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Session 7: Readings 7, 8, 9, 10 - Coggle Diagram
Session 7: Readings 7, 8, 9, 10
The Marketing Mix - place (distribution channels)
Distribution Channels
usually have varied channels - some working together as a network
as well as physical distribution & storage they may also:
information (strategic planning)
promotion
contact
matching (influencing aspects to suit consumers)
negotiation (cots/exchanges)
financing
risk taking (risks in channel distributuon)
Traditional chains had one or two links between manufacturer and consumer - each has individual goals
Vertical Marketing System (VMS) can vary from straight from manufacturer to consumer to having several links
unified system under one management from one channel, usually because:
one other channels / corporation (corporate VMS)
having contractual agreements (contractual VMS)
exerting control through size or power
Service distrubution tends to be direct although sometimes agencies are used
Need to manage channel conflict as it can disrupt the whole chain
Collaborative distribution
unified channel systems can take place horizontally = mutual collaboration / at same level
May merge temporarily for marketing or joint venture or for monetary purposes (sharing cargo holds)
barriers = entrenched culture, loss of control, sharing sensitive data
Several types of CD defined as "sharing of distribution resources between two or more shippers to send their goods within a common logistics network"
backhaul = sharing opposite routes to fill empty capacity
co-loading = sharing capacity in the same direction to fill up loads
continuous move routing = replacing separate shipments with multi-stop trips
physical internet = a shared network based on an interconnected logistics system of shared facilities for transporting and storing freight
Multiple distribution channels
many organisations have different channels to offer to different buyers/segment. eg store/online/ phone / internet / catalouges
Need to offer best for consumers and have stores if the consumers would be willing to travel to it or if it is items they need to go to see/ have (service)
some consumers will always prefer in service - eg banks
Choosing the right distribution channel
Org. distribution objectives/ choices may be influenced by:
level of service they wish to provide (clarks vs shoezone)
size of company - realistic ability
type of product: convenience = intensive distribution, shopping products = selective distribution, speciality = exclusive distribution, perishable = short distribution
competitors, distance between
environmental factors STEEPLE, fast delivery for london/ phone orders for people without internet
channel members need to maintain good relationships to avoid conflict so the chain isn't disrupted
conflict can happen when contract is breached/ org looks out for own interests / miss understanding / lack of communication/ poor performance / different goals- expectations
org. need to consider needs of buyers and other members in network. Support each other and innovate to improve performance
Each member of network must comply to laws regardless of the country - stick to agreements
Exclusive distribution/dealing - when a manufacturer requires distributors to only sell its products and not competitors, or only selling within specific area (sales territories restrictions)
Omni-channel world
one of the 7 big problems in marketing is dealing with omni-channel world, linking of the vast array of channel interfaces
Customers don't know which channel they will buy through next - can essentially use them all each time depending on feeling/location etc
If product not available where customer searches - loss of sale
The Marketing Mix - promotion (marketing communications)
The promotion mix
promotion mix = various communication techniques: advertising, personal selling, sales promotion, PR, product publicity, direct marketing, digital marketing, sponsorship,
Table 1: pg 67 - Key features of marketing communication techniques
Criteria for choosing a marketing communication mix
extent of desired control over the message sent
level of financial resources for investment
size of the target audience and its geographic spread
target audiences' preferences and behaviour with respect to media
goals of the communication
The choice of mix can can be influenced by activities of competitors/cost of media / org or marketers preferences and marketing strategy
tying in marketing to shop/decorations/adverts - selling dogs/carrots as per xmas adverts
communication mix - increase awareness
need to be careful with advertisements. influencers can have bad image (have clause in contracts)
need to have consistent message - inclusive
The Communication Process
"communication techniques are designed to transmit a marketing message from an org/)the source) to a target "receiver or audience" using a particular "medium of transmission"
Diagram, Figure 1 page70
"a message can be designed in a variety of ways, they may be factual and provide info, some use humour, but many use emotion to appeal to target audiences (charities/causes)
"factual communication helpful whilst launching new/revolutionary product and need to understand" may also use emotion too
humour risk because of different sense of humours but can get discussions happening online
Communication process subject to3 potential problems
accuracy of coding of messages (technical problems)
the accuracy of the decoding of the intended meaning of the message (semantic problem)
effectiveness of the decoded message in eliciting the intended response (effectiveness problem)
disruption from "noise" - technical problems in telephone/tv signal
