Types of Channel Conflict (Chapter 12)

• Channel Conflict: arises when one channel member believes another channel member is engaged in behavior that prevents it from achieving its goals
• Vertical Conflict: occurs between different levels in a marketing channel - for example, between a manufacturer and a wholesaler or retailer or between a wholesaler and a retailer
- First, conflict arises when a channel member bypasses another member and sells or buys products direct, a practice called disintermediation.
- Second, conflict occurs due to disagreements over how profit margins are distributed among channel members.
- A third conflict situation arises when manufacturers believe wholesalers or retailers are not giving their products adequate attention
• Horizontal Conflict: occurs between intermediaries at the same level in a marketing channel, such as between two or more retailers or two or more wholesalers that handle the same manufacturer's brands.
• Two sources of horizontal conflict are common.
- First, horizontal conflict arises when a manufacturer increases its distribution coverage in a geographical area.
- Second, dual distribution causes conflict when different types of retailers carry the same brands.

Dual Distribution (Chapter 12)

• an arrangement whereby a firm reaches different buyers by using two or more different types of channels for the same basic product
• for example, GE sells its large appliances directly to home and apartment builders but uses retail stores, like Lowe's, to sell to consumers.

<<< Example: Kellogg selling direct & to retailers thru wholesalers

Multichannel Marketing (Chapter 12)

Multichannel Marketing: the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online.
• seeks to integrate a firm's electronic marketing and delivery channels
- at Eddie Bauer for example, every effort is made to make the apparel shopping and purchase experience for its customers the same across its retail store, catalog, and website channels.
• multichannel marketing also can leverage the value-adding capabilities of different channels
- for example, retail stores leverage their physical presence by allowing customers to pick up their online orders at a nearby store or return or exchange non-store purchases if they wish

<<< Example: Bath & Body Works; Hobby Lobby

Direct Channel vs Indirect Channel (Chapter 12)

Marketing Channels for Consumer Products and Services
• Direct Channel: the producer and the ultimate consumers deal directly with each other
• Indirect Channel: intermediaries are inserted between the producer and consumers and perform numerous channel functions
- most common is when a retailer is large and can buy in large quantities from a producer or when the cost of inventory makes it too expensive to use a wholesaler.

Marketing Channels for Business Products and Services
• Direct Channel: firms using this channel maintain their own salesforce and perform all channel functions.
- this channel is employed when buyers are large and well defined, the sales effort requires extensive negotiations, and the products are of high unit value and require hands-on expertise in terms of installation or use
• Indirect Channel: with one or more intermediaries between the producer and the industrial user
look at page 302-303

Vertical Marketing Systems (Chapter 12)

• professionally managed and centrally coordinated marketing channels designed to achieve channel economies and maximum marketing impact
- Corporate
- Contractual
- Franchising
- Administered
>>> Examples: VMS
> Luxottica brands thru LensCrafters
> Coca-Cola bottlers
> KFC, CiCi Pizza, Enterprise
> Walmart

Factors Affecting Channel Choice (Chapter 12)

• marketing executives consider three questions when choosing a marketing channel and intermediaries:
1. Which channel and intermediaries will provide the best coverage of the target market?
- achieving the best coverage the target market requires attention to the density (which is the number of stores in a geographical area) and type of intermediaries to be used at the retail level of distribution
- three degrees of density exist:
< Intensive distribution: means that a firm tries to place its products and services in as many outlets as possible. It is usually chosen for convenience products or services such as candy, fast food, newspapers, and soft drinks. (EXAMPLES: Redbox movie rental and Microwave popcorn)
< Exclusive distribution: the extreme opposite of intensive distribution because only one retailer in a specific geographical area carries the firm's products. It is typically chosen for specialty products or services, such as some women's fragrances and men's and women's apparel and accessories. Retailers and industrial distributors prefer exclusive distribution for two reasons. First, it limits head-to-head competition for an identical product. Second, it provides a point of difference for a retailer or distributor (EXAMPLE: Lionel miniature train set)
< Selective distribution: lies between these two extremes and means that a firm selects a few retailers in a specific geographical area to carry its products. It weds some of the market coverage benefits of intensive distribution to the control over resale evident with exclusive distribution. (EXAMPLES: SmartCar dealership, pediatric dentist, and hotel chain that caters to travelers (air, train, car, etc.))
2. Which channel and intermediaries will best satisfy the buying requirements of the target market?
< a second consideration in channel choice is gaining access to channels and intermediaries that satisfy at least some of the interest buyers might want fulfilled when they purchase a firm's products or services. These interests fall into four broad categories: (1) information, (2) convenience, (3) variety, and (4) pre- or post-sale services. Each relates to customer experience.
> (1) Information: an important requirement when buyers have limited knowledge or desire specific data about a product or service. Properly chosen intermediaries communicate with buyers through in-store displays, demonstrations, and personal selling
> (2) Convenience: it has multiple meanings for buyers, such as proximity or driving time to a retail outlet (i.e. candy in 24 hr stores). For other consumers, convenience means a minimum of time and hassle (i.e. Jiffy Lube promising to change engine oil and filters quickly). For those who shop on the internet, convenience means that websites must be easy to locate and navigate, and image downloads must be fast.
> (3) Variety: reflects buyers' interest in having numerous competing and complementary items from which to choose. Variety is evident in the breadth and depth of products and brands carried by intermediaries, which enhances their attraction to buyers.
> (4) Pre- or Post-Sale Services: provided by intermediaries are an important buying requirement for products such as large household appliances, that require delivery, installation, and credit.
3. Which channel and intermediaries will be the most profitable?
< profitability is determined by the margins earned (revenue minus cost) for each channel member and for the channel as a whole. Channel cost is the critical dimension of profitability. These costs include distribution, advertising, and selling expenses associated with different types of marketing channels. The extent to which channel members share these costs determines the margins received by each member and by the channel as a whole.

