(BQ) Part 2 book Principles of marketing has contents: Retailing and wholesaling, advertising and public relations, personal selling and sales promotion, creating competitive advantage, the global marketplace, direct and online marketing - building direct customer relationships,...and other contents.
Part 1: Defining Marketing and the Marketing Process (Chapters 1–2) Part 2: Understanding the Marketplace and Consumers (Chapters 3–6) Part 3: Designing a Customer-Driven Strategy and Mix (Chapters 7–17) Part 4: Extending Marketing (Chapters 18–20) 12 Marketing Channels Delivering Customer Value We now arrive at the third marketing mix tool—distribution Firms rarely work alone in creating value for customers and building profitable customer relationships Instead, most are only a single link in a larger supply chain and marketing channel As such, an individual firm’s success depends not only on how well it performs but also on how well its entire marketing channel competes with competitors’ channels To be good at customer relationship management, a company must also Chapter Preview be good at partner relationship management The first part of this chapter explores the nature of marketing channels and the marketer’s channel design and management decisions We then examine physical distribution—or logistics—an area that is growing dramatically in importance and sophistication In the next chapter, we’ll look more closely at two major channel intermediaries: retailers and wholesalers We start by looking at a company whose groundbreaking, customercentered distribution strategy took it to the top of its industry Enterprise: Leaving Car Rental Competitors in the Rear View Mirror Q uick, which rental car company is number one? Chances are good that you said Hertz Okay, who’s number two? That must be Avis, you say After all, for years Avis’s advertising said, “We’re #2, so we try harder!” But if you said Hertz or Avis, you’re about to be surprised By any measure—most revenues, employees, transactions, or number of vehicles—the number-one rentalcar company in the world is Enterprise Holdings, which owns and operates the Enterprise Rent-A-Car, Alamo Rent A Car, and National Car Rental brands Even more, this is no recent development Enterprise left number-two Hertz in its rearview mirror in the late 1990s and has never looked back What may have fooled you is that the Hertz brand was for a long time number one in airport car rentals However, with all of its combined brands and markets, Enterprise Holdings now captures 53 percent of the total rental car market with Hertz a distant second at 16 percent.1 What’s more, by all estimates, the privately owned Enterprise is much more profitable as well How did Enterprise become such a powerful industry leader? The company might argue that it was through better prices or better marketing But what contributed most to Enterprise taking the lead was an industry-changing, customerdriven distribution strategy While competitors such as Hertz and Avis focused on serving travelers at airports, Enterprise developed a new distribution doorway to a large and untapped segment It opened off-airport, neighborhood locations that provided short-term car-replacement rentals for people whose cars were wrecked, stolen, or being serviced or for people who simply wanted a different car for a short trip or a special occasion It all started more than half a century ago when Enterprise founder Jack Taylor discovered an unmet customer need He was working at a St Louis auto dealership, and customers often asked him where they could get a replacement car when theirs was in the shop for repairs or body work To meet this need, Taylor opened a car-leasing business But rather than compete head-on with the likes of Hertz and Avis serving travelers at airports, Taylor located his rental offices in center-city and neighborhood areas, closer to his target customers These locations also gave Taylor a cost advantage: Property rents were lower, and he didn’t have to pay airport taxes and fees This groundbreaking distribution strategy worked, and the business grew quickly As the Taylor family opened multiple locations in St Louis and other cities, they renamed the business Enterprise Rent-A-Car after the U.S Navy aircraft carrier on which Jack Taylor had served as a naval aviator Enterprise continued to focus steadfastly on what it called Thanks to an industrythe “home city” market, changing, customer-driven primarily serving cusdistribution strategy, tomers who’d been in Enterprise left number-two wrecks or whose cars Hertz in its rearview mirror were being serviced Enterprise branch manmore than a decade ago agers developed strong and has never looked back relationships with local Chapter 12 auto insurance adjusters, dealership sales and service personnel, and body shops and service garages, making Enterprise a popular neighborhood rental car provider Customers in the home city market had special needs Often, they were at the scene of a wreck or at a repair shop and had no way to get to an Enterprise office to pick up a rental car So the company came up with another game-changing idea—picking customers up wherever they happen to be and bringing them back to the rental office Hence, the tagline: “Pick Enterprise We’ll Pick You Up,” which remains the Enterprise RentA-Car brand’s main value proposition to this day By the late 1980s, Enterprise had a large nationwide network of companyowned, off-airport locations From this strong base, in the mid-1990s Enterprise began expanding its distribution system by directly challenging Hertz and Avis in the on-airport market A decade later, it had set up operations in 240 airports in North America and Europe Then, in late 2007, the Taylor family purchased the Vanguard Car Rental Group, which owned the National and Alamo brands National focused on the corporate-negotiated airport market, while Alamo served primarily the leisure traveler airport market With the Vanguard acquisition, Enterprise Holdings now captures a more than 31 percent share of the airport market, putting it ahead of Avis Budget Group and Hertz That, combined with its share of the off-airport market, makes Enterprise Holdings the runaway leader in overall car rentals It now operates 7,600 locations in the United States and four other countries Another secret to Enterprise’s success is its passion for creating customer satisfaction To measure satisfaction, Enterprise developed what it calls its ESQi (Enterprise Service Quality index) The company calls some two million customers a year and asks a simple question: “Were you completely satisfied with the service?” Enterprise managers don’t get promoted unless they keep customers completely satisfied It’s as simple as that If customer feedback is bad, “we call it going to ESQi jail,” says an Enterprise human resources manager “Until the numbers start to improve, you’re going nowhere.” As a result, for six years running, customers have rated the Enterprise Rent-A-Car brand number one in the annual J.D Power U.S Car Rental Satisfaction Study Looking ahead, rather than resting on its laurels, Enterprise Rent-A-Car continues to seek better ways to keep customers happy by getting cars where people want them The enterprising company has now motored into yet another inno- | Marketing Channels: Delivering Customer Value 339 vative distribution venue—“car sharing” While competitors and hourly rentals—called WeCar This Hertz and Avis operation parks automobiles at conven- focused on serving ient locations on college campuses and in travelers at densely populated urban areas, where airports, Enterprise residents often don’t own cars and where Rent-A-Car opened business commuters would like to have oc- off-airport, casional car access Enterprise is also target- neighborhood ing businesses that want to have WeCar locations that vehicles available in their parking lots for provided shortcommuting employees to use WeCar mem- term carbers pay $35 for an annual membership fee, replacement depending on the location They can then rentals for people rent conveniently located, fuel-efficient cars whose cars were (mostly Toyota Prius hybrids) for $10 per wrecked, stolen, or hour or $60 to $75 for the day; the rate in- being serviced cludes gas and a 200-mile allotment Renting a WeCar vehicle is a simple get-in-and-go operation Just pass your member key fob over a sensor to unlock the car, open the glove box, and enter a PIN to release the car key Thus, Enterprise Holdings continues to move ahead aggressively with its winning distribution strategy Says Andy Taylor, founder Jack’s son and now long-time CEO, “We own the high ground in this business and we aren’t going to give it up As the dynamics of our industry continue to evolve, it’s clear to us that the future belongs to the service providers who offer the broadest array of services for anyone who needs or wants to rent a car.” The company intends to make cars available wherever, whenever, and however customers want them.2 As the Enterprise story shows, good distribution strategies can contribute strongly to customer value and create competitive advantage for a firm But firms cannot bring value to customers by themselves Instead, they must work closely with other firms in a larger value delivery network Objective OUTLINE Explain why companies use marketing channels and discuss the functions these channels perform Supply Chains and the Value Delivery Network (340–341) The Nature and Importance of Marketing Channels (341–344) Discuss how channel members interact and how they organize to perform the work of the channel Channel Behavior and Organization (344–351) Identify the major channel alternatives open to a company Channel Design Decisions (351–354) Explain how companies select, motivate, and evaluate channel members Channel Management Decisions (354–357) Discuss the nature and importance of marketing logistics and integrated supply chain management Marketing Logistics and Supply Chain Management Author These are pretty hefty Comment terms for a really simple concept: A company can’t go it alone in creating customer value It must work within an entire network of partners to accomplish this task Individual companies and brands don’t compete; their entire value delivery networks (357–365) Supply Chains and the Value Delivery Network (pp 340–341) Producing a product or service and making it available to buyers requires building relationships not only with customers but also with key suppliers and resellers in the company’s supply chain This supply chain consists of upstream and downstream partners Upstream from the company is the set of firms that supply the raw materials, components, parts, information, finances, and expertise needed to create a product or service Marketers, however, have traditionally focused on the downstream side of the supply chain—on the marketing channels (or distribution channels) that look toward the customer Downstream marketing channel partners, such as wholesalers and