communications can be on multiple platforms and can jump from one to the next in discussions
Macro-Level communication framework figure page 71 - demonstrates different ways consumers communicate a brand
Fill & Turnbull (2013) emphasise importance in marketing communications. for engagement with consumers and consumers to influence others. They identify three forms of engagement
cognitive; being absorbed and intellectually immersed
relational; feeling connected
behavioural; feeling involved and joining activities
marketing communications build awareness and familiarity - more will choose over unknown
AIDA concept: Awareness, Interest, Desire and Action - one or combination of all communication should answer the AIDA criteria
Adaption of AIDA: Awareness, Interest, Evaluation, Trial, Adoption. Trial = samples, test runs- not possible for everything
The Marketing Mix for services and non-profit marketing
Remaining 4P's useful for service
sometimes blend of service & good
good service continuum on page 85
Special characteristics of service
Intangibility
inseparability (production & consumption simultaneous)
variability(varies on who did the service)
perishability
profit making not for charities but a goal to reinvest or support causes. Tends to be serviced based teaching etc
People
serve customers & represent brand
important to have good impressions and interactions with customers
HR - need to find good staff, empathetic and good customer service
Processes
some customer able to view the process of preparing/doing a service
not all customers want to be part of the process
technical rather than in person
efficiency of services
Physical Evidence
can be viewed as part of service
resturant - guests will review ambience, quality, décor, cleanliness etc
represents brand
accompany service to make it special - unique features recognised worldwide
The Marketing Mix - pricing
Types of Pricing
Cost-based pricing
working out what costs attribute to the item including materials, advertising, distribution etc and working out a break even point
prices may fluctuate depending on volume sold
direct/marginal cost marketing - way to generate income when sales low. sell at discount, also second-marketing
cost plus/mark-up, adding % on for profit
Competitor Based Pricing
price based on competitors - strong, where are they, what strategies do they use?
what is the market like - saturated?
what is customer perception of org - if good can price higher
competitive bidding - when each org. tries to lower the prices in turn
Customer Based pricing
customer value based pricing / market oriendef pricing - setting price based on value to customer
Demand pricing - willingness to buy at various price points
Good-value pricing = fair price based on quality
Value-added pricing = adding features or services to increase value of an offering to consumers that differentiates it from competitors - can price up higher
psychological -based pricing = using price to elicit emotional response, high price to signal quality or odd-even pricing £7.99 over £8
Factors that affect pricing decisions
cost, competition and value
Objectives, marketing , organisational and pricing. Marketing strategy
pricing (marketing mix, production etc)
Macro / Micro (STEEPLE)
the person who sets and influences price eg management
Figure 2. Page 78
Product Mix Pricing
"when product part of product mix, pricing has to take into account the differing costs, competition and demand among the products and arrive at prices that maximise profit across the overall product mix)" 5 eg are....
Product Line pricing = pricing different products in a range based on level of value e.g diffferent barbies
Optional- Product pricing - This is offering products or accessories alongside the principle product
Captive - product pricing = associated products needed for the principal product eg ink cartridges for printer
By-product pricing = lowering cost of principal product by using other parts for other products eg spent grains from brewing used in marmite
Product bundle pricing = encouraging people to buy more for a combined cheaper price
Pricing in business markets
EVC = Economic Value to the customer
businesses keen to choose option that supports them in lowering their own costs
consumers offered price discounts to encourage purchase -often discounts at other levels...
trade or functional discounts = discount offered by producer for undertaking a particular function - storage/transport/processing/selling/credit
Quantity discounts = one off or cumulative for buying large amounts
cash discounts = encourage quick cash payments
seasonal discounts = encourage out of season
allowances= related action that help buyer achieve goals
Approaches for information pricing
General Survey = asking different segments for feedback - can be flawed
Van Westendorp Survey (price sensitivity analysis) = asking customers questions and analysing reactions for sensitivity and charting on a "price map"
Conjoint analysis = scenario based, customers have to make choices relating to purchase of product
Elasticity modelling = assessing sensitivity to unit price changes (rarely used)
Experimentation = test customers perceptions of product value
Ethical considerations
Dynamic Pricing = assessing needs and characteristics of individual buyers and adjusting price accordingly
Segmented Pricing = charging different price based on segmented information for same product/service. Can be acceptable student/senior discount but other times discrimination and breaking laws
Super-Sized Pricing = enticing customers to buy more than they need. can be wrong when it affects health. McDonalds etc