Principles of Marketing Lecture Slides Dr. Robert Hurley Fordham College of Business
Distribution Channel Functions Contact Financing Information Risk Taking Promotion Matching Negotiation Physical Distribution These Functions Should be Assigned to the Channel Member Who Can Perform Them Most Efficiently and Effectively to Provide Satisfactory Assortments of Goods and Services to Target Customers.
Consumer Marketing Channels & Levels Direct Indirect Channel 1 Channel 2 Channel 3 Channel 4 Channel Level - Each Layer of Intermediaries that Perform Some Work in Bringing the Product and its Ownership Closer to the Final Buyer. M W J R C M W R C M R C M C
Channel Design Decisions Analyzing Consumer Service Needs Setting Channel Objectives & Constraints Exclusive Distribution Selective Distribution Intensive Distribution Identifying Major Alternatives Evaluating the Major Alternatives
Major Logistics Functions Inventory When to order How much to order Just-in-time Costs Minimize Costs of Attaining Logistics Objectives Warehousing Storage Distribution Order Processing Received Processed Shipped Logistics Functions Transportation Rail, Truck, Water, Pipeline, Air
What is Retailing?
All the activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use.
Retailers - businesses whose sales come primarily from retailing.
Retailers can be classified as:
Store retailers such as Home Depot, Sears, Walmart.
Nonstore retailers such as the mail, telephone, and Internet.
Retailer Marketing Decisions Retailer Marketing Mix Retailer Strategy Target Market Retail Store Positioning Product and Service Assortment Prices Promotion Place (Location)
Retailer’s Product Assortment and Services Decisions
Width and Depth of Assortment
Quality of Products
Product Differentiation Strategies
Services Mix Key Tool of Nonprice Competition for Setting One Store Apart From Another.
“ Feel” That Suits the Target Market
and Moves Customers to Buy
The Nature of Personal Selling
Involves two-way, personal communication between salespeople and individual customers whether:
face to face,
through video conferencing,
or by other means.
The term salesperson covers a wide spectrum of positions from:
Order Taking (department store salesperson)
Order Getting (someone engaged in creative selling)
Missionary Selling (building goodwill or educating buyers)
Managing the Salesforce Designing Salesforce Strategy and Structure Recruiting and Selecting Salespeople Training Salespeople Compensating Salespeople Supervising Salespeople Evaluating Salespeople
Designing Sales Force Strategy and Structure Types of Sales Force Structure Complex Combination of Above Types of Sales Force Structures Territorial Exclusive Territory to Sell the Company’s Full Product Line Product Sales Force Sells Along Product Lines Customer Sales Force Sells Along Customer/ Industry Lines
How Will Sales and Sales Support People Work Together? Team Selling Designing Sales Force Strategy and Structure Sales Force Size May Use Workload Approach Who Will Be Involved in the Selling Effort? Outside Sales Force Inside Sales Force Other Sales Force Strategy and Structure Issues
How Salespeople Spend Their Time Administrative Tasks 16% Telephone Selling 25.1% Waiting/ Traveling 17.4% Service Calls 12.7% Face-to-Face Selling 28.8% Companies Look For Ways to Increase the Amount of Time Salespeople Spend Selling.
Step 1. Prospecting and Qualifying Step 2. Pre-approach Step 3. Approach Step 4. Presentation/ Demonstration Identifying and Screening For Qualified Potential Customers. Learning As Much As Possible About a Prospective Customer Before Making a Sales Call. Knowing How to Meet the Buyer to Get the Relationship Off to a Good Start. Telling the Product “Story” to the Buyer, and Presenting Customer Benefits. Steps in the Selling Process
Step 5. Handling Objections Step 6. Closing Step 7. Follow-Up Seeking Out, Clarifying, and Overcoming Customer Objections to Buying. Asking the Customer for the Order. Following Up After the Sale to Ensure Customer Satisfaction and Repeat Business. Steps in the Selling Process
Emphasizes maintaining profitable long-term relationships with customers by creating superior customer value and satisfaction.
Based on the idea that important accounts need focused and on-going attention.
Mass communication technique that offers short-term incentives to encourage purchase or sales of a product or service.
Rapid growth in the industry has been achieved because:
Product managers are facing more pressure to increase their current sales,
Companies face more competition,
Advertising efficiency has declined,
Consumers have become more deal oriented.
What is Sales Promotion ?
