LECTURE IX, PLACE - DISTRIBUTION Distribution channels are independent operations required to make the company’s product or services available to consumers or business. Channel decisions are expensive and long term, assisting in the positioning of a company’s product in the market. Channels are part of the marketing mix and affect and are affected by other factors in the mix. Ultimately the customer determines the type of channel systems. Channel design begins by assessing customer channel service needs and determining the company’s channel objective, threats and opportunities Major channel alternatives are determined based on; types of intermediaries, number of intermediaries and the channel responsibilities of each. Managing conflict among and between the company and its channel system is vital to ensure quality customer services and low cost operations. Given this global marketplace, the cost of producing the product is less expensive than the cost of getting the product to the customer. Physical distribution and logistics systems are important in order to deliver consistent, timely, quality services to customers at minimum cost. Marketing channel decisions are therefore strategically important and influential involving long-term commitments. Companies in making channel decisions must determine; ~ Nature and behaviour of the channels - How the channels firms interact and operate to provide channels function? ~ What are some of the problems inherent in designing and managing these channels? - How can physical distribution attract and satisfy customers?? ‘The Nature of Distribution Channels To repeat “a distribution channel is of a set of independent organizations involved in the process of making a product ot service available for use or consumption by consumer or business users.’(Kotler) Distribution channels result from their ability to get goods and services to the market more effectively, than the company itself. Additionally through their experience in the markets channels provides the company with strategic market information Whereas companies ship goods in bulk, channels transform the assortment of products made by the company into assortments wanted by customers, effectively matching supply and demand, Distribution Channels Functions: 1. Information: gathering and distributing (marixet, economy, customers) 2. Promotion: push advertising, Point of Sele, localized. 3. Contact: with prospective buyers and suppliers 584. Matching: buyers needs and wants with sellers offering 5. Negotiation: transfer of ownership (distributor\wholesaleriretailer) 6. Physical Distribution: transporting and storage 7. Financing: Credit terms, consignment, returns, allowances. 8. Risk taking. Since each channel design may consist of many intermediaries, itis, important that each channel in the design be assigned those functions they can perform efficiently and effectively. Number of Channel Level A channel level includes the number of middlemen necessary to move the product, from the producer to the final customer. The number of middlemen indicates the channel length. Direct Marketing Channel ~ here there is direct selling to the final consumer without middlemen. (Internet) Producer-Consumer Indirect marketing Channels- where there are numerous and variety of middlemen involved in bringing goods and services from the producer to the consumer. Level 1 - Manufacturer - Wholesaler - Customer Levels 2. - Manufacturer - Distributor - Wholesaler - Consumer Levels 3 -Manufacturer - Distributor - Wholesaler - retailer ~ Consumer All organization in the channel are connected by the physical flow of products, ‘ownership and payment as well as information and promotion flows. Channel Behaviour and Organization Channels are a collection of independent organization with varied goals and changing objectives influenced by environmental complexities and culture. Channels are dynamic and ever changing enhanced by changes in technology and transportation, The goal and roles of different channels are sometimes in conflict. Horizontal Conflicts are conflicts between channel members of the same level (Retailer to retailer) Vertical Conflicts are conflicts at different levels of the channels (wholesaler-retailer) Conflict between channels have been sufficiently debilitating to encourage the development of systems to reduce these problems Vertical Marketing Systems (VMS) is a distribution channel structure in which producers, wholesaler and retailers act as a unified system, One channel member may ‘own all the others. In a Corporate VMS coordination and conflict management are attained through contractual agreements among the channel members. Three primary types are; Wholesale Sponsored voluntary Chains, Retailer cooperatives and Franchise Operations. 59CO fered VMS, leadership and control is assumed by one or a few dominant channel members. Horizontal marketing Systems exist where two or more companies at one level join to exploit marketing opportunities. Hybrid Marketing System. ase multi- channel distribution systems where the company sets up more than one channel system in order to reach different customer segments? Sales and markets tend to expand with opportunities to tailor channels to specific consumer segment needs, Note: It's important that students note that when we refer to marketing systems here we are really reflecting on distribution channel design. With the changes in technology and the growth of direct and online marketing, companies are involved in disintermediation where they bypass intermediaries and go directly to the buyer, Channel Design Decision Channel systems evolve to meet the needs of the consumers, ‘There are four major steps involved in designing channels 1. Analyze consumer service needs. Companies must determine the service level needs of its consumer’s and balance the cost and flexibility of providing these levels against the price consumers will pay. Do they value location, personal shopping, wide assortments, augmented service ~ credit, delivery, repairs, installation. 2. Setting Channel Objectives Companies must decide on their channel objectives as well as understand their constraints. Objectives must always be influenced by the desired service level of the customers. Objectives are also influences by product, company and intermediary characteristics as well as competitors or environmental issues, 3. Identifying Major Alternatives ‘The types of middlemen and number of intermediaries and their responsibilities are important factors in making these decisions. The company can practice one of several distribution strategies; Intensive Distribution: Product is stocked in as many outlets as possible. Exclusive Distribution: Limited sumbers of dealers are given the right to distribute and promote the company‘s products in their area Selective Distribution: The Company selectively chooses the intermediaries to camry the company’s products\services Evaluating Major Alternatives: where the company evaluates cach alternative on the basis of economics, control and adaptive criteria Channel Management Decisions involve selecting channel members, motivating and evaluating channel members Physical distribution involves planning, implementing and controlling the physical flow of materials, final goods and related information from producers (point of origin) to consumers, Point of consumption). ‘The activities of distribution logistics include forecasting, information systems, purchasing, production, planning, order Processing, inventory, warehousing and transportation planning, Logistics is important since customer service and satisfaction are vital to marketing strategies.‘The goal of logistics is to provide a targeted level of customer service at least cost Integrated logistics in management emphasizes teamwork within the company and among channel organizations Retailing and Wholesaling Retailing Retailing includes all the activities involved in selling goods and services directly to final consumers. Retailing can be accomplished though stores or non-stores. Non — stores retailing includes; direct mail, catalog, telephone, vending machines, internet and other direct retailing approach. Retailing can be classified by the amount of service, the assortment of products, the relative prices charged and the control of the outlet. ‘The amount of service can reflect self-service, limited service and full service. ‘The product line could reflect specielty stores, department stores, supermarkets, convenience stores and supermarket or hypermarkets. Retailer may be classified according to their pricing strategies ie: discounts stores, off price retail organizations and may include chain stores, franchise operations and merchandising conglomerates. The retailer’s marketing decisions involves considerations about: 1. Target market and positioning decisions 2. Product assortment and service decisions 3. Price decision 4, Promotion 5. Place decisions- (central Business District, regional shopping, community shopping centre and neighbourhood shopping centre) 6. The wheel of retailing explains the evolving characteristics of retailing ~ low market-low price ~ low status to high price, service, etc.; Wholesaling Wholesaling is all the activities involved in selling goods and services to those who buy for resale or business use. Wholesalers participate in the following functions; Selling and promoting Buying and assortment building Bulk Breaking Warehouse and transportation Financing and risk bearing, Market information management ‘Management service and advice Wholesalers fall into three major group: 1, Merchant Wholesalers — are independently owned businesses that take title to the merchandise they handle. Full service wholesalers provide fall service with 61C ~ 7 stock, sales force, credit, delivery and management services. Limited services- wholesalers offer limited services to suppliers and customers. 