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Marketing - Global Approach
Published: August 13, 2009
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- Marketing - Global Approach
- Part I. Marketing Role in the Global Economy
- Production
- Making goods or performing services
- Customer satisfaction
- The extent to which a firm fulfills a customer's needs, desires, and expectations.
- Utility
- The power to satisfy human needs.
- Form utility
- Is provided when someone produces something tangible that someone needs or wants.
- Task utility
- Is provided when someone performs a task for someone else that someone needs or wants.
- Time utility
- Having the product available when the customer wants it.
- Possession utility
- Obtaining a good or service and having the right to use or consume it.
- Micro-marketing
- The performance of activities that seek to accomplish an organization's objectives by anticipating customer or client needs and directing a flow of need-satisfying goods and services from producer to customer or client.
- Macro-marketing
- The social process that directs an economy's flow of goods and services from producers to consumers in a way that effectively matches supply and demand and accomplishes the objectives of society.
- Economic system
- The way an economy organizes to use scarce resources to produce goods and services and distribute them for consumption by various people and groups in the society.
- Planned economic system
- Government planners decide what and how much is to be produced and distributed by whom, when, to whom, and why.
- Market-direct economic system
- The individual decisions of the many producers and consumers make the macro-level decisions for the whole economy.
- Micro-macro dilemma
- Producers and consumers making free choices can cause conflicts and difficulties. What is good for some producers and consumers may not be good for society as a whole.
- Pure subsistence economy
- Each family produces everything it consumes.
- Market
- A group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods and/or services.
- Central markets
- Convenient places in primitive economies where buyers and sellers can meet one-on-one to exchange goods and services.
- Middleman (or Intermediary)
- Someone who specializes in trade rather than production - wholesalers & retailers
- Tariffs
- Taxes on imported products
- Quotas
- Set the specific quantities of products that can move into or out of a country.
- Countertrade
- A special type of bartering in which products from one country are traded for products from another country.
- World Trade Organization
- The only international body dealing with the rules of trade between nations.
- Economies of scale
- As a company produces larger numbers of a particular product, the cost for each of these products goes down.
- Universal functions of marketing
- Buying, selling, transporting, storing, standardization and grading, financing, risk taking, and market information.
- Buying function
- Looking for and evaluating goods and services.
- Selling function
- Involves promoting the product. It includes the use of personal selling, advertising, and other direct and mass-selling methods.
- Transporting function
- The movement of goods from one place to another.
- Storing function
- Holding goods until customers need them.
- Standardization and grading
- Involve sorting products according to size and quality.
- Financing
- Provides the necessary cash and credit to produce, transport, store, promote, sell, and buy products.
- Risk taking
- Involves bearing the uncertainties that are part of the marketing process.
- Market information function
- Involves the collection, analysis, and distribution of all the information needed to plan, carry out, and control marketing activities.
- Facilitators
- Firms that provided one or more of the marketing functions other than buying or selling. (Advertising agencies, marketing research firms, independent product-testing laboratories, Internet service providers, public warehouses, transporting firms, communications companies, and financial institutions (including banks).
- Innovation
- The development and spread of new ideas and products.
- E-Commerce
- Exchanges between individuals or organizations - and activities that facilitate those exchanges - based on applications of information technology.
- Marketing ethics
- The moral standards that guide marketing decisions and actions.
- Part II. Marketing's Role within the Firm or Nonprofit Organization
- Simple trade era
- A time when families traded or sold their 'surplus' output to local middlemen. These specialists resold the goods to other consumers or distant middlemen.
- Production era (Industrial Revolution to 1920)
- A time when a company focuses on production of a few specific products - perhaps because few of these products are available in the market.
- Sales era (1930)
- A time when a company emphasizes selling because of increased competition.
- Marketing department era (1950)
- A time when all marketing activities are brought under control of one department to improve short-run policy planning and to try to integrate the firm's activities.
- Marketing company era (1960)
- A time when, in addition to short-run marketing planning, marketing people develop long-range plans - sometimes five or more years ahead - and the whole company effort is guided by the marketing concept.
- Marketing concept
- Means that an organization aims all its efforts at satisfying its customers - at a profit. Three basic ideas are included in the definition of the marketing concept: 1. customer satisfaction, 2. a total company effort, and 3. profit - not just sales - as an objective.
- Production orientation
- Making whatever products are easy to produce and then trying to sell them.
- Marketing orientation
- Trying to carry out the marketing concept. Instead of just trying to get customers to buy what the firm has produced, a marketing-oriented firm tries to offer customers what they need.
- Customer value
- The difference between the benefits a customer sees from a market offering and the costs of obtaining those benefits.
- Social responsibility
- A firm's obligation to improve its positive effects on society and reduce its negative effects.
- Marketing management process
- The process of 1. planning marketing activities. 2. Directing the implementation of the plans, and 3. Controlling these plans.
- Strategic (management) planning
- The managerial process of developing and maintaining a match between an organization's resources and its market opportunities.
- Marketing strategy
- Specifies a target market and a related marketing mix. It is a big picture of what a firm will do in some market with two parts, target market, and marketing mix.
- Target market
- A fairly homogenous (similar) group of customers to whom a company wishes to appeal.
- Marketing mix
- The controllable variables the company puts together to satisfy this target group.
- Target marketing
- Says that a marketing mix is tailored to fit some specific target customers.
- Mass marketing
- The typical production-oriented approach - vaguely aims at 'everyone' with the same marketing mix. Mass marketing assumes that everyone is the same - and it considers everyone to be a potential customer.
- Channel of distribution
- Any series of firms (or individuals) who participate in the flow of products from producer to final user or consumer.
- Personal selling
- Involves direct spoken communication between sellers and potential customers.
- Mass selling
- Is communicating with large numbers of customers at the same time.
- Advertising
- The main form of mass selling - any paid form of nonpersonal presentation of ideas, goods, or services by an identified sponsor.
- Publicity
- Any unpaid form of nonpersonal presentation of ideas, goods, or services - another form of mass selling.
- Sales promotion
- Promotional activities - other than advertising, publicity, and personal selling - that stimulate interest, trial, or purchase by final customers or other sin the channel. This can involve coupons, point-of-purchase materials, samples, signs, catalogs, novelties, and circulars.
- Marketing plan
- A written statement of marketing strategy and the time-related details for carrying out the strategy. It should spell out the following in detail: 1. What marketing mix will be offered, to whom (that is, the target market), and for how long; 2. What company resources (shown as costs) will be needed at what rate (month by month perhaps); and 3. what results are expected (sales and profits perhaps monthly or quarterly, customer satisfaction levels, and the like). The plan should also include some control procedures - so that whoever is to carry out the plan will know if things are going wrong.
- Implementation
- Putting marketing plans into operation.
- Operational decisions
- Short-run decisions to help implement strategies.
