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MARK 3000 Introduction to Marketing UGA Exam 2 Study Guide

by: Samantha Snyder

MARK 3000 Introduction to Marketing UGA Exam 2 Study Guide MARK 3000

Marketplace > University of Georgia > Marketing > MARK 3000 > MARK 3000 Introduction to Marketing UGA Exam 2 Study Guide
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Study guide contains key terms, reading notes supplemented with lecture notes, video links/notes, notes from guest speakers and information Grantham noted in class as "important" All information...
Principles of Marketing
Kimberly Grantham
Study Guide
Marketing, MARK, Grantham, uga, study, guide, samantha, Snyder, samanthasnyder
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This 23 page Study Guide was uploaded by Samantha Snyder on Monday October 3, 2016. The Study Guide belongs to MARK 3000 at University of Georgia taught by Kimberly Grantham in Fall 2015. Since its upload, it has received 6 views. For similar materials see Principles of Marketing in Marketing at University of Georgia.


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Date Created: 10/03/16
MARK 3000, Grantham Exam 2 Study Guide Chapters 10, 11, 12 and 15 “go through the book and add all bold/italicized words to your notes” Examples – Important – Stressed during lecture • 50 Multiple choices, more weight on research, product and branding than channels/logistics • Study: book, notes, Umano presentation notes, text definitions not covered in class, examples Chapter 10: Marketing Research Key Terms Marketing Research—a set of techniques and principles for systematically collecting, recording, analyzing and interpreting data that can aid decision makers involved in marketing goods, services or ideas Secondary Data—pieces of information that have already been collected from other sources and usually are readily available Primary Data—data collected to address specific research needs Sample—a group of customers who represent the customers of interest in a research study Data—raw numbers or facts Information—organized, analyzed, interpreted data that offer value to marketers Syndicated Data—data available for a fee from commercial research firms such as Information Resources Inc. (IRI), National Purchase Diary Panel and ACNielsen Scanner Data—A type of syndicated external secondary data used in quantitative research that is obtained from scanner readings of UPC codes at check-out counters Panel Data—information collected from a group of consumers Data Warehouse—large computer files that store millions and even billions of individual data Data Mining—the use of a variety of statistical analysis tools to uncover previously unknown patterns in the data stored in databases or relationships among variables Churn—the number of consumers who stop using a product or service, divided by the average number of consumers of that product or service Qualitative Research—internal research methods, including observation, following social media sights, in-depth interviews, focus groups and projective techniques Quantitative Research—structured responses that can be statistically tested to confirm insights and hypotheses generated via qualitative research or secondary data Observation—an exploratory research method that entails examining purchase and consumption behaviors through personal or video camera scrutiny Sentiment Mining—data gathered by evaluating customer comments posted through social media sites like Facebook and Twitter In-Depth Interview—an exploratory research technique in which trained researchers ask questions, listen to and record the answers, and then pose additional questions to clarify or expand a particular issue 1 Focus Group Interviews—a research technique in which a small group of persons (usually 8 to 12) comes together for an intensive discussion about a particular topic, with the conversation guided by a trained moderator using an unstructured method of inquiry Survey—a systematic means of collecting information from people that generally uses a questionnaire Questionnaire—a form that features a set of questions designed to gather information from respondents and thereby accomplish the researcher’s objectives; can be structured or unstructured Unstructured Questions—open-ended questions that allow respondents to answer in their own words Structured Questions—closed-ended questions for which a discrete set of response alternatives, or specific answers, is provided for respondents to evaluate Experimental Research (Experiment)—a type of conclusive and quantitative research that systematically manipulates one or more variables to determine which variables have a causal effect on another variable Experiment—see experimental research Biometric Data—digital scanning of the physiological or behavioral characteristics of individuals as a means of identification Lecture Notes • The Research Process 1. Defining objectives and research needs 2. Designing the research 3. Data collection process 4. Analyzing data and developing insights 5. Action plan and implementation • Types of Data o “know the difference between primary and secondary data like the back of your hand” o Primary: data collected specifically for this research, creates new information, usually costs $ to obtain o Secondary: pieces of information collected prior to this research project, “looking things up,” spend only