retailers, form a vital connection between the firm and its customers The term supply chain may be too limited—it takes a make-and-sell view of the business It suggests that raw materials, productive inputs, and factory capacity should serve as the starting point for market planning A better term would be demand chain because it suggests a sense-and-respond view of the market Under this view, planning starts by identifying the needs of target customers, to which the company responds by organizing a chain of resources and activities with the goal of creating customer value Yet, even a demand chain view of a business may be too limited because it takes a stepby-step, linear view of purchase-production-consumption activities With the advent of the Internet and other technologies, however, companies are now forming more numerous and complex relationships with other firms For example, Ford manages many supply chains— think about all the parts it takes to create a vehicle, from radios to catalytic converters to tires to transistors Ford also sponsors or transacts on many B-to-B Web sites and online pur- Chapter 12 | Marketing Channels: Delivering Customer Value 341 chasing exchanges as needs arise Like Ford, most large companies today are engaged in building and managing a complex, continuously evolving value delivery network As defined in Chapter 2, a value delivery network is made up of the company, suppliers, distributors, and, ultimately, customers who “partner” with each other to improve the performance of the entire system For example, in making and marketing just one of its many models for the global market—say the Ford Escape hybrid—Ford manages a huge network of people within Ford plus thousand of suppliers and dealers outside the company who work together Value delivery network: In making and marketing just one of its many models— effectively to give final customers “the most fuelsay, the Ford Escape hybrid—Ford manages a huge network of people within Ford plus thousand of suppliers and dealers outside the company who work together efficient SUV on the market.” to give final customers “the most fuel-efficient SUV on the market.” This chapter focuses on marketing channels— on the downstream side of the value delivery network We examine four major questions concerning marketing channels: What is the Value delivery network A network composed of the company, nature of marketing channels and why are they important? How channel firms interact suppliers, distributors, and, ultimately, and organize to the work of the channel? What problems companies face in designcustomers who “partner” with each other ing and managing their channels? What role physical distribution and supply chain manto improve the performance of the entire agement play in attracting and satisfying customers? In Chapter 13, we will look at system in delivering customer value marketing channel issues from the viewpoint of retailers and wholesalers Author In this section, we look at Comment the downstream side of the value delivery network—the marketing channel organizations that connect the company and its customers To understand their value, imagine life without retailers—say, without grocery stores or department stores Marketing channel (or distribution channel) A set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user The Nature and Importance of Marketing Channels (pp 341–344) Few producers sell their goods directly to final users Instead, most use intermediaries to bring their products to market They try to forge a marketing channel (or distribution channel)—a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user A company’s channel decisions directly affect every other marketing decision Pricing depends on whether the company works with national discount chains, uses high-quality specialty stores, or sells directly to consumers via the Web The firm’s sales force and communications decisions depend on how much persuasion, training, motivation, and support its channel partners need Whether a company develops or acquires certain new products may depend on how well those products fit the capabilities of its channel members For example, Kodak initially sold its EasyShare printers only in Best Buy stores because of the retailer’s on-the-floor sales staff and their ability to educate buyers on the economics of paying a higher initial printer price but lower long-term ink costs Companies often pay too little attention to their distribution channels—sometimes with damaging results In contrast, many companies have used imaginative distribution systems to gain a competitive advantage Enterprise revolutionized the car-rental business by setting up off-airport rental offices Apple turned the retail music business on its head by selling music for the iPod via the Internet on iTunes And FedEx’s creative and imposing distribution system made it a leader in express delivery Distribution channel decisions often involve long-term commitments to other firms For example, companies such as Ford, McDonald’s, or HP can easily change their advertising, pricing, or promotion programs They can scrap old products and introduce new ones as market tastes demand But when they set up distribution channels through contracts with franchisees, independent dealers, or large retailers, they cannot readily replace these 342 Part Three | Designing a Customer-Driven Strategy and Mix channels with company-owned stores or Web sites if the conditions change Therefore, management must design its channels carefully, with an eye on both tomorrow’s likely selling environment and today’s How Channel Members Add Value Why producers give some of the selling job to channel partners? After all, doing so means giving up some control over how and to whom they sell their products Producers use intermediaries because they create greater efficiency in making goods available to target markets Through their contacts, experience, specialization, and scale of operation, intermediaries usually offer the firm more than it can achieve on its own Figure 12.1 shows how using intermediaries can provide economies Figure 12.1A shows three manufacturers, each using direct marketing to reach three customers This system requires nine different contacts Figure 12.1B shows the three manufacturers working through one distributor, which contacts the three customers This system requires only six contacts In this way, intermediaries reduce the amount of work that must be done by both producers and consumers From the economic system’s point of view, the role of marketing intermediaries is to transform the assortments of products made by producers into the assortments wanted by consumers Producers make narrow assortments of products in large quantities, but consumers want broad assortments of products in small quantities Marketing channel members buy large quantities from many producers and break them down into the smaller quantities and broader assortments desired by consumers For example, Unilever makes millions of bars of Lever 2000 hand soap each week, but you want to buy only a few bars at a time So big food, drug, and discount retailers, such as Kroger, Walgreens, and Target, buy Lever 2000 by the truckload and stock it on their stores’ shelves In turn, you can buy a single bar of Lever 2000, along with a shopping cart full of small quantities of toothpaste, shampoo, and other related products as you need them Thus, intermediaries play an important role in matching supply and demand In making products and services available to consumers, channel members add value by bridging the major time, place, and possession gaps that separate goods and services from those who use them Members of the marketing channel perform many key functions Some help to complete transactions: FIGURE | 12.1 How Adding a Distributor Reduces the Number of Channel Transactions • Information: Gathering and distributing marketing research and intelligence information about actors and forces in the marketing environment needed for planning and aiding exchange • Promotion: Developing and spreading persuasive communications about an offer • Contact: Finding and communicating with prospective buyers • Matching: Shaping and fitting the offer to the buyer’s needs, including activities such as manufacturing, grading, assembling, and packaging Manufacturer Customer Manufacturer Customer 4 Manufacturer Marketing channel intermediaries make buying a lot easier for consumers Again, think about life without grocery retailers How would you go about buying that 12-pack of Coke or any of the hundreds of other items that you now routinely drop into your shopping cart? Customer Manufacturer Distributor Customer 6 Manufacturer Customer A Number of contacts without a distributor M×C=3×3=9 Manufacturer Customer B Number of contacts with a distributor M+C=3+3=6 Chapter 12 • | Marketing Channels: Delivering Customer Value 343 Negotiation: Reaching an agreement on price and other terms of the offer so that ownership or possession can be transferred Others help to fulfill the completed transactions: • Physical distribution: Transporting and storing goods • Financing: Acquiring and using funds to cover the costs of the channel work • Risk taking: Assuming the risks of carrying out the channel work The question is not whether these functions need to be performed—they must be—but rather who will perform them To the extent that the manufacturer performs these functions, its costs go up, and, therefore, its prices must be higher When some of these functions are shifted to intermediaries, the producer’s costs and prices may be lower, but the intermediaries must charge more to cover the costs of their work In dividing the work of the channel, the various functions should be assigned to the channel members who can add the most value for the cost Number of Channel Levels Channel level A layer of intermediaries that performs some work in bringing the product and its ownership closer to the final buyer Direct marketing channel A marketing channel that has no intermediary levels Indirect marketing channel Channel containing one or more intermediary levels Companies can design their distribution channels to make products and services available to customers in different ways Each layer of marketing intermediaries that performs some work in bringing the product and its ownership closer to the final buyer is a channel level Because both the producer and the final consumer perform some work, they are part of every channel Figure 12.2A The number of intermediary levels indicates the length of a channel shows several consumer distribution channels of different lengths Channel 1, called a direct marketing channel, has no intermediary levels; the company sells directly to consumers For example, Mary Kay Cosmetics and Amway sell their products door-to-door, through home and office sales parties, and on the Internet; GEICO sells insurance direct via the telephone and the Internet The remaining channels in Figure 12.2A are indirect marketing