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... oiling of the middleman. Examples: v Door-to-door (it is an open chance for theft) v Co-owned retail outlets, this way the producers by pass the retailers and the wholesalers. Example: the public sector stores. v Interactive shopping. Example: the Internet, the television shopping cable. 2.
Producer to retailer: in this case the producers by pass the wholesalers, in order to have more control on the product. This action depends to some extent on the product. This way is used mostly in durable goods (furniture, electronics). This way is expensive and time consuming so it is done in large bulks, example: fine foods in the past. 3. Franchise system: a company gives to a distributor the right of selling the companys product under the companys name, exclusively in an area. The distributor pays the company money in the form of royalty. 4.
Producer to wholesaler: the wholesaler takes title of the product and this is used in fact (fast moving consumer goods), example: fine foods now. 5. Agents and brokers: they are used to sell to wholesalers and consumers, example; auto mobile. The longer the chain is the least the control is. 1. The characteristics: the characteristics of your consumer and your product, influences the distribution channel. It is direct marketing if your consumers are few, and you need to reach them more closely. But it is indirect marketing if your consumer segment is large, and you do not need to reach them closely. 2.
Gaining a competitive advantage: as we all know competitive advantage could be any thing, it would be the distribution channel. Example: Leggs (stockings), they put their product where least expected, in the super market, mineral water is another example, where the companys competitive advantage is not quality nor price as they are all the same, but it is the distribution channel and the demand. 3. Legal regulations: this may restrict the choice of the middleman. Examples: 1 - a company requests that a middleman only handle the companys product line, it is called exclusive dealing contract. 2 - a company gives the wholesaler the sole right to sell the companys product in a certain area, it is called exclusive sales territory. 3 - a company requests a middleman to take a slow product, to get another fast product. 4.
Product characteristics: depends on the movement of the product, is it an fmcg or not, the technology level. 5. Company characteristics: a company just starting may have enough leverage to get its product exactable by wholesalers. 1. Length of the channel: the shorter the channel is the more the control is 2. Intensity of distribution: this depends on the nature of the product, it is sub classified in to: A-intensity distribution: sells in many out lets (super market, pharmacy), it is non-durable goods and frequently used.
In this case you have less control on the price and display. B-selective distribution: you distribute your product in a limited number of out lets. Example for that is television and microwave (durable goods). C- exclusive distribution: the company grants middlemen the exclusive territorial right to sell their product in a certain area (some times for prestige image). 3. Selecting specific intermediates: you have to know if they can deliver your product to the final market at a reasonable cost, their size (known or unknown), financial resources, experience, coverage, service level and delivery, reptilian, product expertise. 1.
Push policy: pushes the product down to promote the product to the next level down the channel. Example for the push strategy is a new unknown company. 2. Pull strategy: you promote your product directly to the consumer to increase consumer demand, which pulls the product demand up. Example for the pull strategy is a well-known company like Procter and gable. Pricing can determine the success or the failure of a product. The price must be consistent with the quality.
What increased the importance of pricing? 1. Sharp recession: the recession makes the consumers more prices sensitive, because of the decrease in the purchase power. This makes price a prime weapon in competing brands. 2. Foreign competition: competition creates a down wards force on prices. 3. Fragmentation (separation) of many segments: different segments demanding different price levels. 4.
Deregulation's: privatization and the government took its hand out, increased private sector intense price competition. Influential factors that determine price. 1. Market demand: the law of demand and supply. 2. Production and distribution cost: mass production enables producers to produce more products to more consumers cheaply. 3. Competition: you lower your prices to compete (availability vs. price). 4.
Corporate objectives: prestige and positioning. Example LOreal (hair color), their slogan is because you worth it. Price is influenced by corporate objectives. 5. Other factors: segments, consumer income, supply and raw materials, government. This strategy is applied mostly in the fast moving consumer goods, as every food company in the world, they try to reduce the cost and sell cheaper. You show the consumer the regular price and the selling price.
If you are the only one that produces a product, then you start with high prices to recover that start-up cost. After a time interval you reduce the price. Start with very law prices to penetrate the market quickly. Then after a time interval you higher your prices, example cigarettes, you create loyalty and traffic then higher the prices. Buy one get one free, buy one take two.
Most of the cases it happen to clean inventory. 6. Loss leader pricing (retail only) You advertise one product with very low price to create traffic in your store, and you sell another products. Example: LOreal, BTM, Marie last. This is not competition on the basis of price.
Definition of promotion: promotion is a combination of communication strategies to convey brand benefits (information) to customer (target audience) and influence to buy. 1 - To create awareness: especially for new products, or an old product as a particular new aspect. 1) Primary demand for the whole category, sometimes it occurs with old products to simulate the category demand, with out a specific product. The government, industry, and trade do this. In case of new product or inventions it is called pioneer promotion example cd rom. 2) Selective demand; trying to simulate demand for a particular brand. 3 - Encouraging product trail: even after awareness is created, it is worth it to try it. 4 - Identifying prospects: through phones, mails, coupons, and magazines. 5 - To retain loyal customer: it is more cheaper and more profitable to retain loyal customer than getting new one. Example laughthansa miles and more. 6 - Facilitate reseller support: two-way relation ship between the retailer and the producer to share promotion costs. 7 - Combat competition: you have to use promotion to fight back.
