Here you will learn about what factors to pay attention to when developing a Marketing Mix. Marketers should have a strong understanding of various strategies and possible responses from the market, competitors, and consumers. You can see more like this on madmarketingpro.com

1. Bobby Vincent Bruno
Strategic Marketing
Fall 2017
Professor Sonia Lambert
Assistant Deputy Chairperson
1 Discuss fully the 3 types of Target Market Coverage.
2 Discuss fully dual distribution and multi-channel marketing.
3 Discuss fully channel conflict and channel power.
4 Discuss fully skimming and penetration pricing strategies.
5 Discuss fully pricing and competitive interaction.
6 Discuss fully the 4 sources of strategic change.
7 Discuss fully the nature of marketing-cost analysis and the 3 issues that arise.
8 Discuss fully the product-service mix analysis.
9 Discuss fully marketing implementation.

2. 1 Discuss fully the 3 types of Target Market Coverage.

3. Intensive distribution occurs when a business manager is aiming to extend the reach of their
offering through as many sales channels as possible. An example from ‘Strategic Marketing Cases
& Problems’ states that soft drink and candy companies use this approach. One of Coca Cola’s
goals is to have their product within arm’s reach of its customers. Another example of Intensive
distribution can be seen through e-commerce. An online business may sell products through its'
own business website, but they may also s ell through other online marketplaces such as Amazon,
eBay, and as of the writing of this presentation still new Groupon Stores.
Selling your products and/or services through multiple sales and distribution channels will
ultimately increase reach to your target market; however, depending on the brand image the
business is aiming to achieve this may not be a best practice. If the business is to be a high-end,
luxury brand the perceived value of your offering will drop as it becomes easily accessible through
various channels. Also, as this is the case with most businesses when sales go up so do costs. When
distributing your offering through brick-and-mortar locations you can expect a hike in costs
variable costs and possibly even fixed costs. These costs will come in the form of shipping,
manufacturing, warehousing, inventory, and even employees including salesmen, customer
representatives, account managers and more. These costs apply to commerce as well, with the
addition of referral fees. Most e-commerce marketplaces will charge a fee ranging from 3-15% on
each successful transaction. These referral fees may need to be addressed by discussing with
account managers on decreasing the fee or increasing the price of the offering through the
specific channel.

4. The second method used to cover your target market is called Exclusive distribution. This method
is the exact opposite of intensive distribution as the goal isn’t to extend the reach of your
offering through as many sales channels as possible. Instead, this method aims for exclusivity
which can increase perceived value and quality of the transaction regarding placement and POS.
Apple uses an Exclusive distribution which means they pick and choose retailers who they will
allow to sell their products. By doing this Apple has better chances of being featured in unique
ways through their retailers and receive prominent placement in display cases (Although, Apple
will probably have this either way given the high demand for their products). Also, by doing
distributing their products exclusively Apple can set specific terms for retailers to follow in order
to stock and sell Apple products. These terms can include a number of key factors such as
placement, price, and even what items retailers can sell.
This is known as an exclusive distribution agreement. Retailers will often reach out to businesses
and sign this agreement in order to sell the manufacturers products. This can be advantageous to
both retailers and manufacturers; however, if one of the obligations to uphold is to exclusively
sell only one branded product and none of its' competitors, can jeopardize the success of the
retailer if the manufacturer starts to see a severe drop in demand for their products. Although,
retailers will agree to sell only this specific item and none of its competitors, manufacturers
rarely or never agree to sell their products to only one retailer. This could be beneficial for the
retailer; however, this will stump growth and profits for the manufacturer drastically.

