Marketing Notes - After Midterm PDF

Chapter 10 : Exploring Key Concepts in Services Marketing Services: Services are intangible offerings that involve actions, performances, or experiences provided to customers. Unlike physical products, they cannot be touched, tasted, or seen before consumption, making pre-purchase ev...

Chapter 10 : Exploring Key Concepts in Services Marketing Services: Services are intangible offerings that involve actions, performances, or experiences provided to customers. Unlike physical products, they cannot be touched, tasted, or seen before consumption, making pre-purchase evaluation challenging. This characteristic necessitates strategies like using tangible cues, such as atmosphere and images, to convey the value of the service to potential customers. Examples of services range from personal training to providing Wi-Fi access in a coffee shop. Service-Product Contin uum: Most offerings fall on a spectrum, combining elements of both services and products. This continuum helps understand that few offerings are purely service or purely product. For instance, a restaurant provides a service (food preparation and serving) but also offers tangible products (the food and beverages). Economic Importance of Services: Developed economies are increasingly shifting towards a service-oriented model. This trend is driven by several factors: ○ Specialisation of Household Maintenance: As tasks like plumbing, electrical work, and cleaning become more specialised, households are more likely to outsource these services. ○ Cheaper Production Overseas: Manufacturing has shifted to countries with lower production costs, leading to a decline in manufacturing jobs in developed economies and a rise in service sector employment. ○ Value on Convenience and Leisure: Consumers in developed economies are placing a higher value on convenience and leisure activities, fuelling demand for services that cater to these preferences. Distinctive Characteristics of Services Intangibility: The intangible nature of services necessitates using cues to communicate value to customers. These cues can include the service environment, the appearance of service providers, and testimonials from satisfied customers. Since customers cannot try the service beforehand, mitigating perceived risk is crucial. Service providers often use guarantees or warranties to build trust and encourage purchase. Inseparability: Services are produced and consumed simultaneously, making it difficult to separate the provider from the service itself. For example, a haircut is delivered and experienced in real-time by the stylist and the customer. This characteristic underscores the importance of well-trained and skilled service providers who can consistently deliver high-quality service during the interaction. Inconsistency (Variability): Maintaining consistency in service delivery is a challenge due to the human element involved. Strategies to reduce variability include:  ○ Training and Standardisation: This involves providing comprehensive training to employees and establishing clear, standardised procedures for service delivery. Enterprise Rent-a-Car exemplifies this approach by ensuring consistent service quality across its locations. ○ Customisation: While standardisation is important, offering tailored services to meet specific customer needs can enhance satisfaction. This requires a balance between maintaining consistency and allowing for flexibility. ○ Bundling: Offering packages of services as a combined unit can streamline the delivery process and reduce variability. For example, a travel agency might bundle flights, accommodation, and tours into a single vacation package. ○ Automation: Using technology to automate routine tasks can minimise human error and ensure consistency. Self-service kiosks, online ordering systems, and automated appointment reminders are examples of automation in service delivery. ○ Self-Service Technology: Empowering customers to serve themselves through technology can reduce reliance on human interaction and, consequently, variability. Examples include self-checkout machines at supermarkets and online banking platforms. Inventory (Perishability): Services cannot be stored for later sale or use. This perishability requires careful management of supply and demand. For example, ski resorts offer discounted tickets during off-peak hours to encourage usage during periods of lower demand. Similarly, airlines adjust ticket prices dynamically based on seat availability and anticipated demand. The Gaps Model: A Framework for Service Quality The Knowledge Gap: This gap arises when service providers lack understanding of customer needs and expectations. Closing this gap involves: ○ Market Research: Conducting thorough research to understand customer preferences, expectations, and perceptions of service quality. ○ Evaluating Service Quality: Regularly assessing service performance against customer expectations, using methods like customer feedback surveys and service audits. ○ Understanding Desired Service Levels: Identifying the level of service customers expect for each dimension of the service experience. For example, customers at a fine-dining restaurant might have higher expectations for speed of service compared to customers at a fast-food outlet.  