INTRODUCTION TO
MARKETING MANAGEMENT
Review for Quiz 3
Chapters
12, 13 14,15, part of 16 and 18
Dr. Franck VIGNERON
CSUN – College of Business & Economics
1
Chapter 13
Distribution Channels and
Logistics Management
2
What is a Distribution Channel?
• A set of interdependent organizations
(intermediaries) involved in the
process of making a product or
service available for use or
consumption by the consumer or
business user.
3
Distribution Channel Functions
Members of the marketing channel perform many key functions.
They are:
Risk Taking
Financing
Information
Promotion
Physical
Distribution
Negotiation
Contact
Matching
4
Number of Channel Levels
Channel Level
= Each Layer of Marketing Intermediaries that Perform Some Work in
Bringing the Product and its Ownership Closer to the Final Buyer.
Direct Channel
Channel 1
M
Channel 2
C
Indirect Channel
M
R
C
R
C
Channel 3
M
W
Channel 4
M
W
J
R
5
C
Channel Behavior & Conflict
• For the channel to perform well, each channel
member’s role must be specified and conflict
must be managed.
• When this doesn’t happen, conflict occurs:
– Horizontal Conflict occurs among firms at the same
level of the channel, i.e retailer to retailer.
– Vertical Conflict occurs between different levels of the
same channel, i.e. wholesaler to retailer.
6
Conventional Marketing Channel Vs.
a Vertical Marketing System
Manufacturer
Wholesaler
Retailer
Consumer
Vertical
Marketing
System
Manufacturer
Wholesaler
Conventional
Marketing
Channel
Retailer
Consumer
7
Types of Vertical Marketing Systems
Vertical Marketing
Systems (VMS)
Contractual
VMS
Corporate
VMS
Wholesaler Sponsored
Voluntary Chain
40% of
Retail
Sales
Retailer
Cooperatives
Administered
VMS
Franchise
Organizations
ManufacturerSponsored Retailer
Franchise System
ManufacturerSponsored Wholesaler
Franchise System
Ford + dealers
Coca-Cola
Service-FirmSponsored
Franchise System
Hertz/Avis, McDo/Bking, H/R Inn
8
Innovations in Marketing Systems
• Horizontal Marketing
System
• Two or More Companies
at One Channel Level
Join Together to Follow a
New Marketing
Opportunity.
• Example:
• Banks in Grocery Stores
•
Competitors helping each
other
•
E.g., Outside US Néstlé
selling General Mills cereals
Hybrid Marketing
System
A Single Firm Sets Up Two
or More Marketing
Channels to Reach One or
More Customer
Segments.
Example:
Retailers, Catalogs, and
Sales Force
9
Channel Design Decisions
1. Analyzing Consumer Service Needs
2. Setting Channel Objectives & Constraints
3. Identifying Major Alternatives
Intensive
Distribution
Fast Moving C. G.
Selective
Distribution
Exclusive
Distribution
Maytag
Rolls-Royce
4. Evaluating the Major Alternatives
Review Economic, Control, and Adaptive Criteria
5. Designing International Distribution Channels
10
Push and Pull Strategies
Push Strategy
Producer
Wholesalers
Retailers
Customers
Pull Strategy
Producer
Wholesalers
Retailers
Customers
Retailers
Customers
Push/Pull Strategies
Producer
Wholesalers
Advertising and Promotion
11
Distribution Strategies
Major Logistics Functions
Order Processing
Costs
Received
Processed
Shipped
Minimize Costs of
Attaining Logistics
Objectives
Logistics
Transportation
Rail, Truck, Water,
Pipeline, Air,
Intermodal
Functions
Warehousing
Storage
Distribution
Automated
Inventory
When to order
How much to order
Just-in-time
12
Marketing Logistics
• Involves planning, implementing, and
controlling the physical flow of materials,
final goods, and related information from
points of origin to points of consumption to
meet customer requirements at profit.
