Written assignment 3 ( Samsung)
PLEASE FOLLOW ALL INSTRUCTIONS!!!!!!!!!!!!!!!!!
FORMAT & WRITING
Each writing assignment will require you to respond to four questions total (two in Part 1 and two in Part 2).You must respond to all four questions, or the assignment will be unsatisfactory.
Each assignment should be approximatelyfour to five pages of double-spaced text in length. A page is approximately 250 words. You may attach exhibits if you wish. More pages are acceptable, however, fewer than three pages is not satisfactory
Use a minimum of six (6) references, four (4) of them dated 2016 to the present.
Use a simple 12-point font such as Times New Roman and black ink primarily. Use color where it enhances your ability to communicate your thoughts
A cover page is required. A references page is required.The cover page and references page are not included in the written analysis or the page count.
Be sure your name, writing assignment number, the date, and the name of your product or service are on the cover page of your writing assignment.
Use headings to separate topics (e.g., Part 1, 1. Creating Value for Customers
MRKT 310 Principles of Marketing
Week 6 Writing Assignment
Creating Offerings & Using Channels to Create Value for Customers
Learning Outcomes
Offering Type of consumer offerings.Student can describe an offering based on features, benefits, price, and costs of ownership. Student can suggest marketing strategy implications based on the type of consumer offering under examination.
Product lifecycle.Student can suggest potential marketing strategies based on the product or services lifecycle stage.
Marketing channel strategy. Student can outline a multi-channel distribution system and recommend a marketing channel strategy for a product or service offering.
Pricing strategy. Student can analyze a current pricing strategy and make recommendations for modifications.
Directions
Your job in this Writing Assignment is to develop marketing mix strategies to ensure a value offering for the target market you identified in the previous assignment.
We will be looking to see if you can apply the marketing concepts to the real world situation.Assume you now work for this company, and your goal it to help the company grow sales. We dont expect you to develop strategies based on insider knowledge of the product or service since you are most likely not employed by your product or services company.
Again, do not fall into the trap of simply reporting on the product or service. This is obvious because your assignment will look like a rewrite of the companys website. Dont be afraid to make strategy recommendations based on what you have discovered about the product or service, and how you think it can move forward. Be creative, take reasoned risks.
Always keep them in mind your products target market(s) from the previous paper when making your recommendations.
You will also have a chance to recommend new distribution and pricing strategies based on your new target market to meet their needs.
Prepare your assignment beginning with a title page with your name and the name of your product or service. Then answer each of the following questions (two in part 1 and two in part 2) in order and number the beginning of your response to each question. Do not repeat the question. Headings should separate the sections.
Part 1
Type of consumer offering. Describe your product or service offering as it is currently in terms of features and benefits, price and the total cost of ownership as discussed in the week’s readings. Is it more product dominant or service dominant? What are the tangible and intangible aspects? Based on the four categories of type of offerings discussed in course content, describe the category in which your product or service offering belongs. Based on your new target market, would that category of the offering change and if so, how? How would it change the marketing strategy?
Product lifecycle. In which stage of the product lifecycle is your product or service offering now? Would the changes described in number 3 above change the lifecycle stage and if so how? What would this mean to the lifecycle marketing strategy?
Part 2
Marketing channels & strategy. To the best of your ability, outline the marketing channels of your product or service offering as they currently exist. Refer to Figure 6.2 for some ideas. Most product and service offerings will have more than one channel, so your system should include at least two; for example (1) a direct channel for internet sales: manufacturer –> customer; and (2) an indirect channel such as manufacturer –> distributor –> wholesaler –> retailer –> customer. If your product or service only has only a direct channel, explain why. Would this channel strategy change as a result of your new target market? Why or why not?
Pricing strategy. Referring to the various pricing strategies outlined in the week’s readings, which one does your product or service currently use? Would you recommend any changes for your new target market? If so, how would you change it and why?
Week 6 Overview
Principles of Marketing
MRKT 310
Last week we covered the first element of marketing mix strategy, the offering. This week brings us to the second and third elements of marketing mix strategy, (2) distribution and (3) price. Because we are covering two important topics, you may need to devote a little more time to your readings.