The Standards Gap: This gap occurs when internal service standards do not align with customer expectations. To bridge this gap: ○ Set Specific, Measurable Goals: Translate customer expectations into concrete, achievable service standards that employees can understand and strive to meet. ○ Commitment to Service Quality: Instil a culture that prioritises service excellence and empowers employees to take ownership of service delivery. This might involve providing employees with the resources, training, and autonomy to make decisions that benefit the customer. The Delivery Gap: This gap represents the difference between established service standards and the actual service provided. Reducing the delivery gap involves: ○ Empowering Service Providers: Granting employees the authority to make decisions and take actions to satisfy customer needs. The Keg's success is partially attributed to empowering its employees to go the extra mile to ensure customer satisfaction. ○ Providing Support and Incentives: Ensure employees have the necessary resources, training, and emotional support to deliver excellent service. This includes providing clear guidelines, tools, and a supportive work environment. Incentivising employees to deliver exceptional service through rewards and recognition programmes can further motivate performance. ○ Utilising Technology: Leverage technology to streamline service processes, enhance efficiency, and improve the customer experience. For example, using Google Analytics to predict movie demand helps theatres better manage the perishability of their service and allocate resources effectively. The Communication Gap: This gap emerges when the service provider's communication does not match the actual service delivered. Managing this gap involves: ○ Managing Customer Expectations: Setting realistic expectations through honest and transparent communication. Avoid overpromising and underdelivering. ○ Communicating Service Expectations Clearly: Ensure that customers are well-informed about service procedures, policies, and potential wait times. Clear communication helps manage expectations and prevent misunderstandings. Service Recovery: Rebuilding Trust After Failures Service failures are inevitable. However, how a company responds to these failures can significantly impact customer loyalty. Effective service recovery strategies include: Listening to the Customer: Allow customers to express their dissatisfaction fully. Active listening demonstrates empathy and a willingness to understand the situation from their perspective.  Resolving Problems Quickly: The longer a service failure remains unresolved, the more frustrated the customer becomes. It is in the firm's best interest to address and resolve the issue as quickly as possible. Providing a Fair Solution: Fairness is subjective and can be perceived in two ways: ○ Distributive Fairness: This refers to the customer's perception of whether the compensation received for the service failure is commensurate with the inconvenience or loss experienced. ○ Procedural Fairness: This pertains to the perceived fairness of the process used to resolve the complaint. Customers are more likely to be satisfied with the outcome if they believe the procedures used to reach the resolution were fair and transparent. Chapter 5: B2B Marketing Definition: B2B (business-to-business) marketing involves buying and selling goods or services used: ○ In the production of other goods and services. ○ For consumption by the buying firm. ○ For resale by wholesalers and retailers Key Distinction from B2C (Business-to-Consumer): The ultimate purchaser and user of the product or service determines whether it’s B2B or B2C. Examples: ○ Shopify helps businesses create online stores. ○ Apple and Google integrate operating systems into cars. B2B firms target specific customer markets to create value, such as selling to resellers, institutions, government, and manufacturers/producers. Challenges of Reaching B2B Clients: ○ Identifying decision-makers who influence or authorize purchases. ○ Understanding the buying process for each potential client. ○ Identifying factors that influence the buying process of potential clients. B2B Markets Manufacturers or Producers: Buy raw materials, components, or parts to manufacture their own goods.  Resellers: Purchase products to resell to retailers or consumers. This includes wholesalers, distributors, and retailers. Institutions: Includes schools, museums, and religious organizations. Government: A significant purchaser of goods and services. Firms may specialize in selling to government agencies. ○ For example, the Canadian government spends $240 billion annually on goods and services. MERX is a major source for public and private tenders in Canada. Differences Between B2B and B2C Markets The sources highlight key differences in the following areas: Market Characteristics: ○ Derived Demand: Demand in B2B markets is derived from the demand for consumer products. For example, if the demand for cars increases, the demand for car parts (a B2B product) also increases. ○ Fewer Customers, Larger Orders: B2B markets typically involve fewer customers but larger order sizes compared to B2C markets. ○ Geographic Concentration: Customers in B2B markets are often more geographically concentrated than in B2C markets. ○ Inelastic Demand: Demand in B2B markets is often less sensitive to price changes, especially for essential products. Product Characteristics: ○ Technical Nature: B2B products are often technical, purchased based on specifications. ○ Raw and Semi-Finished Goods: B2B transactions frequently involve raw materials and semi-finished goods. ○ Emphasis on Service and Support: Delivery time, technical assistance, after-sale service, and financing are crucial in B2B transactions. Buying Process Characteristics: ○ Complex Decisions: B2B buying decisions tend to be more complex and involve higher risk. ○ Formalized Process: The B2B buying process is usually more formalized, with specific buying criteria and objectives. ○ Competitive Bidding and Negotiation: B2B transactions often involve competitive bidding and price negotiation.  ○ Multiple Participants: Buying centers, consisting of multiple individuals, are common in B2B purchasing decisions. ○ Long-Term Relationships: Close, long-term relationships between buyers and sellers are common in B2B markets. ○ Reciprocal Arrangements: Agreements where two companies agree to buy from each other are prevalent in B2B. ○ Online Buying: Online purchasing is increasingly important in B2B markets. Marketing Mix Characteristics: ○ Direct Selling and Distribution: Direct selling and physical distribution are often essential in B2B. ○ Technical Advertising and Personal Selling: B2B advertising tends to be more technical and emphasizes personal selling. ○ Negotiated Pricing: Prices are often negotiated in B2B transactions and influenced by trade or quantity discounts. The B2B Buying Process The B2B buying process typically involves six stages: 1. Need Recognition: The buying organization recognizes a need for a product or service. Needs can arise internally or be triggered by external factors like supplier information or competitor actions. 2. Product Specification: The buying organization develops detailed specifications for the product or service needed. 3. RFP (Request For Proposal) Process: The buying organization invites potential suppliers to submit proposals based on the specifications. This allows for comparison and selection of the best options. 4. Proposal Analysis and Supplier Selection: The buying organization evaluates the proposals received, often negotiating with multiple vendors before making a final selection based on factors beyond just price. 5. Order Specification (Purchase): The buying organization places the order, specifying all details and terms of the purchase, including payment. 6. Vendor Performance Assessment: The buying organization evaluates the vendor's performance using predetermined metrics to ensure satisfaction and identify areas for improvement. The Buying Center The buying center is a group of individuals within an organization who participate in the buying decision process.  Roles within the Buying Center: Users, influencers, initiators, gatekeepers, deciders, and buyers. Understanding the roles and dynamics of the buying center is crucial for B2B marketers. Organizational Culture Organizational culture influences buying decisions. It comprises values, traditions, and customs that guide behavior within the organization. B2B marketers should consider the organizational culture of potential clients to tailor their approach. Building B2B Relationships Long-term relationships are essential in B2B marketing. Building strong relationships can lead to repeat business, loyalty, and positive word-of-mouth. Methods: Blogs, social media, and other online platforms can help build awareness, educate clients, and foster relationships. Example: Bosch collaborates with social media micro-influencers who review their products on YouTube. Buying Situations New Buy: The first-time purchase of a product or service. This is a complex situation where the buying center likely uses all six stages of the buying process. Modified Rebuy: Purchasing a similar product but with changes to specifications. Current vendors often have an advantage in this situation. Straight Rebuy: Buying additional units of previously purchased products. This is the most common type of B2B purchase. Chapter 11: The Importance of Pricing Price is one of the most important factors in purchase decisions and the only element in the marketing mix that generates revenue. Pricing is often misunderstood by managers. The key to successful pricing is to match the product or service with the consumer's value perceptions. Five C’s of Pricing  Company Objectives ○ Profit Orientation: Maximizing profits, setting target return pricing, and target profit pricing. ○ Sales Orientation: Focus on increasing sales volume. ○ Competitor Orientation: Focus on the competitor's pricing strategies. ○ Customer Orientation: The most important of the five Cs, this orientation focuses on understanding consumer reactions to different prices and their perception of value. Customers ○ Consumers want value, and price is half of the value equation. ○ Demand Curves & Pricing: Demand curves illustrate the relationship between price and demand, helping businesses understand consumer responses to price changes. Prestige Products: Have a unique demand curve where higher prices can sometimes lead to higher demand due to perceived exclusivity and luxury. ○ Price Elasticity of Demand: Measures how consumers respond to price increases or decreases. Formula: Price elasticity of demand = % change in quantity demanded / % change in price Factors Influencing Price Elasticity of Demand: Income Effects: As income increases, demand shifts from lower-priced products to higher-priced products. Substitution Effects: The more substitutes available for a product, the higher the price elasticity of demand. If prices rise, consumers can easily switch to alternatives. Costs ○ Variable Costs: Vary with production volume. ○ Fixed Costs: Remain constant regardless of production volume. ○ Total Cost: Sum of variable and fixed costs. ○ Break-Even Analysis: A tool to determine the point where total revenue equals total cost. Break-Even Point: Fixed Cost/Contribution per Unit Competition ○ Monopoly: One firm controls the market, leading