5. Lastly, there is the Selective distribution method which lies between Intensive and Exclusive
distribution strategies. The selective distribution includes selecting retail locations based off of
certain key factors such as geographic location. This can be beneficial to manufacturers because
it will allow them to get into franchise businesses and other business chains within specific
locations where their target market most-heavily reside. This will limit finances, and cap costs
that come along with new sales channels. Selective distribution has become a popular distribution
channel among marketers because it allows them to focus their efforts on areas that will provide
greater profit contributions.
Selective distribution has lead to what is known today as an Effective distribution which means,
“a limited number of outlets at the retail level account for a significant fraction of the market
potential.” A great example of effective distribution from ‘Strategic Marketing Cases & Problems’
is an expensive men’s wristwatch company which distributes its’ products through only 40% of the
available outlets. However, these outlets account for 80% of the wristwatch market volume.
Adding another retail outlet to its’ distribution channels will only allow the business to potentially
gain a 5% increase in market volume, which after calculating the added costs will only amount to
a small profit contribution.

6. 2 Discuss fully dual distribution and multi-channel marketing.

7. Dual distribution involves extending an offering through two or more channels in order to reach
customers. For example, a wholesale company might have its' own brand and a private retailer
brand where it sells the same products. Customers that are looking for single units will purchase
from the private retail brand whereas retailers looking for multiple units will purchase from the
wholesale brand. This can be an effective strategy as it will allow the business to acquire a larger
market share. However, this specific strategy can be detrimental to a business as having a private
brand will compete with the wholesaler’s retail customer base.
Multi-channel marketing is similar to Dual Distribution as this strategy can also result in competing
for similar customers. However, Multi-channel marketing involves a traditional marketing reach,
which includes a traditional marketing channel such as a brick-&- mortar location or multiple
retail stores and an electronic channel such as a website that reinforces acquisition, retention,
and customer relationships. The addition of a website can be beneficial at times, but it can also
contribute to a stalemate in some cases.

8. 3 Discuss fully channel conflict and channel power.

9. Channel conflict can occur when a channel member decides to buy or sell direct rather than go to
the manufacturer’s agents. This can be seen in the case when Wal-Mart decided to purchase
products directly from manufacturers rather than the manufacturer’s agents. The second cause of
channel conflict occurs when one channel member has demands that might prevent a business
from meeting their profit margin goals. For example, let’s say you manufacture planes and you’re
demanding lower prices from the company that makes the engines. They may not renew the
contract since you’re stopping them from reaching their profit margin goals.
Another reason for channel conflict to occur is when a company feels that one of the channels
isn’t giving their product the proper attention. For example, Nike stopped shipping popular
sneakers such as Nike Shox NZ to Foot Locker in retaliation for the retailer's decision to give more
shelf space to shoes costing under $120 ( Kerin and Peterson 362). The fourth and last reason that
causes channel conflict happens “when a manufacturer engages in dual distribution and
particularly when different retailers or dealers carry the same brands” (Kerin and Peterson 362).
This example can be seen through Shaw Industries’ decision to create its own in-store locations.
This caused a conflict between them and their retailer's customers like Home Depot, who decided
to drop Shaw Industries in light of this situation.

10. Channel power is when one member of the channel attempts to guide and support members of
the other channel. The channel member that assumes this position is known as the channel
captain. Channel power occurs in four different way; economic power, expertise, identification,
and legitimate right.
When a channel power arises through economic power this typically means that the company has
the power to reward other in some means due to its’ financial situation. Next, a channel power
occurs when one company has certain expertise and acts as a helping hand for another. In order
for the company to help they are granted some power of the other. Channel power can also arise
through identification of a brand through other well- known and well-received [by customers]
channels. “For example, retailers may compete to carry Ralph Lauren, or clothing manufacturers
may compete to be displayed by Neiman-Marcus or Nordstrom” (Kerin and Peterson 362). Lastly,
there is channel power through legitimate right. This kind of channel power typically involves a
contractual agreement of some sort. This form of channel power is seen in franchises. Franchises’
will operate under terms defined by the franchise. Ultimately, making the franchise the channel
power with legitimate right.

11. 4 Discuss fully skimming and penetration pricing strategies.

