Honors Marketing: Exam 3

Marketing Channel

Consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users.

Agent or Broker

Their role is to bring a seller and buyer together - Intermediaries

Wholesaler

The intermediary purchases items from the seller, stores them, and resells them to buyers. They typically sell in bulk to retailers or other businesses.

Transactional Functions

Buying: Purchasing products for resale or as an agent for supply of a product

Selling: Contacting potential customers, promoting products, and seeking orders

Risk taking: Assuming business risks in the ownership of inventory that can become obsolete or deteriorate

Logistical functions

Assorting: Creating product assortments from several sources to serve customers

Storing: Assembling and protecting products at a convenient location to offer better customer service

Sorting: Purchasing in large quantities and breaking itno smaller amounts desired by customers

Transporting: Physically moving a product to customers

Facilitating Functions

Financing: Extending credit to customers

Grading: Inspecting, testing, or judging products and assigning them quality grades

Marketing information and research: Providing information to customers and suppliers, including competitive conditions and trends

Direct Channel

The producer and the ultimate consumer deal directly with each other.

Indirect Channel

These intermediaries are inserted between the producer and consumers and perform numerous channel functions. (Ex. Retailer)

Direct to Consumer Marketing Channels

Allow consumers to buy products by interacting with various print or electronic media without a face-to-face meeting with a salesperson.

Multichannel/Omnichannel Marketing

The blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online

Corporate Vertical Marketing System

The combination of successive stages of production and distribution under a single ownership. (Polo/Ralph Lauren)

Exclusive Distribution

A level of distribution density whereby only one retailer in a specific geographic area carries the firm’s products.

Selective Distribution

A level of distribution density whereby a firm selects a few retailers in a specific geographic area to carry its products.

Buyer Requirements (4 Categories)

Information, convenience, variety, and pre/postsale services

Channel Conflict

Arises when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals.

Intensive Distribution

A level of distribution density whereby a firm tries to place its products and services in as many outlets as possible.

Vertical Conflict

Occurs between different levels in a marketing channel— for example, between a manufacturer and a wholesaler or retailer or between a wholesaler and a retailer.
1. Channel member bypasses another member and sells or buys products directly (disintermediation)

2. Disagreements over how profit margins are distributed among channel members

3. Manufactures believe wholesalers or retailers are not giving their products adequate attention

Vertical Marketing Systems

Where franchisor can legitimately direct how a franchise behaves

Horizontal Conflict

Occurs between intermediaries at the same level in a marketing channel, such as between 2 or more retailers or 2 or more wholesalers that handle the same manufacturer’s brands.
1. When a manufacturer increases its distribution coverage in a geographic area
2. Dual distribution causes conflict when different types of retailers carry the same brands

Channel Captain

A channel member that coordinates, directs, and supports other channel members. These can be producers, wholesalers, or retailers. (P&G bc it has a strong consumer following in brands such as Crest, Ride, and Pampers).

Logistics

Those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost.

Supply Chain

The various firms involved in performing the activities required to create and deliver a product or service to consumers or industrial users.

Supply Chain Management

The various firms involved in performing the activities required to create and deliver a product or service to consumers or industrial users.

Consumer Utilities

The utilities provided by retailers create value for consumers. Time, place, form, and possession utilities are offered by most retailers in varying degrees, but one utlities is often emphasized more than others.

Form of Ownership

Distinguishes retail outlets based on whether independent retailers, corporate chains, or contractual systems own the outlet.

Level of Service

Describes the degree of service provided to the customer from three types of retailers: self-, limited-, and full-service.

Merchandise Line

Describes how many different types of products a store carries and in what assortment.

Disintermediation

A source of channel conflict that occurs when a channel member bypasses another member and sells or buys products direct.

Independent Retailer

Independent business owned by an individual

COrporate Chain

Involves multiple outlets under common ownership

Franchising

An individual or firm (the franchisee) contracts with a parent company (the franchisor) to set up a business or retail outlet.

Self Service

Requires that customers perform many functions during the purchase process. Warehouse clubs such as Costco, for example, are usually self-service, with all nonessential customer services eliminated.

Limited Service

Outlets provide some services, such as credit and merchandise return, but not others, such as clothing alterations. (Walmart, Kmart, and Target)

Full Service

Most specialty stores and department stores provide many services to their customers. Neiman Marcus, Nordstrom, and Saks Fifth Avenue.

