Business Dynamics Final

Marketing Intermediaries

organizations that assist in moving goods and services from producers to businesses (B2B) and from business to consumers (B2C)

Channel of Distribution

a whole set of marketing intermediaries that join together to transport and store goods in their path from producers to consumers

Agents and Brokers

marketing intermediaries who bring buyers and sellers together and assist in negotiating an exchange but do not take title to the goods

Wholesaler

a marketing intermediary that sells to other organizations

Retailer

an organization that sells to ultimate consumers

Why Marketing Needs Intermediaries

• intermediaries perform marketing tasks faster and cheaper than most manufacturers could provide them

• make the exchange process easier and more efficient and profitable

How Intermediaries Create Exchange Efficiency

• perform certain marketing tasks-such as transporting, storing, selling, and relationship building-faster and more cheaply than most manufacturers could

• add value that exceeds the cost

Three Key Facts about Marketing Intermediaries

• can be eliminated but their activities cannot

• perform marketing functions faster and cheaper than other organizations can

• add costs to products, but these costs are generally offset by the values they provide

Utility

the want-satisfying ability, or value, that organizations add to goods and services when the products are made more useful or accessible to consumers than they were befor

Six Types of Utilities

form, time, place, possession, information, service

Form Utility

producers provide form utility by changing raw materials to useful products

Time Utility

adding value to products by making them available when they are needed

Place Utility

adding value to products by having them where people want them

Possession Utility

doing whatever is necessary to transfer ownership from one party to another, including providing credit, delivery, installation, guarantees, and follow-up service

Information Utility

adding value to products by opening two-way flows of information between marketing participants

Service Utility

adding value by providing fast, friendly service during and after the sale and by teaching customers how to best use products over time

Wholesalers

normally make B2B sales, but some also have retail functions

• sales of goods and services to other businesses for use in the business or resale

Merchant Wholesalers

independently owned firms that take title to the goods they handle

Two Types of Merchant Wholesalers

• full-service wholesalers perform all distribution functions

• limited-function wholesalers perform only selected distribution functions

Limited Function Wholesalers

• rack jobbers

• cash-and-carry wholesalers

• drop shippers

Rack Jobbers

furnish racks or shelves full of merchandise to retailers, display products, and sell on consignment

Cash-and-Carry Wholesalers

serve mostly smaller retailers with a limited assortment of products

Drop Shippers

solicit orders from retailers and other wholesalers and have the merchandise shipped directly from a producer to a buyer

Agent

generally maintain long-term relationships with the clients they represent

Brokers

usually represent clients on a temporary basis

Fastest Growing Retail Categories

• plant-based foods

• home improvement

• sports and fitness

• home, garden, and furniture

• event tickets

• consumer electronics

• pet care

Intensive Distribution

puts products into as many retail outlets as possible

Selective Distribution

sends products only to a preferred group of retailers in an area

Exclusive Distribution

sends products to only one retail outlet in a given geographic area

Online Retailing

selling goods and services to ultimate customers over the internet

Social Commerce

a form of electronic commerce that involves using social media, online media that supports social interaction, and user contributions to assist in the online buying and selling of products and services

Types of Social Commerce

• peer-to-peer sales platforms

• social network shops and shopping areas

• group buying and daily deals

• peer recommendations

• user-curated shopping

• social shopping

• crowdfunding/crowdsourcing

Telemarketing

the sale of goods and services by telephone

Vending Machines

dispense convenience goods when consumers deposit sufficient money

Carts and Kiosks

lower overhead than stores, so they can offer lower prices on items

Pop-ups

temporary outlets that remain open for a short amount of time in small spaces

Direct Selling

selling to consumers in their homes or where they work

Multilevel Marketing

uses salespeople who work as independent contractors

Direct Marketing

activities that directly link manufacturers or intermediaries with the ultimate consumer

Corporate Distribution System

distribution system in which all of the organizations in a channel of distribution are owned by one firm

Contractual Distribution Systems

distribution system in which members are bound to cooperate through contractual agreements

Administered Distribution Systems

distribution system in which producers manage all of the marketing functions at the retail level

Supply Chains

the sequence of linked activities that must be performed by various organizations to move goods from the sources of raw materials to ultimate consumers

Supply-chain Management

the process of managing the movement of raw materials, parts, work in progress, finished goods, and related information through all the organizations involved in the supply chain; managing the return of such goods, if necessary; and recycling materials when appropriate

Logistics

marketing activity that involves planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit

Seven R’s of Logistics

• right product

• right place

• right customer

• right time

• right quantity

• right condition

• right price

Inbound Logistics

involves bringing raw materials, packaging, other goods and services, and information from suppliers to producers

Materials Handling

the movement of goods within a warehouse, from warehouses to the factory floor, and from the factory floor to various workstations

Outbound Logistics

involves managing the flow of finished products and information to business buyers and consumers

Reverse Logistics

involves bringing goods back to the manufacturer because of defects or for recycling materials

Freight Forwarder

an organization that puts many small shipments together to create a single large shipment that can be transported cost-effectively to the final destination