12. The price skimming strategy works best when a new product or service is being introduced to a
market. This strategy suggests that the price of the offering should be set high initially and
decrease incrementally over a period of time in order to speak to consumers at different levels of
WTP. As seen in ‘Strategic Marketing Problems' here is set criteria to consider before deciding to
use this pricing strategy.
1.Demand is likely to be price inelastic.
As for price changes, demand is unlikely to be heavily influenced. This means a higher price will
consist of relatively similar demand.
2.There are different price-market segments, thereby appealing first to buyers who have a higher
range of acceptable prices.
As the price over a period of time customers with a lower range of acceptable prices may start to
purchase the businesses products or services.

13. 3. The offering is unique enough to be protected from competition by a patent, copyright, or
trade secret.
When a business is unique enough to be protected it is considered to be proprietary. This means
you can set a high initial price and it will be difficult for competitors to enter the market or
undercut you (if possible).
4.Production or marketing costs are unknown.
This question may arise during the planning phase of a new venture where an entrepreneur is
unsure of the production costs for manufacturing, selling, warehousing and other production costs
along with the potential costs of marketing efforts. Although this is criteria to be considered when
setting an initial price it is strongly suggested for entrepreneurs to do have some estimate of
these possible costs before starting a new venture.

14. 5.A capacity constraint in producing the product or providing the service exists.
A capacity constraint deals with the capabilities of the business itself. A business should consider
its’ ability to mass-produce products; or its’ ability to provide its’ proprietary services. By
understanding the constraints on means of production a firm can compare it with a break-even
analysis in order to gain better insights as to how they should set an initial price.
6. An organization wants to generate funds quickly to recover its investment or finance other
developmental efforts.
If an organization is looking to replenish their investment quickly to use the cash for other
developmental efforts a price skimming strategy will be effective as long as it meets criteria
number one. When using the price skimming strategy a firm will set a high initial price which will
generate higher total revenue

15. 7.There is a real perceived value in the product or service.
Customers tend to associate lower prices with lower quality this can usually mark death for a
business. With a high initial price and proprietary offering the offering tends to have a higher
perceived value. However, it wouldn’t be a wise decision to go off of this criterion alone. Usually,
businesses will run surveys, focus groups, and collect qualitative data to determine how a
customer perceives the offering.

16. If an offering meets these criteria a price skimming strategy may be the best pricing choice. For
example, Apple Inc. has been using a price skimming strategy for its’ Apple iPhones. When a new
model is released it has a high initial price; however, as time passes and new models come out the
price of the previous model drops incrementally. This strategy allows Apple to collect higher total
revenue when a model is first released and allows them to reach new customers who have lower
acceptable buying rates, over a period of time.
The price skimming strategy at uses a high initial price on the one hand and on the other price
penetration strategy uses a low initial price. Price penetration strategy should be considered if
the business meets these criteria as shown in ‘Strategic Marketing Problems'.

17. 1.Demand is likely to be price elastic in the target market segments at which the product or
service is aimed.
As price changes quantity demanded is likely to shift. If price increases quantity demanded is
expected to do the same and vice versa.
2.The offering is not unique or protected by patents, copyrights, or trade secrets.
For example, companies like Wish.com sell generic item in which they are not proprietary in any
way, shape, or form.
3.Competitors are expected to enter the market quickly.
Competitors can quickly and easily enter the market and possibly undercut your offering.
4.There are no distinct and separate price-market segments.
The target market has no defined willingness to buy points for the offering as it usually has little
to no perceived value.

18. 5.There is a possibility of large savings in production and marketing costs if a large sales volume
can be generated.
Manufacturers usually offer their products at lesser costs when buyers order larger quantities.
This can result in huge savings as long as the retailer has the right amount of customers.
6.The organization’s major objective is to obtain a large market share.
When an organization's main objective is to obtain a large market share they often operate with
KPI's such as cost per acquisition (CPA). As long as their customers generate (even small) returns
on investment (ROI).
A great example of a company that uses the price penetration strategy is Wish.com. They offer
generic products at extremely low costs. However, Wish.com has generated a huge customer base
and have seen over a billion dollars in sales. With their extremely low prices, they were able to
grow quickly and the results of their growth have been seen through their marketing efforts.

