Mktg final exam study guide PDF

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Study guide for chapter 15-21...

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Ch 15: Managing Marketing Channels and Supply Chains  Marketing Channel o Consists of individuals and firms involved in the process of making a product or service available for use or consumption by consumers or industrial users  Functions and Intermediaries: Make possible the flow of products and services from a producer, through intermediaries, to a buyer.  Type of Intermediary o Middleman: Any intermediary between the manufacturer and end-user markets o Agent or Broker: Any intermediary with legal authority to act on behalf of the manufacturer o Wholesaler: Any intermediary who sells to other intermediaries, usually to retailers; term usually applies to consumer markets o Retailer: Any intermediary who sells to consumers o Distributor: An imprecise term, usually used to describe intermediaries who perform a variety of distribution functions, including selling, maintaining inventories, extending credit, and so on. o Dealer: A more imprecise term than distributor that can mean the same as distributor, retailer, wholesale, and so forth  Functions of Retailers o Transactional Function:  Buying- Purchasing products for resale or as an agent for supply of a product  Selling- Contacting potential customers, promoting products, and seeking orders  Risk Taking- Assuming business risks in the ownership of inventory that can become obsolete or deteriorate o Logistical Function:  Assorting- Creating product assortments from several sources to serve customers  Storing- Assembling and protecting products at a convenient location to offer better customer service  Sorting- Purchasing in large quantities and breaking into smaller amounts desired by customers  Transporting- Physically moving a product to customers o Facilitating Function:  Financing- Extending credit to customers  Grading- Inspecting, testing, or judging products and assigning them quality grades  Marketing Information & Research- Providing information to customers

and suppliers, including competitive conditions and trends 

Figure 15-3

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Direct vs. Indirect Channel o Direct Channel: The producer and the ultimate consumers deal directly with each other. (Ex. A in Figure 15-3). Allow consumers to buy products by interacting with various advertising media without a face-to-face meeting with a salesperson. (Ex. mail-order selling, direct-mail sales, catalog sales, telemarketing, interactive media, and televised home shopping) o Indirect Channel: Intermediaries are inserted between the producer and consumers and perform numerous channel functions. (Ex. B, C, D in Figure 153) Internet Marketing Channels o Employ the Internet to make products and services available for consumption or use by consumers or organizational buyers. Unique feature: they combine electronic and traditional intermediaries to create time, place, form, and possession utility for buyers Multichannel Marketing o The blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online. Seeks to integrate a firm’s electronic marketing and delivery channels. Dual Distribution o An arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product

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Strategic Channel Alliance o One firm’s marketing channel is used to sell another firm’s products. Vertical Marketing Systems o Professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact o Three Major Types:  Corporate- Combination of successive stages of production and distribution under a single ownership. Ex: Ralph Lauren manufactures clothing & owns apparel shops  Contractual- Independent production and distribution firms integrate their efforts on a contractual basis to obtain greater functional economies and marketing impact than they could achieve alone. (Most popular) [3 variations- wholesaler-sponsored voluntary chains, retail-sponsored cooperatives, franchising]  Administered- Achieve coordination at successive stages of production and distribution by the size and influence of one channel member rather than through ownership. Ex: Walmart obtains cooperation of manufacturers due to its position as words largest retailer What 3 questions should be considered when choosing marketing channel? o 1. Which channel and intermediaries will provide the best coverage of the target market?  Target market coverage o 2. Which channel and intermediaries will best satisfy the buying requirements of the target market?  Buyer requirements: information: convenience, variety, pre- or post-sale service o 3. Which channel and intermediaries will be the most profitable?  Profitability – margins earned Three degrees of distribution density o Intensive Distribution: A firm tries to place its products and services in as many outlets as possible. Chosen for convenience products/services o Exclusive Distribution: Opposite of intensive distribution because one only retailer in a specified geographical area carries the firm’s products. Chosen for specialty products or services. Preferred for two reasons: limits head-to-head competition for identical product and provides a point of difference for a retailer or distributor. o Selective Distribution: Lies between the two. A firm selects a few retailers in specific geographical area to carry its products. Gets some of the market coverage benefits of I.D. to control over resale evident with E.D. Eight-Second Rule o Consumers will abandon their efforts to enter or navigate a website if download time exceeds eight seconds.

