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72 Cards in this Set
- Front
- Back
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What is a Channel of Distribution
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Firms or individuals that facilitate the flow of a good or service from producer to consumer (note: producer and consumer are part of every channel)
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What P is a channel of distribution?
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One of the 4 Ps (PLACE)
where will consumers find the product ...and how will it get there? |
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When does the length of a channel go up?
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Length goes up as the number of customers, customer orders, and geographic areas to be served increase
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When does the length of a channel go down?
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It goes down as perishability and a need for greater control over the supplies and materials increase
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What are the three market exposure strategies?
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intensive, selective, and exclusive distribution
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Intensive distribution
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-The product is in as many outlets as possible
-Selling support – not a great deal -Make it easy for customer to obtain |
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Selective distribution
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-Use of more than one, but fewer than all, intermediaries willing to carry the product
-Trade selling support for cost to obtain |
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Exclusive distribution
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-Only a limited number of intermediaries carry the product; cost to obtain not a big issue
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Transactional tasks
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contacting and promoting buyers, negotiating, creating relationships
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Logistical tasks
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order processing, sorting, building assortments
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Facilitating tasks
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research and financing
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transactional, logistical and facilitating tasks
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These functions should be assigned to the channel members who can perform them most efficiently and effectively.
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vertical channel conflict
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conflict between different levels of same channel…McDonald’s order from the top
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horizontal channel conflict
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conflict at same level of channel…Holiday Inn and Triad Ford dealers
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How do channels create value?
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-Decrease costs via solid and “in-touch” (coverage) intermediaries
-If you can decrease channel costs and not lose sales/orders, you can create an advantage relative to the competition -Too many lead to general chaos and conflict (next slide); too few lead to missed opportunities |
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What are the 5 modes of transportation?
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rail
truck water pipeline air |
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rail
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Nation’s largest carrier, cost-effective
for shipping bulk products, piggyback |
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truck
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Flexible in-routing & time schedules
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water
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Low cost for shipping bulky, low-value,
non perishable goods, slowest form |
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pipeline
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Ship petroleum, natural gas, and chemicals
from sources to markets |
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air
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High cost, ideal when speed is needed or
distance markets have to be reached |
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Retailers
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Sell primarily to final consumers for personal and non-personal use
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Examples of retailers
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wal-mart and doctors
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What are the three classifications of retailers?
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self-service
limited-service full-service |
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self-service retailer
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Provide Few or No Services to Shoppers
(e.g., Best Buy) |
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limited-service retailer
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Provide Only a Limited
Number of Services to Shoppers (e.g., Sears) |
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full-service retailer
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Retailers that Provide a
Full Range of Services to Shoppers (e.g., Neiman Marcus) |
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What do successful retailers do?
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-Cater to their target segment(s)
-Understand consumer behavior |
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What are some consumer behaviors?
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-Shoppers need hands
-Appeal to influencers -Consumers like to test out how well the product will work (e.g., how can consumers test out a pencil sharpener if there are no pencils to sharpen?) -Paradox of choice |
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What is Paradox of choice?
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the more choices, the less likely people are to be satisfied with their purchases. So less choices mean more satisfaction!
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What is cross-merchandising
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Items are normally sold individually are merchandised together to up sales of both
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Advertising
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any paid form of nonpersonal presentation and promotion of ideas, goods, or services
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Personal Selling
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selling through personal presentations by members of the sales force
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Sales Promotion
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short-term incentives to encourage purchase
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Public Relations
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building good relations with the company’s various publics by circulating information to the media about the company and managing special events
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What are the objectives of the promotion mix?
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Inform
Awareness Knowledge Persuade Liking Preference Intentions Induce Action Trial Repeat purchase |
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Pull Strategy
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Advertising, sales promotion
Producer <- resellers <- consumers |
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Push Strategy
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Producer -> resellers -> consumers
PS -> personal sales push SP -> sales promotions push |
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What are the ways to decide on a budget?
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affordable
percentage of sales objective and task competive-parity |
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advantages of advertising
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widespread
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disadvantages of advertising
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expensive, short, not personal
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name some consumer promotions
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-Coupons and cash refunds
-Premium -- something of value offered free or at low price -Samples & in-store demonstrations -Sweepstakes & contests -Point-of-purchase displays |
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Kenny's disclaimer research take-aways
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-Unfamiliar brand products should talk slowly
-Brand speed doesn’t matter at all |
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Advertising goals
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--Informative
Knowledge of products; “Don’t drink and drive” --Persuasive Creates liking and purchase; “VISA – It’s Everywhere You Want to Be” (desirable locations that do NOT accept American Express) --Reminder Stimulate repeat purchase; colorful Pepsi ads in a magazine --Reinforcement Ads that show you made the “right call” |
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How should where you are in the PLC affect your advertising budget?
