Procurement and Sales

Procurement and Sales

part one of two

Johannes Dilpert
Hochschule Worms
Fachbereich Wirtschaft

Wintersemenster 2020

FAQs in times of Corona related to the International Center:

jdilpert@hs-worms.de https://www.hs-worms.de/corona/faqs-fuer-international-students/

Johannes Dilpert M.Sc. Wintersemester 2020

Procurement and Sales

Dear student,

first, I would like to introduce myself. My name is Johannes Dilpert.

Next to my job as a lecturer I am working for one of the 79 chambers
of industry and commerce in Germany. So, we have a constant
reference to practice during this course.

At present all of us are worry about corona virus.

I am sure you have heard about it. To make sure that we stay healthy
we are forced keeping distance. Nevertheless, we will go on this way
as good as it is possible. I would like to offer you some slides and
case studies witch you can edit at home.

The foil collection consists of two parts. Please process the first part
by 11.11.2020 and send it in bundles to jdilpert@hs-worms.de. You will
receive the second part after 11.11.2020. Please submit the second Johannes Dilpert M. Sc.
part in a bundled form by e-mail by 09.01.2021.

Please feel free to contact me if you have any questions suggestions

or worries about this lecture. Please use our Skype group.

Skype: https://join.skype.com/i4SNdwyFywkR

Johannes Dilpert M.Sc. Wintersemester 2020

Procurement and Sales

Structue of lecture and schedule

1. Objekt of marketing

2. Marketresearch
Part 1 is to be processed until 11.11.2020
3. Product policy

4. Price policy

5. Distribution policy
Part 2 is to be processed until 09.01.2021
6. Communication policy

Please send your results bundled in one PDF document to jdilpert@hs-worms.de

Johannes Dilpert M.Sc. Wintersemester 2020

Procurement and Sales

Acquirement of marketing theory

➢ Study of literature

➢ Newspaper
➢ FAZ
➢ Handelsblatt, etc.

➢ Exercises

Johannes Dilpert M.Sc. Wintersemester 2020

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Marketing: terminology

„Marketing as market oriented Management“

“In the classical interpretation marketing means

planning, coordinating on and controlling
of all the current and potential markets oriented
business activities”

[Meffert]

Johannes Dilpert M.Sc. Wintersemester 2020

 Procurement and Sales

Please fill in.

Marketing Sales
Definition

Objektive

Approach

https://www.virtualfarm.com/marketing-v-sales/

Johannes Dilpert M.Sc. Wintersemester 2020

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EXHIBIT 5-2 Strategic Capabilities of Procurement vs. Sales

Johannes Dilpert M.Sc. Wintersemester 2020

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Marketing: Historical development

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The role of Marketing

demand supply

s d

seller market buyer's market

d>s s>d

• When supply is HIGH an demand is LOW, the price will be low

• When demand is HIGH an Supply is LOW, the proce will be HIGH

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Case study 1
The discounter Lidl focuses more on quality

The best known and most popular discounters in Germany are still Aldi and Lidl, which pursue a consistent price-volume
strategy. “Lidl ist billig”; (transl. “Lidl is cheap")- the discounter has been advertising with this slogan for many years. But
now Lidl no longer wants to be just cheap, but is putting product range quality at the centre of its communication policy - a
step in the direction of its preference strategy?
Under the motto “Lidl lohnt sich” (transl. Lidl is worth it) Lidl is currently focusing not only on low prices but also
increasingly on the quality of its own range
Narrow and flat product ranges, cost-effective shop fitting, simple presentation of goods, self-service, extremely low
prices, which are mainly used for advertising in the print media - these are the classic features of the price-quantity
strategy in food retailing with which the discounters have been very successful for a long time. So what is behind Lidl's
current communication policy offensive, which uses TV and radio spots, print ads and the Internet to spread the message
that quality is Lidl's top priority?
Lidl has undergone a major change process in recent years. This also included expanding the product range - with the
focus on the quality and variety of our private labels,"; says Christoph Pohl, who is responsible for purchasing on the Lidl
management board. And explaining he adds: “In addition to good taste, freshness has top priority with us.” Efficient
distribution networks and a comprehensive quality assurance system are effective along the entire production and supply
chain: “We now want to communicate this quality awareness to the outside world.”

