Marketing Channels and Supply Chain Management -- terms

marketing fundamentals -- part 10 -- terms

value delivery network -- a network made up of the company, suppliers, distributors, and ultimately customers to "partner" with each other to improve the performance of the entire system
marketing channel (distribution channel) -- a set of interdependent organizations involved in the process of making a product or service available for use or consumption by the consumer for business user
channel level -- a layer of intermediaries that perform some work in bringing the product and its ownership closer to the final buyer
direct marketing channel -- a marketing channel that has no intermediary levels
indirect marketing channel -- a channel containing one or more intermediary levels
channel conflict -- disagreement among marketing channel members on goals and roles -- you should do what and for what rewards
conventional distribution channel -- a channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits even at the expense of profits for the system as a whole
vertical marketing system (VMS) -- a distribution channel structure in which producers, wholesalers, and retailers act as a unified system. One channel member owns the others, has contacts with them, or has so much power that they all cooperate
corporate VMS -- a vertical marketing system that combined successive stages of production and distribution under single ownership - channel leadership is established through common ownership
contractual VMS -- a vertical marketing system in which independent firms at different levels of production and distribution join together through contracts to obtain more economies or sales impact than they could achieve alone
franchise organization -- a contractual vertical marketing system in which a channel member, called a franchiser, links several stages in the production-distribution process
administered VMS -- a vertical marketing system that coordinates successive stages of production and distribution, not through common ownership or contractual ties, but through the size and power of one of the parties
horizontal marketing system -- a channel arrangement in which two or more companies at one level joined together to follow a new marketing opportunity
multichannel distribution system -- a distribution system and which a single firm sets up two or more marketing channels to reach one or more customer segments
disintermediation -- the displacement of traditional resellers from a marketing channel by radical new types of intermediaries
intensive distribution -- stocking the product in as many outlets as possible
exclusive distribution -- giving a limited number of dealers exclusive rights to distribute the company's products in their territories
selective distribution -- they use of more than one, but fewer than all, of the intermediaries who are willing to carry the company's products
marketing logistics (physical distribution) -- the tasks involved in planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to points of consumption to meet customer requirements at a profit
supply chain management -- managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers
distribution center -- a large, highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible
intermodal transportation -- combining two or more roads of transportation
integrated logistics management -- the logistics concept that emphasizes teamwork, both inside the company and among all the marketing channel organizations, to maximize the performance of the entire distribution system
third-party logistics (3PL) provider -- an independent logistics provider that performs any or all of the functions required to get its clients products to market

Pricing Considerations and Strategies

Price can be defined as the sum of the values that customers exchange for the benefits of having or using the product or service. It is the only marketing mix item that produces revenue; all other elements represent costs. Even so, many companies are not good at handling pricing. Pricing decisions are subject to an incredibly complex array of environmental and competitive forces.

Factors that affect pricing decisions

External factors that influence pricing decisions include the nature of the market and demand; competitors costs, prices, and offers; such as the economy, reseller needs, and government actions. The sellers pricing freedom varies with different types of markets. Ultimately, the consumer desides whether the company has set the right price. The consumer weighs the price against the perceived values of using the product -- if the price exceeds the sum of the values, consumers will not buy. Therefore, demand and consumer value perceptions set the ceiling for prices. Consumers also compare a product price to the prices of competitors product. As a result, a company must learn the price and quality of competitors offers.

Many internal factors influence the companies pricing decisions, including the firm's marketing objectives, marketing mix strategy, costs, an organization for pricing. Common pricing objectives include survival, current profit maximization, marketshare leadership, and product quality leadership. The pricing strategy is largely determined by the company's target market and positioning objectives. Pricing decisions affect and are affected by product design, distribution, and promotion decisions and must be carefully coordinated with these other marketing mix variables. Costs set the floor for the companies price -- the price must cover all of the costs of marketing and selling the product, plus a fair rate of return. Finally, in order to coordinate pricing goals and decisions, management must decide who within the organization is responsible for setting price.

Approaches to setting price

A company can select one or combination of three general pricing approaches:

• the cost-based approach (cost-plus pricing, break-even analysis, and target profit pricing);
• the value-based approach; and the competition-based approach. Cost-based pricing sets prices based on the sellers cost structure, whereas value-based pricing relies on consumer perceptions of value to dry pricing decisions.
• Competition-based pricing involves setting prices based on what competitors are charging or are expected to charge.

Pricing is a dynamic process. Companies design a pricing structure that covers all their products. They change this structure overtime and adjust to account for different customers and situations. Pricing strategies usually change as a product passes through its lifecycle. The company can decide on one of several price quality strategies for introducing an imitative product, including premium pricing, economy pricing, good-value pricing, or overcharging. In pricing innovative new products, it can allow a skimming policy by initially setting high prices to "skim" the maximum amount of revenue from various segments of the market. Or it can use penetration pricing by setting a low initial price to penetrate the market deeply and win a large market share.

When the product is part of a product mix, the firm searches for a set of prices that will maximize the profits from the total mix. In product line pricing, the company decides on price steps for the entire set of products it offers. In addition, the company must set prices for optional products (optional or accessory products included with the main product), captive products (products are required for use of the main product),by-products (waste or residual products produced when making the main product), and product bundles (combinations of products and reduced price).

Companies apply a variety of price-adjustment strategies to account for differences in consumer segments in situations. One is discount and allowance pricing, whereby the company establishes cash, quantity, functional, or seasonal discounts, or varying types of allowances. A second strategy is segmented pricing, whereby the company sells a product at two or more prices to accommodate different customers, product forms, locations, or times. Sometimes companies consider more than economics and their pricing decisions, using psychological pricing to better communicate a products intended position. In promotional pricing, a company offers discounts or temporarily sells a product below list price as a special event, sometimes even selling below cost as a loss leader. Another approach is geographical pricing, whereby the company decides how to price to near and distant customers. Finally, international pricing means that the company adjusts its price to meet conditions and expectations in different world markets.

Initiating and responding to price changes

When a firm considers initiating a price change, it must consider customers and competitors reactions. There are different implications in initiating price cuts and initiating price increases. Buyer reactions to price changes are influenced by the meaning customers see in the price change. And competitors reactions flow from a set reaction policy or a fresh analysis of each situation. There are also many factors to consider when responding to a competitors price changes. The company that faces a price change initiated by a competitor must try to understand the competitors intend as well as the likely duration and impact of the change. If a swift reaction is desirable, the firm should preplan its reactions to different possible price actions by the competitors. When facing a competitors price change, the company might sit tight, reduce its own price, raise perceived quality, improve quality and raise price, or launch a fighting brand.

Companies are not usually free to charge whatever prices they wish. Many federal, state, and even local laws governing the rules of fair play in pricing. The major public policy issues in pricing include potentially damaging pricing practices within a given level of the channel (price-fixing and predatory pricing) and across levels of the channel (retail price maintenance, discriminatory pricing, and deceptive pricing).