Using Marketing Channels and Price to Create Value for Customers
Where the offering is and how it is priced communicates value to the customer
6.1 Marketing channels and channel partners
6.2 Typical marketing channels
6.3 Functions performed by channel partners
6.4 Marketing channel strategies
6.5 Channel dynamics
6.6 Demand planning and inventory control
6.7 Warehousing and transportation
6.8 The pricing framework and a firms pricing objectives
6.9 Factors that affect pricing decisions
Notice that most of our sections cover the subjects important to distribution, getting the offering from the manufacturer to the end user, with the last two topics devoted to pricing decisions.
6.1 Marketing channels and channel partners
Goal is to get a product to the customer when, where and how they want it.
Requires cooperating channel partners (or intermediaries) that actively promote and sell the product as it travels through the channels to the end customer.
Because of technology enhancements, distribution has become a much more important factor as companies now realize channel systems are integral to filling customer needs. Some universities have entire majors on distribution and logistics and it is a fertile career field.
Our goal here is to ensure you are keenly aware of the importance of selecting the channel members that deliver the offering at the right time, in the right quantity, and at the right place.
6.2 Typical marketing channels
Two major types of channel systems
Direct channel from producer to consumer with no intermediaries (farmers market, internet if direct from the manufacturer)
Indirect channel Any number of intermediaries between producer and consumer
Many products have multiple channels
Direct channels were almost disappearing until the internet allowed customers to directly buy from manufacturers. You may notice that most tangible goods now have a direct channel as well as indirect channels of distribution. Think of Barnes & Noble with its network of retail stores as well as a vibrant online presence. Of course, the direct channels tend to cannibalized or steal business from the indirect channels even though the goal would be to increase sales by offering both channels. This creates channel conflict, which we will discuss shortly.
This diagram outlines the most common and basic of channel systems. In practice, however, channel systems can be quite complex and may be different based on different customer groups.
Question: Wouldnt fewer intermediaries be more efficient and effective to get products to consumer when, where and how they want them?
Answer: Some large retailers have been able to own more of the channels themselves (disintermediation).
But, the channel member functions have to be performed by some firm, but one firm can perform more than one channel functions.
Only include channel members that add value for the customer.
Walmart is a good example of a company that decided fewer players would be more cost effective, and it is able to offer customers lower prices as a result. Walmart tends to tell a manufacturer what they are willing to pay for their products. This gives Walmart the channel power the ability to dictate favorable terms with their suppliers because they have high volume buying power. It also means that Walmart takes on more of the channel functions themselves. Customers benefit from this arrangement and that is the goal, to create channel systems that add value for customers.
6.3 Functions performed by channel partners
Disseminating marketing communications and promote brands
Push versus pull strategy
Sorting and regrouping products
Storing and managing inventory
Distributing products
Assume ownership risk and extend credit
Share marketing and other information
These are the major functions that need to be performed by some firm in the channel.
We will cover push versus pull strategy later in Week 7, Integrated Marketing Communications. Basically, it is a strategy choice depending on whether you want the end user to demand channel members supply the product (pull), or if the marketing communications to stimulate sales is passed along from manufacturer down the chain (push).
6.4 Marketing channel strategies
Factors affecting the marketing channel strategy decisions
Type of customer
Type of product
Channel partner capabilities
Business environment and technology
Channels are designed primarily based on what customers want. This is tempered with other factors such as type of product, whether it is large and bulky and needs ground transportation, or if it is light and compact and can use air transportation. How far does the product have to travel to reach the end user, does it require refrigeration, and other questions need to be considered when developing channel strategy.
Channel integration
Vertical marketing system formal agreements to cooperate
Conventional marketing system no formal relationships, all independent operators
Horizontal marketing system Two companies at same channel level agree to cooperate (usually for compatible but non competing products)
Channels versus supply chains supply chains are channels that includes the firms involved in distributing the raw materials for manufacturing.
Value chain another term for supply chain BUT acknowledges the value adding role of the intermediary.
Refer to your weeks readings for explanations of these important channel concepts and be sure you leave with a firm grasp of a value chain a system created for the purpose of creating value for the customer. This means it fills a customers time, place, and possession needs.