time and energy to obtain • External Secondary Syndicated Data o Be familiar with… § ACNielsen (focused on trend of mass customization) § SymphonyIRI § JD Power and Associates § Simmons Market Research (consumer behavior) § Slide 8, Marketing Research PowerPoint • Internal Secondary Data o Data Warehouse 2 o Ex. Target— § How target got put on the map o Ex. Kroger—scanner data from Kroger cards • Primary Data Collection o Expensive!!! LOTS of time/energy/money o Observation—Elizabeth Herschel, ethnographic research, first study done on flea markets o Ex. Eye-tracking— o Ex. Nationwide— bowl-somber-bowl/296942/ • In-depth Interviews o Qualitative data is usually done before quantitative data o Ex. AT&T Campaign—“between two worlds” • Focus Groups o People are giving up their time to be there, you must offer some type of incentive o Ex. Dominos—“Pizza Turnaround Documentary” § In the 80s, dominos was the fastest growing fast food company § “we want people to love our pizza” § started totally over § “not about us being right, its about us having better food” § focus groups • Quantitative Research o “pay special attention to pros and cons of different types of quantitative research in your reading” o Experiments § Majority of ad agencies are compensated based on performance § Very hard to isolate impact, but usually looking at sales or awareness o Surveys § Telephone interviews, mail surveys, internet surveys, mall intercept interviews, in-person interviews § Types of questions • Structured “know name of each type” o Likert Scale: strongly agreeàstrongly disagree o Semantic Differential: excellent-------------awful • Unstructured § Questions to avoid • Leading: “don’t you believe that….?” “Wouldn’t you think….?” • Double barreled: asking two unrelated questions as if they are related 3 • Jargon or inappropriate terminology: use common language rather than industry words,” buyer beware” instead of “caveat emptor” § Also consider order of questions! Sensitive, personal questions go at the end (age, gender, income, education level, etc.) o Scanner/panel § Scanner: Can be primary (Ex. price drop from Today-Friday, look at how it affects sales) or secondary (Ex. look at sales from last month), uses UPCs § Panel: Over time!! Numerous data collection opportunities over an extended period of time • Sampling Issues for Primary Data o Probability sampling methods § Simple random Sampling (SRS) • List of 810 #s from registrar, put the # of people you need in a random number generator, let it pick for you § Systematic Random Sampling th • Go down list of random 810 #s and pick every n person § BOTH give every person an equal chance of being picked § Stratified Sampling • Where grouping takes place before random sampling occurs o Non-probability sampling method—cannot use to generalize to a larger population § Convenience sampling (only nonprobability sampling method we are responsible for) –when a grad student comes to our class to do a survey 4 Chapter 11: Product, Branding, and Packaging Decisions Key Terms Core Customer Value—the basic problem solving benefits that consumers are seeking Actual Product—the physical attributes of a product including the brand name, features/design, quality level and packaging Associated Services— (also called augmented product) the non-physical attributes of the product including product warranties, financing, product support, and after-sale service Augmented Product—see associated services Consumer Products—products and services used by people for their personal use Specialty Products/Services—products or services toward which the customer shows a strong preference for and for which he or she will expand considerable effort to search for the best suppliers Shopping Product/Services—those for which customers will spend time comparing alternatives, such as apparel, fragrances, and appliances Convenience Products/Services—those for which the consumer is not willing to spend any effort to evaluate prior to purchase Unsought Products/Services—products and services consumers either do not normally think about buying or do not know about Product Mix— (see product assortment) the complete set of all products offered by a firm Product Lines— (also called variety) groups of associated items, such as those that consumers use together or think of as part of a group of similar products Breadth—number of product lines offered by a firm, Depth—the number of categories within a product line Brand Equity—the set of assets and liabilities linked to a brand that ass to or subtract from the value provided by the product or service Brand Awareness—measures how many consumers in a market are familiar with the brand and what it stands for; created through repeated exposures of the various brand elements (brand name, logo, symbol, character, packaging, or slogan) in the firm’s communications to customers Perceived Value—the relationship between a product’s or service’s benefits and its cost Brand Associations—the mental links that consumers make between a brand and its key product attributes; can involve a logo, slogan, or famous personality Brand Loyalty—occurs when a consumer buys the same brand’s product repeatedly over time rather than buying from multiple suppliers in the same category Manufacturer Brands (National Brands)—brands owned and managed by the manufacturer Retailer/Store Brands (Private-Label Brands)— products that