INTRODUCTION TO

MARKETING MANAGEMENT

Review for Quiz 3

Chapters: 12, 13 14,15, and 17

Dr.
Dr.Franck
FranckVIGNERON
VIGNERON
CSUN
CSUN––College
CollegeofofBusiness
Business&&Economics
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
Risk Taking
Taking Information
Information

Financing
Financing Promotion
Promotion

Physical
Physical Contact
Contact
Distribution
Distribution

Negotiation
Negotiation Matching
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.

Channel 1 Direct Channel

M
M CC

Channel 2 Indirect
M
M Channel RR CC

Channel 3
M
M W
W RR CC
Channel 4
M
M W
W JJ RR CC5
 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

Conventional Vertical
Marketing Marketing
Channel System
Manufacturer
Manufacturer
Manufacturer

Wholesaler
Wholesaler
Wholesaler

Retailer Retailer
Retailer

Consumer Consumer
7
 Types of Vertical Marketing Systems

Vertical
Vertical Marketing
Marketing
Systems
Systems (VMS)
(VMS)

Corporate
Corporate Contractual
Contractual Administered
Administered
VMS
VMS VMS
VMS VMS
VMS

Wholesaler
Wholesaler Sponsored
Sponsored Retailer
Retailer Franchise
Franchise
Voluntary
Voluntary Chain
Chain Cooperatives
Cooperatives Organizations
Organizations

40% of Manufacturer- Manufacturer- Service-Firm-

Retail
Manufacturer- Manufacturer- Service-Firm-
Sales
Sponsored
Sponsored Retailer
Retailer Sponsored
Sponsored Wholesaler
Wholesaler Sponsored
Sponsored
Franchise
Franchise System
System Franchise
Franchise System
System Franchise
Franchise System
System
Ford + dealers Coca-Cola Hertz/Avis, McDo/Bking, H/R Inn
8
Innovations in Marketing Systems

Horizontal
Horizontal Marketing
Marketing Hybrid Marketing
Hybrid Marketing
System
System System
System
Two
TwoororMore
MoreCompanies
Companiesatat
One AASingle
SingleFirm
FirmSets
SetsUp
Up
OneChannel
ChannelLevel
LevelJoin
Join TwoororMore
MoreMarketing
Marketing
Together Two
TogethertotoFollow
FollowaaNew
New Channelsto toReach
ReachOne
One
Marketing
MarketingOpportunity.
Opportunity. Channels
orMore
or MoreCustomer
Customer
Example:
Example: Segments.
Segments.
Banks
Banksin
inGrocery
GroceryStores
Stores Example:
Example:
Competitors
Competitorshelping
helpingeach
eachother
other Retailers,Catalogs,
Retailers, Catalogs,and
and
E.g.,
E.g.,Outside
OutsideUSUSNéstlé
Néstléselling
selling SalesForce
Force
General Mills cereals Sales
General Mills cereals

9
 Channel Design Decisions
1. Analyzing Consumer Service Needs
2. Setting Channel Objectives & Constraints

3. Identifying Major Alternatives

Intensive Selective Exclusive

Distribution Distribution Distribution
Fast Moving C. G. 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

Push/Pull Strategies

Producer Wholesalers Retailers Customers

Advertising and Promotion

11
Distribution Strategies
 Major Logistics Functions

Costs
Costs Order
Order Processing
Processing
Minimize
MinimizeCosts
Costsofof Received
Received
Attaining
AttainingLogistics
Logistics Processed
Processed
Objectives
Objectives Shipped
Shipped

Logistics
Transportation Warehousing
Warehousing
Rail, Truck, Functions Storage
Storage
Water, Pipeline, Distribution
Distribution
Air, Intermodal Automated
Automated
Inventory
Inventory
When
Whento toorder
order
How
Howmuch
muchto toorder
order
Just-in-time
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
Rail
Nation’s
Nation’slargest
largestcarrier,
carrier,cost-effective
cost-effective
for
forshipping
shippingbulk
bulkproducts,
products,piggyback
piggyback
Truck
Truck
Flexible
Flexiblein
inrouting
routing&&time
timeschedules,
schedules,efficient
efficient
for
forshort-hauls
short-haulsof
ofhigh
highvalue
valuegoods
goods
Water
Water
Low
Lowcost
costfor
forshipping
shippingbulky,
bulky,low-value,
low-value,
non
nonperishable
perishablegoods,
goods,slowest
slowestform
form
Pipeline
Pipeline
Ship
Shippetroleum,
petroleum,natural
naturalgas,
gas,and
andchemicals
chemicals
from
fromsources
sourcesto
tomarkets
markets
Air
Air
High
Highcost,
cost,ideal
idealwhen
whenspeed
speedisisneeded
neededor or
distance
distancemarkets
marketshave
haveto
tobe
bereached
reached14
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.
Dr.Franck
FranckVIGNERON
VIGNERON
CSUN
CSUN––School
Schoolof
ofBusiness
Business&&Economics
Economics
16
What is 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
Services Mix
Strategies
Key Tool of Nonprice
Competition
for Setting One Store Apart
From
Store’s Atmosphere Another
• Physical Layout
• “Feel” That Suits the Target
Market 18
and Moves Customers to Buy
 Classification of Retailing

