Principles of Marketing

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Principles of Marketing Lecture Slides Dr.
Robert Hurley Fordham College of Business
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Distribution Channel Functions
Risk Taking
Information
Financing
Promotion
Contact
Physical Distribution
Matching
Negotiation
These Functions Should be Assigned to the Channel
Member Who Can Perform Them Most Efficiently and
Effectively to Provide Satisfactory Assortments
of Goods and Services to Target Customers.
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Consumer Marketing Channels Levels
Channel Level - Each Layer of Intermediaries that
Perform Some Work in Bringing the Product and its
Ownership Closer to the Final Buyer.
Direct Indirect
Channel 1
Channel 2
Channel 3
Channel 4
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Analyzing Consumer Service Needs
Setting Channel Objectives Constraints
Channel Design Decisions
Identifying Major Alternatives
Evaluating the Major Alternatives
Exclusive Distribution
Intensive Distribution
Selective Distribution
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Major Logistics Functions
Order Processing Received Processed Shipped
Costs Minimize Costs of Attaining
Logistics Objectives
Logistics Functions
Warehousing Storage Distribution
Transportation Rail, Truck, Water,
Pipeline, Air
Inventory When to order How much to
order Just-in-time
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What is Retailing?

• All the activities involved in selling goods or
  services directly to final consumers for their
  personal, nonbusiness use.
• Retailers - businesses whose sales come primarily
  from retailing.
• Retailers can be classified as
• Store retailers such as Home Depot, Sears,
  Walmart.
• Nonstore retailers such as the mail, telephone,
  and Internet.

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Retailer Marketing Decisions
Retailer Marketing Mix
Retailer Strategy
Product and Service Assortment Prices Promotion P
lace (Location)
Target Market Retail Store Positioning
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• Product Assortment
• Width and Depth of Assortment
• Quality of Products
• Product Differentiation Strategies

Retailers Product Assortment and Services
Decisions
Services Mix Key Tool of Nonprice Competition for
Setting One Store Apart From Another.

• Stores Atmosphere
• Physical Layout
• Feel That Suits the Target Market
• and Moves Customers to Buy

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The Nature of Personal Selling

• Involves two-way, personal communication between
  salespeople and individual customers whether
• face to face,
• by telephone,
• through video conferencing,
• or by other means.
• The term salesperson covers a wide spectrum of
  positions from
• Order Taking (department store salesperson)
• Order Getting (someone engaged in creative
  selling)
• Missionary Selling (building goodwill or
  educating buyers)

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Managing the Salesforce
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Designing Sales Force Strategy and Structure
Types of Sales Force Structure
Complex Combination of Above Types of Sales Force
Structures
Territorial Exclusive Territory to Sell the
Companys Full Product Line
Product Sales Force Sells Along Product Lines
Customer Sales Force Sells Along Customer/
Industry Lines
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Sales Force Size May Use Workload Approach
Other Sales Force Strategy and Structure Issues
Designing Sales Force Strategy and Structure
Who Will Be Involved in the Selling
Effort? Outside Sales Force Inside Sales Force
How Will Sales and Sales Support People Work
Together? Team Selling
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How Salespeople Spend Their Time
Administrative
Service Calls
Tasks
12.7
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Companies Look For Ways to Increase the Amount of
Time Salespeople Spend Selling.
Telephone
Selling
25.1
Face-to-Face
Selling
28.8
Waiting/
Traveling
17.4
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Step 1. Prospecting and Qualifying
Steps in the Selling Process
Step 2. Pre-approach
Identifying and Screening For Qualified Potential
Customers. Learning As Much As Possible About a
Prospective Customer Before Making a Sales
Call. Knowing How to Meet the Buyer to Get the
Relationship Off to a Good Start. Telling the
Product Story to the Buyer, and Presenting
Customer Benefits.
Step 3. Approach
Step 4. Presentation/ Demonstration
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Step 5. Handling Objections
Steps in the Selling Process
Step 6. Closing
Seeking Out, Clarifying, and Overcoming Customer
Objections to Buying. Asking the Customer for
the Order. Following Up After the Sale to
Ensure Customer Satisfaction and Repeat Business.
Step 7. Follow-Up
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Relationship Marketing

• Emphasizes maintaining profitable long-term
  relationships with customers by creating superior
  customer value and satisfaction.
• Based on the idea that important accounts need
  focused and on-going attention.

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What is Sales Promotion?

• Mass communication technique that offers
  short-term incentives to encourage purchase or
  sales of a product or service.
• Rapid growth in the industry has been achieved
  because
• Product managers are facing more pressure to
  increase their current sales,
• Companies face more competition,
• Advertising efficiency has declined,
• Consumers have become more deal oriented.

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Consumer - Promotion Tools
Short-Term Incentives to Encourage Purchase or
Sales of a Product or Service.