to less price competition. ○ Oligopoly: A handful of firms control the market, resulting in more price competition. ○ Monopolistic Competition: Many firms selling differentiated products at different prices. ○ Pure Competition: Many firms selling commodities for the same price. ○  Channel Members ○ Manufacturers, wholesalers, and retailers may have different perspectives on pricing strategies. ○ Manufacturers need to protect against gray market transactions (unauthorized selling of goods at lower prices). Pricing Methods and Strategies Pricing Methods ○ Cost-Based Methods: Start with cost calculations, adding a markup to determine the selling price. Assumes costs don't vary significantly with production levels. ○ Competitor-Based Methods: Focus on competitors' prices, setting prices to signal how a product compares. Premium Pricing: Setting a higher price to convey higher quality or exclusivity compared to competitors. ○ Value-Based Methods: Focus on the overall value of the product as perceived by consumers. Psychological factors can affect value-based pricing strategies. Pricing Strategies New Product Pricing Strategies ○ Price Skimming: Setting a high initial price for a new product to maximize profit from early adopters, gradually lowering the price over time. ○ Penetration Pricing: Setting a low initial price to gain market share quickly. Everyday Low Pricing (EDLP) ○ Offers consistently low prices, reducing consumers' search costs for the lowest price. High/Low Pricing ○ Relies on the promotion of sales, temporarily reducing prices to encourage purchases. Pricing Tactics Targeted to Consumers ○ Price Lining: Establishing different price points for similar products within a product line, creating distinct quality tiers. ○ Price Bundling: Packaging multiple products together for a single, lower price. ○ Leader Pricing: Aggressively pricing a popular item to attract customers, hoping they will buy other items while shopping.  ○ Consumer Price Reductions: Strategies like coupons, rebates, markdowns, and quantity discounts. Markdowns: Integral to the high/low pricing strategy, clearing out slow-moving or obsolete merchandise and generating store traffic. Quantity Discounts: Offer lower unit prices for buying in larger quantities. Coupons: Retailer-handled discounts. Rebates: Manufacturer-issued refunds. Targeted to Channel Members ○ Seasonal Discounts: Incentives for retailers to order merchandise before the normal buying season. ○ Cash Discounts: Reductions for paying invoices early. ○ Allowances: Price reductions offered for specific behaviors, such as advertising or listing allowances. ○ Quantity Discounts: Reduced prices based on the amount purchased. ○ Uniform Delivered Pricing: A single shipping rate regardless of the buyer's location. ○ Geographic Pricing: Different prices based on the geographic delivery area. Legal & Ethical Aspects of Pricing Deceptive or Illegal Price Advertising ○ Deceptive Reference Prices: Using inflated or fictitious reference prices to make the actual selling price seem more appealing. ○ Loss Leader Pricing: Selling a product below cost to attract customers. ○ Bait & Switch: Advertising a low price to lure customers and then pushing them towards a more expensive product. Predatory Pricing ○ Setting very low prices to drive competitors out of business, intending to raise prices later. Price Discrimination ○ Selling the same product to different resellers at different prices, which can be illegal in certain contexts. Price Fixing ○ Colluding with other firms to control prices, which is illegal. Chapter 12: Distribution Channels Distribution is the third P of the marketing mix and is critical to marketing success. A well-thought-out distribution strategy is crucial when attempting to convince retailers to carry your product. Distribution channels are the institutions that transfer the ownership of goods and move goods from the point of production to the point of consumption. There are three main types of distribution channels: ○ Direct distribution: The producer sells directly to the consumer. ○ Indirect distribution: The producer sells to intermediaries, such as wholesalers and retailers, who then sell to the consumer. ○ Multichannel distribution: The producer uses a combination of direct and indirect distribution channels. Distribution Intensity Intensive distribution is designed to get products into as many outlets as possible. Most consumer packaged goods companies, such as PepsiCo, strive for intensive distribution. Selective distribution uses a few selected customers in an area or territory. Exclusive distribution grants exclusive geographic territories to one or very few retail customers so no other retailers in the territory can sell a particular brand. Cosmetics firms such as Estée Lauder use an exclusive distribution strategy. Supply Chain Management Supply chain management is a set of approaches and techniques that firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and transportation intermediaries into a seamless value chain in which merchandise is produced and distributed in the right quantities, to the right locations, and at the right time. Firms also minimize system-wide costs while satisfying the service levels that their customers require. Logistics Management Logistics Management describes the integration of two or more activities to plan, implement, and control the efficient flow of raw materials, in-process inventory, and finished goods from the point of origin to the point of consumption. Functions Performed by Intermediaries  Intermediaries perform three main