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Marketing

Marketing B Year 1 term 3 and 4
by

Lynette Martina

on 5 July 2015

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Transcript of Marketing

Marketing
Chapter 9-15

https://services.noordhoffuitgevers.nl/

Gebruikersnaam: GraceNzongo@outlook.com
Wachtwoord: Grace1994

What is marketing communication?
build
and maintain favorable relationships
stimulate
demand
for its products and services
The
combined tools
a company uses to
by
informing
or
persuading
a target
audience to:
view the organization
positively
accept
its ideas
Advertising
Advertising
of those who are part of a
target market
Any
paid
form of
non-personal
communication about
products, services, ideas or organizations
by an
identified sponsor
using the
mass media
to
influence
the
knowledge, attitudes or behavior
Publicity
Direct marketing
Personal selling
Sponsorship
Publicity
broadcasted or published in news media for which
no
media time or space has been purchased
Unpaid
communications about
the company, its products/services
Sponsorship
There is a
win/win situation
.
Providing
financial or other types
of
support
to an organization or individual involved in a particular
sport, astistic or anything that is hard to achieve or do
in hopes of acquiring

commercial publicity
, thereby
gaining

goodwill
or
increasing

public awareness
of the company's name and its brands
Personal selling
A company
sales representative
usually makes an
oral presentation
to a
potential buyer
with the ultimate objective of selling product/service
Direct marketing
Marketeers try to develop a
lasting and direct relationship
in order to create
transactions
Two-way process
of marketing communications through which companies
interact directly
with customers to
exchange information
and sell products.
Sales promotion
Sales promotion
Encourage consumers to buy the product
now rather than later


by creating a
temporary shift
in the
price/value ratio
(limited-time price
discount)
to increase sales in the short run
Public relations
Public relations
Promote a
mutual understanding
between
organization and its stakeholders

by creating
a
positive image
of the organization
MARKETING COMMUNICATION
PROMOTION
Communication mix
Integrated marketing communication
Use and integration of
various
media and communication tools
at the same time
so that they
reinforce
each other and form a
comprehensive, consistent message
to the target audience
Unconventional marketing
Stealth marketing
is an alternative type of marketing communication and publicity generators, since they are often
more subtle
than advertising and so
reaching audiences that are tired of big campaigns and other traditional efforts
Stealth marketing
Innovative marketing in which a firm
catches consumers' attention
with
product-related messages
in unexpected places, generating:
Maximum results from minimal resources (
low budget
)
Word-of-mouth
("buzz")
Guerilla marketing
Buzz marketing and Viral marketing are types of Guerilla marketing
- Buzz marketing
Eye catching news or entertainment
(such as online games), intended to get customers to
talk to friends
about a product or service
- Viral marketing
Internet version of word-of-mouth
, spreading the word like a disease or virus
Form of guerilla marketing that either facilitates people
to pass on a marketing message to others
or encourages the to be "sales agents" by offering them an incentive to pass on a message
Mr. Muscle
Apple promoted in the movie "Pitch Perfect"
Sand eating boy that went viral
Promoting paint
Criteria for a successful guerilla marketing campaign
The guerilla action has to be:
Original
(form and content)
Unexpected
and unpredictable
Buzz
ed about (via Youtube)
Relevant
for the brand
Done at the
right time
Sympathetic
Communication strategy
The main steps in developing a
communication strategy
are:

Define the
target audience
Set
communication objectives
Establish the
budget
Determine the
communication mix
Develop the
message
Select
media
Measure the results and
adjust the strategy
Identify target audience
Two
communication strategies
, depending on the selected
target audience
Push strategy
The manufacturer's sales representatives or account managers
focus on the middlemen
to
push the product forward
to
the next level in the distribution channel
Pull strategy
The manufacturer
directly targets the end consumers
through advertising to stimulate demand,
"forcing" intermediaries to carry the product
Push
Pull
One-step flow model
The organization addresses the consumer
directly
as receiver of the message
Mass media
has a strong and direct effect on target group
Two-step flow
To
persuade
buyers, marketeers use the two-step flow of communication:

