BA 332 Exam 4 Study Guide Chapter 11 ? Retailing and Wholesaling Retailing: includes all the activities involved in selling products or services directly to final consumers for their personal use Retailers are classified based on: Amount of service they offer Breadth and depth of product lines Relative prices charged How they are organized Amount of Service Self-service retailers - Serve customers who are willing to perform their own ?locate-compare- select? process to save money. Limited-service retailers - Provide more sales assistance because they carry shopping goods about which customers need information Full-service retailers - Usually carry more specialty goods for which customers need to be ?waited on.? Breadth and Depth of Product Line Specialty Stores: Carry narrow product lines with deep assortments within those lines Department Stores: Carry a wide variety of product lines ? typically clothing, home furnishings, and household goods. Each line is operated as a separate department managed by specialist buyers or merchandisers. Supermarket: Large, low-cost, low-margin, high-volume, self-service store that carries a wide variety of food, laundry, and household products. Convenience Stores: Small stores located near residential areas that are open long hours 7 days a week and carry a limited line of high-turnover convenience goods. Superstores: Much larger than regular supermarkets and offer a large assortment of routinely purchased food products, nonfood items, and services. Category Killers: Giant specialty stores that carry a very deep assortment of a particular line and are staffed by knowledgeable employees. Relative Prices Classifications Discount Store: A retail institution that sells standard merchandise at lower prices by accepting lower margins and selling at high volume. Off-Price Retailer: Retailer that buys at less-than-regular wholesale prices and sells at less than retail. - Factory outlets, warehouse clubs Factory Outlet: Off-price retailing operation that is owned and operated by a manufacturer and that normally carries the manufacturer?s surplus, discontinued, or irregular goods. Warehouse Club: Off-price retailer that sells a limited selection of brand-name grocery items, appliances, clothing, and a hodgepodge of other goods at deep discounts to members who pay annual membership fees. Organizational Classification Chain Stores: Two or more outlets that are owned or controlled, have central buying and merchandising, and sell similar lines of merchandise. Voluntary Chain: A wholesaler-sponsored group of independent retailers that engage in bulk buying and common merchandising. Franchise: A contractual association between a manufacturer, wholesaler, or service organization (a franchiser) and independent businesspeople (franchisees) who buy the right to own and operate one or more units in the franchise system. Retailer Marketing Decisions Retailer Strategy - Segmentation and targeting - Store differentiation and positioning - Retail Marketing Mix Retailers cannot make meaningful decisions related to the retail marketing mix until they first define and profile their target market. Assortment and Services Decisions Product Assortment: Brand of merchandise, merchandising events Services Mix: different numbers and types of services are key to non-price store differentiation Store Atmosphere: physical layout and ?feel? of the store Price, Promotion, and Place Decisions Price policy must fit its target market and positioning, product and service assortment, and competition Can use any or all of the promotion tools ? advertising, personal selling, sales promotion, public relations, and direct marketing ? to reach consumers Retailers can locate in CBDs (central business districts), various types of shopping centers, strip malls, etc. Lifestyle Centers The current trend is? - Powercenters: huge enclosed shopping malls - Lifestyle centers: smaller malls with upscale stores and nonretail activities such as dining and a movie theatre in affluent areas - Or a combination of both The Future of Retailing new retail forms and shortening retail life cycles growth of nonstore retailing retail convergence rise of the megaretailers growing importance of retail technology global expansion of major retailers retail stores as ?communities? or ?hangouts? Wholesaling: includes all activities involved in selling goods and services to those buying for resale or business use. Functions Provided by Wholesalers Selling and promoting Buying and assortment building Bulk-Breaking Warehousing Transportation Financing Risk Bearing Market Information Management Services and Advice Types of Wholesalers Merchant Wholesalers - Largest group of wholesalers - Account for 50% of wholesaling - Two broad categories 1. Full-service wholesalers 2. Limited-service wholesalers Brokers and Agents - do not take title to goods - perform fewer functions - specialize by product line - Agents represent buyers on a more permanent basis - specialize by customer type Trends in Wholesaling Must constantly improve services and reduce costs Distinction between large retailers and wholesalers is blurry Will continue to increase the services provided to retailers Wholesalers are now going global Chapter 12 ? Communicating Customer Value: Advertising and