Logistics vs Supply Chain (Chapter 12)

• Logistics: those activities that focus on getting the right amount of the right products to the right place at the right time at the lowest possible cost

• Supply Chain: the various firms involved in performing the activities required to create and deliver a product or service to consumers or industrial users

• Importance:
- Critical component of marketing mix
- Strategic competitive advantage
- Basis for competition among larger retailers
< Amazon (next day free shipping)
< Wal-Mart (site to store)
< USDA web-based system directly linking farmers w/ distributors & wholesalers

Strategic Channel Alliance (Chapter 12)

an innovation in marketing channels is the use of strategic channel alliances, whereby one firm's marketing channel is used to sell another firm's products
• strategic alliances are popular in global marketing where the creation of marketing channel relationships is expensive and time-consuming
• for example, General Mills and Nestle have an extensive alliance that spans about 140 international markets from Mexico to China.

>>>> Example: Warner Co. produce & distribute movies in China w/ partner

Retailing is... (Chapter 13)

• All activities involved in
‒ selling
‒ renting &
‒ providing
• products & services to
• ultimate consumers for
• personal, family or household use.
• the set of activities that add value to
- products & services
- sold to consumers
- for their personal, family or household
use.

Consumer Utilities Offered by Retailing (Chapter 13)

• The utilities provided by retailers create value for consumers. Time, place, form, and possession utilities are offered by most retailers in varying degrees, but one utility is often emphasized more than others.
- Providing mini banks in supermarkets, as Wells Fargo does, puts the bank's products and services close to the consumer, providing place utility.
- By providing financing or leasing and taking used cards as trade-ins, CarMax makes the purchase easier and provides possession utility.
- Form utility - production or alteration of a product - is offered by Ralph Lauren through its online Create Your Own program, which offers shirts that meet each customer's specifications.
- Finding the right sporting equipment during the off-season is the time utility provided by Sports Authority.
• Many retailers offer a combination of the four basic utilities. Some supermarkets for example offer convenient locations (place utility); are open 24 hours a day (time utility); customize purchases in the bakery, deli, and florist (form utility); and allow several payment and credit options (possession utility).

Classifications of Retail Outlets (Chapter 13)