functions: ○ Transactional: Buying, risk-taking, and promotion ○ Logistical: Physical distribution and managing risk ○ Facilitating: Gathering information and financing Channel Conflict Channel conflict occurs when channel members are not in agreement about their goals, roles, or rewards. There are two types of channel conflict: ○ Vertical conflict: Occurs between different levels of the same channel, such as a manufacturer and a retailer. ○ Horizontal conflict: Occurs between intermediaries at the same level in a channel, such as two retailers. Vertical Marketing Systems Vertical marketing systems (VMSs) are channels in which the members act as a unified system. There are three types of VMSs: ○ Administered VMS: The channel members are independent but coordinate their activities through informal agreements or the power of one dominant member. ○ Contractual VMS: The channel members are bound by contractual agreements, such as franchise agreements. The top 10 franchises in Canada in order are: Tim Hortons®, Subway, McDonald's, Circle K, Jan-Pro Cleaning Systems, Shell Canada, A&W Food Services, Canada Bread Food, RE/MAX, and Pizza Pizza. ○ Corporate VMS: The channel members are owned by a single company. Managing Supply Chains Through Strategic Relationships Strategic relationships with suppliers should be based on mutual trust, open communication, common goals, and credible commitments. Logistics Management: Making Information Flow Data warehouses are huge databases where purchase data is collected at the point of sale. The data warehouse allows companies to track how the corporation is doing as a whole and to customize data requests. Electronic data interchange (EDI) is the computer-to-computer exchange of business documents from retailer to vendor and back. EDI reduces cycle time, improves communication, and makes data analysis easier.  Vendor-managed inventory (VMI) is an approach for improving marketing channel efficiency in which the manufacturer is responsible for maintaining the retailer's inventory levels in each of its stores. Logistics Management: Making Merchandise Flow Distribution (or fulfillment) centers are facilities that are used to receive, store, and ship merchandise to stores. Activities that take place in the distribution centre include inbound transportation, receiving and checking, storing and cross-docking, getting merchandise floor-ready, shipping merchandise to stores, and just-in-time systems. Direct store delivery (DSD) is a method of distribution in which merchandise is shipped directly from the supplier to the store, bypassing the distribution centre. When deciding whether to use a distribution center or direct store delivery, retailers consider the total cost associated with each alternative and the customer service criterion of having the right merchandise at the store when the customer wants to buy it. Getting Merchandise to Customers Customers can choose to take possession of purchased merchandise in a variety of ways, including: shipping to the store, customer store pick-up, or having the merchandise delivered directly from the fulfillment centre. Inventory Management Through Just-in-Time Systems Just-in-time (JIT) inventory systems are designed to deliver less merchandise on a more frequent basis than traditional inventory systems. The goal of JIT systems is to reduce lead time and increase product availability while lowering inventory investment. Example of Successful Distribution: Nestlé Nestlé, despite ranking among the worst polluters of plastic, is pursuing a five-pillar approach to address concerns and aims to make all plastic in any of its packaging recyclable or reusable by 2025. They are also developing a meatless burger to shift consumption away from beef-based products. The success of Nestlé's new initiatives depends heavily on the efficiency of their distribution channels to deliver these products to consumers. This highlights the importance of distribution in the overall success of a company's marketing strategy. Chapter 13 Retailing Retailing sits at the end of the supply chain, where marketing meets the consumer and strives to fulfill customer expectations. Retailing encompasses a set of business activities that add value and occurs through various channels like stores, catalogues, and the internet. Even non-profit organizations, like The Salvation Army, engage in retail operations. Choosing Retail Partners When selecting retail partners, businesses need to consider several factors: Channel Structure: This includes analyzing the level of vertical integration, the manufacturer's brand strength, and the power dynamics between the manufacturer and retailer. For instance, Moores Clothing for Men adds value by offering wardrobe consultations and tailoring services, creating a more vertically integrated structure. Customer Expectations: Manufacturers need to understand where their target market expects to find their products and those of competitors. Retailers need to consider which retailers their customers prefer to buy from. Channel Member Characteristics: Larger firms with more resources are less likely to use supply chain intermediaries, as they can achieve greater control, efficiency, and cost savings by managing distribution themselves. An example of this is Coach, which partners with retailers to ensure convenient product delivery to customers. Types of Retailers The sources categorize retailers into two main groups: 1. Food Retailers Conventional Supermarket: Offers groceries, meat, and produce with limited non-food items in a self-service format. Examples include Safeway in Western Canada and Sobeys in Central and Eastern Canada. Big-Box Food Retailer: Larger than conventional supermarkets, these retailers carry both food and non-food items. They come in three types: ○ Supercentres (popular in Canada) ○ Hypermarkets (more prevalent in Europe and South America, with Carrefour as an example) ○ Warehouse clubs (popular in Canada, with Costco as an example).  