitors if such as customer service from a necessary, to maintain a competitive channel member, is important to advantage. customers ○ Motivate retailers to provide adequate services  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 the “competitive priorities” of ★ EXCLUSIVE DISTRIBUTION - using single speed, quality, cost, or flexibility as outlet in a fairly large geographic area the performance objective. ○ Suitable for products purchased infrequently, consumed over a ★ CHANNEL LEADERSHIP, COOPERATION, long period of time, or that require AND CONFLICT a high level of customer service or ○ Holds certain expectations information (EXPENSIVE ○ Partnerships agree on objectives, PRODUCTS) policies, and procedures (eliminate ○ Not applicable for convenience redundancies) and shopping products ○Channel cooperation reduces ○ Used as an incentive to sellers wasted resources like time, energy, when a limited market is available or materials. (environmentally for products friendly) ○ Products that are first introduced ★ CHANNEL LEADERSHIP are appropriate but as competitors ○ Channel Captain - dominant enter, the product moves through leader its life cycle and other types of Producer, wholesaler, distribution channels become retailer necessary. Posses channel power to attain desired objectives Channel Power - ability to Strategic Issues in Marketing Channels influence others goal achievement. ★ COMPETITIVE PRIORITIES IN ★ CHANNEL COOPERATION MARKETING CHANNELS ○ enables speed up inventory ○ Supply chains can be a source of replenishment, improves customer competitive advantage and a service, and cuts the costs of strong market orientation because bringing products to the supply chain decisions cut across consumer. all functional areas of business. ○ leads to greater trust among ○ Building the most effective and channel members, improves the efficient supply chain can sustain a overall functioning of the channel, business and help it to use and leads to more satisfying resources effectively and be more relationships among channel efficient. members. ○ Supply chains driven by ○ Viewed as a unified supply chain. firm-established goals focus on ★ CHANNEL CONFLICT PAGE 7  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 ○ Occurs when: negotiate territorial issues Members disagree about between regional best methods for distributors distributing products provide recognition to profitably and efficiently certain resellers for their Intermediaries importance in distributing overemphasize competing to others. products or diversity into ★ CHANNEL INTEGRATION product lines traditionally ○ may stabilize supply, reduce costs, handled by other and increase channel member intermediaries coordination. Self-interest creates ★ VERTICAL CHANNEL INTEGRATION - misunderstanding about Combining two or more stages of the role expectations of marketing channel under one channel members management Poor Communication ○ when one member of a marketing ○ No single method to resolve but channel purchases the operations partnership can be reestablished of another member or simply if: performs the functions of another The role of each channel member, eliminating the need for member is clearly defined that intermediary and followed ○ Can be more effective against Members of channel competition because of increased partnerships agree on bargaining power and the ease of means of coordinating sharing information and channels, which requires responsibilities strong, but not polarizing, ○ coordinate efforts to reach a leadership desired target market. Channel ○ To prevent conflict:* members view other members as provide competing extensions of their own resellers with different operations. brands ○ Vertical Marketing System (VMS) allocate markets among - marketing channel managed by a resellers single channel member to define policies for direct achieve efficient, low-cost sales to avoid potential distribution aimed at satisfying conflict over large target market customers accounts Corporate VMS - Combines all stages of marketing  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 channel (producers to implementing, and controlling the consumers) under 1 owner efficient flow and storage of products and Administered VMS - includes: Channel members are ○ Order processing independent, but informal ○ Inventory management coordination achieves a ○ Materials handling high level of ○ Warehousing inter-organizational ○ Transportation management. ★ Outsourcing - contracting of physical Contractual VMS - channel distribution tasks to third parties. members are linked by ★ Third-party logistics (3PL) firms – Firms legal agreements (rights that have special expertise in core and obligations) physical distribution activities such as ★ HORIZONTAL CHANNEL INTEGRATION - warehousing, transportation, inventory Combining organizations at the same management, and information technology level of operation under one management and can often perform these activities ○ Permits efficiencies and more efficiently economies of scale in purchasing, ○ *Outsourcing logistics to marketing research, advertising, third-party organizations, can and specialized personnel. reduce marketing channel costs ○ Ex: the owner of a dry cleaning and boost service and customer firm might buy and combine satisfaction for all supply chain several other existing dry cleaning partners. establishments. ○ DISADVANTAGES of increased TECHNOLOGY ADVANCEMENT IN LOGISTICS size* ★ have revolutionized logistics, bypassing Decreased flexibility shipping and warehousing considerations Difficulties coordinating and transforming physical distribution by among members facilitating just-in-time delivery, precise Need for additional inventory visibility, and instant marketing research and shipment-tracking capabilities. large-scale planning ★ enables companies to