Consumer-Promotion Tools
Consumer-Promotion Objectives
Samples
Advertising Specialties
Increase Short-Term Sales
Coupons
Build Long-Term Market Share
Patronage Rewards
Cash Refunds
Retailers to Carry New Items
Contests
Price Packs
Sweepstakes
Sales Force Support for Current or New Products
Premiums
Games
Consumer Relationship Building
Point-of-Purchase Displays
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Trade - Promotion Tools
Short-Term Incentives That are Directed to
Retailers and Wholesalers.

Trade-Promotion Tools
Trade-Promotion Objectives
Price-Offs
Premiums
Persuade Retailers or Wholesalers to Carry a
Brand
Allowances
Give a Brand Shelf Space
Displays
Buy-Back Guarantees
Promote a Brand in Advertising
Discounts
Push Money
Free Goods
Push a Brand to Consumers
Specialty Advertising Items
Contests
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Business - Promotion Tools
Short-Term Incentives That are Directed to
Industrial Customers.

Business-Promotion Tools
Business-Promotion Objectives
Conventions
Generate Business Leads
Trade Shows
Stimulate Purchases
Reward Customers
Sales Contests
Motivate Salespeople
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Developing the Sales Promotion Program
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Global Marketing Into the Twenty-First Century

• A Global Firm is one that, by operating in more
  than one country, gains marketing, production,
  RD, and financial advantages that are not
  available to purely domestic competitors.
• Global firms face several major problems
• Variable exchange rates,
• Unstable governments,
• Protectionist tariffs and trade barriers,
• Corruption.

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Global Marketing

• Moving from single country to dual country to
  regional to global increases complexity
• Lots of opportunites to do dumb things
• Clairol mMist Stick meant Manure Stick in
  Germany
• Pepsis Come alive with the Pepsi generation
  was translatd into Pepsi brings your ancestors
  back from the grave in China
• The Coca-Cola name in China was read as
  Ke-kou-ke-la meaning Bite the was tadpole
  later changed to Ko-kou-ko-le meaning happiness
  in the mouth.
• In Italy Schweppes Tonic water was translated
  into Schweppes Toilet water

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Decisions in International Marketing
Looking at the Global Marketing Environment
Deciding Whether to Go International
Deciding Which Markets to Enter
Deciding How to Enter the Market
Deciding on the Global Marketing Program
Deciding on the Global Marketing Organization
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Looking at the Global MarketingEnvironment
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Global Segmentation
SES FORMATION (CLUSTERING OF FACTOR SCORES)
High Sweetness
C2
Segment 1
C1
A3
F2
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Segment 4
E2
8
2
Segment 3
3
A3
A3
4
E1
5
Segment 2
C3
A3
A3
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F1
Low Information Search
High Information Search
A2
A1
B1
D3
Segment 5
C1
F2
G2
G1
Low Sweetness
Clustering Step (step of clustering routine where
the cluster is formed)
H3
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Economic Environmental Factors
Subsistence Economies
Countrys Industrial Structure
Raw Material Exporting Economies
Industrializing Economies
Industrial Economies
Income Distribution
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Political-Legal Environmental Factors
Attitudes Toward International Buying
Government Bureaucracy
Monetary Regulations
Political Stability
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Deciding Whether to Go International

• Reasons companies might consider International
  expansion
• Global competitors attacking the domestic
  market,
• Foreign markets might offer higher profit
  opportunities,
• Domestic markets might be shrinking,
• Need an enlarged customer base to achieve
  economies of scale,
• Reduce dependency on any one market,
• Customers might be expanding abroad.
• Most companies do not act until some situation or
  event thrusts them into the international market.

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Five International Product and Promotion
Strategies
Product
Pro m o t I o n
Changes
No changes
No changes
Changes
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Deciding Which Markets to Enter
Marketers Checklist for Identifying
Market Potential
1. Marketing Objectives and Policies?
2. Volume of Foreign Sales Desired?
3. How Many Countries to Enter?
4. Types of Countries to Enter?
5. Evaluate Each Country Based On
a. Market Size b. Market Growth c. Cost of
Doing Business d. Competitive Advantage e.
Risk Level
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Deciding How to Enter the Market
Direct Investment
Greater
Joint Venturing
Exporting
Amount of Commitment, Risk, Control, and Profit
Potential
Lesser
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Deciding on the Global Marketing Organization
Export Department
International Division
Global Organization
Degree of Involvement in International Marketing
Activities
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Marketing Objectives that Affect Pricing
Decisions
Survival Low Prices to Cover Variable Costs
and Some Fixed Costs to Stay in Business.
Current Profit Maximization Choose the Price that
Produces the Maximum Current Profit, Cash Flow or
ROI.
Marketing Objectives
Market Share Leadership Low as Possible Prices
to Become the Market Share Leader.
Product Quality Leadership High Prices to Cover
Higher Performance Quality and R D.
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Price Elasticity of Demand
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Major Considerations in SettingPrices
No Possible Profit at This Price
No Possible Demand at This Price
Consumer Perceptions of Value
Product Costs
High Price
Low Price
Competitors Price and Other External
Internal Factors
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Breakeven Analysis or Target Profit Pricing
Tries to Determine the Price at Which a Firm
Will Break Even or Make a Target Profit
Total Revenue
Target Profit (2 million)
Cost in Dollars (millions)
Total Cost
Fixed Cost
0
Sales Volume in Units (thousands)
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Pricing Methods