channels, containing one or more intermediaries Using direct channels, a company sells directly to consumers (no surprise there!) Examples: GEICO and Amway Producer Producer Using indirect channels, the company uses one or more levels of intermediaries to help bring its products to final buyers Examples: most of the things you buy—everything from toothpaste, to cameras, to cars Producer Producer Producer Manufacturer’s representatives or sales branch Wholesaler Retailer Retailer Consumer Consumer Consumer Channel Channel Channel A Customer marketing channels FIGURE | 12.2 Consumer and Business Marketing Channels Producer Business distributor Business distributor Business customer Business customer Business customer Channel Channel Channel B Business marketing channels 344 Part Three | Designing a Customer-Driven Strategy and Mix Figure 12.2B shows some common business distribution channels The business marketer can use its own sales force to sell directly to business customers Or it can sell to various types of intermediaries, who in turn sell to these customers Consumer and business marketing channels with even more levels can sometimes be found, but these are less common From the producer’s point of view, a greater number of levels means less control and greater channel complexity Moreover, all the institutions in the channel are connected by several types of flows These include the physical flow of products, the flow of ownership, the payment flow, the information flow, and the promotion flow These flows can make even channels with only one or a few levels very complex Author Channels are made up of Comment more than just boxes and arrows on paper They are behavioral systems made up of real companies and people who interact to accomplish their individual and collective goals Like groups of people, sometimes they work well together and sometimes they don’t Channel Behavior and Organization (pp 344–351) Distribution channels are more than simple collections of firms tied together by various flows They are complex behavioral systems in which people and companies interact to accomplish individual, company, and channel goals Some channel systems consist of only informal interactions among loosely organized firms Others consist of formal interactions guided by strong organizational structures Moreover, channel systems not stand still; new types of intermediaries emerge, and whole new channel systems evolve Here we look at channel behavior and how members organize to the work of the channel Channel Behavior Channel conflict Disagreement among marketing channel members on goals, roles, and rewards— who should what and for what rewards A marketing channel consists of firms that have partnered for their common good Each channel member depends on the others For example, a Ford dealer depends on Ford to design cars that meet customer needs In turn, Ford depends on the dealer to attract customers, persuade them to buy Ford cars, and service the cars after the sale Each Ford dealer also depends on other dealers to provide good sales and service that will uphold the brand’s reputation In fact, the success of individual Ford dealers depends on how well the entire Ford marketing channel competes with the channels of other auto manufacturers Each channel member plays a specialized role in the channel For example, the role of consumer electronics maker Samsung is to produce electronics products that consumers will like and create demand through national advertising Best Buy’s role is to display these Samsung products in convenient locations, answer buyers’ questions, and complete sales The channel will be most effective when each member assumes the tasks it can best Ideally, because the success of individual channel members depends on overall channel success, all channel firms should work together smoothly They should understand and accept their roles, coordinate their activities, and cooperate to attain overall channel goals However, individual channel members rarely take such a broad view Cooperating to achieve overall channel goals sometimes means giving up individual company goals Although channel members depend on one another, they often act alone in their own shortrun best interests They often disagree on who should what and for what rewards Such disagreements over goals, roles, and rewards generate channel conflict Horizontal conflict occurs among firms at the same level of the channel For instance, some Ford dealers in Chicago might complain that other dealers in the city steal sales from them by pricing too low or advertising outside their assigned territories Or Holiday Inn franchisees might complain about other Holiday Inn operators overcharging guests or giving poor service, hurting the overall Holiday Inn image Vertical conflict, conflicts between different levels of the same channel, is even more common In recent years, for example, Burger King has had a steady stream of conflicts with its franchised dealers over everything from increased ad spending and offensive ads to the prices it charges for cheeseburgers At issue is the chain’s right to dictate policies to franchisees.3 The price of a double cheeseburger has generated a lot of heat among Burger King franchisees In an ongoing dispute, the burger chain insisted that the sandwich be sold for no more than $1—in line with other items on its “Value Menu.” Burger King saw the value price as key to competing effectively in the current economic environment But the company’s franchisees claimed that they would lose money at that price To re- Chapter 12 | Marketing Channels: Delivering Customer Value 345 solve the dispute, angry franchisees filed a lawsuit (only one of several over the years) asserting that Burger King’s franchise agreements don’t allow it to dictate prices (The company had won a separate case in 2008 requiring franchisees to offer the Value Menu, which is core to its efforts to attract price-conscious consumers.) After months of public wrangling, Burger King finally let franchisees have it their way It introduced a $1 double-patty burger with just one slice of cheese, instead of two, cutting the cost of ingredients The regular quarter-pound double cheeseburger with two pieces of cheese remained on the Value Menu but was priced at $1.19 Some conflict in the channel takes the form of healthy competition Such competition can be good for the channel; without it, the channel could become passive and noninnovative For example, Burger King’s conflict with its franchisees might represent normal give-and-take over the respective rights of the channel partners But severe or prolonged conflict can disrupt channel effectiveness and cause lasting harm to channel relationships Burger King should manage the channel conflict carefully to keep it from getting out of hand In recent years, Burger King has had a steady stream of conflicts with its franchised dealers over everything from advertising content to the price of its cheeseburgers Vertical Marketing Systems Conventional distribution channel A channel consisting of one or more independent producers, wholesalers, and retailers, each a separate business seeking to maximize its own profits, even at the expense of profits for the system as a whole Vertical marketing system (VMS) A distribution channel structure in which producers, wholesalers, and retailers act as a unified system One channel member owns the others, has contracts with them, or has so much power that they all cooperate Corporate VMS A vertical marketing system that combines successive stages of production and distribution under single ownership— channel leadership is established through common ownership For the channel as a whole to perform well, each channel member’s role must be specified, and channel conflict must be managed The channel will perform better if it includes a firm, agency, or mechanism that provides leadership and has the power to assign roles and manage conflict Historically, conventional distribution channels have lacked such leadership and power, often resulting in damaging conflict and poor performance One of the biggest channel developments over the years has been the emergence of vertical marketing systems that provide channel leadership Figure 12.3 contrasts the two types of channel arrangements A conventional distribution channel consists of one or more independent producers, wholesalers, and retailers Each is a separate business seeking to maximize its own profits, perhaps even at the expense of the system as a whole No channel member has much control over the other members, and no formal means exists for assigning roles and resolving channel conflict In contrast, a vertical marketing system (VMS) consists of producers, wholesalers, and retailers acting as a unified system One channel member owns the others, has contracts with them, or wields so much power that they must all cooperate The VMS can be dominated by the producer, the wholesaler, or the retailer We look now at three major types of VMSs: corporate, contractual, and administered Each uses a different means for setting up leadership and power in the channel Corporate VMS A corporate VMS integrates successive stages of production and distribution under single ownership Coordination and conflict management are attained through regular organizational channels For example, the grocery giant Kroger owns and operates 40 manufacturing plants—18 dairies, 10 deli and bakery plants, five grocery product plants, three beverage plants, two meat plants, and two cheese plants—that crank out 40 percent of the more than 14,000 private label items found on its store shelves Little-known Italian eyewear maker Luxottica produces many famous eyewear brands—including its own Ray-Ban and Oakley brands and licensed brands such as Burberry, Chanel, Polo Ralph Lauren, Dolce&Gabbana, Donna Karan, Prada, Versace, and Bulgari It then sells these brands through some of the 346 Part Three | Designing a Customer-Driven Strategy and Mix FIGURE | 12.3 Comparison of Conventional Distribution Channel with Vertical Marketing System Producer Producer Retailer Wholesaler Wholesaler Retailer Contractual VMS A vertical marketing system in which independent firms at different levels of production and distribution join together through contracts Franchise organization A contractual vertical marketing system in which a channel member, called a franchisor, links several stages in the production-distribution process Consumer Consumer Conventional marketing channel Vertical marketing system Vertical marketing system—here’s another fancy term for a simple concept It’s simply a channel in which members at different levels (hence, vertical) work together in a unified way (hence, system) to accomplish the work of the channel world’s largest optical chains—LensCrafters, Pearle Vision, and Sunglass Hut—that it also owns.4 Controlling the entire distribution chain has turned Spanish clothing chain Zara into the world’s fastest-growing fashion retailer (see Real Marketing 