- Marketing program
- Blends all of the firm's marketing plans into one 'big' plan.
- Part III. Focusing Marketing Strategy with Segmentation and Positioning
- Breakthrough opportunities
- Opportunities that help innovators develop hard-to-copy marketing strategies that will be very profitable for a long time.
- Competitive advantage
- Means that a firm has a marketing mix that the target market sees as better than a competitor's mix.
- Differentiation
- Means that the marketing mix is distinct from and better than what is available from a competitor.
- S.W.O.T. Analysis
- Which identifies and lists the firm's strengths and weaknesses and it opportunities and threats.
- Market penetration
- Trying to increase sales of a firm's present products in its present markets
- Market development
- Trying to increase sales by selling present products in new markets.
- Product development
- Offering new or improved products for present markets.
- Diversification
- Moving into totally different lines of business.
- Market
- A group of potential customers with similar needs who are willing to exchange something of value with sellers offering various goods and/or services - and ways of satisfying those needs.
- Generic market
- A market with broadly similar needs - and sellers offering various - often diverse - ways of satisfying those needs.
- Product-market
- A market with very similar needs and sellers offering various close substitute ways of satisfying those needs. A complete product-market definition includes a four-part description.
- What: 1. Product type (type of good and type of service)
- Product type decribes the goods and/or services that customers want.
- To meet what: 2. Customer (user) needs
- Customer needs refer to the needs the product type satisfies for the customer.
- For whom: 3. Customer type
- Customer type refers to the final consumer or user of a product type.
- Where: 4. Geographic area
- Geographic area is where a firm competes.
- Market segmentation
- Is a two step process of: 1. naming broad product-markets and 2. segmenting these broad product-markets in order to select target markets and develop suitable marketing mixes.
- Segmenting
- Marketing-oriented managers think of segmenting as an aggregating process clustering people with similar needs inot a 'market segment'.
- Market segment
- A relatively homogenous group of customers who will respond to a marketing mix in a similar way.
- Ideally 'Good' market segments meet the following criteria.
- 1. Homogenous (similar) within - the customers in a market segment should be as similar as possible with respect to their likely response to marketing mix variable sand their segmenting dimensions.
- 2. Heterogeneous (different) between - the customers in different segments should be as different as possible with respect to their likely responses to marketing mix variables and their segmenting dimensions.
- 3. Substantial - the segment should be big enough to be profitable.
- 4. Operational - the segmenting dimensions should be useful for identifying customers and deciding on marketing mix variables.
- Single target market approach
- Segmenting the market and picking one of the homogeneous segments as the firm's target market.
- Multiple target market approach
- Segmenting the market and choosing two or more segments, then treating each as a separate target market needing a different marketing mix.
- Combined target market approach
- Combining two or more submarkets into one larger target market as a basis for one strategy.
- Combiners
- Try to increase the size of their target markets by combining two or more segments.
- Segmenters
- Aim at one or more homogeneous segments and try to develop a different marketing mix for each segment.
- Qualifying dimensions
- Are those relevant to including a customer type in a product-market
- Determining dimensions
- Are those that actually affect the customer's purchase of a specific product or brand in a product-market.
- Clustering techniques
- Try to find similar patterns within data sets.
- Customer relationship management (CRM)
- The seller fine-tunes the marketing effort with information from a detailed customer database.
- Positioning
- Refers to how customers think about proposed and/or present brands in a market.
- Part IV. Evaluating Opportunities in the Changing Marketing Environment.
- Mission statement
- Sets out the organization's basic purpose for being.
- Competitive environment
- Affects the number of types of competitors the marketing manager must face and how they may behave.
- Competitor analysis
- An organized approach for evaluating the strengths and weaknesses of current or potential competitors' marketing strategies.
- Competitive rivals
- Firms that will be the closest competitors.
- Competitive barriers
- The conditions that may make it difficult, or even impossible, for a firm to compete in a market.
- Economic and technical environment
- Technical environment
- Provides a base for the economic environment.
- Technical skills and equipment affect the way companies convert an economy's resources into output.
- Economic environment
- Is affected by the way all the parts of a macro-economic systems interact.
- It may vary from country to country, but economies around the world are linked.
- Technology
- Is the application of science to convert an economy's resources to output.
- Internet
- Is a system for linking computers around the world.
- Nationalism
- An emphasis on a country's interests before everything else.
- The North American Free Trade Agreement (NAFTA)
- Lays out the plan to reshape the rules of trade among the U.S., Canada, and Mexico. NAFTA basically enlarges the free-trade pact that had already knocked down most barriers to U.S. - Canada trade, and over a 15-year period it will eliminate most such barriers with Mexico. It also establishes a forum for resolving future trade disputes.
- Consumerism
- A social movement that seeks to increase the rights and powers of consumers.
- Cultural and social environment
- Affects how and why people live and behave as they do - which affects customer buying behavior and eventually the economic, political, and legal environment.
- Many variables make up the cultural and social environment. Some examples are:
- The languages people speak
- The type of education they have
- Their religious beliefs
- What type of food they eat
- The style of clothing they have
- The style of housing they have
- How they view work
- How they view marriage
- How they view family
- Strategic business unit (SBU)
- An organizational unit (within a larger company) that focuses on some product-markets and is treated as a separate profit center.
- Portfolio management
- Treats alternative products, divisions, or strategic business units (SBUs) as though they were stock investments, to be bought and sold using financial criteria.
- Part V. Demographic Dimensions of Global Consumer Markets
- Gross National Product (GNP)
- The total market value of goods and services produced by a country's economy in a year.
- Birthrate
- The number of babies born per 1000 people
- Metropolitan Statistical Area (MSA)
- An integrated economic and social unit with a large population nucleus.
- Disposable income
- Discretionary income
- What is left of disposable income after paying for necessities.
- Empty nesters
- People whose children are grown and who are now able to spend their money in other ways.
- Senior citizens
- Part VI. Behavioral Dimensions of the Consumer Market
- Economic needs
- Concerned with with making the best use of a consumer's time and money - as the consumer judges it.
- Needs
- The basic forces that motivate a person to do something.
- Wants
- Are 'needs' that are learned during a person's life.
- Drive
- A strong stimulus that encourages action to reduce a need.
- Physiological needs
- Are concerned with biological needs - food, drink, rest, and sex.
- Safety needs
- Concerned with protection and physical well-being (perhaps involving health, food, medicine, and exercise).
- Social needs
- Are concerned love, friendship, status, and esteem - things that involve a person's interaction with others.
- Personal needs
- Concerned with an individual's need for personal satisfaction - unrelated to what other think or do.
- Perception
- How we gather and interpret information form the world around us.
- Selective exposure
- Our eyes and minds seek out and notice only information that interests us.
- Selective perception
- We screen out or modify ideas, messages, and information that conflict with previously learned attitudes and beliefs.
- Selective retention
- We remember only what we want to remember.
