BUAD301 Exam 3 Study Guide Fall 2018 PDF

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Ji Kyung Park Chapter 12 - Marketing Channels ●

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Marketing (Distribution) Channel ○ A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user Varied terms used for marketing intermediaries ○ Middleman- Any intermediary between manufacturer and end-user marketers ■ Any of below are considered middlemen ○ Agent or Broker- Any intermediary with legal authority to act on behalf of the manufacturer ■ Best buy allowed to sell Apple products ○ Wholesaler- An intermediary who sells to other intermediaries, usually to retailers; term usually applies to consumer markets ■ In b/w manufacturer and retailer ○ Retailer- an intermediary who sells to consumers ■ Can be a dealer ○ Distributors- An imprecise term, usually used to describe intermediaries who perform a variety of distribution functions, including selling, maintaining inventories, extending credit, and so on; a more common term in business markets but may also be used to refer to wholesalers ■ Could be a retailer ○ Dealer- A more imprecise term than distributor that can mean the same as distributor, retailer, wholesaler, and so forth How Intermediaries have value ○ Transactional function ■ Your channel partners offer you important transactional functions. They buy products from you and sell them to their own customers, increasing the total revenue from your product range. At the same time, they minimize your transaction costs. You only deal with a channel partner; they deal with a large number of customers. They also take the risk of holding inventory on your behalf, reducing your stock holding costs and your risk of holding unwanted inventory. ○ Logistical function ■ Distributors and wholesalers provide an important logistical function in your channel to market. Some channel partners take responsibility for the physical distribution of products to your customers. They store the products and provide transport to fulfill customers’ orders. Other partners may take bulk deliveries from your company and split them into the smaller quantities that customers order. By taking on this function, they reduce the burden on your logistics operations. ○ Facilitating function ■ Channel partners provide a range of services that facilitate and support sales of your products. They use their sales force to deal with customers, negotiate sales and provide customer service. The sales force also gathers market

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intelligence, which can help you to market products more effectively. In some cases, channel partners may provide credit and other forms of financing to make it easier for customers to buy. ● The office, dunder mifflin they do it all right in their office, no outside sources doing different steps Common Marketing Channels ○ From the producer’s point of view, a greater number of channel levels means less control and greater channel complexity ○ Direct channel- The method of selling directly to the end buyer from the manufacturer with no middle man or intermediary involved. ■ Apple sells directly to their customers, no middleman ○ Indirect Channel- A chain of intermediaries through which a product moves in order to be made available for purchase by a consumer. An indirect channel of distribution typically involves a product passing through additional steps as it moves from the manufacturing business via distributors to wholesalers and then retail stores. ■ Toyota, Special K, Colgate Dual Distribution ○ A single firm sets up two or more marketing channels to reach one or more customer segments ○ Wholesale or retail resale through more than one distribution channel, such as via dealers to smaller customers and direct to the large customers. ■ Barnes and noble-> bricks-and-mortar stores->online stores->consumers Channel Conflict ○ Conventional Distribution Channel ■ Manufacturer→ Wholesaler→ Retailer→ Consumer ■ No formal means exist for assigning roles and resolving channel conflict ■ The success of individual channel members depends on overall channel success ■ All channel firms should work together smoothly, but they often act alone in their own short-run best interests Types of Channel Conflict ○ Vertical Conflict: conflicts between different levels of the same channel e.g.,) manufacturer vs. retailers ■ Disintermediation: a channel member bypasses another member and sells or buys products directly ● Dealers & Company’s online store ■ Disagreements over how profit margins are distributed among channel members ■ Lack of retailers’ attention on manufacturers’ products ○ Horizontal Conflict: Conflicts among firms at the same level of the channel ■ Exclusive dealers & Walmart/Sears Vertical Marketing Systems ○ Corporate Systems ■ Successive stages of production and distribution under single ownership ● (1) Forward integration: a producer owns the intermediary at the next level down in the channel