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Case study 1
For selected product ranges, Lidl explains to consumers through advertising and on the Internet what it means by
quality
What Lidl sees as quality should be communicated to customers in a way that is comprehensible to them. Among
other things, Lidl's own website provides a wealth of information on relevant quality aspects of selected product
ranges such as meat, bread, coffee, chocolate, fruit and vegetables and wine. For example, in a commercial, the
question is: “How do you actually recognize good chocolate?"; The answer: “Good chocolate can be recognized by the
best cocoa varieties and selected ingredients, by the melting, the smell and the crackling, which appeals to all the
senses. Good chocolate is recognized by its taste and price.”
Lidl's current quality offensive is aimed at creating genuine preferences for its own product range and thus attacking
the classic supermarkets such as Rewe, Edeka or tegut on the quality dimension. Johannes Berentzen, industry expert
at the Wieselhuber management consultancy, speaks of “trading up"; and refers to some developments that one
would not have expected from a discounter in the past. For example, the optical upgrading in shop fitting with
emotionally appealing presentation of the product ranges, but also the expansion of the product range into the
delicatessen area or the expansion of the wine offer.

Source:
http://www.faz.net/aktuell/wirtschaft/unternehmen/discounter-lidl-will-nicht-mehr-so-billig-sein-13432380.html (Stand: 24.07.2015)
https://www.lidl-lohnt-sich.de/schokolade.html (Stand: 24.07.2015)

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Case study 1

Questions:

1. Name and explain the classic features of the price-volume strategy in food retailing.
2. In your opinion, what is the difference between a discounter like Lidl and a full-range retailer
like EDEKA in terms of price-volume strategy
3. Lidl changes its slogan from: “Lidl is cheap"; to “Lidl is worth it";. Discuss possible reasons for
the strategy change. (a few sentences suffice)

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What does marketing involve?

“Marketing is the process of planning and executing the
conception, pricing, promotion and distribution of ideas, goods,
and services to create exchanges that satisfy individual and
organizational objectives.”
[American Marketing Association (AMA)]

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Assumptions about customer behavior

- Market Research Reports - Advertising studies

Market volume media research
Competitor analysis Advertising Tracking

- Product studies - Price studies

Concept Test Cost Analysis
Test markets price elasticities

- Buying behavior studies - Distribution studies

Preference measurement Distribution degree
Segmentation sales effectiveness

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Further influencing factors for Cust. Behavior

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Quality of Measurement
For any marketing research there are three important criteria.

• The objectivity of a measurement can only be guaranteed if different people who

independently measure the same empirical facts get at identical results.

• The reliability of a measurement is only given if identical measured values are obtained
when the same facts are measured repeatedly, i. e. the measurement must be free of
random errors. An important prerequest for reliability is the constancy of the investigation
conditions.

• The validity of a measurement is only guaranteed if exactly the empirical facts the
researcher claims to measure are measured, i. e. the measurement must be free of
systematic errors. An important prerequisite for the validity of a measurement is that the
results can be generalised, i. e. that the measurement results of the sample under
consideration can be transferred to the population (external validity).

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Marketing Mix

• quality, design • listprice,discounts

• brands • price differentiation
• product development • special offers

• distribution channels • advertising

• manufacturer trade • sales promotion
relationship • public relations

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Product policy

Definition: A product is the item offered for sale. A product can

be a service or an item. It can be physical or in virtual or cyber
form. Every product is made at a cost and each is sold at a price.
The price that can be charged depends on the market, the
quality, the marketing and the segment that is targeted. Each
product has a useful life after which it needs replacement, and a
life cycle after which it has to be re-invented.

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Case study 2
Not the products define the market, but the customer goal (job-to-be-done marketing)
In his research, innovation expert Clayton Christensen from Harvard Business School examines what makes
innovations successful, how to avoid flops and overcome barriers to innovation. Procter & Gamble has used his
knowledge and research approaches to increase their success rate of product innovations from 15% to 50%.
One of the most important challenges for marketing is the development of successful product innovations or the
avoidance of flops. One basis for this is the systematic analysis of relevant search fields for the solution of customer
problems. Many companies orientate their search for product ideas towards new product features. According to
Christensen, this question does not go far enough, especially when one considers the customer's goals or disregards
the intended use of the products - what for, in what situation do I want to use the product The core question in his
approach is: What job should the product do for the consumer (job-to-be-done marketing). So when asked about the
requirements for a new milk shake, you will certainly get completely different answers than if you link the question to
the relevant customer goal (the job the product is supposed to do): What does a milk shake have to be like in order to
be suitable for passing the time on a car trip? For many consumers, the benefit expectation for a product is derived
from the usage situation (on the car ride, after sports, when visitors come, etc.). Using numerous examples,
Christensen explains the importance of the goals that customers pursue when using products and the situations in
which the products are consumed.