- Learning
- A change in a person's thought processes caused by prior experience.
- Cues
- Depending on the cues, products, signs, ads, and other stimuli in the environment - an individual chooses some specific response.
- Response
- An effort to satisfy a drive.
- Reinforcement
- The response is followed by satisfaction - that is, reduction in the drive, strengthening the relationship between the cue and the response.
- Attitude
- A person's point of view toward something.
- Belief
- A person's opinion about something.
- Expectation
- Attitudes and beliefs sometimes combine to form an expectation - An outcome or vent that a person anticipates or looks forward to.
- Psychographics or lifestyle analysis
- Is the analysis of a person's day-to-day pattern of living as expressed in that person's activities, interests, and opinions
- AIOs
- Attitudes, Interests, Opinions
- Social class
- A group of people who have approximately equal social position as viewed by others in the society.
- Reference group
- The people to whom an individual looks when forming attitudes about a particular topic.
- Opinion leader
- A person who influences others.
- Culture
- The whole set of beliefs, attitudes, and ways of doing things of a reasonably homogeneous set of people.
- Most consumers seem to use the following five-step problem solving process
- Becoming aware of - or interested in - the problem.
- Recalling and gathering information about possible solutions.
- Evaluating alternative solutions - perhaps trying some out.
- Deciding on the appropriate solution.
- Evaluating the decision.
- Extensive problem solving
- When a consumer puts much effort into deciding how to satisfy an important need.
- Limited problem solving
- When consumers are willing to put some effort into deciding the best way to satisfy a need.
- Routinized response behavior
- When a consumer regularly select a particular way of satisfying a need when it occurs.
- Low-involvement purchases
- Purchases that have little importance or relevance for the customer.
- Adoption process
- The steps individuals go through on the way to accepting or rejecting a new idea. In the adoption process, an individual moves through some fairly definite steps:
- 1. Awareness - the potential customer comes to know about the product but lacks details. The consumer may not even know how it works or what it will do.
- 2. Interest - if the consumer becomes interested, he or she will gather general information and facts about the product.
- 3. Evaluation - a consumer begins to give the product a mental trial, applying it to his or her personal situation.
- 4. Trial - the consumer may buy the product or experiment with it in use. A product that is either too expensive to try or isn't available for trial may never be adopted.
- 5. Decision - the consumer decides on either adoption or rejection. A satisfactory evaluation and trial may lead to adoption of the product and regular use. According to psychological learning theory, reinforcement leads to adoption.
- 6. Confirmation - the adopter continues to rethink the decision and searches for support for the decision - that is, further reinforcement.
- Dissonance
- Tension caused by uncertainty about the rightness of a decision.
- Part VII. Business and Organizational Customers and Their Buying Behavior
- Business and organizational customers
- Are buyers who buy for resale or to produce other goods and services.
- Purchasing specifications
- A written (or electronic) description of what the firm wants to buy.
- ISO 9000
- A way for a supplier to document its quality procedures according to internationally recognized standards.
- Purchasing managers
- Buying specialists for their employers.
- Multiple buying influence
- Several people - perhaps even top management - share in making a purchase decision. Possible buying influences include:
- 1. Users - perhaps production line workers or their supervisors.
- 2. Influences - perhaps engineering or R&D people who help write specifications or supply information for evaluating alternatives.
- 3. Buyers - the purchasing managers who have the responsibility for working with suppliers and arranging the terms of the sale.
- 4. Deciders - The people in the organization who have the power to select or approve the supplier - often a purchasing manager but perhaps top management for larger purchases.
- 5. Gatekeepers - People who control the flow of information within the organization - perhaps a purchasing manager who shields users or other deciders. Gatekeepers can also include receptionists, secretaries, research assistants, and others who influence the flow of information about potential purchases.
- Buying center
- All the people who participate in or influence a purchase.
- Requisition
- A request to buy something.
- New-task buying
- When an organization has a new need and the customer wants a great deal of information.
- Straight rebuy
- A routine repurchase that may have been made many times before.
- Modified rebuy
- The in-between process where some review of the buying situation is done - thought not as much as a in new-task buying.
- Just-in-time delivery
- Reliably getting products there just before the customer needs them.
- Negotiated contract buying
- Agreeing to a contract that allows for changes in the purchase arrangements.
- Reciprocity
- Trading sales for sales - that is, 'if you buy from me, I'll buy from you'.
- Competitive bids
- The terms of sale offered by different suppliers in response to the purchase specifications posted by the buyer.
- North American Industry Classification System Codes (NAICS)
- Groups of firms in similar lines of business.
- Open to buy
- The buyers have budged funds that can be spent during the current period.
- Resident buyers
- Independent buying agents who work in central markets for several retailer or wholesaler customers based in outlying areas or other countries.
- Foreign Corrupt Practices Act
- Passed by the U.S. Congress in 1977, prohibits U.S. firms from paying bribes to foreign officials.
- Part VIII. Improving Decisions with Marketing Information
- Marketing information system (MIS)
- An organized way of continually gathering, accessing, and analyzing information that marketing managers need to make decisions.
- Intranet
- A system for linking computers within a company.
- Data warehouse
- A place where databases are stored so that they are available when needed.
- Decision support system (DSS)
- A computer program that makes it easy for a marketing manager to get and use information as he or she is making decisions.
- Search engine
- A computer program that helps a marketing manager find information that is needed.
- Marketing model
- A statement of relationships among marketing variables.
- Marketing research
- Procedures to develop and analyze new information to help marketing managers make decisions.
- Scientific method
- A decision-making approach that focuses on being objective and orderly in testing ideas before accepting them.
- Hypothesis
- Educated guesses about the relationships between things or about what will happen in the future.
- Market research process
- 1. Defining the problem.
- 2. Analyzing the situation.
- 3. Getting problem-specific data.
- 4. Interpreting the data.
- 5. Solving the problem.
- Situation analysis
- Information study of what information is already available in the problem area.
- Secondary data
- Information that has been collected or published already.
- Primary data
- Information specifically collected to solve a current problem.
- Research proposal
- A plan that specifies what information will be obtained and how - to be sure no misunderstandings occur later.
- Qualitative research
- Seeks depth, open-ended responses, not yes or no answers.
- Focus group interview
- Involves interviewing 6-10 people in an informal group setting.
- Quantitative research
- Seeks structured responses that can be summarized in numbers, like percentages, averages, or other statistics.
- Response rate
- The percentage of people contacted who complete the questionnaire.
- Consumer panel
- A group of consumers who provide information on a continuing basis.
- Experimental method
- Researchers compare the responses of two (or more) groups that are similar except on the characteristic being tested to find out if the specific characteristic - which varies among groups - causes differences in some response among the groups.
- Statistical packages
- Easy-to-use computer programs that analyze data.
- Population
- The total group they are interested in.
- Sample
- A part of the relevant population.