This helps you to protect your market share, but it may not necessarily increase profit. 1) Sales promotion: (non-media advertising), example offers, discounts, special deals, coupons, premiums, sampling, displays, conferences, contests. 2) Advertising: (mass promotion, non-personal selling). Reaches many people, very difficult to measure but not impossible. The objective of advertising is to inform, educate, persuade, and remind. 3) Publicity: any time you are news. It is a free advertisement. It is done by public relations (contacts, reputation). 4) Personal selling: it is an industrial type of selling, store clerk, sales reps. 5) Collateral materials: It is an accessory advertisement material prepared by companies to achieve marketing and public relations objectives. Example brochures, booklets, catalogs, videotapes, annual reports.
Promotion through the product life cycle: 1. Introduction stage: advertisement role is to create awareness. Spending more money on trade promotion to push the product to the market, and to pull the consumer to try the product. Advertisement and sales promotion expenses are high. 2. Growth stage: advertisement expenses increase little or maintain.
Adv. Strategy shifts from awareness to product benefits. Sales promotion drops as many consumers have already tried the product. 3. Maturity stage: sales promotion is likely to increase because of the competition strategies that are applied in this stage. 4. Decline stage: cut back in all promotion expenses. 1. Sales promotion: why does it becoming popular? .
Because of the increase of competition, the large adv. Expenses, less people reading and watching television. The problem with the sales promotion is that the consumer get used to it, and the company cannot stop it, and this leads to a decrease in the companys profit. 2. Publicity: The advantages of publicity are the creditability because it is in the news, cheap, supports the companys image. The disadvantage of the publicity is the no control on your reputation it can back fire in your face. 3. Advertising: there are two main types of adv.
The broadcast media and the print media. 1 - Television: although people are less watching television but they are still watching. 3 - News paper: good for timely adv. And geographic segmentation and psycho graphic section. 4 - Magazines: more psycho graphic than geographic, but does not have the newspaper reach, also it is picked up more than one person and more than one time. 5 - Direct mail: very specific segment, by the name. It is not well known in EGYPT. 6 - Outdoor: billboards, side of transportation. It has fantastic and wide exposure. 7 - Interactive: C.
D. , computers, internat, e-commerce. 8 - Non-traditional media: not one from the above, video rentals, television screens in stores. 1 - Identifying the target market: this should influence the positioning of your product and of your advertisement. 2 - Establish advertising objectives: this means that we must determine how much adv. Effort is needed to influence the targeted group. Example (I want to reach a certain percent of my target audience) then (increase the number of times the TA see your ad. ) 3 - Develop the advertising budget: the size of the budget depends on your objective, is it reaching or frequently reaching. A) Information oriented maintenance: the strategy designed to reinforce the positioning of a brand by giving information about it.
B) The image oriented maintenance strategy: this strategy reinforces the brand or the companys positioning through imaginary. Example (dove soap is associated with softness and smoothness) C) Information oriented change strategy: designed to revitalize brands by advertising to a new product features. D) Image oriented change strategy: designed to revitalize a brand through imaginary and symbolism. Example (new slogan) A) Emotional vs.
rational appeal: usually emotions play a great role because an emotion increases involvement. B) Fear appeal: focuses on the potential problems of using and not using a certain product. Example (insurance) C) Hummer appeal: people do like to laugh, but using this tool may be negative. Example (stupid, too good so people do not remember the product) and it is too risky. D) Spots persons: very effective tool that makes the advertisement memorable. E) Comparative appeal: comparing your product with your competitor.
Example (Arial and Person) F) Subliminal appeal: massage is shown subconscious, so quickly, consumer conscious perceive it only at a subconscious level. 6 - Selects the media: print, TV, interactive, radio, or what? 7 - Evaluate the effectiveness of the advertisement: Sales increases compared to the advertising expenses. Effects of the advertisement on the consumers and your focus group. You can use various ways to measure media on message delivery rate and so. 1 - Although it does inform and help consumers to make decisions, it has its flaws. It invades every day life and it is everywhere. 2 - Keeps prices lower. Promotion creates demand, which leads to more profitability. 3 - Does promotion creates need?
No it does no create a need, but capitalizes them. Definition: systematic gathering, recording, and analyzing of data about problems or situations related to the marketing of goods and services. The research starts by initial assumptions (idea. Theory, opinion) based on our experience. Then to be sure about such assumptions we make research, which either confirm or modify or deny our assumptions.
Then you end up with new assumptions, which in fact is a marketing plan. The difference between market research and marketing research: Internal wider in scope, qualitative, creative. Why do we make a marketing research? q Size and nature of the target audience. External, quantitative, deals with measurements. 1.
