Mktg 361 Chapter 12 - Lecture notes 12 PDF

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Summary

Spring 2019; taken in person with Kathleen Wachter...

Description

Brand Alternatives 

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National Brands o Also called Manufacturer's Brands o Umbrella or Family Brand o Sub-brand Store Brands o Also called private-label, house, or own brands o Premium store brands o Exclusive brands o Copycat brands Generic Brands o Target price-sensitive segment by offering no-frills product at discount price o Except for prescriptions, sales of generics declining National Brands or Store Brands? Store brands enhance and expand assortments o New products o Multiple price tiers Profitability o Expensive to design and market store brands o Risk of uncertain sales Flexibility o Strong national brands dictate how retailers display, advertise, price brand Buying National Brand Merchandise Meeting National-Brand Vendors o Wholesale market centers  Market weeks o Trade shows  Staged at convention centers now associated with wholesale market centers National Brand Buying Process o Buyers meet with key vendors during market weeks or trade shows Developing and Sourcing Store-Brand Merchandise Developing Store Brands o Larger retailers might own or operate manufacturing facilities o Smaller retailers often ask national-brand suppliers to make minor changes to products and label them as store brands Souring Store-Brand Merchandise o Global sourcing now more prominent o Costs associated with global sourcing decisions  Low labor costs in developing countries  Value of foreign currencies

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Tariffs Longer lead times Transportation costs Managerial issues associated with global sourcing decisions Quality control Time to market Sociopolitical risks Resident buying offices Help retailers buy merchandise Large retailers have in other countries Reverse auctions Obtain private-label merchandise at low prices Retail buy provides specifications Competing vendors bid on price they are willing to sell at Retailer can select any of the bids, not obligated to lowest Typically used for retail operations: carpeting, fixtures

Negotiating with Vendors Knowledge is Power o Buyer needs to know what retailers needs are, what vendors capabilities are, and trends in marketplace o Markdown money for unpopular merchandise Negotiation Issues o Price and gross margins  Slotting fees, slotting allowances o Additional markup opportunities o Terms of purchase o Exclusivity o Advertising allowances  Cooperative advertising o Transportation Tips for Effective Negotiating o Have at least as many negotiators as the vendor o Choose a good place to negotiate o Be aware of real deadlines o Separate the people from the problem o Insist on objective information o Invent options for mutual gain o Let them do the talking o Know how far to go o Don't burn bridges o Don't assume Strategic Relationships

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Defining Strategic Relationships o Strategic relationship is also called partnering relationship  Retailer and vendor committed to maintaining relationship over the long term and investing in opportunities that are mutually beneficial  Win-win relationship  Together for better or worse Building Partnering Relationships o Awareness o Exploration o Expansion o Commitment Maintaining Strategic Relationships o Mutual trust o Common goals o Open communication o Credible commitments Legal, Ethical, and Social Responsibility Issues for Buying Merchandise Legal and Ethical Issues o Counterfeit Merchandise  Intellectual property  Trademark  Copyright o Gray-Market, Diverted, and Black-Market Merchandise  Gray-market goods  Parallel imports  Diverted merchandise  Black market o Terms and conditions of purchase  Robinson-Patman Act of 1936 o Commercial bribery o Chargebacks o Buybacks o Exclusive dealing agreements o Tying contract o Refusal to deal Corporate Social Responsibility o Voluntary actions company takes to address ethical, social, and environmental impacts of operations  Give to charity  Support minority groups  Responsible marketing and sales practices  Fair trade  Greenwashing