- Random sampling
- Where each member of the population has the same chance of being included in the sample.
- Confidence intervals
- The range on either side of an estimate that is likely to contain the true value for the whole population.
- Validity
- Concerns the extent to which data measures what it is intended to measure.
- Part IX. Elements of Product Planning for Goods and Services.
- Product
- The need-satisfying offering of a firm.
- Quality
- A product's ability to satisfy a customer's needs or requirements.
- Service
- A deed performed by one party for another.
- Product assortment
- The set of all product lines and individual products that a firm sells.
- Product line
- A set of individual products that are closely related.
- Individual product
- is a particular product within a product line.
- Consumer products
- Products means for the final consumer.
- Business products
- Products means for the use in producing other products.
- Convenience products
- Products a consumer needs but isn't willing to spend much time or effort shopping for.
- Staples
- Products that are bought often, routinely, and without much thought.
- Impulse products
- Products that are bought quickly - as unplanned purchases - because of a strongly felt need.
- Emergency products
- Products that are purchased immediately when the need is great.
- Shopping products
- Products that a customer feels are worth the time and effort to compare with competing products. Shopping products can be divided into two types, depending on what customers are comparing: 1. Homogenous or 2. Heterogeneous shopping products.
- Homogeneous shopping products
- Are shopping products the customer sees as basically the same and wants at the lowest price.
- Heterogeneous shopping products
- Are shopping products the customer sees as different an wants to inspect for quality and suitability.
- Specialty products
- Consumer products that the customer really wants and makes a special effort to find.
- Unsought products
- Products that potential customers don't yet want or know they can buy.
- New unsought products
- Are products offering really new ideas that potential customers don't' know about yet.
- Regularly unsought products
- Are products - like gravestones, life insurance, and encyclopedias - that stay unsought but not unbought forever.
- Derived demand
- The demand for business products derives from the demand for final consumer products.
- Expense item
- A product whose total cost is treated as a business expense in the year it's purchased.
- Capital item
- Is a long-lasting product that can be used and depreciated for many years.
- Installations
- Such as buildings, land rights, and major equipment - are important capital items.
- Accessories
- Are short-lived capital items.
- Raw materials
- Are unprocessed expense items.
- Farm products
- Natural products
- Are products that occur in nature.
- Components
- Are processed expense items that become part of a finished product.
- Supplies
- Are expense items that do not become part of a finished product.
- Professional services
- Are specialized services that support a firm's operations.
- Branding
- The use of a name, term, symbol, or design - or a combination of these - to identify a product.
- Brand name
- A word, letter, or a group of words or letters.
- Trademark
- Includes only those words, symbols, or marks that are legally registered for use by a single company.
- Service mark
- The same as trademark except that it refers to a service offering.
- The following conditions are favorable to successful branding.
- 1. The product is easy to identify by brand or trademark.
- 2. The product quality is the best value for the price and the quality is easy to use maintain.
- 3. Dependable and widespread availability is possible. When customers start using a brand, they want to be able to continue using it.
- 4. Demand is strong enough that the market price can be high enough to make a branding effort profitable.
- 5. There are economies of scale. If the branding is really successful, costs should drop and profits should increase.
- 6. Favorable shelf locations or display space in stores will help. This is something retailers can control when they brand their own products. Producers must use aggressive salespeople to get favorable positions.
- Brand familiarity
- How well customers recognize and accept a company's brand. Five levels of brand familiarity are useful for strategy planning:
- 1. rejection
- 2. nonrecognition
- 3. recognition
- 4. preference
- 5. insistence
- Brand rejection
- The potential customers won't buy a brand unless its image is changed.
- Brand nonrecognition
- Final consumers don't recognize a brand at all - even though middlemen may use the brand name for identification and inventory control.
- Brand recognition
- Customers remember the brand.
- Brand preference
- Target customers usually choose the brand over other brands, perhaps because of habit or favorable past experience.
- Brand insistence
- Customers insist on a firm's branded product and are willing to search for it.
- Characteristics of a good brand name
- Short and simple
- Easy to spell and read
- Easy to recognize and remember
- Easy to pronounce
- Can be pronounced in only one way
- Can be pronounced in all languages (for international markets)
- Suggestive of product benefits
- Adaptable to packaging/labeling needs
- No undesirable imagery
- Always timely (does not go out-of-date)
- Adaptable to any advertising medium
- Legally available for use (not in use by another firm)
- Brand equity
- The value of a brand's overall strength in the market.
- Lanham Act (of 1946)
- Spells out what kinds of marks (including brand names) can be protected and the exact method of protecting them.
- Family brand
- The same brand name for several products - or individual brands for each product.
- Licensed brand
- A well-known brand that sellers pay a fee to use.
- Individual brands
- Separate brand names for each product - when it's important for the products to each have a separate identity, as when products vary in quality or type.
- Generic products
- Products that have no brand at all other than identification of their contents and the manufacturer or middleman.
- Manufacturer brands
- Brands created by producers.
- Dealer brands (Private brands)
- Brands created by middlemen.
- Battle of the brands
- The competition between dealer brands and manufacturer brands, is just a question of whose brands will be more popular and who will be in control.
- Packaging
- Involves promoting, protecting, and enhancing the product.
- Universal product code (UPC)
- A code that identifies each product with marks readable by electronic scanners.
- Federal Fair Packaging and Labeling Act (of 1966)
- Requires that consumer goods be clearly labeled in easy-to-understand terms - to give consumers more information.
- Unit pricing
- Placing the price per ounce (or some other standard measure) on or near a product. This makes price competition easier.
- Warranty
- Explains what the seller promises about its product.
- Magnuson-Moss Act (of 1975)
- Says that producers must provide a clearly written warranty if they choose to offer any warranty.
- Part X. Product Management and New-Product Development
- Product life cycle
- Describes the stages a really new product idea goes through form beginning to end. The product life cycle is divided into four major stages:
- 1. Market introduction
- 2. Market growth
- 3. Market maturity
- 4. Sales decline
- Market introduction stage
- Sales are low as a new idea is first introduced to a market.
- Market growth stage
- Industry sales grow fast - but industry profits rise and then start falling.
- The maturity stage
- Occurs when industry sales level off and competition gets tougher.
- Sales decline stage
- New products replace the old and price competition from dying products becomes more vigorous - but firms with strong brands may make profits until the end.
- Fashion
- The currently accepted or popular style.
- Fad
- An idea that is fashionable only to certain groups who are enthusiastic about it.
- New product
- One that is new in any way for the company concerned.
- Federal Trade Commission (FTC)
- The federal government agency that polices antimonopoly laws. To be called new, says the FTC, a product must be entirely new or change in a 'functionally significant or substantial respect'.
- Consumer Product Safety Act (of 1972)
- Set up the Consumer Product Safety Commission to encourage safety in product design and better quality control.
