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MARK 3001: Exam 2

Ethics
Moral principles and values that govern actions unwritten rules we've developed for interactions with one another govern us when sharing resources or honoring contracts maintains an order & fairness, honesty
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Laws
Society's values which are enforceable in court
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Framework for Ethical Decisions
Societal & Culture norms General Business norms Company norms Personal Norms/VAlues
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Societal Culture & norms
Basic set of values of the society
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General Business norms
What is the standard practice in business Basic business values: Consumer has right to safety, to be informed, to choose, & to be heard No longer caveat emptor (the principle that the buyer alone is responsible for checking the quality and suitability of goods before purchase is made) Industry Standards
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Industry Standards
American Marketing Association (AMA) first, do no harm foster trust and consumer confidence in the marketing system valus of honesty, responsibility, fairness, respect, openness, and citizenship
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Company Norms
What could those in your company say about this decision? Code of conduct, company policy Code of ethics
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Code of Ethics
Many companies have them Help marketing managers & employees make better decisions guidelines help employees identify what their firm recognizes as acceptable business practices effective internal control on behavior>more responsible than external controls(gov't regulation) help employees avoid confusion with ethical decision making facilitates discussion among employees about what is right & wrong
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Personal Norms/Values
How do you feel about this decision? Personal moral philosophies: Moral Idealism: if any bad occurs, then the action is unethical Utilitarianism: balance good versus bad
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Level of Responsibility Model
To whom is a company responsible? Investors only All Stakeholders Society in General
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Corporate Responsibility
Profit Responsibility Companies responsible only to stockholders and investors one duty: maximize profit within the law Stakeholder Responsibility responsible to owners & customers, employees, suppliers Societal Responsibility responsible to owners & stakeholders & society in general: cultural diversity, environmental stewardship, cause related marketing- supporting/sponsoring a non-profit or charitable organization or activity
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Common Ethical Issues
Product Planned Obsolescence Products that are "unhealthy" Place Is there an obligation to serve unsatisfied segments, even if limited profit Price What is "reasonable" profit Most profitable Promotion: how much "puffery" is okay
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Consumer Ethics
If we expect firms to act ethically, then so should we Unauthorized downloading or sharing computer files Copyright violations Insurance fraud Return of used items
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The Supply Chain
Physical Supply Network Raw Materials Components Manufacturer Physical Distribution Network Resellers Consumers Sometimes called Demand/Value chain: must have demand supply chain reflects a production or sales orientation instead to marketing orientation
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Supply Chain Management
management of all activities through which raw materials are transformed into products and made available to final consumers Management requires: Channel Management Logistics Management
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Marketing Channel (channel management)
A set of interdependent organizations involved in transfer of ownership as finished products move from producer(mfg) ot consumer
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Channel Structure
Direct Channels: Mfg- end user Best used when/for: Complex, expensive, customized items Many Business-Business products mfg wants control Indirect Channel: Mfg- Distributor- Retailer -end-user or Mfg- Ret - end user Best Used for: Low cost, standard items Most consumer products
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Channel Intermediaries
Retailer= sells mainly to final consumers Merchant Wholesaler= Buys and takes title to goods from mfg; stores, ships, and sells to other businesses Agent and/or Broker= Facilitates sale between mfg and others
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1st Reason to Use Intermediaries
Intermediaries develop skills in selling Customer knowledge Efficiency in handling large volumes Good merchanidizing
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2nd Reason to Use Intermediaries
Intermediaries Overcome Discrepancies Discrepancy of Quantity= manufacturer produces in large volume, consumers buy in small volume Discrepancy of Assortment= manufacturer produces many of one item; consumer buys one of many items Temporal Discrepancy= difference in when something is produced and when it is purchased Spatial Discrepancy= Difference between where something is produced and where it is purchased
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3rd Reason to Use Intermediaries
Intermediaries Provide Contact Efficiency 25 Transactions needed when going from mfg - consumer(BAD!) 10 Transactions needed with 1 intermediary Fewer transactions the better
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Channel Members Perform Marketing Functions
Transactional Promotion Negotiation Risk Taking Logistical Distribution Sorting Storing Facilitating Researching & Financing
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Importance of Channel Members
Functions must always be performed If no intermediaries, then must be performed by the manufacturer or the consumer For standard, low cost consumer items, intermediaries reduce the cost to the final consumer
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Trends in Channel Design
Disintermediation= elimination or reduction in the number of levels Increased use of electronic channels Software, movies, books online
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Logistics
Management of physical flow of raw materials, components and products across the supply chain Objective: To give customer(channel member or consumer) the needed level of customer service at the lowest cost Measured in terms of: Flexibility Order cycle time Order accuracy Product availability Information
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Logistical Components of the Supply Chain
Sourcing & Procurement Production Scheduling Order Processing Inventory Control Warehouse & Marketing Handling Transportation Logistics Information System
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Sourcing & Procurement
Obtain needed supplies in right quality at lowest cost Develop long term relationships with suppliers
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Production Scheduling
Determining method and timing of the manufacturing of a mix of products Build to stock versus build to order
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Order Processing
A system for easily receiving orders and accurately and quickly filling them EDI- electronic data interchange: computer to computer exchange of ordering information
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Inventory Control
Maintaining the correct amount of inventory Goal is to meet product availability standards while keeping costs low MRP, DRP systems
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Warehousing & Materials Handling Functions
Storing products Moving products within a facility Receiving, sorting, storing, finding, getting ready for shipment
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Transportation
Railroads Motor Carriers Pipelines Water Airways
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Trends in Supply Chain Management
Advanced computer technology (RFID) Outsourcing of logistics functions (3PLs) Electronic distribution
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Relationship of Logistics to Marketing Mix
Product characteristics can significantly impact logistics costs Logistics must be aware of upcoming promotions Effective logistics can reduce prices and/or increase revenue
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Service
Text: intangible tasks Any deed, act, or performance
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Importance of Services
Services as a percentage of GDP- 81% Services as a percentage of employment- 81%
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How Services Differ from Physical Goods
Intangible: can't be seen, touched, tasted, felt, stored; makes evaluation of quality difficult Inseparable: consumer must be present; must manage consumer Perishable: services can't be produced ahead of time & stored; production & consumption occur at same time; can't inspect out defects; must carefully manage supply & demand Heterogeneous: different from time to time; must set standards, use scripts
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Key Dimensions of Service Quality
How consumers view quality: Reliability- serve performed correctly? Responsiveness- is service performed on time? Assurance- do employees look like/talk like they know what they are doing? Empathy- do employees care? Tangibles- are physical surroundings attractive, clean, etc.?
