Marketing & Social Media

Countertrade

• Barter
• Compensation deal
• Buyback arrangement

Discounts/ Allowances

• Cash discount
• Quantity discount
• Functional discount
• Seasonal discount
• Loyalty discounts
• Allowance (products, services, values)
• Negative rebates, add-on fees, penalties
• Bundling ( buger + drinks = menue) and unbundling
• Ankering e.g. image
•  

Price differentiation is the goal

Methods are:

• Customer-segment pricing
  • Students
  • Senior
• Product-form pricing
  • Packages
  • Bottles
  • Tetra-pack
• Image pricing
  • White labels
  • Brands
• Channel pricing
  • Restaurants
  • Vending machine
  • Pharmacy
• Location pricing
  • Locations
  • Seat prices
• Time pricing
  • Season
  • Day/hour
  • Weekends
  • Time of booking (Yield)

Price discrimination leads to a better extraction of the willingness-to-pay

Yield management systems (time based differentiation)

• Optimization of revenue
  • Differentiation by market segment/ customer category
    • Exhaustion of consumer surplus
  • Differentiation by time of consumption
    • Regular capacity utilization
  • Differentiation by time of booking
    • Reaching a booking target

1. The three major pricing strategies are customer value-based pricing, cost-based pricing, and competition-based pricing.
2. Customer perceptions of the product’s value set the ceiling for prices. Company and product costs set the floor for prices. Consumers will base their judgements of a product’s value on the prices that competitors charge for similar products. Thus, in setting prices, companies need to consider all three factors, customer perceived value, costs, and competitors’ pricing strategies.
3. Pricing strategies usually change as a product passes through its life cycle. In pricing innovative new products, a company can use market-skimming pricing by initially setting high prices to “skim” the maximum amount of revenue from various segments of the market. Or it can use marketpenetrating pricing by setting a low initial price to penetrate the market and win a large market share.
4. Companies apply a variety of price differentiation and adjustment strategies to account for differences in consumer segments and situations. One is discount pricing, whereby the company establishes cash, quantity or seasonal discounts. A second is segmented pricing, where the company sells a product at two or more prices to accommodate different customers, product forms or times. Sometimes, companies use psychological pricing to better communicate a product’s intended position.

Direct distribution:

• Complete control consumer process
• Control consumer experience
• Brand image
• Direct interactions and relationship builting with consumers.
• Eliminates intermediaries
• Reducing fees( commision, broker, allowance, advertisiong and promotion)

Downside of direct distribution:

• Great control = great responsibility and risk
• Bears 100% of financial risks
• High startup costs

Indirect distribution:

• Gain access to increased consumer base without the callenge of getting customers through the door
• More time to focus on product and customer base
• More time to increase range to target consumer.
• Low startup cost

Downside:

• Costs to third-party logistics
• Commissions, broker fees and allowances
• Coonstraint on company's freedom to set prices.

Reasons:

1. Growing power of retailers in marketing channels
2. Search for sustainable competitive avantage
3. The need to reduce distribution costs

Retailers…

• Are growing larger
• Enjoy substantial channel power
• Act as buying agents for customers rather than selling agents for suppliers
• Often operate on lowe price / low margin model
• Operate in saturated markets and fight for market share
• Power or dominant retailers ae therefore the "gatekeepers" into the consumer marketplace. Thus, effective channel strategy for dealing with power retailers is crucial

A sustainable competitive advantage is becoming more difficult to attain through:

• Product strategy - rapid technology transfer enables competitors to quickly produce similar products
• Pricing strategy - glocal economy allows competitors to find low-cost production to match prices
• Promotion strategy - high cost, clutter, and short life promotional campaigns limit competitive advantage.

Competitive advantage based on superior marketing channel strategy is more difficult for competitors to copy because:

• Channel strategy is long term
• Requires a channel structure
• Depends on relationships and people
• Requires effective inter-organizational management.

Distribution costs often accoutn for a significant percentage of the final price of products. Sometimes distribution costs ae higher than the manufacturing cost or the costs of raw materials and component parts.

e.g.

1. What role should distribution play in the firm’s overall objectives and strategies?
2. What role should distribution play in the marketing mix?
3. How should the firm’s marketing channels be designed to achieve its distribution objectives?
4. What kinds of channel members should be selected to meet the firm’s distribution objectives?
5. How can the marketing channel be managed to implement the firm’s channel design effectively and efficiently on a continuing basis?

Definition:

The complete sequence of marekting organizations involved in bringing a product from the producer to the customer;

• A system of interdependency within a set of organizations;
• A system that facilitates the exchange process
• Make a product or service availabe for use or consumption by the consumer or business user.

The use of intermediaries results from their greter efficiency in making goods available to target markets.

1. Conventional channel:
   1. Loosely aligned, autonomous organizations that carry out a trade relationship
2. Vertical marketing systems
   1. Tightly organized systems coordinated by ownership of one member, legal agreements, or the power of one member.

A large, highly automated warehouse designed to receive goods from various plants and suppliers, take orders, fill them efficiently, and deliver goods to customers as quickly as possible.

E.g.: high-tech distribution centers: Amazon employs teams of super-retrievers to keep its fulfillment centers humming

Channel members add value by bridging the major time, place and possession gaps that separate goods and services from those who use them.