2.Brokers and Agents— a broker is a wholesaler who does not take title to goods and who fiznctions to assist negotiation between buyers and seller. An agent is a wholesaler who represents buyers and sellers on some contractual basis. They do not take title but perform functions (Manufacturer Agent) 3.Manufacturers’ Sales Branch and Office where the producers and buyers are involved in the wholesaling themselves, Wholesalers are involved in marketing decisions such Target market and positioning decisions, size and type of customers and service needs. Marketing mix decisions involve; product assortment and services, price promotion and place REVIEW OF CONCEPT CONNECTIONS ~ KOTLER AND ARMSTRONG Marketing channel decisions are among the most important decisions that management faces. A company’s channel decisions directly affect every other marketing decision. Each channel system creates a different level of revenues and costs and reaches a different segment of target consumers. Management must make channel decisions carefully, incorporating today’s needs with tomorrows likely selling environment. Some companies pay too little attention to their distribution channels, but others have used imaginative distribution systems to gain competitive advantage. 1. Explain why companies use distribution channels and discuss the functions that these perform. Most producers use intermediaries to bring their product to market. They try to forge a distribution channel- a set of inter- dependent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user. Through their contacts, experience, specialization, and scale of operation, intermediaries usually offer the firm more than it can achieve on its own, Distribution channels perform many key functions. Some help complete transactions by gathering and distributing information needed for planning and aiding exchange; by developing and spreading persuasive communications about an offer; by performing contact work-finding and communicating with prospective buyers; by matching-shaping and fitting the offer to the buyer's needs; and by entering into negotiation to reach an agreement on price and other terms of the offer so that ownership can be transferred. Other functions help to fulfil the completed transactions by offering physical distribution-transporting and storing goods; financing- acquiring and using funds to cover the costs of the channel work: ind risk taking-assuming the risks of carrying out the channel work. oo)2. Discuss how channel members interact and how they organize to perform the work of the channel. The channel will be most effective when each member is assigned the tasks it can do best, Ideally, because the success of individual channel members depends on overall channel success, all channel firms should work togettier smoothly. They should understand and accept their roles, coordinate their goals and activities, and cooperate to attain overall channel goals. By cooperating, they can more effectively sense, serve and satisfy the target market. In a large company, the formal organization structure assigns roles and provides needed leadership. But ina distribution channel made up of independent firms, leadership and power are not formally set. Traditionally, distribution channels have lacked the leadership needed to assign roles and manage conflict. In recent years, however new types of channel organizations have appeared that provides stronger leadership and improved performance. 3. Identify the major channel alternatives open to a company. Each firm identifies altemative ways to reach its market. Available means vary from direct selling to using one, two, three, or more intermediary channel levels. Marketing channels face continuous and sometimes dramatic change. ‘Three of the ‘most important trends are the growth of vertical, horizontal, and hybrid marketing systems. These trends affect channel cooperation, conflict, and competition, Channel design begins with assessing customer channel-service needs and company’s channel objectives and constraints. The company then identifies the major channel alternatives in terms of the types of intermediaries, the number of intermediaries, and the channel responsibilities of each. Each channel alternative must be evaluated according, to economic, control, and adaptive criteria. Channel management calls for selecting qualified intermediaries and motivating them. Individual channel members must be evaluated regularly. 4. Discuss the nature and importance of physical distribution. Just as firms are giving the marketing concept increased recognition, more business firms are paying attention to the physical distribution, or marketing logistics, Logistics is an area of potentially high cost savings and improved customer satisfaction. Marketing logistics involves coordinating the activities of the entire supply chain to deliver maximum value to customers, No logistics system can both maximize customer service and minimize distribution costs. Instead, the goal of logistics management is to provide a targeted level of service at the least cost. The major logistics functions include order processing, warehousing, inventory management, and transportation. 35. Analyze integrated logistics, including how it may be achieved and its benefits to the company. ‘The integrated logistics concept recognizes thet improved logistics requires teamwork in the form of close working relationships across functional areas inside the company and across various organizations in the supply chain, Companies can achieve logistics harmony among functions by oreating, cross-functional logistios teams, integrative supply manager positions, and senior-level logistics executives with cross-functional authority. Channel partnerships can take the form of cross — company teams, shared projects, and information ~sharing systems. Through such partnerships, many companies have switched from anticipatory-based distribution systems to customer- triggered response-based distribution systems. Today, some companies are outsourcing their logistics functions to third-party logisties providers to save costs, increase efficiency, and gain faster and more effective access to global markets. Although many retail stores are independently owned, an increasing number are now banding together under some from of corporate or contractual organization. Wholesalers, too, have experienced recent environmental changes, most notably mounting competitive pressures. They have faced new sources of competition, more demanding customers, new technologies, and more direct ~ buying programs on the part of large industrial, and retail buyers. 6. Explain the roles of retailers and wholesalers in the distribution channel. Retailing and wholesaling consist of many organizations bringing goods and services from the point of production to the point of use. Retailing includes all activities involved in selling goods or services directly to final consumers for their personal, nonbusiness use. Wholesaling includes all the activies involved in selling goods ot services to those who are buying for the purpose of resale or for business use Wholesalers perform many functions, including selling and promoting, buying and assortment building, bulk breaking, warehouse, transporting, financing, risk bearing, supplying market information, and providing management services and advice 7. Describe the major types of retailers and examples of each. Retailers can be classified as store retailers and nonstore retailers. Although most goods and services are sold through stores, nonstore retailing has been growing much faster than has store retailing, Store retailers can be farther classified by the amount of service they provide (self-service, limited service, or full service); product line sold (specialty stores, department stores, supermarkets, convenience stores, off-price retailers, and service businesses): and relative prices (discount stores, off-price retailers and catalog showrooms), Today, many retailers are banding together in corporate and contractual retail organizations, (corporate chains, voluntary chains retailer cooperatives, franchise organizations, and merchandising conglomerates).8. Identify the major types of wholesalers and give examples of each. Wholesalers fall into three groups. First, merchant wholesalers take possession of the goods. They include full- service wholesalers (wholesalers, merchants, industrial distributors) and limited — service wholesalers (cash -and carry wholesalers, truck wholesalers, drop shippers, rack jobbers, producers * cooperatives, and mail-order wholesalers). Second, brokers and agents do not take possession of the goods but are paid a commission for aiding buying and selling, Finally, manufacturers’ sales branches and offices are wholesaling operations conducted by nonwholesalers to bypass the wholesalers. 9, Explain the marketing decisions facing retailers and wholesalers. Each retailer must make decisions about its target markets, product assortment and services, price promotion, and place. Retailers need to choose target markets carefully and position themselves strongly. Today, wholesaling is holding its own in the economy. Progressive wholesalers are adapting their services to the needs of target customers and are seeking cost-reducing methods of doing business. Faced with slow growth in their domestic markets and developments such as the North American Free Trade Association, many large wholesalers are also now going - global. 65LECTURE X INTEGRATED MARKETING COMMUNICATION- PROMOTIONS ‘Marketing in these modern times, requires that companies not only develop good products and services, price them attractively and make them available to consumers but that companies communicate with their customers to inform, persuade or remind. Promotion provides the primary communication function for the company. Promotion includes advertising, sales promotion, public relations, persor#t selling and direct marketing. This is called the promotion mix. The Marketing Communications (Promotion) mi The marketing communication mix is also called the promotion mix. The promotion mix is a blend of advertising, sales promotion, public relations, personal selling and direct marketing which the company uses to pursue its promotion and marketing objectives. Advertising: any paid form of non-personal presentation and promotion of ideas, ‘goods or services by identified companies Sales Promotion: ‘short term incentives to encourage purchase or sale of products or services, Public Relations: building good relationship for the company’s various publics by obtaining favourable publicity or being good corporate citizen, Personal Selling: personal presentation by the company’s sales force for the purpose of making sales or building customer relationships. Direct Selling: direct contact with specifically chosen customers to obtain immediate response and cultivate lasting customer relationship. ic. Mail, telephone, fax, email, Internet, E-Commerce. Modern marketers must understand that the ever-changing environment is creating fragmented markets, which mandates media fragmentation. As marketers shift from mass marketing and as improvement in the computer and information technology evolve, communication strategies reflect narrowing of focus to segmented markets reached by tailored messages, Companies are moving from Broadcasting to narrow casting. Advertising which normally captures the major portion ef the promotion budget now accounts for less than 25%. Why? Under integrated marketing communication (IMC) the company carefully integrates and coordinates its company and its products and services to its targeted market. 