Marketing Exam 3

Distribution strategy

Process and logistics through which products are made available to consumers.

Channel intermediaries

Interdependent organizations that facilitate transfer of products in the distribution system.

Direct channel

No intermediaries; producer/manufacturer sells directly to end consumer.

Non-direct channels

Involves one or multiple intermediaries between producer and end consumer.

Title of ownership

Refers to owning an item/product (e.g., owning shoes after purchase from a store).

Wholesalers

Do not sell directly to customers; they sell in bulk and only to businesses.

Agents/Brokers

Legally never take ownership of a product; facilitate sales between producers and consumers.

B2B

Business to business.

B2C

Business to consumer.

Discrepancy of quantity

Difference between what is optimal quantity for manufacturer and what is optimal for the consumer.

Discrepancy of assortment

Consumers buy a large variety while companies usually specialize in a small assortment.

Temporal discrepancy

Time gap between when something is produced vs when it is consumed.

Spatial discrepancy

Gap between where something is made vs where it is bought.

Transactional functions

Functions performed by intermediaries including negotiating, risk taking, and promotions.

Logistical functions

Functions performed by intermediaries including physical storing, sorting, and distribution.

Facilitating functions

Functions performed by intermediaries including researching and financing.

Intensive distribution

When you saturate the market with your presence; products are available everywhere.

Selective distribution

Available but not everywhere; firms are choosy with where their products are available.

Exclusive distribution

Available at only one retailer; not easily accessible.

Market factors

Influences on distribution strategy based on the type of customers a firm has.

Product factors

Influences on distribution strategy based on the type of product a firm sells.

Producer factors

Influences on distribution strategy based on the image a firm wants and control over locations.

Arms-length relationship

Formal relationship with some interaction but not regularly.

Cooperative relationship

Contracts and regular interactions; casual interactions among small independent businesses.

Integrated relationships

Similar to getting married; firms have access to each other's financial assets and databases.

Power

Entity has the capacity to influence someone's actions.

Control

Exerting power to influence behavior.

Conflict

Arise when different entities have differing goals/objectives.

Department stores

Retail stores like Macy's and Dillard's that have different sections for each category of items.

Specialty stores

Retail stores that specialize in one type of product category, such as running or sports stores.

Supermarkets

Retail stores that sell primarily food, produce, and necessities.

Convenience stores

Retail stores like 7-Eleven that have extended hours and sell snacks.

Drug stores

Retail stores that sell pharmaceutical products and are heavily regulated.

Warehouse clubs

Membership required stores like Costco, Sam's Club, and BJs with low service level and high assortment.

Discount stores

Lower priced stores with cheaper versions of more expensive products such as Dollar Tree and thrift stores.

Off-price retailers

Stores like TJ Maxx and Ross that sell overflow units that don't sell at name brands.

Restaurants

Establishments with a narrow assortment where service level depends on the type of restaurant.

Fast food

Restaurants characterized by low prices and low service level.

Hybrid stores

Stores like Target and Walmart that check multiple retail boxes.

Hypermarkets

Retail stores that sell everything in one location, with Walmart being the closest example.

Non-store retailing

Retailing methods that do not involve a physical store, such as automatic vending.

Electronic retailing

Retailing that started in South Korea where customers order online and pick up later.

Franchising

Opening a retail store with permission from a parent company, operating under strict regulations.

Franchisor

The parent company that helps with details, supplying, and vendors in a franchise.

Franchisee

The individual who operates a franchise, benefiting from the brand name but facing more risk.

Licensing

When a brand allows another brand to use its name on manufactured items.

IMC - Integrated Marketing Communication

A promotion mix that includes elements like advertising, public relations, and sales promotion.

Advertising

A paid form of mass communication that promotes a firm's product through various media.

Public relations (PR)

A non-paid form of communication that builds a firm's image and credibility.

Sales promotion

Incentives such as free samples and coupons designed to spur purchase.

Cost per contact

The cost incurred to reach one person through advertising.

AIDA

A hierarchy of cognitive stages consumers go through: Attention, Interest, Desire, Action.

Push and pull strategies

Advertising strategies where pull targets end customers and push influences intermediaries.

Comparative advertising

Advertising that compares one brand to another, legally requiring objective verification.

Sell the sizzle, not the steak

An advertising principle that emphasizes selling the appeal or outcome rather than the product itself.

