Download MT 219 Marketing Seminar

MT 219 Marketing
Unit Six
Marketing Channels
Retailing and Wholesaling
Note: This seminar
will be recorded by
the instructor.
MT 219 Marketing
Unit Six
Marketing Channels
Retailing and Wholesaling
Note: This seminar
will be recorded by
the instructor.
Review of Unit 5
• How did Unit 5 go? Questions or concerns?
• Instructor suggestions for Unit 6
• Are the Research Projects on segmentation almost
ready for submission this week?
• Additional questions?
What is Price?
• Value exchanged for products
- Money
- Barter
• Only primary source of revenue
Price
Our textbook refers to price as
the value exchanged for
products in a marketing
transaction.
• Price is also the amount of
money charged for a product or
service, or the sum of the
values that consumers
exchange for the benefits of
having or using the product or
service. Kotler
Ebay.com
The term price goes by many names
•
•
•
•
Education we pay tuition,
real estate agents charge a commission,
clubs charge dues,
credit cards charge interest.
“So how do you think marketers
determine the price for the product?”
Cost based pricing
Cost based pricing is adding a dollar amount or
percentage to the cost of the product. Pride and Ferrell
Cost-Based Pricing
• Assesses price based on costs
• Cost-plus pricing- adds a markup to the cost of the
product
• Breakeven pricing- sets prices to ensure that costs are
covered and there is a certain rate of return
Demand Pricing
Demand based pricing is based on the level of demand
for a product. Pride and Ferrell
Competition Based Pricing
Competition based pricing by definition is pricing
influenced primarily by competitors prices. Pride and
Ferrell
Competition-Based Pricing
• Sets prices based upon what the competition’s
strategies, market offerings, costs and prices are.
• Consumers will look at value in the product compare it
to the competition and make a purchase decision based
on what they see.
Value pricing
Value pricing is a pricing strategy that emphasizes
benefits derived from a product in comparison to
the price and quality levels of competing offerings
Pride and Ferrell
Customer Value-Based Pricing
• Assesses prices based on customer perceptions of
value
• Good-value pricing- The correct amount of quality and
service at a fair price
• Value-added pricing- Differentiates the product by
attaching value-added features and services and
charges higher prices for them
Target Market and Profit
• A set of buyers that share common needs or
characteristics that the company decides to serve. A
group of people toward whom the firm decides to direct
its marketing efforts, and ultimately its goods and
services. Boone and Kurtz
• Profit= Total revenue - Total expenses
• Other pricing strategies
Maximizing Volume
• Setting a minimum acceptable profit level and then seek
to maximize sales in the belief that the increased sales
are more important then immediate high profits to the
long-run competitive picture. Boone and Kurtz
Psychological Pricing
•
•
•
•
•
•
•
Prestige
Reference
Bundle
Multiple unit
EDLP
Odd-Even
Customary
Our Topics for This Week
• Channel importance, functions, types, and coverage
• Physical distribution and supply chain management
• Retailing types and trends
• Wholesaling types and role in marketing
Important Definitions
• Marketing Channel – A group of individuals and
organizations directing products from producers to
customers
• Value Delivery Network- Composed of the
company, intermediaries, suppliers and consumers who
are in partnership to deliver customer value systemwide.
Distribution
• Our text defines distribution as the activities that make
products available to customers when and where they
want to purchase them.
• Distribution is also moving goods and services from the
producer to the customer. (Boone and Kurtz)
Marketing Channel/Distribution
Channel
• Our text defines a marketing channel as a group of
individuals and organizations directing products from
producers to customers.
Intermediaries
• Intermediaries are middlemen
between the seller and the buyer.
Sometimes there is one
intermediary between the buyer
and seller and other times there
are several middlemen.
• Our textbook definition of a
marketing intermediary is a
middleman linking producers to
other middlemen or ultimate
consumers through contractual
arrangements or through the
purchase and resale of products.
Other definitions for
marketing/distribution channel
• A distribution Channel (Marketing Channel) are organizations
involved in the process of making the product or service available
for use or consumption by the consumer/business user- Kotler
• Boone and Kurtz similarly defines a Distribution Channel
(Marketing Channel) as a system of marketing institutions that
promotes the physical flow of goods and services, along with
ownership title, from producer to consumer or business user.
Do your think marketing intermediaries
(or middlemen) necessary?
Benefits of Intermediaries
•
•
•
•
•
•
•
•
•
•
•
•
Contacts and experience
Facilitates the exchange process
Joint effort of all channel members
Order processing and the exchange process
Inventory management.
Sorting
Handling materials
Warehousing and transportation
Search for buyers and sellers
Provide information
Promotion
Negotiation
Distribution Channel (Marketing Channel)
• A producer/manufacturer of a product can sell directly to the
consumer.
• The second option is that a producer could sell directly to a
retailer and the retailer could sell directly to the consumer.