66~ ¢ Elements of Comm ion. The party sending the message 2, Encoding: Putting the message in symbolic form 3. Message: The set of symbols the sender transmits, 4, Media: The communication channel the sender uses to reach the receiver. 5. Decoding: how the receiver interprets the message sent by other party. 6. Receiver: (Target Market) the party receiving the message sent by the other party. 7. Response: The reaction of the (target Market) to the message. 8. Feedback: The receiver’s response (sales\no sales) communicated back to ‘the sender. 9. Noise: Any factor, which prevents the message from reaching its audience or distorts the message. Developing Effective Communications 1. Identify the target audience. The marketer must know the target market. They must know to whom they are directing their messages. The target market determines; what will be said, how it will be said, when and where it will be said and who will say it. 2. Determine the communications Objectives Marketers having defined the target market must determine what response they seek from the market, which typically is the purchase response. Markets must understand the buyer readiness stages. These are stages the consumer moves through from first hearing about the product to the purchase and use of the product. 1. Awareness ~ how aware is the target market (audience) of the product or company? 2, Knowledge: what knowledge does the target market have of the product \service and company? 3. Liking: How does the target market feel about the product\services and company? 4. Preference: Does the target market prefer the company's product and services to other competitors? 5. Conviction: Will the target market buy our productiservices on the basis of their conviction? 6. Purchase: Did the target market (audience) buy the product? 3. Designing the message The key to designing the message is that it must be effective. The AIDA model suggest that to be effective the message must. A ~ get attention, I- hold interest, D — arouse desire, A— obtain action. Additionally marketers must determine which appeal is most effective, 677 Rational Appeal - satisfying the customers needs and wants. These appeals are on the basis of product quality, economy, value and performance. Emotional. Appeal — stirring up positive or negative emotions which will motivate the purchase; fear, guilt, shame, love, humour, pride and joy. Moral Appeal — direct the target market to act on some moral basis such as social or human causes. Its particularly relevant in today’s environmentally conscious culture. The structure and format of the message is an interesting dileminia. Marketer must determine whether to; a. Draw conclusion in the message or leave that to the market b. Present a one sided or two sided argument (comparative advertising) ©. Present the strongest arguments first or last. Marketers, particular in the technological environment in which we live, must development effective headline, illustration and copy? To attract attention the marketer uses; novelty and contrast, eye catching pictures and headlines, distinctive formats, message, size and position and colour, shape and movement, 4. Choosing the Media ‘The channels of communication can be classified in two groups. Personal Communication channels where potential customers and others Communicate with each other, face to face, telephone, mail. “Internet chat”. The company controls their sales people, the most important personal communications channel. Other personal channels are: independent experts (consumer advocates) reference groups; (family, friends, neighbours) opinion leaders, “ word of mouth” which is a strong personal channel in Jamaica. Non-personal communications channels are media, which camry messages without personal contact and includes. (1) Media a. Print media — newspaper, magazine, direct mail b. Broadcast media ~ TV, Radio ¢. Display media — bill boards, signs, posters d. Electronic media — internet online, website (2) Atmospheres Designed environment to influence customers to purchase product (3) Events Occurrences staged to communicate with the target market, The message source is determined by how the target market views the sender. The source must be credible and persuasive. Feedback involves interface with the target market in the context of remembering the message, points they recall, how many times they saw it and their past and present attitudes. Feedback could cause changes in the promotion program or the product itself, 85. Setting the total promotion budget. Four common methods 1 Affordable method — sets the budget at the level the company can afford, Starts with the revenues, deducts operating expense and capital outlays and gives some of the remaining fiands to promotion. Ignores the effects of promotion on sales. Percentages of sales methods — sets the budget at a specific % of current or forecasted sales Gr of the sales price. Simple method, which allows managers to understand the relationship between promotions, price and profits. Causes manager to stop viewing sales as the cause rather than the efffect of promotion. Competitive parity method ~ scts the budget to match competitors? outlay assuming that competition knows what it is doing, ‘Objective and task method ~ sets the budget by; defining specific promotion objectives, determining what task to perform to achieve the objectives and estimating the costs of performing these tasks Promotional ‘Advantages dvantages Advertising Public nature —product’s | Expensive, impersonal, Legitimacy, repeat messages | not as persuasive, one many times, reach many way communication markets, Positioning communicated Personal Selling Effective for building Very expensive, long preference, conviction and | term commitment, action through personal personality conflict relationship possible. Wide assortment — coupons, Sales promotion contests, etc. Immediate attention, incentives, rewards | Short lived, does not and information build long-term relationships, Believable, reach prospects Public Relations Under-utilised, often after ‘Non public, immediate and | thought Direct Marketing —_| customized, interactive Not widespread, could be illegal. 69Marketers tend to use two base basic promotion mix strategies. 1. Push strategy ~ where the sales force and trade promotion pushes the Product through the channels. The producer promotes the product to the ‘wholesaler who promotes to the retailer who promotes to the customer. 2. Pulling Strategy ~ calls for spending on consumer advertising and Promotion to generate consumer demand, which will motive retailers to stock up the product, Finally the type of product and markets as well as the stage in the product’ life cycle can influence the promotion mix. Advert ge Any paid form of non — personal presentation and promotion of ideas, goods or services. Marketers make several important decisions when developing the advertising program, 1. Set advertising objectives —the specific communication tasks to be accomplished with a specific target market in a specific time. Informative — used to inform the target market about new product, product features or build demand. Persuasive — used to build selective demand for the product\services by persuading customers it offers the best quality for their money, Comparison — Compares the company’s products or services with other company’s products\services Reminder ~ constant reminders to the target market. 2. Set advertising budget: we have already mentioned four major methods; affordable, percent of sales, competitive parity and objective and task method Additionally when setting the advertising budget the marketer must consider; stage in the prociuct life cycle, market share, competition and clutter and product differentiation strategies 3. Developing advertising strategy; requires determining the message as well as selecting the media, Marketing must determine what they will use to communicate with their target markets. Tt must focus on benefits and it must be meaningful, credible and distinctive. The message should also have impact and style, Style includes using - slic. *-& (people using the product) Life (aspirations) fantasy (dream world) moos vs image, musical, personal, technical expertise, scientific, evidence and testimonials, ‘The major reasons for selecting the media are; a. Reach -% of the target market exposed to the advertising b. Frequency — the number of times the average consumer in the target market is exposed to the message. © Impact — the qualitative value of the exposure through that medium, 70‘When making the media choice, the marketers must consider the media habits of consumers, the nature of the product, the types of messages and the cost. The marketer balances media cost against audience quality and quantity, audience attention and editorial quality Evaluating Advertising ~ at best one evaluates the communication effect as well as the sales effect: Sales Promotion This is a mass communication technique that offers short-term incentives to encourage purchase or sale of a product\service. Sales promotion can take the form of consumer promotion and business promotion. Some tools are; samples, coupons, cash refund offers; price packs (cents off) premiums (goods offered fiee or at alow cost) advertising specialties, patronage rewards (cash or other reward for consistent use of product\service), Point of purchase (POP)(displays and demonstration), contests sweepstakes and games (Courts). In developing the sales promotion program marketers must determine; size of the incentives, conditions for participation, how to promote and distribute the promotion program, the length of the program and how to evaluate the program, Public relations Public relations involve building good relations with the company’s various publics "+ -biaining favourable publicity, building a good corporate image and controlling =afavourable situations. The major functions of public relations are; press