1 INTRODUCTION TO MARKETING MANAGEMENT Dr. Franck VIGNERON CSUN – College of Business & Economics...

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INTRODUCTION TO MARKETING MANAGEMENT

Dr. Franck VIGNERON

CSUN – College of Business & Economics

Dr. Franck VIGNERON

CSUN – College of Business & Economics

Review for Quiz 3

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Chapter Distribution Channels and

Logistics Management

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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.

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ContactContact

FinancingFinancing

InformationInformationRisk TakingRisk Taking

PromotionPromotion

MatchingMatchingNegotiationNegotiation

PhysicalDistribution

PhysicalDistribution

Members of the marketing channel perform many key functions.

They are:

Distribution Channel Functions

5MM WW JJ RR CC

MM WW RR CC

MM RR CC

MM CC

Channel 1

Channel 2

Channel 3

Channel 4

Channel Level

= Each Layer of Marketing Intermediaries that Perform Some Work in Bringing the Product and its Ownership Closer to the Final Buyer.

Number of Channel Levels

Direct Channel

Indirect Channel

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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.

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Conventional Marketing Channel Vs. a Vertical Marketing System

Conventional Marketing

Channel

Vertical Marketing

System

Manufacturer

Retailer

Manufacturer

Retailer

Wh

ole

sale

rW

hole

sale

rManufacturer

Wholesaler

Retailer

Consumer Consumer

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ContractualVMS

ContractualVMS

RetailerCooperatives

RetailerCooperatives

FranchiseOrganizations

FranchiseOrganizations

Wholesaler SponsoredVoluntary Chain

Wholesaler SponsoredVoluntary Chain

Service-Firm-Sponsored

Franchise System

Service-Firm-Sponsored

Franchise System

Manufacturer-Sponsored Wholesaler

Franchise System

Manufacturer-Sponsored Wholesaler

Franchise System

Manufacturer-Sponsored RetailerFranchise System

Manufacturer-Sponsored RetailerFranchise System

Vertical Marketing Systems (VMS)

Vertical Marketing Systems (VMS)

CorporateVMS

CorporateVMS

AdministeredVMS

AdministeredVMS

Types of Vertical Marketing Systems

40% of Retail Sales

Ford + dealers Coca-Cola Hertz/Avis, McDo/Bking, H/R Inn

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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

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

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

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1. Analyzing Consumer Service Needs

2. Setting Channel Objectives & Constraints

ExclusiveDistribution

SelectiveDistribution

IntensiveDistribution

3. Identifying Major Alternatives

4. Evaluating the Major Alternatives

5. Designing International Distribution Channels

Channel Design Decisions

Rolls-RoyceMaytagFast Moving C. G.

Review Economic, Control, and Adaptive Criteria

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Push and Pull Strategies

Producer Wholesalers Retailers Customers


Push StrategyPush Strategy

Pull StrategyPull Strategy

Push/Pull StrategiesPush/Pull Strategies


Advertising and Promotion

Distribution Strategies

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InventoryWhen to order

How much to orderJust-in-time

InventoryWhen to order

How much to orderJust-in-time

CostsMinimize Costs ofAttaining Logistics

Objectives

CostsMinimize Costs ofAttaining Logistics

Objectives

WarehousingStorage

DistributionAutomated

WarehousingStorage

DistributionAutomated

Order ProcessingReceivedProcessedShipped

Order ProcessingReceivedProcessedShipped

Logistics

FunctionsTransportation Rail, Truck,

Water, Pipeline, Air, Intermodal

Major Logistics Functions

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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

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RailNation’s largest carrier, cost-effective for shipping bulk products, piggyback

RailNation’s largest carrier, cost-effective for shipping bulk products, piggyback

TruckFlexible in routing & time schedules, efficient

for short-hauls of high value goods

TruckFlexible in routing & time schedules, efficient

for short-hauls of high value goodsWater

Low cost for shipping bulky, low-value, non perishable goods, slowest form

WaterLow cost for shipping bulky, low-value,

non perishable goods, slowest form

PipelineShip petroleum, natural gas, and chemicals

from sources to markets

PipelineShip petroleum, natural gas, and chemicals

from sources to markets

AirHigh cost, ideal when speed is needed or

distance markets have to be reached

AirHigh cost, ideal when speed is needed or

distance markets have to be reached

Transportation Modes

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1. Speed (door-to-door time)2. Dependability (meet schedules)3. Availability (area served)4. Costs (per ton-distance)5. Flexibility

Checklist for ChoosingTransportation Modes

Choosing Transportation Modes

(ability to handle various products)

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INTRODUCTION TO MARKETING MANAGEMENT

Dr. Franck VIGNERON

CSUN – School of Business & Economics

Dr. Franck VIGNERON

CSUN – School of Business & Economics

Chapter Distribution Strategies

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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.