Functions of the channel are:

• financing,
• Information
• Promotion
• risk taking
• matching,
• Negotiation
• physical distribution

1. Logistic function (overcoming distance between provider and customer)
2. Payment function (collection from customer and securing return flows to provider)
3. Range function (presenting the product in a range and integrating the product into a saleable output system, for example if ski boots are integrated into skiing equipment)
4. Acquisition function (acquiring customers through direct contact and reaching as many customers as possible)
5. Experience function and further customer value functions (by designing purchase as an experience and offering other usage components such as the opening of social networks)
6. Service function (delivery and installation or maintenance)

Interdependent organizations that help make a product or service available for use or consumption Channel decisions

• Affect every other marketing decision
• Can lead to competitive advantage
• May involve long-term commitments to other firms

• Length of distribution
  • i.e. number of intermediaries
• Breadth of distribution
  • E.g., whether to distribute through a selective or intensive network of retailers.

Channel level is a layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer.

The length of the channel is determined by number of intermediary levels

• Direct marketing channel, is a marketing channel that has no intermediary levels.
• Indirect marketing channel is a marketing channel containing one or more intermediary levels.

Number of intermediaries: channel breadth

• Intensive distribution
  • Products stocked in as many outlets as possible
  • A marketing strategy under which a company sells through as many outlets as possible, so that the consumers encounter the product virtually everywhere they go: supermarkets, drug stores, gas stations, and the like. (dove shampoo)
• Exclusive distribution
  • Producer gives only a limited number of dealers the exclusive right to distribute ist products in theri territories
  • Exclusive distribution is an agreement between a supplier and a retailer granting the retailer exclusive rights within a specific geographical area to carry the supplier's product (rolex)
• Selective distribution
  • Use of several intermediaries to carry a company's products
  • Selective distribution involves selling a product at select outlets in specific locations. (mac book)

Conflict occurs.

• Horizontal conflict occurs among firms at the same level of the cannel (i.e. retailer to retailer)
• Vertical conflict occurs between different levels of the same channel (i.e. wholesaler to retailer)

Power withing the channel.

The power wielded by a channel steward is usually influence. Acquiring influence means stewards understand that the efforts of all intermediaries are interdependent eg. if one fails, the customers’ needs may not be met.

There are different types of power.

The power associated with having a unique product/technology or brand (e.g. apple) or the power tied to market access and intelligence (distributors and retailers usually have this type of power) (e.g. walmart)

• Vertical marketing system (VMS) is one in which the main members of a distribution channel--producer, wholesaler, and retailer--work together as a unified group in order to meet consumer needs. One channel member owns the others, has contracts with them, or has so much power that they all cooperate.

Channel level: A layer of intermediaries that performs work in bringing the product and ist ownership closer to the final buyer

• Direct marketing channel: no intermediary levels
• Indirect marketing channels: one or more intermediary levels

A single firm sets up two or more marketing channels to reach customer segments.

Advantages:

• Expansion of sales and marketing coverage
• Tailor-made products and services for the specific needs of customer segments

Disadvantages:

• Harder to control
• Generates conflict

Star alliance consists of 27 airlines "working in harmony" with shared branding and marketing to smooth and extend each member's global air travle capabilities.

Occurs when product or service producers cut out marketing channel intermediaries or wen radically new types of channel intermediaries displace traditional one.

A major trend is toward disintermediation. Product and service producers are bypassing intermediaries and going direclty to final buyers. New types of channel intermediaries are emerging to displace traditional ones.

Disintermediation is the cutting out of marketing channel intermediaries by producers or the displacement of traditional resellers by new intermediaries.

Streaming music services such as Spotify are rapidly disintermediating both traditional music-store retailers and even music download services such as iTunes.

The most successful flagship stores share common key elements. Each store is usually the largest one in a retailer's chain and is located in a prestigious location, especially in areas where there are upscale customers, and it stocks a more complete range of products. The design and location of the flagship store is determined by the combination of financial considerations, brand identity and brand strategy objectives.

It’s tempting to see these stores as shops. Yes, they often provide a shopping function (which in itself differentiates them from pure-play concept stores) but the best flagships add a new dimension of physicality to a brand. They define in materials, aesthetics and by location how a brand wants to be seen in the world. At some level they complement the expansive digital presences of today’s global brands. They can also be an effective countering strategy in sectors where there is an increasing trend towards direct and/or online channels. They provide a new reason to shop live.

It is a shop that sells a carefully curated and unique selection of products that connect to an overarching theme. Often they evoke a lifestyle that appeals to a specific target audience – they are inspirational. Handpicked products are pulled together from different brands and designers, and they usually span different lines, such as fashion, beauty and homewares. In addition, the display mixes these lines and products together in an attractive fashion.

Concept stores are about discovery and experience. So the products and design tend to change regularly to keep telling that story in new and interesting ways. Many of them offer extra experiential elements such as a café or events space, which help build a community around the lifestyle they embody.

Franchise:

• by contract regulated cooperation between two
• Legally independent corporations: The Franchise donor
• Allows the Franchise taker the usage against a fee
• Services, products, systems, brand, etc. .

Indicators:

• Unified appearance in the market place
• Direction and control system for assurance of conform brand and system usage including sanctions and penalties
• Franchise-Taker is operating on own risk and contracting with clients as a legal entity on its own and uses the brand paying the franchise fee.

Planning, implementing, and controlling the physical flow of materials, final goods, and related information from points of origin to consumption

Customer-centered logistics: Marketplace backwards to the factory or sources of supply

• Outbound logistics
• Inbound logistics
• Reverse logistics