avoid expensive mistakes, reduce costs, and generate Logistics in Supply Chain Management increased revenues. ★ Information technology enhances the ★ Logistics, involving physical distribution transparency of the supply chain, allowing (may be performed by producer, all marketing channel members to track wholesaler, retailer), relates to planning, PAGE 9  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 the movement of goods and improve their customer service. ★ ORDER PROCESSING - The receipt and ★ Speed of delivery, flexibility, and quality of transmission of sales order information. service are often as important to (contributes to satisfaction, decreased customers as costs. costs and cycle time, increased profits) ★ Decreasing costs in one area often raises ○ Order entry – Begins when them in another. customers place purchase orders ★ *A total-cost approach to physical ○ Order handling – Product distribution that accounts for all these availability and customer different functions enables managers to creditworthiness is verified; order view physical distribution as a system and assembly occurs shifts the emphasis from lowering the ○ Order delivery – Delivery is costs of individual activities to minimizing scheduled with an appropriate overall costs. carrier ★ Electronic Data Interchange (EDI) - A computerized means of integrating order processing with production, inventory, accounting, and transportation. ○ information system that links marketing channel members and outsourcing firms together ★ INVENTORY MANAGEMENT - Developing ★ Physical distribution managers must be and maintaining adequate assortments of sensitive to the issue of cost trade-offs. products to meet customers’ needs. ○ Trade-offs are strategic decisions ○ Stockouts – Shortage of products to combine (and recombine) ○ Too many products in inventory resources for greatest cost increases risks of obsolescence, effectiveness. pilferage, and damage ○ The goal is not always to find the ○ Reorder point – The inventory lowest cost, but rather to find the level that signals the need to place right balance of costs. a new order ★ Cycle time – The time needed to ○ To calculate the reorder point: complete a process Order lead time – The ○ Firms should look for ways to average time lapse reduce cycle time while between placing the order maintaining or reducing costs and and receiving it maintaining or improving Usage rate – The rate at customer service. which a product’s inventory  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 is used or sold during a ○ Containerization – The specific time period consolidation of many items into Safety stock – The amount a single, large container that is of extra inventory a firm sealed at its point of origin and keeps to guard against opened at its destination stockouts resulting from above-average usage rates ★ WAREHOUSING - The design and and/or longer than operation of facilities for storing and expected lead times moving goods. Reorder Point = (Order ○ Provides time utility by Lead Time × Usage Rate) compensating for dissimilar + Safety Stock production and consumption rates ★ Just-in-time (JIT) – An inventory ○ Helps stabilize prices and the management approach in which supplies availability of seasonal items arrive just when needed for production ○ Choosing appropriate warehouse or resale facilities is an important strategic consideration. ★ MATERIALS HANDLING - Physical ★ 2 general categories: handling of tangible goods, supplies, and ○ Private warehouses – resources. (*Transportation from points of Company-operated facilities for production to points of consumption) storing and shipping their own ○ minimize inventory management products costs, reduce the number of times ○ Public warehouses – Storage a good is handled, improve space and related logistics customer service, and increase facilities that can be leased by customer satisfaction. companies ★ Radio frequency identification (RFID) – ★ Distribution centers – Large, centralized A system of tags and readers that use warehouses that focus on moving rather radio waves to identify and track than storing goods materials tagged with special microchips ★ *Field Public Warehouse - public ○ *Useful for asset management and warehouses at the owner's inventory data collection location. ★ Product characteristics and internal ○ Public warehouses provide bonded packaging are important considerations. storage, a warehouse arrangement ★ Two common methods used in materials in which imported or taxable handling include: products are not released until the ○ Unit loading – One or more boxes products’ owners pay U.S. customs are placed on a pallet or skid duties, taxes, or other fees. PAGE 11  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 ★ TRANSPORATION - The movement of ○ Large logistics firms may be used products from where they are made to to establish seamless global intermediaries and end users. distribution. ○ *the most expensive logistics ★ COORDINATING TRANSPORTATION function. ○ Intermodal Transportation - Two ★ TRANSPORTATION MODES or more transportation modes ○ Railroads - heavy, bulk, long used in combination distance over land ○ Containerization facilitates this by ○ Trucks - flexible schedules and consolidating shipments into routes. Expensive and vulnerable sealed containers for transport by to bad weather. Size and weight piggyback (truck and rail), restrictions fishyback (truck and water), and ○ Waterways - cheapest, heavy, low birdyback (truck and air). value, market must be accessible ○ Freight forwarders – to water Organizations that consolidate ○ Airways - fastest and most shipments from several firms into expensive. High-value, low bulk, efficient lot sizes perishable goods ○ Megacarriers – Freight ○ Pipelines - automated, slow, low transportation firms that provide cost, dependable, contents