• INBOUND + OUTBOUND = Market Logistics
• Supply Chain + value chain management
13
Transportation Modes
Rail
Nation’s largest carrier, cost-effective
for shipping bulk products, piggyback
Truck
Flexible in routing & time schedules, efficient
for short-hauls of high value goods
Water
Low cost for shipping bulky, low-value,
non perishable goods, slowest form
Pipeline
Ship petroleum, natural gas, and chemicals
from sources to markets
Air
High cost, ideal when speed is needed or
distance markets have to be reached
14
Choosing Transportation Modes
Checklist for Choosing
Transportation Modes
1. Speed (door-to-door time)
2. Dependability (meet
schedules)
3. Availability (area served)
4. Costs (per ton-distance)
5. Flexibility(ability to handle
various products)
15
INTRODUCTION TO
MARKETING MANAGEMENT
Chapter 14
Distribution Strategies
Dr. Franck VIGNERON
CSUN – School of Business & Economics
16
What is Retailing?
Retailing
Includes all
the activities Involved in
Selling Goods or Services
Directly to Final
Consumers for Their
Personal, Nonbusiness
Use.
Retailers - those firms engaged primarily
in wholesaling activity.
17
Product Assortment and Services
Decisions
Product Assortment
• Width and Depth of Assortment
• Quality of Products
• Product Differentiation Strategies
Services Mix
Key Tool of Nonprice Competition
for Setting One Store Apart From
Another
Store’s Atmosphere
• Physical Layout
• “Feel” That Suits the Target Market
and Moves Customers to Buy
18
Classification of Retailing
Retail Organizations
Independent, Corporate, or
Contractual
Ownership Organization
Amount of Service
Self-Service, Limited-Service and
Full-Service Retailer
Product Line
Depth/Length and Breadth of the Product
Assortment
Relative Prices
Pricing Structure that is Used
by the Retailer
19
Breadth vs. Depth of Merchandise
Lines
Breadth: Number of different product lines
Shoes
Depth:
Number of
items within
each product
line
Nike running shoes
Florsheim dress
shoes
Top Sider boat
shoes
Adidas tennis shoes
Appliances
Amana
refrigerator
Sony TV sets
JVC videocassette
recorders
General Electric
dishwashers
Sharp microwave
ovens
CDs
Men’s Clothing
Classical
Suits
Ties
Jackets
Overcoats
Socks
Shirts
Rock
Jazz
Country Western
20
Classification of Retailing: Product Line
E.g., + What is an Hypermarket?
Store
Specialty Stores
Department Stores
Supermarkets
Convenience Stores
Superstores
Discount Stores
Off-Price Retailers
Warehouse Clubs
Description
Narrow Product Line, Deep Assortment i.e.
The Limited or Athlete’s Foot
Wide Variety of Product Lines i.e. Clothing,
Home Furnishings, Saks Fifth Avenue
Wide Variety of Food, Laundry, & Household
Products i.e. Kroger
Limited Line of High-Turnover Convenience
Goods i.e. 7-Eleven
Large Assortment of Routinely Purchased
Food & Nonfood Products i.e. Toys R Us
Standard Merchandise at Lower Prices
i.e. Wal-Mart
Changing Collection of Higher-Quality Goods
at a Reduced Price i.e. T.J. Maxx
Limited Selection of Brand-Name Grocery
21 Club
Items, Appliances, Etc. i.e. Sam’s
What is Wholesaling?
Wholesaling All the activities involved
in selling goods and services to
those buying for resale or
business use.
•Wholesaler - those firms engaged
primarily in wholesaling activity.
•Wholesalers buy mostly from
producers and sell mostly to:
–Retailers,
–Industrial consumers, and
–Other wholesalers.
22
Why are Wholesalers Used?
Wholesalers are Often Better at Performing One or More
of the Following Channel Functions:
Management
Services & Advice
Market
Information
Risk Bearing
Selling and
Promoting
Wholesaler
Functions
Financing
Buying and
Assortment Building
Bulk Breaking
Warehousing
Transportation
23
Types of Wholesalers
Merchant Wholesaler
Independently Owned
Business that Takes Title to the
Merchandise it Handles.