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Product Assortment and Services Decisions

Product Assortment• Width and Depth of Assortment• Quality of Products• Product Differentiation StrategiesServices Mix

Key Tool of Nonprice Competition

for Setting One Store Apart From

AnotherStore’s Atmosphere• Physical Layout• “Feel” That Suits the Target Market and Moves Customers to Buy

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Retail OrganizationsIndependent, Corporate, or

ContractualOwnership Organization

Amount of Service

Self-Service, Limited-Service andFull-Service Retailer

Amount of Service

Self-Service, Limited-Service andFull-Service Retailer

Product LineDepth/Length and Breadth of the Product

Assortment

Product LineDepth/Length and Breadth of the Product

Assortment

Relative PricesPricing Structure that is Used

by the Retailer

Relative PricesPricing Structure that is Used

by the Retailer

Classification of Retailing

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Breadth vs. Depth of Breadth vs. Depth of Merchandise LinesMerchandise Lines

Nike running shoes

Florsheim dress shoes

Top Sider boat shoes

Adidas tennis shoes

Amana refrigeratorSony TV sets

JVC videocassetterecorders

General Electricdishwashers

Sharp microwaveovens

Classical

Rock

Jazz

Country Western

SuitsTies

JacketsOvercoats

SocksShirts

Depth:Number of

items withineach product

line

Breadth: Number of different product lines

Shoes Appliances CDs Men’s Clothing

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Specialty Stores

Department Stores

Supermarkets

Convenience Stores

Superstores

Discount Stores

Narrow Product Line, Deep Assortment i.e. The Limited or

Athlete’s FootWide Variety of Product Lines i.e. Clothing, Home Furnishings, Saks Fifth

AvenueWide Variety of Food, Laundry, & Household Products i.e. KrogerLimited Line of High-Turnover

Convenience Goods i.e. 7-ElevenLarge Assortment of Routinely

Purchased Food & Nonfood Products i.e. Toys R Us

Standard Merchandise at Lower Pricesi.e. Wal-Mart

Off-Price RetailersChanging Collection of Higher-Quality

Goods at a Reduced Price i.e. T.J. Maxx

Warehouse ClubsLimited Selection of Brand-Name

Grocery Items, Appliances, Etc. i.e. Sam’s Club

Classification of Retailing: Product Line

Store Description

E.g., + What is an HypermarketHypermarket?

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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.

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WholesalerWholesalerFunctionsFunctions

ManagementServices & Advice

ManagementServices & Advice

Selling andPromoting

Selling andPromoting

MarketInformation

MarketInformation

Buying andAssortment Building

Buying andAssortment Building

Risk BearingRisk Bearing Bulk BreakingBulk Breaking

TransportationTransportation

FinancingFinancing WarehousingWarehousing

Wholesalers are Often Better at Performing One or More of the Following Channel Functions:

Why are Wholesalers Used?

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Types of Wholesalers

Merchant WholesalerIndependently Owned

Business that Takes Title to the

Merchandise it Handles.

Brokers/ AgentsThey Don’t Take Title

to the Goods, and TheyPerform Only a Few

Functions.

Manufacturers’ Sales Branches and

OfficesWholesaling by Sellers or

Buyers Themselves Rather Than Through

Independent Wholesalers.

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Consolidation within the Industry is Reducing # of WholsalersConsolidation within the Industry is Reducing # of Wholsalers

Distinction Between Large Retailers and Wholesalers BlursDistinction Between Large Retailers and Wholesalers Blurs

Wholesalers Will Continue to Increase the Services ProvidedWholesalers Will Continue to Increase the Services Provided

Wholesalers Are Beginning to Go GlobalWholesalers Are Beginning to Go Global

Trends in Wholesaling

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Chapter

Integrated Marketing Communication Strategy

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AdvertisingPR

Place(Distribution)

Personal Selling

Product

SalesPromotion

Promotion

Place

The Promotional Mix

Advertising Strategies

4P’s

Price

Direct MKG

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Informative AdvertisingInform Consumers or Build Primary Demand

i.e CD Players

Comparison Advertising

Compares One Brand to Another

i.e. Avis vs. Hertz

Persuasive AdvertisingBuild Selective Demand

i.e Sony CD Players

Reminder AdvertisingKeeps Consumers Thinking

About a Producti.e. Coca-Cola

Advertising ObjectiveSpecific Communication Task Accomplished with a Specific

Target Audience During a Specific Period of Time

Setting Advertising Objectives

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Figure 9.3 Comprehensive Communication Model

Sender(Source)

Receiver(Consumer)

Message

Channel(Medium

)

Enc

odes

Decodes

Feedback

Responds Appropriately

?