19. 5 Discuss fully pricing and competitive interaction.

20. When an organization is deciding on how to appropriately price their offerings there should be
some emphasis placed on competitive interaction. This means giving attention to how your
competitors might react to your pricing. Competitive interaction occurs when one organization
sets a price that undercuts one of its competitors in order increase sales, unit volume, and profit
(Kerin and Peterson 432). However, when a manager decides to undercut a competitor they must
plan for a reaction from that competitor. Without proper planning and preparation, the once
advantageous decision to lower prices can cause a price war between competing firms. When a
competing firm chooses to match your lower price the potential increase in unit volume, sales,
and profits are nulled and the result is that both firms see a loss for lowering their prices.
Marketing manager often overlooks competitive interaction when pricing offerings. Two things
that may help marketing managers plan competitor moves, their own subsequent moves, and
outcomes ( Kerin and Peterson 432) are as follows: First, managers should focus on the long-term
outcomes of their present decision. In order for managers to do this, they should learn to "look
forward and reason backward" ( Kerin and Peterson 432) using deductive reasoning. Second,
should ask themselves some questions and answer them as if they were a manager at a rival
company. The following questions are provided by “Strategic Marketing Problems” and the
answers to these questions can make a significant difference in the long run.

21. 1.What are the competitors’ goals and objectives? How are they different from our own goals and
objectives?
2.What assumptions has the competitor made about itself, our company and offerings, and the
marketplace? Are these assumptions different from ours?
3.What strengths does the competitor believe it has and what are its weaknesses? What might the
competitor believe our strengths and weaknesses to be?
Bypassing these questions can lead a manager to make a choice without the necessary decision
making information. That being a said a manager will cut prices and possibly cause a price war. A
great example of a price war that has been going for years involves cell phone services. Sprint,
AT&T, T-Mobile, and Verizon have been running marketing campaigns which indirectly target each
other. In addition to their expensive marketing campaigns, they continue to issue price cuts as an
incentive for users to use their services. To analyze their situation we will use industry
characteristics and the risk of price wars provided by "Strategic Marketing Managers".

22. Industry Characteristics Higher Risk levels Lower Risk Levels
Product/Service Type Undifferentiated Differentiated
Market Growth Rate Stable/Decreasing Increasing
Price Visibility to Competitors High Low
Buyer Price Sensitivity High Low
Overall Industry Cost Trend Declining Stable
Industry Capacity Utilization Low High
Number of Competitors Many Few

23. After analyzing the risk chart we can see that a number of these apply to the cell phone service
price war. The four large players previously mentioned are undifferentiated, the price visibility to
competitors is extremely high, and buyer sensitivity is high. The four main cell phone service
providers can make claims regarding the best service in the most areas; however, most buyers
cannot personally make this observation. Therefore, the firms should be considered
undifferentiated in terms of usability of their offering. Second, the visibility of each firm's prices
is extremely visible as you can view each service provider's costs and plans simply by visiting their
website. Third, the population continues to grow and people will at some point in time need to
choose a service provider causing the market growth rate to be relatively high. However, Buyer
sensitivity is high for cell phone service providers' customers. Considering that there are
competitors out there and customers will need to choose one and the quality if undifferentiated
the next step is to look at price.
Now, since all of the firms are cutting their prices each firm has been seeing decreases year over
year and some greater than 8%.1 Considering the fact that all of the firms are still open they may
have placed heavy emphasis on competitive reaction. I believe the price war will continue until
the companies reach a bare minimum necessary to continue operation by reaching an equilibrium,
or some of these firms will be forced out of the market.

24. 6 Discuss fully the 4 sources of strategic change.