Convenience Store: Provides a limited selection of items at convenient locations with quick checkout. These stores often charge higher prices than other food retailers and commonly sell gasoline, which contributes significantly to their sales. An example is 7-Eleven. 2. General Merchandise Retailers Discount Store: Offers a wide variety of products with limited service at low prices. Giant Tiger is an example of a discount store in Canada. Specialty Store: Focuses on a limited number of complementary merchandise categories within a relatively small store. Category Specialists: Offers a narrow variety but a deep assortment of merchandise within a specific category. Department Store: Provides a broad variety and deep assortment of products with some customer service, organized into separate departments. Drugstore: A specialty store that specializes in health and personal grooming products, including pharmaceuticals. Shoppers Drug Mart is an example of a drugstore chain in Canada. Off-Price Retailer: Offers an inconsistent assortment of merchandise at reduced prices. Services Retailer: Primarily sells services rather than physical merchandise. Developing a Retail Strategy When developing a retail strategy, retailers need to: Identify target market segments. Develop the retail mix, which includes: ○ Product (Merchandise Assortment): Retailers may develop private-label brands to differentiate their offerings. ○ Price: Retailers need to establish a pricing strategy that aligns with their target market and competitive landscape. Costco, for example, attracts a wide range of consumers with its value-oriented pricing. ○ Promotion: Retailers utilize a variety of promotional strategies, both within their stores and through mass media channels. The Canadian Tire app is an example of a promotional tool that allows customers to shop conveniently. ○ Place: This refers to the retailer's location and distribution strategy. Shoppers Drug Mart, for example, enhances convenience by offering 24-hour service at select locations. ○ Personnel: Well-trained sales staff and customer service representatives contribute to the overall promotional package. Retailers can provide additional value by offering services like easy product purchase and use assistance. Technology, such as in-store kiosks and self-checkout lanes, can augment  personnel efforts. Apple's knowledgeable salespeople and "Apple Geniuses" are key to the company's retail success. ○ Presentation (Store Design & Display): The store's design and displays should effectively promote and showcase merchandise. Retailers aim to create an appealing and "shoppable" atmosphere. Shelf Grams, which combine planograms (shelf layouts) and heatmaps (visual representations of customer attention), can be used to optimize product placement and display effectiveness. The Wheel of Retailing The Wheel of Retailing is a concept that describes the cyclical evolution of retail businesses. New retailers often enter the market with low prices, limited services, and modest facilities. As they gain success, they may upgrade their offerings and increase prices, creating opportunities for new low-price competitors to enter the market. This cycle continues as retailers adapt to changing market conditions and consumer preferences. The Internet and Omnichannel Retailing An omnichannel strategy aims to create a seamless and consistent experience for consumers across all distribution channels, whether they shop online, in-store, or through a catalogue. Omnichannel retailers, those selling through multiple channels, often see higher sales from customers who shop across various channels compared to those who only use a single channel. Benefits of Internet Channels for Retailers Expanded Product Selection: Online channels allow retailers to offer a wider range of products without the physical constraints of a store. Personalized Information: Retailers can leverage data analytics to provide customers with more personalized information and recommendations. Data Collection: Online channels enable retailers to gather valuable data about consumer shopping behavior, which can be used to improve marketing and merchandising strategies. Cost-Effective Market Entry: The internet provides a cost-effective way for retailers to enter new markets and reach a broader customer base. Effective Omnichannel Retailing To implement an effective omnichannel strategy, retailers need to ensure consistency across all channels in areas such as:  Integrated CRM (Customer Relationship Management): This involves managing customer interactions and data across all channels to provide a unified and personalized customer experience. Brand Image: Maintaining a consistent brand image across all channels is crucial for building brand recognition and trust. Pricing: Pricing strategies should be aligned across channels to avoid customer confusion and maintain price integrity. Supply Chain: An efficient and integrated supply chain is essential to ensure timely and reliable product fulfillment across all channels. MEC (Mountain Equipment Company) Case Study The sources highlight the case of MEC (Mountain Equipment Company), a Canadian outdoor retailer. Founded in 1971, MEC faced