Consumer - Promotion Tools Point-of-Purchase Displays Premiums Price Packs Cash Refunds Coupons Samples Short-Term Incentives to Encourage Purchase or Sales of a Product or Service. Consumer-Promotion Objectives Consumer-Promotion Tools Games Sweepstakes Contests Advertising Specialties Patronage Rewards Increase Short-Term Sales Build Long-Term Market Share Retailers to Carry New Items Sales Force Support for Current or New Products Consumer Relationship Building
Specialty Advertising Items Trade - Promotion Tools Contests Free Goods Buy-Back Guarantees Allowances Price-Offs Short-Term Incentives That are Directed to Retailers and Wholesalers. Trade-Promotion Objectives Trade-Promotion Tools Push Money Discounts Premiums Displays Persuade Retailers or Wholesalers to Carry a Brand Give a Brand Shelf Space Promote a Brand in Advertising “ Push” a Brand to Consumers
Business - Promotion Tools Short-Term Incentives That are Directed to Industrial Customers. Business-Promotion Objectives Business-Promotion Tools Generate Business Leads Stimulate Purchases Reward Customers Motivate Salespeople Conventions Trade Shows Sales Contests
Developing the Sales Promotion Program Decide on the Size of the Incentive Set Conditions for Participation Evaluate the Program Determine How to Promote and Distribute the Promotion Program Determine the Length of the Program
Global Marketing Into the Twenty- First Century
A Global Firm is one that, by operating in more than one country, gains marketing, production, R&D, and financial advantages that are not available to purely domestic competitors.
Global firms face several major problems:
Variable exchange rates,
Protectionist tariffs and trade barriers,
Moving from single country to dual country to regional to global increases complexity
Lots of opportunites to do dumb things:
Clairol “mMist Stick” meant “Manure Stick” in Germany
Pepsi’s “Come alive with the Pepsi generation’ was translatd into “Pepsi brings your ancestor’s back from the grave” in China
The Coca-Cola name in China was read as “Ke-kou-ke-la” meaning “Bite the was tadpole” later changed to “Ko-kou-ko-le” meaning happiness in the mouth.
In Italy Schweppes Tonic water was translated into Schweppes Toilet water”
Decisions in International Marketing Looking at the Global Marketing Environment Deciding Whether to Go International Deciding Which Markets to Enter Deciding How to Enter the Market Deciding on the Global Marketing Program Deciding on the Global Marketing Organization
Looking at the Global Marketing Environment The International Trade System The World Trade Organization and GATT Regional Free Trade Zones
Global Segmentation SES FORMATION (CLUSTERING OF FACTOR SCORES) High Sweetness Low Sweetness Low Information Search High Information Search C1 3 E2 H3 A3 C1 Segment 5 C2 C3 7 9 5 2 4 8 F1 A3 A3 A3 A3 F2 D3 B1 A2 E1 Segment 2 Segment 4 F2 G2 G1 Segment 1 A1 Clustering Step (step of clustering routine where the cluster is formed) Segment 3 6 1 B3 D1 H1 D2
Economic Environmental Factors Country’s Industrial Structure Subsistence Economies Raw Material Exporting Economies Industrializing Economies Industrial Economies Income Distribution
Political-Legal Environmental Factors Government Bureaucracy Attitudes Toward International Buying Monetary Regulations Political Stability
Cultural Environmental Factors How Customers Think About and Use Products Business Norms and Behavior Cultural Traditions, Preferences, and Behaviors
Deciding Whether to Go International
Reasons companies might consider International expansion:
Need an enlarged customer base to achieve economies of scale,
Reduce dependency on any one market,
Customers might be expanding abroad.
Most companies do not act until some situation or event thrusts them into the international market.
Five International Product and Promotion Strategies Product No changes Changes P r o m o t I o n No changes Changes Straight Extension Communication Adaptation Product Adaptation Dual Adaptation Product Invention Develop New Product
Deciding Which Markets to Enter Marketer’s Checklist for Identifying 2. Volume of Foreign Sales Desired? 3. How Many Countries to Enter? 4. Types of Countries to Enter? 5. Evaluate Each Country Based On: a. Market Size b. Market Growth c. Cost of Doing Business d. Competitive Advantage e. Risk Level 1. Marketing Objectives and Policies? Market Potential
Deciding How to Enter the Market Direct Investment Joint Venturing Exporting Amount of Commitment, Risk, Control, and Profit Potential Greater Lesser
Deciding on the Global Marketing Organization Export Department International Division Global Organization Degree of Involvement in International Marketing Activities
Marketing Objectives that Affect Pricing Decisions Marketing Objectives Survival Low Prices to Cover Variable Costs and Some Fixed Costs to Stay in Business. Current Profit Maximization Choose the Price that Produces the Maximum Current Profit, Cash Flow or ROI. Market Share Leadership Low as Possible Prices to Become the Market Share Leader. Product Quality Leadership High Prices to Cover Higher Performance Quality and R & D.
Price Elasticity of Demand Price Quantity Demanded per Period A. Inelastic Demand - Demand Hardly Changes With a Small Change in Price. P 2 P 1 Q 1 Q 2 Price Quantity Demanded per Period P’ 2 P’ 1 Q 1 Q 2 B. Elastic Demand - Demand Changes Greatly With a Small Change in Price.
