Marketing Exam 3

B2B transaction

Some companies focus entirely on business markets, this is true _______________.

Example: Caterpillar: which makes construction and mining equipment
-Nothing sold into the consumer market except 1 item (generators – 9/16)

Some companies sell to both consumers and business markets

Knoll makes award-winning office furniture as well as stylish furniture got homes is an example of:

Commercial Market

Companies that acquire products to support, directly or indirectly, production of other goods and services.

Ex: BASF doesn’t sell directly to the end consumer. Selling to companies that make the products that you and I buy

Governments roles

Federal, state, local, foreign government

Schools Business market

Completely separate Education Market

_______ of all internet sales are B2B transactions

91%

Operating costs

They cut them by processing through e-commerce

-Customer support costs, Selling support costs
-Touch points of the product are less
-Less human interaction - lowers overhead

Why are over 90% of internet sales B2B?

Businesses selling directly to other businesses are less concerned about Marketing and more concerned about operating costs AND, the Internet continues to open up foreign markets to smaller e-tailers

Geographic market concentration

The U.S. business market is more concentrated than the consumer market. Certain industries locate in particular areas to be close to customers

Technology

Silicon Valley, The “Triangle”

Mining & Quarrying

Companies are located where the raw materials are located

As the B2B internet transactions continue to grow…

Business markets are becoming less geographically concentrated.

§The purchasing / negotiation process of the B2B market is…more or less formal than consumer?

More formal and technical than the consumer purchasing process because…

-B2B involves more complex decisions

-Suppliers who serve B2B markets must work with multiple buyers

-Transactions require a longer time frame

-What is an industry that is B2B that involves long selling time and complex moving parts?

-Airline / Aerospace; automaker considering who to use for its tire supplier

Business Market Demand Categories

Inventory Adjustments, Derived Demand, Joint Demand, Inelastic Demand, and Volatile Demand

Derived Demand

There is a direct link between demand for a company’s output and its purchases of resources.

In ____________ models, the demand for a commodity, product, service is the consequence of the demand for another item.

Derived Demand is a dependent model.

Example:
-Demand for computer microprocessor chips is derived from demand for personal computers

Volatile Deman

Derived demand creates volatility in business market demand

Many factors contribute to demand volatility:
-Increased customer choices
-Product customization
-Rapid technological improvements
-Global competition
-Upstream supply fluctuations

Managing ___________ efficiently can be a huge competitive differentiator for companies

Joint Demand

When the demand for one product is directly related to market demand for a related good or service.
Example:
-If housing construction slows, the drop in the supply of lumber will affect the demand for concrete

The demand for one resource affects the demand for another

Inelastic Demand

Demand throughout an industry will not change significantly due to a price change
Example:
-If the price of gas increases, the demand will not change

Just-In-Time (JIT)

This inventory method requires vendors to deliver product in exact quantities and exact timing.

Ex: Seasonal Products

Air Conditioners, Humidifiers, etc.

Other companies like Harley Davidson, McDonald’s, Dell also use ___

Offshoring

Movement of high-wage jobs from one country to lower-cost overseas locations.

Ex: Telemarketing / Customer Service - India

Nearshoring

Moving jobs to vendors in countries close to the business’s home country

Ex: Canada and Mexico are attractive nearshoring locations

Why would companies participate in offshore / nearshore employment?

Cheaper labor!!

Outsourcing

Using outside vendors to provide goods and services for previously produced in-house good and services

Reasons for Outsourcing

-Cost reduction
-Quality and speed of software maintenance and development
-Greater value of end product (improve brand image / recognition)

Problems with Offshoring and Outsourcing

-Cost savings are less than expected

-Can raise security concerns over proprietary technology or customer data

-Can reduce company’s ability to respond quickly to marketplace

-Can create conflicts between non-union outside workers and in-house union employees

-Can negatively affect employee morale and loyalty

Merchandiser

-Merchandiser is synonymous with buyers
-They plan floor space and secure needed products at the best possible prices and selection

Function of a Merchandising unit

-Producing a strong Line Review for management

-Locating and evaluating alternative suppliers

-Making purchase decisions

-Improving retail turns, GMROI, inventory turns, departmental margin contribution, etc.

Stages in the B2B Buying Process

1. Recognize Problem and General Solution

2. Determine Characteristics and Quantity

3. Describe Characteristics and Quantity

4. Search for and Qualify sources

5. Acquire and Analyze Proposals

6. Evaluate Proposals and Select Suppliers

7. Select Order Routine

8. Obtain Feedback and Evaluate Performance

What is a Brand?

-Name, term, sign, symbol, design, or some combination
-Identifies the products of one firm while differentiating them from competitor’s

Brand Loyalty

Measured in three different ways brand recognition/awareness, preference, and loyalty

Brand recognition/awareness

Consumer awareness and identification of a brand (Do I know of a certain brand?)

Brand preference

Consumer choice of a product on the basis of a previous experience (I like McDonalds vs Whataburger because of the service)

Brand Loyalty

Consumer refusal of alternatives and extensive search for desired merchandise (No matter what, I will never buy Dodge over Ford

Types of Brands

Generic products, Manufacturer’s, Private, captive, family and individual

Generic products

Products characterized by plain labels, no advertising, and the absence of brand names

Manufacturer’s brand

Brand name owned by a manufacturer or other producer

Private brands

Brands offered by wholesalers and retailers

Captive brands (actually Exclusive brand)

-National brands sold exclusively by a retail chain
-Walmart sells “Old Glory” clothing line
-By the way, you’ll never hear __________ _________, it’s __________ brand

Family brand

-Single brand name that identifies several related products
-Campbell’s, Progresso, Axe deodorant, Ford SUV’s

Individual brand

-Single brand that uniquely identifies a product
-Shell gasoline.