Factors that affect a products intensity of distribution
intensive distribution = want to sell product in as many outlets as possible
selective distribution = selling products at select outlets in specific locations.
exclusive distribution = selling products through one or very few outlets
There are three general categories of distribution intensity listed above. The choice of which of these a company selects says a lot about the offering. Rolls Royce doesnt want to have a dealership next to every Ford, GM, and Dodge dealership in town. A person who wants to purchase a Rolls Royce is willing to travel to a very limited number of exclusive dealerships. Its part of the personal value equation for that customer.
The choice also depends on the price of the product and whether the company needs to penetrate a market, then intensive distributions the right choice. Most grocery items fall into this category.
Selective is somewhere in between these two extremes. Check the readings for more details.
6.6 Demand planning and inventory control
Demand planning process of estimating how much product customers will buy from you so can plan production capacity to not run out
Inventory control process of ensuring have adequate supply of products on hand and in sufficient assortment to meet customer needs
Product tracking process to knowing where inventory is at all times
Part of distribution is to ensure the offerings are available when customers need them and in the right quantity. Companies do not want to store too much excess inventory even if would mean ability to meet any and all customer demand. Technology has made these three functions much more cost efficient and has added value for customers who get what they want when they want it.
6.7 Warehousing and transportation
Warehousing handles fluctuations in demand
Distribution centers a warehouse that focuses on moving product to various wholesalers, retailers or consumers
Transportation the logistics of moving goods via air, boat, rail, pipeline, plane or truck
The readings will give you a brief overview of these three concepts that completes our discussion on distribution.
6.8 Pricing framework and a firms pricing objectives
A framework for how to set prices
This illustration, which you can also find in the readings, shows the main elements of pricing and the types of concerns a company has when determining a price for its offerings. Notice the arrow depicting the order in which these concerns are addressed.
The price basement, or the lowest price, is usually some profit over break even. So those tasks of determining total costs and break even points is important. After that, pricing strategies have a lot ot do with the customer and their perception of price and the offering. These considerations result in a price ceiling, or the highest price customers would pay for an offering based on their personal value equation.
6.9 Factors that affect pricing decisions
How will customers perceive the price?
How does it compare to competitors?
Are there any external factors such as the economy, government laws or regulations that impact the price?
How much does it cost to create the offering?
Here are some of the questions the company asks when determining price based on consumer, competitive and external factors in addition to the break even point.
6.10 Pricing strategies
Introductory pricing
strategies
skimming
penetration
everyday low price
Sample pricing approaches
cost plus
markup
markdown
odd/even pricing
prestige pricing
leader pricing
sealed bid pricing
online auction
going rate price
price bundling
captive pricing
product mix pricing
two-part pricing
payment pricing
promotional pricing
price discrimination
Introductory pricing is difficult since actual demand has not been proven and the pricing decision is a little more complex based on projected as opposed to actual demand. Otherwise, the readings will discuss all of the various pricing strategies available to companies.
In practice, most companies use multiple pricing strategies. Consider an airline seat. Two people sitting on the same plane in the same aisle could have paid dramatically different prices for virtually the same seat and service: or a product could be bundled with another product with the combined price lower than buying both products separately.
You will recognize many of these pricing strategies from your own buying experiences. Some of these are more relevant to Business-to-Business marketing such as sealed bid pricing or captive pricing.
Week 6
Assessments
Week 6 Discussion Forum participation
Week 6 Writing Assignment
Week 6 Quiz
All due Tuesday
by 11:59 pm,
Eastern Time
Clearly where a product is distributed is crucial to a successful offering as the cartoon above illustrates. The offering, the price, and the marketing communications become irrelevant if the distribution is not customer focused.
Questions or concerns?
Be sure to take advantage of the General Discussion topic in the Week 6 Discussion Forum to ask any questions, get clarifications, or otherwise seek the advice and assistance of your faculty member.
