Marketing Exam 2; Ch. 9-15

Marketing channel

pipeline of organizations through which a product passes from producer to consumer  

Channel members: distributors, intermediaries, resellers, middlemen, wholesalers, retailers  

Transactional functions

contacting and promoting products to potential customers  

Ex: Best Buy running an advertising campaign

Logistical functions

physical distribution, storing, and sorting goods  

Ex: eggs are transported from farms and sorted before going to stores 

Facilitation functions

research and financing

Depth of a distribution channel

the number of intermediaries between the producer of a good and the consumer 

0 depth is when the producer sells directly to the consumer

Width of a distribution channel

the number of outlets offering a product in a particular geographic area 

3 types of coverage strategies:

Intensive: Used for items with a routine buying process where proximity to the customer is crucial; gum, snacks

Selective: distributing a product in selected outlets within a geographic area provides for some coverage with some expectation of sales effort; electronics, appliances, moderately priced goods

Exclusive: offered in one outlet within the area; luxury or higher priced specialty goods

Licensing

Generates revenue flow with little new investment

Advantages: avoid tariffs, quotas, or export barriers; autonomy and freedom to adapt the licensed goods to local tastes

Disadvantages: limited market control, agreement may have a short life span, strong competitors can develop

Global strategic partnerships (GSP)

ambitious, reciprocal, cross-border alliances that may involve business partners in many different country markets  

• The participants remain independent subsequent to the formation of the alliance 

• The participants share the benefits of the alliance as well as control over the performance of assigned tasks 

• The participants make ongoing contributions in technology, products, and other key strategic areas 

Joint venture

partners share equity investment in an independent entity; offer 2 or more companies the opportunity to share risk and combine complementary strengths

• Advantages: limit financial risk, limit exposure to political uncertainty, learn about a new market environment, combine different value chain strengths, may be the only way to enter a new country or region if government practices favor local companies  

• Disadvantages: partners must share rewards, potential for conflict between partners

Foreign direct investment/acquisition/ownership can be used as a means for accessing a new market

• Advantages: provide instant market access, offer greater control than other market entry methods 

• Disadvantages: requires more commitment in terms of managerial effort and investment  

Price skimming

a firm charges the highest price possible that buyers who want the product the most will pay

• Used when demand is inelastic 

• Often used with new products without much competition 

Penetration pricing strategy

Pricing products lower than competitors

• Used when demand is elastic and there’s a high degree of price sensitivity 

• A firm may introduce a new product using this to gain market share, weaken competitors, and set up a barrier to entry

5 price-adjustment strategies

Discount and allowance pricing

Segmented or discriminatory pricing

Psychological pricing: customers use price to judge quality

Promotional pricing: temporarily price products below list price to create buying urgency

Geographical pricing

Hedging

Actually figure out what this is

Prevents against profit being lost through currency exchange

Countertrade

receiving payment for goods sold in some form other than cash

Transfer prices

prices set determining the cost of products shipped between headquarters and foreign subsidiaries

Should be set at “arm’s length” or commensurate with open market prices  

Integrated marketing communication (IMC)

deliberate coordination of all brand communication tools to present a unified and persuasive message to audiences

• Views advertising, public relations, promotions, and personal selling as interdependent strategies that work in harmony resulting in brand presence that is consistent, coherent, and credible  

• Ability to prevent fragmentation

Advantages and disadvantages of advertising

Advantages:

• Scale: reach millions quickly 

• Precise control: ensures that the message, imagery, and timing are exactly as the company intends 

• Excels at storytelling

Disadvantages

• Expensive 

• Less credible than earned publicity 

• Difficult to measure: its impact is harder to prove

Public relations

Encompasses reputation management, media relations, influencer engagement, and community storytelling 

Goal: to earn credibility through third-party voices (journalists, cultural leaders, everyday consumers) 

• Advantages: credibility, efficiency, cultural impact 

• Disadvantages: lack of control, unpredictability, difficulty in measurement 

Consumer promotions

short-term incentives to purchase (coupons, rebates, contests, sweepstakes, loyalty rewards, limited-time discounts)