subject several modes of shipment to shrinkage. Legal Issues in Channel Management ★ Federal, state, and local laws governing distribution channel management in the United States are based on the principle that the public is best served by protecting competition and free trade. ★ CHOOSING TRANSPORTATION MODES ★ Under the authority of federal legislation, ○ based on the cost, speed, such as the Sherman Antitrust Act and dependability, load flexibility, the Federal Trade Commission Act, courts accessibility, and frequency that is and regulatory agencies determine under most appropriate and generates what circumstances channel management the desired level of customer practices violate this underlying principle service. and must be restricted. ○ Marketers compare transportation modes to determine if the benefits ★ RESTRICTED SALES TERRITORIES from a more expensive mode are ○ prohibit intermediaries from worth the higher costs. selling outside of designated sales  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 territories. (it favors ★ EXCLUSIVE DEALING - manufacturer intermediaries because it provides forbids an intermediary from carrying them exclusive territories where it products of competing manufacturers minimize competition) ○ Only considered legal if the: ○ Courts have conflicting positions Exclusive dealing blocks regarding restricted sales competitors from less than territories. 15 percent of the market ○ Although the courts have deemed The sales volume is small restricted sales territories a The producer is smaller restraint of trade among than the retailer intermediaries handling the same ★ REFUSAL TO DEAL brands, they have also held that ○ Producers have the right to exclusive territories can actually choose or reject the channel promote competition among members dealers handling different brands. ○ Suppliers may not legally refuse to deal with wholesalers or dealers ★ TYING AGREEMENTS - supplier furnishes merely because these wholesalers a product to a channel member with the or dealers resist policies that are stipulation that the channel member must anticompetitive or in restraint of purchase other products as well trade. ○ offload slow-moving inventory. ○ *If dealers and customers in a ○ A franchiser may tie the purchase given market have access to of equipment and supplies to the similar products or if the exclusive sale of franchises, justifying the dealing contract strengthens an policy as necessary for quality otherwise weak competitor, the control and protection of the arrangement is allowed. franchiser’s reputation ○ Courts accept tying agreements when: The supplier is the only firm able to provide products of a certain quality The intermediary is free to carry competing products as well A company has just entered the market PAGE 13  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 protecting customer privacy has CHAPTER 4: INTEGRATED MARKETING COMMUNICATIONS become a major challenge. ○ Through digital media, companies can provide product information ★ Coordination of promotion and other and services that are coordinated marketing efforts for maximum with traditional promotional informational and persuasive impact on activities. customers ○ Coordinating multiple marketing ★ *Marketers now use TV, direct mail, the tools to produce this synergistic internet, special-interest magazines, effect requires a marketer to smartphones, mobile applications, social employ a broad perspective. media, sales calls, and outdoor boards. ○ A major goal of integrated ★ *a number of promotion-related marketing communications is to companies provide one-stop shopping for send a consistent message to the client seeking advertising, sales customers. promotion, and public relations, thus reducing coordinating efforts. ★ enable synchronization of promotion elements and can improve the efficiency ★ *Rising costs have also meant marketers and effectiveness of promotion budgets. demand systematic evaluations of communication efforts and reasonable ★ The concept is increasingly effective. return on investment. ○ Mass media advertising is used less today because of high cost and unpredictable audiences. The Communication Process ○ Marketers take advantage of more precisely targeted promotional tools. ○ Database marketing and marketing analytics allow marketers to target individual customers more precisely. ★ The specific communication vehicles ★ *communication begins with a source, employed and the precision with which which is a person, group, or organization they are used are changing as both that has a meaning it attempts to share information technology and customer with a receiver or audience. The receiver interests become increasingly dynamic. or audience provides the original source ★ Marketers and customers have almost with a response to the message in the unlimited access to data about each form of feedback. Thus, communication other. can be viewed as a circular process.. ○ Integrating and customizing marketing communications while  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 ★ Communication - sharing of meaning movements, and other body through the transmission of information movements and postures. ★ Source - A person, group, or organization ○ *Marketers can receive feedback with a meaning it tries to share with a from consumers in different ways. receiver or an audience During face-to-face ★ Receiver - The individual, group, or communication, = quick organization that decodes a coded When mass communication message. such advertising is used, = ○ Audience - 2 or more receivers slow and difficult to ★ Coding Process - Converting meaning recognize into a series of signs or symbols Some relevant and timely ○ The source must consider certain feedback can occur in the characteristics of the receiver or form of sales increases, audience. inquiries