are developed by retailers Private-label Brands— brands developed and marketed by a retailer and available only from that retailer Family Brand—a firm’s own corporate name used to brand its product lines and products Co-Branding— the practice of marketing two or more brands together, on the same package or in the same promotion Individual Brands—the use of individual brand names for each of a firm’s products Brand Extension—the use of the same brand name for new products being introduced into the same or new markets 5 Line Extension—the use of the same brand name within the same product line and represents an increase in the product line’s depth Brand Dilution—occurs when a brand extension adversely affects the consumer perceptions about the attributes that the core brand is believed to hold Brand Licensing—a contractual agreement between firms, whereby one firm allows another to use its brand name, logo, symbols or characters in exchange for a negotiated fee Brand Repositioning (Rebranding)— a strategy in which marketers change a brand’s focus to target new markets or realign the brand’s core emphasis with changing market preferences Primary Package—the packaging the customer uses, such as the toothpaste tube, from which he or she typically seeks convenience in terms of storage, use and consumption Secondary Package—the wrapper of exterior carton that contains the primary package and provides the UPC label used by retail scanners; can contain additional product information that may not be available on the primary package Lecture Notes • Product lines = product variety = depth • Product mix = product assortment = breadth 6 Chapter 12: Developing New Products Key Terms Innovation—the process by which ideas are transformed into new products and services that will help firms grow Diffusion of Innovation—the process by which the use of an innovation, whether a product or service, spreads throughout a market group over time and over various categories of adopters Pioneers—new product introductions that establish a completely new market or radically change both the rules of competition and consumer preferences in a market Breakthroughs—see pioneers First Movers—product pioneers that are the first to create a market or product category, making them readily recognizable to consumers and thus establishing a commanding and early market share lead Innovators—those buyers who want to be the first to have the new product or service Early Adopters—the second group of consumers in the diffusion of innovation model (after innovators) to use a product or service innovation; generally don’t like to take as much risk as innovators but instead wait to purchase the product until after careful review Early Majority—a group of consumers in the innovation diffusion model that represents approximately 34% of the population; members don’t like to take risk and therefore tend to wait until bugs are worked out of a particular product or service; few new products and services can be profitable until this group buys them Late Majority—the last group of buyers to enter a new product market, when they do, the product has achieved its full market potential Laggards—consumers who like to avoid change and rely on traditional products until they are no longer available Reverse Engineering—involves taking apart a competitor’s product, analyzing it, and creating an improved product that does not infringe on the competitor’s patents (if any exist) Lead Users—innovative product users who modify existing products according to their own ideas to suit their specific needs Concepts—brief written descriptions of a product or service, its technology, working principles, and forms, and what customer needs it would satisfy Concept Testing—the process in which a concept statement that describes a product or a service is presented to potential buyers or users to obtain their reactions Product Development— (also called product design) entails a process of balancing various engineering, manufacturing, marketing and economic considerations to develop a product’s form and features or a service’s features Product Design—see product development Prototype—the first physical form or service description of a new product, still in rough or tentative form, has the properties as a new product but is produced through different manufacturing processes, sometimes even crafted individually Alpha Testing—an attempt by the firm to determine whether a product will perform according to its design and whether it satisfies the need for which it was intended; occurs in the firm’s research and development (R&D) department 7 Beta Testing—having potential consumers examine a product prototype in a real-use setting to determine its functionality, performance, potential problems, and other issues specific to its use Premarket Test—conducted before a product or service is brought to the market to determine how many customers will try and then continue to use it Test Marketing—introduces a new product or service to a limited geographical area (usually a few cities) prior to national launch Trade Promotions—advertising to wholesalers or retailers to get them to purchase new products, often through special pricing incentives Introductory Price Promotions—short-term price discounts designed to encourage trial Trade Show—major events attended by buyers who choose to be exposed to products and services offered