relations, product publicity, public affairs, lobbing, investor relations and development, Major public relation tools include; news, speeches, special events, written materials, audio visual materials, corporate identity, material and public service activities, Major public relations decisions include; setting P.R. objectives, choosing the PR. message and vehicles, implementing the PR plan and evaluating the results, Personal Selling Sales forces not only sell product and services to customers, they represent their company being extension of the customer's perception of the company’s quality service and customer relations. A sales person covers a range of functions from. order taker (dept store) to order getter (Insurance) to missionary sale person (goodwill). The rote of sales people vary with different organizations but typically they include; representing the company to customers, representing customers to the company, producing customer satisfaction and company profit and creating long term profitable relationship with the customers, Sales force management is concerned with analysis, planning, implementing and control over sales force activities Sales force management includes the following; 1. Designing sales force strategy and structure a. Territorial Sales force structure; assigns the sales force to specific territories to soll the company full line of products and service. Benefits to this method include; salesperson’s job well defined, sales person gets all the ncredit for accomplishment in the area, increases motivation and keeps travel expenses low, b. Product Sales force structure — sales people specialize in selling a portion of the company’s offerings (special products). Although this enables specific product expertise, the sales person may not be able to intelligently satisfy customers who may need others of the company’s products/services. €. Customer sales force structure - where sales people specialise in selling to specific customers in the industry. This is beneficial in so far as specialized customer knowledge enable the development of product/services to satisfy customer’s wants and needs more effectively and builds long-term customer relationship d. Sales Force Size most companies use some forms of workload approach to determine sales force size. This approach divides the company customers into accounts of varying sizes and determines how many sales people can provide the products and service levels required. Company's sales force may be divided into outside sales force (Geld sales force) and inside sales force (telemarketing). Companies recognizing the cost and the value of their sales people sometimes enhance the sales people’s productivity by providing them with technical support people and sales assistants. Additionally companies are practicing “team selling” where all significant others, engineering, finance, production, upper management, ete, are involved in the selling process. Rreruiting and selecting sales people - effective recruitment and selection of the ght persons are critical. Sales people tend to be enthusiastic, persistent, self starters, self confident and committed. Sources of good potential sales persons are Varied and includes current sales persons, internal personnel, advertising, college, and competition. The selection process evaluates sales aptitude, analytical and organizational skills, and personality trait inter alia (and others) ‘Training sales people is important to establish produet/services knowledge, understand the corporate culture and learn how to enable satisfactory customer relations. Compensating sales people may involve a variety of methods including: fixed salary, variable salary, fixed portion plus bonus and commissions, bonus and commissions only, expense allowance and some job security and satisfaction. Management must decide which mix is more effective bearing in mind that the compensation plan should motivate and direct the sales people. Sales people supervision is supposed to direct and motivate sales people. Some forms of supervision are: annual call schedule, time and duty analysis and sales force automation system, Some of the factors involved in motivating sales people include the organisations culture, sales quotas, sales meetings and sales contest. nD~\ 2. Discuss the process and advantages of integrated marketing communications. Recent shifts in marketing strategy from mass marketing to targeted or one-on-one marketing, coupled with advances in information technology, have had a dramatic impact on marketing communications. Although still important, the mass media are siving way to profusion of smaller, more focussed media Companies are doing less broadcasting and more narrow casting. As marketing communicators adopt richer but more fragmented media and promotion mixes to reach their diverse markets, they risk creating a communication hodgepodge for consumers. To prevent this more companies are adopting the concept of integrated marketing communications, which calls for carefully integrating all sources of company communication to deliver a clear and consistent message to target markets, To integrate its extemal communications effectively, the company must first integrate its internal communications activities. The'company then works out the roles that the various promotional tools will play and the extent to which each will be used. It carefully coordinates the promotional activities and the timing of when major campaigns take place, finally to help implement its integrated marketing strategy, the company appoints a marketing communications director who has over= all responsibility for the company’s communications efforts, 3. Outline the steps in developing effective marketing communications. Ja preparing marketing communications, the communicator’s first task is 10 identify the target audience and its characteristics. Next, the communicator has to determine the communication objectives and define the response sought, whether it be awareness, knowledge, liking, preference, conviction, ot purchase. Then a message should be constructed with an effective content and structure. Media must be selected, both for personal and non-personal communication. ‘The communicator must find highly credible sources to deliver the message. Finally, the communicator must collect feedback by watching how much of the market becomes aware, tries the product, and is satisfied in the process. 4 Explain the methods for setting the promotion budget and factors that affect the design of the promotion mix. The company has to decide how much to spend for promotion, The most popular approaches are to spend what the company can afford, to use a percentage of sales, to base promotion on competitors’ spending, or to base it on an analysis and costing of the communication objectives and tasks. The company has to divide the promotion budget among the major tools to create the Promotion mix. Companies can pursue a push or a pull promotional strategy, or a combination of the two. The best specific blend of promotion tools depends on the ‘ype of product- market, the buyer's readiness stage, and the product life-cycle stage. 14People at all levels of the organization must be aware of the many legal and ethical issues surrounding marketing communications. Companies must work hard and proactively at communicating openly, honestly and agreeably with their customers and resellers Companies must do more than make good products-they have to inform consumers about product benefits and carefully position products in consumers’ minds. To do this, they must skilfully employ three mass-promotion tools in addition to personal selling, which targets specific buyers: advertising, sales promotion, and public relations. 5. Define the roles of advertising, sales promotion, and public relations in the promotion mix. Advertising the tise of paid media by a seller to inform, persuades, and remind about its products or organization-is a strong promotion tool. American marketers spend more than $212 billion cach year on advertising, and it takes many forms and has many uses. Sales promotion covers a wide variety of short-term incentive tools- coupons, premiums, contests, allowances-designed to stimulate final and business consumers, the trade, and the company’s own sales force. Sales promotion spending has been growing faster than advertising spending in recent years. Public relations- gaining favourable publicity and creating a favourable company image- is the least. used of the major promotion tools, although it has great potential for building consumer awareness and preference. 6. Describe the major decisions involved in developing an advertising programme. Advertising decision-making involves decisions about the objectives, the budget, the message, the media, and, finally, the evaluation of results. Advertisers should set clear objectives as to whether the advertising is supposed to inform, persuade, or remind buyers. The advertising budget can be based on what is affordable, on sales, on competitors” spending, or on the objectives and tasks. The message decision calls for planning a message strategy and executing it effectively. ‘The media decision involves defining reach, frequency, and impact goals; choosing major media types; selecting media vehicles, and deciding on media timing. Message and media decisions must be closely coordinated for maximum campaign effectiveness Finally, evaluation calls for evaluating the communication and sales effects of advertising before, during, and after the advertising is placed. 