PromotionPromotion mix – set of processes by which we manage customer buying processAdvertising - influence attempt in which a firm recognizes they, we, the product existWant consumer to think “we need this product”Use media to advertise (print, mag, news, radio, tv, internet)Advertising media has changedSales promotions – to try or to buy (coupons/buy 1 get one free/ scholarships)Incentive to choose s product over anotherPublic relations – focuses on image, not salesNew companies need to build an imageRetain, restore, change imageChanging image is hardRepair can be really hard (BP oil)Personal selling – sales people/ greeters in storesDirect marketing – (SAT’s  colleges contact you)Before  stuff in mail, unsolicited buy focus on your needsStory – marketing campaign – get Saks gift card for test driving carCar  increase sale of cars in a slow monthDirect marketing – financial packagesPersonal selling – sales people (most similar to customer), follow up emailsAdvertising – invitationPublic relations – still tell story 10 years later, recommend companyPriceWho pays for this promotion? – Dealership, manufacturer, Saks or combinationMarketing campaign’s fixed costs don’t change with the quantityWho might pick up the cost? Dealership (increase sales), manufacturer (use highest capacity), Saks (attract customers)Dealership and manufacturing company usually split costs 50/50Mail #1, Mail #2, Sales/rec, carSaksPays for card 1, card 2, Mail listSupply chainSupply channel – the stuff upstreamFrom you (MFG – RM+IG)Marketing Channel – the stuff downstreamFrom you (MFG – Wholesale, Retailers, End)Any level of purchasing(finding/buying from vendors)Distribution levels  supply chainTrafficPhysical transport of goods/materialsLOGISTICS – the time and transport of materialsMust estimate demand downOrder upTo estimate demand (informal + formal)Informal – eyeballing amountsFormalEconometric – look at past/current sales to predict demandTime seriesGives trends and usual cyclicality/seasonalityRegression – income, unemployment rate, weather, etcCross sectioningExcess inventory – estimate too high  BAD EFFECTSUsing extra storage (excess FC)Excess costsHave sales – erosion of brand image and inventoryPeople wait till stuff goes on sale (loss)Sell to TJ Maxx (loss)Correct – sold everything  RAREStockout – estimate too low  BAD EFFECTSAngry customersLose sales – person goes to rivalsPossibility lose customer foreverLose money and takes hit to brandSupply chain management is about getting the right stuff in the right amount, in the right place, at the right time, at the right price, at the lowest costRight amounts of the right stuff (right quantities of sizes)Independent businesses – multiple manufactures and retailerWhat holds it all together? No overall managementThey are transactions between each stageMarket transactions  stable  with regards to price, availability, attributesPredisposed to spot transactionsOverwhelming number are purchasing transactions, held together if we all have consistent products/purchasesReality  not always stablePromotionPromotion mix – set of processes by which we manage customer buying process- Advertising - influence attempt in which a firm recognizes they, we, the product existo Want consumer to think “we need this product”o Use media to advertise (print, mag, news, radio, tv, internet)o Advertising media has changed- Sales promotions – to try or to buy (coupons/buy 1 get one free/ scholarships)o Incentive to choose s product over another- Public relations – focuses on image, not saleso New companies need to build an imageo Retain, restore, change image o Changing image is hardo Repair can be really hard (BP oil)- Personal selling – sales people/ greeters in stores- Direct marketing – (SAT’s  colleges contact you)o Before  stuff in mail, unsolicited buy focus on your needsStory – marketing campaign – get Saks gift card for test driving car- Car  increase sale of cars in a slow month- Direct marketing – financial packages- Personal selling – sales people (most similar to customer), follow up emails- Advertising – invitation - Public relations – still tell story 10 years later, recommend companyPrice- Who pays for this promotion? – Dealership, manufacturer, Saks or combination- Marketing campaign’s fixed costs don’t change with the quantity- Who might pick up the cost? Dealership (increase sales), manufacturer (use highest capacity), Saks (attract customers)- Dealership and manufacturing company usually split costs 50/50o Mail #1, Mail #2, Sales/rec, car- Sakso Pays for card 1, card 2, Mail list Supply chain- Supply channel – the stuff upstreamFrom you (MFG – RM+IG)- Marketing Channel – the stuff downstreamFrom you (MFG – Wholesale, Retailers, End)- Any level of purchasing(finding/buying from vendors)- Distribution levels  supply chain- Traffico Physical transport of goods/materials- LOGISTICS – the time and transport of materials- Must estimate demand down- Order up- To estimate demand (informal + formal)o Informal – eyeballing amountso Formal Econometric – look at past/current sales to predict demand  Time series Gives trends and usual cyclicality/seasonality  Regression – income, unemployment rate, weather, etc Cross sectioningExcess inventory – estimate too high  BAD EFFECTS- Using extra storage (excess FC)- Excess costs- Have sales – erosion of brand image and inventory- People wait till stuff goes on sale (loss)- Sell to TJ Maxx (loss)Correct – sold everything  RARE Stockout – estimate too low  BAD EFFECTS- Angry customers- Lose sales – person goes to rivals- Possibility lose customer forever- Lose money and takes hit to brandSupply chain management is about getting the right stuff in the right amount, in the right place, at the right time, at the right price, at the lowest cost- Right amounts of the right stuff (right quantities of sizes)Independent businesses – multiple manufactures and retailer - What holds it all together? No overall management- They are transactions between each stage- Market transactions  stable  with regards to price, availability, attributeso Predisposed to spot transactionso Overwhelming number are purchasing transactions, held together if we all have consistent products/purchasesReality  not always stableSources of