Miscomprehends?

Yes

Yes

No

No

CommercialNon-ProfitIndividualFormal vs. Informal

SymbolsPicturesWordsImages

Verbal vs. Nonverbal1-sided vs. 2-sided

Factual vs. Emotional

Paid vs. UnpaidPrint, Broadcast, Electronic

Personal vs. Impersonal

Pretests to Ensure Message Will be ReceivedPosttests to Ensure Message Was Received

Selective Exposure

IndividualsTarget Audience

Intermediary AudienceUnintended Audiences Mediated by:

InvolvementMood

ExperiencePersonal Charac.

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Step 1. Identifying the Target Audience

Step 2. Determining the Communication ObjectivesBuyer Readiness Stages

PurchasePurchase

Conviction

Preference

Liking

Knowledge

Awareness

Steps in Developing Effective Communication

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Step 3. Designing a Message

Message ContentRational Appeals

Emotional AppealsMoral Appeals

Message StructureDraw ConclusionsArgument TypeArgument Order

Message FormatHeadline, Illustration,

Copy, & ColorBody Language


• AIDA model. 1). Get attention 2). Hold interest

3). Arouse desire 4). Obtain action

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Appeal - the creative attempt to motivate Appeal - the creative attempt to motivate consumers toward some form of activity, consumers toward some form of activity,

or to influence attitudes toward a product or serviceor to influence attitudes toward a product or service

Rational appeal - a focus toward the consumer’s practical utility oriented needs

Emotional appeal - 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 ComparativeFear Sex EgoOriented

Appeals

Advertising Strategies+ Morale Appeal: Social causes & Human Rights

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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.

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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.

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Nonpersonal CommunicationChannels

Step 4. Choosing Media

Personal CommunicationChannels


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

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CREDIBILITY OF THE MEDIA CHANNELS

SPONSORING VERSUS ADVERTISING

+

-

CREDIBILITY OF THE SOURCES

FOR-PROFIT Org. VERSUS NOT FOR PROFIT Org.

-

+

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CREDIBILITY OF THE MEDIA CHANNELS IN RELATION WITH THE SOURCES

FOR-PROFIT Org. VERSUS NOT FOR PROFIT Org.

SPONSORING+

++

VERSUS

ADVERTISING --

-

Campaign Evaluation

Communication Effects

Is the Ad Communicating Well?

Communication Effects

Is the Ad Communicating Well?

Advertising Program EvaluationAdvertising Program Evaluation

Sales Effects

Is the Ad Increasing Sales?

Sales Effects

Is the Ad Increasing Sales?

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Affordable Based on What the

Company Can Afford

Objective-and-Task Based on Determining

Objectives & Tasks, Then Estimating Costs

Objective-and-Task Based on Determining

Objectives & Tasks, Then Estimating Costs

Percentage of SalesBased on a Certain Percentageof Current or Forecasted Sales

Percentage of SalesBased on a Certain Percentageof Current or Forecasted Sales

Competitive-ParityBased on the Competitor’s

Promotion Budget

Competitive-ParityBased on the Competitor’s

Promotion Budget

One of the Hardest Marketing Decisions Facing a Company is How Much to Spend on

Promotion.

Setting the Total Promotion Budget

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Sales Promotion + PR+ Advertising

ChapterChapter

Dr. Franck Vigneron

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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.

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SampleSample

CouponsCoupons

Cash RefundsCash Refunds

Price PacksPrice Packs

PremiumsPremiums

Advertising Specialties

Advertising Specialties

Trial amount of a productTrial amount of a product

Savings when purchasing specified products

Savings when purchasing specified products

Refund of part of the purchase priceRefund of part of the purchase price

Reduced prices marked on the label or package

Reduced prices marked on the label or package

Goods offered free or low cost as an incentive to buy a product

Goods offered free or low cost as an incentive to buy a product

Articles imprinted with an advertiser’s name given as gifts

Articles imprinted with an advertiser’s name given as gifts

Major Consumer Sales Promotion Tools/1

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Patronage RewardsPatronage Rewards