Major Considerations in Setting Prices No Possible Profit at This Price Product Costs Consumer Perceptions of Value No Possible Demand at This Price Competitors’ Price and Other External & Internal Factors High Price Low Price Factory Existing Products Selling and Promoting Profits through Volume
Breakeven Analysis or Target Profit Pricing Total Revenue Total Cost Fixed Cost Target Profit ($2 million) Sales Volume in Units (thousands) Cost in Dollars (millions) Tries to Determine the Price at Which a Firm Will Break Even or Make a Target Profit 0 2 4 6 8 10 12 200 400 600 800 1,000
Target Return Pricing
Perceived Value Pricing
Characteristics of Service 1. Intangibility 2. Inseparability 3. Variability 4. Perishability Characteristics of Services and Their Marketing Implications
Service Situation Service Provider Profile Selection and Training Role Performance Customer Satisfaction and Market Share Strategy and Role Definition Service Strategy and Role Definition
Strategies for Service Firms Interactive Marketing Employees Company Customers Internal Marketing External Marketing
Benefits of Direct Marketing Benefits of Direct Marketing to Customers Benefits of Direct Marketing to Companies
Direct Marketing Consists of Direct Communications with Carefully Targeted Individual Consumers to Obtain an Immediate Response.
Fun, Convenient & Hassle-Free Saves Time Larger Merchandise Selection Comparison Shopping Mailing Lists for Almost Any Market Customized Offers Ongoing Relationships with Customers Timed to Achieve Higher Readership & Response Order Products for Themselves or Others Privacy
Trends Leading to the Growth of Direct Marketing Increasing Number of Market Niches with Distinct Preferences Higher Costs of Driving, Traffic and Parking Congestion Consumers Lack of Time Convenience of Ordering From Direct Marketers Growth of Customer Databases
Average Consumer Customer Anonymity Standard Product Mass Production Mass Distribution Mass Advertising Individual Customer Customer Profile Customized Market Offering Customized Production Individualized Distribution Individualized Message Mass Promotion Individualized Incentives Two-Way Messages Economies of Scope Share of Customer Profitable Customers Customer Retention One-Way Message Economies of Scale Share of Mind All Customers Customer Attraction Mass Marketing Vs. One-to-One Marketing Mass Marketing One-to-One Marketing
Forms of Direct Marketing Communication Catalog Marketing Kiosk Marketing Online Marketing Direct-Mail Marketing Direct-Response TV Marketing Telemarketing Face-to-Face Selling
Over 14 million copies of 8,500 different catalogs mailed annually
Most direct retailers also have catalogs on the Web
Outbound telemarketing to sell
Inbound telemarketing to receive orders
900 #’s to sell information, etc.
Direct-Response Television Marketing Kiosk Marketing
Direct-Response Advertising such as Infomercials
Home Shopping Channels dedicated to selling goods and services (QVC & HSN)
Forms of Direct Marketing Communication
Information and ordering machines (kiosks) in stores, airports, and other locations.
Hallmark, Lee Jeans and Tower Records
Online Marketing and Electronic Commerce
Online Marketing is conducted through interactive online computer systems, which link consumers with sellers electronically.
Two types of Online Marketing Channels:
Commercial Online Services offer online information and marketing services to subscribers who pay a monthly fee. (i.e. AOL, CompuServe & Prodigy)
The Internet (the Net) is the vast global and public web of computer networks.
The explosion of Internet usage has created a new world of electronic commerce , a term that refers to the buying and selling process supported by electronic means.
The Benefits of Online Marketing Convenient Private Abundance of Information Interactive Immediate For Consumers For Companies Reduces Costs Increases Efficiency Provides Flexibility Global Medium Consumer Relationship Building
Online Marketing Channels Creating an Electronic Storefront Buy Space on a Commercial Online Service Company Can Open It’s Own Corporate or Marketing Web Page Placing Advertisements Online Place Ads in Special Sections of Online Services Place Ads in Certain Internet Newsgroups Buy Online Ads That Pop Up While Consumers are Surfing, “Banners” Content Sponsorships Participating in Forums, Newsgroups & Web Communities Forums: Discussion Groups on Commercial Online Services, “Chat Rooms” Newsgroups: Internet Version of Forums Web Communities: Sites Where Members Exchange Views Online Using E-Mail and Webcasting Customers Send Questions, Suggestions & Complaints Via E-Mail Webcasting: Automatic Downloading of Information to PC’s
Promise and Challenge of Online Marketing Limited Consumer Exposure and Buying Skewed User Demographics and Psychographics Chaos and Clutter Ethical Concerns Security