- Product liability
- The legal obligation of sellers to pay damages to individuals who are injured by defective or unsafe products.
- Concept testing
- Getting reactions from customers about how well a new product idea fits their needs.
- Product managers (brand managers)
- Manage specific products - often taking over the jobs formally handled by an advertising manager.
- Part XI. Place and Development of Channel Systems
- Place
- Making goods and services available in the right quantities and locations - when customers want them.
- Channel of distribution
- Any series of firms or individuals who participate in the flow of products from producer to final user or consumer.
- Direct marketing
- Direct communication between a seller and an individual customer using a promotion method other than face-to-face personal selling.
- Discrepancy of quantity
- The difference between the quantity of products it is economical for a producer to make and the quantity final users or consumers normally want.
- Discrepancy of assortment
- The difference between the lines a typical producer makes and the assortment final consumers or users want.
- Regrouping activities
- Adjust the quantities and/or assortments of products handled at each level in a channel of distribution.
- Accumulating
- Collecting products from many small producers.
- Bulk-breaking
- Dividing larger quantities into smaller quantities as products get closer to the final market.
- Sorting
- Separating products into grades and qualities desired by different target markets.
- Assorting
- Putting together a variety of products to give a target market what it wants.
- Traditional channel systems
- The various channel members make little or no effort to cooperate with each other. They buy and sell from each other - and that's the extend of their relationship. Each channel member does only what it considers to be in its own best interest; it doesn't worry much about the effect of its policies on other members of the channel.
- Channel captain
- A manager who helps direct the activities of a whole channel and tries to avoid or solve channel conflicts.
- Vertical marketing systems
- Channel systems in which the whole channel focuses on the same target market at the end of the channel.
- Corporate channel systems
- Corporate ownership all along the channel.
- Vertical integration
- Acquiring firms at different levels of channel activity.
- Administered channel systems
- The channel members informally agree to cooperate with each other.
- Contractual channel systems
- The channel members agree by contract to cooperate with each other.
- Ideal market exposure
- Makes a product widely enough to satisfy target customers' needs but not exceed them.
- Intensive distribution
- Selling a product through all responsible and suitable wholesalers or retailers who will stock and/or sell the product.
- Selective distribution
- Selling through only those middlemen who will give the product special attention.
- Exclusive distribution
- Selling through only one middleman in a particular geographic area.
- Dual distribution
- When a producer uses several competing channels to reach the same target market - perhaps usually several middlemen in addition to selling directly.
- Reverse channels
- Channels used to retrieve products that customers no longer want.
- Part XII. Distribution Customer Service and Logistics
- Logistics
- The transporting, storing, and handling of goods to match target customers' needs with a firm's marketing mix - both within individual firms and along a channel of distribution.
- Physical distribution (PD)
- Another common name for logistics.
- Customer service level
- How rapidly and dependably a firm can deliver what they, the customers, want.
- Physical distribution (PD) concept
- Says that all transporting, storing, and product-handling activities of a business and a whole channel system should be coordinated as one system that seeks to minimize the cost of distribution for a given customer service level.
- Total cost approach
- Involves evaluating each possible PD system and identifying all of the costs of each alternative.
- Chain of supply
- The complete set of firms and facilities and logistics activities that are involved in procuring materials, transforming them into intermediate or finished products, and distributing them to customers.
- Electronic data interchange (EDI)
- An approach that puts information in a standardizes format easily shared between different computer systems.
- Transporting
- The marketing function of moving goods. Transportation provides time and place utilities - at a cost.
- Containerization
- Grouping individual items into an economical shipping quantity and sealing them in protective containers for transit to the final destination. This protects the products and simplifies handling during shipping.
- Piggyback service
- Means loading truck trailers - or flatbed trailers carrying containers - on railcars to provide both speed and felexibility.
- Freight forwarders
- Combine the small shipments of many shippers into more economical shipping quantities.
- Storing
- The marketing function of holding goods. It provides time utility.
- Inventory
- Is the amount of goods being stored.
- Private warehouses
- Storing facilities owned or leased by companies for their own use.
- Public warehouses
- Independent storing facilities.
- Distribution center
- A special kind of warehouse designed to speed the flow of goods and avoid unnecessary storing costs.
- Part XIII. Retailers, Wholesalers, and Their Strategy Planning
- Retailing
- Covers all of the activities involved in the sale of products to final consumers.
- Features of a retailer's offering that relate to economic needs include:
- 1. Convenience (location, available hours, parking, finding needed products, fast checkout).
- 2. Product selection ( Width and depth of assortment, quality).
- 3. Special services (special orders, home delivery, gift wrap, entertainment).
- 4. Fairness in dealings (honesty, correcting problems, return privileges, purchase risks).
- 5. Helpful information (courteous sales help, displays, demonstrations, product information).
- 6. Prices (value, credit, special discounts, taxes or extra charges).
- Some retailer's features that relate to social and emotional factors include:
- Social image (status, prestige, 'fitting in' with other shoppers).
- Shipping atmosphere (comfort, safety, excitement, relaxation, sounds, smells).
- General stores
- 150 years ago, stores that carried anything they could sell in reasonable volume - were the main retailers in the United States.
- Single-line (limited-line stores)
- Conventional, stores that specialize in certain lines of related products rather than a wide assortment.
- Specialty shop
- A type of conventional limited-line store - usually small and has a distinct 'personality'.
- Department stores
- Larger stores that are organized into many separate departments and offer many product lines.
- Mass-merchandising concept
- Says that retailers should offer low prices to get faster turnover and greater sales volumes - by appealing to larger markets.
- Supermarkets
- Large stores specializing in groceries with self-service and wide assortments.
- Catalog showroom retailers
- Sell several lines out of a catalog and display showroom - with backup inventories.
- Discount houses
- After WWII, offered 'hard goods' (cameras, TVs, appliances) at substantial price cuts to customers who would go to the discounter's low rent store, pay cash, and take care of any service or repair problems themselves.
- Mass-merchandisers
- Large, self-service stores with many departments that emphasize 'soft goods' (housewares, clothing, and fabrics) and staples (like health and beauty aids) but still follow the discount house's emphasis on lower margins to get faster turnover.
- Supercenters (hypermarkets)
- Very large stores that try to carry not only food and drug items but all gods and services that the consumer purchases routinely.
- Convenience (food) stores
- Convenience-oriented variation of the conventional limited-line food stores.
- Automatic vending
- Is selling and delivering products through vending machines.
- Door-to-door selling
- A salesperson going directly to the consumer's home.
- Telephone and direct-mail retailing
- Allow consumers to shop at home - usually placing orders by mail or a toll-free long-distance telephone call and charging purchases to a credit card.
- Wheel of retailing theory
- Says that new types of retailers enter the market as low-status, low-margin, low-price operators and then - if successful - evolve into more conventional retailers offering more services with higher operating costs and higher prices.