Retail Organizations
Independent, Corporate, or
Contractual
Ownership Organization

Amount
Amount of
of Service
Service
Self-Service,
Self-Service, Limited-Service
Limited-Service and
and
Full-Service
Full-Service Retailer
Retailer
Product
Product Line
Line
Depth/Length
Depth/Length and
and Breadth
Breadth of
of the
the Product
Product
Assortment
Assortment

Relative
Relative Prices
Prices
Pricing
Pricing Structure
Structure that
that is
is Used
Used
by
by the
the Retailer
Retailer
19
 Breadth vs. Depth of
Merchandise Lines
Breadth: Number of different product lines

Shoes Appliances CDs Men’s Clothing

Amana
Nike running shoes
Depth: refrigerator Classical
Suits
Number of Florsheim dress Sony TV sets
Ties
items within shoes JVC videocassette Rock
Jackets
each product recorders
Top Sider boat Overcoats
line General Electric Jazz
shoes Socks
dishwashers
Shirts
Sharp microwave Country Western
Adidas tennis shoes
ovens

20
 Classification of Retailing: Product Line

E.g., + What is an Hypermarket?

Hypermarket

Store Description
Specialty Stores Narrow Product Line, Deep
Assortment i.e. The Limited or
Department Stores Athlete’s
Wide Variety Foot Lines i.e.
of Product
Clothing, Home Furnishings, Saks Fifth
Supermarkets Wide VarietyAvenue
of Food, Laundry, &
Household Products i.e. Kroger
Convenience Stores Limited Line of High-Turnover
Convenience Goods i.e. 7-Eleven
Superstores Large Assortment of Routinely
Purchased Food & Nonfood Products
Discount Stores i.e. Toys R at
Standard Merchandise UsLower Prices
i.e. Wal-Mart
Off-Price Retailers Changing Collection of Higher-Quality
Goods at a Reduced Price i.e. T.J.
Maxx
Limited Selection of Brand-Name
Warehouse Clubs
Grocery Items, Appliances, Etc. i.e.21
Sam’s Club
What is 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
Management Selling
Selling and
and
Services
Services &
& Advice
Advice Promoting
Promoting
Market
Market Buying
Buying and
and
Information
Information Wholesaler Assortment
Assortment Building
Building
Functions
Risk
Risk Bearing
Bearing Bulk
Bulk Breaking
Breaking

Financing
Financing Warehousing
Warehousing

Transportation
Transportation 23
 Types of Wholesalers

Merchant Wholesaler
Independently Owned
Business that Takes Title to
the
Merchandise it Handles.

Manufacturers’
Sales Branches and
Offices Brokers/ Agents
Wholesaling by Sellers or They Don’t Take Title
Buyers Themselves to
Rather Than Through the Goods, and They
Independent Perform Only a Few
Wholesalers. Functions. 24
 Trends in Wholesaling

Consolidation
Consolidation within
within the
the Industry
Industry is
is Reducing
Reducing #
# of
of Wholsa
Wholsa

Distinction
Distinction Between
Between Large
Large Retailers
Retailers and
and Wholesalers
Wholesalers Blur
Blur

Wholesalers
Wholesalers Will
Will Continue
Continue to
to Increase
Increase the
the Services
Services Provid
Provid

Wholesalers
Wholesalers Are
Are Beginning
Beginning to
to Go
Go Global
Global
25
 Chapter 15

Integrated Marketing
Communication Strategy

26
 The Promotional Mix

PR Direct
Advertising MKG
Sales Personal
Promotion
Selling

Product Promotion
4P’s
Place
Price
(Distribution) Place
27
Advertising Strategies
 Setting Advertising Objectives