Designed to prompt immediate action

• Advantages: immediacy, measurability, data capture, quick spike in sales, can be tracked through redemption rates, provide insight into customer behavior 

• Disadvantages: potential erosion of brand equity if used too often, short-lived effects, costs associated with administration and fraud prevention 

Trade promotion

target intermediaries like retailers, wholesalers, and distributors; Include slotting allowances, co-op advertising, in-store displays, temporary price reductions  

Essential to securing shelf space and visibility for manufacturers  

Advantages: securing shelf space, creating visibility, building retailer partnerships 

Disadvantages: reduce profit margins, foster dependency on retailer demands, and complicating accounting  

Personal selling

direct interaction between a sales representative and a customer

Important in high involvement purchases like business-software, pharmaceuticals, financial services, and luxury goods 

• Advantages: ability to diagnose needs, handle objections, build trust 

• Disadvantages: high cost, limited scalability, variability in effectiveness depending on the representative's skill  

Advantages and risks of AI in modern communication

Advantages: streamlines creative production, optimizes media placement, enhances measurement 

Risks: can face heavy backlash

Cross-marketing

products and services that tie-in movies, people, or events of global recognition and popularity and try to feed off the product’s brand image and preference  

Summary of promotion

• Advertising builds scale 

• Public relations adds credibility 

• Promotions drive urgency 

• Trade promotions secure distribution 

• Personal selling closes complex deals 

• AI acts as the conductor   

Advertising budget: All I can afford

advertising budget is set by “whatever is left” of the budget after all other resources are allocated

Used by smaller businesses

Advertising budget: Percent of sales

a percentage is applied either to the previous year’s sales or the forecasted ones for the upcoming year; the worst method

• Money will be wasted if advertising has no effect on sales or if an economic downturn causes sales to fall then you have less to spend on ads when you need them most  

• A negative cycle of decreasing sales and shrinking ad budgets  

Advertising budget; competitive parity

advertising budgets are based on those of competitors in the industry

Fails to connect the budget to where it’s actually needed in advertising 

Advertising budget: objective and task approach

sales and communications objectives are set, then the advertising tasks to accomplish the objectives are defined  

• Advantages: connects advertising goals to the budget, forces planning and discipline, provides means for learning how to make advertising more effective in the long run 

• Disadvantages: difficult to determine the right, achievable objectives, time-consuming process, could result in costly ad budget without the means to measure advertising effectiveness  

Challenges in selecting an advertising media mix

• Media fragmentation: audiences are spread across hundreds of TV/streaming channels, social platforms, and countless internet sites  

• Increased clutter: consumers are exposed to thousands of advertising messages daily, each competing with many others  

• Critical-thinking consumers: authenticity and transparency are valued over hype for many younger generations 

Reach

the number of different targeted audience members exposed to the ad at least once within a given time frame (like a month) 

Frequency

the number of times on average those reached are exposed to the ad 

Consumer promotion

Goal: boost trial and loyalty; increase short-term sales or strengthen long-term customer relationships

Tools: samples, coupons, rebates, price packs, in-store promotion

Trade promotion

Supports retailers and wholesalers; encourage retailers to stock, display, and promote products

Tools: Retailer incentives, co-op advertising and display support, bulk discounts, buy-back guarantees

Customer lifetime value (CLV)

If cusotmer satisfaction can be maintained or increased over time with a customer, the CLV will increase

This is why marketers often target youth; if you can get a customer hooked on a product oung, you’ll have a high CLV

Where is the importance of building customer relationships the most important?