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● (2) Backward Integration: a retailer owns a manufacturing operation ■ One channel member has much more control over other members ○ Contractual Systems ■ Independent firms at different levels of production and distribution join together through contracts to obtain more economies or sales impact ● Wholesaler-sponsored voluntary chains ● Retailer-sponsored cooperatives ● Franchising ○ e.g,) Ford -- Dealers (retail franchise systems) Pepsi-cola -- Bottlers (wholesale franchise system) ○ Administered Systems ■ Coordination is achieved by the size and influence of one channel member rather than ownership (Ex. P ang G) Horizontal Marketing Systems (Strategic Channel Alliances) ○ Two or more companies at one level join together to follow a new marketing opportunity ○ Companies can combine their financial, production, or marketing resources to accomplish more than any one company could alone ■ Walmart putting a mcdonalds in it

Chapter 13 - Retailer ●

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Retailer Marketing and Positioning Decision ○ Target Market and positioning decision ■ e.g.) Wal-Mart vs. Target ○ Product Assortment ■ Product assortment differentiates the retailer from competitors. e.g.) Lane bryant ○ Pricing ■ No price promotion, “High-Low” pricing, Everyday Low Pricing ○ Retail communication ■ Important in positioning a store, and creating brand image ○ Place Coordination Challenges in On-line Channels ○ Channel conflicts can arise when an on`line channel is created alongside a more traditional channel ■ Domain conflict over sales: the manufacturer who sells online can directly cannibalize the consumers of the bricks-and-mortar channel ■ Domain conflict over the functions and duties (“free-riding opportunity”): the bricks-and-mortar retailer may have to bear the costs of promotional flow, but may have received no compensation for it ■ Domain conflict over post sale service Conflict Reduction Strategies for On-line Channels ○ Going on-line, but offering benefits to standard retailers not available on the company website ■ Nike.com helps shoppers find a brick and mortar store

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■ Offer its largest retailers “private goods” like the Air2 Max shoe Using reward power to share sales credit with brick and mortar retailers Avoiding selling on a manufacturer-operated web site

Chapter 14 - Integrated Marketing Communications ●

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Promotional Tools ○ Advertising ○ Direct Marketing: direct communication with carefully targeted individual consumers to obtain an immediate response e.g.) online marketing, direct mail, telephone marketing ○ Personal Selling ○ Public Relations: special events, press conferences, etc. ■ Publicity: indirectly paid presentation of an organization, good or service. e.g) news story ○ Sales Promotion: coupons, samples, etc. Advertising ○ Mass or customized ■ Mass- its everyone ○ Payment ■ Fees paid for space or time ○ Strengths ■ Efficient means for reaching large numbers of people ○ Weaknesses ■ High Absolute costs ■ Difficult to receive good feedback ○ Whom: ■ Some control based on where ad is placed ○ What: ■ Great control; company develops message ○ When: ■ Great control; space may not be available Personal Selling ○ Mass or customized ■ Customized ○ Payment ■ Fees paid to salespeople as either salaries or commissions ○ Strengths ■ Immediate feedback ■ Very persuasive ■ Can select audience ■ Can give complex information ○ Weaknesses ■ Extremely expensive per exposure ■ Messages may differ between salespeople ○ Whom:

■ Great control; depends who salesperson contacts What: ■ Some control; salesperson can vary presentations ○ When: ■ Great control based on salesperson’s timing of call Public Relations ○ Mass or customized ■ Mass ○ Payment ■ No direct payment to media ○ Strengths ■ Often most credible source in consumer’s mind ○ Weaknesses ■ Difficult to get media cooperation ○ Whom: ■ No control over who sees it ○ What: ■ Little control over what media transmits ○ When: ■ Little control except for timing of when it occurs Sales Promotion ○ Mass or customized ■ mass ○ Payment ■ Wide range of fees paid, depending on the promotion selected ○ Strengths ■ Effective at changing behavior in short run ○ Weaknesses ■ Easily abused ■ Can lead to promotional wars ■ Easily duplicated ○ Whom: ■ Some control over where sent, used, displayed, etc. ○ What: ■ Great control over type of promotion and message ○ When: ■ Some control over duration Direct marketing ○ Mass or customized ■ Customized ○ Payment ■ Cost of communication through mail, telephone, or computer ○ Strengths ■ Messages can be prepared quickly ■ Facilitates relationship with customers ○ Weaknesses ○