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Green sheen

Key Terms: Black market: the availability of merchandise at a high price when it is difficult or impossible to purchase under normal market circumstances; commonly involves illegal transactions Buyback: a strategy vendors and retailers use to get products into retails stores, either when a retailer allows a vendor to create space for goods by "buying back" a competitor's inventory and removing it from a retailer's system or when the retailer forces a vendor to buy back slow-moving merchandise Charge back: a practice used by retailers in which they deduct money from the amount they owe a vendor Commercial bribery: a vendor's offer of money or gifts to a retailer's employee for the purpose of influencing purchasing decisions Cooperative (co-op) advertising: a program undertaken by a vendor in which the vendor agrees to pay all or part of a promotion for its products Copycat brand: a branding strategy that imitates the manufacturer brand in appearance and trade dress but generally is perceived as lower quality and is offered at a lowed price Copyright: a regulation that protects original works of authors, painters, sculptors, musicians, and others who produce works of artistic or intellectual merit Corporate social responsibility (CSR): voluntary actions taken by a company to address the ethical, social, and environmental impacts of its business operations and the concerns of its stakeholders Counterfeit merchandise: goods that are made and sole without permission of the owner of a trademark, a copyright, or a patented invention that is legally protected in the country where it is marketed Diverted merchandise: merchandise that is diverted from its legitimate channel of distribution; similar to gray-market goods except there need not be distribution across international boundaries Duty: a tax placed by a government on imports Exclusive brands: a brand developed by a national brand vendor, often in conjunction with a retailer, and sold exclusively by a retailer Exclusive dealing agreement: restriction a manufacturer or wholesaler places on a retailer to carry only its products and no competing vendors' products Fair trade: purchasing practices that require producers to pay workers a living wage, well more than the prevailing minimum wage, and offer other benefits, like onsite medical treatment Family brand: a product's brand name associated with the company's name Generic brand: unbranded, unadvertised merchandise found mainly in drug, grocery, and discount stores Gray-market goods: merchandise that possesses a valid U.S. registered trademark and is made by a foreign manufacturer but is imported into the United States without permission of the U.S. trademark owner

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Green: a marketing strategy that promotes environmentally safe or beneficial products or services Green sheen: the disingenuous practice of marketing products or services as being environmentally friendly with the purpose of gaining public approval and sales rather than actually improving the environment Greenwashing: the disingenuous practice of marketing products or services as being environmentally friendly with the purpose of gaining public approval and sales rather than actually improving the environment House brand: products developed and marketed by a retailer and available for sale only by that retailer Intellectual property: property that is intangible and created by intellectual (mental) effort as opposed to physical effort Lift-out: a strategy vendors and retailers use to get products into retails stores, either when a retailer allows a vendor to create space for goods by "buying back" a competitor's inventory and removing it from a retailer's system or when the retailer forces a vendor to buy back slow-moving merchandise Manufacturer's brand: a line of products designed, produced, and marketed by a vendor Markdown money: funds provided by a vendor to a retailer to cover decreased gross margin from markdowns and other merchandising issues Market weeks: often located in wholesale market centers, market weeks are a specific period of time in which buyers meet with vendors in their showrooms National brand: a line of products designed, produced, and marketed by a vendor Own brand: products developed and marketed by a retailer and available for sale only by that retailer Parallel imports: merchandise that possesses a valid U.S. registered trademark and is made by a foreign manufacturer but is imported into the United States without permission of the U.S. trademark owner Partnering relationship: long term relationship in which partners make significant investments to improve both parties' profitability Premium store brand: a branding strategy that offers the consumer a private label at a comparable manufacturer-brand quality, usually with a modest price savings Private-label brand: products developed and marketed by a retailer and available for sale only by that retailer Resident buying office: an organization located in a major buying center that provides services to help retailers buy merchandise Reverse auction: auction conducted by retailer buyers. Known as a reverse auction because there is one buyer and many potential sellers. In reverse auctions, retail buyers provide a specification for what they want to a group of potential vendors. The competing vendors then bid down the price at which they are willing to until the buyer accepts a bid Slotting allowance: fee paid by a vendor for a space in a retail store Slotting fee: fee paid by a vendor for a space in a retail store Stocklift: a strategy vendors and retailers use to get products into retails stores, either when a retailer allows a vendor to create space for goods by "buying back" a competitor's

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inventory and removing it from a retailer's system or when the retailer forces a vendor to buy back slow-moving merchandise Store brand: products developed and marketed by a retailer and available for sale only by that retailer Strategic relationship: long-term relationship in which partners make significant investments to improve both parties' profitability Subbrand: part of branding strategy in which a product's brand name is associated with the description of the product, such as Frosted Flakes, where the family brand is Kellogg's Tariff: a tax placed by a government on imports Trademark: any mark, work, picture, or design associated with a particular line of merchandise or product Trade show: a temporary concentration of vendors that provides retailers opportunities to place orders and view what is available in the market place Trust: a belief that a partner is honest and benevolent Tying contract: an agreement between a vendor and a retailer requiring the retailer to take a product it does not necessarily desire (the tied product) to ensure that it can buy a product it does desire (the tying product) Umbrella brand: a product's brand name associated with the company's name Wholesale market: a concentration of vendors within a specific geographic location, perhaps even under one roof or over the internet...