7-Explain how sales promotion campaigns are developed and implemented. Sales promotion campaigns call for setting sales promotions objectives (in general, sales promotions should be consumer relationship building); selecting tools: developing and implementing the sales promotion programme by using trade promotion tools (discounts, allowances, free goods, push money) and business 75_~ promotion tools (conventions, trade shows, sales contests) as well as deciding on such things as the size of the incentive, the conditions for participation, how to promote and distribute the promoticn package, and the length of the promotion After this process is completed, the company evaluates the results, 8. Explain how comp: publics. Companies use public relations to communicate with their publics by setting PR objectives, choosing PR messages and vehicles, implementing the PR plan, and evaluating PR results. To accomplish these goals, public relations professionals use several tools such as news, speeches, and special events. They also prepare written, audiovisual, and corporate identity materials and contribute money and time to public service activities. use public relations to communicate with their Selling is one of the world’s oldest professions. People who do the selling are called by a variety of names, including salespeople, sales representatives, account executives, sales consuliams, sales engineers, agents, district managers and marketing representatives. Regardless of their titles, members of the sales force play a key role in modern marketing organizations. The term sales person covers a wide spectrum of positions. Salespeople may be order takers, such as the department store salesperson who stands behind the counter. Or they may be order getters, salespeople engaged in the creative selling of products and services such as appliances, industrial equipment, advertising, or consulting services, and so forth. Other sale-people do missionary selling, in which they are not involved in taking an order but in building goodwill or educating buyers. To be successful in these more creative forms of selling, a company must first build and then manage an effective sales force. 9. Discuss the role of a company’s salespeople in creating value for customers and building customer relationships. Most companies use salespeople and many companies assign them an important role in the marketing mix. For companies selling business products, the firm’s salespeople work directly with the customers. Often, the sales force is the customer’s only direct contact with the company and, therefore, may be viewed by customer as representing the company itself. In contrast for consumer products companies that sell through intermediaries, consumers usually do not meet salespeople or even know about them. But the sales force works behind the scenes, dealing with wholesalers and retailers to obtain their support and helping them become effective in selling the firm’s products. As an element of the marketing mix, the sales force is very effective in achieving certain marketing objectives and carrying out such activities as prospecting, communicating, selling and servicing, and information gathering, But with companies becoming more market oriented, a market-focused sales force also 76works to produce customer satisfaction and company profit. To accomplish these goals, the sales force needs skills in marketing analysis and planning in addiction to the traditional selling skills, The high cost of the sales force calls for an effective sales management process consisting of six steps: designing sales force strategy and structure, recruiting and selecting, training, compensating, supervising and, evaluating salespeople, 10. Explain how companies design sales force strategy and structure. In designing a sales force, sales management must address issues such as what type of sales force structure will work best (territorial, product, customer, or complex structured); how large the sales force should be; who will be involved in the selling effort and how its varions sales and sales support people will work together (inside or outside sales forces and team selling). 11. Explain how companies recruit, select, and train salespeople. To hold down the high costs of hiring the wrong people, sales people must be recruited and selected carefully. In recruiting sales people, a company may look to Job duties and the characteristics of its most successful salespeople to suggest the traits it wants in its salespeople and then look for applicants through recommendations of current salespeople, employment agencies, classified ads, and by contacting college students, In the selection process, the procedure can vary from a single informal interview to lengthy testing and interviewing. After the selection process is complete, training programmes familiarize new salespeople not only with the art of selling but also with the company’s history, its products and policies, and the characteristics of its market and competitors. 12. Describe how companies compensate and supervise sales people, and how they evaluate sales force effectiveness. The sales force compensation system helps to reward, motivate, and direct salespeople, In compensating salespeople, companies try to have an appealing plan, usually close to the going rate for the type of sales job and needed skills, In addition to compensation, all salespeople need supervision, and many need continuous encouragement because they must make many decisions and face many frustrations, periodically, the company must evaluate their performance to help them do a better Job. In evaluating salespeople the company relies on getting regular information gathered through sales reports, personal observations, customers’ letters end complaints, customer surveys, and conversations with other salespeople. 13. Discuss the personal selling process, distinguishing between transaction- oriented marketing and relationship marketing The art of selling involves a seven-step selling process: prospecting and qualifying, Preapproach, approach, presentation and demonstration, handling objections, closing 1and follow-up. These steps help marketers close a specific sale and as such are transaction criented. However, a seller’s dealings with customers should be guided by the larger concept of relationship marketing. The company’s sales force should help to orchestrate a whole-company effort to develop profitable long-term relationships with key customers based on superior customer value and satisfaction, TB.LECTURE X Coarrnued ‘ Direct and Online Marketing. The New Marketing Model. Direct Marketing. Direct Communications with carefully targeted individual consumers to obtain an immediate response and cultivate lasting customer relationships Customer Database: An organized collection of comprehensive data about individual customers or prospects including geographic, demographic, psychographic and behavioural data. Companies use their databases to identify prospects, decide which customers would receive a particular offer, deepen customer loyalty and reactivate customer purchases. Direct Marketing: includes such major forms as; face to face selling, telemarketing, direct mail marketing, catalogue marketing, direct response, television marketing, kiosk marketing and online marketing, Telemarketing: is using the telephone to call directly to prospective customers Direct Mail Marketing: is direct marketing through single mailings that include letters advertisements, samples, foldout, and other “sales people with wings” sent to prospect with marketing lists. Catalogue Marketing: is direct marketing through print, video or electronic catalogue that are mailed to direct customer, made available in stores or presented online. Direct Response Television Marketing: is direct marketing through television including direct response television advertising or informercial and home shopping channels. Online Marketing: is marketing conducted through interactive online computer systems which link consumers with sellers electronically, Commercial Online Services: are online services which offer online information and marketing services to subscribers who pay a monthly fee for these services, American examples of these are America Online, CompuServe, and Prodigy. Internet: is the vast and burgeoning global web of computer networks with no central Management or ownership linking computer users all around the world, Users pay a fee to the commercial access provider to be hooked to the network. (SP Intemet Service Provider) World Wide Web: is the user-ftiendly Intemet access standard Electronic Commerce (E. Commerce) is the general term for a buying and selling Process that is supported by electronic means. Electronic markets are market spaces rather than market places. All the usual marketing interactions are processed electronically, Corporate Web Site: is the web site that seeks to build customer goodwill and to supplement other sales channels rather than to sell the company’s product directly 79Marketing Web Site: are designed to engage consumers in an interaction that will move them closer to a purchase or other marketing outcomes. Online Ads: are advertisements available for viewing while the subscriber surf's “olicks on” accesses online services or web sites including banners, pop up windows, tickers (banners that move across the screen) and roadblocks (full screen ads the user must view before he/she can move on to the other screens.) Web casting: is the automatic downloading of customized itiformation of interest to recipients PC’s affording an attractive channel for delivering internet advertising or other information content. Online marketers face challenges such as; 1, Limited consumer exposure and buying- © - < ” actual purchases still limited ae 2. Skewed user demographics and psychographics- web audience is becoming ‘more technically oriented but is still limited to upscale and technically skilled user’s 3. Chaos and clutter causing time consumption by consumers navigating the Internet, 4. Security: consumers worry about the unethical use of personal information Integrated Direct Marketing: arc direct marketing campaigns that use maltiply vehicles (methods) and multiply stages (strategies and tactics) to improve response rate and profits REVIEW OF CONCEPT CONNECTIONS ‘Mass marketers have typically tried to reach millions of buyers with a single product and a standard message communicated via the mass media. Consequently, most mass marketing communications were one-way communications directed at consumers rather than two way communications with consumer. Today many companies are turning to direct marketing in an effort to reach carefully targeted customers more efficiently and to build stronger, more personal , @ne-to-one relationships with them. 1. Discuss the benefits of direct marketing to customers and companies and the trends fueling its rapid growth. Customers benefit from direct marketing in many ways. For consumers, home shopping is fun, convenient, hassle-free; saves time; and gives them a bigger selection of merchandise. It allows them to comparison shop using mail catalogues and online shopping services, then order products and services without dealing with salespeople. Sellers also benefit. Direct marketers can target almost any group, customize offers to special wants and needs, and then use individualized Communications to promote these offers, Direct marketers can also build an ongoing relationship with each customer, time offers to reach prospects at the right moment, thereby receiving higher readership and response; and easily test alternative media and messages. Finally, direct marketers gain privacy because their offer and strategy are less visible to competitors, 80Various trends have led to the rapid growth of direct marketing. Market "demassification” has produced a constantly increasing number of market niches with specific preferences. Direct marketing enables sellers to focus efficiently on these minimarkets with offers that better match particular consumer wants and needs. Other trends encouraging at home shopping include higher cost of driving, traffic and parking congestion, lack of time, a shortage of retail sales help, and long lines at checkout counters. Consumers like the convenience of direct marketers’ toll free phone’ numbers, their acceptance of orders round the clock and their commitment to customer service. The growth of quick delivery via express carriers has also made direct shopping fast and easy. The increased affordability of computers and customers databases has allow direct marketers to single out the best prospects for cach of their products. Finally, in business-to-business marketing, lower cost per Contact media has proven more cost effective in reaching and selling to more prospects and customers than using a sales force. 