MKT333 part2 Flashcards
chapter 11 Retailing and Wholesaling
At Walmart: “Save money. Live better.” Says Walmart’s CEO, “We’re obsessed with delivering value to customers.”
Retailing
Retailing
All the activities involved in selling goods or services directly to fi nal consumers for their personal, nonbusiness use.
Marketing
Retailer
A business whose sales come primarily from retailing.
Shopper
marketing Using point-of-sale promotions and advertising to extend brand equity to “the last mile” and encourage favorable in-store purchase decisions.
Types of Retailers
Amount of Service
Type Description Examples
Specialty store
A store that carries a narrow product line with a deep assortment, such as apparel stores, sporting-goods stores, furniture stores, fl orists, and bookstores.
REI, Radio Shack, Williams-Sonoma
Department store
A store that carries several product lines—typically clothing, home furnishings, and household goods—with each line operated as a separate department managed by specialist buyers or merchandisers.
Macy’s, Sears, Neiman Marcus
Supermarket
A relatively large, low-cost, low-margin, high-volume, self-service operation designed to serve the consumer’s total needs for grocery and household products.Kroger, Safeway, SuperValu, Publix
Convenience store
A relatively small store located near residential areas, open long hours seven days a week, and carrying a limited line of high-turnover convenience products at slightly higher prices.7-Eleven, Stop-N-Go, Circle K, Sheetz
Discount store
A store that carries standard merchandise sold at lower prices with lower margins and higher volumes.
Walmart, Target, Kohl’s
Off-price retailer
A store that sells merchandise bought at less-than-regular wholesale prices and sold at less than retail. These include factory outlets owned and operated by manufacturers; independent off-price retailers owned and run by entrepreneurs or by divisions of larger retail corporations; and warehouse (or wholesale) clubs selling a limited selection of goods at deep discounts to consumers who pay membership fees.
Mikasa (factory outlet); TJ Maxx (independent off-price retailer); Costco, Sam’s Club, BJ’s (warehouse clubs)
Superstore A very large store that meets consumers’ total needs for routinely purchased food and nonfood items. This includes supercenters, combined supermarket and discount stores, and category killers, which carry a deep assortment in a particular category.
Walmart Supercenter, SuperTarget, Meijer (discount stores); Best Buy, PetSmart, Staples, Barnes & Noble (category killers)
Specialty store
A retail store that carries a narrow product line with a deep assortment within that line.
Department store
A retail store that carries a wide variety of product lines, each operated as a separate department managed by specialist buyers or merchandisers
Supermarket
A large, low-cost, low-margin, highvolume, self-service store that carries a wide variety of grocery and household product
Despite a sagging economy that has troubled other supermarkets, leading grocery-only retailer Kroger’s sales and market share gains have been the best in the industry thanks to customer-focused pricing. Kroger gives you “more value for the way you live.”
Convenience store A small store, located near a residential area, that is open long hours seven days a week and carries a limited line of high-turnover convenience goods.
Superstore
A store much larger than a regular supermarket that offers a large assortment of routinely purchased food products, nonfood items, and services
Category killer
A giant specialty store that carries a very deep assortment of a particular line.
Service retailer
A retailer whose product line is actually a service; examples include hotels, airlines, banks, colleges, and many others.
Discount store
A retail operation that sells standard merchandise at lower prices by accepting lower margins and selling at higher volume.
Off-price retailer
A retailer that buys at less-than-regular wholesale prices and sells at less than retail.
Independent off-price retailer
An off-price retailer that is either independently owned and run or is a division of a larger retail corporation.
Factory outlet
An off-price retailing operation that is owned and operated by a manufacturer and normally carries the manufacturer’s surplus, discontinued, or irregular goods.
Warehouse club
An off-price retailer that sells a limited selection of brand name grocery items, appliances, clothing, and other goods at deep discounts to members who pay annual membership fees.
Warehouse clubs: Costco is a retail treasure hunt, where one’s shopping cart could contain a $50,000 diamond ring resting on top of a vat of mayonnaise.
Corporate chains Two or more outlets that are commonly owned and controlled.
