Disrupting the traditional way of distributing a product/service
FedEx - Small package delivery
Amazon - online selling
Apple's iTunes / iPod - turned music on its ear
Uber - app-based ride service
Good distribution strategies
can contribute strongly to customer value and create a competitive advantage for a firm. But, they must work closely with other firms in a larger value delivery network.
Value Delivery network
A network composed of company suppliers, distributors, and ultimately, customers who partner with each other to improve the performance of the entire system in delivering customer value.
Marketing channel (distribution channel)
A set of interdependent organizations that help make a product or service available for a use or consumption by the consumer or business user.
The role of marketing intermediaries is to
transform the assortments of products made by producers into the assortments wanted by consumers
Producers
Make narrow assortments of products in large quantities.
Consumers
Want broad assortments of products in small quantities
Marketing channel members
Buy large quantities and break them down into the smaller quantities desired by consumers. Play an important role in matching supply and demand.
Channel level
A layer of intermediaries that performs some work in brining the product and its ownership closer to the final buyer.
Direct marketing channel
A marketing channel that has no intermediary levels
Indirect marketing channel
A marketing channel containing one or more intermediary levels
Channel Behavior
Marketing channel consists of firms that have partnered for their common good. Depend on each other; For dealer depends on Ford to design cars that meet customer needs; for depends on the dealer to engage customers, persuade them to buy Ford cards, and se
Channel conflict
Disagreements among marketing channel members on goals, roles, and rewards - who should do what and for what rewards
Horizontal conflict
Ford dealer vs. Ford dealer in Chicago; holiday inn vs holiday inns that overcharge guests or give poor service
Vertical conflict
McDonald's conflict with 3,100 independent franchisees
Conventional distribution channel
A channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, perhaps even at the expense of profits for the system as a whole.
Vertical marketing systems (VMS)
A channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contracts with them, or has so much power that they all cooperate.
VMS
- Corporate - combines successive stages of production and distribution under single ownership
- Contractual - Independent firms at different levels of production and distribution join together through contracts
- Administered - A VMS that coordinates suc
Horizontal marketing system
A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity.
McDona's inside a walmart
Multichannel distribution system
A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments.
Disintermediation
The cutting out of marketing channel intermediaries by product or service producers or the displacement of traditional resellers by radical new types of intermediaries. (Netflix).
Marketing channel design
Designing effective marketing channels by analyzing customer needs, setting channel objectives, identifying major channel alternatives, and evaluating those alternatives.
Types of distribution
- Intensive - Stocking the product in as many outlets as possible.
- Exclusive - Giving a limited number of dealers the exclusive right to distribute the company's products in their territories.
- Selective - The use of more than one but fewer than all of
Marketing channel management
Selecting, managing, and motivating individual channel members and evaluating their performance over time.
Marketing logistics (physical distribution)
Planning, implement, and controlling the physical flow of material, final goods, and related information form points fo origin to points of consumption to meet customer requirements at a profit.
Supply chain management
Managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers
Distribution centr
A large, highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible.
Inventory management
Must maintain the delicate balance between carrying too little inventory and carrying too much. With too little stock, firms risks not having products when customers want to buy (costly emergency shipments or production). Carry too much inventory results
Just-in-time
- carry only small inventories of parts or merchandise - geese days of operations, new stock arrives exactly when needed
Multimodal transportation
Combining two or modes of transportation
Integrated logistics management
The logistics concept that emphasizes teamwork - both inside the company and among all the marketing channel organizations - to maximize the performance of the entire distribution system.
Third-party logistics (3PL) provider
An independent logistics provider that performs any or all of the function required to get a client's product to market.
Retailing
All the actives involved in selling goods or services directly to final consumers for their personal, nonbusiness use.
Retailer
A business whose sales com primarily from retailing.
Corporate chains
Two or more outlets that are commonly owned and controlled
Franchise
A contractual association between a manufacturer, wholesaler, or service organization (a franchisor) and independent businesspeople (franchises) who buy the right to own and operate one or more units in the franchise system.