2. Define a customer database and list the four ways companies use databases in direct marketing. A customer database is an organized collection of comprehensive data about individual customers or prospects, including geographic, demographic, Psychographic, and behavioural data, Companies use databases to identify prospects, decide which customers should receive a particular offer, deepen customer loyalty, and reactivate customer purchases, 3. Identify the major forms of direct marketing, The main forms to direct marketing include face-to-face selling, telemarketing, direct mail marketing,catalogue marketing, direct response television marketing, Kiock marketing and oniine marketing. Most companies today continue to rely heavily on face selling through a professional sales force, or they hire manufactures representative and agents, Telemarketing consist of using the telephone to sell dizectly to consumers Direct-mail marketing consists of the company sending an offer, announcement, reminder, or other item to a person at a specific address, Recently, three new forms of mail; delivery have become popular Fax mail. e-mail and voice mail. Some marketers rely on catalogue marketing, or selling through catalogues mailed to a select list of customers or made available in stores Diseet response television marketing has two forms: direct response advertising or infomercials and home shopping channels, Kiosks are information and ordering machines that direct marketers place in stores, airports, and other locations. Online marketing involves online channels and electronic commerce and is usually conducted through interactive online computers systems, which electronically Tink consumers with sellers. 814. Compare the two types of online marketing channels and explain the effects of the Internet on electronic commerce. The two types of online marketing channels are commercial online services and the Internet. Commercial online services provide online information and marketing Services to subscribers for a monthly fee. The Internet is a vast global and public web of computer networks. In contrast to commercial online services, use of internet is free anyone with aPC, a modem, and the right software can browse the internet and obtain or share information on almost any subject and to interact with other users, The explosion of Intemet usage has created a new world of electronic commerce, 2 term that refers to the buying and selling process that is supported by electronic means. In this process, electronic markets become “marketspaces” in which sellers offer products and services electronically whereas buyers search for information, ‘identify theit wants and needs, and then place orders using credit card or other form of electronic payment. 5, Identify the benefits of online marketing to consumers and marketers and the four ways marketers can conduct online marketing. For consumers, online marketing is beneficial for many reasons. It is interactive, immediate, and provides access to an abundance of comparative information about Products, companies and competitors. Marketers also benefit from online maricting, For them, it helps consumer relationship building, reduces costs, increases efficiency, provides more flexibility, and is in the form of the Internet, a global medium that enables buyers and sellers in different countries to interact with each other in seconds. Marketers can conduct online marketing by creating, an electronic storefront, placing ads online; participating in Intemet forums, newsgroups, or “Web communities”; or using online e-mail or webcasting, 6. Discuss the public policy and ethical issues facing direct marketers, Direct marketers and their customers have typically forged mutually rewarding relationships. However, there remains a potential for customer abuse, ranging from irritation and unfair practices to deception and fraud. In addition, there have been growing concems about invasion of privacy, perhaps the most difficult public policy issue currently facing the direct market industry, 82LECTURE XI ‘THE GLOBAL MARKETPLACE Globalisation has been defined as the integration of economies. A final thrust is ‘Political Union’ in which sovereignty is sometimes subsumed to the good of the union. Phrases such as: GATT - General Agreement on Tariffs and Trade WTO =: World Trade Organization NAFTA - North American Free Trade Association EU - European Union CARICOM - Caribbean Community and Common Market OPEC - Organization of Petroleum Exporting Countries FTAA - Free Trade Agreement of the Americas are common place in their relevance. ‘The crops of wheat in the USA and Russia determines the price of bread in Jamaica, Crime in Jamaica adversely affects tourism and foreign direct investment. A war in the Middle East impacts on the Jamaican budget. The foreign exchange rate affects all Jamaicans. The GATT Agreement and WTO implementation along with the information technology and improvement in transportation ail serve to bring the ‘global” market to the domestic market. Think about you and you recent purchase or preferred purchases. The global market place is here and you must be ready for the interface. Firms which operate globally achieve lower cost and higher brand image. However, considering variable exchange rates, unstable goverament, protectionist tariff and trade barriers as well as cultural factors global marketing is risky. Companies entering the global marketplace must consider, (1) The global market environment (2) Whether to go global or not? (3) Which of the global markets will it enter? (4) How will the company enter the markets? (5) What global marketing programme should a company use? (©) What sort of global marketing organization will serve the company? A Global Industry (Petroleum) is one in which the strategic positions of firms in the industry depends on their global position. A global firm operates in more than one country, experiences economies of scale in Production, Distribution, Marketing,co R&D, and Finance. Brand and reputation exposure not available to domestic firms publicizes these companies. ‘The Global Marketing Environment reflects a situation where; (A) World economies are globalised (B) Intemational Companies have grown in numbers and sizes (C) The International Finance institutions are becoming trade friendly (P)GATT, WTO and reduction in trade and tariff barriers (quota, embargo, exchange control) and non-tariff barriers ‘Tariff is a tax levied by a government against certain imported products. Tariffs are designed to raise revenue or protect domestic firms or industry. Quota is a limit placed on the emount of goods an importing company will accept in certain product categories. Embargo Is a ban on imports on certain products or from certain countries Exchange Control is government limits on the amount of foreign exchange with other countries and on the exchange rate against other countries Non Tax Trade Barriers are cultural reaction to certain products and services which manifest themselves in low product viability A country’s economic environment reflects the country’s attractiveness as a market (A) What kind of industrial Structure ~ Subsistence, Raw material exporting, industrializing economies, Industrial economies. (B) What kind of Income Distribution (Low- Medium-High) A country’s Political & Legal Environment can be influencing What are the attitudes to global business, Government Bureaucracy, Political Stability, Monetary Regulation? A culture is a most pervasive influence (Trinidad vs Jamaica). 2. Whether to go Global or Not? (1) Can we gain sales and other economies? (2) Is our domestic market structurally strong? (3) Are there higher profit opportunities abroad? (4) Will it reduce our dependence on any one market? (5) Do we have the resources to effectively enter? 3. Which of the Global Markets will it enter? ‘The decision depends on many factors including (2) What are the company's’ marketing objectives and policies? (2) What volume of sales is required? (3) How many countries will the firm enter? (4) What types of Countries? Questions on the market size, growth, cost of doing business, competitive advantage and risks must be answered 4. How will the company enter the market? There are many marketing entry strategies the firm may use: 841. Exporting: exporting products and selling through middlemen (indirect exporting) or using the company's own organizational branches departments sales representative or agents (direct exporting) Joint Venturing: entering the market by joining foreign companies to produce or market a product or service, Licensing: Charging a fee or royalty to a firm using the company’s manufacturing process, products, trademark Patents etc, Little risk but maintaining control of license is important. 4, Contract Manufacturing: Contracting with foreign manufacturers to produce the product or services. Decreased control over manufacturing process but fast start up is ensured. 5. Management Contracting: domestic company supplies the management know how to a foreign company which supplies the capital. Domestic company exports management services. 