12.1) Contractual VMS A contractual VMS consists of independent firms at different levels of production and distribution who join together through contracts to obtain more economies or sales impact than each could achieve alone Channel members coordinate their activities and manage conflict through contractual agreements The franchise organization is the most common type of contractual relationship A channel member called a franchisor links several stages in the production-distribution process In the United States alone, some 1,500 franchise businesses and 883,000 franchise outlets account for more than $844 billion of economic output Industry analysts estimate that a new franchise outlet opens somewhere in the United States every eight minutes and that about one out of every 12 retail business outAlmost every kind of business lets is a franchised business.5 has been franchised—from motels and fast-food restaurants to dental centers and dating services, from wedding consultants and maid services to fitness centers and funeral homes There are three types of franchises The first type is the manufacturer-sponsored retailer franchise system—for example, Ford and its network of independent franchised dealers The second type is the manufacturer-sponsored wholesaler franchise system—Coca-Cola licenses bottlers (wholesalers) in various markets who buy Coca-Cola syrup concentrate and then bottle and sell the finished product to retailers in local markets The third type is the service-firm-sponsored retailer franchise system— for example, Burger King and its nearly 10,500 franchiseeoperated restaurants around the world Other examples can be found in everything from auto rentals (Hertz, Avis), apparel retailers (The Athlete’s Foot, Plato’s Closet), and motels (Holiday Inn, Ramada Inn) to real estate (Century 21) and personal services (Great Clips, Mr Handyman, Molly Maid) Franchising systems: Almost every kind of business has been The fact that most consumers cannot tell the difference befranchised—from motels and fast-food restaurants to dating tween contractual and corporate VMSs shows how successfully services and cleaning and handyman companies Chapter 12 | Marketing Channels: Delivering Customer Value Real Marketing 12.1 Zara: Fast Fashions—Really Fast Fashion retailer Zara is on a tear It sells “cheap chic”—stylish designs that resemble those of big-name fashion houses but at moderate prices Zara is the prototype for a new breed of “fast-fashion” retailers, companies that recognize and respond to the latest fashion trends quickly and nimbly While competing retailers are still working out their designs, Zara has already put the latest fashion into its stores and is moving on to the next big thing Zara has attracted a near cultlike clientele in recent years Following the recent economic slide, even upscale shoppers are swarming to buy Zara’s stylish but affordable offerings Thanks to Zara’s torrid growth, the sales, profits, and store presence of its parent company, Spain-based Inditex, have more than quadrupled since 2000 Despite the poor economy, Inditex opened 450 stores last year, while other big retailers such as Gap closed stores Despite the poor economy, Inditex’s sales grew percent last year By comparison, Gap’s sales fell As a result, Inditex has now sprinted past Gap to become the world’s largest clothing retailer Inditex’s 4,670 stores in 74 countries sewed up $14.9 billion in sales last year Zara clearly sells the right goods for these times But its amazing success comes not just from what it sells Perhaps more important, success comes from how and how fast Zara’s cutting-edge distribution system delivers what it sells to eagerly awaiting customers Zara delivers fast fashion—really fast fashion Through vertical integration, Zara controls all phases of the fashion process, from design and manufacturing to distribution through its own managed stores The company’s integrated supply system makes Zara faster, more flexible, and more efficient than international competitors such as Gap, Benetton, and H&M Zara can take a new fashion concept through design, manufacturing, and store-shelf placement in as little as two weeks, whereas competitors often take six months or more And the resulting low costs let Zara offer the very latest midmarket chic at downmarket prices The whole process starts with input about what consumers want Zara store managers act as trend spotters They patrol store aisles using handheld computers, reporting in 347 two to three times each week, compared with competing chains’ outlets, which get large shipments seasonally, usually just four to six times per year Speedy design and distribution allows Zara to introduce a copious supply of new fashions—some 30,000 items last year, compared with a competitor average of less than 10,000 The combination of a large number of new fashions delivered in frequent small batches gives Zara stores a continually updated merchandise mix that brings customers back more often Zara customers visit the store an average of 17 times per year, compared to less than five customer visits at competing stores Fast turnover also results in less outdated and discounted merchandise Because Zara makes what consumers already want or are now wearing, it doesn’t have to guess what will be hot six months in the future In all, Zara’s carefully integrated design and distribution process gives the fast-moving retailer a tremendous competitive advantage real time what’s selling and what’s not selling They talk with customers to learn what they’re looking for but not yet finding At the same time, Zara trend seekers roam fashion shows in Paris and concerts in Tokyo, looking for young people who might be wearing something new or different Then they’re on the phone to company headquarters in tiny La Coruña, Spain, reporting on what they’ve seen and heard Back home, based on this and other feedback, the company’s team of 300 designers, 200 specifically for Zara, conjures up a prolific flow of hot new fashions Once the designers have done their work, production begins But rather than relying on a hodgepodge of slow-moving suppliers in Asia, as most competitors do, Zara makes 40 percent of its own fabrics and produces more than half of its own clothes Even farmed-out manufacturing goes primarily to local contractors Almost all clothes sold in Zara’s stores worldwide are made quickly and efficiently at or near company headquarters in a remote corner of northwest Spain Finished goods then feed into Zara’s modern distribution centers, which ship them immediately and directly to stores around the world, saving time, eliminating the need for warehouses, and keeping inventories low The highly automated centers can sort, pack, label, and allocate up to 80,000 items per hour Again, the key word describing Zara’s distribution system is fast The time between receiving an order at the distribution center to the delivery of goods to a store averages Controlling the entire distribution chain makes Zara more 24 hours for European stores flexible and more efficient—a virtual blur compared with and a maximum of 48 hours its competitors It can take a new line from design to for American or Asian stores production to worldwide distribution in its own stores in Zara stores receive small ship- less than a month (versus an industry average of nine ments of new merchandise months) Continued on next page Index identifying, 528–529, 529 identifying strategies, 530 microenvironment, 68 myopia, 529 objectives, 530 price change reactions, 326–328, 327 strengths and weaknesses, 530–531 uncontested market spaces, 533, 534–535 Complex buying behavior, 150–151 Complexity, 158 Computers, notebook computer evaluation, 161 Concentrated marketing, 202–204 Concept development, 264–265 Concept testing, 265, 265 Confidentiality See Privacy Conformance quality, 230 Consumer buyer behavior buyer decision process, 152–156 buyer decision process for new products, 156–158 complex buying behavior, 150–151 cultural factors, 135–139 defined, 133 dissonance-reducing buying behavior, 151 habitual buying behavior, 151–152 model, 134–135, 135 personal factors, 144–147 psychological factors, 147–150 social class, 139 social factors, 139–144 subculture, 136–138 variety-seeking buying behavior, 152 Consumer frugality, 24–25 Consumer market, 69, 133 Consumer product, 226 Consumer Product Safety Act, 82, 280 Consumer promotions, 482, 483–486 Consumer-generated marketing, 18–19, 32 Consumer-generated media, 32 Consumer-generated message, 443–444, 444, 445–446 Consumerism, 592–593 Consumer-oriented marketing, 599–600 Consumer-to-business (C-to-B) online marketing, 512, 512–513 Consumer-to-consumer (C-to-C) online marketing, 511–512 Contests, 484, 486, 487 Continuity of advertising, 449 Continuous inventory replenishment, 363 Contract logistics, 365 Contract manufacturing, 564 Contractual VMS, 346, 348 Convenience product, 226, 227 Convenience store, 375, 377, 377–378 Conventions, 487 COPPA See Children’s Online Privacy Protection Act (COPPA) Core customer value, 225, 226 Corporate identity materials, 456 Corporate image advertising, 228 Corporate marketing ethics policies, 604 Corporate VMS, 345–346 Corporate Web site, 513, 513 Cost-based pricing I21 break-even analysis, 298, 298–299, 299 cost-plus pricing (markup pricing), 297–298 costs as function of production experience, 296–297 costs at different levels of production, 296 customer value-based pricing vs., 291, 292 defined, 295 fixed costs (overhead), 296 target profit pricing, 298, 298–299, 299 total costs, 296 variable costs, 296 Cost-plus pricing, 297–298 Coupons, 483–484, 485 Cradle-to-cradle practices, 595 Creative concept, 442 Credit card use, 402 Cross-market segmentation, 199–200 Crowdsourcing, 263, 263–264 Cues, 149 Cultural environment core beliefs, 86 defined, 86 nature, people’s views of, 87–88 organizations, people’s view of, 87 others, people’s view of, 86–87 persistence of values, 86 secondary beliefs and values, 86–88 society, people’s view of, 87 themselves, people’s view of, 86, 86 universe, people’s view of, 88 Cultural pollution, 591 Culture cultural shifts, 136 defined, 135 global market potential, 562 global marketing environment, 557–560, 558 social class, 139, 140 subcultures, 136–138 Customer advantages, 528 Customer Business Development (CBD), 462–463 Customer database, 499, 499–500 Customer equity, 21, 21–22 Customer insights and marketing information, 98–100 Customer intimacy, 537 Customer lifetime value, 20, 20 Customer loyalty programs, 483, 483 Customer management organization, 56 Customer microenvironment, 69 Customer relationship company insights, 96–97 management See Customer relationship management (CRM) planning marketing, 45–47 Customer relationship groups, 22 Customer relationship management (CRM) changing nature of, 16–19 consumer-generated marketing, 18–19 customer satisfaction, 13 customer value, 12 customer-managed relationships, 17–18 customer-perceived value, 12–13 defined, 12, 119 levels and tools, 