Pricing Considerations and Strategies - terms

marketing fundamentals -- part 9 -- terms

price -- the amount of money charged for product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service
dynamic pricing -- charging different prices depending on individual customers and situations
target costing -- pricing that starts with an ideal selling price, then targets costs that will ensure that the price is met
fixed costs -- costs that do not very with production or sales levels
variable costs -- costs that vary directly with the level of production
total costs -- the sum of the fixed and variable costs for any given level of production
demand curve -- a curve that shows the number of units the market will buy in the given time period at different prices that might be charged
price elasticity -- a measure of the sensitivity of demand to changes in price
cost-plus pricing -- adding a standard markup to the cost of the product
break-even pricing (target profit pricing) -- setting price to break even on the costs of making and marketing a product; or setting price to make a target profit
value-based pricing -- setting price based on buyers perceptions of value rather than on the seller's costs
value pricing -- offering just the right combination of quality and good service at a fair price
competition-based pricing -- setting prices based on the prices that competitors charge for similar products
market-skimming pricing -- setting a high price for a new product to skim maximum revenues nearby layer from the segments willing to pay the high price: the company makes fewer but more profitable sales
market-penetration pricing -- setting a low price for a new product in order to attract a large number of buyers and large market share
product line pricing -- setting the price steps between various products in a product line based on cost differences between the products, customer evaluations of different features, and competitors prices
optional-product pricing -- the pricing of optional or accessory products along with a main product
captive-product pricing -- setting a price for products that must be used along with a main product, such as blades for a razor and film for camera
By-product pricing -- setting a price for by-products in order to make the main products price more competitive
products bundle pricing -- combining several products and offering the bundle at a reduced price
discount -- a straight reduction in prices on purchases during a stated period of time
allowance -- promotional money paid by manufacturers to retailers in return for an agreement to feature the manufacturers product in some way
segmented pricing -- selling a product or service at two or more prices, where the difference in prices is not based on differences in costs
psychological pricing -- a pricing approach that considers the psychology of prices and not simply the economics; the price is used to say something about the product
reference prices -- prices that buyers carry in their minds and refer to when looking for a given product
promotional pricing -- temporarily pricing products below the list price, and sometimes even below cost, to increase short-run sales

New-Product Development and Product Life-Cycle Strategies

marketing fundamentals -- part 8 -- summary

A company's current products face limited lifespans and must be replaced by newer products. But new products can fail -- the risks of innovation are as great as the rewards. The key to successful innovation lies in total company effort, strong planning, and a systematic new product development process.

Companies find and develop new product ideas from a variety of sources. Many new product ideas stem from internal sources. Companies conduct formal research and development, pick the brains of their employees, and brainstorm at executive meetings. By conducting surveys and focus groups and analyzing customer questions in complaints, companies can generate new product ideas that will meet specific consumer needs. Companies track competitors offerings and inspect new products, dismantling them, analyzing their performance, in deciding whether to introduce a similar or improved product. Distributors and suppliers are close to the market and can pass along information about consumer problems and new product possibilities.

New product development process

The new product development process consists of eight sequential stages. The process starts with idea generation. Next comes ideas screening, which reduces the number of ideas based on the companies own criteria. Ideas that pass the screening stage continue through product concept development, in which a detailed version of the new product idea is stated in meaningful consumer terms. In the next stage, concept testing, new product concepts are tested with a group of target consumers to determine whether the concept has strong consumer appeal. Strong concepts proceed to marketing strategy development, in which an initial marketing strategy for the new product is development from the product concept. In the business analysis stage, a review of the sales, costs, and profit projections for a new product is conducted to determine whether the new product is likely to satisfy the company's objectives. With positive results here, the ideas then become concrete through product development and test marketing and finally are launched during commercialization.

Product life cycle

Each product has a lifecycle marked by a changing set of problems and opportunities. The sales of the typical product follow an S-shaped curve made up of five stages. The cycle begins with the product development stage when the company finds and develops a new product idea. The introduction stage is marked by slow growth and low profits as the product is distributed to the market. If successful, the product enters a growth stage, which offers rapid sales growth in increasing profits. Next comes a maturity stage, when sales growth slows down and profits stabilize. Finally, the product enters a decline stage, in which sales of profits dwindle. The company's task during the stage is to recognize the decline in to decide whether it should maintain, harvest, or drop the product.

Marketing strategies change during product lifecycle

In the introduction stage, the company must choose a launch strategy consistent with its intended product positioning. Much money is needed to attract distributors and build their inventories and to inform consumers of the new product and achieve trial. In the growth stage, companies continue to educate potential customers and distributors. In addition, the company works to stay ahead of the competition and sustain rapid market growth by improving product quality, adding new product features and models, entering new market segments and distribution channels, shifting advertising from building product awareness to building product convention in purchase, and lowering prices at the right time to attract new buyers. In the maturity stage, companies continue to invest in maturing products and consider modifying the market, the product, and the marketing mix. When modifying the market, the company attempts to increase the consumption of the current product. When modifying the product, the company changes some of the products characteristics -- such as quality, features, or style -- to attract new users or inspire more usage. When modifying the marketing mix, the company works to improve sales by changing one or more of the marketing mix elements. Once the company recognizes that a product has entered the decline stage, management must decide whether to maintain the brand without change, hoping that competitors will drop out of the market; harvest the product, reducing costs and trying to maintain sales; or drop the product, selling it to another firm or liquidating it at salvage value.

New-Product Development and Product Life-Cycle Strategies

Marketing fundamentals -- part 8 -- terms

new-product development -- the development of original products, product improvements, product modifications, and new brands through the firm's own R&D efforts
idea generation -- the systematic search for new product ideas
idea screening -- screening new product ideas in order to spot good ideas and drop bad ones as soon as possible
product concept -- a detailed version of the new product idea stated in meaningful consumer terms
concept testing -- testing new product concepts with a group of target consumers to find out if the concepts have strong consumer appeal
marketing strategy development -- designing an initial marketing strategy for a new product based on the product concept
business analysis -- a review of the sales, costs, and profit projections for a new product to find out whether these factors satisfy the Company's objectives
product development -- developing the product concept into a physical product in order to ensure that the product idea can be turned into a workable product
test marketing -- the stage of new product development in which the product and marketing program are tested and more realistic market settings
commercialization -- introducing a new product into the market
sequential product development -- a new product development approach in which one company department works to complete its stage of the process before passing the new product along to the next department and stage
simultaneously (or team-based) product development -- an approach to developing new products in which various company department's work closely together, overlapping the steps in the product development process to save time and increase effectiveness
product life cycle (PLC) -- the course of a product sales and profits over its lifetime. It involves five distinct stages: product development, introduction, growth, maturity, and decline.
style -- a basic and distinctive mode of expression
fashion -- a currently accepted or popular style in a given field
fad -- a fashion that enters quickly, is adopted with great zeal, peaks early, and declines very quickly
introduction stage -- the product life cycle stage in which the new product is first distributed it made available for purchase
growth stage -- the product life cycle stage in which the products sales start climbing quickly
maturity stage -- the stage in the product life cycle in which sales growth slows or levels off
decline stage -- the product life cycle stage in which a product sales decline

Product, Services, and Branding Strategy

marketing fundamentals -- part 7 -- summary

A product is more than a simple set of tangible features. In fact, many marketing offers consist of a combination of tangible goods and services, ranging from pure tangible goods at one extreme to pure services at the other. Each product or service offered to customers can be viewed on three levels. The core product consists of the core problem-solving benefits that consumer seek when they buy a product. The actual product exists around the core and includes the quality level, features, design, branding, and packaging. The augmented product is the actual product plus the various services and benefits offered with it, such as warranty, free delivery, installation, and maintenance.

Products

Broadly defined, a product is anything that can be offered to the market for attention, acquisition, use, or consumption that might satisfy a want or need. Products include more than just physical objects. Products can include services, events, persons, places, organizations, ideas, or mixes of these entities. Services are products that consist of activities, benefits, or satisfactions offered for sale that are essentially intangible, such as banking, hotel, tax preparation, and home repair services.

Products and services fall into two broad classes based on the types of consumers that use them. Consumer products -- those bought by final consumers -- are usually classified according to consumer shopping habits (convenience products, shopping products, specialty products, and unsought products). Industrial products -- purchased for further processing or for use in conducting a business -- include materials, parts, capital items, supplies and services. Other marketable entities -- such as organizations, persons, places, and ideas -- can also be thought of as products.

Company product offerings

Individual product decisions involve product attributes, branding, packaging, labeling, and product support services. Product attributes decisions involve product quality, features, style and design. The branding decisions include selecting a brand name and developing a brand strategy. Packaging provides many key benefits, such as protection, economy, convenience, and promotion. Package decisions often include designing labels, which identify, described, and possibly promote the product. Companies also develop product support services that enhance customer service, satisfaction and safeguard against competitors.