Why location?
1. Location is one of the most influential considerations in a customer's store-choice decision - usually pick location closest to your home or work.
2. Location decisions have strategic importance because they can be used to develop a sustainable competi
Unplanned Locations
Do no have centralized management that determine what stores will be in a development, where the specific stores will be located, and how they will be operated.
Freestanding Sites
Retail locations for an individual isolated stores unconnected to other stores; however they might be near other freestanding stores or near a shopping center.
Freestanding Sites Advantages
Convenience for customers, higher vehicular traffic and visibility to attract customers driving by; models occupancy costs; fewer restrictions on signs, hours, or merchandise that might be imposed by management of planned locations.
Freestanding Site Disadvantages
Limited trade area; no other retailers to attract customers interested in conveniently shopping for multiple categories of merchandise on one trip; higher occupancy costs than shopping centers because they don't have other retailers to share the common ar
Outparcels
Freestanding stores that are not connected to other stores in a shopping center but are located on the premises of a shopping center, typically in the parking area
Advantages
Convenience of a drive through window, extensive parking, clear visibility form the street (fast-food and banks)
Shopping center
A group of retail business built on a site that is planning, developed, owned, and managed as a unit.
Convenience, Neighborhood, and Community Centers
As known as strip shopping center - attached rows of open-air stores, with onsite parking usually located in from of the stores.
Smaller centers
10,000 - 60,000 sq ft
Anchored by a supermarket
Designed for shopping convenience
10-15 smaller retailers
Larger centers
25,000 - 50,000 sq ft
Anchored by a big box store
Offer customers convenient locations
Easy parking
Low occupancy costs
Disadvantages - limited trade area due to their size, lack of entertainment and restaurants, no protection from the weather
Power Centers
Shopping centers that consist primarily of collections of big box retail stores
- Open Air
- Near enclosed shopping mall
- Low occupancy costs
- Modest levels of consumer convenience
Enclosed Shopping Malls Advantages
Attract many shoppers
Large trade area
Older citizens get exercise by walking
Teenagers hang out
High pedestrian traffic
Sales per sq ft almost twice that of power or strip centers
Weather isn't a worry
Mall mgmt ensures level of consistency
Enclosed shopping malls disadvantages
Occupancy costs are higher than strip centers
Freestanding
Retailers may not like the mall mgmt's control of their operations
Specialty & dept store may sell very similar merchandise close by
Parking not as convenient
May be 40 years old
Online sales
Lifestyle Centers
shopping centers that have an open-air configuration of specialty stores, entertainment, and restaurants, with design ambience and amenities such as fountains and street furniture
Lifestyle centers advantages
Outdoor attractions, very convenient, lower occupancy costs, higher-income areas, higher purchases per visit offset fewer shoppers
Lifestyles centers disadvantages
Limited auto access
Bad weather can be an impediment
Less traffic than malls
Mixed-Use Developments (MXDs)
combine several different uses into one complex including retail, office, residential, hotel, recreation, or other functions
Factory outlet
An off-price retailing operation that is owned and operated by a manufacturer and normally carries the manufacturer's surplus, discontinued, or irregular goods.
Omnicenters
Combines enclosed malls, lifestyle center, and power centers
Wholesaling
all the activities involved in selling goods and services to those buying for resale or business use
Wholesaler
a firm engaged primarily in wholesaling activities
marchant wholesaler
An independently owned wholesales business that take title to the merchandise it handles.
