-
4 easy tests in selecting brand names
- Easy to:
- say
- spell
- read
- remember
-
4 ways a product should fit with the brand
- -legal requirement
- -customer culture
- -target market
- -product benefits (ie: huggies, luvs)
-
Brand equity pyramid
- Consumer Brand Connection (top level)
- •Consumer brand connection
- •(resonance)
- •Deep loyalty to the brand
Consumer Judgement & Consumer Feelings level:
- Brand Performance:
- •Consumer begin to ask questions such as
- "how does this brand perform & what does it do for me?
- Brand Imagery:
- •Consumers develops a deeper emotional reaction to the brand
- Brand awareness:
- •Consumers are simply aware that the product exists
-
Types of branding strategies
- Individual or Family
- -individual brands
- -create a separate, unique brand for each product item (ie
- -Family branding strategy (umbrella brand
- strategy)
- -Market multiple items under the same brand
- name
- -ie: Kraft, Campbells, Betty Crocker
- National vs. Store brand (retailer offers their own version, might be a store brand or
- private label)
- -Store brand concept began in 1970's
- -Store brands (particularly food products) Now
- count for 30% of all products bought
- -ie: Walmart
- -Great Value, Kroger-Value Line, Target - Archer Farms, Market Pantry, HT- HT
- Traders, Harris Teeter Organics, Harris Teeter Your Pet, Your Baby, Your Tot,
- Your Home
- --Great Value is also the largest brand in the
- country (?)
- Generic Branding:
- -On the decline
- -No branding
- -Plain label + ingredients
- Licensing:
- -One firm sells the right to another firm to
- legally use a protected brand name for a specific purpose and a specified
- period of time
- -ie: Children's programming (Disney,
- Dora, Sponge Bob)
- Co-Branding:
- -Combines 2 or more brands for added
- recognition power
- -Ingredient branding: is a specific type of
- co-branding--> the branded materials become component parts of the larger brand.
- ie: Lunchables
-
The 4 I’s of Services
The 4 I’s of Services: (characteristics that services share)
- 1.Intangibility:
- •The characteristic of the service that the customers can not touch, see, or hold before buying the service.
- •This means you do not know what quality of service you will receive until you actually receive it.
- •Ie: Doctors office: evaluate through friendliness of staff or the facility location
- 2.Inconsistency
- •Characteristic of the service that even the SAME SERVICE provided by the SAME INDIVIDUAL for the SAME CUSTOMER can vary.
- •Ie: hairdresser: perhaps they were under the weather, so you hair cut may not be at
- the same level as usual
- •Use TQM programs in place to ensure a greater level of consistency
- 3.Inseparability
- •Characteristic of the service that we cant separate from the deliverer of the service from the service itself
- •Ie: Burger King: Part of her order
- was messed up so she was not happy overall
- (AKA the service encounter: interaction between the employee and the customer)
- 4.Inventory
- •More subjective than that of goods.
- •Carrying cost depend upon the cost of employees and equipment.
- •Sometimes a service provider will be available but there is little/no demand for that service.
- •Carrying costs widely vary for different industries.
-
Goods/Services Continuum
•Physical goods are on the left: No real service aspect.
•Services:To the fart right
•Lots of products are a mix of a good and service
As you move form left to right you can have inconsistency
-
Different ways to evaluate products:
Different ways to evaluate products:
- 1.Tangible goods (ie car)
- uses search properties to evaluate the product
- •Ie:researching color, style, size
- 2.Some services have experience properties
- •Ie: daycare facility
- •Can only be evaluated during or after purchase
- 3.Other services have credence properties
- •Most difficult to evaluate.