• Form of Ownership:
- Independent Retailer:
< One of the most common forms of retail ownership is the independent business owned by an individual.
< Advantage of this form is the owner is the boss.
< For customers, the independent store can offer convenience, personal service, and lifestyle compatibility
- Corporate Chain:
< Involves multiple outlets under common ownership
< In a chain operation, centralization in decision making and purchasing is common
< Chain stores have advantages in dealing with manufacturers, particularly as the size of the chain grows. A large chain can bargain with a manufacturer to obtain good service or volume discounts on orders
< For consumers, the buying power of chains translates into lower prices compared with other types of stores
< Consumers also benefit in dealing with chains because there are multiple outlets with similar merchandise and consistent management policies.
< Large chains such as Walmart are implementing pioneering new technologies such as radio frequency identification (RFID) tags to improve the quality of information available about products
- Contractual Systems:
< Involve independently owned stores that band together to act like a chain.
< One retailer-sponsored cooperative is Associative Grocers, which consists of neighborhood grocers that all agree with several other independent grocers to buy their goods directly from food manufacturers. In this way, members can take advantage of volume discounts commonly available to chains and also give the impression of being a large chain, which may be viewed more favorably by some consumers. Wholesaler sponsored voluntary chains such as Independent Grocers Alliance try to achieve similar benefits.
< In a franchise system, an individual or firm (the franchisee) contracts with a parent company (the franchisor) to set up a business or retail outlet. The franchisor usually assists in selecting the location, setting up the store or facility, advertising, and training personnel. The franchisee usually pays a one-time franchisee fee and an annual royalty, usually tied to the franchise's sales.
> There are two general types of franchises: Business-Format Franchises (the franchisor provides step-by-step procedures for most aspects of the business and guidelines for the most likely decisions a franchisee will face), such as McDonald's, RadioShack, and Subway, and Product-Distribtution Franchises (the franchisor provides a few general guidelines and the franchisee is much more independent), such as a Ford dealership or a Coca-Cola distributor.

• Level of Service
- Self-Service:
< Requires that customers perform many functions during the purchase process (i.e. Walmart's self checkout and place order through app for Pizza Hut)
< Save time and save money
- Limited Service:
< Provide some services, such as credit and merchandise return, but not others, such as clothing alterations.
< General merchandise stores such as Walmart, Kmart, and Target are usually considered limited service outlets
< Customers are responsible for most shopping activities, although salespeople are available in departments such as consumer electronics, jewelry, and lawn and garden.
< More sales assistance and some services 
- Full Service:
< Incluse most specialty stores and department stores
< Provide many services to their customers
< Rely on better service to sell more distinctive, higher-margin goods and to retain their customers
< More personal sales assistance and personalized services

• Type of Merchandise Line
- Depth of Line:
< Vast assortment of related line of items, e.g. Sports Authority
< Tremendous depth in one primary line, e.g. Victoria's Secret
< Focus on one product category, e.g. Rack Room (shoes)
< Save time, save money, and knowledgeable salespeople
< Number of items within product line
- Breadth of Line
< Broad product lines w/ limited depth , e.g. Macy's
< Everything under one roof
< Scrambled Merchandising: offering several unrelated product lines in a single store (i.e. the modern drug store)
< Number of different product lines

Types of Non-Store Retailers (Chapter 13)

• Automatic Vending: Vending machines
• Direct Mail and Catalogs
• Television Home Shopping
• Online Retailing
• Telemarketing: using the telephone to interact with and sell directly to consumers
• Direct Selling

Components of Retail Strategy (Chapter 13)

• Definition #1: Long-term course of action to deliver unique customer experiences
• Definition #2: A detailed plan of how a business intends to offer products/services to consumers and influence their purchase decisions
• Retailing Strategy is all about these three things...
- Get consumers into store
- Convert consumers into customers
- Do this at the lowest possible operating cost that is consistent w/ level of service expected
• Retail Store Positioning: Breath of Product Line (y-axis) vs Value Added Graph (x-axis)
< Broad breadth of product line & Low value added = Walmart and Costco
< Narrow breadth of product line & Low value added = Payless ShoeSource and Claire's
< Broad breadth of product line & High value added = Bloomingdales and Belk's
< Narrow breadth of product line & High value added = Jimmy Choo and Dick's

• In developing a retailing strategy, managers work with he retailing mix, which includes activities related to managing the store and the merchandise in the store. The retailing mix is similar to the marketing mix and includes retail pricing, store location, retail communication, and merchandise.
• Retailing mix:
- Positioning matrix
< Breadth of product line
< Value added
- Merchandise assortment
< Breadth of product line
< Depth of product line
- Pricing
< Markups: refers to how much should be added to the cost the retailer paid for a product to reach the final selling price
< Markdowns: occurs when the product does not sell at the original price and an adjustment is necessary
< Off-price retailing: selling brand-name merchandise at lower than regular prices
- Store location
< Business district/"downtown" / Central Business District
< Shopping center/mall / Regional Shopping Centers
- Communications
< Image
< Atmosphere or ambiance
- Merchandise: managing the assortment of merchandise
< two most popular measures for retailers are sales per square foot and same-store sales growth

Wheel of Retailing vs Retail Life Cycle (Chapter 13)

• The Wheel of Retailing: a concept that describes how new forms of retail outlets enter the market.
- Usually they enter as low-status, low-margin stores. Gradually these outlets add fixtures and more embellishments to their stores to increase attractiveness to customers. With these additions, prices and status rise. As time passes, these outlets add even more services and their prices and statuses go higher.