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■ Declining customer response ■ Database management is expensive ○ Whom: ■ Great control with database selection of recipients ○ What: ■ Great control; company develops message ○ When: ■ Great control of timing PLC (product life cycle) and Promotion Mix ○ Introduction ■ To Inform ■ Publicity in veterinary magazines ■ Advertising ■ Salesforce in the form of free samples ○ Growth ■ To persuade ■ Personal selling to intermediaries ■ Advertising to differentiate Dog Chow attributes from those of competing brands ○ Maturity ■ To remind ■ Reminder advertising ■ Sales promotion in the form of discounts and coupons ■ Limited personal selling ■ Direct-mail reminder ○ Decline ■ Little money spent on advertising Integrated Marketing Communication (IMC) ○ IMC is a strategic process of integrating many communications channels to deliver a clear consistent, and compelling message about a company and its brands ○ Reason for growing importance of IMC ■ Companies can no longer be tied to a specific communication tool (such as media advertising) ■ Various contact methods should be used to deliver the message to fragmented audiences ■ Greater value can be generated from integrating various communication tools rather than having them operate autonomously ■ By using the IMC approach, companies can take advantage of synergy among promotional tools Communication Channel Strategies ○ Push strategy: a promotion strategy that calls for using the sales force and trade promotion to push the product through marketing channels to final consumers ■ Flow of promotion: mainly personal selling directed to intermediaries ○ Pull strategy: a promotion strategy that calls for spending a great amount on advertising and consumer promotion to build up consumer demand that will pull the product through the channels

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Flow of promotion: mainly advertising directed to consumers

Chapter 15 - Advertising ●

Developing the Advertising Program ○ Specifying Advertising objectives ■ Pioneering ads (informative ads) ● Telling the market about a new product ● Explaining how the product works ● Reducing consumers’ fears ● Building a company image ■ Competitive ads (persuasive ads) ● Building brand preference ● Persuading customers to purchase now ● Encouraging switching to your brand ● Changing product/brand perception ■ Reminder ads ● Maintaining the customer relationship ● Reminding of needs in the near future ● Keeping it in the customer’s mind during the off-seasons ○ Setting the Advertising Budget

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Affordable method: setting it at the level companies think they can afford Percentage-of-sales method: setting it at a certain percentage of current or forecasted sales ■ Competitive-parity method: setting their promotion budgets to match competitors’ outlays ■ Objective-and-task method: setting it based on what it wants to accomplish with promotion Designing the advertisement ■ Advertising appeals ● (1) Informational/Rational appeals ○ Feature, price, etc. ○ Competitive advantage ● (2) Emotional Appeals ○ Personal states of feeling (fear, humor, love, pride, selfesteem, etc.) ○ Social-based feeling (status, respect, affiliation,etc.) Selecting the Right Media

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(1) Reach ● The number of different people exposed to an advertisement ● Circulation, rating ■ (2) Frequency ● The average number of times a person in the target audience is exposed to a message ● Gross Rating Points= Reach * Frequency Scheduling the advertising ■ Continuous schedule: continues schedule throughout the year ■ Flighting schedule: intermittent schedule to reflect seasonal demand ● Starbucks making pumpkin spice during fall, mocha peppermintduring

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christmas Pulse schedule: Continuous schedule + Flighting Schedule

Chapter 16 - Digital Communication ●

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Online Marketing Communication Options ○ Web sites ○ Email ○ Search engine advertisements ○ Banner advertisements ■ Retargeting ○ Banner advertisements: Unique value position, effective design, message consistency Social Media ○ Objectives ■ Building brand equity ■ Inducing additional purchase ■ Improving customer service (e.g., Delta) ■ Reach new customers (lay’s do us a flavor facebook competition) ■ Provide product information and support (cisco support community) Interactive Marketing ○ Choice Boards- An interactive internet enabled system that allows individual consumers to design their own products and services by answering a few questions and choosing from a menu of product or service attributes, prices, and delivery options. ○ Collaborative filtering- A process that automatically groups people with similar wants and buying intentions. ○ Personalization- Customer initiated process of generating content on a marketers website that is custom tailored to their needs. Ex; Nike ID ○ Online customer experience- Customers share experiences with other customers who hold the same interests and buy the same products. Ex: harley davidson forum. ○ Viral marketing: ■ Internet-enabled promotional strategy that encourages individuals to forward marketer-initiated