Manufacturers’ Sales
Branches and Offices
Wholesaling by Sellers or
Buyers Themselves
Rather Than Through
Independent
Wholesalers.
Brokers/ Agents
They Don’t Take Title to
the Goods, and They
Perform Only a Few
Functions.
24
Trends in Wholesaling
Consolidation within the Industry is Reducing # of Wholsalers
Distinction Between Large Retailers and Wholesalers Blurs
Wholesalers Will Continue to Increase the Services Provided
Wholesalers Are Beginning to Go Global
25
Chapter 15
Integrated Marketing
Communication Strategy
26
The Promotional Mix
PR
Advertising
Sales
Promotion
Direct
MKG
Personal
Selling
Product
Place
Price
(Distribution)
Promotion
4P’s
Place
27
Advertising Strategies
Setting Advertising Objectives
Informative Advertising
Inform Consumers or
Build Primary Demand
i.e CD Players
Persuasive Advertising
Build Selective Demand
i.e Sony CD Players
Advertising Objective
Specific Communication Task
Accomplished with a Specific
Target Audience
During a Specific Period of Time
Comparison Advertising
Reminder Advertising
Compares One Brand to
Another
i.e. Avis vs. Hertz
Keeps Consumers Thinking
About a Product
i.e. Coca-Cola
28
Figure 9.3 Comprehensive
Communication Model
Commercial Verbal vs. Nonverbal
Non-Profit
1-sided vs. 2-sided
Individual Factual vs. Emotional
Formal vs.
Informal
Sender
(Source)
Message
Symbols
Pictures
Words
Images
Selective
Exposure
Individuals
Target Audience
Intermediary Audience
Unintended Audiences
Channel
(Medium)
Receiver
(Consumer)
Mediated by:
Involvement
Mood
Experience
Personal Charac.
Decodes
Paid vs. Unpaid
Print, Broadcast, Electronic
Personal vs. Impersonal
Pretests to Ensure Message Will be Received
Posttests to Ensure Message Was Received
Feedback
Responds
Appropriately
?
No
Yes
Miscomprehends
?
Yes
No
29
Steps in Developing Effective Communication
Step 1. Identifying the Target Audience
Step 2. Determining the Communication Objectives
Buyer Readiness Stages
Awareness
Knowledge
Liking
Preference
Conviction
Purchase
30
Steps in Developing Effective Communication
Step 3. Designing a Message
Message Content
Rational Appeals
Emotional Appeals
Moral Appeals
Attention
Message Structure
Draw Conclusions
Argument Type
Argument Order
Interest
Desire
Message Format
Headline, Illustration,
Copy, & Color
Body Language
Action
• AIDA model.
1). Get attention
3). Arouse desire
2). Hold interest
4). Obtain action
31
Appeals
Appeal - the creative attempt to motivate
consumers toward some form of activity,
or to influence attitudes toward a product or service
Rational appeal -
Emotional appeal -
a focus toward the consumer’s
practical utility oriented needs
a focus on psychological
rather than utility needs
(all appeals can be positive or negative
and should be meaningful, distinctive,
and believable to be effective)
Humor
Fear
Sex
Comparative
+ Morale Appeal: Social causes & Human Rights
Advertising Strategies
Ego
Oriented
32
Structure & Format
• The marketing communicator needs a
strong structure and format for the
message.
• 1). Three structure issues must be
addressed:
– a). Whether to draw a conclusion or leave it to the
audience.
– b). Whether to present a one-sided argument or a
two-sided argument.
– c). Whether to present the strongest arguments
first or last.
33
Structure & Format (continuous)
• 2). The message format decides on the
headline, illustration, copy, and color.
• 3). To attract attention the advertiser can
use:
–
–
–
–
–
a).
b).
c).
d).
e).
Novelty and contrast.
Eye-catching pictures and headlines.
Distinctive formats.
Message size and position.
Color, shape, and movement.