As usual, use the General Discussion in the Week 6 Discussion Forum to post your questions and concerns. Week 6 Learning Activities.html
WEEK 6
1. Marketing Channels and Channel Partners
Many products begin selling in a direct channel, from producer directly to the end user. Once upon a time, all marketing was done via a direct channel. A farmer produced corn, sold it to a neighbor, or he bartered the corn for the neighbors wheat. We can still see a direct channel in action when we shop at roadside vegetable stands on our way to the beach. The Internet has resurrected the direct channel, the most compelling example being Dell Computers, which allows a customer to build a computer online, have it assembled to specifications, and then delivered.
Direct channels would be pretty impractical today, and most products now have complex channel systems. These are indirect channels of distribution. The best channel systems are designed with the customer in mind: how to get the right quality good to the end user most efficiently and effectively.
See how IKEA uses its channels to deliver low-cost furniture to its global customers. Week 6, “Using Marketing Channels and Price to Create Value for Customers” was derived from
Principles of Marketing, which was adapted by the Saylor Foundation under a Creative Commons
Attribution- NonCommercial-ShareAlike 3.0 Unported license without attribution as requested by the
work’s original creator or licensee. 2015, The Saylor Foundation. UMGC has modified this work and it is
available under the original license.
Week 6
Using Marketing Channels and Price to
Create Value for Customers
Sometimes when you buy a good or service, it passes straight from the producer to you. But
suppose every time you purchased something, you had to contact its maker? For some products
or services, such as a haircut, this would work. But what about the items you purchase at the
grocery store? You couldn’t begin to contact and buy from all the makers of those products. It
would be an incredibly inefficient way to do business.
Fortunately, companies partner with one another, alleviating you of this burden. So, for example,
instead of Procter & Gamble selling individual toothbrushes to consumers, it sells many of them
to stores, which then sell them to everyone.
The specific avenue a seller uses to make a finished good or service available for purchasefor
example, whether you are able to buy it directly from the seller, at a store, online, or from a
salespersonis referred to as the product’s marketing channel (or distribution channel). All of
the people and organizations that buy, resell, and promote the product “downstream” as it makes
its way to you are part of the marketing channel.
Likewise, price creates value for customers and is the way the company makes its revenue and
profit by exchanging value with the customer. When Chick-fil-A opens new locations, the company
offers the first 100 customers a free meal every week for a year. Customers camp out overnight to
get in line for the free meals. When KFC introduced its grilled chicken, the company put coupons
good for a free piece of chicken in many Sunday newspapers.
So how do sellers make any money if they always offer goods and services on sale or for a special
deal? Many sellers give customers something for free, hoping they’ll buy other products, but a
careful balance is needed to ensure profit.
Price is the only marketing mix variable or part of the offering that generates revenue. Buyers
relate the price to value. They must feel they are getting value for the price paid. Pricing decisions
http://www.saylor.org/site/textbooks/Principles%2520of%2520Marketing.pdf
http://www.saylor.org/site/textbooks/Principles%2520of%2520Marketing.pdf
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are extremely important. So how do organizations decide how to price their goods and services?
This week, we explore both distribution and price as a means to add value for customers.
6.1 Marketing Channels and Channel Partners
LEARNING OBJECTIVES
1. Explain why marketing channel decisions can result in the success or failure of products.
2. Describe the types of organizations that work together as channel partners and what each does.
Today, marketing channel decisions are as important as the decisions companies make about the
features and prices of products (Littleson, 2007). Consumers have become more demanding.
They are used to getting what they want. If you can’t get your product to them when, where, and
how they want it, they will simply buy a competing product. In other words, how companies sell
has become as important as what they sell (CBSNews.com, 2007).
The firms a company partners with to actively promote and sell a product as it travels through its
marketing channel to users are referred to by the firm as its channel members (or partners).
Companies strive to choose not only the best marketing channels but also the best channel
partners. A strong channel partner like Walmart can successfully promote and sell a product that
might not otherwise turn a profit for its producer. In turn, Walmart wants to work with strong
channel partners it can depend on to continuously provide it with great products. By contrast, a
weak channel partner, like a bad spouse, can be a liability.
The simplest marketing channel consists of just two partiesa producer and a consumer. Your
haircut is a good example. When you get a haircut, it travels straight from your hairdresser to you.