15–16 marketing research, 129–131 I22 Index partner relationship management, 19 planning marketing, 46 selected customer relationships, 16 strategy, 120 two-way customer relationships, 17–18 using marketing information, 119–120 Customer relationships, sales promotions and, 482–483 Customer sales force structure, 469 Customer satisfaction customer delight, 14–15 customer relationships and, 13, 15 defined, 13 Customer service, 233–234, 234 Customer value channel members adding value, 342–343 communicating See Communications core customer value, 225 customer equity, 21–22 customer lifetime value, 20 defined, 12 delivering See Marketing channels delivery network, 351 loyalty and retention, 20–21 marketing process, relationships with the right customers, 22 satisfaction and, share of customer, 21 Customer value analysis, 531 Customer value-based pricing cost-based pricing vs., 291, 292 defined, 291 good-value pricing, 292–293, 293 overview, 291–292 value-added pricing, 293, 293–295 Customer-centered company, 544, 545 Customer-centered new-product development, 269–270, 271–272 Customer-driven marketing strategy customer selection, 8–9 customer-driven, 8–12 differentiation, 51, 190–191 differentiation and positioning, 207–215 management orientations, 9–12 market positioning, 49, 51 market segmentation, 49, 190, 191–200 market targeting, 49, 190, 200–207 marketing concept, 10–11 purpose of, 48 value proposition, Customer-managed relationships, Customer-perceived value, 12–13 Customer-solution approach, 479 Customer-value marketing, 600 D Data mining, 119 Data warehouse, 119 Deceptive packaging, 585 Deceptive practices, 585–586, 586 Deceptive pricing, 585 Deceptive promotion, 585 Deciders, 172 Decline stage of product life cycle, 273, 278–279, 279 Decoding, 415 Deficient products, 603 Demand chain, 340 Demand for products demand curve, 302, 303 monopolistic competition, 301–302 oligopolistic competition, 302 price elasticity of demand, 302–303 price influences, 301–304, 305–306 price-demand relationship analysis, 302 pure competition, 301 pure monopoly, 302 Demographic segmentation age and life-cycle segmentation, 92–193 defined, 191 gender segmentation, 193–194 income segmentation, 194 Demography age structure, 70–74 baby boomers, 70–72 changing American family, 74 defined, 70 diversity, 75–77 education, 75 Generation X, 72, 72–73 generational marketing, 73–74 geographic population shifts, 74–75 global marketing, 562 macroenvironment, 70–77 Millennials, 73, 73 Demonstration step in sales, 479–480 Department store, 375, 376 Derived demand, 167–168, 168 Descriptive research, 103 Design for environment (DFE), 595 Desirable products, 603, 604 Development, public relations function, 454 Differentiated marketing, 202 Differentiation channel, 211 choosing strategy for, 208–215 competitive advantage, 210–212 competitive strategy, 537 defined, 51, 190 image, 211 marketing strategy, 48 people, 211 positioning and, 49–51, 190–191, 207–215 product, 211 retailer strategy, 383–384 services, 211, 241, 241 wholesaler marketing decisions, 396 Digital age, 26–27 Digital direct marketing, 505–508 Direct exporting, 563 Direct investment, 563, 565 Direct mail, 447 Direct marketing buyer benefits, 497–498 catalog marketing, 502, 502 channel, 343 customer databases, 499–500 defined, 408, 409, 496 Index digital technologies, 505–507 direct-mail marketing, 501–502 direct-response television (DRTV) marketing, 503–504, 504 growth of, 497 interactive TV (iTV), 508 kiosk marketing, 504, 504–505 mobile phone marketing, 505–507 model, 496–497 podcasts, 507–508 promotion mix, 425 seller benefits, 498–499 telephone marketing, 502–503, 503 trends, 495 vodcasts, 507–508 Direct-mail marketing, 501–502 Director of sales, 468 Direct-response television (DRTV) marketing, 503–504, 504 Disabled consumers, 76–77 Discount store, 375, 378 Discounts, 319, 486 Disintermediation, 350–351 Dissonance-reducing buying behavior, 151 Distribution centers, 360–361, 361 Distribution channel See also Marketing channels channels between nations, 572 channels within nations, 572 defined, 341 global marketing, 572, 572–573 global value delivery network, 572 whole-channel view, 572 Distribution costs, 584 Diversification, 45 Diversity, changing demographics, 75–77 Divisibility, 158 Dogs (BCG Approach), 43, 43 Do-Not-Call Implementation Act, 82 Downsizing, 45 Dumping, 571 Dynamic pricing, 323–324 E Echo boomers, 73 Eco-Management and Audit Scheme (EMAS), 598 Economic community, 555, 555 Economic environment business buyer behavior, 174, 175–176 consumer buyer behavior and, 146 consumer spending changes, 77–78 defined, 77 heavy equipment sales slow-down, 185 income distribution, 78, 556–557 industrial economy, 77 marketing and uncertainty of, 25 subsistence economy, 77 Economy airline fees, 62 airline services, 547 battery sales, 254–255 beer promotion and sales decline, 431 bicycle prices, 218 car part retailers, 161 consumer frugality, 24–25 I23 direct marketing, 523 economic turnaround, 185 emerging, 556 entertainment, 93 food sales in a down economy, 459 global market potential, 562 global marketing environment, 556–557, 557 industrial, 556 industrializing, 556 limited time offers, 334 marketing and uncertainty of, 23, 33 marketing information, 128 new normal for shopping, 284 personal care items, 309 price cutting, 490 pricing considerations, 303–304, 304 raw material exporting, 556 retailing in a slowed economy, 389–390, 402 SPAM as indicator of conditions, 576 subsistence, 556 thrift stores, 611 travel intermediaries, 369 Editorial quality, 449 Education, changing demographics, 75 Electronic data interchange (EDI), 363 Electronic product price decreases, 547 E-mail, online marketing, 517–518, 518 Emerging economy, 556 Emotional appeal, 417 Encoding, 415 End user, 544 Entertainment, merging with advertising, 441–442 Entrepreneurial marketing, 535–536, 536 Environment economic See Economic environment global marketing, 554–560 marketing See Marketing environment organic farming, 611 sustainable marketing and social responsibility, 27–28 Environmental sustainability See also Sustainable marketing defined, 71, 79, 594 solar-panel heat, 79 Environmentalism, 593–598 E-procurement, 178–180 Ethics airline pricing, 308–309 American Marketing Association Code of Ethics, 607–608 billboard regulations, 430 cemetary services, 254 chasing products, 368 credit cards, 402 drug company marketing, 185 flight costs, 334 heart procedures, 93 Internet ad sponsorship, 523 iPhone antenna problems, 284 marketing information, 128 obesity of children, 218 prescription drug ads, 459 smoking rates, 33 socially responsible behavior, 83 sustainable marketing, 604, 604–606, 610 tariffs, 576 I24 Index teardowns, 546–547 technology needs survey, 490 toning shoes, 61 Vitaminwater, 160 Ethnographic research, 107–109 E-training, 473 European Commission, 81 European Union, 81 Event marketing, 486 Event sponsorship, 486 Events, 420 Everyday low pricing (EDLP), 293, 387 Excessive markups, 585 Exchange, Exclusive dealing, 356 Exclusive distribution, 353, 353, 356 Exclusive territorial agreement, 356–357 Execution styles, 442–443, 443 Expense reports, 477 Experience curve, 297, 297 Experiences of customers, 224–225, 225 Experiential retailing, 384, 384–387 Experimental research, 110 Exploratory research, 103 Export department, 573 Exporting, 562–563, 563 External stimuli, 152 Extranet links, 178 Extranets, 121 F Factory outlets, 378, 380 Fad, 274, 274 Fair Packaging and Labeling Act, 82, 233 False wants, 589–590 Family changing demographics, 74 consumer buyer behavior and, 141, 143–144, 144 Fantasy message, 443 Farming, organic, 611 Fashion, 274, 274 Federal Cigarette Labeling and Advertising Act, 82 Federal Food and Drug Act, 82 Federal Food, Drug, and Cosmetic Act, 280 Federal Trade Commission Act, 82, 233 Feedback collecting, 420, 422 defined, 415 Field sales force, 470 Fighter brand, 328, 328 Financial intermediaries, 68 Financial publics, 69 Financial Reform Law, 82 Fishyback transportation, 362 Fixed costs, 296 Flash mob, 515, 515 Fluctuating demand, 168 FOB-origin pricing, 322 Focus, competitive strategy, 537 Focus group interviewing, 111 Follow-up step in sales, 480 Formulated marketing, 536 Four Cs of marketing, 53 Four Ps of marketing, 12, 51–53, 134–135 Franchise organization, 346, 381–382, 382 Fraud, Internet, 518–519 Freight-absorption pricing, 323 Frequency marketing program, 15 Frequency of advertising, 446 Frugality of consumers, 24–25 Full-service retailer, 376 Functional organization, 56 G Games, 484, 486 Gatekeepers, 172 Gender segmentation, 193–194 General need description, 176–177 General public, 69 Generation X, 72, 72–73 Generation Y, 73 Generational marketing, 73–74 Geographic factors in global market potential, 562 Geographic market, 544 Geographic organization, 56 Geographic population shifts, 74–75 Geographic segmentation, 191, 192 Geographical organizations, 573 Geographical pricing, 322–323 Global firm, 553 Global marketing See also International market choosing markets to enter, 561–562 competition, 553 cultural environment, 557–560, 558 decision on, 560–561 direct investment, 565 economic environment, 556–557 exporting, 563 growth of, 552–553 international trade system, 554–556 joint venturing, 563–565 organization, 573–574 political-legal environment, 557 program choices, 565–573 Global organizations, 573 Globalization, changing landscape of marketing, 27 Goals logistics system, 358, 360 setting company goals, 40 Good-value pricing, 292–293, 293 Government market, 69, 181–182, 182 Government pricing factors, 304 Government publics, 69 Great Depression, 4, 23, 42, 133, 256, 337 Great Recession, 23, 24, 33, 65, 71, 72, 77, 131, 254, 303, 305, 307, 379, 525, 526, 527, 576 Green retailing, 392–394, 393 Greenhouse gases, 596 Greenwashing, 585–586 Group, defined, 139 Group interviewing, 111 Growth stage of product life cycle, 273, 275, 277, 279 Growth-share matrix, 42–44 cash cows, 42–43, 43 defined, 42 dogs, 43, 43 Index problems with matrix approaches, 43–44 question marks, 43, 43 stars, 42, 43 H Habitual buying behavior, 151–152 Handling objections, 480 Harmful products, 586–587, 587 Health Care Reform Act, 185 High-low pricing, 387 High-pressure selling, 586 Hispanic American consumers, 136–137 Home Mortgage Disclosure Act, 82 Home shopping channels, 504 Horizontal conflict, 344 Horizontal marketing system, 348 Hydrofluorocarbons (HFCs), 596 I Idea generation concept development, 264–265 concept testing, 265, 265 crowdsourcing, 263, 263–264 defined, 261 external idea sources, 262–263 idea screening, 264 internal idea sources, 261–262 Idea screening, 264 Ideas, 229 Identity theft, 518–519 Image differentiation, 211 Image message, 443 Image overhaul, 335–336 Income distribution, 78, 556–557 Income segmentation, 194 Independent off-price retailer, 378 India, economic environment, 77 Indirect exporting, 563 Indirect marketing channel, 343 Individual factors, business buyer behavior, 174 Individual interviewing, 110–111 Individual marketing, 