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Case study 2
In England, cream cheese is considered healthy. So it is obvious to give children cream cheese in their lunch box.
However, as with yoghurt, conventional packaging easily breaks down and then causes dirt. You also need a spoon to
eat. So although the attitude towards a product is good, the situational context is a barrier. The Frubes brand used this
insight for a successful product innovation: it developed a cream cheese packaging that is robust and small enough for
a lunch box and from which the cream cheese can be consumed directly - without a spoon. With 18 million units sold
per year, Frubes has become the most successful product in this segment.
Which products come into question if we have the goal of eating healthily? Sure, the apple and the orange. Which
ones come into question if we have to eat something quickly? The apple and the bagel. We are very flexible in
developing products according to the target or To rearrange the job. We learn which products are suitable to achieve a
certain goal and have learned which product properties are important for this.
Source: http://scienceupdate.decode-online.de/sites/default/files/pdf/de_P_ScienceUpdate_3_2012.pdf (Stand: 10.8.2015)

Questions:
1. According to Christensen, what are the success factors for a product innovation? Name and describe them in a few
sentences.
2. Are you aware of other product flops? Choose a product flop of your choice and address the barriers to success in a
few sentences. Find a way to successfully establish the product on the market.

Johannes Dilpert M.Sc. Wintersemester 2020

Procurement and Sales

Product policy

Johannes Dilpert M.Sc. Wintersemester 2020

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Product Policy
Portfolio analysis

question mark Stars

Increase or skim hold / increase
market growth

Poor dogs Cash cow

skim or liquidate keep

relevant market share

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Price policy

Johannes Dilpert M.Sc. Wintersemester 2020

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Price policy

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Price policy

Price elasticity

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Preispolitik / Kontrahierungspolitik

Practice 1

X(p) = 25-2,5p be a price paragraph function. How great is the elasticity of demand at
the point p = 4?

Solution: The elasticity of demand at the point p = 4 corresponds to ℇ = – 2/3

Please show the calculation method.

Practice 2

X(p) = 20-5p be a price paragraph function. How great is the elasticity of demand at the
point p = 2?
What is the maximum sales price?

Solution 1: The elasticity of demand at the point p = 2 corresponds to ℇ = – 1

Solution 2: maximum sales price is p=2

Please show the calculation method.

Johannes Dilpert M.Sc. Wintersemester 2020

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Case study 3
Discount battle in the car trade
Consumers can look forward to high discounts in the German car market. This is the result of a recent study by
the CAR Institute of the University of Duisburg-Essen.
According to the scientists, the high discounts on new car purchases are primarily the result of the aggressive
pricing policy of volume manufacturers. For example, the market leader VW is granting additional discounts for 11
models, from the small car Up to Golf and Passat to the SUV Touareg. Around 31 percent of all new VW cars are
also registered with the manufacturer and dealers so that they can be sold as; “used cars”. A pricing policy that
allows significant discounts of up to 29 percent for Internet intermediaries makes life difficult for the dealers.
Competitors are trying to keep pace with the market leader. In order to meet the new competition on the Internet,
Ford had encouraged its dealers to offer their cars in the dealership on the same terms as on the Internet. This
action was intended to put the Internet intermediaries out of business but did not bring the hoped-for success.
According to the study, the Ford Fiesta, for example, is currently discounted more than any other model on the
German market. The level of discounts in the dealer operation has increased massively as a result of the campaign.
In addition, the Federal Cartel Office (Bundeskartellamt) is now also investigating Ford.

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Case study 3
Opel and Peugeot/Citroen are also targeted by the investigators because of a similar discount policy among dealers.
After all, Opel was recently able to reduce the proportion of car registrations. About 36 percent of all Opel brand
vehicles sold were registered to dealers, manufacturers or car rental companies. This is more than for any other
German brand, which the manufacturer attributes to increased sales in employee leasing.
Overall, however, the high proportion of own registrations, which are sold on the market at high discounts as used
cars, remains a problem for the industry. Although their share has fallen slightly to 29. 1 percent, it is still very high
overall. Volkswagen and BMW in particular did much more tricks here than in previous months.
Source:
http://www.handelsblatt.com/unternehmen/industrie/vw-ford-opel-rabattschlacht-im-autohaus/11879646.html

Questions:
1. Name and describe the approach of the major car manufacturers (e. g. VW as an OEM) to be able to offer your
vehicles at a reasonable price.
2. For what reasons do you think the Federal Cartel Office (Bundeskartellamt) investigates?

Johannes Dilpert M.Sc. Wintersemester 2020