6. Joint Ownership: Foreign direct investments in which the firms shares. ownership and control. 7. Foreign Direct Investment: Developing foreign based assembly or manufacturing facilities. Advantages: lower cost labour and raw material, improve image, and create jobs, full control over investments What Global Marketing should the company use? Standardized Marketing Mix ~ same combination of Product, Place, Promotion and Price as its Domestic operations. Adapted Marketing Mix — adjust the marketing mix elements to each intemational target markets 3, Three Product Strategies Available (1)Straight Product extension ~ no change in the product (2)Product Adaptation — adapting the product to meet local wants and conditions (3)Product Invention- the creation of new products or services for the foreign market ‘The Company may use some the same promotion strategies or adapt it for local Conditions. By communication adaptations the company fully adapts the advertising message to the local markets. ‘Companies can charge a uniform price worldwide, charge what consumers in each country can pay or use a standard mark up of cost everywhere . Company must not charge less than it cost to produce the product. If they did and it could be proved then the WTO can take action against this ‘dumping’ ‘The company may decide to design distribution channels to consider all the necessary links in distributing the seller’s product to the final buyer. Channels between and within nations must be considered. Since channels vary from country to country the firm needs to consider the number and types of middlemen available and the size and character of retail units abroad.‘What sort of Global Organization will serve the company? There are three basic formats: (J) Export Department — ship goods to foreign (2) International Division - Specialist in international business could be geographical, world products groups or international subsidiaries. (3) Global Organization — Global Marketers REVIEW OF CONCEPT CONNECTIONS — KOTLER AND ARMSTRONG In the past, U.S. companies paid little attention to international trade. If they could pick up some extra sales through exporting, that was fine. But the big ‘market was at home, and it teemed with opportunities. Companies today can no longer afford to pay attention only to their domestic market, regardless of its size. Many industries are global industries, and firms that operate globally achieve lower costs and higher brand awareness. At the same time, global marketing is risky because of variable exchange rates, unstable governments, protectionist tariffs and trade barriers, and several other factors. Given the potential gains and risks of international marketing, companies need a systematic way to make their international marketing decisions. 1. Discuss how the international trade system, economic, political-legal and cultural environments affect a company’s international marketing decisions. A company must understand the global marketing environment, especially the international trade system. It must assess each foreign market's economic, political- legal and cultural characteristics. The company must then decide whether it wants to 0 abroad and consider the potential risks and benefits. It must decide on the volume of intemational sales it wants, how many countries it wants to market in, and which specific markets it wants to enter, This decision calls for weighing the probable rate of return on investment against the level of risk 2. Describe three key approaches to entering inter- national markets. The company must decide how to enter each chosen market- whether through exporting, joint venturing, or direct investment. Many companies start as exporters, move to joint ventures, and finally make a direct investment in foreign markets, In exporting, the company enters a foreign market by sending and selling products through international marketing intermediaries (indirect exporting) or the company’s ‘own department, branch, or sales representative or agents (direct exporting). When establishing a joint venture, a company enters foreign markets by joining with foreign companies to produce or market a product or service. In licensing, the company enters a foreign market ~ contracting with a licensee in the foreign market, offering the right to use a manufacturing process, trademark, patent, trade secret, of other item of value for a fee or royalty. 863. Explain how companies adapt th markets Companies must also decide how much their products, promotion, price, and channels should be adapted for each foreign market. At one extreme, global companies use a standardized marketing mix worldwide. Others use an adapted marketing mix, in which they adjust the marketing mix to each target market, bearing more costs but hoping for a larger market share and return, marketing mixes for international 4. Identify the there major forms of international marketing organization. The company must develop an effective organization for international marketin; ‘Most firms start with an export department and graduate to an international division. A few become global organizations, with worldwide marketing planned and managed by the top officers of the company. Global organizations view the entire world as a single, borderless market. 87o LECTURE XI SOCIAL RESPONSIBILITY AND MARKETING ETHICS In trying to find an appropriate definition of “Ethies” I visited with trustworthy Oxford Concise and came away with two- (1) The Science of morals in human conduct (this one begs the questions, what are morals?) and (2) A set of moral principles (whose and what culture?) There are no universally accepted definition of ethics. The philosopherSexamined two different groups of theories, Teleological and Deontological Theory.” (1) Teleological Theory ‘The moral worth of behaviour is determined by its consequences (war-what is it good for?) One’s choice is based on what is best for everyone involved. How can anyone presume to know what is best? These smacks of Rousseau’s common will Utilitarianism a (Teleological theory) reflects the greatest good for the greatest number (shades of Marshall). Hence from a marketing point of view itis ethical for company to conceal potential negative consequences if the majority of consumers benefit and only a minority could suffer dire consequences. Try admitting this in the world today Utilitarian ethics are evaluated on a cost/benefit analysis ie. as long as the benefits to society (or a specific segment) exceeds the cost, the behaviour is considered ethics Again, this barometer speaks to the Jamaican ideal “money and power” are kings. Companies could then conceal the danger to construction workers in asbestos removal from school buildings since the action of removal benefits future generations of school children. Does that means that a bus driver, who swerves to avoid hitting a small child but overturns the bus injuring some passengers should be charged for negligent driving? Is it ethical to mandate, maximum occupancy on buses when the rigid application of that number causes some workers to be late for work and lose their job? Who measures the levels of advantages to ascertain the proper way? 2) Deontological Theory Deals with methods and intentions involved in a particular action and Places greater importance on personal and social values rather than economic values ‘The Deontological theory expresses the notion of ethical behaviour through the golden rule. “ Do not do unto others what you would not have others do unto you.” The Deontological theory is now receiving major attention We study consumer behaviour in order to understand how and why consumers make purchase decision, These insights allow marketers to design more effective marketing strategies. However there is concem that an in- depth 88understanding of human behaviour may allow unethical marketers to exploit human vulnerabilities giving them (Unethical Marketers) un-fair advantages. But the consideration of ethics should not find resolution in cost benefit analysis. Adulthood is a little late to start learning ethics, Value systems are developed early in life. One cannot expect the marketer to act outside his or her own norm when short or medium term objectives, e.g, profits, reduction in cost, increased productivity and increased sales’ engender the adoption of existing or social or short ~ medium term objectives. When marketers have a strong sense of ethics or social responsibility these values will prevail in their business dealings, throughout their business dealings. Consideration of Ethics must not be confined to the marketers only. Consumers in their behaviour, in their actions or reactions have responsibilities to act ethically. Consider if you will the theory that in Jamaica the lack of integrity or expectations for unethical behaviour inflates cost 30%. Ethical behaviour is a two ‘way ~street, it is a mutually beneficial practice, habit, culture. For the marketing process to work beneficially for all in the society, marketers and consumers must understand and practice ethical behaviour. In some situations it is imperative for influences to be brought to bear to influence appropriate behaviour. But what is appropriate behaviour? In the 50°s and 60°s consideration for the Bauxite Industry were the availability of the natural resources and the attendant benefits to society or segments of the society, There was minimal consideration for environmental effects ‘Now, some of the prominent advertising for the industry reflects restoration of Land for Agricultural business, Public announcement of “Accident — Free Days” negotiated terms for the working environment and Long Term postulations of the Industry’s benefit to society Accordingly we can delineate influence being brought to bear on influencing appropriate behaviour and enhancing ethical practices. For the purpose of this course we will address these influences under two considerations: (1) “The belief that ethics and social responsibility should be an integral components of every marketing decision and embodied in a revised marketing concept - the societal marketing concept — which calls on marketers to fill the needs of their target market in ways that improve society as a whole.” (2) Government and citizens actions to promote consumers’ and societies? benefits and curb marketing ills. With the Government we will examine Regulations (Laws) Consumer Education and Incentive Methods. With the citizens we will view consumerism and