Most companies produce a product line rather than a single product. A product line is a group of products that are related in function, customer purchase needs, or distribution channels.
Line stretching involves extending a line downward, upward, or in both directions to occupy a gap that might otherwise be filled by competitor. In contrast, line filling involves adding items within the present range of the line. This set of product lines and items offered to customers by a particular seller make up the product mix. The mix can be described by four dimensions: weight, blankets, and depth, inconsistency. These dimensions are the tools for developing the company's product strategy.

Branding strategy

Some analysts see brands as the major enduring asset of a company. Brands are more than just names and symbols -- they embody everything that the product or service means to consumers. Brand equity is the positive differential affect that knowing the brand-name has on customer response to the product or service. A brand with strong brand equity is very valuable asset.

In building brands, companies need to make decisions about brand positioning, brand-name selection, brand sponsorship, and brand development. The most powerful brand positioning builds around strong customer beliefs and values. Brand-name selection involves finding the best brand-name based on a careful review of product benefits, the target market, and proposed marketing strategies. A manufacturer has four brand sponsorship options: it can launch a manufacturer's brand (or national brand), sell to resellers to use as a private brand, market licensed brands, or join forces with another company to co-brand a product. The company also has four choices when it comes to developing brands. It can introduce line extensions, brand extensions, multibrand, or new brands (new brand names in new product categories).

Companies must build and manage the brands carefully. The brand positioning must be continuously communicated to consumers. Advertising can help, but brands are not maintained by advertising but by the brand experience. Customers come to know a brand through a wide range of contacts and interactions. The company must put as much care into managing these touch points as it does to producing its ads. Thus, managing a company's brand assets can no longer be left only to brand managers. Some companies are now setting up brand asset management teams to manage their major brands. Finally, companies must periodically audit their brand's strengths and weaknesses. In some cases, brands may need to be repositioned because of changing customer preferences or new competitors. Other cases may call for completely rebranding a product, service, or company.

Marketing services

Services are characterized by four key characteristics; they are intangible, inseparable, variable, and perishable. Each characteristic poses problems in marketing requirements. Marketers work to find ways to make their service more tangible, to increase the productivity of providers who are inseparable from their products, to standardize quality in the face of variability, and to improve demand moments and supply capacities in the face of service parishability.

Good service companies focus attention on both customers and employees. They understand the service profit chain, which links service and profits with employee and customer satisfaction. Service marketing strategy calls not only for external marketing but also for internal marketing to motivate employees and interactive marketing to create service delivery skills among service providers. To succeed, service marketers must create competitive differentiation, offer high service quality, and find ways to increase service productivity.

Product issues

Marketers must consider two additional product issues. The first is social responsibility. These include public policy issues and regulations involving acquiring or dropping products, patent protection, product quality and safety, and product warranties. The second involves special challenges facing international product and service marketers. International marketers must decide how much to standardize or adapt their offerings for world markets.

Pricing, Distributing, and Promoting Products

business essentials -- part 11 -- summary

In pricing, managers decide what the company will get in exchange for products. Pricing objectives refer to the goals that producers hope to attain as a result of pricing decisions. These objectives can be divided into two major categories: (1) pricing to maximize profits: if prices are too low, the company will probably sell many product units but miss the chance to make additional profits on each one. If prices are set too high, it will make a large profit on each unit but will sell fewer units. (2) marketshare objectives: many companies are willing to accept minimal profits, even losses, to get buyers to try products. They may use pricing to establish market share -- a company's percentage of the total market sales for specific product type.

Managers must measure the potential impact before deciding on final prices. For this purpose, they use two basic tools (which are often combined): (1) cost oriented pricing: managers price products by calculating the cost of making them available to shoppers; when they total these costs and add a figure for profit, they arrive at a markup. (2) breakeven analysis: breakeven analysis assesses total costs vs. revenues for various sales volumes. It shows, any particular sale price, the financial results -- the amount of profit or loss -- for each possible sales volume. The number of units that must be sold for total revenue to equal total cost is the breakeven point.

The distribution mix

The success of any product depends on its distribution mix: the combination of distribution channels of the firm uses to get products to end-users. Intermediaries help to distribute a producer's goods: wholesalers sell products to other businesses, which resell them the final consumers. Retailers sell products directly to consumers.

Among the eight distribution channels, the first four are aimed at getting products to consumers, the fifth is for consumers or business customers, and the last three are aimed at getting products to business customers.
Channel 1 involves direct sales to consumers
Channel 2 includes a retailer
Channel 3 in involves both a retailer in a wholesaler
Channel 4 includes an agent or broker
Channel 5 includes only an aged between the producer and consumer
Channel 6, which is used extensively for e-commerce, involves a direct sale to an industrial user
Channel 7 entails selling to business users through wholesalers
Channel 8 includes retail superstores they get products from producers or wholesalers (or both) for reselling to business customers

Retailing

U.S. retail operations fall under two classifications.
Product line retailers featuring broad product lines include department stores in supermarkets. Small specialty stores are clearly defined market segments by offering full product lines in their rope product fields. Bargain retailers carry wide range is a products income in many forms, including discount houses, catalog showrooms, factory outlets, warehouse clubs (or wholesale clubs), and convenience stores.

Nonstore retailing includes direct response retailing, in which firms make direct contact with customers to inform them about products and take sales orders. Mail order (or catalog marketing) is a form of direct response retailing, as is telemarketing. Electronic retailing uses communications networks that allow sellers to connect to consumers computers. Internet retail shopping includes electronic storefronts where customers can examine the stores products, place orders, and make payments electronically. Customers can also visit cyber malls -- a collection of virtual storefronts representing a variety of product lines on the Internet.

Physical Distribution

Physical distribution refers to all the activities needed to move products from producers to consumers, so that products are available when and where customers want them at reasonable cost. Physical distribution activities include providing customer services, warehousing, and transportation of products. Warehouses provide storage for products and may be either public or private. Transportation operations physically move products from suppliers to customers. Trains, railroads, planes, water carriers (boats and barges), and pipelines are major transportation modes used in the distribution process.

Promotions

Although the ultimate goal of promotion is to increase sales, other roles include communicating information, positioning a product, adding value, and controlling sales volume. In deciding on the appropriate promotional mix -- the best combination of promotional tools (for example advertising, personal selling, public relations) -- marketers must consider the good or service being offered, characteristics of the target audience and the buyer's decision process, and of course the promotional mix budget.

Advertising media includes television, newspapers, direct mail, radio, magazines, outdoor advertising, and the Internet, as well as other channels such as Yellow Pages, movies, special events, and door-to-door selling. The combination of media that a company chooses is called its media mix.

Personal Selling

Personal selling tasks include order processing, creative selling (activities that helped persuade buyers), and missionary selling (activity that promoted firms and products). Point-of-purchase (POP) displays are intended to grab attention and help customers find products in stores. Purchasing incentives include samples (which let customers try products without having to buy them) and premiums (rewards for buying products). At trade shows, seller's rent booths to display products to customers who have an interest in buying. Contests are intended to increase sales by stimulating buyers interest in a product.