34
Steps in Developing Effective
Communication
Step 4. Choosing Media
Personal Communication
Channels
Nonpersonal Communication
Channels
35
Issues in Credibility
• Credibility of Informal Sources
– E.g., Word-of-mouth
• Credibility of Formal Sources
– Differ. Between for profit vs nfp Org.
• Credibility of Spokespersons and
Endorsers
– Importance of perceived competency and
expertise
• Message Credibility
– Past experience with organization
CREDIBILITY OF THE MEDIA CHANNELS
SPONSORING
VERSUS
ADVERTISING
+
-
CREDIBILITY OF THE SOURCES
FOR-PROFIT Org.
-
VERSUS
NOT FOR PROFIT
Org.
+
CREDIBILITY OF THE MEDIA CHANNELS IN
RELATION WITH THE SOURCES
FOR-PROFIT Org.
SPONSORING
VERSUS
NOT FOR PROFIT Org.
+
++
--
-
VERSUS
ADVERTISING
Campaign Evaluation
Advertising Program Evaluation
Communication Effects
Sales Effects
Is the Ad Communicating Well?
Is the Ad Increasing Sales?
Setting the Total Promotion Budget
One of the Hardest Marketing Decisions Facing a
Company is How Much to Spend on Promotion.
Affordable
Based on What the
Company Can Afford
Objective-and-Task
Based on Determining
Objectives & Tasks, Then
Estimating Costs
Percentage of Sales
Based on a Certain Percentage
of Current or Forecasted Sales
Competitive-Parity
Based on the Competitor’s
Promotion Budget
40
Dr. Franck Vigneron
Chapter 16
Sales Promotion + PR
+ Advertising
41
What is Sales Promotion ?
Sales Promotion is a Mass
Communication Technique That
Offers Short-Term Incentives to
Encourage Purchase or Sales of a
Product or Service.
 Offers Reasons to Buy Now.
 Stimulate earlier or stronger
market response.
42

Major Consumer Sales Promotion
Tools/1
Sample
Trial amount of a product
Coupons
Savings when purchasing specified products
Cash Refunds
Refund of part of the purchase price
Price Packs
Reduced prices marked on the label or
package
Premiums
Goods offered free or low cost as an
incentive to buy a product
Advertising
Specialties
Articles imprinted with an advertiser’s name
given as gifts
43
Major Consumer Sales Promotion
Tools/2
Patronage Rewards
Cash or other rewards for the use of a
certain product
Point-of-Purchase
Displays and demonstrations that take place
at the point of sale
Contests
Consumers submit an entry to be judged
Sweepstakes
Consumers submit their names for a
drawing
Game
Presents consumers with something every
time they buy
44
Major Trade Sales Promotion
Tools/1
Trade-Promotion
Objectives
Persuade Retailers or
Wholesalers to Carry a Brand
Give a Brand Shelf Space
Promote a Brand in
Advertising
Push a Brand to Consumers
45
Major Trade Sales Promotion
Tools/2
Trade-Promotion
Tools
Discounts
a straight reduction in price on
purchases during a stated period
of time. Can be called price-off,
off-invoice, or off-list.
46
Major Trade Sales Promotion
Tools/3
Trade-Promotion
Tools
Allowances
•
Promotional money paid by manufacturers
to retailers who agree to feature the
manufacturer’s products in some way.
Forms include:
•
a). An advertising allowance compensates
retailers for advertising a product.
•
b). A display allowance compensates them
for using displays.
•
c). Manufacturers may offer free goods,
which are extra cases of merchandise, to
resellers who buy a certain quantity or who
feature a certain flavor or size.
•
d). Manufacturers may give retailers free
specialty advertising items that carry the
company’s name (such as pens).
47
Major Business Sales Promotion
Tools
Business-Promotion
Objectives
Business-Promotion
Tools
Generate Business Leads
Conventions
Stimulate Purchases
Trade Shows
Reward Customers
Sales Contests
Motivate Salespeople
48
Developing the Sales Promotion
Program
Decide on the Size of the Incentive
Set Conditions for Participation
Determine How to Promote and
Distribute the Promotion Program
Determine the Length of the Program
Evaluate the Program
49
What is Public Relations?
