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| Value delivery network |
made up of the company, suppliers, distributors, and ultimately customers who “partner” with each other to improve the performance of the entire system |
| Marketing channel (distribution channel) |
of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user |
| Information |
gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding in exchange |
| Promotion: |
developing and spreading persuasive communications about an offer |
| Contact |
finding and communicating with prospective buyers |
| Matching |
shaping and fitting the offer to the buyer’s needs, including activities such as manufacturing, grading, assembling, and packaging |
| Negotiation |
reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred |
| Physical distribution |
transporting and storing goods |
| Financing |
acquiring and using funds to cover the costs of the channel work |
| Risk taking |
assuming the risks of carrying out the channel work |
| Channel level |
layer of intermediaries that perform some work in bringing the product and its ownership closer to the final buyer |
| Direct marketing channel |
no intermediary levels; company sells directly to consumers |
| Indirect marketing channels- |
contains one or more intermediaries’ |
| Channel conflict |
disagreement among marketing channel members on goals and roles- who should do what and for what rewards |
| Horizontal conflict |
occurs among firms at the same level of the channel |
| Vertical conflict |
between different levels of the same channel (more common) |
| Conventional distribution channel |
one or more independent producers, wholesalers and retailers, each a separate business seeking to maximize its own profits even at the expense of profits for the system as a whole |
| Vertical marketing system (VMS |
producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contacts with them, or has so much power that they all cooperate |
| Corporate VMS |
combines successful stages of production and distribution under single ownership. |
| Contractual VMS |
independent firms at different levels of production and distribution join together through contracts to obtain more economies or sales impact than they could achieve alone |
| Franchise organization |
most common type of contractual relationship- a channel member called a franchisor links several stages in the production-distribution process |
| Manufactured-sponsored retailer franchise system |
ex. Ford and its network of independent franchised dealers |
| Manufacturer |
sponsored wholesaler franchise system |
| Service-firm-sponsored retailer franchise system |
ex. Hertz, McDonald’s, Holiday Inn |
| Administered VMS |
leadership is assumed not through common ownership or contractual ties but through the size and power of one or a few dominant channel members (aka channel captains) |
| Horizontal Marketing Systems |
channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity |
| Multichannel Distribution Systems |
(hybrid marketing channels)- a single firm sets up two or more marketing channels to reach one or more customer segments |
| Disintermediation |
when product or service producers cut out intermediaries and go directly to final buyers, or when radically new types of channel intermediaries displace traditional ones |
| Intensive distribution |
stock product in as many outlets as possible |
| Exclusive distribution |
giving a limited number of dealers the exclusive right to distribute the company’s products in their territories |
| Selective distribution |
Selective distribution |
| Marketing logistics (physical distribution |
planning, implementing, and controlling the physical flow of goods, services and related info from points of origin to points of consumption to meet customer requirements at a profit |
| Supply chain management |
managing upstream and downstream value-added flows of materials, final goods, and related info among suppliers, company, resellers, and final consumers |
| Distribution Centers |
large, highly automated warehouses designed to receive goods from various plants and suppliers, take orders, fill them efficiently and deliver goods to consumers as quickly as possible |
| Intermodal transportation |
combining two or more modes of transportation |
| Vendor-Managed Inventory (VMI) |
Customer shares real-time data on sales and current inventory levels w/ supplier who then takes full responsibility for managing inventories and deliveries |
| Integrated logistics management |
emphasizes teamwork, both inside and outside company and among all the marketing channel organizations, to maximize the performance of the entire distribution system |
| Price |
amount of money charged for a product or service, or the sum of all the values that customers give up in order to gain the benefits of having or using a product or service |
| Value-based pricing |
setting price based on buyer’s perceptions of value rather than on the seller’s cost |
| Good-value pricing |
offering just the right combination of quality and good service at a fair price |
| Value-added pricing |
attaching value-added features and services to differentiate a marketing offer and support higher prices, rather than cutting prices to match competition |
| Fixed costs (overhead) |
costs that do not vary with production or sales level |
| Variable costs |
vary directly with the level of production |
| Total costs |
sum of the fixed and variable costs for any given level of production |
| Cost-plus pricing |
adding a standard markup to the cost of the product |
| Break-even pricing |
setting price to break even on the costs of making and marketing a product; or setting a price to make a target profit |
| Target costing |
pricing tat starts wit an ideal selling price based on customer-value considerations, then targets costs that will ensure that the price is met |
| Demand curve |
shows the number of units the market will buy in a given time period, at different prices that might be charged |
| Price elasticity |
a measure of the sensitivity of demand to changes in price |
| Market-skimming pricing |
setting a high initial price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales |
| Market penetration pricing |
setting a low price for a new product in order to attract a large number of buyers and a large market share |
