Marketing test 3

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Marketing test 3
2013-11-07 22:06:04

marketing test 3
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  1. 4 easy tests in selecting brand names
    • Easy to:
    •             say
    •             spell
    •             read
    •             remember
  2. 4 ways a product should fit with the brand
    • -legal requirement
    • -customer culture
    • -target market
    • -product benefits (ie: huggies, luvs)
  3. 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
  4. 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
  5. 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.
  6. 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
  7. 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
  8. 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
  9. 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)

    • Unit Volume
    • •Qty produced

    • 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
  10. 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
  11. 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)
  12. Choose a Pricing Strategy:
    Demand oriented approaches
    • Demand oriented approaches
    • •tend to focus on a qty or volume produced


    • 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


    • 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
  13. 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
  14. Choose a Pricing Strategy:
    Profit oriented approaches
    Balances the revenues and costs for the product, then sets the price
  15. Choose a Pricing Strategy:
    Competition oriented approaches
    • -Based on tradition (swatch watch)
    • -based on competition prices
    • -loss leader
  16. 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
  17. Price adjustment strategies
    Begin with MSRP and then adjust the price ie: discounts, allowances, etc
  18. 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.
  19. 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
  20. 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)
  21. 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
  22. 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
  23. Major Logistic Functions
    • •Warehousing
    • - 2 Types

           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
  24. 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
  25. 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
  26. 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
  27. Wheel of Retailing Hypothesis
  28. 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)
  29. 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
  30. 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
  31. Organization by:
    Store Types & Merchandise Selection
  32. Retail Mix
    • Retail pricing
    • 3 choices for pricing strategies for retailers:


    • 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

  33. 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