- •May not be able to evaluate even after service is rendered (because you may not feel you have the required knowledge to evaluate)
- •Ie: car mechanic, dentist,
•Capacity management: ie: heating and air conditioning company
-
6 steps for setting the price for a product
- -developing pricing objectives
- -estimating demand
- -determining costs
- -choose a pricing strategy
- -set the list or quoted price
- -price adjustment strategies
-
Developing Pricing Objectives
- Sales Objective
- •Maximize sales
- Marketshare objective
- •Increase our marketshare
- Profit Objective
- •Achieve a target level of profit growth
- •Manage the overall long term growth
- •Maximize current profits (short term strategy)
- Survival
- •Just trying to stay afloat (keep doors open)
- Social Responsibility
- •Firm forgoes some profit in order to recognize its obligation to consumers and society
-
Evaluating the Pricing Environment:
Market structure & pricing flexibility
- Pure competition
- •Many sellers & many buyers
- •Represents a commodity such as
- agriculture (not much differentiation)
- •Price is mostly a function of supply & demand (limited supply = higherprice)
- •Not much pricing flexibility
- Monopolistic competition:
- •Many sellers & many buyers
- •In this type of industry you can
- differentiate the product in many ways
- •Ie:quality, customer service, innovation
- •Lots of pricing flexibility
- •Ie: fast food
- Oligolopy
- •Few sellers
- •Highly sensitive to the competition
- •Status quo pricing: one firm sets the price and others follow
- •Pricing flexibility is more limited
- •Ie: mobile market (cell phones)
- Pure monopoly
- •1 seller
- •Can be regulated or not regulated
- •Ie: dominion power
- •Very limited pricing flexibility for regulated
-
The Price Elasticity of Demand
A measure of the sensitivity of customers to changes in price
- Elastic demand:
- •Customers very sensitive to changes in price
- •A price change results in an even greater demand in quantity demanded Qd
- •Ie: substitute products have elastic demand (such as coke & pepsi)
- •Requires a large cash outlay such as a car
- Inelastic demand:
- •Customers are NOT very sensitive to changes in price
- •So a change in price will NOT result in much of a change in quantity demanded Qd
- •Ie: necessity products (gasoline, milk, bread, diapers)
-
Choose a Pricing Strategy:
Demand oriented approaches
- Demand oriented approaches
- •tend to focus on a qty or volume produced
NEW PRODUCT
- Skimming
- •The firm sets a high initial price with the intention of reducing it sometime in the future
- Penetration
- •Firm sets a lower initial price to increase market share
EXISTING PRODUCTS
- Prestige
- •The product is priced at a premium to reflect the value and the social status of the product
- •ie: Rolex
- Price Lining
- •When items within a product line sell at different prices, know as price points, to indicate the benefits associated with the products.
- •Ie:Appliances
- •GE – low grade $400
- • Mid grade $ 700
- • Top of the line $1000
•The prices are an indicator to the consumer that the higher price will include more benefits and better quality
- Odd-Even pricing
- •Psychological approach to pricing that odd numbered prices appear cheaper to consumers
- • ie:gasoline
- Target pricing
- •Firm determines up front a good price for the product and then engineers the product for that price
- •Ie:toys
- Bundle pricing
- •Selling 2 or more products as a simple package for1 low price (usually related)
- •Ie:Tooth brushes & toothpaste
- Yield management
- •Charge different prices to different customers to manage capacity, while maximizing revenue
- •Ie: Airlines, hotels, cruiselines
-
Choose a Pricing Strategy:
Cost oriented approaches
- Cost orientated approaches
- •Product driven, set the price based on the cost of producing, distributing and selling the product PLUS a fair rate of return
-
Choose a Pricing Strategy:
Profit oriented approaches
Balances the revenues and costs for the product, then sets the price
-
Choose a Pricing Strategy:
Competition oriented approaches
- -Based on tradition (swatch watch)
- -based on competition prices
- -loss leader
-
Set the list or quoted price
Two basic options:
- One Price policy:
- •the price you see is the price you pay
- •Ie: retailers
- Flexible Price policy:
- •dynamic pricing
- •Charge different prices based on the buyers and buying conditions
- •Ie: car sales
-
Price adjustment strategies
Begin with MSRP and then adjust the price ie: discounts, allowances, etc
-
Distribution vs. supply chain
- The DIFFERENCE between
- Distribution and supply chain
- Distribution Channel = Marketing channel
- •Individual s & firms involved in the process of making a product or a service available for use or distribution
- •Direct
- Distribution channel
- •Producer
- sells to consumer or industrial user
Indirect distribution channel
- •Intermediaries
- involved in the distribution channel
- •Wholesalers:
- Buy from MFTR & sell to retailers
- •Retailers:
- Buy from wholesaller and
- sells to consumers
- •Agents:
- facilitate transactions between the buyer and the seller. Agents can represent
- the seller or buyer.
- •Brokers:
- Facilitate transactions between the buyer and the seller. Brokers do not represent the buyer or seller, they just facilitate the deal.
- Supply Chain
- •Very broad concept
- •Consists of all firms that supply raw materials, component parts & supplies plus the
- firms that facilitate the movement of the product from the producer to the consumer.