Target

opinion leaders
, who will influence the attitudes and buying behavior of others
Set communication objectives
Communication objectives
Definition
An objective -
derived from the overall marketing goals
- that
specifically expresses

what the firm wants to achieve
with its communication program (such as advertising recall, product recognition, brand awareness)
Classic response hierarchy model
The communication model suggests that the consumer, before buying, passes through
three major stages of learning
in a fixed sequence
Cognition
(information, knowledge)
Affection
(appreciation, liking)
Conation
(action, behavior)
Cognition
Knowledge
Liking
Affection
Conation
Action
The two best known classic response hierarchy models/ learning models are

AIDA Model (Strong)
Hierarchy-of-effects model (Lavidge-Steiner)
A
ttention
I
nterest
D
esire
A
ction
Get noticed
Raise curiosity
Stimulate a craving for the product
Make consumers buy
-
-
-
-
Awareness
Knowledge
Liking
Preference
Conviction
Purchase
-
-
-
-
-
-
Brand awareness, measured through unaided or aided recall
Of product features
Positive or negative attitude
Prefers product over other brands
The purchase makes sense
Ready to buy
Cognitive
Affective
Conative
Non-classical models
Low-involvement hierarchy


Dissonance hierarchy
Know Buy Appreciate


Buy Appreciate Know
Establish the communication budget
Setting the budget
Anti-cyclical budgeting
Inverse relationship between sales level and promotion budget:
During recession/ decreasing revenues: increase promotional spending
During strong economic growth: cut budget or let it increase less than sales level
Competitive-parity method
Based on budget of leading competitor
Objective-and-task method
Dependent on communication goals and the activities required to attain them
Affordable method
Available funds after fixed expenses and reasonable profit
Percentage-of-sales method
Certain percentage of past or projected sales
Determine the communication mix
Communication mix
Combination of communication tools
that an organization uses to attain its objectives. The optimum communication mix depends on the company's:
Select media
Develop the message
Measure results and adjust the strategy
Ch9
Ch10
Theme communication is long term and is designed to change attitudes
Campaign communication is short term and is designed to generate turnover
Theme communication
Campaign communication
Advertising, public relations and sponsorship used to create a
positive brand image
and - in the long run -
influence
the target market members'
knowledge and attitudes
Price-offer promotion
Sales promotion, displays and direct-marketing communication to
directly increase sales
volume by
stimulating
(short-term) consumer buying behavior, supplemented by more permanent marketing tools such as product presentation, packaging and personal selling
Corporate identity

Corporate identity
- the company's image:
In
public opinion
In the
target market's perception
Actual (perceived)
corporate identity
Difference between image building and the corporate identity
I
mage building
- the company's use of the marketing communication:
To gain
public understanding
or acceptance of the company's activities
To create a
positive image
of the company with its various stakeholders
Desired
corporate identity

Business plan
Communication plan
Marketing plan
Advertising plan
Goals
Target market
Product characteristics
Product life cycle stage
Available resources
Advertising plan
Elements of an advertising plan:
Analysis of the
product or service
Selecting the advertising
target audience
Formulating
advertising objectives
Setting the advertising
budget
Determining the advertising
strategy
Developing the advertising
campaign
Selecting the
media
Measurement
of advertising
effectiveness
Classic response hierarchy model
The communication model suggests that the consumer, before buying, passes through
three major stages of learning
in a fixed sequence
Cognition
(information, knowledge)
Affection
(appreciation, liking)
Conation
(action, behavior)
Cognition
Knowledge
Liking
Affection
Conation
Action
Awareness
Understanding
Conviction
Action
Cognitive
Affective
Conative
Advertising objectives
DAGMAR-model believes consumers pass
through
four
stages:
DAGMAR-model is used when setting advertising objectives because it
provides sound criteria for setting objectives
.
D
efining
A
dvertising
G
oals for
M
easured
A
dvertising
R
esults
Awareness, understanding, conviction, action
This model does not express advertising goals in terms of sales but
directly related to communication
the knowledge, attitude, action.
Identify target audience
Set communication objectives
Establish the communication budget
Determine the communication mix
Select media
Develop the message
Measure results and adjust the strategy
Ch9
Ch10
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Advertising
messages
that make sense in each product life cycle stage
Introduction
Growth
Maturity
Decline
TIME
SALES IN € OR VOLUME
Market decline:
Alternatives for "
milking
" the product:
Suggest
new uses, increase consumption
frequency
Attract
new target market
Introduction:
Informing consumers about the brand and creating
interest
in its benefits:
Functional product characteristics (ingredients or effect)
Added value (low cost, convenience, design)
Market growth:
Persuasive advertising and
positioning
to create
brand preference
:
Distinctive product attributes (unique claim)
Affective attributes (brand image, emotional value)