• Producers can sell directly to wholesalers and a wholesaler is
responsible for selling to the retailer and the retailer sells to
the consumer.
• The last option is the producer uses an agent/broker to find
wholesalers and the wholesalers sell to the retailers and the
retailers sell to the customer
So how do you know what Distribution Channel
(Marketing Channel) to select?
• Short vs long distribution
• Expensive or inexpensive
Why do we need channels?
• Channels create value for the consumer
• Help facilitate transactions:
- Act as information conduits
- Promote the product and company
- Provide a contact for the consumer
- Match products with the consumers needs by developing appropriate
offers
- Negotiate the terms of the sale with the consumer
• Fulfill completed transaction:
- Physically transport or store goods and products
- Finance transactions
- Assume risk in undertaking channel activities
Types of Conventional Channels
• Producer - Consumer (no intermediary)
• Producer - Retailer - Consumer
• Producer – Wholesaler – Retailer – Consumer
• Producer-agent/broker – Wholesaler-Retailer –
Consumer
• These intermediaries are independent entities
Vertical Marketing Systems
• System where the producer and intermediaries act as
one system.
• Corporate VMS- One entity owns the other
intermediaries. Example: Kroger
• Contractual VMS- Uses legal agreements between
independent producer and intermediaries to provide
product or services. Example: McDonalds.
• Administered VMS- System is controlled by size and
power of one of the intermediaries or the producer.
Example: Wal-Mart.
Channel Issues and Decisions
• Number of distribution channels (coverage intensity)selective, intensive or exclusive distribution
• Conflict- horizontal and vertical
• Leadership and Power- Concept of Channel Captain
• Disintermediation
What is Supply Chain Management?
• Long term partnerships among marketing
channel members that reduce inefficiencies,
costs, and redundancies. They also develop
innovative approaches to satisfy customers.
• Emphasis is on stability for customers
Marketing Logistics
• Warehousing
• Inventory Management
• Transportation
• Logistics Information Management
Retailing
• Activities associated with providing
products to the final consumer for
their own use
Types of Retailers
• Retailers can be classified in different ways
• Amount of Service
-Self-service, limited-service or full-service
• Product Line
-Specialty, department, supermarket, convenience,
superstore
Types of Retailers- continued
• Relative Price
-Discount, off-price, factory outlet, warehouse
club
• Organizational Approach
-Chain, franchise
Retailer Marketing Decisions- Strategy
• Segmentation and targeting- Seeks to identify those
groups of people that the retailer will target.
• Store differentiation and positioning- Seeking to set the
retailer apart from the competition in the eyes of the
consumer.
• How might the segmentation, targeting and positioning
of Wal-Mart differ from JC Penny? What value is
created by each?
Retailer Marketing DecisionsMarketing Mix
• Product and service assortment-Product assortment decisions impact the types of brands that
will be carried and the level of quality the assortment will have
-Service assortment looks at the level of support, advice or
assistance that will be available for customers.
-Store atmosphere looks at what the general ambiance and store
environment will be like.
Retailer Marketing Decisions- Marketing
Mix- continued
• Price- Looks at the prices that will be charged by the
store.
• Place- Involves where stores will be located. Will it be
stand-alone or part of a shopping center or mall? Many
bricks and mortar retailers have website retail locations
also.
• Promotion- Involves how and where the retail store will
promote to their customers and public.
Retailing Trends
• Retail life cycles are shortening and new retail forms are
appearing.
- Retailing is dynamic and always evolving
- Wheel of Retailing concept
• Slower economies means consumers are becoming
thriftier
- In difficult times consumers curtail discretionary spending
- As economic conditions improve consumers will purchase more
- Consider that some products sell better in difficult times
Retailing Trends- continued
• Growth of non-store retailing as consumers buy off the
internet and through direct marketing
• Retail convergence is taking place where retailers sell
the same products to the same consumers across all
competition. This makes for keen competition.
• Megaretailers are increasingly becoming prevalent and
making it challenging for smaller retailers to compete on
the basis of price.
Retailing Trends- continued
• The growth of retail technology that help retailers
manage inventory and keep track of sales
• Major retailers are expanding internationally
• Retail stores are trying to create a community
atmosphere to provide a social retail environment
Wholesaling
• Activities involving marketing intermediaries who
purchase or represent products for resale or business
use.
• Types of wholesalers
- Merchant wholesalers- Independent companies that take title to the
goods
- Agents and brokers- Do not take title to merchandise
- Manufacturer’s sales branches and offices- Owned by maker of the
products
Wholesaler Activities
•
•
•
•
•
•
•
•
Promote and sell the products they carry
Build assortments of goods for customers
Bulk-break goods for their customers
Offer warehouse services and often transport goods
Offer financing of purchases
Channel market information
Assume risk of title for manufacturers
Provide training and promotional services to retailers
Any Questions?
Thank you for attending!
See you next week!