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Channel Conflict o Arises when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals. Two types: vertical conflict and horizontal conflict Disintermediation o When a channel member bypasses another member and sells or buys products direct. (Ex. of vertical conflict) What is a Channel Captain? o Channel member that coordinates, directs, and supports other channel members. Can be producers, wholesalers, or retailers. Legal Restrictions affecting Channel Strategy o Sherman Act  Dual distribution: if manufacturer’s behavior is viewed as an attempt to lessen competition by eliminating wholesalers or retailers  Resale restriction o Clayton Act  Dual distribution  Vertical integration: not illegal, but subject to legal action if it has potential to lessen competition  Exclusive dealing: supplier requires channel members to sell only its products or restricts distributor from selling competition  Tying arrangements: supplier requires a distributor purchasing some products to buy others from the supplier. Illegal if products could be purchased at fair market value from other suppliers  Refusal to deal Logistics o Activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost.  The practice of organizing the cost-effective flow of raw materials, inprocess inventory, finished goods, and related information from point of origin to point of consumption to satisfy customer requirements Supply Chain o The various firms involved in performing the activities required to create and deliver a product or service to consumers or industrial users.  Includes suppliers that provide raw material inputs to a manufacturer as well as the wholesales and retailers that deliver finished products to consumers. How do you choose a Supply Chain? o 1. Understand the customer: Identify the needs of the customer segment being served. Defines the importance of efficiency & responsiveness in meeting customer requirements o 2. Understand the supply chain: What a supply chain is designed to do well.

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Ranges from being responsive to customer requirements and demand to efficiency with a goal of supplying products at lowest cost o 3. Harmonize the supply chain with the marketing strategy: Ensure that what the supply chain is capable of doing well is consistent with the targeted customer’s need sand its marketing strategy. Total Logistics Cost o Expenses associated with transportation, materials handling, and warehousing, inventory, stockouts (being out of inventory), order processing, and return products handling. Customer Service o The ability of logistics management to satisfy users in terms of time, dependability, communication, and convenience. Figure 15-10 o Time: the time between the ordering of an item and when it is received and ready for use or sale o Dependability: Consistency of replenishment o Communication: 2 way link between buyer and seller that helps in monitoring service and anticipating future needs o Convenience: Minimum effort on the buyer in doing business with the seller.

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Vendor-Managed Inventory (VMI) o Inventory management system where the supplier determines the product amount and assortment a customer needs and automatically delivers the appropriate items

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Reverse Logistics

o The process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistribution, or disposal. Ch 16: Retailing and Wholesaling  Retailing o All activities involved in selling, renting, and providing products and services to ultimate consumers for personal, family, or household use  What’s Retailing? o Activities involved in selling, renting, and providing products and services to ultimate consumers for personal, family, or household use o Where the customer meets the product. Where exchange occurs. Creates customer value and has significant impact on the economy.  What are the 4 Utilities? o Time Utility: Having it available when needed (Ex. right sporting equipment during offseason) o Place Utility: Having the offering available where consumers need it (Ex. Wells Fargo mini banks in supermarkets) o Form Utility: Production or alteration of a product. (Ex. Ralph Lauren) o Possession Utility: The value of making an item easy to purchase through the provision of credit cards or financial arrangements (Ex. CarMax leasing)  Form of Ownership o Distinguishes retail outlets based on whether independent retailers, corporate chains, or contractual systems own the outlet. o Three Forms:  Independent Retailer- one of the most common. The owner is the boss. Can offer convenience, personal service, and lifestyle compatibility  Corporate Chain- Multiple outlets under common ownership. Centralization in decision making and purchasing is common. Consumers benefit because there are multiple outlets with similar merchandise. Chains benefit because they can get discounts on orders.  Contractual Systems- Independently owned stores that brand together to act like a chain.  Deals with retailer-sponsored cooperatives, wholesalersponsored voluntary chains, and franchises. (2 general types of franchises: business-format [McDonald’s], and productiondistribution [Ford dealership])  Level of Service o The degree of service provided to the customer o Three levels:  Self- Customers perform many functions during the purchase process. All nonessential customer services eliminated (Ex. Costco)

Limited- Provide some services, such as credit and merchandise return, but not other, such as alterations. Customers responsible for most shopping activities but salespeople are available. (Ex. Wal-Mart)  Full- Provide many services to their customers. Include most specialty stores and department stores. Better service to sell more distinctive, higher-margin goods and to retain customers (Ex. Nordstrom) Merchandise Line o Describes how many different types of products a store carries and in what assortment Depth of Product Line o A store carries a large assortment of each product item (Ex. shoe store that offers running shoes, dress shoes, and children’s shoes) Breadth of Product Line o The variety of different items a store carries (Ex. Appliances and books) “General merchandise stores” Scrambled Merchandising o Offering several unrelated product lines in a single store  Hypermarket: a form of scrambled merchandising. Large stores based on offering everything under one roof to eliminate the need to go to more than one location. Intertype Competition o Competition between very dissimilar types of retail outlets. Results from scrambled merchandising policies. Nonstore Retailing o Occurs outside a retail outlet through activities that involve varying levels of customer and retailer involvement. (Ex. Automatic vending, direct mail/catalogs, television home shopping, online retailing, telemarketing, direct selling) Telemarketing o Using the telephone to interact with and sell directly to consumers. Viewed as more efficient means of targeting consumers Retail Positioning Matrix o A matrix developed by the MAC Group, Inc., that positions retail outlets on two dimensions: breadth of product line and value added. Value added includes location, product reliability, or prestige Retailing Mix o The activities related to managing the store and the merchandise in the store, which include retail pricing, store location, retail communication, and merchandise.