205, 205 Individual product and service decisions, 229, 229–234 branding, 231–232 customer service, 233–234, 234 labeling, 233 packaging, 232, 232–233 product features, 230 product quality, 230 product style and design, 230–231 Industrial economy, 556 Industrial product, 227 Industrializing economy, 556 Inelastic demand, 168 Influencers, 172 Infomercials, 503 Information search, 152–153 Informative advertising, 437, 437 Innovation blowback, 576 Innovative marketing, 600 Inside sales force, 470 Institutional market, 180 Insurance for product liability, 280 Integrated logistics management cross-functional teamwork inside the company, 363–364 defined, 363 logistics partnerships, 364 Integrated marketing communications defined, 412 model, 409–410, 410, 411–412 need for, 410, 412–414, 413 Integrated marketing program, 12 Intensive distribution, 352–353 Interactive marketing, 240 Interactive TV (iTV), 508 Intermarket segmentation, 199–200 Intermodal transportation, 362–363 Internal database, 100–101 Internal marketing, 240 Internal publics, 69 Internal stimuli, 152 International divisions, 573 International market See also Global marketing advertising, 452–454 defined, 69 marketing channels, 354, 354 product and services marketing, 280–282 retailer global expansion, 394 segmenting, 199–200 International marketing manners, 175–176 International marketing research, 123–124 International pricing, 324, 324–325 International subsidiaries, 573 International trade system free trade zones, 555, 555–556 GATT, 554–555, 555 nontariff trade barriers, 554 quotas, 554 tariffs, 554 World Trade Organization, 555, 555 Internet advertising media, 447 defined, 26 digital age, 26–27 digital product supply chain, 362 fraud, 518–519 global marketing pricing, 571, 571 online marketing, 508–509 Sales 2.0, 475–476 selling, 475–477, 476 Windows shoppers, 391 Internet Crime Complaint Center (IC3), 519, 519 Interpersonal factors, business buyer behavior, 174 Interpretive consumer research, 148 Intrepreneurial marketing, 536 Introduction stage of product life cycle, 273, 275, 279 Inventory continuous inventory replenishment, 363 management, 361–362 RFID tracking, 392 stockturn rate (turnover rate), 403 vendor-managed, 178 vendor-managed inventory, 363 Investor relations, 454 Iraq war, 87 I25 I26 Index J Joint ownership, 564–565 Joint venturing, 563–564, 564 contract manufacturing, 564 defined, 563 joint ownership, 564–565 licensing, 563, 563–564 management contracting, 564 market entry strategies, 563 K Kiosk marketing, 504–505, 505 L Labeling, 233, 233 Language in global marketing, 569, 570 Lanham Trademark Act, 82 Learning, influence on consumer buyer behavior, 149 Learning curve, 297, 297 Legal factors in global market potential, 562 Legislation See also specific Act billboard regulations, 430 marketing and, 81–83 online marketing, 520 product quality and safety, 280 sustainable marketing, 599 telemarketing industry, 503 Lesbian, gay, bisexual, and transgender (LGBT), 76 Less-for-much-less positioning, 214 Licensing of brands, 248–249, 249 defined, 563 joint venturing, 563, 563–564 Life-cycle, influence on consumer buyer behavior, 145 Life-cycle segmentation, 192–193 Life-cycle strategies, 273–279 Lifestyle, influence on consumer buyer behavior, 146 Lifestyle center, 388, 388 Lifestyle message, 442 Lifestyles of health and sustainability (LOHAS), 88 Limited-service retailer, 376 Line extension, 250 Lobbying, 454 Local marketing, 204–205 Local publics, 69 Location-based pricing, 320 Logistics cross-functional teamwork inside the company, 363–364 information management, 363 integrated logistics management, 363–365 inventory management, 361–362 logistics partnerships, 364 marketing, 357–358 system goals, 358, 360 third-party, 364–365, 365 transportation, 362–363 warehousing, 360–361 Loyalty status, 197 M Macroenvironment cultural environment, 86–88 defined, 66 demographic environment, 70–77 economic environment, 77, 77–78 major forces, 71 natural environment, 78–79 political environment, 81–83 social responsibility, 83–85 technological environment, 80–81 Madison & Vine, 441 Magazines, 447, 447, 449 Magnetic resonance imaging (MRI), 118, 128 Magnuson-Moss Warranty Act, 82, 280 Mail questionnaires, 110 Manufacturer’s agents, 396 Manufacturer’s representatives, 396 Manufacturers’ sales branches and offices, 396, 398 Market, defined, Market challenger, 538, 539, 541–542, 542 Market development, 45 Market follower, 538, 539, 542–543 Market leader, 538–541, 539 Market management organization, 56 Market myopia, Market nicher, 538, 539, 543, 543–544 Market offerings, 6, 224, 228–229 Market penetration, 44–45 Market segment, defined, 49 Market segmentation behavioral segmentation, 192, 196–197 business markets, 198–199 consumer markets, 191–198 customer-driven marketing strategy, 8, 48 defined, 49, 190 demographic segmentation, 191–194, 192 geographic segmentation, 191, 192 international markets, 199–200 multiple segmentation bases, 198 psychographic segmentation, 192, 194–196 requirements for effective segmentation, 200 retailer strategy, 383–384 wholesaler marketing decisions, 396 Market share, 438, 540, 540–541 Market targeting concentrated marketing (niche marketing), 202–204 customer-driven marketing strategy, 48 defined, 49, 190 differentiated marketing, 202 market segment evaluation, 201 micromarketing, 204–205 retailer strategy, 383–384, 384 socially responsible, 206–207 strategy, 206 undifferentiated marketing (mass marketing), 201–202, 495 wholesaler marketing decisions, 396 Market-centered company, 545, 545 Marketing customer demands, customer needs, customer value and satisfaction, customer wants, defined, description, 4–5 Index exchanges and relationships, 7–8 process of, 5, 5, 29, 29 sales potential, 93 system, 7–8, video case, 34 Marketing, changing landscape of, 22–29 consumer frugality, 24–25 digital age, 26–27 globalization, 27 not-for-profit marketing, 28–29 social responsibility, 27–28 sustainable marketing, 27–28 uncertain economic environment, 23, 25 Marketing channels See also Distribution channel channel behavior, 344–345 channel design decisions, 351–356 channel levels, 343–344 defined, 341 disintermediation, 350–351 horizontal marketing system, 348, 348 intermediaries, 352–353 international, 354, 354 logistics and supply chain management, 357–365 management, 354–356 marketing channel design, 351 multichannel distribution system, 349, 349 objectives, 352 overview, 341–342 public policy and distribution decisions, 356–357 supply chains, 340–341 value added, 342–343 value delivery network, 341 vertical marketing system, 345–348 wholesaler marketing decisions, 398 Marketing communications mix, 408 Marketing concept, 10–11, 582–584 Marketing control, 56–57 Marketing dashboard, 57–58 Marketing department organization, 55–56 Marketing environment adapting to turbulent environment, 64–65 defined, 66 macroenvironment, 66, 70–88 microenvironment, 66–69 responding to, 89–91 Marketing implementation, 54–56 Marketing information competitive marketing intelligence, 101–102 customer insights and, 98–100 customer relationship management and, 119–120 development of, 100–102 distribution and using, 120–121 internal data, 100–101 needs assessment, 100 nonprofit organizations, 121–122 research See Marketing research small businesses, 121–122 Marketing information system (MIS), 99, 99–100 Marketing intermediaries, 68 Marketing logistics, 357 Marketing management department organization, 56 market analysis, 53–54 marketing control, 56–57 marketing implementation, 54–56 marketing planning, 54 Marketing management orientations, 9–12 marketing concept, 10–11 product concept, 9–10 production concept, selling concept, 10 societal marketing concept, 11–12 Marketing mix customer-driven, 48 defined, 12, 51 four Ps, 51–53 wholesalers, 396, 398–399 Marketing objectives and policies, 561–562 Marketing profitability metrics, 61 Marketing research causal research, 103 consumer privacy, 124–125 contact methods, 110–114 defined, 103 defining the problem, 103 descriptive research, 103 ethnographic research, 107–109 experimental research, 110 exploratory research, 103 international marketing research, 123–124 interpreting and reporting findings, 118–119 misuse of findings, 125–126 observational research, 107 plan development, 104 plan implementation, 118 primary data, 104, 106–118 research instruments, 117–118 research objectives, 103 sampling plan, 114, 116 secondary data, 104–106 survey research, 109 Marketing ROI, 57–58, 58 Marketing services agencies, 68 Marketing strategy customer selection, 8–9 customer-driven, 8–12, 48, 48–49, 51 deep brand community, 36–37 defined, 48 development, 265–266 management orientations, 9–12 planning, 54, 55 value brand experiences, 36–37 value proposition, Marketing Web site, 513–514 Market-oriented business definition, 39, 39 Market-penetration pricing, 314–315 Market-skimming pricing, 314, 315 Markets-of-one marketing, 205 Markup pricing, 297–298, 585 Maslow’s Hierarchy of Needs, 148, 148 Mass customization, 205 Mass marketing, 201–202, 495 Materialism, 589, 589–590 Materials and parts, 227 Maturity stage of product life cycle, 273, 277–278, 279 I27 I28 Index Mechanical research instruments, 117–118 Media advertising, 444, 446–449 defined, 415 impact, 446 multitaskers, 448 nonpersonal communication channels, 419–420 timing, 449, 449 types, 447, 447–449 vehicles, 449 Media publics, 69 Megaretailers, 390–391 Membership warehouses, 380 Merchant wholesaler, 396, 397 Message advertising, 442–444 consumer-generated, 443–444, 444, 445–446 content, 417, 417–418 defined, 415 execution, 442–443, 443 fantasy, 443 format, 418, 418 image, 443 lifestyle, 442 mood advertising, 443 musical, 443 qualitative value, 446 slice of life, 442 source selection, 420 strategy, 442 structure, 418 Microenvironment the company, 67 competitors, 68 customers, 69 defined, 66 marketing intermediaries, 68 publics, 69 suppliers, 67 Micromarketing business-to-business marketing, 205 defined, 204 individual marketing, 205, 205 local marketing, 204–205 Middle-of-the roaders, 537 Millennials, 73, 73 Mission statement, 39–40, 41–42 Mobile phone marketing, 505–507 Modified rebuy, 171 Monopolistic competition, 301–302 Mood advertising message, 443 More-for-less proposition, 214–215 More-for-more positioning, 213 More-for-the-same value proposition, 213 Motivation influence on consumer buyer behavior, 147–148 sales quota, 477 salespeople, 477 Multibrands, 251 Multichannel distribution system, 349, 349 Multiple niching, 544 Musical message, 443 N NAFTA See North American Free Trade Agreement (NAFTA) Narrowcasting, 409, 448 National brands vs store brands, 246–248 National Environmental Policy Act, 82 National Traffic and Safety Act, 82 Natural environment, 78–79 Nature, people’s view of, 87–88 Need recognition, 152, 153 Neighborhood shopping center, 388 Neurographix, 128 New clean technology, 595 New product adoption process, 156–157 defined, 156 individual differences in innovativeness, 157 product characteristics and