• Markup Pricing
• Target Return Pricing
• Perceived Value Pricing
• Value Pricing
• Going-Rate Pricing
• Sealed-Bid Pricing

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Characteristics of Service
1. Intangibility
Characteristics of Services and Their Marketing
Implications
3. Variability
2. Inseparability
4. Perishability
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Service Strategy and Role Definition
Service Situation
Strategy and Role Definition
Service Provider Profile
Selection and Training
Role Performance
Customer Satisfaction and Market Share
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Strategies for Service Firms
Company
Interactive Marketing
Employees
Customers
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Benefits of Direct Marketing

• Direct Marketing Consists of Direct
  Communications with Carefully Targeted Individual
  Consumers to Obtain an Immediate Response.

Fun, Convenient Hassle-Free
Mailing Lists for Almost Any Market
Benefits of Direct Marketing to Customers
Benefits of Direct Marketing to Companies
Saves Time
Customized Offers
Larger Merchandise Selection
Ongoing Relationships with Customers
Timed to Achieve Higher Readership Response
Comparison Shopping
Privacy
Order Products for Themselves or Others
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Increasing Number of Market Niches with Distinct
Preferences
Trends Leading to the Growth of Direct Marketing
Higher Costs of Driving, Traffic and Parking
Congestion
Consumers Lack of Time
Convenience of Ordering From Direct Marketers
Growth of Customer Databases
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Mass Marketing Vs. One-to-One Marketing
Mass Marketing
One-to-One Marketing
Average Consumer
Individual Customer
Customer Anonymity
Customer Profile
Standard Product
Customized Market Offering
Mass Production
Customized Production
Mass Distribution
Individualized Distribution
Mass Advertising
Individualized Message
Individualized Incentives
Mass Promotion
Two-Way Messages
One-Way Message
Economies of Scale
Economies of Scope
Share of Mind
Share of Customer
All Customers
Profitable Customers
Customer Retention
Customer Attraction
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Forms of Direct Marketing Communication
Face-to-Face Selling
Direct-Mail Marketing
Online Marketing
Kiosk Marketing
Catalog Marketing
Telemarketing
Direct-Response TV Marketing
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Forms of Direct Marketing Communication
Direct-Mail Marketing

• High target-market selectivity
• Personalized
• Flexible
• Mail, Fax mail, E-mail, Voice Mail

Catalog Marketing

• May sell full line of merchandise
• Over 14 million copies of 8,500 different
  catalogs mailed annually
• Most direct retailers also have catalogs on the
  Web

Telemarketing

• Outbound telemarketing to sell
• Inbound telemarketing to receive orders
• 900 s to sell information, etc.

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Forms of Direct Marketing Communication
Direct-Response Television Marketing

• Direct-Response Advertising such as Infomercials
• Home Shopping Channels dedicated to selling goods
  and services (QVC HSN)

Kiosk Marketing

• Information and ordering machines (kiosks) in
  stores, airports, and other locations.
• Hallmark, Lee Jeans and Tower Records

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Online Marketing and ElectronicCommerce

• Online Marketing is conducted through interactive
  online computer systems, which link consumers
  with sellers electronically.
• Two types of Online Marketing Channels
• Commercial Online Services offer online
  information and marketing services to subscribers
  who pay a monthly fee. (i.e. AOL, CompuServe
  Prodigy)
• The Internet (the Net) is the vast global and
  public web of computer networks.
• The explosion of Internet usage has created a
  new world of electronic commerce, a term that
  refers to the buying and selling process
  supported by electronic means.

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The Benefits of Online Marketing
Convenient
For Consumers
For Companies
Private
Reduces Costs
Consumer Relationship Building
Abundance of Information
Increases Efficiency
Interactive
Provides Flexibility
Immediate
Global Medium
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Online Marketing Channels
Creating an Electronic Storefront Buy Space on a
Commercial Online Service Company Can Open Its
Own Corporate or Marketing Web Page
Placing Advertisements Online Place Ads in
Special Sections of Online Services Place Ads in
Certain Internet Newsgroups Buy Online Ads That
Pop Up While Consumers are Surfing,
Banners Content Sponsorships
Participating in Forums, Newsgroups Web
Communities Forums Discussion Groups on
Commercial Online Services, Chat
Rooms Newsgroups Internet Version of Forums Web
Communities Sites Where Members Exchange Views
Online
Using E-Mail and Webcasting Customers Send
Questions, Suggestions Complaints Via
E-Mail Webcasting Automatic Downloading of
Information to PCs
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Promise and Challengeof Online Marketing