25. Strategic change arises in four different ways including market evolution, technological
innovations, market redefinition, and change in marketing channels. These four elements provide
insight as to what is going on in the world of business which will help determine an organization
next steps.
The first factor that plays a role in strategic changes is market evolution. Market evolution arises
through changes in primary demand. Primary demand is fomented by consumers who are looking
for products that have beneficial traits such as non-GMO , or calcium. Therefore, Marketing
efforts are conducted to educate consumers of the benefits of their products that consumers are
looking for.
Second is technological innovation and format wars. The medium in which information is
transferred and/or viewed has changed many times over. For example, we started with video
cassettes to DVD's and now digital videos. There was also the phonograph invented by Thomas
Edison, which was used to produce sound. However, today we use radio and other music streaming
applications to listen to music.

26. Technological innovations lead to format wars where an advance in a specific medium is made and
eventually replaces its predecessor.
The next factor that influences strategic change is market redefinition. This strategic change
occurs when there is a heavy demand from buyers or it can be brought up by competitors. For
example, price wars result from a firm undercutting its competitors. Therefore, in most cases,
the logical next is to match your competitor's price to prevent loss of customers. By doing this
the market is redefined, and instead of charging the original hundred dollars for your services you
now have to charge eighty dollars.
Last, but not least is change in marketing channels. Traditionally businesses operate out of brick-
&-Mortar locations, but with advancements in technology we now have internet channels in which
we can sell products/services. With this technology, people can also make purchases without ever
leaving their homes. The use of a website may not be for all businesses ; however, it is a great
way for businesses to make themselves more accessible and convenient to their customers.

27. 7 Discuss fully the nature of marketing-cost analysis and the 3 issues that
arise.

28. Marketing costs analysis serves the purpose of allocating costs to specific marketing activities or
efforts. This will allow an organization to see clearly, the financial contribution of their marketing
activities. Marketing activities are defined on the basis of (1) elements of the product-service
offering such as ads that give information about an organizations offering, by providing answers to
questions like, “What does your product or service do?”, "What is the benefits of your
product/service?", and "How does your product/service stand out from the competition?" (2) Sales
divisions, district, or territories, which is areas in which specific marketing efforts or sales teams
are responsible for converting prospects into customers. (3) Marketing channels, such as Facebook
and Google's search and display network where organizations can promote their offerings through
paid ads and/or (4) type or size of customers which involve marketing efforts composed to
resonate specifically with an organizations target market.

29. There are three issues that arise when referring to the marketing-cost analysis.
1.How should costs be allocated to separate marketing activities?
When deciding how costs should be allocated to separate marketing activities a manager should
assign costs to the specific marketing activity using quantitative or qualitative measurements that
act as proof of costs linked to the specific marketing activity.
2.What costs should be allocated?
All costs that arise due to a marketing activity whether costs of creating, planning, preparing and
costs that arise afterward such as sales commissions and other variable costs should be allocated
to that specific marketing activity.
3.Should all costs be allocated to marketing activities?
This depends on the firms’ administrative policy. If the firm opts for a “whole equal the sum of
the parts” (Kerin and Peterson 525) income statement, then all costs that can be identified and
linked to a specific marketing activity should allocate. The cost that cannot be linked to any
specific marketing activity should not be allocated.

30. 8 Discuss fully the product-service mix analysis.

31. In order to assess the product-service mix, there are two factors to be considered. One of which is
the performance of offering in similar markets and the second is the financial worth of the
product-service offering.
A Manager should determine the performance of offering in relevant markets. This places an
emphasis on sales volume as it provides quantitative information regarding the performance of
the offering. Additionally, the proportion of sales from the product-service offering should be
considered. Businesses like Kodak for example, experience the "80-20 rule" (Kerin and Peterson
524) – this means that 80 percent of the firms' sales are generated by 20% of the firms' offerings.
Kodak experienced this rule which made them vulnerable to shifts in the market when
technological advances were made in the photography market.
Next is the market share which is how an organization can measure their performance relevant to
other organizations in the marketplace. When market share is being used for controlling the
following questions (Kerin and Peterson 524) should be considered in order to properly assess an
organizations performance in a market.