Importance of wholesalers
Selling and promoting
Buying and assortment building
Bulk Breaking
Wareshousing
Transportation
Financing
Risk bearing
Market info
Mgmt services and advice
Broker
a wholesaler who does not take title to goods and whose function is to bring buyers and sellers together and assist in negotiation
Agent
a wholesaler who represents buyers or sellers on a relatively permanent basis, performs only a few functions, and does not take title to goods
Manufacturers' and retailers' branches and offices
wholesaling by sellers or buyers themselves rather than through independent wholesalers
The promotion mix
Also called its marketing communication mix consist of a specific blend of:
1. Advertising (broadcast, print, online, mobile, outdoor) (lost cost of exposure; repeat many times; popularity; legitimate; one-way communication)
2. Sales promotion (discounts,
Content Marketing
creating, inspiring, and sharing brand messages and conversations with and among consumers across a fluid mix of paid, owned, earned, and shared channels
Paid
promotional channels paid for by the marketer
Owned
websites, corporate blogs, owned social media pages, sales force, events
Earned
PR media channels, television, newspapers, blog - not paid for, include contact because of viewer, reader, or user interest.
Shared
Shared by consumers with other consumers, such as social media, blogs, mobile media, viral channels as well as word-of-mouth
personal communication channels
Channels through which two or more people communicate directly with each other, including face to face, on the phone, via mail or e-mail, or even through an internet "chat
Word-of-mouth influence
the impact of the personal words and recommendations of trusted friends, associates, and other consumers on buying behavior
buzz marketing
cultivating opinion leaders and getting them to spread information about a product or a service to others in their communities
non personal communication channels
media that carry messages without personal contact or feedback, including major media, atmospheres, and events
Affordable method
setting the promotion budget at the level management thinks the company can afford
percentage of sales method
setting the promotion budget at a certain percentage of current or forecasted sales or as a percentage of the unit sales price
competitive parity method
setting the promotion budget to match competitors' outlays
Objective-and-tack method
Developing the promotion budget by:
1. Defining specific promotion objectives
2. Determining the tasks needed to achieve these objectives
3. Estimating the costs of performing these tasks. The sum of these costs is the proposed promotion budget.
push strategy
A promotion strategy that calls for using the sales force and trade promotion to push the product through channels. The producer promotes the product to channel members who in turn promote it to final consumers.
- John Deere trackers
pull strategy
a promotion strategy that calls for spending a lot on consumer advertising and promotion to induce final consumers to buy the product, creating a demand vacuum that "pulls" the product through the channel.
- Axe grooming products
push-pull strategy
Advertising
any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor
advertising objective
a specific communication task to be accomplished with a specific target audience during a specific period of time
inform, persuade, remind
Informative advertising - communicating customer value, explaining how products work, building a brand and company image.
Persuasive Advertising - Building brand preference, encouraging switching to a brand, creating customer engagement
Reminder Advertisi
advertising budget
the dollars and other resources allocated to a product or a company advertising program
advertising strategy
The strategy by which the company accomplishes its advertising objectives. It consists of two major elements: creating advertising messages and selecting advertising media.
Madison & Vine
a term that has come to represent the merging of advertising and entertainment in an effort to break through the clutter and create new avenues for reaching customers with more engaging messages
creative concept
the compelling "big idea" that will bring an advertising message strategy to life in a distinctive and memorable way
1. Meaningful
2. Believable
3. Distinctive
execution style
the approach, style, tone, words, and format used for executing an advertising message
Slice of life
typical people using the product in a normal setting - IKEA
Lifestyle
How a product fits in a with a particular lifestyle - LuluLemon
Fantasy
creates a fantasy around the product or its use - Calvin Klein Euphoria
native advertising
advertising or other brand-produced online content that looks in form and function like the other natural content surrounding it on a web or social media platform
advertising media
the vehicles through which advertising messages are delivered to their intended audiences
1. Determining
2. Choosing among major media types
3. selecting specific media vehicles
4. Choosing media timing
Public Relations (PR)
building good relations with the company's various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events
direct and digital marketing
engaging directly with carefully targeted individual consumers and customer communities to both obtain an immediate response and build lasting customer relationships
Omni-channel retailing
creating a seamless cross-channel buying experience that integrates in-store, online, and mobile shopping
Online marketing
Marketing via the Internet using company Web sites, online ads and promotions, e-mail, online video, and blogs.
