Question 1 (Debate) Some marketers, feel that the image of a particular channel in which they sell product does not matter- all that matters is that the right customers shop there and the product is displayed in the right way. Others maintain that channel images- such as retail store- can be critical and must be consistent with the image of the product. Take a position and justify: Whether channel images do not really affect the brand images of the products they sell versus channel images must be consistent with the brand image (A) Pro: Here the argument may be that buyers purchase products and services to satisfy their needs and wants.
Consumers in their purchasing decision process, they may have the image of the product and services in mind based on the reputation of the company that produces product or offers services preferred by consumers. Thus to such consumers where to buy the product or services may be not important as long they have products or services that will provide them with satisfaction (Blyth,2005). Marketers who favor product’s brand image over channel image may hold the argument that products with strong brand name and strongly advertised will always be sought after by customers who need them regardless where they are being displayed.
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Distribution issues come into play heavily in deciding brand level strategy. In order to secure a more exclusive brand label, for example, it is usually necessary to sacrifice volume; it would do no good, for Mercedes-Benz to create a large number of low priced automobiles. Some firms can be very profitable going for quantity where economies of scale come into play and smaller margins on a large number of units add up e. g. , McDonald’s survives on much smaller margins than upscale restaurants. Some firms choose to engage in a niche strategy where they forsake most customers to focus on a small segment where less competition exists e. . , opening a retail clothing store for very tall people. (Blyth, 2005). Market balance: It is essential that different firms in the same business not attempt to compete on exactly the same variables. If they do, competition will invariably degenerate into price; there is nothing else that would differentiate the firms. Thus, for example, in the retail food market, there are low price supermarkets such as Boxer supermarket that provide few if any services, intermediate level markets like ShopRite, and high-end markets such as Woolworths food that charge high prices and claim to carry superior merchandise and offer exceptional service
Risk:?? In general, firms that attempt riskier ventures and their stockholders expect a higher rate of return. Risks can come in many forms, including immediate loss of profit due to lower sales and long term damage to the brand because of a poor product being released or because of distribution through a channel perceived to carry low quality merchandise (Du Plessis et al, 2005: 303) Last minute items: some Companies such as coca-cola, and Uniliver benefits from extensive distribution such that its products may not need a customer to go through a purchasing decision process, but rather at a moment customer desires for products e. . wanting to quenching ones thirst (Du Plessis et al, 2005: 303) (B) Con: Owing to the fact that the consumer buying process, the consumer “value proposition,” changes based on individuals wants and needs at a time of purchase, for important products or services thus may demand different level of service, attention, and or “exclusivity” when buying. Such consumers their needs and wants may be met and influenced by different distribution channels of which a producer use. Kotler and Keller (2009: 459)
Objectives: A firm’s distribution objectives will ultimately be highly related some will enhance each other while others will compete. For example more exclusive and higher service distribution will generally entail less intensity and lesser reach. Cost has to be traded off against speed of delivery and intensity; it is more expensive to have a product available in convenience stores than in supermarkets, for example Narrow vs. wide reach: The extent to which a firm should seek narrow exclusive vs. wide intense distribution depends on a number of factors.
One issue is the consumer’s likelihood of switching and willingness to search. For example, most consumers will switch soft drink brands rather than walking from a vending machine to a convenience store several blocks away, so intensity of distribution is essential here. However, for sewing machines, consumers will expect to travel at least to a department or discount store, and premium brands may have more credibility if they are carried only in full service specialty stores. Retailers involved in a more exclusive distribution arrangement are likely to be more “loyal” i. e. they will tend to: ? Recommend the product to the customer and thus sell large quantities; ? Carry larger inventories and selections; ? Provide more services Thus, for example, Compaq in its early history instituted a policy that all computers must be purchased through a dealer. Compaq missed the opportunity to sell large numbers of computers directly to large firms. On the other hand, dealers were more likely to recommend Compaq since they knew that consumers would be buying these from dealers. www. consumerpsychologist. com/distribution. html 12/09/2010 Distribution opportunities
In general, you cannot save money by “eliminating the middleman” because intermediaries specialize in performing certain tasks that they can perform more cheaply than the manufacturer. It would not make sense for manufacturers to ship their grocery products in small quantities directly to consumers. ? Intermediaries breaks bulk (manufacturers sell to a modest number of wholesalers in large quantities; quantities are then gradually broken down as they make their way toward the consumer; ?? ? Consolidating goods (retail stores carry a wide assortment of goods from different manufacturers.