| Product line pricing |
setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features and competitors’ prices |
| Optional-product pricing |
offering to sell optional or accessory products along with their main products |
| Captive-product pricing |
setting a price for products that must be used along with a main product (ex. Razor blades for a razor or film for a camera) |
| By-product pricing |
setting a price for by-products in order to make the main product’s price more competitive |
| Product bundle pricing |
sellers often combine several of their products and offer the bundle at a reduced price |
| Discounts |
a straight reduction in price on purchases during a stated period of time |
| Allowances |
promotional money paid by manufacturers to retailers in return or an agreement to feature the manufacturer’s products in some way |
| Segmented pricing |
selling a product or service at two or more prices, where the difference in prices is not based on differences in costs |
| Psychological pricing |
pricing approach that considers the psychology of prices and not simply the economics; the price is used to say something about the product |
| Reference pricing |
prices that buyers carry in their minds and refer to when looking at a given product |
| Promotional Pricing |
temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales |
| Geographic pricing |
setting price based on the buyers geographic location |
| Dynamic pricing |
adjusting prices continually to meet the characteristics and needs of individual customers and situations |
| Promotion mix (marketing communications mix) |
specific blend of advertising, sales promotion, public relations, personal selling, and direct-marketing tools that the company uses to persuasively communicate customer value and build relationships |
| Advertising |
any paid form of nonpersonal presentation and promotion of ideas, goods or services by an identified sponsor |
| Sales promotion- |
short-term incentives to encourage the purchase or sale of a product or service |
| Public relations |
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 |
| Personal selling |
personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships |
| Direct marketing |
Direct marketing |
| Integrated marketing communications (IMC) |
company carefully integrates its many communications channels to deliver a clear, consistent, and compelling message about the organization and its brands |
| Affordable method |
set promotion budget at the level they think the company can afford |
| Percentage-of-sales-method |
setting promotion budget at a certain percentage of current or forecasted sales or as a percentage of the unit sales price |
| Competitive-Parity Method |
setting promotion budgets to match competitor’s outlays |
| Objective-and –Task Method |
Objective-and –Task Method |
| Advertising agency |
a marketing services firm that assists companies in planning, preparing, implementing, and evaluating all or portions of their advertising programs |
| Public Relations |
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 |
| Salesperson |
an individual acting for a company by performing one or more of the following activities: prospecting, communicating, servicing, and information getting. |
| Sales force management |
analysis, planning, implementation, and control of sales force activities. It includes designing sales force strategy and structure and recruiting, selecting, training, supervising, compensating and evaluating firm’s salespeople. |
| .Territorial sales force structure |
a sales force organization that assigns each salesperson to an exclusive geographic territory in which that salesperson sells the company’s full line |
| Product sales force structure |
sales force organization under which salespeople specialize in selling only a portion of the company’s products or lines |
| Customer sales force structure |
sales force organization under which salespeople specialize in selling only certain customers to industries |
| Outside sales force |
salespeople who travel to call on customers in the field |
| Inside sales force |
salespeople who conduct business from their offices, via telephone, the internet or visits from prospective buyers |
| Team selling |
using teams of people from sales, marketing, engineering, finance, technical support, and even upper management to service large, complex accounts |
| Sales quotas |
standards stating the amount they should sell and how sales should be divided among the company’s products |
| Selling process |
steps the salesperson follows when selling, which include prospecting and qualifying, preapproach,, approach, presentation and demonstration, handling objections, closing and following |
| Prospecting |
salesperson identifies qualified potential customers |
| Preapproach |
salesperson learns as much as possible about a prospective customer before making a sales call |
| Approach |
salesperson meets the customer for the first time |
| Presentation |
salesperson tells the product “story” to the buyer, highlighting customer benefits and showing how the product solves the customer’s problems |
| Handling objections |
salesperson seeks out, clarifies, and overcomes customer objections to buying |
| Closing |
when the salesperson asks the customer for an order |
| Follow-up |
when the salesperson follows up after the sales to ensure customer satisfaction and repeat business |
| Direct Marketing |
direct communications with carefully targeted individual consumers to obtain an immediate response |
| Customer database |
an organized collection of comprehensive data about individual customer or prospects, including geographic, demographic, psychographic and behavioral data |
| Telephone marketing |
using the telephone to sell directly to customers |
| Catalog Marketing |
direct marketing through print, video, or electronic catalogs that are mailed to select customers, made available in stores, or presented online |
| Direct-Response Television Marketing |
direct marketing via television including direct-response television advertising or infomercials and home shopping channels |
| Integrated direct marketing |
direct marketing campaigns that use multiple vehicles and multiple stages to improve response rates and profits |