Pricing, distributing, and providing products -- terms

business essentials -- part 11 -- terms

pricing -- process of determining what a company will receive in exchange for its products
pricing objectives -- goals the producers hope to attain in pricing products for sale
market share -- as a percentage, total of market sales for specific company or product
markup -- amount added to an items cost to sell it at a profit
variable cost -- cost that changes with the quantity of a product produced or sold
fixed cost -- cost unaffected by the quantity of a product produced or sold
breakeven analysis -- for particular selling price, assessment of the sellers cost vs. revenues at various sales volumes
breakeven point -- sales volume at which the sellers total revenue from sales equals total costs (variable and fixed) with neither profit or loss
price skimming -- selling an initially high price to cover new product costs and generate a profit
penetration pricing -- selling an initially low-price to establish a new product in the market
price lining -- setting a limited number of prices for certain categories of products
psychological pricing -- pricing tactic that takes advantage of the fact that consumers do not always respond rationally to stated prices
odd-even pricing -- psychological pricing tactic based on the premise that customers prefer prices not stated in even dollar amounts
distribution mix -- the combination of distribution channels by which a firm gets its products to end-users
intermediary -- individual or firm that helps to distribute a product
wholesaler -- intermediary who sells products to other businesses for resale to final consumers
retailer -- intermediary who sells products directly to consumers
distribution channel -- network of interdependent companies to which a product passes from producer to end-user
direct channel -- distribution channel in which a product travels from producer to consumer without intermediaries
sales agent/broker -- independent intermediary who usually represents many manufacturers and sells to wholesalers or retailers
industrial (business) distribution -- network of channel members involved in the flow of manufactured goods to industrial customers
merchant wholesaler -- independent wholesaler who takes legal possession of goods produced by a variety of manufacturers and then resells them to other businesses
e-intermediary -- Internet distribution channel member that assists in moving products through to customers or that collects information about various sellers to be presented in convenient format for Internet customers
department store -- large product line retailer characterized by organization into specialized departments
supermarket -- large product line retailer offering a variety of food and food related items in specialized departments
specialty store -- small retail store carrying one product line or category of related products
bargain retailer -- retailer carrying a wide range of products at bargain prices
discount house -- bargain retailer that generates large sales volume by offering goods at substantial price reductions
catalog showroom -- bargain retailer in which customers place orders for catalog items to be picked up on premises where houses
factory outlet -- bargain retailer added by the manufacturer whose products bid to sells
warehouse club (or wholesale club) -- bargain retailer offering large discounts on brand-name merchandise to customers who have paid annual membership fees
convenience store -- retail store offering easy accessibility, extended hours, and fast service
direct response retailing -- nonstore retailing by direct interaction with customers to inform them of products and to receive sales orders
mail order (or catalog marketing) -- form of nonstore retailing in which customers place orders for catalog merchandise received to the mail
telemarketing -- nonstore retailing in which the telephone is used to sell directly to consumers
electronic retailing -- nonstore retailing in which information about the sellers products and services is connected to consumers computers, allowing consumers to receive the information and purchased the products in the home
e-catalog -- nonstore retailing in which the Internet is used to display products
electronic storefront -- commercial web site in which customers gather information about products, buying opportunities, placing orders, and paying for purchases
cybermall -- collection of virtual storefronts (business web sites) representing a variety of products and product lines on the Internet
interactive marketing -- nonstore retailing that uses a Web site to provide real-time sales and customer service
video marketing -- nonstore retailing to consumers via standard and cable television
physical distribution -- activities needed to move the product efficiently from manufacturer to consumer
warehousing -- physical distribution operation concerned with the storage of goods
private warehouse -- warehouse owned by and providing storage for single company
public warehouse -- independently owned and operated warehouse stores goods for many firms
order fulfillment -- all activities involved in completing a sales transaction, beginning with making the sale and ending with on-time delivery to the customer
promotion -- aspect of the marketing mix concerned with the most effective techniques for selling a product
positioning -- process of establishing identifiable product image in the minds of consumers
promotional mix -- combination of tools used to promote products
advertising -- promotional tool consisting of paid, not personal communications used by an identified sponsored to inform an audience about a product
advertising media -- variety of communication devices for carrying a seller's message to potential customers
direct-mail -- advertising medium in which messages are mailed directly to consumers homes or places of business
media mix -- combination of advertising media chosen to carry message about a product
personal selling -- promotional tool in which a salesperson communicates one-on-one with potential customers
order processing -- personal selling task in which salespeople receive orders and see to their handling and delivery
creative selling -- personal selling task in which salespeople tried to persuade buyers to purchase products by providing information about their benefits
missionary selling -- personal selling tasks and which salespeople promote their firms and products rather than try to close sales
sales promotion -- short-term promotional activity designed to stimulate consumer buying or cooperation from distributors and sales agents
coupon -- sales promotion technique and what a certificate is issued entitling the buyer to reduced price
point-of-purchase (POP) display -- sales promotion technique in which product displays are located in certain areas to stimulate purchase
premium -- sales promotion technique and which offers are free or reduced price items are used to stimulate purchases
trade show -- sales promotion technique in which various members of an industry gather to display, demonstrate, and sell products
publicity -- promotional tool in which information about a company or product is transmitted by general mass media
public relations -- company influenced publicity directed at building goodwill with the public or dealing with unfavorable events

Product, Services and Branding Strategy

marketing fundamentals -- part 7 -- terms

product -- anything that can be offered to a market for attention, acquisition, use, or consumption them I satisfy a want or need
service -- any activity or benefits of one-party can offer to another that is essentially intangible and is not result in the ownership of anything
consumer product -- product blought by final consumer for personal consumption
convenience product -- consumer product that the customer usually buys frequently, immediately, and with a minimum of comparison in buying effort
shopping product -- consumer goods that the customer, and the process of selection and purchase, characteristically compares on the basis such as suitability, quality, price, and style
specialty product -- consumer product with unique characteristics of brand identification for which is significant group of buyers is willing to make a special purchase effort
unsought product -- consumer product that the consumer either does not know about or knows about what does not normally think of buying
industrial product -- product bought by individuals and organizations for further processing or for use in conducting business
social marketing -- the design, implementation, in control of programs seeking to increase the acceptability of a social idea, cause, or practice among a target group
product quality -- the ability of a product to perform its functions; it includes the products overall durability, reliability, precision, ease of operation and repair, and other valued attributes
brand -- a name, term, sign, symbol, or design, or a combination of these intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors
packaging -- the activities of designing and producing the container or wrapper for product
product line -- a group of products that are closely related because they function in a similar manner, are sold to the same customer groups, marketed to the same types of outlets, or fall within given price ranges
product mix (or product assortment) -- the set of all product lines and items that a particular seller offers for sale
brand equity -- the positive differential effect that knowing the brand name has on the customer response to the product or service
private (or store) brand -- a brand created and owned by a reseller of a product or service
co-branding -- the practice of using the established brand names of two different companies on the same product
line extension -- using a successful brand name to introduce additional items in a given product category under the same brand name, such as new flavors, forms, colors, added ingredients, or package size
brand extension -- using a successful brand name to launching new or modified product in a new category
service intangibility -- a major characteristics of services -- they cannot be seen, tasted, felt, heard, or smell before they are bought
service inseparability -- a major characteristics of services -- they are produced and consumed at the same time and cannot be separated from their providers, whether the providers are people or machines
service variability -- a major characteristics of services -- their quality may very greatly, depending on who provides them and when, where, and how
service parishability -- a major characteristics of services -- they cannot be stored for later sale or use
service-profit chain -- the chain that links service from profits with employees and customer satisfaction
internal marketing -- marketing by a service firm to train and effectively motivate its customer contact employees and all of the supporting services people to work as a team to provide customer satisfaction
interactive marketing -- marketing by a service firm that recognizes that perceived service quality depends heavily on the quality of buyer/seller interaction

Understanding marketing processes and consumer behavior

business essentials -- part 10 -- summary

Marketing is "the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individuals and organizational goals." Consumers buy products that offer the best value -- the comparison of products benefits to its costs -- when it comes to meeting their goals and wants. The satisfied buyer perceives that the benefit derived from the purchase outweighs its costs.

5 outside factors comprise a company's external environment and influence its marketing programs by posing opportunities or threats:
(1) political and legal environment
(2) social and cultural environment
(2) technological environment
(4) economic environment
(5) competitive environment

Marketing managers plan and implement all marketing activities that result in the transfer of products to customers. These activities accumulate in the marketing plan -- a detailed strategy for focusing the effort to meet customer needs and wants.