Public Relations Firms are doing less broadcasting and more narrowcasting. A strong need for integrated marketing communications (IMC) exists because conflicting messages from different sources can create confusion or blur brand perceptions. Marketing Communications Mix Advertising Sales Promotion Public Relations Personal Selling Direct Marketing Advertising Advertising is used by: - Business firms - Nonprofit organizations - Professionals - Social agencies - Government Setting Advertising Objectives An advertising objective is a specific communication task to be accomplished with a specific target audience during a specific period of time. Classified by purpose: - Inform - Persuade - Compare - Remind Setting the Advertising Budget Affordable: based on what the company thinks it can afford Percentage-of-Sales: based on a percentage of current or forecasted sales Competitive-Parity: set budget to match competitors Objective-and-Task: set objectives, determine tasks to achieve objectives, sum of task costs equals budget Advertising Strategy Consists of two major elements: - Creating advertising messages - Selecting advertising media The Message Strategy Identify customer benefits Develop Compelling Creative Concept, The ?Big Idea? Advertising appeals should be meaningful, believable, and distinctive Message Execution Typical Approaches - Lifestyle - Fantasy - Mood or Image - Musical - Personality Symbol - Technical Expertise - Scientific Evidence - Testimonial Evidence or Endorsement - Slice of Life Selecting Advertising Media Reach: percentage of people exposed to ad Frequency: number of times a person is exposed to an ad Media Impact: the qualitative value of a message exposure through a given medium Choosing Media Type Factors to consider: - Media habits of target customers - Nature of the product - Type of message - Cost - Media vehicles: specific media within general media type Deciding on Media Timing Must decide how to schedule the advertising over the course of a year - Follow seasonal pattern - Oppose seasonal pattern - Same coverage all year Choose the pattern of the ads - Continuity - pulsing Evaluating Advertising Measure the communication effects of an ad. - ?Copy Testing? Measure the sales effects of an ad. - Is the ad increasing sales? Other Advertising Considerations International advertising issues: - To what degree should global advertising be adapting to various countries? - Greater need for standardization of global brand advertising strategies. - Specific to local cultures and other factors. 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. used to promote products, people, places, ideas, activities, organizations, and even nations - The ?I Love New York!? campaign attracted millions more tourists to the city. Public Relations Functions Press relations or press agency Product publicity Public affairs Lobbying Investor relations Development Public Relations Tools News Speeches Special events Buzz marketing Mobile marketing Written materials Audiovisual materials Corporate identity materials Public service activities Chapter 13 ? Personal Selling and Sales Promotion The Nature of Personal Selling Salespeople want to build long-term customer relationships. Order taker: Department store clerk Order getter: Demands creative selling and relationship building. The Role of the Sales Force Personal selling is a paid, personal form of promotion. Involves two-way personal communication between salespeople and individual customers. Salespeople: Represent a company to customers by performing one or more of the following activities: prospecting communicating selling servicing information gathering relationship building Sales Force serves as critical link between company and its customers - they represent the company to the customers - they represent the customers to the company - Goal = Customer Satisfaction and Company Profit Major Steps in Sales Force Management Designing sales force strategy and structure Recruiting and selecting salespeople Training salespeople Compensating salespeople Supervising salespeople Evaluating salespeople Sales Force Structure Territorial: Salesperson assigned to exclusive area and sells full line of products Product: Sales force sells only certain product lines Customer: Sales force organizes along customer or industry lines Complex: Combination of several types of structures Inside Sales Force Conduct business from their offices via telephone or visits from perspective buyers. Team Selling Used to service large, complex accounts. Can find problems, solutions, and sales opportunities that no single salesperson could. Can include experts from any area of selling firm. Pitfalls to Team Selling: Salespeople are competitive and have typically been rewarded on the basis of individual performance. Team selling can confuse or overwhelm customers. Some people have trouble working in teams. Difficult to evaluate individual contributions. Recruiting and Selecting Salespeople key talents of salespeople - Intrinsic motivations - Disciplined work style - Ability to close a sale - Ability to build relationships with customers Recruiting Salespeople Recommendations from current sales force Employment agencies Classified ads Web searches College students Recruit from other companies Sales