- Scrambled merchandising
- Carrying any product lines they think they can sell profitably.
- Corporate chain
- A firm that owns and manages more than one store - and often it's many.
- Cooperative chains
- Are retailer-sponsored groups - formed by independent retailers - that run their own buying organizations and conduct joint promotion efforts.
- Voluntary chains
- Wholesaler-sponsored groups that work with 'independent' retailers.
- Franchise operation
- The franchiser develops a good marketing strategy, and the retail franchise holders carry out the strategy in their own units.
- Wholesaling
- Is concerned with the activities of those persons or establishments that sell to retailers and other merchants, and/or to industrial, institutional, and commercial users, but that do not sell in large amounts of final consumers.
- Wholesalers
- Are firms whose main function is providing wholesaling activities.
- Manufacturers' sales branches
- Warehouses that producer set up at separate locations away from their factories - these establishments basically operate as wholesalers.
- Merchant wholesalers
- Own, (take title to) the products they sell.
- Service wholesalers
- Are merchant wholesalers who provide all the wholesaling functions.
- General merchandise wholesalers
- Are service wholesalers who carry a wide variety of nonperishable items such as hardware, electrical supplies, plumbing supplies, furniture, drugs, cosmetics, and automobile equipment.
- Single-line (or general-line) wholesalers
- Are service wholesalers who carry a narrower line of merchandise than general merchandise wholesalers.
- Specialty wholesalers
- Are service wholesalers who carry a very narrow range of products and offer more information and service than other service wholesalers.
- Limited-function wholesalers
- Provide only some wholesaling functions.
- Cash-and-carry wholesalers
- Operate like service wholesalers - except that the customer must pay cash.
- Drop-shippers
- Own (take title to) the products they sell - but they do not actually handle, stock, or delivery them. These wholesalers are mainly involved in selling.
- Truck wholesalers
- Specialize in developing products that they stock in their own trucks.
- Rack jobbers
- Specialize in hart-to-handle assortments of products that a retailer doesn't want to manage - and rack jobbers usually display the products on their own wire racks.
- Catalog wholesalers
- Sell out of catalogs that many be distributed widely to smaller industrial customers or retailers who might not be called on by other middlemen.
- Agent middlemen
- Are wholesalers who do not own the products they sell. Their main purpose is to help in buying and selling.
- Manufacturers' agent
- Sells similar products for several noncompeting producers - for a commission on what is actually sold.
- Export or import agents
- Are basically manufactures' agents who specialize in international trade.
- Brokers
- Bring buyers and sellers together.
- Export and import brokers
- Operate like other brokers, but they specialize in bringing together buyers and sellers from different countries.
- Selling agents
- Take over the whole marketing job of producers - not just the selling function.
- Combination export manager
- Is a blend of manufacturers' agent and selling agent - handling the entire export function for several producers of similar but noncompeting lines.
- Auction companies
- Provide a place where buyers and sellers can come together and bid to complete a transaction.
- Part XIV. Promotion - Introduction to Integrated Marketing Communications
- Promotion
- Communicating information between seller and potential buyer or others in the channel to influence attitudes and behavior.
- Personal selling
- Involves direct spoken communication between sellers and potential customers. Face-to-face selling provides immediate feedback - which helps salespeople to adapt.
- Advertising
- Any paid form of non-personal presentation of ideas, goods, or services by an identified sponsor.
- Publicity
- Any unpaid form of nonpersonal presentation of ideas, goods, or services.
- Sales promotion
- Refers to promotion activities - other than advertising, publicity, and personal selling - that stimulate interest, trial, or purchase by final customers or others in the channel.
- Sales managers
- Are concerned with managing personal selling.
- Advertising managers
- Manage their company's mass-selling effort - in television, newspapers, magazines, and other media.
- Public relations
- Communication with noncustomers, including labor, public interest groups, stockholders, and the government.
- Sales promotion managers
- Manage their company's sales promotion effort.
- Integrated marketing communications
- The intentional coordination of every communication from a firm to a target customer to convey a consistent and complete message.
- Three basic promotion objectives
- Informing target customers about the company and its marketing mix.
- Persuading target customers about the company and its marketing mix.
- Reminding target customers about the company and its marketing mix.
- AIDA model
- Consists of four promotional jobs
- 1. Get Attention
- 2. Hold Interest
- 3. Arouse Desire
- 4. Obtain Action
- Communication process
- A source trying to reach a receiver with a message.
- Source
- Receiver
- Noise
- Any distraction that reduces the effectiveness of the communication process.
- Encoding
- Is the source deciding what it wants to say and translating it into words or symbols that will have the same meaning to the receiver.
- Decoding
- Is the receiver translating the message.
- Message channel
- The carrier of the message.
- Pushing (a product through a channel)
- Using normal promotion effort - personal selling, advertising, and sales promotion - to help sell the whole marketing mix to possible channel members.
- Pulling
- Getting customers to ask middlemen for the product.
- Adoption curve
- Shows when different groups accept ideas.
- Innovators
- Are the first to adopt. They are eager to try a new idea and willing to take risks.
- Early adopters
- Are well respected by their peers and often are opinion leaders. They tend to be more mobile, and more creative than later adopters.
- Early majority
- Avoid risk and wait to consider a new idea after many early adopter have tired it - and liked it. Average-sized business firms that are less specialized often fit into this category.
- Late majority
- Are cautious about new ideas. Often they are older than the early majority group and more set in their ways.
- Laggards (or nonadopters)
- Prefer to do things the way they've been done in the past and are very suspicious of new ideas.
- Primary demand
- Demand for the general product idea - not just for the company's own brand.
- Selective demand
- Demand for a company's own brand.
- Task method
- Basing the budget on the job to be done.
- Part XV. Personal Selling
- Order getters
- Are concerned with establishing relationships with new customers and developing new business.
- Order-getting
- Means seeking possible buyers with a well-organized sales presentation designed to sell a good, service, or idea.
- Order takers
- Sell to the regular or established customers, complete most sales transactions, and maintain relationships with their customers.
- Order-taking
- Is the routine completion of sales made regularly to the target customers.
- Supporting salespeople
- Help the order-oriented salespeople - but they don't try to get orders themselves.
- Missionary salespeople
- Are supporting salespeople who work for producers - calling on their middlemen and their customers.
- Technical specialists
- Are supporting salespeople who provide technical assistance to order-oriented salespeople.
- Team selling
- When different sales reps work together on a specific account.
- Major accounts sales force
- Sells directly to large accounts.
- Telemarketing
- Using the telephone to 'call' on customers or prospects.
- Sales territory
- A geographic area that is the responsibility of one salesperson or several working together.
- Job description
- A written statement of what a salesperson is expected to do.
- Sales quota
- The specific sales or profit objective a salesperson is expected to achieve.
- Prospecting
- Involves following all the leads in the target market to identify potential customers.