Market maturity:
Increase brand loyalty, brand awareness, attract new buyers:
Differentiate
brand (e.g. superior performance)
New
(product improvement, price deal)

Campaign development
Briefing
Briefing for an advertising campaign
A briefing clarifies
what
message the campaign should communicate and allows the advertising agency to develop the
creative concept
Execution
Creative concept
Media selection
Advertising campaign
Campaign development
Media selection
Media planning

Media selection:
criteria

Coverage
(target market reach)
Percentage of the target audience reached
Media types
(visual, auditory, audio-visual)
Media plan
(part of advertising plan): defines the media objectives and presents the strategy to achieve them
Media objectives
(SMART):
Target audience (primary/secondary)
Reach (number exposed at least once during a specific period to the medium or the advertisement)
Frequency: number of times a person is exposed to a medium/ad in a given time frame
Communication capability
: the medium's effectiveness in communicating the message depending on:
Technical features
Context of the medium
Contact situation
Reach
(total/average/current/(un)duplicated):
Number of people exposed to the medium
Media costs
GRP
: Gross rating point: when reach (expressed as a percentage of the total market is multiplied by the frequency we obtain the GRP. By comparing the GRP of different media types we can assess the effectiveness of a medium type
CPM
: Cost per mille: cost of reaching 1,000 individuals/households in the target audience with the advertising message in a particular medium
Measuring effectiveness
Post test
Recall (unaided)
Recognition
Copy test
: researching the effect of a message,
before or after
the campaign
Pretest
Portfolio test (hidden ad)
Consumer jury (alternative ads)
Theater test (TV/movie)
Sales management
Personal selling
A salesperson's job is to:
Personally

assist or persuade
a potential customer to buy a product or service to
the mutual benefit
of both buyer and seller
Types of sales positions:
Missionary salesman
: creates buying atmosphere
Sales engineer
: helps sales people with technology and commercial expertise
Trade sales people
: provide promotional help to manufacturer's customers
Order taker
: Repeat sales from existing customers
Order getter
: Creative selling, new business sales
Support sales people
: Facilitate selling process
Marketing strategy
Promotion strategy
Sales force
Implementing the sales plan
Organization of the sales force
Sales management and sales objectives
Sales force structure
Sales force can be
organized
in
three different
ways:
By region
Divide market into districts
in which each sales representative sells
entire product mix
(territorial structure)
By product
Each product(line) is sold by
a specialized sales person
or team in
entire market
By customer
Specialized sales team
or account manager - carrying
entire product mix
- assigned to
specific customers
or industry
Sales management
Building and managing a sales force requires:

Recruiting qualified applicants
Accurate job descriptions and effective recruiting strategy to reduce turnover rate
Selecting job candidates
Great sales people exhibit empathy, enthusiasm, self-confidence, ambition and high energy level
Sales training
In-depth training to increase sales professionals' productivity
Motivating the sales force
Improve the sales performance by creating enthusiasm and team spirit
Sales compensation plan
Straight salary, straight commission or combined salary - incentive plan
Direct marketing
the company's objective is to build
lasting relationships
with
carefully targeted individual consumer
s or buyers in narrowly defined segments and
Direct marketing is a
custom tailored marketing approach
in which
to generate an
immediate measurable response
in the form of an order, a request for further information, or a visit to a store, website or other place of business for the purchase of a product or service.
using
detailed customer information
from a computerized database and
direct communication tools
such as the internet, telephone or direct mail
Advantages for direct marketing:
Lower costs
per order
Through customer database and "list management"
How to maintain in
contact
with the customers in direct marketing
Media:
Personal selling
Internet, websites (online marketing)
Direct mail
Telephone
Sponsored magazines
Direct response television marketing
Control
distribution channel (circumvent retailers)
Customized
,
personalized
marketing strategies
Direct
relationship
with the customers
Sales promotion
Sales promotion is a set of
direct incentives
designed to generate
immediate consumer purchases
by
temporarily increasing
a product's
value
, e.g. by offering a:

Bonus pack (extra product)
Loyalty program
Price deal (savings coupon)
Contest or sweepstakes
Common
objectives
of sale promotion:
Attract new customers (horizontal promotion)
Increase repurchase and brand loyalty (vertical promotion)
Underline brand image (them promotions)
Add affective value to brand
Sales representative
Introduce products
Push strategy, convince buyers of product's benefits
Find new prospects
Relationship selling, maximize shelf space and market share
Keep customers satisfied
Advice buyers, handle complaints, increase customer loyalty
Collect market information
Monitor changing buyer needs, competitive and market trends
Excellent customer service
Help to adapt products and train employees
Seek repeat orders
Assist retailers with the product presentations and promotion

Initial contact and sales presentation
Anticipation and problem-solving skills
Watch for signals, ask for permission
Keep all promises about delivery and services (
relationship management
)

Referrals or leads preferred over "cold calls"
Learn about organization and buying behavior
Phase 1 Preparation
Phase 3 Transaction
Phase 2 Persuasion
Prospecting
Preapproach
Closing the sale
Following up
Approach and presentation
Overcoming objections
Integrate with other policies
Reward
performance,
adjust
the strategy, set new objectives
Setting objectives
Planning strategies
Appraising performance
New objectives
Adapting or developing new strategies
Feedback
Set objectives
New accounts, sales, profit contribution, etc.
Plan strategies
Tailored
sales territory
and competition

Setting objectives
Sales manager and sales person
jointly
establish performance goals and strategies
Appraise performance
Periodically
review progress
toward
goals
based on agreed upon criteria

Trade promotion
Increase order size and inventory
Provide better shelf place
Allow
P
oint
O
f
P
urchase displays
Include products in ads
Promote the product
Sales force promotions
: encourage sales people to improve their sales
Trade promotions are
sales campaigns aimed at retailers, wholesalers, agents and other middlemen
that encourage them to:
Trade promotion objectives are realized through:
Selling-in activities
: influence resellers to carry specific products, pay close attention to them and keep larger quantities in stock
Selling-out activities
: increase retailer's turnover by using tools such as flyers, window posters, displays and other POS/POP-material
Trade shows
Pricing decisions
Price ceiling
Possible prices
Price floor
Perceived value
Resellers
Legislation and ethics
Product mix
Cost of the product
Competition
Company and marketing strategy
How much is the buyer
willing
to pay for the product or service?
What are the
fixed and variable costs
? Loss leaders
Is the pricing strategy
consistent
with the corporate and marketing objectives?
How will the
price affect
competition and consumer demand?
How will the price affect sales of
our products and services
? Complementary products
Will the profit margin
support the intermediaries' marketing efforts
?
Do our pricing decisions meet
legal and ethical standards
? Cartels
Price mechanism
Price affects both
demand and supply
: if the
price is high,
there is
little demand
but because of the profit
plenty supply
.
This
increases competition
, it also creates a
downward pressure on prices
, as a result of which more
consumers will buy the product
.
The
demand will
therefore
go up
.
For companies the
price decrease due to
the
competition
will lead to lower margins and eventually to a
reduction in market supply.
The demand curve shows
how many products customers will buy at various prices
A movement
along the demand curve

shows how much demand increases as price decreases and vice versa
A shift
of the demand curve is caused by more
fundamental forces
such as:

For an upward shift the bullet points mentioned are positive and for a downward shift they are negative.
changes in market size,
availability of substitutes,
consumer tastes
consumer income.
Introductory price
Penetration pricing
Price skimming
Penetration pricing
Launch a new product at a
very low price
, in a
price-sensitive mass market
to quickly gain a large
market share
Price skimming
Introduce an
innovative product
at a
high price
,
gradually lowering
it to attract more price sensitive buyers
Pricing definitions
Price perception
: how do consumers view or experience a price setting (too high/low)?
Price awareness
: the degree of consumer knowledge about the price of alternative products
Price acceptance
: do consumers think the charged price is reasonable?
Price threshold
: the highest and lowest prices a consumer is willing to pay
Price sensitivity
: the extent to which consumers will react to small price changes.