Force Training Goals Learn about and identify with the company Learn about the company?s products Learn customers? and competitors? characteristics Learn how to make effective presentations Learn field procedures and responsibilities Compensating Salespeople Fixed amount: Salary Variable amount: Commissions or bonuses Expenses: Repays for job-related expenditures Fringe benefits: Vacations, sick leave, pension, etc. Supervising Salespeople Directing Salespeople Help them identify customers and set call norms. Specify time to be spent prospecting Annual call plan Time-and-duty analysis Sales force automation systems Annual Call Plan: shows which customers and prospects to call on in which months and which activities to carry out. Activities include taking part in trade shows, attending sales meetings, and carrying out marketing research. Time-and ?Duty Analysis: Assessment of time spent selling, traveling, waiting, eating, taking breaks, and doing administrative tasks. Sales Force Automation: computerized sales force operations for more efficient order-entry transactions, improved customer service, and better salesperson decision-making support. How Salespeople Spend Their Time Supervising Salespeople Motivating Salespeople Organizational climate Sales quotas Positive incentives: Sales meetings Sales contests Recognition and honors Cash awards, trips, profit sharing Major Steps in Effective Selling Prospecting and Qualifying Preapproach Approach Presentation and demonstration Handling objections Closing Follow-up Rapid Growth of Sales Promotion Rapid Growth in the Industry has been achieved because? Product managers are facing more pressure to increase their current sales. Companies face more competition from less differentiated brands. Advertising efficiency has declined. Consumers have become more deal oriented. Developing the Sales Promotion Program Decide on the Size of the Incentive Set Conditions for Participation Decide how to promote and distribute the promotion program Decide on the length of the program Evaluate the Program Chapter 15 ? The Global Marketplace Global Marketing in the 21st Century The world is shrinking rapidly with the advent of faster communication, transportation, and financial flows. International trade is booming and accounts for 25% of U.S. GDP. Global competition is intensifying. Higher risks with globalization. Cultural Environment Sellers must examine the ways consumers in different countries think about and use products before planning a marketing program. Business norms vary from country to country. Companies that understand cultural nuances can use them to advantage when positioning products internationally. Deciding Whether to Go Global Reasons to consider going global - Foreign attacks on domestic markets may be countered by counterattacks abroad. - Home market may be stagnant or shrinking while foreign markets offer higher profit opportunities. - Customers may be expanding globally and require international servicing. - Foreign markets with higher profit opportunities - Need larger customer base to achieve economies of scale - Follow customers who are expanding Market Entry Strategies Exporting - Indirect: Working through independent international marketing intermediaries. - Direct: Company handles its own exports. Joint Venturing - Joining with foreign companies to produce or market a product or service. Approaches: - Licensing - Contract manufacturing - Management contracting - Joint ownership Direct Investment: The development of foreign-based assembly or manufacturing facilities. This approach has both advantages and disadvantages. Deciding on the Global Marketing Program Standardized Marketing Mix: - Selling largely the same products and using the same marketing approaches worldwide. Adapted Marketing Mix: - Producer adjusts the marketing mix elements to each target market, bearing more costs but hoping for a larger market share and return Five Global Product and Promotion Strategies Global Product Strategies Straight product extension: - Marketing a product in a foreign market without any change. Product adaptation: - Adapting a product to meet local conditions or wants in foreign markets. Product invention: - Creating new products or services for foreign markets. Global Promotion Strategies Can use a standardized theme globally, but may have to make adjustments for language or cultural differences. Communication Adaptation: - Fully adapting an advertising message for local markets. Changes may have to be made due to media availability. Global Pricing Strategies Companies face many problems in setting their international prices. Possible approaches include: Charge a uniform price all around the world. Charge what consumers in each country will pay. Use a standard markup of costs everywhere. International prices tend to be higher than domestic prices because of price escalation. Companies may become guilty of dumping ?a foreign subsidiary charges less than its costs or less than it charges in its home market. Deciding on the Global Marketing Organization Organize an export department Create international divisions Geographical organizations World product groups International subsidiaries Become a global organization
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