Marketing Management Chapter 11: Distribution and Supply Chain Management


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Chapter 11: Summary

Distribution comprises channels and supply chain management. Channels deal with institutional linkages such as retailers and wholesalers, whereas supply chain management addresses the processes underlying these linkages, such as warehousing, transportation, and inventory management, and connects them from the supplier to the end user. The objective of both components is to provide a high level of customer service at a manageable cost.

Distribution channels take on various functions of the manufacturers because they can perform them more efficiently. Depending on the type of product and type of consumer, they can range from the zero level, where the contact between manufacturer and end user is direct, to multiple levels, from producer to wholesalers and retailers. The choice of channel is an important one because it has major strategic implications and is difficult to change. Within the channel choice, decisions also need to be made about channel compensation and control. To a large degree, effective channel management depends on close information linkages. The use of information analysis at the retail level increasingly makes other channel members dependent on these information sources. Overall, channel members need to add value to the distribution process—or be eliminated. This also applies to the purchasing process, which is an integral part of distribution, albeit an internally focused one.

Supply chain management benefits from a systems view of corporate activity and includes the development of close relationships with both suppliers and customers. Effective coordination between parties reduces cost and provides for competitive advantage through approaches such as just-in-time (JIT) delivery, electronic data interchange (EDI), and early supplier involvement (ESI). Production, transportation, facility, inventory, and communication decisions are the key areas within logistics, all of which require trade-offs and collaborative action among participants. Even though the optimizing activities of a firm provide for some benefits, competitive differentiation occurs mainly through coordination with other companies.

The firm may evaluate transportation based on transit time, reliability, and cost and achieve operational improvements, but a strategic collaborative approach with customers and suppliers can deliver even greater benefits. Such collaboration can include the use of third-party logistics providers. Logistics can also play a major role in making the firm more environmentally responsive by designing reverse distribution systems for the recycling of merchandise and by devising distribution processes that minimize risk and damage to the environment.

All channel and supply chain efforts are designed to increase customer service. The intent is to delight the customer. It is therefore important to understand the importance of customer complaints. Such complaints should be encouraged so that the firm learns early on about potential problem areas. In addition, they need to be resolved quickly so that customers are willing to return. Good customer service requires the orientation and commitment of the entire corporate culture so that the customer notices at each point of contact with the firm that customer service thinking is a part of the organization.

Marketing Management Chapter 10: Pricing Decisions


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Chapter 10: Summary

Much of pricing theory is derived from economics, especially from supply and demand theory. This information is encapsulated in the famous demand and supply curves. The price is set by the point where the curves intersect. The degree to which demand is susceptible to price changes (price elasticity of demand) is another concept borrowed from economics but very useful to marketers.

Again in theory, but rarely in practice, these curves can be obtained from statistical analysis of historical data, survey research, and experimentation. Rather less theoretically, factors affecting the pricing policies of a specific organization include organization factors, product life cycle, product portfolio, product line pricing, segmentation and positioning, and branding. Factors derived from customers are demand, benefits, value, and distribution channels. Of these, perceived value is especially important because it defines what the customer should be prepared to pay.

Pricing new products offers a different set of challenges. In general, the two main opposing strategies are

•     Skimming—High price, to skim off the short-term profit

•     Penetration—Low price, to maximize long-term market share

Practical pricing policies for existing brands may include cost-plus pricing, target pricing, historical pricing, product line pricing, competitive pricing, market-based pricing, and selective pricing. The price can also be a major factor in determining a product’s or service’s image, ranging from quality-price to budget-price.

A wide range of discounts may be offered: trade, quantity, cash, allowances, seasonal, promotional, and individual.

Prices may also be set at levels that are judged to be “psychologically” appropriate ($9.95, for instance). Other ways of achieving a price effect may lie with other parts of the offer, such as product bundling, at one extreme, and charging separately for “options,” at the other. Alternatively, price may be negotiated, as it often is in capital goods markets.

Organizations may resort to price competition for several reasons, including volume sales, other stimuli, and minor brands. On the other hand, the dangers of initiating a price war include low-quality image, temporary advantage, and profit loss.

Curative International Marketing, Corporate and Business Diplomacy: A Triple Application for Migration


Hello! I am sharing an abstract of a new paper published in The Synergy of Business Theory and Practice. Special thanks to Hans, Evangelos, Maria, and Dolores. Find a link to the complete paper attached below.

This contribution aims to cover a literature gap as to conceptualizing the nexus between sustainable corporate policy and globalization phenomena challenges exemplified by migration. The work is designed as a conceptualized chapter derived from a synthesis of discussed concepts and a case study of migration based on documentary analysis. Based on a review on mainstream literature on a still scattered and ambiguous body of knowledge in the research stream of corporate and/or business diplomacy, the work suggests a synthesis of the two concepts with international curative marketing for sustainable corporate policy. The contribution suggests a distinction between business and corporate diplomacy complemented by multidisciplinary concepts derived from the curative international marketing paradigm and a distinction between legitimacy and reputation-orientated corporate mindset.

Marketing Management Chapter 9: New Products

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Chapter 9: Summary

The theory of new products or new services starts with a gap analysis, which looks to the following: (1) usage gap, (2) distribution gap, (3) product gap, and (4) competitive gap. In practice, much organizational development effort is devoted to the modification of existing successful products or services by feature modification, quality modification, style modification, and image modification. Potential new products need to be screened against a number of strategic dimensions, including production capabilities, financial performance, investment potential, human factors, materials supply, cannibalism, and time. Market factors, such as matching with existing product lines, price and quality, distribution patterns, and seasonality, also need to be considered.

Sources for generating new product ideas include customers and innovative imitation. In the Western approach, the product development process then is supposed to follow a number of formal steps, including gap analysis (for scanning and idea generation), strategic screening, concept testing, product development, product testing, test marketing, and product launch. A test market may take place in a television-viewing area, a test city, or a residential neighborhood. In industrial markets in particular, it may be restricted to test sites. All these approaches pose problems of effectiveness and cost, while possibly offering competitors advance warning.

It is worth remembering the major caveats mentioned in section 9.1, “Introduction.” Brand stability implies that there should be more emphasis on the further development of existing brands than on totally new ones, contrary to conventional teaching. The Japanese approach is to launch many new products without following any of the stages of testing described here.