Cost-oriented pricing
Demand-oriented pricing
Competition-oriented pricing
Pricing methods
Base price
Just as manufacturers benefit from
price stability,
intermediaries benefit from
margin stability
, provided by steady prices.
A recommended retail price is often called
Manufacturer's Suggested Retail Price (MSRP)
In the business market most products have an
established base price/ list price:
the publicity announced price for which the company expects to sell the product
In the B2B market however prices are
negotiable
Discounts
In
B2B markets
it is customary for suppliers to quote a product's list price and then refer to any available discounts that reduce the price for the potential buyer
Quantity discount
Price reductions for
large-volume orders
in € or in numbers
It costs the seller less per unit to sell a large order than a small one
Seasonal discount
A discount for buyers that purchase products
out of season
Ironing out peaks and valleys in production activities of a manufacturer
Cash discount
In exchange for prompt payment
Accounts receivable are an expense and collection proplem
Functional (trade) discount
Reduction of the list price, granted for handling distribution-related services or functions in the trade channel
Would otherwise have been the manufacturer's responsibility
Allowances
Trade in allowances
Granted to buyers for turning in a used product when purchasing a new one
Promotional (trade) allowances
Reward resellers for promoting products to customers through advertising, personal selling, displays or other promotions
Rebates
Refunds of (a portion of) the purchase price to customers who buy a particular product during a specific period
Transfer pricing

Usually these transactions are not paid for by funds, but still the price of the goods transferred have to be determined
The two commonly used methods are:
Market price (if available)
Cost-based price
Many corporations sell products from one of their divisions or subsidiaries to another.
Start with costs and work toward selling price
The product's price is based on
the firm's cost
. Two common forms of cost-oriented pricing:
Cost-plus pricing
Variable-cost pricing
Cost plus pricing
The seller's costs (or a certain percentage of it) are
added to
the item's
production cos
t to establish its price, including a profit margin
Formula
Price =
Total fixed costs + variable costs + projected profit
Units produced
Formula mark-up pricing
Price =
Product cost
(100 - mark-up percentage) / 100
Variable-cost pricing
Also called
direct costing
The product's price is based on the
variable costs
The
difference between variable costs and selling price
(
contribution margin
) contributes to
overhead
(
fixed costs
) and profit
Break-even analysis
Involves calculating the
number of units
that must be sold at
a certain price
for the firm to
cover costs
and hence,
break-even
Formula
Break-even point (in units) =
Total fixed costs
Unit selling price - Unit variable costs
Target-return pricing
When considering the introduction of a new product marketeers may have to determine whether they will be able to price the product high enough to provide a
target ROI
Target-return break-even point =
Formula
Fixed costs +
required return
Selling price - variable costs per unit
Start with selling price and work toward costs
The company's price is based on:
The amount that consumers are
willing
to pay
minus the required mark-up percentage
for intermediaries based on their selling expenses and desired profits
Consumer-oriented companies also consider the
non-monetary price
of their products and services including:
Consumer's time spent
Distance traveled
Anxiety and other related costs to make the purchase
Demand-oriented pricing is only possible if:
Management can assess the product's demand at a particular price, based on customers' price sensitivity/
price elasticity of demand
Price elasticity of demand
Price elasticity of demand
Formula
E =
p
% change in
quantity
demanded (q)
% change in
price
(p)
Price discrimination
The practice of charging
different buyers

different prices
for the
exact same quality
and
quantity
of goods
Customer-type pricing
: Children, older adults
Product-form pricing
: Chanel No.5; 30ml, 50ml, 100ml
Location-based pricing
: Theater tickets, wine, sunbathing lotion
Time pricing
: Roses at Mother's Day, business hotels

Four options:
Me-too pricing
: ‘at market’ pricing; same price as price leader (e.g. CheapTickets.com)
Premium pricing
: above market pricing; charging more than competitors (e.g. Prada)
Discount pricing
: below market pricing; appealing to price-conscious consumers (e.g. Aldi)
Backward pricing
: manufacturer works from selling price less VAT less mark ups to determine its own ex-factory price.