Major Types of Retail Organizations
Type Description Examples
Corporate chain
Two or more outlets that are commonly owned and controlled. Corporate chains appear in all types of retailing but they are strongest in department stores, discount stores, food stores, drugstores, and restaurants.
Sears (department stores), Target (discount stores), Kroger (grocery stores), CVS (drugstores)
Voluntary chain
Wholesaler-sponsored group of independent retailers engaged in group buying and merchandising.
Independent Grocers Alliance (IGA), Do It Best (hardware), Western Auto, True Value
Retailer cooperative Group of independent retailers who jointly establish a central buying organization and conduct joint promotion efforts. Associated Grocers (groceries), Ace Hardware (hardware)
Franchise organization
Contractual association between a franchisor (a manufacturer, wholesaler, or service organization) and franchisees (independent businesspeople who buy the right to own and operate one or more units in the franchise system).
McDonald’s, Subway, Pizza Hut, Jiffy Lube, Meineke Muffl ers, 7-Eleven
Franchise
A contractual association between a manufacturer, wholesaler, or service organization (a franchisor) and independent businesspeople (franchisees) who buy the right to own and operate one or more units in the franchise system.
Franchising: These days, it’s nearly impossible to stroll down a city block or drive on a suburban street without seeing an abundance of franchise businesses.
Retail targeting and positioning: Whole Foods Market succeeds by positioning itself strongly away from Walmart and other discounters. “A devoted Whole Foods customer is more likely to boycott the local Walmart than to shop at it.”
A retailer’s price policy must fi t its targeting and positioning. Bergdorf Goodman caters to the upper crust with prices to match.
Shopping center
A group of retail businesses built on a site that is planned, developed, owned, and managed as a unit.
Shopping centers: Today’s centers are more about “creating places to be rather than just places to buy.”
Value pitches from retailers: Even upscale Whole Foods Market has kicked up promotion of its private-label brand, 365 Everyday Value, with ads sporting headlines such as “Sticker shock, but in a good way.
Wheel-of-retailing concept
A concept that suggests new types of retailers usually begin as low-margin, low-price, low-status operations but later evolve into higher-priced, higher-service operations, eventually becoming like the conventional retailers they replaced.
New retail forms: Many retailers—such as Toys “R” Us—are setting up limited-time “pop-up” stores that let them promote their brands to seasonal shoppers and create buzz in busy areas.
The Internet has spawned a whole new breed of shopper—people who just can’t buy anything unless they fi rst look it up online and get the lowdown.
Growing Importance of Retail Technology
Retail technology: Stop & Shop uses technology to make shopping faster and more convenient for customers.
McDonald’s golden arches are now going green. Its new eco-friendly restaurants are designed from the bottom up with a whole new eco-attitude.
Wholesaling
Wholesaling: Many of the nation’s largest and most important wholesalers—like Grainger—are largely unknown to fi nal consumers. But they are very well known and much valued by the business customers they serve
Wholesaling
All the activities involved in selling goods and services to those buying for resale or business use.
Wholesaler
A firm engaged primarily in wholesaling activities
wholesalers add value by performing one or more of the following channel functions:
● Selling and promoting: W holesalers’ sales forces help manufacturers reach many small customers at a low cost. The wholesaler has more contacts and is often more trusted by the buyer than the distant manufacturer. ● Buying and assortment building: W holesalers can select items and build assortments needed by their customers, thereby saving much work. ● Bulk breaking: W holesalers save their customers money by buying in carload lots and breaking bulk (breaking large lots into small quantities). ● Warehousing: W holesalers hold inventories, thereby reducing the inventory costs and risks of suppliers and customers. ● Transportation: W holesalers can provide quicker delivery to buyers because they are closer to buyers than are producers.
● Financing: Wholesalers fi nance their customers by giving credit, and they fi nance their suppliers by ordering early and paying bills on time. ● Risk bearing: Wholesalers absorb risk by taking title and bearing the cost of theft, damage, spoilage, and obsolescence. ● Market information: Wholesalers give information to suppliers and customers about competitors, new products, and price developments. ● Management services and advice: Wholesalers often help retailers train their salesclerks, improve store layouts and displays, and set up accounting and inventory control systems.