32. 1.First, what is the market on which the market-share percentage is based, and has the market
definition changed?
Market share can be accounted for in a different way such as geographic location, product type
or model, customer or channel and more.
2.Is the market itself changing?
If the market is changing and there is a high market share this can be misleading due to the fact
that sales can be increasing or declining. In this situation, it is best to calculate sales by unit
instead of by dollars.

33. The second factor to be considered is the appraisal of the financial contribution. The purpose of
the financial contribution is for an organization to discover whether an offering is contributing to
costs – both variable costs plus the costs of goods and fixed costs. This analysis should be
conducted using the contribution margin approach. Therefore, the offerings can be measured by
how much they contribute to both direct and overhead costs. This analysis is used to define which
offerings are operating at loss and which offerings are with keeping in the product mix.

34. 9 Discuss fully marketing implementation.

35. Marketing Implementation is the execution of the marketing strategy. This part of the marketing
program is crucial in that it can lead a company to success or failure. A company that succeeds in
implementing its marketing program strategically also has a higher likelihood of success. Some
key points to be considered when implementing a marketing program is timing, the logistical
aspects of a marketing program (Kerin and Peterson 580), and synchronization.
Timing plays a big role in implementing a marketing program. As seen in the case of Matilda Bay
Wine cooler, by Miller Brewing Company, a product that may have been well received by the
market failed because of poor timing. First, Matilda Bay Wine Cooler was released during the Fall
which is a slow season for wine. Second, the wine cool market was seeing a decline at the time of
Matilda’s release.
Another key point in marketing implementation is the logistic aspects of the marketing program. A
great example is when Holly Farms introduced its roasted chicken. The roasted chicken was well
received by consumers; however, Holly Farms discovered that their roasted chicken had a shelf
life of only 18 days and it took 9 days to move the product from production to supermarkets. This
created an issue for Holly Farms as they couldn't expect supermarkets to sell roasted chicken with
a shelf life of days from point of arrival. This would've caused an issue for the supermarkets as
well as Holly. In light of this finding, Holly Farms pulled its national release.

36. If Holly Farms has seen this issue earlier they may have created a new method to decrease or
eliminate shipping time. In stores like Stop & Shop today they have rotisserie chicken made in the
store, completely eliminating shipping time and drastically undercutting the constraint that Holly
Farms faced.
Lastly, there is synchronization between the internal operations of the business and its marketing-
mix. If a company is going to include in its marketing-mix fast shipping, or 24/7 customer service,
or launch large-scale ad campaigns for a specific product the organization would need to prepare
for the outcome of their efforts.
There are some varying factors that will require a business to synchronize its internal operations
to meet the requirements of the market. For example, businesses that are seasonal need to
prepare for their strongest season. Party City is known for selling huge amounts of costumes
during Halloween. To synchronize with the season they hire employees temporarily in order to
meet the direct demand in stores. They also prepare by stocking up on inventory so that they can
turn away fewer customers and benefit from the boost in sales.

37. When a business is launching a large-scale ad campaign for a product they should also prepare for
the response of the market. If they are expecting a boost in sales as a result of their
advertisements they should consider increasing staff such as salespeople and customer service
representatives. They should also evaluate the amount of inventory necessary so that they aren't
turning away too many customers.
Implementing a marketing program is a rigorous task and all things should be considered from
negative and positive outcomes of a marketing programs efforts. Marketing Managers should pay
attention equally to both the implementation as well as the formulation of the marketing program
since these two go hand in hand.

38. Works Cited
 Kerin, Roger A., and Robert A. Peterson. Strategic Marketing Problems: Cases
and Comments. Pearson, 2011. (362-580)
 1. Levy, Adam. “The Cost of Wireless Service Is Plummeting as Price War
Rages On.” The Motley Fool, 11 June 2017,
www.fool.com/investing/2017/06/11/the-cost-of-wireless-service-is-
plummeting-as-pric.aspx.