Management uses major
competitors’ prices
as
primary basis
for price setting (rather than cost or demand considerations)
Stay out pricing
: prices determined so low that new entrants will not enter the market
Put out pricing
: market leader with lots of capital lowers its prices drastically to expel smaller competitors from its market
Market structures and competition
To what extend a company can
set
its own prices depends on the
type of competitive market
in which it operates
Monopoly
Oligopoly (Heterogeneous)
Monopolistic Competition
Pure competition
One supplier only (with patent or exclusive right to sell)
Government regulations, potential rivals or product substitutes limit pricing options
Few large suppliers control market (mobile phone service providers)
Competitors respond to each other's strategies and price changes
Price cuts are copied, increases only if initiated by market leader
Many suppliers of similar but not identical (heterogeneous)products
Flexibility in marketing strategy and price setting
Most common market form (including national brands)
Many suppliers of identical (homogeneous) products
Supply and demand determine market price; no independent marketing strategy needed; agricultural products
Competitive bidding
Public tendering
(get the best price for large projects)
Sealed bidding
Private tendering
(no public announcement(
Few suppliers only, quick delivery required
Expected profit
method
Supplier is trying to maximize the expected profit
Reasons for
lower bid prices
Survival in bad times
Excess production capacity
Follow-up opportunities
Distribution
Importance of distribution
Distribution is much more than physical distribution, it includes:

Strategic choices
of marketing channels and intermediaries
Alliances
and
long-term commitments
to other organizations like franchising
Decisions about
where and how customers will buy
Distribution functions
Channel structure
Shape or form of the distribution channel (all firms and institutions) involve in selling, buying, transferring title and performing related functions
Channel length
Number of levels in structure
Two types of channels are:
Direct marketing channels
Indirect marketing channels
Value chain
A supply chain/value chain is a
traditional marketing channe
l (producers wholesalers, retailers, consumers)
+ facilitating institutions
(shipping companies, banks, advertising agencies, etc.)
The value chain helps managers find ways to create, communicate and deliver more
customer value
on every activity the company performs
A
major function
of the distribution channel: the
combined effort
of all its members to form a supply chain that can:
Serve customers
as efficient as possible by creating a
competitive advantage
The complete sequence of
suppliers and activities
contribute to the
creation and deliver
y of
products and services
Target market coverage
Distribution intensity
refers to
number of retail outlets
used to distribute a production in a market, three options:
Exclusive distribution
:
Single/limited number of retail outlets in trading area
Expensive specialty products or (in B2B) high-priced equipment
High control and harmonious relationship with middlemen
Intensive distribution:
As many outlets as possible (convenience products)
Maximizes: exposure, convenience, impulsive buying
Selective distribution
:
Most widely used distribution strategy (shopping products)
Limited number of outlets
Selection based on: location, store size/image, product mix, management expertise
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Product life cycle
Growth
Maturity
TIME
SALES IN € OR VOLUME
Introduction
Decline
Assessing channel members
What criteria do manufacturers use to evaluate and select distributors?
Selection criteria:
Compatible target market/clientele
Customer orientation/marketing drive
Current product line assortment
Growth potential
Service reputation
Financial strength
sales force quality
Inventory/warehouse practices
Management expertise/cooperativeness
Channel conflict
One channel member's behavior prevents another firm in the supply chain form achieving its goals
Three types of channel conflict:
Horizontal conflict
Between intermediaries at the
same channel level
(supermarkets vs franchisees)
Multichannel conflict
Between
different types
of
resellers
(specialty store vs discounter)
Vertical conflict
Among members at
different levels of a marketing channel
(manufacturer's marketing website vs brick-and-mortar retailer)
Disintermediation
: Bypassing a wholesaler or other middleman, appearance of new type of intermediary
Marketing logistics
Logistics management
Materials management
Flow of raw materials (inbound distribution)

Physical distribution management
Getting finished product to customer (outbound distribution)
Deliver right product, at right price, right time, lowest price
Vital link between company and customers (differentiation opportunity)
Build long-term customer satisfaction (revenue generator)

Retailing
All activities involved in
selling
products and services
directly to ultimate customers
for their personal, family or household use

Retailers -
the only
channel intermediaries
that are in
direct contact with final consumers


Marketing-oriented retailers attract customers by:
Adding value to the
merchandise
Through their
location
The available
product assortment
Store image
Customer service