Types of Wholesalers
Merchant wholesaler
An independently owned wholesale business that takes title to the merchandise it handles.
Major Types of Wholesalers
page 346 - 347
Broker
A wholesaler who does not take title to goods and whose function is to bring buyers and sellers together and assist in negotiation.
Agent
A wholesaler who represents buyers or sellers on a relatively permanent basis, performs only a few functions, and does not take title to goods.
Manufacturers’ sales branches and offices
Wholesaling by sellers or buyers themselves rather than through independent wholesalers.
Trends in Wholesaling
Pharmaceuticals wholesaler McKesson helps its retail pharmacist customers be more effi cient by offering a wide range of online resources. Retail pharmacists can even use the McKesson system to maintain medical profi les on their customers.
chapter 12 Communicating Customer Value Advertising and Public Relations
The Promotion Mix
The fi ve major promotion tools are defi ned as follows: 2
● Advertising: Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identifi ed sponsor. ● Sales promotion: S hort-term incentives to encourage the purchase or sale of a product or service. ● Personal selling: Personal presentation by the fi rm’s sales force for the purpose of making sales and building customer relationships. ● Public relations: Building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events. ● Direct marketing: Direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships.
Promotion mix ( or marketing communications mix) The specific blend of promotion tools that the company uses to persuasively communicate customer value and build customer relationships.
Advertising
Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identifi ed sponsor.
Sales promotion
Short-term incentives to encourage the purchase or sale of a product or service.
Personal selling
Personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships.
Public relations (PR) Building good relations with the company’s various publics by obtaining favor able publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events.
Direct marketing
Direct connections with carefully targeted individual consumers to both obtain an immediate response and cultivate lasting customer relationships.
The new marketing communications model: Sweeping advances in communications technology are causing remarkable changes in the ways in which companies and customers communicate with each other.
Integrated marketing communications (IMC)
Carefully integrating and coordinating the company’s many communications channels to deliver a clear, consistent, and compelling message about the organization and its products.
The “HD loves HB” integrated marketing communications campaign uses a rich, wellcoordinated blend of promotion elements to successfully deliver Häagen-Dazs’ unique message.
Shaping the Overall Promotion Mix
The Nature of Each Promotion Tool
Advertising
Advertising can reach masses of geographically dispersed buyers at a low cost per exposure, and it enables the seller to repeat a message many times. For example, television advertising can reach huge audiences.
Personal Selling
Personal selling is the most effective tool at certain stages of the buying process, particularly in building up buyers’ preferences, convictions, and actions
With personal selling, the customer feels a greater need to listen and respond, even if the response is a polite “No thank-you.”
Sales Promotion
Sales promotion includes a wide assortment of tools—c oupons, contests, discounts, premiums, and others—all of which have many unique qualities.
Public Relations
Public relations is very believable—news stories, features, sponsorships, and events seem more real and believable to readers than ads do.
Direct Marketing
A lthough there are many forms of direct marketing—direct mail and catalogs, online marketing, telephone marketing, and others—they all share four distinctive characteristics.
Promotion Mix Strategies
Push strategy
A promotion strategy in which the sales force and trade promotion are used to
push the product through channels. The producer promotes the product to channel members who in turn promote it to fi nal consumers.
producer —> Producer marketing activities (personal selling, trade promotion, other —> Retailers and wholesalers —> Reseller marketing activities (personal selling, advertising, sales promotion, other —> Consumers
Pull strategy
A promotion strategy in which a company spends a lot of money on consumer advertising and promotion to induce fi nal consumers to buy the product, creating a demand vacuum that
pulls the product through the channel.
Producer Producer marketing activities (consumer advertising, sales promotion, other —> consumers
Advertising
Setting Advertising Objectives
Advertising objective
A specifi c communication task to be accomplished with a specific target audience during a specifi c period of time page 396
Advertising budget
The dollars and other resources allocated to a product or a company advertising program.