Water Transportation

inexpensive but slow

Pipeline Transportation

fast and efficient

Air Transportation

fast but expensive

Intermodal Shipping

using multiple modes of transportation to complete a single long-distance movement of freight

Piggybacking

truck trailers placed on trains

Fishybacking

truck trailers placed on ships

Birdybacking

truck trailers placed on planes

Storage Function

companies must have a goods available in various parts of the country ready to be shipped locally when ordered

Tracking Goods

storage warehouses hold products for relatively long period of time

Promotion

all the techniques sellers use to motivate people to buy their products or services

Promotion Mix

the combination of promotional tools an organization uses

Integrated Marketing Communication (IMC)

technique that combines the promotional tools into one comprehensive and unified promotional strategy

Steps in a Promotional Campaign

• identify a target market

• define the objectives for each element of the promotion mix

• determine a project budget

• develop a unifying message

• implement the plan

• evaluate effectiveness

Advertising

paid, nonpersonal communication through various media by organizations and individuals who are in some way identified in the advertising message

Product Placement

putting products into TV shows, movies, and video games where they will be seen

Infomercials

a full-length TV program devoted exclusively to promoting a good or service

Online Advertising

online ads are attempts to get potential customers to a website to learn about a project

Interactive Promotion

promotion process in which buyers and sellers work together to create mutually beneficial exchange relationships

Social Media Advertising

• companies can measure how many times a post is viewed or shared

• allows marketers to test promotions before bringing them to traditional media

• a company can establish a base with customers by including top managers in the dialogue

Global Advertising

• requires marketers to develop a single product and promotional strategy to implement worldwide

• problems can arise with using one advertising campaign in all countries-especially bad translations

• many marketers are moving from globalism to regionalism

Personal Selling

• the face-to-face presentation and promotion of goods and services

• salespeople need to listen to customer needs, help reach a solution, and do everything possible to make the transaction as simple as possible

Steps in Selling Process

• prospect and qualify

• preapproach

• approach

• make a presentation

• answer objectives

• close the sale

• follow up

Prospecting

researching potential buyers and choosing those most likely to buy

Qualifying

making sure that people have a need for the product, the authority to buy, and the willingness to listen to a sales messages

Prospect

a person with the means to buy a product, the authority to buy, and the willingness to listen to a sales message

Trial Close

a question or statement that moves the selling process toward the actual close

B2C Sales Process

• most of these sales take place in retail stores

• the salesperson does not have to do much prospecting or qualifying

• retail salesperson do not usually need a preapproach step

• follow up if the product is to be delivered or installed

Public Relations (PR)

management function that evaluates public attitudes, changes policies and procedures in response to the public’s requests, and executes a program of action and information to earn public understanding and acceptance

Three Steps of a PR Program

• listen to the public

• change policies and procedures

• inform people you’re responsive to their needs

Publicity

any information about an individual, product, or organization that’s distributed to the public through the media and that’s not paid for or controlled by the seller

Advantages of Publicity

• free

• reaches people who would not look at an advertisement

• more believable than advertising

Disadvantages of Publicity

• no control over whether the media will use a story or when they may release it

• it can be good or bad

• once a story has been run, it is not likely to run again

Sales Promotion

promotional tool that stimulates consumer purchasing and dealer interest by means of short-term activities

B2B Sales Promotion Techniques

• trade shows

• portfolios for salespeople

• deals (price reductions)

• catalogs

• conventions

B2C Sales Promotion Techniques

• coupons

• cents-off promotions

• sampling

• premiums

• sweepstakes

• contests

• bonuses (buy one, get one free)

• catalogs

• special events

• lotteries

• in-store displays

External Sales Promotion

• trade shows

• coupons, displays, and store demonstrations

• sampling

• event marketing

Viral Marketing

paying customers to say positive things on the Internet or setting up multiple selling schemes whereby consumers get commissions for directing friends to specific websites

Social Networking

• increase exposure for products or services

• create loyalty among customers

• drive traffic to the company website

• help companies come up with new ideas

• allow businesses to communicate easily with customers

Blogging

• allows companies to interact with customers

• can attract new customers

• can improve the company’s website ranking

Podcasting

a means of distributing audio and video programs via the Internet that lets users subscribe to a number of files, also known as feeds, and then hear or view the material at the time they choose

E-mail Promotions

• increase brand awareness

• update subscribers on various delas or promotions

Mobile Marketing

use text messaging to promote sweepstakes, send customers news or sports alerts, and give company information

Push Strategy

the producer uses advertising, personal selling, sales promotion, and all other promotional tools to convince wholesalers and retailers to stock and sell merchandise

Pull Strategy

heavy advertising and sales promotion efforts are directed toward consumers so that they’ll request the products from retailers

Accounting

the recording, classifying, summarizing, and interpreting of financial events and transactions to provide management and other interested the information they need to make good decisions

Stakeholders

employees, owners, creditors, unions, investors, and the government

Financial Accounting

the means by which management provides information (such as financial statements) that assist external parties in making decisions about the company

Managerial Accounting

the means by which management provides information (such as financial statements) that assist internal parties in making decisions about the company

Tax Accounting

the means by which management determines the amount of taxes that a company owes, how to legally reduce those taxes, and analyzes the impact of business decisions on taxes