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New products have bigger budgets to build awareness and initiate trial
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How should Product substitutability affect your advertising budget?
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If you are playing in a less differentiated market or a commodity-like market (e.g., soft drinks, beer, banks, airlines), you will tend to spend more on advertising to establish your image of differentiation
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How should Market Clutter affect your advertising budget?
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The greater the market clutter, the more advertising is needed
AFLAC (sales up 28% the 1st year the duck came on the air – name recognition from 13% to 91%) |
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Stanton and Herbst advertising budget Implications
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The market structure (pre-existing market share, brand loyalty numbers of players in the market) before the campaign must be considered
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Ways to communicate PR
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Publications
Events Sponsorships News Speeches PSAs Implications for Children’s Advertising |
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Coupon content
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In other words, if “powerful stain removal” is claimed as the sole and large benefit of a product, people believe it will remove stain better than an “all-in-one.” So, less is more!
Unless the “all-in-one” costs more – price and quality often go hand in hand! So, don’t price the all-in-one at parity! |
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coupon lovers*
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Lovers of the shopping experience (Garretson and Burton, 2003)
Saving $ makes time spent prepping worth it. Less likely to say “cheaper” = “poorer quality” Switch more often so that behavior is more in line with being “savvy” – loyal to bargain hunting! Likely to endorse that coupon redemption makes them feel great, they enjoy time spent cutting out coupons, love the “deal,” enjoy using them regardless of value, redemption makes them feel elated beyond money saved |
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why are rebates good for retailers and manufacturers?
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Offer a short-term price reduction without losing the “value” associated with price
Can be quickly started and turned off Count on consumers not to redeem them |
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Why do customers not like rebates?
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Little immediate gratification
Buy now, put forth effort, save money weeks (or months) after I purchased the new product Lack of trust |
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matches vs. rebates*
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People like matches (e.g., BOGO, buy 2 get 1)
Discounts are not as good as matches, but they are better than rebates |
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discounts imply that
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the quality has declined or the product was not made well. Discounts are perceived as better than rebates
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BOGO
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BOGO for $5.00 may be better than a $2.50 discount on both!
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Why do consumers not like the after-rebate format? (lower price)
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ARFs lead to lower purchase intention (negative affect – Ratner and Herbst, 2005)
ARFs are seen as deceptive (small type). They emphasize the lower A-R price that is not available at time of purchase (other important price information is in small print) - effect is even larger the larger the rebate |
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In-store advertisements
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Influence more than 75% of shoppers to buy one brand in particular (Mediaedgecia, 2005)
35% of people say I-S ads influence them to try a new product/brand 44% of people are aware of I-S ads Best if on end-caps; least effect on in-store TVs and shopping carts |
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Name some psychological factors that affect the effectivness of promotions
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Source Characteristics
The Effect of Affect Disclaimer Speed Sampling, Signage, Experience-Creation… |
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What are the two aspects of personal selling?
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sales management
salespersonship |
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pluses of a sales job
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Helping people-- solving problems
An active, people job Independence -- manage your own time and territory Visibility Good Pay Good career stepping stone |
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What are some ways to be a good listener?
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Asking good questions
Repeating Summarizing Clarifying information Tolerating silences Interpreting and using non-verbal communication |
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Pluses of Personal Selling to the firm
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top fourth bring in half
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Compensating sales people
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Fixed amount
Variable amount Expense allowances Benefits - provide security and job satisfaction |
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advantages of objective-and-task method
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Requires management to spell out assumptions about the relationship among dollars spent, exposure levels, trial rates and regular usage
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disadvantages of competitive parity method
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No evidence that competitive parity discourages promotional wars
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advantages/disadvantages of percentage of sales method
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-Links promotion expenditures to sales
-But it also views sales as the determiner of promotion rather than the result |
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disadvantages of affordable method
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-Ignores the role of promotion as an investment and the immediate impact of promotion on sales volume.
-Leads to an uncertain annual budget - making long-range planning difficult |
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sales promotion offers an ________ to buy
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incentive
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advertising offers a ______ to buy
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reason
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what should you consider when deciding on an advertising budget?
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stage in plc, sustitutability, market clutter
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in the face of crisis...
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don't lie
keep employees in the know recognize people's concerns accept responsibility |