Affordable method
Setting the promotion budget at the level management thinks the company can afford
Percentage-of-sales method
Setting the promotion budget at a certain percentage of current or forecasted sales or as a percentage of the unit sales price.
Competitive-parity method
Setting the promotion budget to match competitors’ outlays.
Objective-and-task method
Developing the promotion budget by (1) defi ning specifi c objectives, (2) determining the tasks that must be performed to achieve these objectives, and (3) estimating the costs of performing these tasks. The sum of these costs is the proposed promotion budget.
Advertising strategy
The plan by which the company accomplishes its advertising objectives. It consists of two major elements: creating advertising messages and selecting advertising media
Advertising clutter: Today’s consumers, armed with an arsenal of weapons, can choose what they watch and don’t watch. Increasingly, they are choosing not to watch ads.
Madison & Vine A term that has come to represent the merging of advertising and entertainment in an effort to break through the clutter and create new avenues for reaching consumers with more engaging messages.
Madison & Vine: NBC’s The Biggest Loser and health-club chain 24 Hour Fitness have created a product placement partnership that fully and thematically integrates the brand with the show.
Creative concept The compelling big idea that will bring the advertising message strategy to life in a distinctive and memorable way.
The message can be presented in various execution styles , such as the following:
● Slice of life: This style shows one or more “typical” people using the product in a normal setting. For example, a Silk Soymilk “Rise and Shine” ad shows a young professional starting the day with a healthier breakfast and high hopes. ● Lifestyle: T his style shows how a product fi ts in with a particular lifestyle. For example, an ad for Athleta active wear shows a woman in a complex yoga pose and states: “If your body is your temple, build it one piece at a time.” ● Fantasy: T his style creates a fantasy around the product or its use. For example, recent IKEA ads show consumers creating fanciful room designs with IKEA furniture, such as “a bedroom for a queen made by Bree and her sister, designed by IKEA.” ● Mood or image: T his style builds a mood or image around the product or service, such as beauty, love, intrigue, or serenity. Few claims are made about the product or service except through suggestion. ● Musical: T his style shows people or cartoon characters singing about the product. For example, Chevrolet recently ran a two-minute-long TV commercial featuring most of the cast of the TV show Glee in an elaborate production number set to the 1950s brand jingle, “See the U.S.A. in Your Chevrolet.” ● Personality symbol: This style creates a character that represents the product. The character might be animated (Mr. Clean, the GEICO Gecko, or the Zappos Zappets) or real (perky Progressive Insurance spokeswoman Flo, the E*TRADE b abies, Ronald McDonald). ● Technical expertise: T his style shows the company’s expertise in making the product. Thus, natural foods maker Kashi shows its buyers carefully selecting ingredients for its products, and Jim Koch of the Boston Beer Company tells about his many years of experience in brewing Samuel Adams beer. ● Scientifi c evidence: T his style presents survey or scientifi c evidence that the brand is better or better liked than one or more other brands. For years, Crest toothpaste has used scientifi c evidence to convince buyers that Crest is better than other brands at fi ghting cavities. ● Testimonial evidence or endorsement: This style features a highly believable or likable source endorsing the product. It could be ordinary people saying how much they like a given product.
Execution styles: This ad creates a nostalgic mood around the product. “So I baked her the cookies she’s loved since she was little.”
Execution style The approach, style, tone, words, and format used for executing (properly conveying) an advertising message.
Advertising media The vehicles through which advertising messages are delivered to their intended audiences.
Viewer engagement: Viewers most deeply engaged in the Discovery Channel’s Dirty Jobs series turned out to be truck-buying men, a ripe demographic for Ford’s F-Series pickups.
Marketers have discovered a dazzling array of alternative media, like this heated Caribou Coffee bus shelter.
Media timing: Vicks NyQuil runs ads like this only during the cold and fl u season.
Return on advertising investment The net return on advertising investment divided by the costs of the advertising investment.
Advertising agency A marketing services fi rm that assists companies in planning, preparing, implementing, and evaluating all or portions of their advertising programs.
Standardized global advertising: VISA coordinates its worldwide advertising under the theme “more people go with VISA,” a theme that works as well in Brazil (bottom) as it does in the United States (top).