about products, or ○ The source needs to use signs or changes in attitude or symbols that the receiver or brand awareness levels. audience uses to refer to the ★ Channel Capacity - The limit on the concepts the source intends to volume of information a communication convey. channel can handle effectively ★ Communications Channel - The medium of transmission that carries the coded The Role and Objectives of Promotion message from the source to the receiver ★ (How American Get Their News) ★ Promotion - informing and persuading one or more audiences ○ Many organizations spend considerable resources to build and enhance relationships with ★ Decoding Process - Converting signs or current and potential customers as symbols into concepts and ideas well as other stakeholders. ★ Noise - reduces a communication’s clarity and accuracy ★ For maximum benefit from promotional ○ Audience - 2 or more receivers efforts, marketers strive for proper ★ Feedback - The receiver’s response to a planning, implementation, coordination, decoded message and control of communications. ○ verbal and nonverbal ★ Effective management of integrated ○ In interpersonal communication, marketing communication is based on feedback occurs through talking, information about and feedback from teaching, smiling, nodding, eye customers and the marketing environment, often obtained from an PAGE 15  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 organization’s marketing information ★ Stimulate Demand system. ★ Primary Demand - Demand for a product ★ depends to some extent on the quantity category and quality of information the ★ New Introductory Promotion - informs organization receives. consumers about a new product ★ Because customers derive information ★ Selective Demand - Demand for a and opinions from many different sources, specific brand integrated marketing communications ○ singling out attributes important planning also takes into account informal to potential buyers methods of communication, such as word ○ Can be stimulated by: of mouth and independent information Differentiating the product sources on the internet. from competing brands in the minds of potential buyers Increasing the number of product uses and promoting them through advertising campaigns, price discounts, free samples, coupons, consumer contests and games, and sweepstakes Encouraging existing customers to use more of the product ★ Encourage Product Trial - use certain ★ Create Awareness - For an organization types of promotion—free samples, that is introducing a new product or a line coupons, test drives, or limited free-use extension. offers, contests, and games—to encourage ○ Promotional efforts may aim to product trial in order to move through the increase awareness of: product adoption process. Brands ★ Identify Prospect - aim to identify Product features customers who are interested in the firm’s Image-related issues (such product and are likely potential buyers as ethical or socially ○ For example, a marketer may run a responsive behavior) television advertisement Operational characteristics encouraging the viewer to visit the (such as store hours, company’s website and share locations, and credit personal information in order to availability)  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 receive something of value from ○ used most often by firms in the company. extremely competitive consumer The organization can markets. respond with phone calls, ★ Reduce Sales Fluctuations - A business email, or personal contact cannot operate at peak efficiency when by salespeople. sales fluctuate widely (holidays, seasonal ★ Retain Loyal Customers - Maintaining products, economic changes, etc.). long-term customer relationships (use ○ Promotional activities are often reinforcement advertising) designed to stimulate sales during ○ The costs of retaining customers slumps. are usually considerably lower During peak periods, a than those of acquiring new ones. marketer may refrain from ○ Retention techniques include advertising to prevent frequent-user programs and stimulating sales to the special offers for existing point at which the firm customers. cannot handle all the ★ Facilitate Reseller Support - Strong demand. reseller relationships to sustain a A company may advertise competitive advantage customers can be better ○ Various promotional methods can served by coming in on help an organization achieve this certain days. goal: Sharing a portion of Promotional Mix retailers’ advertising expenses for promoting the ★ Promotion Mix - A combination of products promotional methods used to promote a Providing wholesalers and specific product retailers with special offers and buying allowances ★ ADVERTISING- paid nonpersonal Working with retailers in communication about an organization and the presentation and its products transmitted to a target promotion of the products audience through mass media. ★ Combat Competitive Promotional Efforts ○ Advertising is changing as ○ to offset or lessen the effect of a consumers’ mass media competitor’s promotional or consumption habits are changing: marketing programs. Consumers are striving to maximize their presence PAGE 17  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 and impact through digital ○ several types of interpersonal media. communication: Ads are being designed Kinesic communication – that cater to smaller, more head, eyes, arms, hands, personalized audiences. legs, or torso Traditional media like Proxemic communication newspapers are in a – physical distance in decline due to a drop in face-to-face interactions readership. Tactile communication – ○ Individuals and organizations use touching advertising to promote goods, services, ideas, issues, and people. ★ PUBLIC RELATIONS - a broad set of ○ ADVANTAGES communication efforts used to create and Extremely