Kotler and Keller (2009: 457) Effect of Product lifecycle: There is no optimum channel of distribution for all products. As products flow through a life cycle, older channels will diminish and new ones develops. As consumer attitudes, position, and usage of the product changes, the consumers will navigate to different channels. A product that was exclusively sold selected dealers at the beginning of it lifecycle will now made available at discount stores as it is at the end of its product lifecycle. Summary Physical distribution, or Place, must integrate with the other ‘P’s in the marketing mix.
For example, the design of product packaging must fit onto a pallet, into a truck and onto a shelf; prices are often determined by distribution channels; and the image of the channel must fit in with the supplier’s required ‘positioning. ‘ In the preceding section we looked both positions (1) marketers who favour brand image of a product and (2) marketers who are in favour of channel image. Question 2 1. Explain the appropriateness and benefits of each of the following elements of the marketing communication mix: ? Advertising; is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Kotler and Keller, 2009: 538) Benefits: Advertising Reaches large, geographically dispersed audiences, often with high frequency; Low cost per exposure, though overall costs are high; Consumers perceive advertised goods as more legitimate; Dramatizes company/brand; Builds brand image; may stimulate short-term sales; Impersonal, one-way communication. There are three goals of advertising. These goals are to: Inform Persuade, and Remind; as depicted in figure 1 below. [pic] Figure 1 the three goals of Advertising Source: http://www. davedolak. com/promix. htm-Advert In addition (Kotler and Keller, 2009: 539) recognizes the fourth goal of dvertising is to Reinforce current purchasers that they have made the right decision to buy company’s product. ? Personal selling; is the ‘Personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships. Personal selling is paid personal communication that attempts to inform customers and persuade them to purchase products or services’. Dave Dolak, 2010 Benefits: ? Personal selling allows the marketer or seller to communicate directly with the prospect or customer and listen to his or her concerns; ? Answer specific questions; ? Provide additional information, inform; Persuade, and possibly even recommend other products or services. ? Kotler and Armstrong (2006) ? Public relation; may be defined as “A Building good relationship 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”. Kerin & Rdelius (2007) Public Relations, is the overall term for marketing activities that raise the public’s consciousness about a product, service, individual or issue. In short, PR is the management of a company’s public image that helps the public understand the company and its products.
Public relations is most effective when it is viewed as a strategic management function supporting the business goals of the organization. PR can use all the same communications tools as in other areas of marketing. (Publicity) Publicity also aims to create interest in a person, product, idea, organization, or business establishment generally through the generation and placement of favorable stories in the news media such as newspapers, magazines, TV, and radio. For example at Pellerade we feature our unique homes on both Top billing Magazines and TV shows. www. topbilling. om/Pellerade Anyone can buy advertising space but not just anyone can earn the respect of media in order to establish an effective PR campaign. ? Direct marketing; may be referred to “Direct communications with carefully targeted individual consumers to obtain an immediate response and cultivate lasting or enduring customer relationships”. Direct marketing usually is carried out through telephone (telemarketing and telesales), direct mail (brochures, catalogs, and flyers), direct-response broadcast advertising (television & radio), online computer shopping, and cable television infomercials and home shopping networks.
There are many benefits of direct marketing to both buyers and sellers: Customers enjoy the convenience of direct marketing as they do not have to battle traffic, find a parking space, or shop through stores; Often they can simply order from a catalog using the telephone or while shopping online and their goods shipped directly to their doors; Buying through direct marketing channels is also private and easy; Direct marketing can be fun, save time, offer a broader selection, allow comparison shopping, and allow the individual to direct-order customized products.
Sellers also enjoy many benefits of direct marketing: It is a great tool in customer relationship building as it provides direct communication with customers; Direct marketers can also gather information about their customers; specific needs; Direct marketing allows sellers to customize offerings, create ongoing relationships directly with customers, preserve privacy, and constantly adjusted to improve response rates. Direct marketers can also be less visible to competitors; hence can be a strategic tool. Kotler and Keller, 2009: 573) ? Sales Promotion; “a key ingredient in marketing campaigns, consists of a collection of incentives tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by consumer or trade”. (Kotler and Keller, 2009: 554) Relevant and benefits: ? Sellers use incentives to: attract new customers, reward loyal customers, and increase the repurchase rate of occasional users ? Sales promotions are mostly used to attract brand switchers ?