B2B because the stakes of each sale are high and number of potential buyers is low

Traditional sales process

• Prospecting: locating and qualifying prospects 

• Preapproach: planning the sales call 

• Approach: making a good first impression 

• Presentation: presenting the value proposition, uncovering and handling objections, closing 

• Follow-up: checking in with the customer right after the order (solution) is delivered 

B2B consulting/selling process:

learning, analyzing/synthesizing, teaching, post-sales service

B2B consulting/selling process: learning

ultimate goal is to qualify whether or not the firm represents a potential opportunity 

• Get out all the potential issues 

• Prioritize the issues 

• Collect evidence and impact  

• Explore context and constraints  

B2B consulting/selling process: analyzing/synthesizing

goal is to design a customized solution that fits your customer’s need

• First find your firm’s unique strengths that your competitors cannot offer  

• Next identify a customer’s problem 

• Then either find a direct solution or ask your company to specifically create one for that customer 

B2B consulting/selling process: teaching

Bring new insights and expertise to your customer

1. Assess customer key problems 

2. Offer different perspective that challenges assumption 

3. Lay out the business case 

4. Make it connect emotionally 

5. Convince them of the solution 

6. Offer your solution 

B2B consulting/selling process: post-sales service

Most important phase of the sales process

Always follow-up and make sure the customer is satisfied, this is how you build a relationship

Inbound digital marketing

attracts customers by creating valuable content and experiences tailored to them 

content marketing: blog posts, ebooks, videos all created by the company

Search engine optimization (SEO)

a website can be designed in such a way to maximize the change of appearing in search results 

3 stages a search bot goes through: discovery, relevance, authority

Outbound digital marketing

seeks to put messages in front of potential customers through paid promotion

Main purpose of a firms social media webiste

to drive traffic to the company website

sometimes they use it to directly serve customers too

social media and company websites allow companies to listen to what consumers care about, customer support, and consumer feedback on the brand

Viral marketing

2 goals: for consumers to take action as a result of the viral message and to forward the message

Mobile marketing

the closest you can get to your consumers

4 keys to successful mobile marketing:

Permission: invite customers to engage with your brand rather than intrude on them 

• Relevance: respond to consumer wants/needs at the precise moment of desire 

• Location: serve location-relevant content to your consumer 

• Convenience: be accessbile, keep things simple and direct, and provide immediate solutions

How a brand becomes mobile ready

• Align the brand’s marketing objectives with meeting the consumers’ needs 

• Connect mobile strategy to marketing objectives 

• Make mobile a priority; include it at every level of your organization 

• Fully resource mobile with both funds and staff to maintain it in the long run 

• Foster cross-channel collaboration to make sure a consistent brand message is sent across platforms 

2 fundamentals of privacy in mobile

transparency and consumer choice p

Setting pricing policy

1. select the pricing objective

2. determine demand

3. estimate costs

4. i cant read 4

5. select a pricing method

6. selecting final price

Objectives of pricing products (important you gotta know this)

(these are things you have to think about in terms of what your goal is with you pricing)

***Segmentation and positioning

***Signal of product quality

Profit goals

Market share goals (competitive pricing climate)

Social responsibility (price gouging)

Perceived value pricing

basing price on perceived value to customers

Often used in conjunction with heavy promotion

Going rate (competitive) pricing

pricing according to what competition is doing

oil companies, fruit and veggie

what’s the equation for unit cost?

Unit cost=variable cost+(fixed cost/unit sales)

what’s the equation for markup price?

markup price=unit cost/(1-desired return on sales)

Loss-leader pricing

lose money on 1 product and promotie it to drive customers into stores so they’ll buy more

used by retailers (typically grocery stores)

For discriminatory pricing to work…

market must be segmentable and segments must have different intensities of demand

Members in low-priced segment must not be able to sell product to high-priced segment

Cost of servicing different segments must not exceed profit generated by discrimination

Must not breed resentment

Must be legal

Public relations

communications management that seeks to influence stakeholders

How promotion is used in the product life cycle

Introduction: to inform

Growth: to persuade

Maturity: to remind

Decline: not much money is spent on promotion here

Push and pull strategies

Push: target channel members, personal selling, sales promotion (discounts)

Pull strategy: advertising

AIDA(R) marketing funnel

Attention/awareness, Interest, Desire, Action, Retention/repeat

Advertising objectives

Informative advertising: build primary demand

Persuasive advertising: build selective demand

Comparison advertising: compares one brand to another

Reminder advertising: keeps consumers thinking about a product

5 M’s of advertising

Mission, money, message, media, measurement

Communication models

Basic:

Sender > Message > Channel > Receiver

Elements of communication process:

Sender > Encoding > Message > Decoding > Receiver