Brand Equity

The total value that a brand name has earned in the marketplace. Desired by all companies. Adds “free value” to your company, brand loyal consumers, and credibility. allows companies to sell higher in end goods. and provides a competitive advantage and consistent, higher EPS for the company’s shareholders.

Product Identification

_________ __________ in the marketplace are done so via
-Brand names, symbols, and distinctive packaging

Ex: Apple logo

Brand name

-Part of a brand that can be spoken
-ESPN, CNN, BMW – involved in the logo

Loses protection when a class of products becomes known by that name

Ex: Google it we don’t say safari it or explorer it

Brand Logo

-Symbol or pictorial design that distinguishes a product
-Shell Oil, Olympics

-Effective _____ ____ are easy to pronounce, recognize, and remember

Trademarks

Brand for which the owner claims exclusive legal protection

Why should a company trademark search a potential brand name?

cause it could become more valuable than the products the company makes!

Why it is so important to protecting trademarks

Gives organizations…
-Exclusive legal right to use a brand name
-Brand logo
-Slogan
-Product name abbreviation
-Combination of the above

Organizations can also seek protection for…
-Packaging elements
-Product features (features must be proprietary)

Packaging

Serves three major objectives

-Physical protection against damage, spoilage, and shrinkage (what is shrinkage)?

-Assistance in marketing the product

-Cost effectiveness

Brand Extensions

Attaching a popular brand name to a new product in an unrelated product category.

Ex: Nautica makes apparel
-They also use the brand on furniture and bedding

or Barbie (toys, playsets, sunglasses purses, combs, etc.)

Market Penetration

Increasing sales of existing products in existing markets or new markets.

Product positioning

Consumers’ perception of a product relative to competing brands (ie: Samsung vs Vizio)

Market development

Concentrates on finding new markets for existing products

What is the market penetration percentage when companies can say they have reached mass market appeal?

20%

Product development

Introduction of new products into identifiable or established markets

Product diversification

Focuses on developing entirely new products for new markets.

Cannibalization

Introducing a new product that adversely affects sales of existing products.

Ex: a company taking up shelf space so their competitors can’t

Consumer Adoption Process

Stages consumers go through in learning about a new product, trying it, and deciding whether to purchase it again

•Awareness

•Interest

•Evaluation

•Trial

•Adoption/rejection

Consumer Early Adopters

-People who purchase new products as soon as the products enter the market
-Purchase right after the innovators (people who have been following the technology)

Diffusion process

-Process by which new goods or services are accepted in the marketplace
-Market Acceptance

Companies that reach early adopters can

-Treat them as a test market
-Evaluating the product and discovering suggestions for modifications

Early adopters can act as opinion leaders

-From whom others seek advice
-Attitudes toward new products quickly spreads to others

Relative advantage

-Innovation that appears far superior to previous ideas
-Blockbuster, Red Box, Netflix

Compatibility

-Innovation consistent with the values and experiences of potential adopters
-I expect the new iPhone to be superior to last generation

Complexity

-Relative difficulty of understanding the innovation influences the speed of acceptance

Possibility of trial use

-Initial free or discounted trial of a good or service reduces adopter’s financial risk
-It’s the least determining factor because it’s a small group that can be discounted / free at launch

Observability

-Observing an innovation’s superiority increases the adoption rate
-Most people will not be the ones on the crest of the wave – they wait until it’s “safe”

Product is ____

KING!!!!

Product Development is a huge expenditure in every organization?  Why?

-Because it’s the lifeblood of your existence – if you’re not innovating, you’re dying

-Brings together functional experts

-Very rewarding because you’re helping shape the future of the company

What do Product Managers do…

-Another term for a brand manager

-Works with Sales to accomplish corporate revenue & income goals

-Supports the marketing strategies of an individual product or product line

-Set prices based upon market conditions

-Develop advertising and sales promotion programs in conjunction with Marketing

-Travels overseas (in many instances)

Steps in developing products

Idea Generation, Screening, Business analysis, Development, test marketing, and commercialization

Idea generation

-New product development begins with ideas from many sources

Screening

-Separates ideas with commercial potential from those that cannot meet company objectives or consumer adoption

Business analysis

-Assessing the new product’s potential market, growth rate, and likely competitive strengths

Development

-Financial commitments increase substantially as a company converts an idea into a visible product

Test Marketing

-To verify that the product will perform well in a real-life environment
-Peoria, Ill; Sioux Falls, SD

Commercialization

-A product is ready for full-scale marketing and introduction

Product Liability

-Responsibility of manufacturers and marketers for injuries and damages caused by their products

Reliability

Manufacturers must design their products to protect users from harm

The consumer product safety commission

-Has jurisdiction over most consumer product categories

The food and drug administration

-Approves food, medications, and health-related devices

Liability

-Lawsuits are increasing domestically and internationally

To counter increased litigation and legislation

-Companies sponsor voluntary improvements in safety standards

Safety planning and testing can be effective marketing tools

-Adding products to Consumer Reports
-Voluntarily shows confidence in your products performance
-Adds to your credibility and “want” to get your products into the spotlight