Sales promotions used in markets of high brand similarity can produce a high sales response in the short run ? In market of high brand dissimilarity, sales promotion may be able to alter market share permanently ? Manufacturers also benefit: Manufacturers may use sales promotion to determine the level of price they can charge for products; adjust short term variations is supply and demand; induce new customer to try new products; and lead to more varied retail formats for example EDLP store ?
Retailers’ Benefits: Increase sales of complementary categories; Induce some store switching by consumers; Promote great consumer awareness of prices; permit manufacturers to sell more than they would on list price; Help manufacturer adapt programs to different consumer segment ? Service marketers benefit: To establish loyalty; Attract new customers (Kotler and Keller, 2009: 554) ? Event And Experiences According to the IEG sponsorship report, $14. 9 billion will be spent in North America in 2007 on sponsorship of events. Kotler and Keller, 2009: 560) argues that becoming part of a special and more personally relevant moment in consumers’ lives, involvement with events can broaden and deepen relationship in consumers’ lives Marketers sponsor events: To identify with particular target market or life style; To increase awareness of company or product name; To reinforce consumer perceptions of key brand image associations; To enhance corporate image dimensions; To create experience and evoke feelings; To show company’s commitment on social issues; To entertain key client or key employees ; To permit promotional opportunities . Marketing communication mix planning for Soft Drink Manufacturer Marketing communication may be referred to as “the process whereby the information about an organization and its offering disseminated to selected markets. Communication is necessary to inform potential and current clients about the availability of an offering, its unique benefits, where and how to obtain it and use it” (du Plessis, et al, 2005:368) In developing effective communications; (Kotler and Keller, 2009: 516) provides a process of eight steps to follow as summarized in figure 2 below |Identify target audience | Determine objectives | |Design communication | |Select channels | |Establish budget | |Decide on media mix | |Measure results | |Manage integrated | |communications | Figure 2 Steps in developing effective Communications Source: (Kotler and Keller, 2009: 516) Integrating communication mix According to (du Plisses, et al, 2005:368); the objectives of communication programs will depend on the overall marketing strategy of the organization and the subsequent phases in the product/services lifecycle.
PLC plays a role in determining whether communication objectives should stimulate primary demand or selective demand: ? The communication focus in the early phase of life cycle will be on stimulating primary demand e. g. soft drink or juice of different flavors. The message conveyed at this phase of life cycle will focus on; (1) inducing trial by using sales promotion tool, (2) create brand awareness with the aid of advertisement, (3) educating customers and communicate the benefits of the products by applying personal selling element, (4) overcoming objections to product, in this regard Personal selling will be effective. Later in the PLC, communication efforts may focus on the stimulation of demand for product brand name e. g. coca-cola. The message here may focus on persuasion, and reminding customers of the company. Public relation, Events and experience sponsorships may be recommended in this situation (du Plessis, et al, 2005:370). Design the communications To achieve the desired response we may be required applying three strategies: ? Message strategy; buyers may expect one of four types reward from a product: rational, sensory, social, and ego satisfaction.
It may be important that messages are phrased in the same way of promising such rewards for example portraying high profile people drinking ice tea manufactured by the company at business meeting may be of status satisfaction (Kotler and Keller, 2009:517) ? Creative strategy; marketers have the options of transformational and informational appeals to deliver effective messages. (1) Informational appeal elaborates on product attributes e. g. adverts that concentrate solutions i. e. (drinking juice bearing the company name will quench you thirsty for longer).
Transformational appeal elaborate on non product related benefits, but rather the use of messages that will stir up emotions (Kotler and Keller, 2009:517) ? Message source; messages delivered by attractive, or popular sources may achieve high attention. If the drink manufactured has nutritious values, message delivered by a well known doctor may be believed for the claim. Communication Budgeting The company has four options: 1. the affordable method; 2. percentage of sale method; 3. competitive parity method 4. the objective and task method
One need to note that each these methods has advantages and disadvantages, thus the best option should be the one that benefit company more. Evaluation and Control of communication process The following questions may serve as a checklist: 1. How does a customer find out about our offering? 2. Does the message gain the attention of intended audience? , does it address the wants and needs of target market? Does it suggest benefits or means of satisfying the needs and wants? 3. Is the appropriately positioned? 4. Does the message inform, persuade, remind and educate customers about our offering 5.