- Sales presentation
- A salesperson's effort to make a sale or address a customer's problem.
- Prepared sales presentation
- Uses a memorized presentation that is not adopted to each individual customer.
- Close
- The salesperson's request for an order.
- Consultative selling approach
- Involves developing a good understanding of the individual customer's needs before trying to close the sale.
- Selling formula approach
- Starts with a prepared presentation outline - much like the prepared approach - and leads the customer through some logical steps to a final close.
- Part XVI. Advertising and Sales Promotion
- Product advertising
- Institutional advertising
- Tries to promote an organization's image, reputation, or ideas rather than a specific product.
- Pioneering advertising
- Tries to develop primary demand for a product category rather than demand for a specific brand.
- Competitive advertising
- Tries to develop selective demand for a specific brand. It may be either direct or indirect.
- Direct type
- Aims for immediate buying action.
- Indirect type
- Points out product advantages to affect future buying decisions.
- Comparative advertising
- Means making specific brand comparisons - using actual product names.
- Reminder advertising
- Tries to keep the product's name before the public.
- Advertising allowances
- Price reductions to firms further along in the channel to encourage them to advertise or otherwise promote the firm's products locally.
- Cooperative advertising
- Involves middlemen and producers sharing in the cost of ads.
- Copy thrust
- What the words and illustrations should communicate.
- Advertising agencies
- Are specialists in planning and handling mass-selling details for advertisers.
- Correct advertising
- Ads to correct deceptive advertising.
- Part XVII. Pricing Objectives and Policies
- Price
- The amount of money that is charged for 'something' of value.
- Target return objective
- Sets a specific level of profit as an objective.
- Profit maximization objective
- Seeks to get as much profit as possible.
- Sales-oriented objective
- Seeks some level of unit sales, dollar sales, or share of market - without referring to profit.
- Status quo objectives
- Don't-rock-the-pricing-boat objectives. This occurs when managers are satisfied with their current market share and profits.
- Administered prices
- One-price policy
- Means offering the same price to all customers who purchase products under essentially the same conditions and in the same quantities.
- Flexible-price policy
- Means offering the same product and quantities to different customers at different prices.
- Skimming price policy
- Tries to sell the top (skim the cream) of a market - the top of the demand curve - at a high price before aiming at more price-sensitive customers.
- Penetration pricing policy
- Tries to sell the whole market at one low price.
- Introductory price dealing
- Temporary price cuts - to speed new products into a market.
- Discounts
- Are reductions from list price given by a seller to buyers who either give up some marketing function or provide the function themselves.
- Quantity discounts
- Discounts offered to encourage customers to buy in larger amounts.
- Cumulative quantity discounts
- Apply to purchases over a given period - such as a year - and the discount usually increases as the amount purchased increases.
- Noncumulative quantity discounts
- Apply to only individual orders.
- Seasonal discounts
- Are discounts offered to encourage buyers to buy earlier than present demand requires.
- Net
- Means the payment for the face value of the invoice is due immediately.
- Cash discounts
- Reductions in price to encourage buyers to pay their bills quickly.
- 2/10, net 30
- Means the buyer can take a 2 percent discount off the face value of the invoice if the invoice is paid within 10 days.
- Trade (functional) discount
- A list price reduction given to channel members for the job they are going to do.
- Sale price
- A temporary discount from the list price.
- Everyday low pricing
- Setting a low list price rather than relying on a high list price that frequently changes with various discounts or allowances.
- Allowances
- Like discounts, are given to final consumers, customers, or channel members for doing something or accepting less of something.
- Advertising allowances
- Price reductions given to firms in the channel to encourage them to advertise or otherwise promote the supplier's products locally.
- Stocking allowances
- Sometimes called slotting allowances - are given to a middleman to get shelf space for a product.
- Push money (or prize money) allowances
- Sometimes called PM's or spiffs - are given to retailers by manufacturers or wholesalers to pass on to the retailers' sales-clerks for aggressively selling certain items.
- Trade-in allowance
- A price reduction given for used products when similar new products are bought.
- Rebates
- Refunds paid to consumers after a purchase.
- F.O.B.
- Means free on board some vehicle at some place. Typically, F.O.B. pricing names the place - often the location of the seller's factory or warehouse. The seller pays the cost of loading the products onto some vehicle, then title to the product passes to the buyer. The buyer pays the freight and takes responsibility for damage in transit.
- Zone pricing
- Means making an average freight change to all buyers within special geographic areas.
- Uniform delivered pricing
- Making an average freight charge to all buyers.
- Freight-absorption pricing
- Absorbing freight cost so that a firm's delivered price meets the nearest competitor's.
- Value pricing
- Setting a fair price level for a marketing mix that really gives the target market superior customer value.
- Unfair trade practice acts
- Put a lower limit on prices, especially at the wholesale and retail levels.
- Dumping
- Pricing a product sold in a foreign market below the cost of producing it or at a price lower than in its domestic market.
- Phony list prices
- Prices customers are shown to suggest that the price has been discounted from list.
- Wheeler Lea Amendment
- Bans 'unfair or deceptive acts in commerce'.
- Price discrimination
- Selling the same products to different buyers at different prices.
- Robinson-Patman Act (of 1936)
- Makes illegal any price discrimination - if it injures competition.
- Part XVIII. Price Setting in the Business World
- Markup
- A dollar amount added to the cost of products to get the selling price.
- Markup (percent)
- Means percentage of selling price that is added to the cost to get the selling price.
- Markup chain
- The sequence of markups firms use at different levels in a channel - determines the price structure in the whole channel.
- Stockturn rate
- The number of times the average inventory is sold in a year.
- Average-cost pricing
- Adding a reasonable markup to the average cost of a product.
- Total fixed cost
- The sum of those costs that are fixed in total - no matter how much is produced.
- Total variable cost
- The sum of those changing expenses that are closely related to output.
- Total cost
- The sum of total fixed and total variable costs.
- Average cost (per unit)
- Is obtained by divided total cost by the related quantity (that is, the total quantity that causes the total cost).
- Average fixed cost (per unit)
- Is obtained by dividing total fixed cost by the related quantity.
- Average variable cost (per unit)
- Is obtained by dividing total variable cost by the related quantity.
- Experience curve pricing
- Is average-cost pricing using an estimate of future average costs.
- Target return pricing
- Adding a target return to the cost of a product. Could be percent or specific dollar value.
- Long-run target return pricing
- Adding a long-run average target return to the cost of a product.
- Break-even analysis
- Evaluates whether the firm will be able to break even - that is, cover all its costs - with a particular price.
- Break-even point (BEP)
- The quantity where the firm's total cost will just equal its total revenue.
- Fixed-cost (FC) contribution per unit
- The assumed selling price per unit minus the variable cost per unit.
- Marginal analysis
- Focuses on the changes in total revenue and total cost from selling one more unit to find the most profitable price and quantity.