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Figure 16-8

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Off-Price Retailing o Selling brand-name merchandise at lower than regular prices. Difference between this and discount stores is that the retailer uses OPR from manufacturers with excess inventory at prices below wholesale prices. Central Business District o The oldest retail setting, usually the community’s downtown area Regional Shopping Centers o 50 to 150 stores that typically attract customers who live or work within a 5- to 10-mile range. Community Shopping Center o A retail location that typically has one primary store (department store branch) and 20-40 smaller outlets that serve a population of consumers who are within a 10-20 minute drive Strip Mall o Clusters of stores to serve people within a 5-10 minute drive Power Center o A variation of a strip mall that is a huge shopping strip with multiple anchor stores. Combines the convenience of location provided by strip malls with the power of national stores. Shopper Marketing o The use of displays, coupons, product samples, and other brand communications to influence shopping behavior in a store.

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Category Management o Assigns a manager the responsibility for selecting all products that consumers in a market segment might view as substitutes for each other, with the objective of maximizing sales and profits in the category Wheel of Retailing o How new forms of retail outlets enter the market Figure 16-9

How do we classify Retail Operations? o Form of ownership, level of service, merchandise line What is the Retailing Mix? o Activities related to managing the store and the merchandise in the store. (Includes retail pricing, store location, retail communication, and merchandise) Retail Life Cycle and the Stages o The process of growth and decline that retail outlets, like products, experience, consisting of 4 stages o Four Stages of the Retail Life Cycle  Early Growth- The stage of emergence of a retail outlet, with a sharp departure from existing competition. Market shares gradually rise but profits might be low because of start-up costs  Accelerated Development- Both market share and profit achieve their greatest growth rates. Focus on the distribution element. Later competitors may enter. Main goal for retailer: establish a dominant position in the fight for market share.

Maturity Stage- New retail forms enter the market, stores try to maintain their market share, and price discounting occurs. Some competitors drop out of the market. Price discounting begins  Decline Stage- Market share and profit fall rapidly. To prevent this, retailers need to find ways of discouraging their customers from moving to low-margin, mass-volume outlets or high-price, high-service boutiques. Multichannel Retailers o Retailers that utilize and integrate a combination of traditional store formats and nonstore formats such as catalogs, TV home shopping, and online retailing Merchant Wholesalers o Independently owned firms that take title to the merchandise they handle (Also called industrial distributor) Classified as full or limited service wholesalers. o Two FULL Service Wholesalers  General Merchandise- Carry a broad assortment of merchandise and perform all channel functions. (Ex. drug and clothing industry)  Specialty Wholesalers- Offer a relatively narrow range of products but have an extensive assortment within the product lines carried. (Ex. health foods and automotive industries) o Four LIMITED Service Wholesalers  Rack Jobbers- Furnish the racks or shelves that display merchandise in retail stores, perform all channel functions, and sell on consignment to retailers (bill retailers when merch. is sold)  Cash and Carry- Take title to merchandise but sell only to buyers who call on them, pay cash for merchandise, and furnish their own transportation for merchandise. Carry a limited product assortment, do not deliver, extend credit, or supply market information.  Drop Shippers/Desk Jobbers- Wholesalers that own the merchandise they sell but do not physically handle, stock, or deliver it. Solicit orders from retailers and other wholesalers and have the merchandise shipped directly from producer to buyer. (Bulky items)  Truck Jobbers- Small wholesalers that have a small warehouse from which they stock their trucks for distribution to retailers. Handle limited assortments of fast-moving or perishable items sold for cash directly from trucks in their original packages. Manufacturer’s Agent o Work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory. Act as a producer’s sales arm and are responsible for the transactional channel functions, primarily selling. (Also called manufacturers representative.) 

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Brokers o Independent firms or individuals with principal function to bring buyers and sellers together to make sales. No continuous relationship with the buyer or

seller but negotiates contracts between two parties and then move to another task. Ch 17: Integrated Marketing Communications and Direct Marketing  Promotional Mix o The combination of one or more communication tools used to do the following:  1. Inform prospective buyers about the benefits of the product  2. Persuade them to try it  3. Remind them later about the benefits they enjoyed by using the product  Integrated Marketing Communication (IMC) o The concept of designing marketing communications programs that coordinate all promotional activities—advertising, personal selling, sales promotion, public relations, and direct marketing—to provide a consistent message across all audiences.  Communication o The process of conveying a message to others, and it requires six elements (source, message, channel of communication, receiver, encoding, decoding)  Source o A company or person who has information to convey  Message o Information sent by a source to a receiver  Channel of Communication o The means of conveying a message to a receiver. Usually done by a salesperson, advertising media, or public relations tools.  Receivers o Consumers who read, hear, or see the message  Active vs. Passive Receivers o Active: on social media who will become “influentials” and “delighted” with the brand advertised. These customers will then become “evangelists” who will send messages to their online friends and then back to the advertiser about the joys of using th...