Does the company establish budgets and measure the effectiveness of promotional efforts. Summary The marketing communication mix consists of eight major elements, however we have explained appropriateness and benefits of six communication elements such as Personal selling, Public Relations and Publicity, Advertising, Sales promotion, Direct marketing, and Events and experiences. We concluded this section by providing major points in planning communication mix Question 3 International marketing: 1. Which option would you advise African Firm if decide to enter and serve European Union?
Justify your answer. ? African firm may have the option of a joint venture. The product may be manufactured in Europe by the 50/50 joint venture and marketed by the European firm. Small African investors may join with European investors to create a joint venture company in which they share ownership and control ? A joint venture may be more desirable for economical and political reasons ? The foreign firm might lack the : I. Financial II. Physical III. Managerial resources needed to undertake the venture alone. IV. European union might require joint ownership for entry Kotler and Keller, 2009:649) It is also important for African firm to note that joint venture has its drawbacks: I. The partners might disagree over investment II. Over marketing III. Over other policies IV. Can also prevent a multinational company from carrying out specific manufacturing and marketing policies on world wide basis. 2. Discuss the considerations that must be taken into account when deciding which European markets to enter International company must decide how much to adapt their marketing strategy to local conditions: Product decision; The product decisions made for the domestic market are basically similar to those of international markets. For the international organization, however, there are a few decisions that are more important. Some of these refer to aspects such as: 1. The use of brand name, 2. Packaging, 3. Product guarantee and 4. After sale service. Different requirements concerning packaging and the contents necessitate the international organization to make some adaptations.
This may be a challenge to international entrepreneur for example whether to sell standardized product or individualized product to a foreign country (du Plessis, 2005: 347) ? Distribution decisions; The international marketer must also give attention to the distribution of products and services, such decisions include: 1. Physical distribution and type of the distribution channel to use. 2. Factors such as the characteristics of target market, product characteristics, the type of competition and environmental factors may influence distribution decisions on international arena. 3. Traditional problems, e. . power, conflict, and leadership of the channel also exist for international organization that need to develop it own channel distribution. (Kotler and Keller, 2009:649) ? Marketing communication decision; These decisions should include: 1. Language and cultural differences make communication in foreign market difficult for international marketer. 2. Legislative issues should also concern international organization with regards to the use of advertising campaign. 3. The decision may be made on the use of standardized advertising messages for European market in which organization is to do business.
Standardized advertising messages may present advantages of (1) economies of scale, (2) cost servings. However, cultural and language differences may hinder the international company to take and use the advantages for its benefits. ? Pricing decision; International organization must take the cognizance of the following factors in determining price: 1) Transport costs Inter alia shipping and freight 2) Tariffs 3) International taxes payable (du Plessis, 2005: 347) (Kotler and Keller, 2009:655) add that international firm may face pricing problems including: 1) Price escalation, ) Transfer prices, 3) Dumping charges, 4) Gray markets. Summary An African firm as decided to enter European Union, it must also decide the best mode of entry. In this regard we have chosen a joint venture as the best fit for African firm. African firm must also consider the marketing programs as how to best adapt to Euro zone market. These include pricing, product, communication mix, and distribution channel. Bibliography David Arnold, (November to December, 2006) “Seven Rules of international Distribution” Harvard Business Review.
Kerin, Hartley & Rudelius (2007). Marketing: The core. 2nd Edition. McGraw-Hill International Edition. Kotler, P. & Armstrong G. (20008) Principles of Marketing. 12th Edition. Prentice Hall. Philip Kotler & Kevin Lane Keller (2009) Marketing Management (13th Edition) Pearson Education International: Pearson Prentice Hall. PJ du Plessis, CJ Jooste, JW Strydom (2005) Applied strategic marketing second Edition: Heinemann Msweli-Mbanga, T. (2004). The 8Rs of Direct selling. Van Schaik. http://www. davedolak. com/promix. htm-Advert