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Adjusting the Marketing Mix
Basic marketing mix (4P's) is expanded Strategies/applications differ in each of the 4P's as compared to applications for physical goods
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Expanded 4P's of Services (what are they)
Physical evidence- Place & Product Processes- Product & Price People - Price & Promotion
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Expanded 4P's of Services (in detail)
People Employees The Customer Other customers all influence quality of experience Physical Evidence The tangible part of the service The "services cape" Processes Activities which lead up to and are a part of the service
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Adjusting the Basic Marketing Mix
Product: Emphasize the service process; Build brand image Place: Generally no intermediaries; Convenience is important Price: Prices are harder to set and justify to customers for many services; Use Price to adjust demand to supply Promotion: Focus on making services seem tangible; Share good performance ratings
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Core Service
Key service being purchased Use a logo that reflects service (interactive imagery) interactive imagery= logo itself tells you what the service is and what the company does
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Product
Everything a person receives in an exchange Physical good, service, idea
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Product Issues
Types of products Branding of products Packaging of products Number of products How are new products developed and managed
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Types of Consumer Products
Classified by search process Type is not inherent to the product category Convenience= merits little shopping Shopping=will compare several options Speciality= will go out of way to get Unsought= unaware or unwanted
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Branding
Brand= identification of the seller's product Brand Name= that part that can be spoken Brand Mark= part that cannot be spoken Global Brand= At least 33% of the product is sold outside its home country
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What a Brand really is
A shortcut in buying A promise: about performance about quality Who creates the promise the company the customers
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Brand
Brand Love: loyalty beyond reason Brand Equity: value of a company/brand name; what extra value does the brand name bring; Lanham Act Developing Brand names: often outsourced to branding companies; easy to say, memorable, suggests product use, can be easily translated, evokes correct emotion-brand values
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Branding Strategies
Brand versus no brand (generic) Manufacturer (by producer) Private (by retailer) Family (all products have same brand) versus Individual (each product has own brand) Co-branding: two individual brands, from different companies, are shown on one package
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Functions/Benefits of Packaging
Functional Benefits Contain and protect Perceptual Benefits Promote- last 5 seconds Create image Value Benefit Add value beyond the contents
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Number of Products
Most firms offer a wide number of products Product mix= all items a firm offers Product line=group of related items Depth of product line= how many items in the product line Width of product mix= how many different product lines
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New Product Development
Firms continually develop new products New to world New modification New to firm Use an established new product development process Manage products throughout life cycle
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New Product Development Process
New Product Strategy Idea Generation Idea Screening Business Analysis Development Test Marketing Commercialization
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New Product Strategy
A goal or strategy on how new products will fit into overall corporate success 3M's strategy
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Idea Generation
Sources of New Product Ideas Customers Employees Distributors Competitors Vendors R&D Consultants
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Idea Screening
Narrowing down and eliminating bad ideas Includes concept testing
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Business Analysis
Demand Cost Sales Profitability
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Development
Creation of prototype Packaging, branding, labeling Final gov't approvals if needed Detailed marketing strategy Significant cost commitment
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Test Marketing
The Limited Introduction to determine consumer reactions Sometimes done with a scanner panel Sometimes done in a lab setting
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Commercialization
Product Inventory Buildup Distribution Advertising (consumer and trade)
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Why products fail
Will this (new product development process) guarantee success in the market?- No, but will reduce risk No discernible benefits/differences Product quality problems Poor execution of other marketing mix element
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Diffusion
The process by which the adoption of a new product spreads. Is faster when: Complexity is lower Compatibility is higher Relative Advantage is higher Observability is higher Trial ability is higher
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Product Life Cycle
Sales growth of new products can be tracked over time Length of time varies but basic shape remains the same Best used for product categories
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Product Life Cycle Introduction
Characteristics: New product High costs to market Profit none (negative) Generally no competitors Innovators buy Strategies: Must create primary demand Offer basic product Advertising should educate and inform Sampling give-aways
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Product Life Cycle Growth
Characteristics: Rapidly rising sales Profits increase and often peak Some repeat buyers Competition begins to enter Early adopters buy Strategies: Must create specific (secondary) demand Lower prices to gain market penetration Expand distribution and advertising
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Product Life Cycle Maturity
Characteristics: Sales reach high level, but growth slows Many competitors (price) Market saturation Profits are high and then begin to decline due to price pressures Middle majority buys Strategies: Look for new product innovations and modifications Heavily promote brand with reminder advertising Offer incentives
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Product Life Cycle Decline
Characteristics: Sales drop off Profits stop Laggards buy Strategies: Reduce promotion Consolidate inventory to a few locations Consider modifying or dropping product
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Extending Time in the PLC
Increase frequency of use- by same consumers Increase number of users- expand into different target market with same product Find new uses- identify new applications of the product
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