Socially responsible marketing

Marketing practices that consider ethical implications and aim for positive social impact.

Ethics

The study of what is right or wrong in business conduct.

Foreign corrupt practices act (FCPA)

A U.S. law that prohibits offering bribes to foreign officials for business purposes.

Turnkey projects

A way to get around FCPA wherein an American company pays a local company a lump sum amount of money and doesn't ask questions about how their contract goals were completed.

Corporate social responsibility (CSR)

Firms undertaking activities with a social wellbeing outcome in mind.

Greenwashing

The practice of deceptively portraying a product, policy, or activity as more environmentally friendly than it really is, often through exaggerated or misleading claims.

Global marketing; International marketing

Marketing in multiple countries.

Protectionism

Tariffs = tax on imports.

Currency exchange rates

Currency exchange rates are different across different countries.

Dumping

When a firm sells below production cost in a foreign country, made possible by subsidies.

World Trade Organization (WTO)

GATT before WTO; General agreement on trade; established after WWI and was replaced by WTO.

Countertrade

When multiple parties exchange something of value, aka exchange of goods instead of monetary compensation.

Global marketing strategy

Standardization = when you sell the same products the same way all around the world.

Adaptation

Modification of product, promotion/positioning, price, place (distribution) depending on the country.

Culture

Belief and values that guide thought processes and actions, usually based at a group/community level and passed from one generation to another.

Beliefs

Convictions/what you hold to be true, not necessarily rational.

Values

Principles that guide behavior, including individualism and collectivism.

Power distance index (PDI)

Degree of hierarchy in society; US least PDI, some Asian countries are high in PDI.

Individualism

A cultural orientation where individuals prioritize their own goals over group goals; high in US.

Collectivism

A cultural orientation where group goals are prioritized over individual goals; most of Asia and some other countries are high in collectivism.

Luxury products

Highly admired in countries with high PDI; seen as a status symbol.

Cultural differences

Variations in norms, values, and beliefs across different societies.

Legal restrictions

Regulations that vary depending on the country.

Terrain

Physical geography that can influence marketing strategies.

Uncertainty Avoidance Index (UAI)

Captures what extent society is accepting of risk/uncertainty.

Immigration and Risk Acceptance

Places built on immigration are more accepting of risk.

Lower UAI Numbers

Lower numbers mean a society is better about change.

Steve Jobs Example

Steve Jobs being fired by someone he recruited and then coming back after starting another firm.

Web 1.0

Started in the mid 90s; rise of internet and ecommerce; start of the world wide web created by the military in the 70s.

Web 2.0

Early to mid 2000s; emergence of collaborative systems; rise of social media and social interactions; content being produced by users.

Web 3.0

Late 2000s to mid 2010s; rise of smartphones and mobile apps; internet of things (IoT).

Web 4.0

Since mid 2010; artificial intelligence (AI), quantum computers, augmented reality (AR), big data.

Tradeoffs in Digital Marketing

Privacy concerns; perception of creepiness; growing backlash; no exposure to new ideas; benefits.

Enhanced Personalized Products

Offer something of value based on customer data; tailored marketing to each individual.

Search Engine Optimization (SEO)

Process of gaining ranks in search results; most ad spending goes towards online presence.

Paid Search

Sponsored rank done via bidding for a rank; lawyers spend a lot on ad optimization.

Organic Search

Not paid for; website design so Google is more likely to pick it up.

Native Advertising

When a firm's ad blends in with the website and other content; consumers let their guard down to interact with the ad.

Golden Triangle

Top left side of the search engine map.

Contextual Ads

Ads match the website topic.

Retargeting

When the same ads are shown across multiple websites.

Morphing Display

Firms have different versions of the ad and a consumer's preferences determines the ad they receive.

Artificial Intelligence (AI)

Concept launched in the 50s; technology wasn't ready until recently to get the concept more developed; evolved a lot in the last 20 years; machine learning algorithm that has the ability to learn on its own; marriage between human cognition and computer science (machines mimicking human thought processes/behavior); machines being able to accomplish tasks in smart/autonomous manner; evolves with additional data.

Non-AI

Uses rules based algorithms; cannot deviate from rules implemented in the program; cannot change drastically the way humans can.

Machine Learning (ML)

Subset of AI; process of making computers learn and think/act like humans through data feeding.