Public relation departments may perform any or all of the following functions:
● Press relations or press agency: Creating and placing newsworthy information in the news media to attract attention to a person, product, or service. ● Product publicity: Publicizing specifi c products. ● Public affairs: B uilding and maintaining national or local community relationships. ● Lobbying: B uilding and maintaining relationships with legislators and government offi cials to infl uence legislation and regulation. ● Investor relations: M aintaining relationships with shareholders and others in the fi nancial community. ● Development: W orking with donors or members of nonprofi t organizations to gain fi nancial or volunteer support.
Public relations campaigns: NHLBI’s “The Heart Truth” campaign has produced impressive results in raising awareness of the risks of heart disease in women.
The power of PR: Apple’s iPad and iPad 2 launches created unbounded consumer excitement, a media frenzy, and long lines outside retail stores—all with no advertising, just PR.
Papa John’s “Camaro Search” campaign used traditional PR media plus a host of new social media.
chapter 13
personal selling and sales promotion
Personal Selling
Personal selling Personal presentations by the fi rm’s sales force for the purpose of making sales and building customer relationships.
Salesperson An individual representing a company to customers by performing one or more of the following activities: prospecting, communicating, selling, servicing, information gathering, and relationship building.
Professional selling: It takes more than fast talk and a warm smile to sell high-tech diesel locomotives. GE’s real challenge is to win buyers’ business by building day-in, day-out, year-in, year-out partnerships with customers.
Salespeople link the company with its customers. To many customers, the salesperson is the company.
Sales force management Analyzing, planning, implementing, and controlling sales force activities
page 425
Territorial sales force structure A sales force organization that assigns each salesperson to an exclusive geographic territory in which that salesperson sells the company’s full line
Product sales force structure A sales force organization in which salespeople specialize in selling only a portion of the company’s products or lines.
Customer (or market) sales force structure A sales force organization in which salespeople specialize in selling only to certain customers or industries.
Major Steps in Sales Force Management :
- Designing sales force strategy and structure
- Recruiting and selecting salespeople
- Training salespeople
- Compensating salespeople
- Supervising salespeople
- Evaluating salespeople
Sales force structure: Whirlpool specializes its sales force by customer and by territory for each key customer group.
Outside sales force (or fi eld sales force) Salespeople who travel to call on customers in the fi eld.
Inside sales force Salespeople who conduct business from their offices via telephone, the Internet, or visits from prospective buyers.
For many types of selling situations, phone or Web selling can be as effective as a personal sales call. At Climax Portable Machine Tools, phone reps build surprisingly strong and personal customer relationships.
Team selling Using teams of people from sales, marketing, engineering, fi nance, technical support, and even upper management to service large, complex accounts.
Great salespeople: The best salespeople possess intrinsic motivation, a disciplined work style, the ability to close a sale, and, perhaps most important, the ability to build relationships with customers.
E-Training can make sales training more effi cient—and more fun. Bayer HealthCare Pharmaceuticals’ role-playing video game—Rep Race—helped improve sales rep effectiveness by 20 percent.
Sales force automation: Technology has reshaped the ways in which salespeople carry out their duties and engage customers.
Sales force automation: Technology has reshaped the ways in which salespeople carry out their duties and engage customers.
Selling on the Internet: Machinery manufacturer Makino makes extensive use of online social networking—everything from proprietary online communities and webinars to Twitter, Facebook, and YouTube. Courtesy
Sales quota A standard that states the amount a salesperson should sell and how sales should be divided among the company’s products.
Selling process The steps that salespeople follow when selling, which include prospecting and qualifying, preapproach, approach, presentation and demonstration, handling objections, closing, and follow-up.
Steps in the Selling Process Prospecting and qualifying --> Preapproach -->Approach --> Presentation and demonstration -->Handling objections-->Closing-->Follow-up
Prospecting The sales step in which a salesperson or company identifi es qualifi ed potential customers.
Marketing
Preapproach The sales step in which a salesperson learns as much as possible about a prospective customer before making a sales call.
