Retailing: all the activities in selling goods or services directly to final consumers for personal,
non-business use.
For example, sell bulb to ordinary customers in a store.
Types of retailing:
Department stores: broad variety. (macys, jc Penney) sell shoes, cosmetics, beds, etc. try to the
every day low price
Drug stores: pharmacy (CVS, Rite Aid)
Specialty stores: small stores that sell specialty goods (MAC store inside macys, only sell MaC
cosmetics) include specialist such as makeup artists.
Category specialist: sell goods by different companies as well (Sephora sells Dior, MAC, naked,
etc or Staples sell office product by different companies)
Superstore: grocery stores, low prices (Wallmart, Target) Big box retailers. Sell daily use items.
Everyday low price.
Off price stores: inconsistent assorted. What you see this month will be different next month
(TJ Max, Marshall’s). discount on items.
Convenience stores: small stores in residential areas. Small inventory.
OMNI CHANNEL RETALING
Creating a seam less cross-channel buying experience that integrates in-store, online, and
mobile shopping.
Rapid increase ofw
online shopping.
Omni-channel consumers look for products and prices online.
Many store gives you the option to buy the product online but go to the store to pick it up.
Off line, when you go to the store to pick it up you find complementary product. For example,
buy an iPhone online, go to pick it up in the store and in the store you find cases for the iPhone.
Sometime if you order online from the store you will get free shipping.
Ex. Video. Mobile POS. Reminder send by the stores to your phone after you sign in.
Online stores is not the only channel that is going to succeed in the future.
You need the 3 channel (omni channel)
Ex. Amazon started online and now have physical stores.
Ex. Showrooms.
Direct to consumers and own customer relations
Challenges for omni challenge: e-commerce and retail team are not similar. Unified backbone
(combine them)
Use of algoritms by facebook. Shows you campaign that will be interesting for you.
Omni is the future of retailing.
WHAT IS A BRAND?
Name, sign, symbol, or desing.
It is basically a promise to the consumers. A promise of the values that the company stands for.
Ex. Swoosh of nike. Promis of achievement, comfort
Role of brands:
Identify the maker (swoosh of nike), legal protection (provide legal protection toy your
company), signify associations, loyalty
Brand equity
Added intangible value.
For example, a simple t-shirt but with the Ralph Lauren logo. “Quality, comfort, prestige”
Extra value that you are willing to pay as a consumer because of the prestige of the brand.
World most valuable brands? Apple, googl Microsoft
Advantages of strong brands:
Greater loyalty.
Improved perceptions of product performance
Less vulnerability to crises and to competitive marketing actions.
Selective attention
Less price sensitivity (you loyal customers will still buy your product if prices increase)
Licensing opportunities
Nike in ads use a strategy of “different steps until achieving victory”. Challenge, in the zone,
doubt & suffering, rededication, victory.
Never talks about the shoes.
Brand elements:
Names, logos, symbols. For example, you can recognize delta just for its logo. Jingles of
McDonald. Slogans “Just do it”
Brand extension
Ex. Mercedes Benz. If the company wants to start producing bicycles, this new product category
is a brand extension.
It doesn’t work for all companies. Ex. Colgate also tried to enter the frozen food market. It was
a total failure.
Brand extension increases brand equity.
Ex. Colgate start producing toothpaste, and then start doing toothbrushes.
Very few people companies know why they do what they do.
How apple communicates? Making products beautifully design and friendly.
People don’t buy what you, buy why you do it.
Hire people who believe what you believe.
Early majority will not try something until someone else try it first
Innovators and early adopters are comfortable making those decisions (they will stay on line
for 6 hours to buy the new iPhone, they want to be first).
Law of diffusion of innovation. Successful example. Martin Luther king speech. No invitation or
sign up option. He tell people what he believe. “I believe” Match with people. They showed up
for themselves. 25% of audience was white.
GOLDEN CIRCLE
Why they do it? Branding/ sustainable advantage (Nike)
How? How does the company set them apart from competition
What products do they make
EX. Apple vs Dell
Dell communicates outside in. We made computers. Place on cost. Low price computers. Little
focus on why. Do not motivate people as Apple.
Apple outside out. (Why are we valuable) Why we are the best. Why we represent luxury and
differentiation.
ENTRA DIFFERENT APPROACHES TO PRICING
4 levesl of pricing:
Demand oriented approaches (7), cost-oriented approaches (3), profit-oriented approaches (2),
competition-oriented approaches (3)
Demand oriented approach (consumers willingness to pay by mktg research or go to Ipsos)
Skimming pricing: company introduces a new product into the market for the 1 st time. (first
mover advantage, can charge a premium and high initial price)PS4, then reduce price because
of X-Box
Penetration: setting a low price on a new market to appeal immediately to the mass market.
Make sure that your customers are trying your product, that is the purpose of low price.
First, chase bank offer discounts to sign up, the start charging interest
Prestige: high price for status. Better quality of treatment. (based on cognitive bias)
Price lining: each product will be price different according to the different features. (ex.Toyota
Camry, basic mode vs luxury model with leather seats, electronic chart, etc)
Odd-even pricing: $1.99 instead of $2. Setting a prices under a rounded number. Why this
approach? Psychological pricing strategies. Customers are concern about the price (value for
money). Ex. Commonly used by fast food restaurants
Bundle pricing: marketing of two or more products in a single package price. For example, slice
of pizza bundle with a coke.
Yield management pricing: variable pricing strategy. Ex. Airlines industry. Same economy tickets
is sold at different prices based on when did you buy the ticket. Why airlines do this? They want
to get the require revenue before the fight takes off.