Depth of Product Line

he store carries a large assortment of each product item.

Breadth of Product Line

The variety of different product items a store carries.

Supercenter

Combines a typical merchandise store with a full-sized grocery store.

Automatic Vending

Nonstore retailing. Makes it possible to serve customers when and where stores cannot. Machine maintenance, operating costs, and location leases can add to the cost of the products, so prices in these are often higher than those in stores.

Direct Mail and Catalogs

“The store that comes to the door.” Eliminates the cost of a store and clerk. Improve marketing efficiency through segmentation and targeting, and they create customer value by providing a fast and convenient means of making a purchase. They can also enhance brand awareness and offer personalized promotions.

Television Home Shopping

When consumers watch a shopping channel on which products are displayed; orders are then placed over the the telephone or via the Internet.

Online Retailing

Allows consumers to search for, evaluate, and order products through the Internet.

Telemarketing

Using the telephone to interact with and sell directly to consumers.

Direct Selling

Sometimes called door-to-door retailing, involves direct sales of products and services to consumers through personal interactions and demonstrations in their home or office.

Retail Positioning Matrix

A matrix that positions retail outlets on two dimensions: breadth of product line and value added, such as location, product reliability, or prestige.

Retailing Mix

The activities related to managing the store and the merchandise in the store, which include retail pricing, store location, retail communication, and merchandise.

Markup

How much should be added to the cost the reatiler paid for a product to reach the final selling price.

Markdown

Occurs when the product does not sell at the original price and an adjustment is necessary

Everyday Low Pricing (EDLP)

Emphasizing consistently low prices and eliminate most markdowns with a strategy often called

Off-Price Retailing

Selling brand-name merchandise at lower than regular prices.

Retail Image

Oftne described as the way in which the store is defined in the shopper’s mind, partly bu its functional qualities and party by an aura of psychological attributes.

Shopper Marketing

The use of displays, coupons, product samples, and other brand communications to influence shopping behavior in a store.

Category Management

An approach to managing the assortment of merchandise in which a manager is assigned the responsibility for selecting all products that consumers in a market segment might view as substitutes for each other, with the objective of maximizing sales and profits in the category.

Retail Life Cycle

The process of growth and decline that retail outlets, like products, experience, consisting of the early growth, accelerated development, maturity, and decline stages.

Marketplace

Here buyers and sellers engage in face-to-face exchange relationships in a material environment characterized by physical facilities and mostly tangible objects.

Digital Marketspace

A digitally enabled environment characterized by face-to-screen exchange relationships and electronic images and offerings.

Interactive Marketing

Two-way buyer–seller electronic communication in which the buyer controls the kind and amount of information received from the seller.

Personalization

The consumer-initiated practice of generating content on a marketer’s website that is custom tailored to an individual’s specific needs and preferences.

Permission Marketing

The solicitation of a consumer’s consent (called “opt-in”) to receive e-mail and advertising based on personal data supplied by the consumer.

Customer Experience

The sum total of internaction that a customer has with a company’s website

8-Second Rule

Customization

The growing practice of not only customizing a product or service but also personalizing the marketing and overall shopping and buying interaction for each customer.

Viral Marketing

A digitally enabled promotional strategy that encourages individuals to forward marketer-initiated messages to others via e-mail, social networking websites, and blogs.

Cookies

Computer files that a marketer can download onto the computer and mobile phone of an online shopper who visits the marketer’s website.

Behavioral Targeting

Uses information provided by cookies to direct online advertising from marketers to those online shoppers whose behavioral profiles suggest they would be interested in such advertising.

Social Commerce

The use of social networks for browsing and buying.

Cross-Channel Consumers

An online consumer who shops online but buys offline, or shops offline but buys online.

Showrooming

The practice of examining products in a store and then buying them online for a cheaper price.

Webrooming

The practice of examining products online and then buying them in a store.

Marketing Attribution

The practice and techniques used to credit or value a particular channel and consumer touchpoint.

Promotional Mix

The combination of one or more communication tools used to: (1) inform prospective buyers about the benefits of the product, (2) persuade them to try it, and (3) remind them later about the benefits they enjoyed by using the product.

Advertising

Any paid form of nonpersonal communication about an organization, product, service, or idea by an identified sponsor.