Informative Advertising Persuasive Advertising

Inform Consumers or Build Selective Demand
Build Primary Demand i.e Sony CD Players
i.e 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 Keeps Consumers Thinking
Another About a Product
i.e. Avis vs. Hertz i.e. Coca-Cola 28
 Figure 9.3 Comprehensive
Communication Model
Commercial Verbal vs. Nonverbal
Non-Profit 1-sided vs. 2-sided Selective Individuals
Individual Factual vs. Emotional Exposure Target Audience
Formal vs. Intermediary Audience
Encodes

Informal Unintended Audiences Mediated by:

Involvement
Channel Mood
Sender Messag Receiver
(Medium Experience
(Source) e (Consumer)
) Personal Charac.
Symbols
Decodes
Pictures Paid vs. Unpaid Responds
Words Print, Broadcast, Electronic Yes
Appropriately
Images Personal vs. Impersonal
?
No
Miscomprehends Yes
?
Pretests to Ensure Message Will be Received
Posttests to Ensure Message Was Received No

Feedback 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
Purchase 30
 Steps in Developing Effective Communication

Step 3. Designing a Message

Message Content
Rational Appeals
Emotional Appeals Message Structure
Moral Appeals Draw Conclusions
Argument Type Message Format
Argument Order Headline, Illustration,
Copy, & Color
Body Language

• AIDA model.
1). Get attention 2). Hold interest
31
3). Arouse desire 4). Obtain action
 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 a focus on psychological
practical utility oriented needs 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 Ego

Oriented
32
+ Morale Appeal: Social causes & Human
Advertising Strategies
 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). Novelty and contrast.
– b). Eye-catching pictures and headlines.
– c). Distinctive formats.
– d). Message size and position.
– e). 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.

- +
37
 CREDIBILITY OF THE MEDIA CHANNELS IN
RELATION WITH THE SOURCES

FOR-PROFIT Org. VERSUS NOT FOR PROFIT Org.

SPONSORING
+ ++
VERSUS

ADVERTISING
-- -

38
 Campaign Evaluation

Advertising
Advertising Program
Program Evaluation
Evaluation

Communication
Communication Effects
Effects Sales
Sales Effects
Effects
Is
Isthe
theAd
AdCommunicating
CommunicatingWell?
Well? Is
Isthe
theAd
AdIncreasing
IncreasingSales?
Sales?
 Setting the Total Promotion Budget

One of the Hardest Marketing Decisions

Facing a Company is How Much to Spend on
Promotion.

Affordable Percentage
Percentage of
of Sales
Sales
Based on What the Based
BasedononaaCertain
CertainPercentage
Percentage
Company Can Afford of
ofCurrent
Currentor
orForecasted
ForecastedSales
Sales

Objective-and-Task
Objective-and-Task Competitive-Parity
Competitive-Parity
Based
BasedononDetermining
Determining Based
Basedon
onthe
theCompetitor’s
Competitor’s
Objectives
Objectives&&Tasks,
Tasks,Then
Then Promotion
PromotionBudget
Budget
Estimating
EstimatingCosts
Costs
40
Dr. Franck Vigneron

Chapter
Chapter 16
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

42

market response.
Major Consumer Sales Promotion
Tools/1

Sample
Sample Trial
Trial amount
amount of
of aa product
product

Savings
Savings when
when purchasing
purchasing specified
specified
Coupons
Coupons products
products

Cash
Cash Refunds
Refunds Refund
Refund of
of part
part of
of the
the purchase
purchase price
price

Reduced
Reduced prices
prices marked
marked on on the
the label
label
Price
Price Packs
Packs or
or package
package
Goods
Goods offered
offered free
free or
or low
low cost
cost as
as an
an
Premiums
Premiums incentive
incentive to
to buy
buy aa product
product
Advertising
Advertising Articles
Articles imprinted
imprinted with
with an
an advertiser’s
advertiser’s
Specialties
Specialties name
name given
given as
as gifts
gifts
43
 Major Consumer Sales Promotion
Tools/2

Cash
Cash or
or other
other rewards
rewards for
for the
the use
use of
of aa
Patronage
Patronage Rewards
Rewards certain
certain product
product
Displays
Displays and
and demonstrations
demonstrations thatthat
Point-of-Purchase
Point-of-Purchase take
take place
place at
at the
the point
point of
of sale
sale
Consumers
Consumers submit
submit an
an entry
entry to
to be
be
Contests
Contests judged
judged