by potential suppliers in an industry Manufacturer’s Suggested Retail Price (MSRP)—the price that manufacturers suggest retailers use to sell their merchandise Slotting Allowance—fees firms pay to retailers simply to get new products into stores or to gain more / better shelf space for their products Product Life Cycle (PLC)—defines the stages that new products move through as they enter, get established in, and ultimately leave the marketplace and thereby offers marketers a starting point for their strategy planning Introduction Stage—stage of the PLC when the innovators start buying the product Growth Stage—stage of the PLC when the product gains acceptance and demand, sales increase, and competitors emerge Maturity Stage—stage of the PLC when industry sales reach their peak, so firms try to rejuvenate their products by adding new features or repositioning them Decline—stage of the PLC when sales decline and the product eventually exits the market Lecture Notes (“Product” PowerPoint) – combination of chapter 11 and 12 • “on test” – 4 types of products, on exam we will have to categorize them based on a situation o remember: how the product is being used determines the TYPE of product it is o Specialty Product: customers show such a strong preference that they will expend considerable effort to search § Ex. Grantham’s sister is a chef and will go way out of her way for a certain brand of spice o Convenience Product: consumer is willing to spend minimum time and effort to evaluate a product prior to purchase § Ex. Grantham doesn’t really care about cooking and will buy the cheapest, private label (store brand) spices o Shopping Product: consumers spend a fair amount of time comparing alternatives § Ex. Comparing options to get good quality but also inexpensive spices o Unsought Products: consumers usually do not think about buying these products or don’t know about them 8 § Ex. Grantham has to chose life insurance options every year through her job—doesn’t want to do that but has to § Usually, unsought products follow a sales orientation by the nature of the good itself • Product Mix and Product Line o Breadth / “product mix”: number of product lines o Depth / “product lines”: number of categories within a product line o Proctor & Gamble—great example, remember: multi-segmented marketing § Breadth of 5 (columns), depth of 8 (rows) o Look at specific categories too! § Ex. Tide—pods, powder, liquid, capsules etc. • Changing Product Line Depth o Increasing depth § Ex. Band-Aid has 40+ products now § Ex. Cinnamon Bun Oreos—new version of Oreos increases depth o Ex. Pinesol—seeking consumer input on next scent for Pinesol o Decreasing Depth § Ex. McCormick’s cuts tons of spices from their lines every year • Changing Product Mix Breadth o Increasing breadth § Ex. Listerine • Now expanding to family products • “total mouth approach” o Decreasing breadth § Ex. TCBY Enterprises-Inc.html § Decided to expand TCBY through a frozen treat line in grocery stores, mad a strategic decision that it wasn’t worth it 9 • Branding o Consider both what you SEE and what you HEAR o “branding builds a wall around your product” § Ex. Chick-fil-a: public controversy a few years ago was short lived—why? They HUGELY invest in branding, which resulted in a STRONG wall built around the brand o The unspoken part of a brand is called the “brand mark” o Value of branding for a consumer § Ex. Apple § Apple sued Samsung for theft of intellectual property and wanted Samsung’s products off the market (8 devices) § The ruling opened up room for lawsuits against google, HTC, Motorola, etc. • Brand History in Advertising o Current trend: using nostalgia, associations with the brand from the past to build current brand o Ex. Bruce Weindruch at the History Factory § Using history to sell to the present § Whole agency devoted to helping your company do this o Ex. Planter’s Peanuts—through the years commercial o Ex. American Express—The Next Evolution of Membership is Here 10 • Brand Equity o Branding increases the financial value of the brand itself o “I encourage you to use this as a reference point” o Interbrand o Consider perceived value § Ex. Target reemergence-of-targets-bullseye-mascot/ • Bringing back bullseye bc it’s what people are used to • RISKY investment in building brand back up o What are firms REALLY investing in with celebrity endorsements? § Consider the legal ramifications—sooo risky § You are building your brands image on the image that that celebrity projects § Ex. Pepsi with Beyoncé • Lovemark or Brand Love o Lovemarks “transcend” regular brand loyalty o Ex. likes-to-ensure-true-customer-relationships/ § Building a LOVE for your product § Facebook, google, amazon, apple etc. o Ex. § “transcend” brands § reach heart AND mind—make intimate connection § “take a brand away, and people will replace it. Take a lovemark away and people will protest” o Ex. Paul McCartney concert was all about nostalgia 11 • Brand Ownership o Co-branding: two or more brands on a product § Ex. Oreos and Breyer's o Co-advertising: “a brand too strong to say on it’s own” § Ex. Old Spice in 2012 o Exclusive Co-branded: JLO Marc Anthony exclusively at Kohl’s o President’s Choice: private label, premium brand (higher quality, higher price) o Generic: whole name of product is what it actually is— “napkins” at the dollar store o Copycat: same color/shape packaging, next to