Marketing managers rely on the "Four P's" of marketing, or the marketing mix.
The "Four P's" of marketing are:
(1) product: marketing begins with a product, a good, a service, or an idea designed to fill a consumer need or want. Product differentiation is the creation of a feature or image that makes a product differ from competitors.
(2) pricing: pricing is a strategy of selection of the most appropriate price at which to sell product.
(3) place (distribution): all distribution activities are concerned with getting a product from the producer to the consumer.
(4) promotion: promotion refers to techniques for communicating information about products and includes advertising.

Marketers think in terms of target markets -- groups of people who have similar ones and needs and who can be expected to show interest in the same products. Target marketing requires market segmentation -- dividing a market into customer types or "segments."

Members of a market segment must share some common traits that influence purchasing decisions. Following are three of the most important influences:
(1) geographic variables are the geographical units that may be considered in developing a segmentation strategy.
(2) demographic variables describe populations by identifying such traits as age, income, gender, ethnic background, marital status, race, religion, and social class.
(3) members of a market can be segmented according to such psychographic variables like lifestyles, interest, and attitudes.

Students of consumer behavior have constructed various models to help marketers understand how consumers decide to purchase products. One model considers five influences that lead to consumption:
(1) problem/need recommendation: the buying process begins with consumer recognizes a problem or need.
(2) information seeking: having recognized the need, consumers seek information.
(3) evaluation of alternatives: by analyzing the attributes that apply to a given product, consumers compare products in deciding which probably best meets the needs.
(4) purchase decision: "buy" decisions are based on rational motives, emotional motives, or both. Rational motives involve the logical evaluation of product attributes such as cost, quality, and usefulness. The national motives involve nonobjective factors and include sociability, imitation of others, and aesthetics.
(5) purchase evaluations: marketers want consumers to be happy after the consumption of products so they are more likely to buy them again.

Organizational (or commercial) markets, in which organizations buy goods and services to be used in creating and delivering consumer products, fall into three categories. (1) the industrial market consists of businesses that buying goods to be converted into other products or goods that are used during production. (2) before products reach consumers, they passed through the reseller market consisting of intermediaries that buy finished goods and resell them. (3) government and institutional markets: federal, state, and local governments by durable and nonverbal products. The institutional market consists of nongovernmental buyers such as hospitals, churches, museums, and charities.

A product is a good, service, or idea that is marketed to fill consumer needs and wants. Customers buy products because of the value that the offer. Thus, a successful product is a value package -- a bundle of attributes that, taken together, provides the right features and offers the right benefits. Attributes include such characteristics as ease-of-use, prestige of ownership, warranties, and technical support. Features are the qualities, tangible and intangible, that a company builds into its products (such as a 12 horsepower motor on a lawnmower). To be sellable, features also must provide benefits (example, an attractive lawn). The items in the value package are services and features that, collectively, add value by providing benefits that increase the customer's satisfaction.

Each product is given an identity by its brand in the way is packaged. The goal in developing brands, symbols that distinguish products and signal their uniform quality -- is to increase brand loyalty (the preference that consumers have for a product with a particular brand name). National brands are produced, widely distributed by, and carry the name of the manufacturer: they are often widely recognized because of national advertising campaigns. Licensed brands are brand names purchased from the organization or individuals who own them. When a wholesaler or retailer develops a brand name and has a manufacturer place it on a product, the product name is then called a private brand (or private label). With a few exceptions, a product needs some form of packaging -- a physical container in which is sold, advertised, or protected. A package makes the product attractive, displays the brand name, and identifies feature in benefits. It also reduces the risk of damage, breakage, or spoilage, and it lessens the likelihood of theft.

Understanding marketing processes and consumer behavior -- terms

business essentials -- part 10 -- terms

Marketing -- the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives
value -- relative comparison of products benefit with its costs
utility -- ability of a product to satisfy human want or need
consumer goods -- product purchased by consumers for personal use
industrial goods -- products purchased by companies to produce other products
services -- intangible products, such as time, expertise, or activity that can be purchased
relationship marketing -- marketing strategy that emphasizes lasting relationships with customers and suppliers
external environment -- outside factors that influence marketing programs by posing opportunities or threats
substitute product -- product that is dissimilar to those of competitors but that can fulfill the same need
brand competition -- competitive marketing that appeals to consumer perceptions of similar products
international competition -- competitive marketing of domestic products against foreign products
marketing manager -- manager who plans and implements the marketing activities that result in the transfer products from producer to consumer
marketing plan -- detailed strategy for focusing marketing efforts on consumer needs and wants
marketing mix -- the combination of product, pricing, promotion, and distribution strategies used to market products
product -- good, service, or idea that is marketed to fill consumer needs and wants
product differentiation -- creation of a product or product image that differs enough from existing products to attract consumers
distribution -- part of the marketing mix concerned with getting products from producers to consumers
target market -- group of people that has similar wants and needs and that can be expected to show interest in the same products
market segmentation -- process of dividing a market into categories of customer types
geographic variables -- geographical units that may be considered in developing a segmentation strategy
demographic variables -- characteristics of populations that may be considered in developing a segmentation strategy
psychographic variables -- consumer characteristics, such as lifestyles, opinions, interest, and attitudes, that may be considered in developing a segmentation strategy
consumer behavior -- various facets of the decision process by which customers come to purchase and consumer products
brand loyalty -- pattern of regular consumer purchasing based on satisfaction with the product
rational motives -- reasons for purchasing a product that are based on logical evaluation of product attributes
emotional motives -- reasons for purchasing a product that are based on nonobjective factors
data warehousing -- process of collecting, storing, and retrieving data in electronic files
data mining -- application of electronic technologies for searching, sifting, and reorganizing data in order to collect marketing information and target products in the marketplace
industrial market -- organizational market consisting of firms that buy goods that are either converted into products or use during production
reseller market -- organizational market consisting of intermediaries that buy and resell finished goods
institutional market -- organizational market consisting of non-governmental buyers of goods and services such as hospitals, churches, museums, and charitable organizations
feature -- tangible quality that a company builds into a product
value package -- product marketed as a bundle of value-adding attributes, including reasonable cost
convenience good/service -- inexpensive product purchased and consumed rapidly and regularly
shopping good/service -- moderately expensive, infrequently purchased product
specialty good/service -- expensive, rarely purchased product
expense item -- industrial products purchased and consumed rapidly and regularly for daily operations
capital item -- expensive, long-lasting, infrequently purchased industrial products such as buildings and equipment
product mix -- group of products that a firm makes available for sale
product line -- group of similar products intended for similar group of buyers who will use them in similar ways
speed to market -- strategy of introducing new products to respond quickly to consumer or market changes
product life cycle (PLC) -- serious of stages in a products profit producing life
branding -- process of using symbols to communicate the qualities of a product made by particular producer
brand awareness -- extent to which a brand name comes in mind when a consumer considers a particular product category
national brand -- brand-name product produced by, widely distributed by, and carrying the name of the manufacture
licensed brand -- brand-name product for whose name the seller has purchased the right from an organization or individual
private brand (or private label) -- brand-name product the wholesaler or retailer has commissioned from a manufacturer
packaging -- physical container in which a product is sold, advertised, or protected

Motivation Theories and Management Styles

The foundation of good human relations -- interactions between employees and employers and their attitudes toward one another -- is a satisfied and motivated work force. Satisfaction and motivation depend on a psychological contract between organizations in employees: (the set of expectations held by employees concerning what they will contribute in what the organization will provide in return). If contracts are managed effectively, workers will probably be satisfied and motivated. If not, they are likely to be dissatisfied and unmotivated.

Job satisfaction is the degree of enjoyment that people get from doing their jobs. Morale reflects the degree to which they perceive that their needs are being met by their jobs. When workers are satisfied the morale is high, the organization benefits in many ways. Satisfied employees are more committed and loyal and more likely to make useful contributions. They tend to have fewer grievances engage in fewer negative behaviors (complaining, deliberately slowing their work pace, and so forth). Satisfying workers tend to come to work everyday and to remain with the organization. By permitting satisfaction and morale, then, management helps to ensure more efficient operations.