No one else owns, handles, or remarkets the haircut before you get it. However, many other
products and services pass through multiple organizations before they get to you. These
organizations are called intermediaries (or middlemen or resellers).
Companies partner with intermediaries not because they necessarily want to (ideally they could
sell their products straight to users) but because the intermediaries can help them sell the
products better than they could working alone. In other words, they have some sort of capabilities
the producer needs: contact with many customers or the right customers, marketing expertise,
shipping and handling capabilities, and the ability to lend the producer credit are among the types
of help a firm can get by using a channel partner.
Intermediaries also create efficiencies by streamlining the number of transactions an organization
must make, each of which takes time and costs money to conduct. As Figure 6.1, “Using
Intermediaries to Streamline the Number of Transactions” shows, by selling the tractors it makes
through local farm machinery dealers, manufacturer John Deere can streamline the number of
transactions it makes from eight to just two.
Figure 6.1 Using Intermediaries to Streamline the Number of Transactions
The marketing environment is always changing, so what was a great channel or channel partner
yesterday might not be a great channel partner today. Changes in technology, production
techniques, and your customer’s needs mean you have to continually reevaluate your marketing
channels and channel partners. Moreover, when you create a new product, you can’t assume the
channels that were used in the past are the best ones (Lancaster & Withey, 2007). A different
channel or channel partner might be better.
Consider Microsoft’s digital encyclopedia, Encarta, which was first sold on CD and via online
subscription in the early 1990s. Encarta nearly destroyed Encyclopedia Britannica, a firm that had
dominated the print encyclopedia business for literally centuries. Ironically, Microsoft had
actually tried to partner with Encyclopedia Britannica to use its encyclopedia information to make
Encarta but was turned down.
But today, Encarta no longer exists. It’s been put out of business by the free online encyclopedia
Wikipedia. The point is that products and their marketing channels are constantly evolving.
Consequently, you and your company have to be ready to evolve, too.
Types of Channel Partners
Let’s now look at the basic types of channel partners. To help you understand the types of channel
partners, we will go over the most common types of intermediaries. The two types you hear about
most frequently are wholesalers and retailers. Keep in mind, however, that the categories we
discuss in this section are just thatcategories. The lines between wholesalers, retailers, and
producers have begun to blur. Microsoft is a producer of goods, but it has opened its own retail
stores to sell products to consumers, much as Apple has done (Lyons, 2009). Walmart and other
large retailers now produce their own brands and sell them to other retailers. Similarly, many
producers have outsourced their manufacturing, and although they still call themselves
manufacturers, they act more like wholesalers. Wherever organizations see an opportunity, they
are beginning to take it, regardless of their positions in marketing channels.
Wholesalers
Wholesalers obtain large quantities of products from producers, store them, and break them
down into cases and other smaller units more convenient for retailers to buy, a process called
“breaking bulk.” Wholesalers get their name from the fact that they resell goods “whole” to other
companies without transforming the goods. If you are trying to stock a small electronics store, you
probably don’t want to purchase a truckload of iPads. Instead, you probably want to buy a smaller
assortment of iPads as well as other merchandise. Via wholesalers, you can get the assortment of
products you want in the quantities you want. Some wholesalers carry a wide range of different
products; others carry narrow ranges of products.
Most wholesalers “take title” to goodsor own them until purchased by other sellers. Wholesalers
such as these assume a great deal of risk on the part of companies farther down the marketing
channel. For example, if the iPad you plan to purchase is stolen during shipment, damaged, or
becomes outdated because a new model has been released, the wholesaler suffers the lossnot
you. Electronic products, in particular, become obsolete very quickly. Think about the cell phone
you owned just a couple of years ago. Would you want it today?
Retailers
Retailers buy products from wholesalers, agents, or distributors and then sell them to
consumers. Retailers vary by the types of products they sell, their sizes, the prices they charge, the
level of service they provide consumers, and the convenience or speed they offer. You are familiar
with many of these types of retailers because you have purchased products from them.
Supermarkets, or grocery stores, are self-service retailers that provide a full range of food
products to consumers, as well as some household products. Supermarkets can be high, medium,
or low range in terms of the prices they charge and the service and variety of products they offer.
