The Marketing Mix Chapter Outline Chapter 8 THE MARKETING MIX ...

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Estimate production needsShift storage costsTrade - given to participants in marketing channelCash - reflects credit costsAllowancesReductions in price given because something is due the consumerPrice discount for defect or damageTrade-in allowance given to trade on a new purchaseAdvertising allowance - encourage advertising by firm’s in the marketing channelRights of ConsumersBASIC RIGHTS OF CONSUMERSDanger Signals Indicating <strong>Marketing</strong> ProblemsINDICATOR INDICATIONSales ? Down from previous periodCustomers ? Walking out without buying? No longer visiting store? Returning more merchandise? Expressing more complaintsEmployees and ? Being slow to greet customerssalespeople ? Being indifferent to or delaying customerDanger Signals Indicating <strong>Marketing</strong> Problems (continued)INDICATOR INDICATIONEmployees and ? Not urging added or upgraded salessalespeople ? Having poor personal appearance? Lacking knowledge of store? Making more errors? Good ones leaving the companyStore image ? Of greed through unreasonable prices? Inappropriate for market area? Unclear, sending mixed signalsCredit1. Credit card companies.a. Very convenient.b. Major cost is a percent of purchase price.c. Risk free if rules are followed2. Business itself provides credit.a. Small businesses who know their customers.b. Larger businesses than can afford to have their own credit department or own creditcard.Costs involved in offering credit.1. Major cost is interest paid for use of borrowed funds or foregone earnings.2. Opportunity cost since cash which would have been collected could have beeninvested.3. Most difficult part of offering credit lies in the other costs which are not easily seen ormeasured.a. Bad debt loss.b. Restrict credit to those with the best credit records, requiring sizable downpayments or running credit checks.4. Credit person or department costly in terms of labor, records,and collecting past dueaccounts.Decision to offer credit not easy.1. Firms prefer cash purchases because its costs them less and is risk free.
2. Some firms avoid this problem by increasing the price of their goods by the amountneeded to cover the credit card company's charges and then giving discounts of equalamounts to cash customers.G. Benefits of offering credit are difficult to measurePlaceDistribution system should market product available to consumers in a manner consistent with theproduct, price and promotionIncludes all decisions that affect how, how much, where and whenImportant factorsLocationSize and timing of production relative to consumptionMarket ChannelsPath by which a firm’s products will travel to ultimate consumerDirect system - firm handles the distribution of it’s productsContracted system - dealer networkAdministered channel - no formal agreement between producer and distributorFirm through persistence insures it’s products are prominently displayed, promoted & pricedDominant firms have market powerMarket IntermediariesWholesalers - firms that sell to retailersMerchant wholesalers - own the productsWarehouse inventoriesProvide services including credit, delivery, pricing, accounting, store location, etc.Rack jobbers - place products on retailers shelvesBrokers (Agents) - do not own the productsRepresent seller’s product to buyersReceive sales commissionsPromotionA. Informs potential buyers of firm's products.B. Type of promotion used depends on three factors.1. Intended audience.2. Type of product.3. Kind of information conveyed.AdvertisingAdvertising - paid form of promotion.A. Most effective at delivering a common message to a large group of people.B. Cheapest form of promotion when cost is calculated on a per person basis.C. Largest users of advertising are the sellers of consumer products.1. Used to introduce new products or product changes.2. Encourage sales.3. Compare a product to other products.4. Inform consumers of special promotions.5. Keep product's name in consumer's mind.D. Effective advertising program must clearly define the audience.1. Choice of media will depend on intended audience.2. Even within a media, placement of advertising will depend on the intendedreceiver.E. Mailing lists of people with a high likelihood of being interested in a specific product areavailable.F. Generic advertising is used in commodities such as milk, beef, pork, and fruits.1. Groups of producers share the costs and benefits of advertising.2. Participation in the program is often mandatory.Sales PromotionGoalsConvince people to try new productsEncourage current customers to use product more frequently
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