Employee motivation theories

Motivation is the several forces that cause people to behave in certain ways.
the three major approaches to human relations in the workplace are:
(1) classical theory
(2) behavior theory
(3) contemporary theory

There are five motivation theories:
(1) Theories X and Y
(2) Maslow's heirarchy of needs
(3)two-factor theory
(4) expectancy theory
(5) equity theory

There are five major programs designed to make jobs more interesting and rewarding:
(1) reinforcement/behavior modification theory
(2) management by objectives and (MBO)
(3) participative management and empowerment
(4) job enrichment and job redesign
(5) modified work schedules
including (a) work sharing
(b) flextime programs
(c) telecommuting

An important component of the managers directing function, leadership is the process of motivating others to work to meet specific objectives. Contemporary theories of leadership focus on managerial styles -- patterns of behavior that manager exhibits in dealing with subordinates. Managers who adopt an autocratic style issue orders and expect them to be followed. This style allows for rapid decision-making. Managers who adopt a democratic style ask for input from subordinates before making decisions, but they retain final decision-making power. Managers who adopt a free-rein style advise subordinates who are allowed to make decisions. Managers have begun to adapt a contingency approach to managerial style: viewing the appropriate managerial behavior in any situation as dependent, or contingent, on the elements unique to that situation. This approach recognizes the complexity of managerial problems and acknowledges that people in different cultures expect different things from their managers.

Motivating, satisfying, and leading employees -- terms

business essentials -- part 9 -- terms

psychological contract -- set of expectations held by an employee concerning what he or she will contribute to organization and (referred to as contributions) and what the organization will in return provide the employee (referred to as inducements)
job satisfaction -- degree of enjoyment that people derive from performing their jobs
morale -- the overall attitude that employees have toward their workplace
turnover -- annual percentage of an organization's workforce that leaves and must be replaced
motivation -- the set of forces that cause people to behave in certain ways
classical theory of motivation -- theory holding that workers are motivated solely by money
Hawthorne effect -- tendency for productivity to increase when workers believe they are receiving special attention from management
Theory X -- theory of motivation holding that people are naturally irresponsible and uncooperative
Theory Y -- theory of motivation holding that people are naturally responsible, growth oriented, self-motivated, and interested in being productive
hierarchy of human needs model -- theory of motivation describing five levels of human needs and arguing that basic needs must be fulfilled before people work to satisfy higher level needs
two-factor theory -- theory of motivation holding that job satisfaction depends on two types of factors, hygiene and motivation
expectancy theory -- theory of motivation holding that people are motivated to work toward rewards that they want and that they believe have a reasonable chance of obtaining
equity theory -- theory of motivation holding that people evaluate their treatment by employers relative to the treatment of others
reinforcement -- theory that behavior can be encouraged or discouraged by means of rewards or punishments
management by objectives (MBO) -- set of procedures involving both managers and subordinates in setting goals and evaluating process
participative management and empowerment -- method of increasing job satisfaction by giving employees a voice in the management of their jobs in the company
job enrichment -- method of increasing job satisfaction by adding one or more motivating factors to job activities
job redesign -- method of increasing job satisfaction by designing a more satisfactory fit between workers and their jobs
work sharing (or job sharing) -- method of increasing job satisfaction by allowing two or more people to share a single full-time job
flextime programs -- method of increasing job satisfaction by allowing workers to adjust work schedules on a daily or weekly basis
telecommuting -- former flextime that allows people to perform some or all of the job away from standard office settings
leadership -- process of motivating others to work to meet specific objectives
managerial style -- pattern of behavior than a manager exhibits in dealing with subordinates
autocratic style -- managerial style in which managers generally issue orders and expect them to be obeyed without question
democratic style -- managerial style and which managers generally ask for input from subordinates but retain final decision taking power
free-rein style -- managerial style in which managers typically serve as advisers to subordinates who are allowed to make decisions
contingency approach to managerial style -- approach to managerial style holding that the appropriate behavior in any situation is dependent (contingent) on the unique elements of that situation

Managing human resources and labor relations

business essentials -- part 8

Human resource management (HRM) is the set a organizational activities directed at attracting, developing, and maintaining an effective workforce. HR planning involves two tasks. Job analysis is a systematic analysis of jobs within an organization. It results in the creation of the job description in the job specification. Managers must plan for future HR needs by assessing past trends, future plans, and general economic trends. Forecasting labor supply is really two tasks -- forecasting internal supply and forecasting external supply. The next step in HR planning is matching HR supply and demand -- dealing with predicted shortfalls or overstaffing. If the shortfall is predicted, new employees can be hired. The external labor forecast helps managers recruit on the bases of which type of workers are available or scarce.

Staffing and organization means recruiting and hiring the right mix of people. Recruiting is the process of attracting qualified persons to apply for open jobs. Internal recruiting means considering present employees as candidates -- a policy that helps build morale and keep high-quality employees. External recruiting involves attracting people from outside the organization. Methods include advertising, campus interviews, employment agencies or executive search firms, union hiring halls, and referrals by present employees. The next step is the selection process -- gathering information that will predict applicants job success and then hiring the most promising candidates. Common selection techniques include application blanks, tests, and interviews. Some organizations also use such selection techniques as polygraphs and drug tests.

New employees must be trained and allowed to develop job skills. On the job training occurs while the employee is at work. Off the job training takes place at off-site locations where controlled environments allow focused study. In larger firms, performance appraisals show how well workers are doing their jobs. Typically, appraisal involves a regular written assessment as part of a multistep process that begins when a manager defines performance standards for employee. The manager then observes the employee, and the process ends when manager and employee meet to discuss the appraisal.

Compensation

A compensation system is the total package that a firm offers employees in return for their labor. The right combination of compensation elements will make employees feel valued while holding down company costs. Wages are paid for time worked (for example, by the hour). A salary is paid for discharging the responsibilities of the job. Beyond a certain point, money motivates employees only when tied directly to performance. One way to establish this link is the use of incentive programs -- special pay programs designed to motivate high performance. Benefits -- compensation other than wages and salaries -- comprise a large percentage of most compensation budgets. The law requires most companies to provide Social Security retirement benefits and workers compensation insurance (insurance for compensating workers injured on the job). Most companies provide health, life, and disability insurance; retirement plans pay pensions to workers when they retire. Many companies are experimenting with cost-cutting plans, such as the cafeteria benefit plan, in which a certain dollar amount of benefits per employee is set aside so that each employee can choose from a variety of alternatives.

HR management is heavily influenced by the law. One area of HR regulation is equal employment opportunity -- regulation to protect people from unfair or inappropriate discrimination in the workplace. Because illegal discrimination is based on a prejudice about classes of individuals, laws protect various classes. Enforcement of equal opportunity legislation is handled by the Equal Employment Opportunity Commission, or EEOC, which is responsible for federal regulations, and the Office of Federal Contract Compliance Programs, for OFCCP, which is responsible for executive orders applying to companies doing business with the government. Other legislation deals with the emerging legal issues, including employee safety and health.

Workforce diversity

Workforce diversity refers to the range of workers attitudes, values, beliefs, and behaviors that differ by gender, race, ethnicity, age, and physical ability. Today, many U.S. businesses are working to create workforces that reflect the growing diversity of the population as it enters the labor pool. Although many firms see the diverse workforce as a competitive advantage, not all are equally successful in or eager about implementing diversity programs.

Many firms today also face challenges in managing knowledge workers. The recent boom of high technology companies has led to rapidly increasing salaries and high turnover among the workers who are best prepared to work in those companies. Contingent workers are temporary and part-time workers hired to supplement an organization's permanent workforce. Their numbers have grown significantly since the early 1980s and are expected to rise farther. The practice of hiring contingent workers is gaining popularity because it gives managers more flexibility and because temps are usually not covered by employers benefit programs.