adoption rate, 157–158 New task, 171 New-product development defined, 260 management See New-product development management process See New-product development process strategy, 260–261 New-product development management customer-centered new-product development, 269–270 systematic new-product development, 270, 272 team-based new-product development, 270, 271, 271–272 turbulent times, 272–273 New-product development process, 261, 261–269 commercialization, 268–269 concept development, 264–265 concept testing, 265, 265 crowdsourcing, 263, 263–264 external idea sources, 262–263 idea generation, 261–264 idea screening, 264 internal idea sources, 261–262 marketing strategy development, 265–266, 266 product development, 266–267 test marketing, 267, 267–268 Newspapers, 447, 449 Niche marketing, 202–204 Noise, defined, 415 Nonpersonal communication channels, 419, 419–420 Nonprofit organizations, 121–122 Nonstore retailing, 375, 391–392 Nontariff trade barriers, 554 North American Free Trade Agreement (NAFTA), 400, 555–556 Notebook computer evaluation, 161 Not-for-profit marketing, 28–29 Nutrition Labeling and Education Act, 82, 233 O Objective-and-task method, 424 Objectives advertising, 437–438 communications, 416–417 company, 40 of competitors, 530 marketing channel, 352 Index sales calls, 479 sales promotion, 482–483 Observational research, 107 Occasion segmentation, 196 Occupation, influence on consumer buyer behavior, 145 Off-invoice promotions, 486 Off-list promotions, 486 Off-price retailer, 375, 378, 380 Oligopolistic competition, 302 One-to-one marketing, 205 Online marketing business-to-business, 510–511 business-to-consumer, 509–510, 510 click-and-mortar companies, 509 click-only companies, 509 consumer-to-business, 512, 512–513 consumer-to-consumer, 511–512 defined, 508 domains, 509–513, 510 e-mail, 517–518, 518 Internet and marketing, 508–509 online advertising, 514 research, 112–114 social networks, 515–517, 516 spam, 517 viral marketing, 514–515, 515 Web site creation, 513–514 Online privacy, 519–520 Online security, 519 Online social network consumer buyer behavior, 141, 142–143 defined, 141 online marketing, 515–517 Operating control, 57 Operational excellence, 537 Opinion leader, 139 Optional product pricing, 316, 316 Order-routine specification, 178 Organization business buyer behavior, 174 global marketing, 573–574 marketing department, 56 people’s view of, 87 pricing considerations, 301 retail, 381–382, 382 Organization marketing, 228 Organizational climate, 477 Outdoor, 447 Outside sales force, 470 Outsourced logistics, 365 Overall cost leadership, 536 Overhead, 296 P Packaging deceptive, 585 environmentally responsible, 233 frustration-free, 232, 232 innovative, 232 tamper-resistant, 233 Partner relationship management (PRM) defined, 19 managing and motivating channel members, 355–356 I29 partners inside the company, 19, 46–47 partners outside the firm, 19 planning marketing, 46 Partners inside the company, 46 Partners outside the firm, 47 Partnerships, logistics, 364 People differentiation, 211 Perceived obsolescence, 587 Percentage-of-sales method, 423, 431 Perception, influence on consumer buyer behavior, 148–149 Performance quality, 230 Performance review, 178 Permission-based e-mail marketing, 517–518 Person marketing, 228, 228–229 Personal buyer decision factors age and life-cycle stage, 145 economic situation, 146 lifestyle, 146 occupation, 145 personality, 146–147 self-concept, 147 Personal communication channels, 419 Personal interviewing, 110 Personal selling approach, 479 closing, 480 company and customer link, 465–466 customer relationship management, 480–481 defined, 408, 464 follow-up, 480 handling objections, 480 marketing and sales coordination, 466 nature of, 464–465 preapproach, 478–479 presentation and demonstration, 479–480 promotion mix, 424–425, 425 prospecting, 478 qualifying, 478 sales force, role of, 465–467 salesperson, 465 social responsibility, 428 Personality, influence on consumer buyer behavior, 146–147 Personality symbol style, 443 Personalized URLs (PURLs), 501, 501 Persuasive advertising, 437, 438 Phishing, 519 Physical distribution, 357 Physical distribution firms, 68 Piggyback transportation, 362 Place defined, 52 marketing mix, 52 Place marketing, 229, 387–388 Planned obsolescence, 587–588, 588 Planning See Strategic planning Pleasing products, 603 Podcasts, 507–508 Point-of-purchase (POP) promotions, 484 Political environment defined, 81 ethics and socially responsible actions, 83–85 global market potential, 562 global marketing, 557 I30 Index government agency enforcement, 82–83 legislation affecting marketing, 82 legislation regulating business, 81–83 Pollution cultural pollution, 591 industrial trends, 78–79 prevention, 594–595, 595 Portfolio analysis, 42–44 Positioning brand positioning, 244–245, 245 choosing strategy for, 208–215 communicating and delivering chosen position, 215 competitive advantage, 210–212 defined, 49, 191 differentiation and, 49–51, 191, 207–215 less for much less, 214 map, 208, 208 marketing strategy, 48 more for less, 214–215 more for more, 213 more for the same, 213 positioning statement, 215 retailer strategy, 383–384, 384 the same for less, 214 value, 212–213, 213 wholesaler marketing decisions, 396 Positive incentives, 477 Postpurchase behavior, 154–156 Power center, 388 Preapproach, 478–479 Predatory pricing, 330–331, 331 Premiums, 484 Press agency, 454 Presentation step in sales, 479–480 Press relations, 454 Price elasticity of demand, 302–303 Price packs, 484 Price-fixing, 328 Price-off promotions, 486 Price/pricing allowances, 319 basing-point, 322–323 break-even, 298, 298–299, 299 by-product, 316, 316, 318, 318 captive product, 316, 316, 317–318 changes, 325–328, 326 competition-based, 299–300 cost-based See Cost-based pricing cost-plus, 297–298 customer value-based See Customer value-based pricing cuts, 325 deceptive, 585 defined, 52, 290 discounts, 319 dynamic, 323–324 everyday low pricing (EDLP), 293, 387 FOB-origin, 322 freight-absorption, 323 geographical, 322–323 global marketing, 571 good-value, 292–293, 293 government factors, 304 high-low, 387 increases, 325, 325–326 international, 324, 324–325 location-based, 320 marketing mix, 52 market-penetration, 314–315 market-skimming, 314, 315 markups, 297–298, 585 new-product strategies, 314–315 optional product, 316, 316 predatory, 330–331, 331 price decision considerations, 300–306 product bundle, 316, 318–319 product line, 315, 316 product mix strategies, 315–319 product-form, 320, 320 promotional, 321–322, 322 psychological, 320–321, 321 public policy and, 328–332, 330 real-time, 323 reference, 320–321 retailer strategy, 387 segmented, 319–320 sustainable marketing, 584–585 target return, 298, 298–299, 299 time-based, 320 uniform-delivered, 322 value-added, 293, 293–295 wholesaler marketing decisions, 396 zone, 322 Primary data collection, 106–118 contact methods, 110–114 defined, 104 ethnographic research, 107–109 experimental research, 110 listening online, 115–116 observational research, 107 planning for collection, 106 research instruments, 117–118 sampling, 114, 116 survey research, 109 Privacy chief privacy officer, 125 marketing research, 124–125 online marketing invasion of, 519–520 Problem recognition, 176, 177 Product actual, 225, 225 adaptation, 566, 568 augmented, 225, 226 classifications, 226–228 consumer, 226 convenience, 226, 227 core, 225, 225 defined, 51, 224 features, 230 global marketing, 566, 568–569 individual product decisions, 229, 229–234 industrial, 227–228 invention, 568–569 levels, 225–226, 226 market offerings, 224, 228–229 marketing mix, 52 Index shopping, 226, 227 specialty, 226–227, 227 straight product extension, 566 style and design, 230–231, 231 unsought, 227, 227 Product adaptation, 566, 568 Product bundle pricing, 316, 318–319 Product concept, 9–10, 264–265 Product development, 45, 266–267 Product differentiation, 211 Product invention, 568–569 Product leadership, 537 Product liability, 280 Product life cycle (PLC) advertising budget, 438 decline stage, 273, 273, 278–279, 279 defined, 273 growth stage, 273, 273, 275, 277, 279 introduction stage, 273, 273, 275, 279 maturity stage, 273, 273, 277–278, 279 product development, 273, 273, 276–277 Product line, 234–235 Product line filling, 234–235 Product line pricing, 315, 316 Product line stretching, 235, 235 Product management organization, 56 Product mix, 235–236 Product portfolio, 235–236 Product position, 207 Product publicity, 454 Product quality, 230 Product sales force structure, 468–469 Product specification, 177 Product stewardship, 595 Product-form pricing, 320, 320 Production concept, Product-market expansion grid, 44, 44 Product-oriented business definition, 39, 39 Promotion See also Advertising budget, 422–424, 423 deceptive, 585 defined, 52 global marketing, 569–571 marketing mix, 52 retailer strategy, 387 social responsibility, 427–428 sustainable marketing costs, 584–585 wholesaler marketing decisions, 398 Promotion clutter, 482 Promotion mix advertising, 424 defined, 408 direct marketing, 425 integrating, 426–427 marketing communications, 424–427 personal selling, 424–425, 425 promotion tools, 408 public relations, 425 pull strategy, 425–426, 426 push strategy, 425–426, 426 sales promotion, 425 Promotional pricing, 321–322, 322 Promotional products, 484 Proposal solicitation, 177 Prospecting for customers, 478 Psychographic segmentation, 194–196 Psychological buyer decision factors attitudes, 150 beliefs, 150 learning, 149 motivation, 147–148 perception, 148–149 Psychological pricing, 320–321, 321 Public defined, 69 types of, 69 Public affairs, 454 Public policy direct marketing, 518–520 distribution decisions and, 356–357 Internet fraud, 518–519 invasion of privacy, 519–520 pricing and, 328–332, 330 Public relations (PR) defined, 408, 454 functions, 454 promotion mix, 425 role and impact, 455–456 tools, 456–457 Public service activities, 456 Pull strategy, 425–426, 426 Pulsing advertising, 449 Purchase decision, 154 Pure competition, 301 Pure monopoly, 302 Push money, 487 Push strategy, 425–426, 426 Q QSCV (quality, service, cleanliness, and value), 47 Qualifying customers, 478 Qualitative value of messages, 446 Quality-price nichers, 544 Question marks (BCG Approach), 43, 43 Questionnaires, 117 Quotas, 554 R Radio, 447 Radio-frequency identification (RFID), 80, 392 Railroads, 362 Raw material exporting economy, 556 Real-time pricing, 323 Rebates, 484 Receiver, defined, 415 References prices, 320–321 Relationships, personal selling and customers, 480–481 Relative advantage, 157 Reminder advertising, 437, 438 Research and development marketing research See Marketing research technological environment, 81 Reseller market, 69 Resellers defined, 68 I31 I32 Index pricing considerations, 304 reseller margins, 309 Response, defined, 415 Retailer convenience store, 375, 377, 377–378 defined, 374 department store, 375, 376 discount store, 375, 378 full-service, 376 limited-service, 376 marketing decisions, 382–388 off-price retailer, 