Approach The sales step in which a salesperson meets the customer for the fi rst time.
Presentation The sales step in which a salesperson tells the “value story” to the buyer, showing how the company’s offer solves the customer’s problems.
This classic ad from Boise makes the point that good selling starts with listening. “Our account representatives have the unique ability to listen to your needs.”
Handling objections The sales step in which a salesperson seeks out, clarifi es, and overcomes any customer objections to buying.
Closing The sales step in which a salesperson asks the customer for an order.
Follow-up The sales step in which a salesperson follows up after the sale to ensure customer satisfaction and repeat business.
Marketing
Sales promotion Short-term incentives to encourage the purchase or sales of a product or a service.
Marketing
Sales promotions are found everywhere. For example, your favorite magazine is loaded with offers like this one that promotes a strong and immediate response.
Customer loyalty programs: Kroger keeps its Plus Card holders coming back by linking food purchases to discounts on gasoline prices.
Consumer promotions Sales promotion tools used to boost short-term customer buying and involvement or to enhance long-term customer relationships.
Samples are offers of a trial amount of a product. Sampling is the most effective—but most expensive—way to introduce a new product or create new excitement for an existing one.
Coupons are certifi cates that save buyers money when they purchase specifi ed products.
Cash refunds (or rebates) are like coupons except that the price reduction occurs after the purchase rather than at the retail outlet.
Price packs (also called cents-off deals ) offer consumers savings off the regular price of a product. The producer marks the reduced prices directly on the label or package.
Premiums are goods offered either free or at low cost as an incentive to buy a product, ranging from toys included with kids’ products to phone cards and DVDs. A premium may come inside the package (in-pack), outside the package (on-pack), or through the mail
Advertising specialties, also called promotional products, are useful articles imprinted with an advertiser’s name, logo, or message that are given as gifts to consumers.
Companies use sweepstakes and contests to create brand attention and boost consumer involvement. Enter this year’s “Dads Making a Difference Contest” and you could win your dad up to $30,000 in support of a community project.
Event marketing (or event sponsorships) Creating a brand-marketing event or serving as a sole or participating sponsor of events created by others.
Trade promotions Sales promotion tools used to persuade resellers to carry a brand, give it shelf space, promote it in advertising, and push it to consumers.
Business promotions Sales promotion tools used to generate business leads, stimulate purchases, reward customers, and motivate salespeople.
Some trade shows are huge. At this year’s International Consumer Electronics Show 2,700 exhibitors attracted more than 150,000 professional visitors.
chapter 14 direct and online marketing
page 450
Direct marketing Connecting directly with carefully targeted segments or individual consumers, often on a one-to-one, interactive basis.
The new direct marketing model: Companies such as
GEICO have built their entire approach to the marketplace
around direct marketing—just visit geico.com or call
1-800-947-auto.
Southwest Airlines uses techie direct marketing tools—including a blog, DING!
widget, and smartphone app—to inject itself directly into customers’ everyday lives—at
their invitation.
Customer database An organized collection of comprehensive data about individual customers or prospects, including geographic, demographic, psychographic, and behavioral data.
Customer databases: Best Buy mines its huge database to glean actionable
insights on customer interests, lifestyles, passions, and likely next purchases.
It uses this information to develop personalized, customer-triggered
promotional messages and offers.
Customers and prospects: 1. Face-to-face selling 2. Direct-mail marketing 3. Catalog marketing 4. Telemarketing 5. Direct-response television marketing 6. Kiosk marketing 7.Online marketing
Direct-mail marketing Marketing that occurs by sending an offer, announcement, reminder, or other item directly to a person at a particular address.
Direct mail marketing: Insurance companies like Farmers Insurance rely heavily on TV
advertising to establish broad customer awareness. However, they also use lots of good
old direct mail to communicate with consumers in a more direct and personalized way.
Catalog marketing Direct marketing through print, video, or digital catalogs that are mailed to select customers, made available in stores, or presented online.
Telemarketing
Using the telephone to sell directly
to customers.
Marketers use inbound toll-free 800 numbers to receive
orders from television and print ads, direct mail, or catalogs.