Labor unions

A labor union is a group of individuals working together to achieve shared job-related goals. Labor relations describes the process of dealing with employees represented by a union. Their power comes from collective action, such as collective bargaining -- the process by which union leaders and company managers negotiate conditions of employment for unionized workers. Although millions of workers still belong the unions, membership as a percentage of the total workforce has declined at a steady rate since the mid 1950s.

The collective bargaining process begins when a union is recognized as a negotiator for its members. Among issues that are important to union negotiators are (1) compensation, (2) benefits, and (3) job security. An impasse occurs when management and labor fail to agree on a contract. Each side can use several tactics to support its cause until the impasse is resolved. The most important union tactic is the strike, which occurs when employees temporarily walk off the job and refuse to work. Unions may also use picketing, boycotts, and work slowdowns. Management may resort to lockouts -- denying employees access to the workplace. A firm can also hire temporary or permanent replacements called strikebreakers. Rather than use these tactics, labor and management can call in the third party to help resolve the dispute.

Target markets and Segmentation

Marketers know that they cannot appeal to all buyers in their markets, or at least not to all buyers in the same way. Buyers are too numerous, too widely scattered, in their needs and buying practices. Therefore, most companies today are moving away from mass marketing. Instead, they practice target marketing -- identifying market segments, selecting one or more of them, and developing products and marketing mixes tailored to each. In this way, sellers can develop the right products for each target market and adjust their prices, distribution channels, and advertising to reach the target market effectively.

Target marketing involves designing strategies to build the right relationships with the right customers. Market segmentation is that act of dividing a market into distinct groups of buyers with different needs, characteristics, or behaviors who might require separate products and marketing mixes. Once the groups have been identified, target marketing evaluates each market segments attractiveness and selects one or more segments to serve. Market positioning consists of deciding how to best serve target customers -- setting the competitive positioning for the product in creating a detailed marketing plan.

There is no single way to segment a market. Therefore, the marketer tries different variables to see which give the best segmentation opportunities. For consumer marketing, the major segmentation variables are geographic, demographic, psychographic, and behavioral. In geographical segmentation, the market is divided into different geographical units such as nations, regions, states, cities, or neighborhoods. In demographic segmentation, the market is divided into groups based on demographic variables, including age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality. In psychographic segmentation, the market is divided into different groups based on social class, lifestyle, or personality characteristics. In behavioral segmentation, the market is divided into groups based on consumers knowledge, attitudes, uses, or responses to a product.

Business marketers use many of the same variables to segment their markets. But business markets also can be segmented by business consumer demographics at (industry, company size), operating characteristics, purchasing approaches, situational factors, and personal characteristics. The effectiveness of segmentation analysis depends on finding segments that are measurable, accessible, substantial, differentiable, and actionable.

Identifying attractive market segments

To target the best market segments, the company must first evaluate each segments size and growth characteristics, structural attractiveness, and compatibility with company objectives and resources. It then chooses one of four target marketing strategies -- ranging from very broad to very narrow targeting. The seller can ignore segment differences and target broadly using undifferentiated (or mass) marketing. This involves mass-producing, mass distributing, and mass promoting about the same product in about the same way to all consumers. Or the seller can adopt differentiated marketing -- developing different markets offers for several segments. Concentrated marketing (or niche marketing) involves focusing on only one or a few market segments. Finally, micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. Micromarketing includes local marketing and individual marketing. Which targeting strategy is best depends on company resources, product variability, product lifecycle stage, market variability, and competitive marketing strategies.

Maximum competitive advantage

Once a company has decided which segments to enter, it must decide on its marketing position strategy -- on which positions to occupy in its chosen segments.
The positioning task consists of three steps;

1. identifying a set of possible competitive advantages on which to build position,
2. choosing the right competitive advantages, and
3. selecting an overall positioning strategy

The brands full positioning is called its value proposition -- the full mix of benefits on which the brand is positioned. In general, companies can choose from one of five winning value propositions on which to position their products: more for more, more for the same, the same for less, less for much less, or more for less. Company and brand positioning are summarized in positioning statements that state the target segment in need, positioning concept, and specific points of difference. The company must then effectively communicate and deliver the chosen position to the market.

marketing fundamentals -- part 6 -- terms

market segmentation -- dividing a market into distinct groups with distinct needs, characteristics, or behaviors who might require separate products or marketing mixes
target marketing -- the process of evaluating each market segment's attractiveness and selecting one or more segments to enter
market positioning -- arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers
geographic segmentation -- dividing a market into different geographical units such as nations, states, regions, countries, cities, or neighborhoods
demographic segmentation -- and dividing the market into groups based on demographic variables such as each, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality
age and lifecycle segmentation -- dividing a market into different age and lifecycle groups
gender segmentation -- dividing the market into different groups based on gender
income segmentation -- dividing the market into different groups based on income
psychographic segmentation -- dividing a market into different groups based on social class, lifestyle, or personality characteristics
behavioral segmentation -- dividing a market into groups based on consumer knowledge, attitude, use, or response to a product
occasion segmentation -- dividing the market into groups according to occasions when buyers get the idea to buy, actually make their purchase, or use the purchased item
benefit segmentation -- dividing the market into groups according to the different benefits that consumers seek from the product
intermarket segmentation -- forming segments of consumers who have similar needs and buying behavior even though they are located in different countries
target market -- a set of buyers sharing common needs or characteristics that the company decides to serve
undifferentiated (mass) marketing -- a market coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offer
differentiated (segmented) marketing -- a marketing covered strategy in which a firm decides to target several market segments and designs separate offers for each
concentrated (niche) marketing -- a market coverage strategy in which a firm goes after a large share of one or a few segments, or niches
micromarketing -- the practice of tailoring products and marketing programs to the needs and wants of specific individuals and local customer groups (includes local marketing and individual marketing)
local marketing -- tailoring brands and promotions to the needs and wants of local customer groups (cities, neighborhoods, and specific stores)
individual marketing -- tailoring products and marketing programs to the needs and preferences of individual customers (also labeled "markets-of-one marketing," "customized marketing," and "one-to-one marketing.")
product position -- the way the product is defined by consumers on important attitudes, the place the product occupies in consumers mind to relative to competing products
competitive advantage -- an advantage over competitors gained by offering consumers greater value, either through lower prices or by providing more benefits that justify higher prices
value proposition -- the full positioning of a brand, the full mix of benefits on which it is positioned
positioning statement -- a statement that summarizes company or brand positioning -- it takes this form: To (target segment and need) are (brand) is (concept) that (point of difference).