375, 378, 380 organizational approach, 381–382 product line, 376–378 relative prices, 378–381 self-service, 376 service retailer, 378 specialty store, 375, 376 supermarket, 375, 376–377, 377 superstore, 375, 378 types, 375 warehouse clubs, 380–381 Retailing defined, 374 experiential, 384, 384–387 global expansion, 394 green, 392–394, 393 megaretailers, 390–391 nonstore, 375, 391–392 shopper marketing, 374, 374–375 slowed economy, 389–390 technology and, 392, 392 tighter consumer spending, 389–390 trends and developments, 389–394 wheel-of-retailing concept, 390 Return on advertising investment, 449–450, 451–452 Return on marketing investment, 57–58, 58 Return on sales investment, 477 Reverse innovation, 576 Robinson-Patman Act, 82, 328, 331, 427 S Sales 2.0, 475–476 Sales assistants, 470 Sales contests, 477, 487 Sales force automation systems, 475 compensation, 474 complex sales force structure, 469–470 customer sales force structure, 469 evaluating, 477 inside sales force, 470 Internet sales, 475–477 management, 468 motivating, 477 outside sales force, 470 personal selling, 464–467 product sales force structure, 468–469 promotions, 482 recruiting and selecting, 472–473 roles and status, 465–467 size, 470, 470 structure, 468–470 supervising, 474–475 team selling, 471–472 territorial sales force structure, 468 training, 473 Sales meetings, 477 Sales promotion business promotions, 482, 487 consumer promotions, 482, 483–486 defined, 408, 481 examples, 481, 482 objectives, 482–483 program development, 487–488 promotion clutter, 482 promotion mix, 425 rapid growth of, 482 sales force promotions, 482 trade promotions, 482, 486–487 Sales quota, 477 Sales reports, 477 Salesperson, 465 Salesperson-owned loyalty, 466 Salutary products, 603 Same for less proposition, 214 Sample defined, 114, 483 nonprobability sample, 114, 116 probability sample, 114, 116 sample size, 114 Sampling plan, 114 Scientific evidence style, 443 Secondary data commercial online databases, 102, 106, 122 defined, 104 gathering, 104–106 information sources, 105 Internet search engines, 106 Security See Privacy Segmentation See Market segmentation Segmented marketing, 202 Segmented pricing, 319–320 Selective distortion, 149 Selective distribution, 353 Selective retention, 149 Self-concept, influence on consumer buyer behavior, 147 Self-service retailer, 376 Selling concept, 10 Sender, defined, 415 Sense-of-mission marketing, 600, 600–601 September 11, 2001, 87 Served market, 541 Service inseparability, 237, 237 Service intangibility, 236, 237 Service marketing, 240, 241 Service nichers, 544 Service perishability, 237, 238 Service products, 52 Service profit chain, 238–241, 240 Service retailer, 378 Service variability, 237, 238 Services defined, 224 to disadvantaged consumers, 588–589 individual service decisions, 229–234 Index marketing, 236–243 marketing strategies, 238–243 productivity, 242–243 quality management, 241–242 recovery, 242, 242 Services differentiation, 211, 241, 241 Services mix, 384 Share of customer, 21 Sherman Antitrust Act, 82, 328 Shoddy products, 586–587 Shopper marketing, 374–375 Shopping center, 388, 388 Shopping product, 226, 227 Slice of life message, 442 Small business marketing research, 121–122 Smoking rates, 33 Social class, 139, 140 Social conscience, 605 Social costs, 590–591 Social factors and consumer behavior buzz marketing, 139–141 family, 141, 143–144, 144 groups, 139 online social networks, 141, 142–143 opinion leaders, 139 roles and status, 144 Social marketing, 229 Social network, customer-managed relationships, 17–18 See also Online social network Social responsibility marketing communications, 427, 427–428 pricing considerations, 304 product decisions and, 280 sustainable marketing, 27–28, 601, 602–603 target marketing, 206–207 Socially responsible behavior, 83 Societal marketing concept, 11–12, 583, 601, 603–604 Sociocultural factors in global market potential, 562 SOHO (small office/home office), 75 Solutions selling, 171 Spam, 82, 517 Special events, 456 Specialty product, 226–227, 227 Specialty store, 375, 376 Specific customers, 544 Speeches, 456 Standardized advertising, 453, 453 Standardized global marketing, 565 Stars (BCG Approach), 42, 43 Stimulus object, 149 Stockturn rate, 403 Store atmosphere, 384 Store brands, 246–248, 247 Straight product extension, 566 Straight rebuy, 171 Strangers as customers, 22 Strategic business unit (SBU), 42–43 Strategic group, 530 Strategic planning business portfolio, 40, 42–44 company objectives and goals, 40 concept, 583 customer-focused mission, 41–42 I33 defined, 38 growth and downsizing, 44–45 mission statement, 39–40 Style, 274, 274 Subcultures African American consumers, 137 Asian American consumers, 137–138 defined, 136 Hispanic American consumers, 136–137 mature consumers, 138, 139 Subliminal advertising, 149, 149 Subsistence economy, 556 Supermarket, 375, 376–377, 377 Superstore, 375, 378 Suppliers microenvironment, 67 supplier development, 170 supplier search, 177 supplier selection, 177–178 Supplies and services, 228 Supply chain defined, 19 description, 340 distribution centers, 360, 361 green, 358 information management, 363 integrated logistics management, 363–365 inventory management, 361–362 logistics information management, 363 logistics system, 358, 360 management, 357, 358 marketing logistics, 357 transportation, 362–363 value delivery network, 340–341, 341 warehousing, 360–361 Survey research, 109 Sustainability vision, 596 Sustainable company, 606 Sustainable marketing See also Environmental sustainability concept, 583 consumerism, 592–593 consumer-oriented marketing, 599–600 customer-value marketing, 600 deceptive practices, 585–586, 586 defined, 582 environmentalism, 593–598 ethics, 604–606, 607–608 high prices, 584–585 high-pressure selling, 586 impact on other businesses, 591–592, 592 impact on society as a whole, 589–591 individual consumer impact, 584–589 innovative marketing, 600 marketing concept, 582–584, 583 organic farming, 611 planned obsolescence, 587–588, 588 poor service to disadvantaged consumers, 588–589 regulations, 599 sense-of-mission marketing, 600–601, 602–603 shoddy, harmful, or unsafe products, 586–587, 587 social criticisms, 584–592 social responsibility, 27–28 societal marketing, 601, 603–604 I34 Index sustainable company, 606 sustainable marketing principles, 599–604 Sweepstakes, 484 SWOT analysis, 53–54, 54 Systematic new-product development, 270, 272 Systems selling, 171 T Target audience for communications, 415 Target costing, 300–301 Target market concentrated marketing (niche marketing), 202–204 defined, 201 differentiated marketing, 202 micromarketing, 204–205 socially responsible, 206–207 strategy, 206 undifferentiated marketing (mass marketing), 201–202 Target marketing, Target return pricing, 298, 298–299, 299 Targeting See Market targeting Tariffs, 554, 576 Team selling, 471–472 Team-based new-product development, 270 Teardowns, 546–547 Technical expertise style, 443 Technical sales support people, 470 Technological environment, 80, 80–81 Technology communications, 409 company and marketing strategy, 60–61 consumer-generated marketing, 32 contests, 490 cut on ad revenues, 546 digital direct marketing, 505–508 direct marketing, 522 electronic tracking industry, 610 freemium, 254 government markets, 184 innovations, 576 Internet complaints, 459 marketing environment, 93 marketing research, 128 medical procedure pricing, 308 new product testing, 284 online pricing errors, 334 public relations and the Internet, 459 retail, 392, 392, 402 small business promotions, 430 social context ads, 160 technology needs survey, 490 wireless broadband, 218 Teens, 73 Telemarketers, 470, 502–503, 503, 523 Telephone Consumer Protection Act, 82 Telephone interviewing, 110 Telephone marketing, 502–503, 503 Television advertising advantages and limitations, 447 advertising media mix, 447–448, 449 Children’s Television Act, 82 DRTV marketing, 503–504, 504 interactive TV (iTV), 508 Territorial sales force structure, 468 Territory manager, 468 Territory sales representative, 468 Test marketing, 267, 267–268 Testimonial evidence or endorsement, 443 Third-party logistics (3PL) provider, 364–365, 365 Three-day cooling-off rule, 428 Time-and-duty analysis, 474 Time-based pricing, 320 Toning shoes, 61 Total costs, 296 Total quality management (TQM), 230 Touch point, 119 Trade promotions, 482, 486–487 Trade shows, 487, 487 Trainship transportation, 362 Transaction oriented, 480 Trickle-up innovation, 576 Trucks, 362 True friends as customers, 22 Truth-in-Lending Act, 82 Tweens, 73 Tying agreement, 357 U Underserved consumers, 588, 588–589 Undifferentiated marketing, 201–202, 495 Uniform-delivered pricing, 322 Union of South American Nations (UNASUR) , 556 Unique selling proposition, 212 Universe, people’s view of the, 88 Unsafe products, 586–587 Unsought product, 227, 227 Usage rate, 197 User status, 197 Users, 172 V Value See Customer value Value chain, 46 Value delivery network, 47, 340–341, 341 Value disciplines, 537 Value marketing, 78 Value proposition choosing of, customer lifetime value, 20, 20 positioning strategy, 212–213, 213 Value selling, 481 Value-added pricing, 293, 293–295 Valued brand experience, 36–37 Variable costs, 296 Variety-seeking buying behavior, 152 Vendor-managed inventory, 178, 363 Vertical conflict, 344 Vertical marketing systems administered, 348 contractual, 346, 348 conventional distribution channel, 345 corporate, 345–346 defined, 345 Viral marketing, 514–515, 515 Vodcasts, 507–508 Index W Warehouse clubs, 380–381, 381 Warehousing, 360–361 Water carriers, 362 Web 1.0, 26 Web 2.0, 26, 475, 476 Web 3.0, 26–27 Web See World Wide Web Web communities, 515 Web sellers, 470–471, 471 Web site creation, 513–514 Webnography, 109 Wheeler-Lea Act, 82, 585 Wheel-of-retailing concept, 390 Whole-channel view, 572, 572 Wholesale clubs, 380 Wholesalers agent, 396, 397–398 broker, 396, 397 defined, 394 functions, 394–395 manufacturer’s sales branches and offices, 396, 398 marketing decisions, 396, 398–399 merchant, 396, 397 Wholesaling defined, 394 trends, 399–400 Windows shoppers, 391 Wireless broadband, 218 Word-of-mouth influence on buying behavior, 139, 419 Workforce, white-collar, 75 World product groups, 573 World Wide Web listening online, 115–116 online social influence on buyer behavior, 142–143 Written materials, 456 Y Young adults, 73 Z Zone pricing, 322 I35 ... perform some work, they are part of every channel Figure 12. 2A The number of intermediary levels indicates the length of a channel shows several consumer distribution channels of different lengths Channel... same amount of products with 2, 098 fewer shipments, while burning 168,000 fewer • • 359 gallons of diesel fuel and eliminating 1,8 82 tons of greenhouse gasses Says the company’s director of environmental... maximum speed of its truck fleet by miles per hour, which produced a savings of million gallons of fuel per year and emissions reductions equivalent to taking 12, 000 to 15,000 cars off of the road