Marketing website
a website that engages consumers to move them closer to a direct purchase or other marketing outcome
email marketing
sending highly targeted, highly personalized, relationship-building marketing messages via email
viral marketing
the digital version of word-of-mouth marketing: videos, ads, and other marketing content that is so infectious that customers will seek it out or pass it along to friends
Blogs
online forums where people and companies post their thoughts and other content, usually related to narrowly defined topics
Social media
independent and commercial online communities where people congregate, socialize, and exchange views and information
Mobile marketing
marketing messages, promotions, and other content delivered to on-the-go consumers through mobile phones, smartphones, tablets, and other mobile devices
Direct-mail marketing
marketing that occurs by sending an offer, announcement, reminder, or other item directly to a person at a particular address
catalog marketing
direct marketing through print, video, or digital catalogs that are mailed to select customers, made available in stores, or presented online
Telemarketing
using the telephone to sell directly to customers
Direct-response television marketing
direct marketing via television, including direct-response television advertising and interactive television advertising
Kiosk marketing
Information and ordering machines generally found in stores, airports, and other locations.
Personal selling
Personal presentation by the firm's sales force for the purpose of making sales and building customer relationships
salesperson
an individual who represents a company to customers by performing one or more of the following activities: prospecting, communicating, selling, servicing, information gathering, and relationship building
territorial sales force structure
a sales force organization that assigns each salesperson to an exclusive geographic territory in which that salesperson sells the company's full line
product sales force structure
a sales force organization in which salespeople specialize in selling only a portion of the company's products or lines
customer sales force structure
a sales force organization in which salespeople specialize in selling only to certain customers or industries
outside sales force
salespeople who travel to call on customers in the field
inside sales force
salespeople who conduct business from their offices via telephone, online and social media interactions, or visits from prospective buyers
Team selling
using teams of people from sales, marketing, engineering, finance, technical support, and even upper management to service large, complex accounts
Compensating Salespeople
Fixed amounts
Variable amounts
Expenses
Fringe benefits
Sales quota
a standard that states the amount a salesperson should sell and how sales should be divided among the company's products
Social selling
using online, mobile, and social media to engage customers, build stronger customer relationships, and augment sales performance
sales promotion
Short-term incentives to encourage the purchase or sale of a product or service
1. Final guyers - consumers promotions
2. Retailers and wholesalers -trade promotions
3. Business customers - business promotions
4. Members of the sales force - sales force p
business buying behavior
the buying behavior of organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others
business buying process
the decision process by which business buyers determine which products and services their organizations need to purchase and then find, evaluate, and choose among alternative suppliers and brands
derived demand
Business demand that ultimately comes from (derives from) the demand for consumer goods.
supplier development
systematic development of networks of supplier-partners to ensure an appropriate and dependable supply of products and materials for use in making products or reselling them to others
straight rebuy
a business buying situation in which the buyer routinely reorders something without any modifications
Modified rebuy
a business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers
new task
a business buying situation in which the buyer purchases a product or service for the first time
systems selling
buying a packaged solution to a problem from a single seller, thus avoiding all the separate decisions involved in a complex buying situation
buying center
all the individuals and units that play a role in the purchase decision-making process
Users
members of the buying organization who will actually use the purchased product or service
Influencers
People in an organization's buying center who affect the buying decision; they often help define specifications and also provide information for evaluating alternatives.
Buyers
people in an organization's buying center who make an actual purchase
Deciders
people in an organization's buying center who have formal or informal power to select or approve the final suppliers
gatekeepers
people in an organization's buying center who control the flow of information to others
E-procurement
purchasing through electronic connections between buyers and sellers - usually online
B-to-B digital and social media marketing
using digital and social media marketing approaches to engage business customers and manage customer relationships anywhere, anytime
Institutional market
schools, hospitals, nursing homes, prisons, and other institutions that provide goods and services to people in their care
Government Market
governmental units - federal, state, and local - that purchase or rent goods and services for carrying out the main functions of government