Managing human resources and labor relations

business essentials -- part 8 -- terms

Human resource management (HRM) -- set of organizational activities directed at attracting, developing, and maintaining an effective workforce
job analysis -- systematic analysis of jobs within an organization
job description -- outline of the duties of a job, working conditions, and the tools, materials, and equipment used to perform it
job specification -- description of the skills, abilities, and other credentials required by a job
replacement chart -- list of each management position, who occupies it, how long a person will likely stay in the job, and who is qualified as a replacement
employee information system (skills inventory) -- computerized system containing information on each employee's education, skills, work experiences and career aspirations
recruiting -- process of attracting qualified persons to apply for jobs and organization is seeking to fill
internal recruiting -- considering present employees as candidates for openings
external recruiting -- attracting persons outside the organization to apply for jobs
validation -- the process of determining the predictive value of a selection technique
on-the-job training -- training, sometimes informal, conducted while an employee is at work
off-the-job training -- training conducted in a controlled environment away from the worksite
vestibule training -- off the job training conducted in a simulated environment
performance appraisal -- evaluation of employees job performance in order to determine the degree to which the employee is performing effectively
compensation system -- set of rewards that organizations provide to individuals and return for their willingness to perform various jobs and tasks within the organization
wages -- compensation in the form of money paid for time worked
salary -- compensation in the form of money paid for discharging the responsibilities of a job
incentive program -- special compensation program designed to motivate high-performance
bonus -- individual performance incentive in the form of a special payment made over and above the employee's salary
merit salary system -- individual instead of linking compensation to performance in nonsales jobs
pay for performance or variable pay -- individual incentive yhat rewards a manager for especially productive output
profit-sharing plan -- incentive plan for distributing bonuses to employees when company profits rise above a certain level
gainsharing plan -- incentive plan that rewards groups for productive improvements
pay-for-knowledge plan -- incentive plan to encourage employees to learn new skills or become proficient at different jobs
benefits -- compensation and other than wages and salaries
workers compensation insurance -- legally required insurance for compensating workers injured on the job
cafeteria benefit plan -- benefit plan that set limits on benefits per employee, each of whom may choose from a variety of alternative benefits
equal employment opportunity -- legally mandated nondiscrimination in employment on the bases of race, creed, sex, or national origin
protected class -- set of individuals to buy nature of one or more common characteristics are protected under the law from discrimination on the basis of that characteristics
Equal Employment Opportunity Commission (EEOC) -- federal agency and forcing several discrimination related laws
affirmative action plan -- practice of recruiting qualified employees belonging to racial, gender, or ethnic groups you are underrepresented in an organization
Occupational Safety and Health Act of 1970 (OSHA) -- federal law setting in enforcing guidelines for protecting workers from unsafe conditions and potential health hazards in the workplace
sexual harassment -- practice or instance of making unwelcome sexual advances in the workplace
quid pro quo harassment -- form of sexual harassment in which sexual favors are requested in return for job related benefits
hostile work environment -- form of sexual harassment deriding from off-color jokes, lewd comments, and so forth
employment-at-will -- principle, increasingly modified by legislation and judicial decision, the organizations should be able to retain or dismiss employees at their discretion
workforce diversity -- range of workers attitudes, values, and behaviors that differ by gender, race, and ethnicity
knowledge workers -- employees who are of value because of the knowledge they possess
contingent worker -- employee hired on something other than a full-time basis to supplement and organizations permanent workforce
labor union -- group of individuals working together to achieve shared job-related goals, such as higher pay, shorter working hours, more job security, greater benefits, or better working conditions
labor relations -- process of dealing with employees who are represented by union
collective bargaining -- process by which labor and management negotiate conditions of employment for union represented workers
cost-of-living adjustment (COLA) -- labor contract clause tying future raises to changes in consumer purchasing power
wage reopener claus -- clause allowing wage rates to be negotiated during the life of the labor contract
strike -- labor action in which employees temporarily walk off the job and refuse to work
economic strike -- strike usually triggered by stalemate over one or more mandatory bargaining items
sympathy strike -- strike in which one union strikes to support action initiated by another
wildcat strike -- strike that is an authorized by the strikers union
picketing -- labor action in which workers publicize their grievances at the entrance to an employer's facility
boycott -- labor action in which workers refuse to buy the products of a targeted employer
slow down -- labor action in which workers perform jobs at a slower than normal pace
lockout -- management tactic whereby workers are denied access to the employer's workplace
strikebreaker -- worker hired as permanent or temporary replacement for striking employee
mediation -- method of resolving a labor dispute in which a third party suggests, but does not impose, a settlement
voluntary arbitration -- method of resolving a labor dispute in which both parties agree to submit to the judgment of a neutral party
compulsory arbitration -- method of resolving a labor dispute in which both parties are legally required to accept the judgment of a neutral party

Consumer and business buyer behavior -- terms

marketing fundamentals -- part 5 -- terms

Consumer buyer behavior -- the buying behavior of final consumers, individuals and households to buy goods and services for personal consumption
consumer market -- all the individuals and households that buy or acquire goods and services for personal consumption
culture -- the set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions
subculture -- a group of people with shared values systems based on common life experiences in situations
social class -- relatively permanent and ordered divisions and a society whose members share similar values, interests, and behaviors
group -- two or more people who interact to accomplish individual or mutual goals
opinion leader -- person within a reference group who, because of special skills, knowledge, personality, or other characteristics, exerts influence on others
lifestyle -- a person's pattern of living as expressed in his or her activities, interests, and opinions
personality -- the unique psychological characteristics that lead to relatively consistent and lasting responses to ones own environment
motive -- a need that is sufficiently pressing to direct the person to seek satisfaction of the need
perception -- the process by which people select, organize, and interpret information to form a meaningful picture of the world
learning -- changes in an individual's behavior arising from experience
belief -- a descriptive thought that a person holds about something
attitude -- a person's consistently favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea
cognitive dissonance -- buyer discomfort caused by post-purchase conflict
new product -- a good, service, or idea that is perceived by some potential customers as new
adoption process -- the mental process through which an individual passes from first hearing about an innovation to final adoption
business buyer behavior -- the buying behavior of the organization's that buy goods and services for use in the production of other products and services or for the purpose of reselling or renting them to others at a profit
derived demand -- business demand will ultimately comes from (derived from) the demand for consumer goods
straight rebuy -- a business buying situation in which the buyer routinely reorders something without any modifications
modified rebuy -- a business buying situation in which the buyer wants to modify product specifications, prices, terms, or suppliers
new task -- a business buying situation in which the buyer purchases of product or service for the first time
systems selling -- buying a packaged solution to a problem from a single seller, thus avoiding all the separate decisions involved in a complex buying situation
buying center -- all the individuals and units that participate in the business buying decision process
value analysis -- an approach to cost reduction in which components are studied carefully to determine if they can be redesigned, standardized, or made by less costly methods of production
e-procurement -- online purchasing also called e-commerce

How companies analyze and distribute marketing information

Information gathered in internal databases and through marketing intelligence and marketing research usually requires more analysis. This may include advanced statistical analysis for the application of analytical models that will help marketers make better decisions. In recent years, marketers have paid special attention to the analysis of individual customer data. Many companies have now acquired or developed special software and analysis techniques -- called customer relationship management (CRM) -- that integrate, analyze, and apply the mountains of individual customer data contained in their databases.

Marketing information has no value until it is used to make better marketing decisions. Does, the marketing information system must make the information available to the manager's and others who make marketing decisions or deal with customers. In some cases, this means providing regular reports an update; in other cases it means making nonroutine information available for special situations and on the spot decisions. Many firms use company intranets and extranets to facilitate this process. Thanks to modern technology, today's marketing managers can gain direct access to the information system at any time and from virtually any location.

Public policy and ethic issues.

Some marketers pay special marketing research situations, such as those conducting research and small businesses, nonprofit, or international situations. Marketing research can be conducted effectively by small businesses and nonprofit organizations with limited budgets. International marketing researchers follow the same steps as domestic researchers but often face more and different problems. All organizations need to respond responsibly to major public policy and ethical issues surrounding marketing research, including issues of intrusions on consumer privacy and misuse of research findings.

The marketing research process

The first step in the marketing research process involves defining the problem and setting the research objectives, which may be exploratory, descriptive, or casual research. The second step consists of developing a research plan for collecting data from primary and secondary sources. The third step calls for implementing the marketing research plan by gathering, processing, and analyzing the information. The fourth step consists of interpreting and reporting the findings. Additional information analysis helps marketing managers appy the information and provides them with sophisticated statistical procedures and models from which to develop more rigorous findings.

Both internal and external secondary data sources often provide information more quickly at a lower cost the primary data sources, and they can sometimes yield information that a company cannot collect by itself. However, needed information might not exist in secondary sources, and even if data can be found, they might be largely unusable. Researchers must also evaluate secondary information to insure that it is relevant, accurate, current, and impartial. Primary research must also be evaluated for these features. Each primary data collection method -- observational, survey, and experimental -- has its own advantages and disadvantages. Each of the various primary research contact methods -- mail, telephone, personal interview, and online -- also has its own advantages and drawbacks.