• The Retail Life Cycle: the process of growth and decline that retail outlets experience over time.
- Early Growth (stage of emergence for a retail outlet), Accelerated Development (later competitors may enter and the key goal is to establish a dominant position in the fight for market share), Maturity Stage (some competitors drop out of market and stores try to maintain their market share and price discounting occurs), Decline Stage (market share and profit fall rapidly)

Types of Wholesalers (Chapter 13)

• Merchant Wholesalers:
- independently owned firms that take title to the merchandise they handle
- classified as either full-service or limited-service wholesalers, depending on the number of functions performed
- two major types of full-service wholesalers exist:
1. General Merchandise Wholesalers: carry a broad assortment of merchandise and perform all channel functions. Most prevalent in the hardware, drug, and clothing industries. However, these wholesalers do not maintain much depth of assortment within specific product lines
2. Specialty Merchandise Wholesalers: offer a relatively narrow range of products but have an extensive assortment within the product lines carried. They perform all channel functions and are found in the health foods, automotive parts, and seafood industries

- four major types of limited-service wholesalers exist:
1. Rack jobbers: furnish the racks or shelves that display merchandise in retail stores, perform all channel functions, and sell on consignment to retailers, which means they retain the title to the products displayed and bill retailers only for the merchandise sold. Familiar products such as toys, housewares, and health and beauty items are sold by rack jobbers.
2. Cash and carry wholesalers: take title to merchandise but sell only to buyers who call on them, pay cash for merchandise, and furnish their own transportation for merchandise. They carry a limited product assortment and do not make deliveries, extend credit, or supply market information. This type of wholesaler is common in electric supplies, office supplies, hardware products, and groceries.
3. Drop shippers or desk jobbers: are wholesalers that own the merchandise they sell but do not physically handle, stock, or deliver it. They simply solicit orders from retailers and other wholesalers and have the merchandise shipped directly from a producer to a buyer. They are used for bulky products such as coal, lumber, and chemicals, which are solid in extremely large quantities.
4. Truck jobbers: are small wholesalers that have a small warehouse from which they stock their trucks for distribution to retailers. They usually handle limited assortments of fast-moving or perishable items that are sold for cash directly from trucks in their original packages. They handle products such as bakery items, dairy products, and meat.

• Agents and Brokers make their profit from commissions or fees paid for their services, whereas merchant wholesalers make their profit from the sale of the merchandise they own
• Manufacturer's agents and selling agents are the two major types of agents used by producers
• Manufacturer's agents work for several producers and carry noncompetitive, complementary merchandise in an exclusive territory. They act as a producers sales arm in a territory and are principally responsible for the transactional channel functions, primarily selling. They are used extensively in the automotive supply, footwear, and fabricated steel industries.
• Selling agents represent a single producer and are responsible for the entire marketing function of that producer. They design promotional plans, set prices, determine distribution policies, and make recommendations on product strategy. Selling agents are used by small producers in the textile, apparel, food, and home furnishing industries.
• Brokers are independent firms or individuals whose principal function is to bring buyers and sellers together to make sales. Brokers, unlike agents, usually have no continuous relationship with the buyer or seller but negotiate a contract between two parties and then move on to another task. They are used extensively by producers of seasonal products (such as fruits and vegetables) and in the real estate industry.

Elements of Social Media Strategy (Chapter 16)

• How social media ties to the strategic marketing process
• How to select a social network
• How social media can be used to generate sales
• How to measure the results of the social media program

Social Media Performance Measures (Chapter 16)

• Measures linked to inputs or costs - cost per thousands (CPM), cost per click (CPC), and cost per action (CPA)

• Measures linked to outputs or revenues - users/members, fans, share of voice, page views, visitors, unique visitors, average page views per visitor, interaction rate, click-through rate (CTR), and fan source

Marketplace vs Marketspace (Chapter 18)

Marketplace:
• Traditional
• Here buyers and sellers engage in face-to-face exchange relationships in a material environment characterized by physical facilities (stores and offices) and mostly tangible objects

Marketspace:
• an Internet-enabled digital environment characterized by face-to-screen exchange relationships and electronic images and offerings

Interactive Marketing vs Multichannel Marketing (Chapter 18)

• Interactive Marketing: Two-way buyer-seller electronic communication in a computer-mediated environment in which the buyer controls the kind and amount of information received from the seller.
It is characterized by sophisticated choice board and personalization systems that transform information supplied by customers into customized responses to their individual needs.
- Interactivity - "listening" & responding to customer needs
- Individuality - empowering consumers to...
Influence time & extent of buyer-seller interaction AND Have a say....
< Kinds of products & services they buy
< Information they receive
< Prices they pay