Public Relations Involves Building Good
Relations With the Company’s Various
Publics by Obtaining Favorable Publicity,
Building Up a Good Corporate Image,
and Handling or Heading Off
Unfavorable Rumors, Stories, and
Events.
50
Major Public Relations Functions
Press Relations
Product Publicity
Public Affairs
Public Relations
Departments May
Perform Any of All
of the Following
Functions:
Lobbying
Investor Relations
Development
51
Major Public Relations Tools
News
Web Site
Speeches
Public
Service
Activities
Special
Events
Corporate
Identity
Materials
Audiovisual
Materials
Written
Materials
52
Major Public Relations Decisions
Setting Public Relations Objectives
Choosing the Public Relations Messages
and Vehicles
Implementing the Public Relations Plan
Evaluating Public Relations Results
53
What is Advertising?
Advertising is Any Paid Form of
Nonpersonal Presentation and
Promotion of Ideas, Goods, or
Services by an Identified
Sponsor.
54
Media Selection
• Deciding on reach, frequency, and impact.
• a). Reach is the percentage of people in the target
market exposed to an ad campaign during a
given period.
• b). Frequency is the number of times the average
person in the target market is exposed to an
advertising message during a given period.
• c). Media impact is the qualitative value of an
exposure through a given medium.
55
6 major advertising
media
•
•
•
•
•
•
Television
Radio
Magazines
Newspaper
Internet
And Outdoor (e.g., billboards)
56
Copy and Message Direction
Motivational
Source
Motivation =
Product
Performance
Perf. Is
representation of
product
Copy of Message
Motivation =
Association with
Product Universe
Perf. is + than
representation
product
Centered on Product
Copy of Message
Centered on Results
from Product
1. Message on
Product
2. Message on
Resultats
Copy of Message
Centered on Psyco
-socio of Product
3. Message on Univers
57
Chapter 18
Competitive Strategies: Attracting,
Retaining, and Growing Customers
58
Customer Relationship Marketing
• Traditional marketing theory and practice have focused on
attracting new customers rather than retaining existing ones.
• 1). The move today, however, is toward relationship marketing-creating,maintaining, and enhancing strong relationships with
customers and other stakeholders.
• 2). Beyond designing strategies to attract new customers and
create transactions with them, companies are going all out to
retain current customers and build profitable, long-term
relationships with them.
• 3). This new view is that marketing is the science and art of
finding, retaining, and growing profitable customers.
59
Satisfaying the Needs
Create the Product
Identify
The needs
to Satisfy
STAGES
NEEDS
PRODUCTS
Retain Customer
By Maintaining Satisfaction
Adapt and
Deliver
the Products
to The Right
Target
60
Customer Delivered Value
61
Customer Satisfaction
Expectations are Based on
Customer’s Past Buying Experiences,
the Opinions of Friends, & Marketer
and Competitor Information and
Promises.
Product Falls
Short of
Expectations
Product
Matches
Expectations
Customer is
Dissatisfied
Customer is
Satisfied
Product
Exceeds
Expectations
Customer is
Highly
Satisfied
or
Delighted!
62
Steps in Analyzing Competitors
Identifying the
company’s
competitors
= BENCHMARKING
Assessing competitor’s
objectives, strategies,
strengths and weaknesses,
and reaction patterns
Selecting which
competitors to
attack or avoid
63
Basic Competitive Strategies
Overall Cost
Leadership
Focus
Differentiation
Middle of
the Road
64
Competitive Strategies: Value
Disciplines
Companies Gain
Leadership Positions by
Delivering Superior Value
to their Customers
Through These
Strategies:
Operational
Excellence
Alaska Airlines
Customer
Intimacy
Ikea
Product
Leadership
intel
65
Competitive Marketing Strategies
Firms Competing in a Given Target Market Differ in their
Objectives and Resources so May Choose the Following
Forms:
Market Leader
Market Challenger
Market Follower
Market Nicher
66