Whole Foods and Central Market are grocers that offer a wide variety of products, generally at
higher prices. Midrange supermarkets include stores such as Albertsons and Kroger. Aldi and
Sack ‘n Save are examples of supermarkets with a limited selection of products and service but
low prices. Drugstores specialize in selling over-the-counter medications, prescriptions, and
health and beauty products, and offer services such as photo developing.
Convenience stores are miniature supermarkets. Many of them sell gasoline and are open 24
hours. Often they are located on corners, making it easy and fast for consumers to get in and out.
Some of these stores contain fast-food franchises such as Subway. Consumers pay for the
convenience in the form of higher markups on products.
Specialty stores sell a certain type of product, but they usually carry a deep line of it. Zales,
which sells jewelry, and Williams-Sonoma, which sells an array of kitchen and cooking-related
products, are examples of specialty stores. The personnel who work in specialty stores are usually
knowledgeable and often provide customers with a high level of service. Specialty stores vary by
size. Many are small. However, giant specialty stores called category killers have emerged.
A category killer sells a high volume of a particular type of product and, in doing so, dominates
the competition, or “category.” Petco and PetSmart are category killers in the retail pet-products
market. Best Buy is a category killer in the electronics-product market.
Department stores, by contrast, carry a variety of household and personal types of
merchandise such as clothing and jewelry. Many are chain stores. The prices department stores
charge range widely, as does the level of service shoppers receive. Neiman Marcus, Saks Fifth
Avenue, and Nordstrom sell expensive products and offer extensive personal service. Department
stores such as JCPenney, Sears, and Macy’s charge midrange prices, and offer a midrange level of
service. Walmart, Kmart, and Target are discount department stores with cheaper goods and a
limited amount of service.
Superstores are oversized department stores that carry a broad array of general merchandise as
well as groceries. Banks, hair and nail salons, and restaurants such as Starbucks are often located
within these stores for the convenience of shoppers. You have probably shopped at a SuperTarget
or a huge Walmart with offerings such as these.
Warehouse clubs are supercenters that sell products at a discount. They require people to
become members by paying an annual fee. Costco and Sam’s Club are examples. Off-
price retailers are stores that sell a variety of discount merchandise that consists of seconds,
overruns, and the previous season’s stock other stores have liquidated. Big Lots, Ross Dress for
Less, and dollar stores are off-price retailers.
A new type of retail store that turned up in the last few years is the pop-up store. Pop-up stores
are small, temporary stores. They can be kiosks that temporarily occupy unused retail space. The
goal is to create excitement and “buzz” for a retailer that then drives customers to their regular
stores. In 2006, JCPenney created a pop-up store in Times Square for a month. Kate Coultas, a
spokesperson for JCPenney, said the store got the attention of Manhattan’s residents. Many
hadn’t been to a JCPenney in a long time. “It was a real dramatic statement,” Coultas said. “It
kind of had a halo effect” on the company’s stores in the surrounding boroughs of New York City
(Austin, 2009).
Not all retailing goes on in stores, however. Nonstore retailingretailing not conducted in
storesis a growing trend. Door-to-door sales; party selling; selling to consumers via television,
catalogs, the Internet, and vending machines; and telemarketing are examples of nonstore
retailing. So is direct marketing. Companies that engage in direct marketing develop and send
promotional materials such as catalogs, letters, leaflets, e-mails, and online ads straight to
consumers urging them to contact their firms directly to buy products.
6 . 1 K E Y T A K E A W A Y
The specific way in which you are able to buy a product is referred to as its marketing channel. Marketing
channel decisions are as important as the decisions companies make about the features and prices of
products. Channel partners are firms that actively promote and sell a product as it travels through its
channel to its user. Companies try to choose the best channels and channel partners to help them sell
products because doing so can give them a competitive advantage.
6.2 Typical Marketing Channels
LEARNING OBJECTIVES
1. Describe the basic types of channels in business-to-consumer (B2C) and business-to-business (B2B)
markets.
2. Explain the advantages and challenges companies face when using multiple channels and alternate
channels.
3. Explain the pros and cons of disinterm