• Multichannel Marketing: blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, building relationships with consumers who shop and buy online and in traditional marketplace - the cross channel shopper

Marketspace Utilities (Chapter 18)

• Place and Time Utility: in marketspace, the provision of direct, on-demand information is possible from marketers anywhere to customers anywhere, at any time. Operating hours and geographical constraints do not exist in marketspace.
• Possession Utility: getting a product or service to consumers so they can own or use it - is accelerated. Airline, car rental, and lodging electronic reservation systems allow comparison shopping for the lowest fares, rents, and rates and almost immediate access to and confirmation of travel arrangements and accommodations.
• Form Utility: The greatest marketspace opportunity for marketers. Interactive two-way Internet-enabled communication capabilities in marketspace invite consumers to tell marketers specifically what their requirements are, making customization of a product or service to fit their exact needs possible.

Choiceboard vs Personalization (Chapter 18)

• Choiceboard: an interactive, internet-enabled system that allows individual customers to design their own products and services by answering a few questions and choosing from a menu of product or service attributes (or components), prices, and delivery options. (marketer-initiated efforts)

• Personalization: the buyer-initiated practice of generating content on a marketer's website that is custom tailored to an individual's specific needs and preferences.
- Permission marketing
< Consumer consent ("opt in")
< Receive email & ads
< Personal data from consumer
< Proven way to build & maintain relationships

7 C's of Web Design (Chapter 18)

• Companies produce a customer experience through seven website design elements
1. Context: refers to a websites aesthetic appeal and the functional look and feel of the site's layout and visual design
2. Content: applies to all digital information on a website, including the presentation form - text, video, audio, and graphics
3. Customization: the ability of a site to modify itself to, or be modified by and for, each individual user
4. Connection: the network of linkages between a company's site and other sites. These links are embedded in the website; appear as highlighted words, a picture, or graphic; and allow a user to effortlessly visit other sites with a mouse click
5. Communication: refers to the dialogue that unfolds between the website and its users
6. Community: many company websites encourage user-to-user communications hosted by the company to create virtual communities, or simply, community. This design element is popular because it has been shown to enhance customer experience and build a favorable buyer-seller relationships
7. Commerce: the website's ability to conduct sales transactions for products and services

Online Buyer: who, what, why, when and where (Chapter 18)

• Who:
^ Online buyer
- Access to computer or cell phone, smartphone
- Female vs male
- Younger
- Better educated
- More affluent
• What they buy/want:
Audio/video demos
Digital items
Unique items
Convenience items
Standardized items
Product information
• Why they buy (6 C's):
Convenience: ease of purchase
Choice: selection of items; assistance
Customization: individualize product & marketing, overall experience for each customer
Communication: interaction between marketer & customer
Cost: same or cheaper than stores
Control: empowered over shopping & purchase decision process

Cross Channel Shopper (Chapter 18)

• an online customer who researches products online and then purchases them at a retail store
• they want the right products at the best price and they don't want to wait several days for delivery
• Top reasons they research items online before buying in stores is...
^ Compares products among retailers
^ Obtains information not in stores
^ Reduces trips to multiple retail locations

Showrooming (Chapter 18)

Occurs when a shopper visits a retail store to inspect merchandise but then goes online to compare prices from other retail and online sellers to attempt to make the best purchase

Promotional vs Transactional Website(Chapter 18)

Uses either...
• Transactional websites: electronic storefronts. They focus principally on converting an online browser into an online, catalog, or in-store buyer using the website design elements.
- Cannibalization: it is the negative impact of a company's new product on the sales performance of its existing and related products. It refers to a situation where a new product "eats" up the sales and demand of an existing product, potentially reducing overall sales, even if sales of the new product are increasing. This can negatively affect both the sales volume and market share of the existing product.
- Channel conflict: the potential harm to trade relationships with their retailing intermediaries.
• Promotional websites: advertise and promote a company's products and services and provide information on how items can be used and where they can be purchased.
- Interactive experiences
- Interest & trial
- Separate website for each brand
- Support traditional marketing channel

PizzaHut & IMC (Case Study)

check powerpoint

Amazon (Case Study)

• How do Amazon logistics & supply chain activities help create value for the customer?
• What systems did Amazon develop to improve the flow of products? What systems improved the flow of orders?
• Why will logistics & supply chain play an important role in Amazon's future?