cost-efficient maintain favorable relationships between when it reaches a vast an organization and its stakeholders. number of people at a low ○ A component of public relations is cost per person publicity—nonpersonal Visibility gained can communication in news-story form enhance a firm's image. about an organization, its ○ DISADVANTAGES products, or both. Absolute dollar outlay can ○ efforts may be the responsibility of be high an individual or of a department Rare rapid feedback within the organization, or the Difficult to measure effect organization may hire an external on sales public relations firm. Less persuasive than ○ should be viewed as an ongoing personal selling program rather than a set of tools to be used only during crises. ★ PERSONAL SELLING - a paid personal communication that persuades them to purchase products in an exchange situation. ★ SALES PROMOTION - an activity or ○ Advantages: Involves more material that acts as a direct inducement, specific communication than offering added value or incentive for the advertising; has greater impact on product to resellers, salespeople, or customers; provides immediate customers. feedback ○ Marketers spend more on sales ○ Limitation: Expense promotion than on advertising, and sales promotion is a  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 faster-growing area than ○ SIZE advertising. ○ Marketers frequently rely on sales ○ GEOGRAPHIC DISTRIBUTION promotion to improve the effectiveness of other ○ DEMOGRAPHIC promotion-mix ingredients. CHARACTERISTICS ★ CHARACTERISTICS OF THE PRODUCT ○ Generally, promotion mixes for business products concentrate on personal selling, whereas Selecting Promotion Mix Elements advertising plays a major role in promoting consumer goods ★ PROMOTIONAL RESOURCES, Marketers of business OBJECTIVES, AND POLICIES products use some ○ The size of an organization’s advertising and promotional budget affects the occasionally sales number and relative intensity of promotion to promote promotional methods included in a products. promotion mix. Personal selling is used Having more promotional extensively for consumer dollars to spend does not durables, such as home necessarily mean using appliances, automobiles, more promotional and houses, whereas methods. consumer convenience ○ resources spent on promotional items are promoted mainly activities have a positive influence through advertising and on shareholder value. sales promotion. ○ A company’s promotional Public relations appears in objectives and policies influence promotion mixes for the types of promotion selected. business and consumer Different objectives require products. different promotional ○ A product’s price also influences mixes. the composition of the promotion mix: ★ CHARACTERISTICS OF THE TARGET High-priced products call MARKET for personal selling. PAGE 19  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 For low-priced convenience content may be items, marketers use restrictive. advertising. ○ A product’s use can also affect the ★ PUSH AND PULL CHANNEL POLICIES combination of promotional ○ Push policy – Promoting a product methods employed. only to the next institution down the marketing channel ★ COST AND AVAILABILITY OF Normally stresses personal PROMOTIONAL METHODS selling ○ National advertising and sales ○ Pull policy – Promoting a product promotion require large directly to consumers to develop expenditures. strong consumer demand that efforts succeed in reaching pulls products through the extremely large audiences, marketing channel the cost per individual Done primarily through reached may be quite advertising and sales small. promotion ○ Many small, local businesses ○ at times, an organization uses both advertise products through local simultaneously. newspapers, magazines, radio and television stations, outdoor displays, internet ads, and signs on mass transit vehicles. ○ A consideration that marketers explore when formulating a promotion mix is the availability of promotional techniques. A firm may find no available advertising medium effectively reaches a certain target market. Availability issues become Growing Importance of Word-of-Mouth Communications more pronounced when marketers advertise in foreign countries. ★ Word-of-mouth communication – Some media may Personal, informal exchanges of not be available or communication that customers share with are illegal. one another about products, brands, and Regulations or companies standards for media  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 ★ influenced by friends and family members when they make purchases. ★ link between word-of-mouth communication and new-customer acquisition when there is customer involvement and satisfaction. ★ Effective marketers attempt to identify opinion leaders and encourage them to try their products in the hope that they will spread favorable publicity about them. ★ Consumers are more likely to share negative word-of-mouth information than positive word-of-mouth communication. ★ Electronic word of mouth - communicating about products through websites, blogs, email, social networks, or online forums. ★ Buzz marketing – An attempt to incite publicity and public excitement surrounding a product through a creative event ★ Viral marketing – A strategy to get consumers to share a marketer’s message, often through email or online videos, in a way that spreads dramatically and quickly ★ Word of mouth seems to be most effective for new-to-market and more expensive products. PAGE 21  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 CHAPTER 5: STRATEGIC MARKETING  INTEGRATED BUSINESS MANAGEMENT FIRST SEMESTER: Notes/Reviewer 2024 NOTES ! Thank you for trusting me with your transes! Contact me anytime if you want to avail other colors or my commissioned works Your feedback is highly appreciated ! COLOR PALETTE PAGE 23