environmentalism as the affect marketing strategies. ‘The Social Marketing Concept, if we start from the premise that companies prosper when society prospect; suggest that we would be better off if social responsibility was an integral component of every marketing decision. ‘The Societal 39Marketing Concept requires that marketers adhere to principles of social Fesponsibility in marketing their goods and services. Here marketers not only satisfy the needs and wants of consumers more effectively and efficiently than competitors but they do so in a way, which preserves and enhances the well being of the consumers and society. Societal marketing therefore is defined as “Marketers filling the needs and wants of the targeted consumer in ways that improve society as a whole while filling the objectives of his/her organization”. ‘The Societal Marketing Concept questions, whether the pure marketing concept the (satisfying needs and wants of consumers) is adequate in today’s situation of environmental problems, resource shortages, population growth, world-wide economic problems and neglected social service. “Societal Marketing” requires a long term perspective. It recognizes that companies prosper in stronger and healthier societies and that companies which incorporate ethical behaviour and social responsibility in their business will attract and maintain loyal customer-support over the long run. Grace Kennedy's strategies unfold from their 25year plan projected to 2020 and it incorporates not only economic probabilities but social, cultural, technological and global probabilities “Sovietal Marketing” requires managers to balance three considerations in setting their marketing policies; company (profits), consumer (wants) and society's (interest), Society Human Welfare Consumers Company Company (Wants, Satisfaction) (Profits) Deterrents to societal marketing are reflecting by to-day's short-term business orientation, personified by objectives such as increased market share and quick profits, Managerial performance is usually measured and evaluated on the basis of these short-term results. Hence the effective marketer satisfies the short term needs tending to ignore their long-term impacts. Our Manufacturing community's short term trending now places them at tremendous competitive disadvantage. 90Additionally; Unelected Business Executives determine the context of their business or the current environment of their business,-“Probe “championed the scenic value of HLS. property and waterfalls and summed their opinion that it was g00d that the government did not rechannel the waterfalls for power but declared the area a “National Resource”. One may be tempted to ask whether the decision was made with a view to the Tourist dollars. Another consideration is the perception of Johnson & Johnson $240 million recall cost in the Tylenol situation. Was that strategy to avoid Legal consequences even through Johnson & Johnson believed it to be a case of outside tampering or was it in social interests. Whatever the consideration Tylenol is now the US leading brand of pain relievers and Johnson Johnson is one of America’s most admired company for community and environmental responsibility and one of the most profitable, Public Policy and Consumer Protection New social policies affecting marketing are usually the outgrowth of: (1) Market place abuses brought to the attention of policy makers through the media, consumer advocacy groups or consumers themselves and (2) Public recognition of the need for economic or social welfare, (Fair Competition Act 1993). ‘Typically Government use Regulation, consumer education and incentives to encourage desired behaviour by the company to the consumers. Regulations Policy makers prohibit certain types of marketing practices, (sale of unsafe products) influence the nature of certain practices (information on package labels) and prescribe other practices. (No misleading or deceptive advertising), Consumer Education Government can mandate that companies provide or they themselves can provide information to enhance the correctness of the consumer decision. Witness the label now adorning all cigarette packs, It is worthy to note the loss of benefits from this label when one considers that the economic situation in Jamaica results in minimal “pack” sales of cigarettes and consequently the non-effectiveness of the chief Medical Officers warning. Incentives are where government provides benefits such as tax deductions (Government Bonds, Tax incentives) to encourage certain behaviour. ‘Many newly adopted marketing strategies evolve from consideration of newly enacted Legislation i. Product safety, Truth labelling (real interest rate) Package to price (1 Ib =13 02) Nutritional Labelling (Low calorie) Quality (Grade A or B Labels and Return on bottles The stages in the social and Economic growth of countries mandate the relative importance of different social concerns, 91oo Consumerism 1s an organized social movement intended to strengthen the rights and power of consumers relative to sellers? Marketers could use this as an opportunity to serve customers better by listing and providing consumer information, education and protection. Environmentalism is an organized social movement seeking to minimize harm or practices. It calls for curbing consumer wants when their satisfaction would create too many environmental problems REVIEW OF CONCEPT CONNECTIONS - KOTLER AND ARMSTRONG In this chapter, we've closed with many important concepts involving marketing’s seeping impact on individual consumers, other business, and society as a whole. Responsible marketers discover what consumers want and respond with the right products, priced to give good value to buyers and profits to the producer. A marketing system should sense, serve, and satisfy consumer need and improve the quality of consumer’s lives. In working to meet consumer needs marketers may take some actions that are not to everyone’s liking or benefit. Marketing managers should be aware of the main criticisms of marketing. 1. Identify the major social criticisms of marketing, Marketing's impact on individual consumer welfare has been criticized for its high prices, deceptive practices, high-pressure selling, shoddy or unsafe products, planned obsolescence, and poor service to disadvantaged consumers. Marketing’s impact on society has been criticized for creating false wants and too much materialism, too few social goods, cultural pollution, and too much political power. Crities have also criticized marketing’s impact on other business for harming competitors and reducing competition through acquisitions, practices that create barriers to entry, and unfair competitive marketing practices 2. Define consumerism and environmentalism and explain how they affect marketing strategies. Concerns about the marketing system have led to citizen movements. Consumerism is an organized social movement intended to strengthen the rights and power of consumers relative to sellers, Alert marketers view it as an opportunity to serve consumers better by providing more consumer information, education, and protection. Environmentalism is an organized social movement seeking to minimize the harm done to the environment and quality of life by marketing practices. The first wave of modem environmentalisin was driven by environmental group and concerned consumers whereas the second wave was driven by the government, which passed Jaws and regulations governing industrial practices impacting the environment. Moving into the twenty —first century, the first two environmentalism waves are merging into a third and stronger wave in which companies are accepting 92,TABLE 2.2 Section Executive summary Curiont marketing situation, ‘Threats’ and opportunities, amalysig, Objectives and issues Marketing strategy, Action peegeams Budgets Controts XN Contents of a Marketing Plan Purpose review, helping top manayement to find the plan's major paints quickly. A table of contents | / Presents a brief summary of the rain goals and recommendations of the plan for management | should follow the executive summary. j Describes the target market and company’s position in it, including information about the ‘market, product performance, competition, and distribution, This section includes: + A market description that defines the market and major segments, then reviews eustemer | ‘needs and foctors in the marketing envircrment that may affect customer purchasing. | * A product review, thet shows sales, prices, and gross margins of the major products in the product line, * Areviow of competition, which identities major competitors and assesces thelr market Positions and strtegies for product quality, pricing, distelbution, ane promotion, + A review of distribution, which evaluatos recent sales trends and other developments in ‘major distribution channels ‘Assesses major threats and opportunities that the product might face, helping management to antleipate important positive or negative developments that might have an impact on the firm and its stategies, States the marketing objectives that the company would tike to attain during the ptan’s tera ‘and discusses key issues tat will affect their attainment. For example, if the goal is to ‘achieve 0 15 percent meriet share, this section laoks at how this goal might be achieved. uiines the broad marketing log by which the business unit topes to achieve its marketing Cbjectives and the specific of target markets, positioning, and marketing expenditure levels. | outlines specific strtegies for each marketing-mix element and explains how each responds {othe threats, opportunities, and critical Issues spelled out earlier in the plan. Spells aut how marketing strategies will be turned into specific action programms that answer the following questions: What will be done? Wher will it be done? Iho is responsibie for doing U1? How much wil it cost? Details a supporting marketing budget that is essentially a projected poflt-and-loss statement. ' shows expected revenues (forecasted number of units sokd and the average net price) and expected costs {of production, distibution, and marketing). The difference is the projected profit, Once approved by higher managemént, the budget becomes the basis for materials buying, production scheduling, personnel planning, and marketing operations. Cutines the control that will be used to moniter progress and allow higher man review implementation results and spot products that are not meeting their goals,