Wheel of retailing
1
Innovative retailers
enter the market by offering lower-priced merchandise.
2 As established retailers respond with
trading-down
strategies, the innovators
add services
to attract upscale customers, while
raising prices
.
3 As the wheel turns,
new discounters
enter at the market’s low end.
Types of retail stores

Classification of stores based on three dimensions:
Merchandise mix (products, brands, depth, breadth)
Relative prices (margins, discounts, sales events)
Level of service (full-, limited-, self-service)


Types of stores:
specialty store (fish, women’s shoes, jewellery)
convenience store (small, limited assortment: Shell)
supermarket (Tescos, Waitrose, AH. Aldi,Lidl)
superstore (hypermarket - Carrefour, Delhaize)
department store (Harrods,Bijenkorf)
discount store (Wal-Mart)
category killer (Toys ‘r Us, MediaMarkt)
Non-store retailing
Non-store retailing grows much faster than in-store retailing

Major forms of non-store retailing:
Direct marketing
Direct mail
Sponsored magazines
Telephone marketing
Direct response television marketing

Direct selling (door-to-door)
Personal interactions and sales presentations at home or work (Avon, Herbalife)
Home shopping parties (Tupperware)


Network marketing (multilevel marketing)
Master distributor resells company’s products to independent distributors
Gets commission on what they sell to consumers (Amway)

Street pedding
Door-to-door selling
Vans, trucks
Push carts in streets
Temporary stalls in open markets

Automatic vending

24/7 sales through coin / credit card operated vending machines
Online marketing
Online marketing (internet marketing) should be part of any retailer’s marketing strategy

Two types of company websites:
Corporate website

Information
about company and its offerings
Creates customer
goodwill

Marketing website

Engages
visitors to encourage
purchase
or store visit
Provides
convenient shopping
experience
Internet retailing reaches
consumers across the world


Benefits of internet retailing:
Interactive communication between firm and customers

Real time interaction
with potential buyers
Virtual sales reps
: less costly than sales force
Communication channel
for questions, feedback, complaints

Global market coverage
Even small retailers can expand trade area
May lead to lucrative marketing opportunities
Allows specialized retail business for niche products

Tailored marketing strategies
Adapt marketing mix to target markets
Contact segment through targeted e-mails
Appealing site may lead to viral marketing

Added value
RETAILER:
Advanced multimedia options
Allows quick adjustments in prices, ads, etc.
Downloading music, software, brochures saves shipping costs

CONSUMER:
Convenient 24/7 access
Interactive decision / experimental design
Product reviews and price comparisons
What is franchising?

Contract
between franchisor and franchisees
Right to offer
products / services under trade name

One-time
franchise fee,
monthly royalt
y fees
Marketing
and operating assistance

Two basic
forms
of franchising:
Product distribution
franchising, e.g. Volvo dealership, Coca-Cola bottler
Business format
franchising, e.g. Holiday Inn, Burger King 
Franchising
Assess
franchising opportunities
based on:
Tried, successful
business format
Strategy for
growth opportunities
Marketing communication
plan
Tailored training
and managerial advice
Win-win
contract
Solid
company reputation
Territorial restrictions
Reasonable
exit conditions
Personal contacts and
mutual trust

Key account management
Manufacturer’s
dual target market
approach:

Consumer
marketing strategy
Trade marketing
strategy (‘push marketing’) including key account management (tailored program for major retailer)

Reasons for a key account manager:
High sales volume
and profit
Avoid multiple contacts
in different territories
Complex buying
process
Custom-made products
, packaging, pricing, promotion
Strategic relationship
with major retailers

Retailing is in transition

Strategic plan should include:
Core business and target market
Analysis of competition, customers’ profile, shopping behavior
Positioning strategy and store concept (‘store format’)
Integrated retailing mix
How to create a better store image?