Consumers
Consumers submit
submit their
their names
names for
for aa
Sweepstakes
Sweepstakes drawing
drawing
Presents
Presents consumers
consumers with
with something
something
Game
Game every
every time
time they
they buy
buy
44
Major Trade Sales Promotion
Tools/1

Trade-Promotion
Objectives
Persuade
Persuade Retailers
Retailers or
or
Wholesalers
Wholesalers to
to Carry
Carry aa Brand
Brand
Give
Give aa Brand
Brand Shelf
Shelf Space
Space
Promote
Promote aa Brand
Brand in
in
Advertising
Advertising
Push
Push aa Brand
Brand to
to Consumers
Consumers

45
 Major Trade Sales Promotion
Tools/2

Trade-Promotion
Tools

a straight reduction in price

Discounts
Discounts 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
• Promotional money paid by manufacturers
Trade-Promotion to retailers who agree to feature the
manufacturer’s products in some way.
Tools Forms include:
a). An advertising allowance compensates
retailers for advertising a product.
b). A display allowance compensates them for
using displays.
Allowances
Allowances 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- Business-Promotion
Promotion Tools
Objectives
Generate
Generate Business
Business Leads
Leads Conventions
Conventions
Stimulate
Stimulate Purchases
Purchases Trade
Trade Shows
Shows
Reward
Reward Customers
Customers Sales
Sales Contests
Contests
Motivate
Motivate Salespeople
Salespeople

48
Developing the Sales Promotion
Program

Decide
Decide on
on the
the Size
Size of
of the
the Incentive
Incentive

Set
Set Conditions
Conditions for
for Participation
Participation

Determine
Determine How
How to
to Promote
Promote and
and
Distribute
Distribute the
the Promotion
Promotion Program
Program

Determine
Determine the
the Length
Length of
of the
the Program
Program

Evaluate
Evaluate the
the Program
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
Press Relations
Relations Public Relations
Departments May
Product Perform Any of All
Product Publicity
Publicity
of the Following
Functions:
Public
Public Affairs
Affairs

Lobbying
Lobbying

Investor
Investor Relations
Relations

Development
Development 51
 Major Public Relations Tools

News
Web Site Speeches

Public Special
Service Events
Activities

Corporate
Written
Identity
Audiovisual Materials
Materials
Materials
52
Major Public Relations Decisions

Setting
Setting Public
Public Relations
Relations Objectives
Objectives

Choosing
Choosing the
the Public
Public Relations
Relations Messages
Messages
and
and Vehicles
Vehicles

Implementing
Implementing the
the Public
Public Relations
Relations Plan
Plan

Evaluating
Evaluating Public
Public Relations
Relations Results
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 = Motivation =
Product Association with
Performance Product Universe

Perf. Is
representation of Perf. is + than
product representation
product

Copy of Message
Copy of Message Copy of Message Centered on Psyco
Centered on Product Centered on Results -socio of Product
from Product

1. Message on 2. Message on 3. Message on

57
Product Resultats Universe
 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

Identify Create the Product

The needs
to Satisfy

STAGES NEEDS PRODUCTS

Adapt and
Deliver
the Products
Retain Customer to The Right
By Maintaining Satisfaction Target

60
Customer Delivered Value

61
 Customer Satisfaction

Expectations are Based on

Customer’s Past Buying
Experiences, the Opinions of Product
Friends, & Marketer and Exceeds
Competitor Information and Expectatio
Promises. ns
Product Product
Customer
Falls Short Matches
is Highly
of Expectation
Satisfied
Expectatio s
or
ns Customer is Delighted!
Customer Satisfied 62
is
 Steps in Analyzing Competitors

= BENCHMARKING
Identifying the
company’s
competitors

Assessing competitor’s
objectives, strategies,
strengths and weaknesses,
and reaction patterns

Selecting which
competitors to
attack or avoid
63
Basic Competitive Strategies

Overall
Overall Cost
Cost Focus
Focus
Leadership
Leadership

Middle
Middle of
of
Differentiation
Differentiation the
the Road
Road
64
 Competitive Strategies: Value
Disciplines
Companies Gain
Operational
Leadership Positions
Excellence
by Delivering Superior
Alaska Airlines
Value to their
Customers Through
These Strategies: 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:

66