Cost oriented approach (very rare that companies follow this approach)
Standard markuo\p pricing
Adding a fixed percentage to the cost.
Ex. Cost of producing a box is $2. I want to a 50% mark up. Price will be $3. (cost + % markup_
Cost-plus pricing
Cost + fixed absolute value
Experience curve pricing
The more experience a firm gets, allows it to be more efficient in its production capability
Cost of unit of manufacturing goes down because of the efficiency of the effect, it allows the
company to low the prices
Ikea effect: the mlknore effort consumers put into getting something, the more they value that
product. In ikea, you assemble your furniture.
Because a ll the experinec of producing their articles, ikea can play with the prices to win
against compeitors. Young manufacturers have less experience.
PROFIT ORIENTED PRICING APPROACH (NOT VERY FOLLOWED BY COMPANIES)
Target profit pricing
Involves setting an annual target of a specific dollar amount of profit
Ex. Profit per bottle produced.
COMPETITION ORIENTED PRICING APPROCHES
Above-at- or below-market pricing
Managers can choose a strategy above or below market price.
Ex. Wallmart sells different brands. However, wallamrt’s brand is cheaper than other brands.
(private brand)
Loss-leader pricing
Price one of their products extremely low. Attract consumers to walk into the store and buy
other items at normally price. (usually with furniture stores, Bob’s discount furniture)
ENTRASUPPLY CHAIN MANAGEMENT
Process of sourcing or getting the raw materials to make your product, manufacturing the
product, distributing it, and given it to consumer for consumption.
Supplier= supplies raw materials to manufacturer
Manufacturer: converts raw materials to the final good. There are assembling lines inside the
manufacturing materials.
Distributor: provides warehousing/ storage support. Manages inventory, sells the goods to the
next channel partner. Dognite of the supply chain. Distributing final goes to the supply chain
partner. Big warehouses to store the products. Are exclusive. (only coke)
Retailer – Acts as the final point of purchase. Consumers buy from retailers in a conventional
supply chain. Come in different shapes and sizes. Ex. Small grocery stores. National chian like
Walmart target. Bending machines. Gas stations.
Logistics/transportation: safe transportation of raw materials and final products from one
supply chain partner to the other. Comes to play at different points of the supply chain. Ex.
Tracking companies. Move final product to manufacturer to distributor.
Wholesaler: not present in all supply chains. Limited number od distributors but several
number of retailers. Insert whole sales between them to make a supply chain efficient ang get
the product on time. Is like a mini distributor. Not necessarily excusive (can have coke, pepsi,
etc) ex. Costco. They sell to small local store or single family store.
 Producing and making products available to buyers requires building relationships with
“upstream” and “downstream” supply chain partners.
 Upstream: Firms that supply the raw materials, components, parts, and other
elements necessary to create a good. All those entities that goes from the start
to the point of manufacturing.
 Downstream: Marketing channel partners that link the firm to the customer.
(distribution to consumer)
PUSH VERSUS PULL
PUSH: company pushes the product to resellers (ex. Pharmaceutical products, textbooks)
companies convince the distributors to take the products. The distributor will push to
wholesaler and retailers to take the products. Them will push to consumers to buy the product.
Pull: company promotes directly to final consumers (Nike)
Most companies use come combination of push and pull. Ex. Pepsi. Spends $$ in advertising.
We only sell pepsi in this restaurant (push strategy) pull advertising to consumers
CHANNEL CONFLICT: one channel member believes another channel member is engaged in
behavior that prevents it from achieving goals.
Sources:
1. Vertical conflict: between partners at different level of supply chain channel.
Ex. Distributor and retailer conflicting over who is responsible for bearing the cost of
expired products. Sharing of risk and sata.
2. Horizontal conflict
a. Between partners at the same level of supply chain channel
b. Example: A small retailer having a conflict with a big retailer over the pricing of a
product. , Holiday Inn franchisees might complain about other Holiday Inn
operators overcharging guests or giving poor service, which hurts the overall
Holiday Inn image
3. Disintermediation
channel conflict that arises when a channel member bypasses another member
and sells or buys products direct. One channel partner tries to make the other
channel partner irrelevant.
Nike sells products on its website directly to consumers. Retailers (macys,
footlocker, etc)will not be happy
Amazon startin its own transportation logistic (affecting fedex and amazon)
ENTRA PRODUCT LIFECYCLE
Charts out your product sales an profits over the curse of its life time
1. Product development stage: Why is the profit negative at the beginning? There is no
sales
Profit= sales – expenditures
2. Introduction stage: company slowly introducing into the market. No rapid increase in
sales.
Sales just started
Why is the profit more negative? Sales are not that high. Companies is facing old time
expenditures. Promotion costs, marketing costs, distribution costs.
3. Growth: sales began to increase. Period of rapid market acceptance. Increase of sales.
This stage does not last forever. Why? You will reach stage in which they will not be new
buyers.
4. Maturity stage: no new buyer to reach. Level of. Profits level of.
5. Decline stage: people stop buying the product. Decline in slaes and profit.
Ex. Kodak film roll camera
Everybody wanted to buy the camera. But, digital camera appeared. Kodak fil roll camera
was affected. Sales dropped.
Do all products go through the 5 stages? NO.
Monopoly services (ConEdinson). No decline stage
FADS (temporary periods of unsually high sales driven by consumer enthusiasm and
immediate product or brand popularity) ex. Pokemon GO: everyone was playing it. Rapid
growth stage. Later, rapid decline. Period of rapid market acceptance and growth stage. No
majority face.