financial challenges and filed for creditor protection in 2020. As part of its rebranding efforts, the company is focusing on returning to its roots and regaining its position as an industry leader. The case of MEC illustrates the importance of adapting to changing market conditions and consumer preferences to remain competitive in the retail landscape. Chapter 14: What is Integrated Marketing Communications (IMC)? IMC represents the promotion dimension of the four Ps of marketing. It encompasses a variety of communication disciplines—advertising, personal selling, sales promotion, public relations, direct marketing, digital, social, and mobile media—in combination to provide clarity, consistency, and maximum communicative impact. The Communication Process Senders initiate communication by encoding a message. Receivers decode the message, but not always in the way the sender intended. Senders often adjust messages based on the medium and the characteristics of the receiver. Feedback from the receiver helps the sender understand whether the message was received as intended. Examples of feedback include purchases, complaints, compliments, and coupon redemptions. Steps in Planning an IMC Campaign The sources outline seven key steps in planning an integrated marketing communications campaign: 1. Identify Target Audience: ○ Research is essential to identify and understand the target audience. ○ Information gathered about the target audience informs the tone of the advertising and the media selected for the campaign. 2. Set Objectives: ○ Objectives should align with overall marketing goals. ○ Factors to consider include: Pull strategy vs. push strategy: A pull strategy aims to create demand among consumers, who then "pull" the product through the distribution channel. A push strategy focuses on motivating retailers to stock and promote the product, "pushing" it onto consumers. Nature of the market Nature of the product Stage in the product life cycle ○ Common IMC objectives include informing, persuading, and reminding customers. 3. Determine Budget: ○ The budget should consider: The role of advertising in achieving promotional objectives Expenditure variations throughout the product life cycle The nature of the market and the product ○ Common budgeting methods include: Objective and task: Determine the cost of specific tasks needed to achieve objectives (most difficult method). Competitive parity: Align communication expenses with market share. Percentage of sales: Allocate a fixed percentage of forecasted sales to advertising. Affordable budgeting: Allocate remaining funds to advertising after covering other expenses (assumes communication doesn't drive sales). 4. Convey Message: ○ Develop a unique selling proposition that highlights the product's distinct attributes and becomes the campaign's central theme. ○ Choose an appropriate appeal: Rational appeal: Uses factual information and logic to persuade consumers. Emotional appeal: Targets consumers' emotions and desires to create a connection with the brand. 5. Evaluate and Select Media:  ○ Media planning: Involves determining the best media to reach the target audience. ○ Media mix: Refers to the combination of media channels used in the campaign. ○ Media buy: Involves purchasing advertising space or time in the selected media. ○ Consider mass media (reaching a large, anonymous audience) versus niche media (targeting a smaller, more specific audience). ○ Evaluate different media categories based on their advantages and disadvantages (see chart in source). ○ Determine the advertising schedule: Continuous: Advertising runs steadily throughout the campaign. Flighting: Advertising alternates between periods of high activity and no activity. Pulsing: Combines continuous and flighting, with a base level of advertising supplemented by periods of increased activity. 6. Create Communication: ○ The execution style should align with the chosen medium and campaign objectives. ○ Creativity is important but should not overshadow the message. 7. Assess Impact Using Marketing Metrics: ○ Pretesting: Evaluate the effectiveness of the communication before launching the campaign. ○ Tracking: Monitor the performance of the campaign during its run. ○ Post-testing: Measure the effectiveness of the campaign after its completion. Integrated Marketing Communications Tools The sources discuss six key tools used in IMC campaigns: 1. Advertising: ○ The most visible element of IMC. ○ Highly effective at building awareness and generating interest. 2. Personal Selling: ○ Essential for products that require salesperson assistance. ○ More expensive than other promotional methods, but can add significant value. 3. Sales Promotions: ○ Can target both end consumers and channel members (e.g., retailers). ○ Often used in conjunction with other IMC elements. ○ Can be used to achieve both short-term and long-term objectives. 4. Direct Marketing: ○ Highly targeted, motivating action, measurable, and informative. ○ Forms of direct marketing include:  Direct mail/email: Targeted messages sent to mailboxes or inboxes. Catalogues: Hard copy and online catalogues showcasing a wide range of products. Direct Response TV (DRTV): Short commercials or infomercials with a strong call to action. Kiosks: Facilitate service delivery or product sales. 5. Public Relations (PR): ○ Generates "free" media attention, which has become increasingly important as the cost of other media has risen. ○ Offers greater credibility than traditional advertising, especially as consumers become more skeptical of marketing messages. ○ PR tools include publications, videos, annual reports, media relations efforts, and digital media. 