Marketing test 3

• Easy to:
•             say
•             spell
•             read
•             remember

• -legal requirement
• -customer culture
• -target market
• -product benefits (ie: huggies, luvs)

• 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

• 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: (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.

•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:

• 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

• -developing pricing objectives
• -estimating demand
• -determining costs
• -choose a pricing strategy
• -set the list or quoted price
• -price adjustment strategies

• 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

• 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

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)

• 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

• 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

Balances the revenues and costs for the product, then sets the price

• -Based on tradition (swatch watch)
• -based on competition prices
• -loss leader

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

Begin with MSRP and then adjust the price ie: discounts, allowances, etc

• 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.

• 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

• 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)

• 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

• •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

• •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

• 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

• 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

• 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

• 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)

• 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

• 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
• 

• 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: 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