Here, the Carolina Cookie Company urges, “Don’t wait
another day. Call now to place an order or request a catalog.”
Direct-response television (DRTV) marketing Direct marketing via television, including direct-response television advertising (or infomercials) and interactive television (iTV) advertising.
Large, well-known companies—such as Kodak—are now using
direct-response TV to get the message out directly to customers.
Kiosk marketing: Redbox operates more than 27,000
DVD rental kiosks in supermarkets and fast-food outlets
nationwide.
Online marketing
Efforts to market products and services
and build customer relationships over
the Internet.
Internet A vast public web of computer networks that connects users of all types around the world to each other and an amazingly large information repository.
Click-only companies
The so-called dot-coms, which operate
online only and have no brick-andmortar market presence.
Click-and-mortar companies
Traditional brick-and-mortar companies
that have added online marketing to
their operations.
Online Marketing Domains
B-to-C: Targeted to consumers; Initiated by
business
C-to-C: Targeted to consumers; Initiated by
consumer
B-to-B: Targeted to businesses; Initiated by
business
C-to-B: Targeted to businesses; Initiated by
consumer
Business-to-consumer (B-to-C) online marketing
Businesses selling goods and services
online to final consumers.
Business-to-business (B-to-B) online marketing Businesses using online marketing to reach new business customers, serve current customers more effectively, and obtain buying effi ciencies and better prices.
Consumer-to-consumer (C-to-C) online marketing
Online exchanges of goods and
information between fi nal consumers.
Blogs
Online journals where people post their
thoughts, usually on a narrowly defi ned
topic.
Using the blogosphere to reach carefully targeted consumers: Purex used
SocialSpark to help introduce its Purex Complete 3-in-1 Laundry Sheets via
blogs such as Freaky Frugalite, Bargain Briana, 3 Kids and Us, and others that
reach homemakers
Consumer-to-business (C-to-B) online marketing Online exchanges in which consumers search out sellers, learn about their offers, initiate purchases, and sometimes even drive transaction terms
Setting Up for Online Marketing:
Conducting online marketing:
Online social networks, E-mail, Mobile marketing, Online ads and promotions, Web sites
Corporate (or brand) Web site A Web site designed to build customer goodwill, collect customer feedback, and supplement other sales channels rather than sell the company’s products directly.
Corporate Web sites: You can’t buy anything at Nestlé’s colorful Wonka.com site, but you can learn about different Nestlé candy products or just hang around for a while and “feed your imagination.”
Marketing Web site
A Web site that interacts with consumers to move them closer to a direct purchase or other marketing
outcome.
Online advertising
Advertising that appears while consumers are browsing the Web, including display ads, search-related ads, online classifi eds, and other forms.
Viral marketing
The Internet version of word-of-mouth marketing: a Web site, video, e-mail message, or other marketing event that is so infectious that customers will seek
it out or pass it along to friends.
Viral marketing: Sometimes a well-made regular ad can go viral. For example, Volkswagen’s clever “The Force” Super Bowl ad, featuring a pint-sized Darth Vader, received more than 18 million online hits the week
before it aired on TV during the Super Bowl.
Online social networks
Online communities where people congregate, socialize, and exchange views and information.
Thousands of social networking sites have popped up to cater to specifi c interests, backgrounds, professions, and age groups. At Dogster, 700,000 members set up profi less of their four-legged friends, read doggy diaries, or just give a dog a bone.
E-mail marketing
Sending highly targeted, tightly personalized, relationship-building marketing messages via e-mail.
Spam
Unsolicited, unwanted commercial e-mail messages.
E-mail can be an effective marketing tool. But there’s a dark side—spam, unwanted commercial e-mail that clogs up our inboxes and causes frustration.
Mobile marketing
Marketing to on-the-go consumers through mobile phones, smartphones, tablets, and other mobile
communication devices.
Internet fraud has multiplied in recent years. The FBI’s
Internet Crime Complaint Center provides consumers with
a convenient way to alert authorities to suspected
violations.