6. Social and Mobile Media: ○ Digital media tools include websites, blogs, social media platforms, and mobile apps. L'Oréal's Shift to Digital Communications The sources highlight L'Oréal's transition to digital marketing and social media as part of its IMC strategy. The company leverages technology to gather information about its target audience and uses online influencers to promote its products. Chapter 15: Advertising Advertising is a paid form of communication from an identifiable source, delivered through a communication channel, and designed to persuade the receiver to take some action. Objectives of Advertising: ○ Inform: Especially important in the early stages of the product life cycle to educate consumers about a new product or service. ○ Persuade: Used to convince consumers to choose a specific brand, often by highlighting its unique benefits or comparing it to competitors. ○ Remind: Keeps a product or brand top-of-mind for consumers, encouraging repeat purchases and brand loyalty. The AIDA Model The AIDA model describes the stages a consumer goes through before purchasing a product or service: Attention: Capturing the consumer's attention is the first step, often achieved through creative and engaging advertising. Interest: Once attention is gained, the ad must pique the consumer's interest and make them want to learn more. Desire: The advertisement should create a desire for the product or service, making the consumer feel like they need it. Action: The ultimate goal is to motivate the consumer to take action, such as making a purchase, visiting a website, or requesting more information. Lagged Effect: It's important to note that advertising doesn't always have an immediate impact. Repeated exposure to a message over time can influence consumer behavior even if they don't act right away. Focus of Advertisements Product-focused advertisements: Highlight the features and benefits of a specific product or service. Institutional advertisements: Promote a company, organization, or industry as a whole, often focusing on building a positive image or addressing social issues. Types of Advertisements Public Service Announcements (PSAs): Focus on public welfare and are typically sponsored by non-profit organizations. PSAs are a form of social marketing, aiming to raise awareness and encourage positive behavioral change. Product Placement: Involves integrating products into non-traditional settings, such as movies, TV shows, and music videos. This subtle form of advertising can increase brand visibility and create positive associations. Regulatory and Ethical Issues Deceptive Advertising: Advertising that is misleading or likely to deceive consumers is prohibited by law. Puffery: Exaggerated praise that stops short of deception is generally permitted in advertising. Sales Promotions Consumer Sales Promotions: Targeted at end consumers to stimulate demand, encourage trial, or build brand loyalty.  Trade Channel Sales Promotions: Directed at channel members, such as retailers and wholesalers, to encourage them to stock and promote products. Types of Sales Promotions: Coupons, deals, premiums, contests, sweepstakes, samples, loyalty programs, point-of-purchase (POP) displays, and rebates. Using Sales Promotion Tools While sales promotions can be effective, marketers must use them carefully to avoid negative long-term consequences. Excessive reliance on promotions can lead to: ○ Forward buying: Consumers stock up on products during promotions, resulting in a temporary sales spike followed by a decline. ○ Erosion of brand value: Frequent discounting can lower the perceived value of a product or brand. Personal Selling Personal selling involves direct, person-to-person communication between a salesperson and a potential customer. It can take various forms, including face-to-face meetings, video conferencing, telephone calls, and online interactions. Advantages of Personal Selling Customization: Salespeople can tailor their message to the specific needs and interests of each customer. Relationship building: Personal selling fosters strong relationships with customers, leading to increased loyalty. Customer insights: Salespeople gather valuable feedback from customers that can inform product development and marketing strategies. Support for CRM: Personal selling plays a crucial role in the success of customer relationship management (CRM) programs by providing personalized interactions and gathering customer data. The Personal Selling Process The personal selling process consists of five key steps: 1. Generate and Qualify Leads: Identify potential customers and determine if they are likely to be interested in the product or service. 2. Preapproach: Research the potential customer and plan the sales approach to ensure it is tailored to their needs.  3. Sales Presentation and Overcoming Objections: Present the product or service in a compelling way, address any concerns the customer may have, and answer their questions. 4. Closing the Sale: Ask for the order and finalize the sale. 5. Follow-Up: Ensure customer satisfaction and build long-term relationships. Value Added by Personal Selling Building relationships: Personal selling enables salespeople to establish trust and rapport with customers. Educating and providing advice: Salespeople share their expertise and knowledge, helping customers make informed purchasing decisions. Saving time and simplifying buying: Salespeople streamline the buying process for customers, making it easier and more efficient.