Define your situation or the problem: A) Find causes of the problem, not only symptoms. B) Make the information gathered measurable. C) The various pieces of data must be related. (The profits decreases by X percent. The research must answer why is that happening) A) Assuming the current knowledge, meaning to look in side your company first. B) The objective of that kind of research is simply to learn more about the current situation, market, and competition before the formal research iis done. 1 - Internal data: company records, sales records, product shipments, advertising expenses, and customers letters. 2 - External data: data that already exists or published somewhere, having been already used for another purpose.
Example (governmental reports, dept. of commerce, market research firms, trade association) D) Problems attached to that research: example (not accurate, compliance, may not be relevant, it may be not valid or reliable, out dated) This research is done to gain additional information directly from the market place. There are 3 main ways for gathering primary data: A) Observation: researchers watch their consumers and monitor their actions. Example (standing in the super market) B) Experimental: researchers design actions to measure actual causes and effects relation ship.
This research is used mainly for test marketing new product and advertising campaign. C) Survey: it is simply asking people. It is the most commonly way used for gathering primary data. It may be done by mail, phone, and personal interview.
It is called also quantitative research as it deals with numbers. The data collected through this research, must be valid and reliable so it must be {as close as possible, if you repeated the research it gives the same data} Problems occur when designing questionnaire. Too difficult and hard to tabulate. 4. Scale system: from 1 to 5 as from poor to excellent. After the data is collected it must be validated and tabulated and coded and summarized. A- examine the international business environment 1.
Social: you must know and examine people, culture, language, and education level. This is in order to match your business to the social elements in the foreign country. 2. Legal system: the legal systems vary from a country to another. In the international, the laws of the host country bind the foreign company. 3. Economic system: you must know where this country is moving economically and in what stage does it stand on the international economical map. You must also understand the trade agreements in this country. 4.
Political system: you must know the government attitude to wards business and degree of freedom, which allow the business to operate freely. Also the type of the political system is important (ex: library, democratic, national). 5. Technology: the technology level tends to be a major driving force to wards globalization. Also it reflects the ability to gather data and information, establishment of communication channels. 6. Competition: the competition is stronger in the international market, as the market is open for many nations. Also the domestic products are cheaper and governmentally subsidized.
B-Why should a company expand to the international market? 2. Stability through diversification. 3. Large market size (ex: mineral water) 7. The high level of competition in the local market, 8. An offer from a foreign distributor. 9. The position in the product life cycle. (Ex: cigarettes in usa) 10.
The identification of a marketing niche. C-Barriers to international marketing 2. Trade barriers (ex: Egypt will not allow the import of textiles) How do we enter the international market? (Ways and forms form entering the international market. ) 1. Import and export agent: this form is the most common form in Egypt. Its main job is to sell goods form another party with a very little risk involved and they spend a small amount of money and effort. The problem in such form that these middle men is not aggressive marketers. 2.
Company sales branch: this form usually is concerned about sales not marketing. This operating sales branch enables the company to promote its products more aggressively and develop foreign markets more effectively. The control of the sales effort is closer and stronger. The problem or disadvantage in this form is that the sales men do not know the market in such foreign company. 3. Licensing: foreign producers produce the goods (my goods with their my name) for a fee or a royalty payment (ex: McDonalds and Button). 4. Contract agreement: foreign producer contract with foreign company to produce products that the foreign company will sell in the producers country. 5.
Joint venture: it is a partner agreement where foreigner and local jointly own a company. (Ex fine foods 51 % and unilever 49 %) 6. Wholly owned subsidiary: it is opening a full companies factories. In that form there an absolute control of every thing. It is a very advanced stage. 7. Worldwide enterprise: example Microsoft. The willingness of people responds to accurately (they will lie, suspicious of strangers, there is a distrust of the government, scarcity of reliable data in other countries is worse than Egypt).
Cultural influences and differences are very important, when analyzing the consumers economic abilities to buy we must study 3 things: It is elements that can influence a company s marketing program: 1. Family: the concept of what family is, as the family in some cultures is close (china), but in other are not. This affects the usage of the promotional tools. 3. Educational system and liberty rate. 4. Language difference: you cannot always translate every thing. 5. Religion: you must find out what is acceptable and what is not.
All above gapes are in their way to close because of the increasing effect of globalization and standardization. Q: To what extent can a company market the same product in several different countries? (Ex: electronics) You have to be careful when branding and labeling. (You must write the label in another language. Exporters face many currency conversions, lack of control over middleman pricing. The price in the foreign country is usually higher than in the original country, because of the additional expenses that are added to the original price like taxes and distribution. Dumping cartel is a group of companies that produce simile products that combine to restrain competition (ex: OPEC). Physical distribution expenses count for much more larger share of the final selling price in case of international distribution. (Ex: laws on packaging and shipping, humidity, marine insurance, and bribery) In this case your contacts and research are the most promotional tool used.
Q: To what extent can we standardize and use the same advertisement in different countries? Sometimes the ads are customized to match with specific countries. Some countries have governmental laws for advertising. Bibliography:
Free research essays on topics related to: target audience, sales promotion, competitive advantage, product life cycle, durable goods
Research essay sample on Product Life Cycle Durable Goods