Consumer privacy: By clicking on the little AdChoices advertising option icon in the upper right of this online ad, consumers can learn why they are seeing the ad and opt out if they wish.
chapter 15 the global marketplace
page 483
Many American companies have now made the world their market, as this Niketown storefront in China featuring NBA star Kobe Bryant suggests. Quintessentially American Nike draws 65 percent of its sales from non-U.S.
markets.
Major International Marketing Decisions 1. Looking at the global marketing environment 2. Deciding whether to go global 3. Deciding which markets to enter 4. Deciding how to enter the market 5. Deciding on the global marketing program 6. Deciding on the global marketing organization
U.S. companies looking abroad must start by understanding the international trade system . When selling to another country, a fi rm may face restrictions on trade between nations. Governments may charge tariffs , taxes on certain imported products designed to
raise revenue or protect domestic fi rms.
page 484
Trade barriers: The Chinese government has set up a “great fi rewall of
China”—electronic and censorship barriers that limit or keep out foreign Web
sites such as Google and YouTube, while creating safe havens within which
Chinese copycat Web sites such as Baidu and Youku can thrive.
Economic community
A group of nations organized to work
toward common goals in the regulation
of international trade.
Economic communities: The European Union represents one of the world’s
single largest markets. Its current member countries contain more than half a
billion consumers and account for 20 percent of the world’s exports.
The country’s industrial structure shapes its product and service needs, income levels,
and employment levels. The four types of industrial structures are as follows:
● Subsistence economies: In a subsistence economy, the vast majority of people engage in simple agriculture. They consume most of their output and barter the rest
for simple goods and services. They offer few market opportunities.
● Raw material exporting economies: These economies are rich in one or more
natural resources but poor in other ways. Much of their revenue comes from exporting these resources. Some examples are Chile (tin and copper) and the
Democratic Republic of the Congo (copper, cobalt, and coffee). These countries
are good markets for large equipment, tools and supplies, and trucks. If there
are many foreign residents and a wealthy upper class, they are also a market for
luxury goods.
● Emerging economies (industrializing economies): In an emerging economy, fast growth in manufacturing results in rapid overall economic growth. Examples include the BRIC countries—Brazil, Russia, India, and China. As manufacturing increases, the country needs more imports of raw textile materials, steel, and heavy machinery, and fewer imports of fi nished textiles, paper products, and automobiles. Industrialization typically creates a new rich class and a small but growing middle class, both demanding new types of imported goods.
● Industrial economies: Industrial economies are major exporters of manufactured
goods, services, and investment funds. They trade goods among themselves and
also export them to other types of economies for raw materials and semifi nished
goods. The varied manufacturing activities of these industrial nations and their
large middle class make them rich markets for all sorts of goods. Examples include
the United States, Japan, and Norway.
The second economic factor is the country’s income distribution . Industrialized nations may have low-, medium-, and high-income households. In contrast, countries with
subsistence economies consist mostly of households with very low family incomes. Still
other countries may have households with either very low or very high incomes. Even
poor or emerging economies may be attractive markets for all kinds of goods. These days, companies in
a wide range of industries—from cars to computers
to candy—are increasingly targeting even low- and
middle-income consumers in emerging economies
The impact of culture on marketing strategy: IKEA customers in China want
a lot more from its stores than just affordable Scandinavian-design furniture.
Many iconic American brands are prospering globally, even in some of the
most unlikely places. At this Tehran restaurant, American colas are the drink
of choice. Coke and Pepsi have grabbed about half the national soft drink
sales in Iran. (Also, did you notice the familiar TABASCO hot sauce bottle?)
Deciding Whether to Go Global
Not all companies need to venture into international markets to survive. For example, most
local businesses need to market well only in their local marketplace. Operating domestically is easier and safer. Managers don’t need to learn another country’s language and laws.
They don’t have to deal with unstable currencies, face political and legal uncertainties, or
redesign their products to suit different customer expectations.
Deciding Which Markets to Enter
Before going abroad, the company should try to defi ne its international marketing objectives and policies . It should decide what volume of foreign sales it wants. Most companies start small when they go abroad. Some plan to stay small, seeing international
sales as a small part of their business.