-
Advantages of intermediaries:
- Transactional functions
- -Not all intermediaries take on this function
- -The intermediary takes on the risk associated with selling the product
- Logistical functions
- -Intermediary provides a variety or an assortment of goods in 1 location
- Facilitating functions
- -Assist producers in making the product more attractive
- -Product display
- -Competitor comparison
- -Extending credit to consumers (making it easier for us to purchase)
- Disintermediation
- •Removal of intermediaries from the distribution channel
- •Didn’t happen -> instead new intermediaries
-
Marketing Systems
- Conventional marketing system
- •Multi level distribution system
- •Members work independently & are mostly concerned about buying and selling the product
- •No formal relationship with a conventional marketing system
- Vertical marketing system
- •Formal cooperation between members at 2 or more levels of the distribution channel
- •Ie: mftr & retailer
- Administered
- •All the channel members are independent, but a single channel member is considered a leader within that distribution channel
- •Ie: Walmart
- Corporate
- •A single firm that owns 2 or more levels of the distribution channel
- •Ie: Sherwin williams (mftr & retailer)
- •Contractual
- Cooperation by contract
- •It spells out the rights and responsibilities of each party
- •Ie: service firms sponsored
- •Franchise:
- mcdonalds,
- subway, 7-11
- Horizontal
- •2 or more firms at the SAME level of the distribution channel that agree to work together to get the product to the consumer.
- •Ie: one world alliance (american airlines, british airways, mexicana, finair)
-
Distribution Intensity:
how available is the product?
- Intensive distribution
- •Maximize our market coverage through every retailer and wholesaler that will stock the product
- •Ie: convenience product like Milk & Soda
- Selective distribution
- •Many products fall in this category
- •Ie: appliances, technology based products
- Exclusive distribution
- •Limited distribution to a single outlet in a geographic region
- •Ie: BMW
-
Channel Conflict
- •Horizontal conflict
- –Conflict between 2 or more players at the same level
- –Ie: car dealerships
- •Vertical conflict
- –Conflicts between 2 or more
- players at different levels of the distribution channel
- –Ie: mftr that makes the decision to sell
- direct
-
Major Logistic Functions
Storage warehouse solution: long term
- Distribution center: less about storage
- of the product and more about getting
- the product where it needs to be
- •Ie: Walmart: distribution centers
- •Started in 1960’s in a rented garage
- •1970’s 1st distribution center
- •Today: 100 distribution centers
- across the USA that serve 100+ stores,
- employ 500-1000’s employees at each
- location, 4 centers in Virginia (closest in
- Toano).
- Inventory Management
- •How much product do we keep on hand
- •Just in time
- Transportation Management - pie chart of various transportation types
- •Advantages & Disadvantages of each
- •Truck: 35%
- •Rail: 31%
- •Pipeline: 16%
- •Water: 11%
- •Air: 5%
- Logistics Information Management
- •How companies share information with their suppliers
-
Wholesaling Intermediaries:
Merchant Wholesalers
- Full service
- •Provides many services for that MFTR
- Types
- •General merchandise (full line)
- •Carry a broad assortment of merchandise
- •Ie: most prevalent in clothing industry
- •Specialty merchandise (limited line)
- •Carry a narrow range of products, but it is extensive within the line
- •Ie: auto parts
Limited service
- Cash & Carry
- •Carry low cost merchandise for
- retailers and industrial customers
- •Limited product assortment
- •Ie: merchandise for grocery stores & office supplies
- Truck Jobbers
- •Carry a limited assortment of semi-perishable goods for small grocers
- •Ie: milk , bread, snack foods
- Drop shippers
- •Ship the merchandise direct from the mftr
- •Bulky products
- •Ie: coal, oil, lumber
- Rack jobbers
- •Supply retailers with health, beauty, & magazines
- •Responsible for providing and stacking the items
-
Wholesaling Intermediaries:
Brokers & Agents
- Broker:
- •facilitates the transaction between, many small buyers
- •ie: real estate, food
- Manufacturer agent
- •Carries several lines of non-competing products usually in an exclusive territory
- •Ie:automotive industry, steel industry
- Selling agent
- •Represents a single producer
- •Does all of the marketing for that producer
- •Ie: textile, food, apparel
-
Wholesaling Intermediaries:
Manufacturer owned branches & offices
- Manufacturer branch office
- •Carry the inventory
- •Provide sales and service within a specific geographic region
- •Ie: Car dealership
- Manufacturer sales office
- •Just provide a direct selling function for the manufacturer
- •Ie: Hormel foods
-
Wheel of Retailing Hypothesis
-
Classification by:
Level of service
- Self service
- •Customers make their own product selection with out any real help in the store.