Point-of-PurchasePoint-of-Purchase

ContestsContests

SweepstakesSweepstakes

GameGame

Cash or other rewards for the use of a certain product

Cash or other rewards for the use of a certain product

Displays and demonstrations that take place at the point of sale

Displays and demonstrations that take place at the point of sale

Consumers submit an entry to be judged

Consumers submit an entry to be judged

Consumers submit their names for a drawing

Consumers submit their names for a drawing

Presents consumers with something every time they buy

Presents consumers with something every time they buy

Major Consumer Sales Promotion Tools/2

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Trade-Promotion Objectives

Persuade Retailers or Wholesalers to Carry a Brand

Persuade Retailers or Wholesalers to Carry a Brand

Give a Brand Shelf SpaceGive a Brand Shelf Space

Promote a Brand in Advertising

Promote a Brand in Advertising

Push a Brand to ConsumersPush a Brand to Consumers

Major Trade Sales Promotion Tools/1

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Trade-Promotion Tools

DiscountsDiscountsa straight reduction in price on purchases during a stated period of time. Can be called price-off, off-invoice, or off-list.

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• 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).

AllowancesAllowances

Trade-Promotion Tools

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Business-Promotion Objectives

Generate Business LeadsGenerate Business Leads

Stimulate PurchasesStimulate Purchases

Reward CustomersReward Customers

Motivate SalespeopleMotivate Salespeople

Business-Promotion Tools

ConventionsConventions

Trade ShowsTrade Shows

Sales ContestsSales Contests

Major Business Sales Promotion Tools

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

Set Conditions for ParticipationSet Conditions for Participation

Evaluate the ProgramEvaluate the Program

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

Distribute the Promotion Program

Determine the Length of the ProgramDetermine the Length of the Program

Developing the Sales Promotion Program

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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.

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Press RelationsPress Relations

Product PublicityProduct Publicity

Public AffairsPublic Affairs

LobbyingLobbying

Investor RelationsInvestor Relations

DevelopmentDevelopment

Public Relations Departments May Perform Any of All of the Following

Functions:

Major Public Relations Functions

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News

Speeches

Special Events

Written MaterialsAudiovisual

Materials

Corporate Identity

Materials

Public Service

Activities

Web Site

Major Public Relations Tools

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Setting Public Relations ObjectivesSetting Public Relations Objectives

Choosing the Public Relations Messages and Vehicles

Choosing the Public Relations Messages and Vehicles

Implementing the Public Relations PlanImplementing the Public Relations Plan

Evaluating Public Relations ResultsEvaluating Public Relations Results

Major Public Relations Decisions

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What is Advertising?

Advertising is Any Paid Form of Nonpersonal

Presentation and Promotion of Ideas, Goods, or Services by an Identified

Sponsor.

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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.

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6 major advertising 6 major advertising mediamedia

• Television• Radio• Magazines• Newspaper• Internet• And Outdoor (e.g., billboards)

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Copy and Message Direction

Motivational

Source

Motivation = Product

Performance

Perf. Is representation of

product

Copy of Message

Centered on Product

1. Message on Product

Perf. is + than representation

product

Copy of MessageCentered on Results

from Product

Motivation = Association with Product Universe

Copy of Message

Centered on Psyco

-socio of Product

2. Message on Resultats

3. Message on Universe

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ChapterChapter

Competitive Strategies: Attracting, Retaining, and Growing Customers

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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.

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Satisfaying the Needs

Retain CustomerBy Maintaining Satisfaction

Create the Product

NEEDSSTAGES PRODUCTS

IdentifyThe needsto Satisfy

Adapt andDeliver

the Productsto The Right

Target

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Customer Delivered Value

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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 Expectatio

ns

Customer is

Dissatisfied

Product Matches

Expectations

Customer is Satisfied

Product Exceeds

Expectations

Customer is Highly

Satisfied or

Delighted!

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Steps in Analyzing Competitors

Identifying the company’scompetitors

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

Selecting whichcompetitors toattack or avoid

= BENCHMARKING

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Overall CostLeadership

Overall CostLeadership

DifferentiationDifferentiation

FocusFocus

Middle ofthe RoadMiddle ofthe Road

Basic Competitive Strategies

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Competitive Strategies: Value Disciplines

Operational ExcellenceAlaska Airlines

Customer Intimacy

Ikea

Product Leadership

intel

Companies Gain Leadership Positions by Delivering Superior Value to their Customers Through These Strategies:

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Competitive Marketing Strategies

Firms Competing in a Given Target Market Differ in their Objectives and Resources so May Choose the

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