Ch 3 - Corporate social responsibility and marketing ●

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Social responsibility in Marketing ○ Organizations consider the social environmental consequences of their actions for all parties ○ Societal responsibility ■ Obligations that organizations have to the preservation of the ecological environment and the general public Nike-Sweatshops ○ “Considered” Program

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Reduce greenhouse gases and trim factory inefficiency by making cleaner, more sustainable designs in Nike’s own labs ■ Design shoes that don't use toxic chemicals ■ Examples: ● Windmills at a green nike facility in belgium ● The nike air jordan XX3 being made completely without toxic chemicals Corporate Social Responsibility efforts are marketing opportunities ■ Green Marketing-the process of selling products and/or services based on their environmental benefits. Such a product or service may be environmentally friendly in itself or produced in an environmentally friendly way ■ Cause Marketing-Cause marketing is defined as a type of corporate social responsibility, in which a company’s promotional campaign has the dual purpose of increasing profitability while bettering society. Pepsi Refresh project ■ Pre Pepsi refresh project ● Brand Associations ○ Fun, joy, culturally hip, sociable, spirited, feeling free, music, entertainment ● Brand personality ○ For the young and young at heart, the choice of a new generation ■ Post Pepsi refresh project ● Brand associations ○ Hopeful, agent of change, do-gooder, enabler, community minded, serious ● Brand personality ○ For those who want to change their worlds, a brand who cares about people ■ The project failed miserably because there is no logical connection between drinking soda and doing good for the world Greenwashing ■ Some companies engage in greenwashing ■ Greenwashing: the act of misleading consumers regarding the environmental practices of a company or the environmental benefits of a product or service

Open Ended Question Possibilities (Pick 4 of 5) 1. The Documentary - Two things that you agree with and two things that you do not agree with. ● Agree: ○ Advertisers are the culmination of businesspeople and entertainer ○ The best advertisements are something that people wouldn’t think about. Something to get people talking

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Consumers are attracted to things that they aren’t used. An example of this being the airline having different colored planes. This came at the time when people associated planes as machines of war ● Disagree: ○ There was an example that an executive said a lot of firms just take the clients money and try for them to make money. This is flawed in my opinion because people should love what they do and not do it just for the paycheck ○ Some of the best ads don’t need the products 2. Crescent Pure Article - The three possible positionings. He pros and cons of each. Which is the best positioning in ur opinion and why? ● Positionings: ○ Sports drink Positioning ■ Pro: ● 42% of sports beverage drinkers consider sports drinks to be anytime drinks and not just for exercise. (Wider consumer base than Energy drinks and are consumed more often) ● New diet and low-sugar sports drinks were growth areas for the industry. ■ Con: ● Concern regarding rising childhood obesity rates resulted in removal of high-calorie sugary drinks and snacks, including sports drinks, from school vending machines beginning in 2014. ● 94% of the sports drink market is already dominated by two large sports drink brands. The other 6% consists of over 20 other brands. The market is highly saturated and entry into this market would prove incredibly difficult ○ Energy Drink positioning ■ Pro: ● Demand for energy drinks with lower levels of caffeine and purer ingredients is rising due to customers increasing need of healthier food and beverages ■ Con: ● Negative media attention leads to concerns for the long term viability of the market. ● The main demographic of energy drink consumers is men 1824 if you identify as an energy drink you are limiting yourself to only a small target market. ● Also energy drink consumers do not have very high incomes meaning once you set the price low it will be nearly impossible to ever raise the price of your product because the consumers are extremely price sensitive ○ Organic Drink Positioning ■ Pro: ● Claim a price premium over conventional beverages (On average 25%)

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Growth of the organic food and beverage industry By listing as organic drink, it offers room for product line expansion because of how broad the category is

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By limiting its positioning to just one or two segmental attributes, PDB might risk excluding additional, lucrative customer segments. ● In my opinion the best positioning option is the Sports drink positioning. This is due to the fact that demand will be significantly higher as many people drink sports drinks such as gatorade on a regular basis as opposed to simply when they need an energy boost. 3. DTC Advertising - What arguments are there about it? Why do people agree and why do people disagree? What are your personal thoughts? ● Argument for Pull strategy ...