- •Often bringing your own bags/containers
- •Check yourself out
- •Ie: warehouse clubs, supermarkets, gas stations, redbox
- •This is a growing trend
- Full service
- •Provide a variety of supporting services
- •Trained sales associates that offer personalized and customized service
- •Ie: higher end dept stores, specialty retail stores
- Limited service
- •Falls in the middle
- •Select areas of the store will offer service
- •Ie: JCPenny, walmart (photo, garden, electronics)
-
Classification by:
Organizational approach
- Independent retailer
- •Majority of retailers
- •Owned by an individual
- •Ie: convenience stores, clothing, hardware
- Corporate chain stores
- •2 or more outlets that are commonly owned and operated
- •Ie: grocery stores, dept stores
- Contractual System - Franchise organizations
- •Independent stores that band together to act like a chain. Franchises are an example of this
- •2 types:
- •Business format franchise
- •More common with fast food
- franchises
- •Franchiser provides step by step procedures on most aspects of the business
- •Product distribution franchise
- •Used with car dealerships
- •They provide a few general guidelines
- •The franchisee is more independent
- Merchandising conglomerates
- •Combines several different retailing lines under 1 single owner
- •Ie: limited brands: 6 brands in 1
-
Classification by:
Merchandise selection
- Merchandise breadth: # of product lines
- •What is the Range of product lines offered by the retailer
- •Narrow: limited selection of product lines
- •Broad: wide range of product lines
- Merchandise depth : amt of selection within the product category or product lines
- •What is the choice that is available within the product line
- •Shallow: selection within the product line/
- category is limited
- •Deep: great deal of selection within the
- product line/ category

-
Organization by:
Store Types & Merchandise Selection
-
Retail Mix
- Retail pricing
- 3 choices for pricing strategies for retailers:
Premium
- Regular
- Everyday low pricing:
- •retailer maintains a consistently low price and tries to eliminate markdowns.
- •Ie: Walmart
- Everyday fair pricing
- •May not offer the lowest price but they do offer good value and customer service.
- •Ie: Target
- Off price retailing: Bargain discount pricing
- •Offer a variety brand named goods at a significant discount.
- •Single Price (Dollartree) or extreme value retailers (Marshalls)
- •Factory outlet stores (Williamsburg outlets)
- •Warehouse Clubs (Costco)
- Store location
- Central business district
- •Downtown shopping district
- •Some challenges:
- •Parking
- •Security
- •Expense (real estate prices)
- •How is foot traffic?
- Shopping center (Collection of shops )
- •Ranges from a small outdoor shopping center anchored by a food lion and maybe 3 shops
- to a super regional mall (multiple anchor tenants & 40-50 smaller shops)
- •Trend: Lifestyle center
- •Combines the feel of a neighborhood park with the convenience of an outside shopping center
- Ie: Peninsula town center, city center, town center
- Power Center
- •Retailers that are located by themselves generally
•They need to be a destination
•Advantage: large parking, own security, well lit
- Nontraditional Store Locations
- •Wide range: from small cart to a kiosk to a store within a store concept (ie Starbucks in a Harris Teeter)
- •Advantages: cheaper realestate, traffic from other store
- Retail Communication
- Retail Communication involves positioning and creating an image:
- Store layout
- •The grid layout
- •Used with grocery store, convenience stores, discount stores
- •Merchandise is placed in aisles
- •The free flow layout
- •Used by specialty retailers and upper end dept stores
- •Merchandise is arranged in circles
- •More conducive to browsing
- Fixture type and merchandise density
- •How much stuff is packed into the store
- The sound of music
- •Sets the stage as you enter the store
- Color and lighting
- •Do they use subdue colors or primary colors
- •Overhead lighting or softer lighting
- Store personnel
- •Are they friendly? Are they easy to find?
- •Ie: Bath and body works: very friendly
Merchandise
-
Non Store Retailing:
Non Store Retailing: Any method a firm uses that doesn’t require the customer to visit the physical storefront.
- •Online retailing
- •Direct selling - Parties and networks
- •Direct mail & catalogs
- •Telemarketing
- •Television Home Shopping
- •Automatic vending
|
|