1) Identify
store image characteristics
, important to customers
2)
Rank the store
on these factors and
compare
to competitors
3) Decide
what image
the store should have (
SWOT
-analysis)
4) Develop plan for systematically
changing store image
/ retailing mix

Store format 
Strategic
choice to appeal to target market

Retailing mix 
Tactical
use of the marketing tools:
Product (merchandise selection, category management, store brands)
Promotion (integrated marketing communication, incl. website)
Price (mark-ups, price deals, loss leaders)
Place (store location, accessibility, store hours)
Personnel (customer service, suggestion selling, trading up)
Presentation (ambience, layout, exterior and interior décor)

Global marketing
Three stages in going international:
International marketing
Company’s focus is on home market
International transactions planned domestically
Marketing abroad through exporting
Marketing mix adapted to meet legal/cultural standards
Customers’ foreign subsidiaries stimulate going international
Global marketing
View entire world as your market
Market product nearly the same way in all markets
Focus on similarities, not differences (global brands)
Economies of scale through standardized marketing
Sped up by ‘born-global firms’
Multinational marketing
Worldwide player
International markets integral part of growth strategy
Corporate headquarters in home country (Volkswagen, Shell, Akzo Nobel)
View the world as unique parts
Market in each country as a local firm would (multi-domestic marketing)
Customization, decentralized decision-making
Research, product development, production abroad
Licensing and joint ventures.
Isolation is no longer an option
Internal analysis
Global screening
Target market selection
Strategy development
Market entry strategy
Controlling the marketing program
Motivation to internationalize?
How many markets, what countries?
Environmental analysis
How attractive are these markets?
Thorough market / buyer analysis
Selection based on sales potential.
Marketing strategy and mix
Refine sales objectives for each market
How to enter markets
Modify organizational structure?

Monitor/evaluate results
Modify objectives? Improve strategy?

Global marketing environment

Cultural environment
Values
Customs
Cultural symbols
Reduced world trade
Limited supply
Higher prices
Quotas
Import tariffs
Protectionism
Protectionism - a government policy that
shields domestic industries
from
foreign competition
through
tariffs
and
quotas
.


tax on specific products entering a country
raising their price
reducing imports

limit on the quantity of a specific product
that the importing country will accept

Embargo
no importation of a certain product allowed at all

Management view of other cultures
What is the difference between an ethnocentric and a geocentric orientation of managers?

Export strategies
What export strategies and intermediaries are used to target foreign markets?


Other common
market entry strategies
abroad

Licensing
l
icensor gives
licensee
right
to produce and market its products
in return for a fee or royalties.

Joint venture
collaboration
between two independent companies
form a
new and separate firm t
o enter a market
share ownership, risks, control and profits.

Direct investment
company
buys or builds
a plant abroad

total ownership
; high commitment to the market.

Customization or globalization?
Other entry strategies
Should management
adapt
its marketing strategy to fit local conditions?




Global localization
(glocal marketing strategy, glocalization)
corporate strategy  global strategic direction(standardized products)
local subsidiaries  adapt strategy to local market(limited modifications)
seeking a balance between standardization andadaptation.

Same price around the globe
What are buyers willing to pay?
Cost-plus approach
Tariff, shipping and margin costs encourage manufacturers to make simplified products so they can be sold at reasonable prices
Internet enforces uniform prices all over the world.
International pricing strategies
Foreign market analysis includes three types of business environments that influence strategy development:
Economic environment
Level of economic development
Economic infrastructure
Purchasing power
Political-legal climate
Political stability
Trade regulations
Protectionism
Geocentric orientation:
no country is superior or inferior
respect differences between countries when developing strategies.
Ethnocentric orientation:
assumption that your own cultural values are superior
attitude: no need to adapt home country business strategy abroad

Indirect export
- firm does not deal directly with foreign buyers
- works with independent intermediaries (export agent, EMC, trading company)
Export agent
: brings together sellers and buyers from different countries; collects a commission for arranging sales
Export management company
(EMC): performs all services that an in-house export department would; provides management expertise and information to its clients
Trading company
: marketing intermediary that takes title to the products; exports, imports, invests manufactures; provides more service than an EMC
Direct export
- manufacturer performs all export functions in-house
- runs overseas sales office or distribution network.
Standardized marketing strategy
(standardization, globalization)
Same marketing plan for all countries, minimal modifications (global marketing)
Highly efficient (lower costs).
Internationally operating companies have two options:
Customized marketing strategy
(customization)
Tailoring marketing activities to each local market (multinational marketing)
Highly effective (high sales)
Two approaches in customization:

Differentiated international marketing strategy
(multinational marketing)
completely tailor marketing mix to each country
Terms and definitions
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