Personal Selling

The two-way flow of communication between a buyer and seller, often in a face-to-face encounter, designed to influence a person’s or group’s purchase decision.

Choiceboards

An interactive, digitally enabled system that allows individual customers to design their own products and services by answering a few questions and choosing from a menu of product or service attributes (or components), prices, and delivery options.

Public Relations

A form of communication management that seeks to influence the feelings, opinions, or beliefs held by customers, prospective customers, stockholders, suppliers, employees, and other publics about a company and its products or services.

Sales Promotion

A short-term inducement of value offered to arouse interest in buying a product or service.

Direct Marketing

A promotional alternative that uses direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet.

Product Life Cycle and Promotion Strategy

Introduction: To Inform (Publicity in magazines, advertising salesforce calling on intermediaries, sales promotion in form free samples)
Growth: To Persuade (Personal selling to intermediaries, advertising to differentiate a product from competing brands)
Maturity: To Remind (Reminder advertising, sales promotion in form of discounts, coupons, and events, limited personal selling, direct-mail reminders)
Decline: To Phase Out (Little money spent on promotion)

Product Characteristics

The proper blend of elements in the promotional mix also depends on the type of product. 3 specific types should be considered, complexity, risk, and ancillary services.

Stages of the Consumer Journey

Prepurchase Stage: Advertising is more helpful than personal selling because advertising informs the potential customer of the existence of the product and the seller.
Purchase Stage: The importance of personal selling is highest, whereas the impact of advertising is lowest. Sales promotion in the form coupons, deals, point-of-purchase displays, and rebates can be very helpful in encouraging demand. Social media can play an important role in the final decision by delivering promotions and givign consumers control of the process.
Postpurchase Stage: the salesperson is important. More personal selling helps reduce the buyer‘s postpurchase anxiety. All stages impact consumer behavior.

Push Strategy

Directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product.

Pull Strategy

Directing the promotional mix at ultimate consumers to encourage them to ask the retailer for a product.

Promotion Decision Process

Planning: Developing the promotion strategy (identify the target audience, specify the objectives, set the budget, select the right promotional tools, deisng the promotion, schedule the promotion)
Implementation: Executing the Promotion Program (Pretest the promotion, carry out the promotion)
Evaluation: Assessing the Promotion Program (Posttest the promotion, make needed changes)

Percentage of Sales Budgeting

Allocating funds to promotion as a percentage of past or anticipated sales, in terms of either dollars or units sold.

Competitive Parity Budgeting

Allocating funds to promotion by matching the competitor’s absolute level of spending or the proportion per point of market share. Also called matching competitors or share of market.

All-You-Can Afford Budgeting

Allocating funds to promotion only after all other budget items are covered.

Objective and Task Budgeting

Allocating funds to promotion whereby the company: (1) determines its promotion objectives; (2) outlines the tasks to accomplish those objectives; and (3) determines the promotion cost of performing those tasks.

Direct Orders

The result of direct marketing offers that contain all the information necessary for a prospective buyer to make a decision to purchase and complete the transaction.

Lead Generation

The result of a direct marketing offer designed to generate interest in a product or service and a request for additional information.

Traffic Generation

The outcome of a direct marketing offer designed to motivate people to visit a business.

Product Advertising

Advertisements that focus on selling a product or service and which take three forms: (1) pioneering (or informational), (2) competitive (or persuasive), and (3) reminder.

Institutional Advertisements

Advertisements designed to build goodwill or an image for an organization rather than promote a specific product or service.

Message Content

This is critical when designing an effective advertisement.

Message Creativity

Determined by both the originality and appropriateness of the message used to inform and persuade, including visual or auditory presentation.

Message Appeals

Creative information and persuasive content can be combined in the form of an appeal that provides a reason for the consumer to act.

Reach

The number of different people or households exposed to an advertisement.

Frequency

The average number of times a person in the target audience is exposed to a message or an advertisement.

Gross Rating Points (GRP)

A reference number used by advertisers that is obtained by multiplying reach (expressed as a percentage of the total market) by frequency.

Cost Per Thousand (CPM)

The cost of reaching 1,000 individuals or households with the advertising message in a given medium (M is the Roman numeral for 1,000).

Media Alternatives Pros and Cons

Look at Document

Infomercials

Program-length (30-minute) advertisements that take an educational approach to communication with potential customers.