- Marginal revenue
- The change in total revenue that results from the sale of one more unit of a product.
- Marginal cost
- Is the change in total cost that results from producing one more unit.
- Rule for maximizing profit
- The highest profit is earned at the price where marginal cost is just less than or equal to marginal revenue.
- Marginal profit
- The extra profit on the last unit - is near zero.
- Price leader
- Usually sets a price for all to follow - perhaps to maximize profits to get a certain target return on investment.
- Value in use pricing
- Setting prices that will capture some of what customers will save by substituting the firms product for the one currently being used.
- Reference price
- The price they expect to pay - for many of the products they purchase.
- Leader pricing
- Setting some very low prices - real bargains - to get customers into retail stores.
- Bait pricing
- Setting some very low prices to attract customers but trying to sell more expensive models or brands once the customer is in the store.
- Psychological pricing
- Setting prices that have especial appeal to target customers.
- Odd-even pricing
- Setting prices that end in certain numbers.
- Price lining
- Setting a few price levels for a product line and then marking all items at these prices.
- Demand-backward pricing
- Setting an acceptable final consumer price and working backward to what a producer can charge.
- Prestige pricing
- Setting a rather high price to suggest high quality or high status.
- Full-line pricing
- Setting prices for a whole line of products.
- Complementary product pricing
- Setting prices on several products as a group.
- Product-bundle pricing
- Setting one price for a set of products.
- Bid pricing
- Offering a specific price for each possible job rather than setting a price that applies for all customers.
- Negotiated price
- A price set based on bargaining between the buyer and seller.
- Part XIX. Implementing and Controlling Marketing Plans: Evolution and Revolution
- Control
- The feedback process that helps the marketing manager learn 1. how ongoing plans and implementation are working and 2. how to plan for the future.
- Total quality management (TQM)
- Everyone in an organization is concerned about quality, throughout all of the firm's activities, to better serve customer needs.
- Continuous improvement
- A commitment to constantly make things better one step at a time.
- Pareto Chart
- A graph that shows the number of times a problem cause occurs, with problem causes ordered from more frequent to least frequent.
- Fishbone diagram
- A visual aid that helps organize cause-and-effect relationships for 'things gone wrong'.
- Empowerment
- Giving employees the authority to correct a problem without first checking with management.
- Benchmarking
- Picking a basis of comparison for evaluating how well a job is being done.
- Sales analysis
- A detailed breakdown of a company's sales records
- Typical Sales Data Breakdowns
- 1. Geographic region - country, state, county, city, sales rep's territory.
- 2. Product, package size, grade, or color.
- 3. Customer size.
- 4. Customer type or class of trade.
- 5. Price or discount class.
- 6. Method of sale - online, telephone, or sales rep.
- 7. Financial arrangement - cash or charge.
- 8. Size of order.
- 9. Commission class.
- Performance analysis
- Looks for exceptions or variations from planned performance.
- Performance index
- A number like a baseball batting average that shows the relation of one value to another.
- Iceberg principle
- Much good information is hidden in summary data. Problems in one area may hide below the surface.
- Full-cost approach
- All costs are allocated to products, customers, or other categories. Because all costs are allocated, we can subtract costs from sales and find the profitability of various customers, products, and so on.
- Contribution-margin approach
- All costs are not allocated in all situations.
- Marketing audit
- Is a systematic, critical, and unbiased review and appraisal of the basic objectives and policies of the marketing function and of the organization, methods, procedures, and people employed to implement the policies.
- Part XX. Managing Marketing's Link with Other Functional Areas
- Capital
- The money invested in a firm - usually handled by the firm's chief financial officer.
- Cash flow statement
- Is a financial report that forecasts how much cash will be available after paying expenses.
- Production capacity
- The ability to produce a certain quantity and quality of specific goods or services.
- Virtual corporation
- Where the firm is primarily a coordinator - with a good marketing concept.
- Mass customization
- Tailoring the principles of mass production to meet the unique needs of individual customers.
- Task transfer
- Using telecommunications to move service operations to places where there are pools of skilled workers.
- Natural accounts
- Are the categories to which various costs are charged in the normal financial accounting cycle. These accounts include salaries, wages, social security, taxes, supplies, raw materials, auto, gas, and oil expenses, advertising, and others. These accounts are called natural because they have the names of their expense categories.
- Functional accounts
- Show the purpose for which expenditures are made. Factory functional accounts include shearing, milling, grinding, floor cleaning, maintenance, and so on.
- Part XXI. Developing Innovative Marketing Plans
- S.W.O.T. Analysis
- Identifies and lists the firm's strengths, weaknesses, and its opportunities and threats.
- Market potential
- What a whole market segment might buy.
- Sales forecast
- An estimate of how much an industry or firm hopes to sell to a market segment.
- Common top-down approach to forecasting
- 1. Develop a national income forecast (for each country in which the firm operates) and use this to:
- 2. Develop an industry sales forecast, which then is used to:
- 3. Develop forecasts for a specific company, its specific products, and the segments it targets.
- Trend extension
- Extends past experience into the future.
- Factor method
- Tries to forecast sales by finding a relation between the company's sales and some other factor (or factors). The basic formula is: something (past sales, industry sales, etc) times some factor equals sales forecast.
- Factor
- A variable that shows the relation of some other variable to the item being forecast.
- Time series
- Historical records of the fluctuations in economic variables.
- Leading series
- A time series that changes in the same direction but ahead of the series to be forecast.
- Indices
- Statistical combinations of several time series - in an effort to find some time series that will lead the series they're trying to forecast.
- Jury of executive opinion
- Combines the opinions of experienced executives, perhaps from marketing, production, finance, purchasing, and top management. Each executive estimates market potential and sales for the coming years. Then they try to work out a consensus.
- Spreadsheet analysis
- Costs, sales, and other information related to a problem are organized into a data table - a spreadsheet- to show how changing the value of one or more of the numbers affects the other numbers.
- Exporting
- Selling some of what the firm produces to foreign markets.
- Contract manufacturing
- Turing over production to others while retaining the marketing process.
- Management contracting
- The seller provides only management skills - other own the production and distribution facilities.
- Joint venturing
- A domestic firm entering into a partnership with a foreign firm.
- Wholly owned subsidiary
- A separate firm - owned by a parent company.
- Multinational corporations
- Have a direct investment in several countries and run their businesses depending on the choices available anywhere in the world.
- Part XXII. Ethical Marketing in a Consumer-Oriented World: Appraisal and Challenges
- Marketing Inefficiencies are due to one or more of three reasons
- 1. Lack of interest in or understanding of the sometimes fickle customer.
- 2. Improper blending of the four P's - caused in part by overemphasis on internal problems as contrasted with a customer orientation.
- 3. Lack of understanding of or adjustment to the marketing environment, especially what competitors do.
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Mr Michaels "I want what all men want...I just want it more" 5W2H