product, has been getting more & more shelf space in recent years § Ex. Equate brand at Walmart o DO NOT USE “generic” and “copycat” interchangeably!!! o Family vs. individual strategies § Family branded products will carry corporate name • Ex. Kellogg’s cornflakes, Johnson & Johnson baby shampoo § Individually branded products have their own name • Ex. Mr. Clean (proctor & gamble product) o Doesn’t have to be mutually exclusive • Ex. Starbucks first brand campaign in 2014 o o “meet me at Starbucks” o Attempt to position brand away from what you can get at Starbucks, and more towards an intangible experience in a global context o 24 hours, 28 countries—highlights consumer experience inside the store o AdAge—Starbucks “nailed it…capitalizing on this ‘third place’—not at work, not at home” campaign/295175/ • Brand Extension o “what new product categories do we see our company finding success in, without straying too far from our core?” o Ex. State Farm—main business is insurance, but also offers banking, mutual funds, etc. o Ex. Burger King selling perfume in Japan o Risk involved in brand extensions – Ex. Michael Jordan was involved in so many brand endorsements that it started to not really mean anything aka brand lost equity • Brand Repositioning o SO HARD! We are creatures of habit...but repositioning is sometimes necessary o Takes a lot of time and energy 12 § Ex. “under new management” signs, dawn with air freshener base, Special K: new tagline is “eat special, feel special” • Functions of Packaging o At point of sale— “what is the LAST thing I can do to convince the customer to buy?” o Ex. Tropicana—changes packaging, $35 Million Mistake o Ex. Pepsi—Emoji bottles campaign/302748/ o Ex. Umano— “sometimes hangtag is still too much” “lifestyle brand—think of something bigger” • New products will always be needed!! • Diffusion of Innovation o “Know and be comfortable with the characteristics of each of these categories” o Innovators – 2.5% § Obsessive with having the newest and best o Early Adopters – 13.5% § Concerned with what other people think § “opinion leaders” o Early Majority – 34% § Collect information and evaluate products before making a purchase § “deliberate” o Late Majority – 34% § Want products to be tried & true, often use social networks to investigate products o Laggards – 16% § Ignored by marketers § “tradition,” set in their ways 13 • Ex. Tesla o Tesla is observable, the cars have stopping power o Trialability—test driving o Comparability—comparing the tesla, an electric car, to a regular car. How are they alike? How are they different? • Product Development o Alpha testing—employees testing a prototype in R&D Dept. o Beta testing— “opt-in” innovators testing § Ex. Google Glasses • Abandoned • Market Testing o Use to gage reactions to ALL 4 P’s o Premarket tests: customers exposed, customers surveyed, firm makes a choice § Ex. Nielson is a firm that manages premarket tests for other companies o Test Marketing: mini product launch, more expensive than premarket tests, market demand can be estimated, usually refined to a geographical location • Product Launch o HUGE investment in a product at this point o Ex. Steve Jobs § First iPad launch was “The BEST product launch ever!” yet launch of iPad 2 topped it • Evaluation of results o When a product fails, REALLY look at why...was it inappropriate pricing? Poor/inappropriate promotion? A product that just isn’t good? o • Lantham Act o Brand names are protected by the Lantham act o Brand name or product name? think “Band-Aid” being protected, not “adhesive bandages” 14 • Product Life Cycle (PLC) o Best used to describe a whole category o Most products have a similar pattern of growth and decline o Consider during each stage, what is going on with the 4 P’s? o Introductory stage § Focus on primary demand at this stage § Ex. got milk? milk-ad-dropped/ • got milk? Is back now • aimed at increasing overall milk consumption § Ex. “pork—the other white meat” o Growth stage § Focus on selective demand o Maturity stage § Jif, Folgers…stayed in mature stage for a LONG time—which is the goal, more $$ o Decline Stage § Peter Drucker— “organized abandonment” theory • Every 2 or 3 years, review the firm’s product line and ask, “if we didn’t do this already, would be launch this project now? • If the answer is no, abandon the product 15 • Extending time in the PLC o Increase frequency of use § Most common method § Ex. Toothbrushes—generally, when you go to the dentist, you get a new toothbrush to use until the next time you go to the dentist…but how do toothbrush companies make money this way? They don’t…birth of the color strip in toothbrushes that “when it fades, you’re due for a new brush” but they fade in about 2 months vs 6 months o Increase number of users § Position product to appeal to a new market segment o Find new uses § “breathe life into a product” § Ex. Arm & Hammer—use in fridge, use in laundry, use to whiten teeth…all NEW uses other than cooking • 4 Exceptions to the PLC – video in class! • o Fads § Very popular for a short period of time, very unpredictable § Ex. Furbys and SillyBandz, movies, books, songs § High risk—can make OR lose A LOT of money! § Typically have really high sales numbers o Trends § Think: fashion, mass social movements § A little more long lasting than a fad § Organic food… is it a fad? A trend? Permanent? § Trick: preemptively create products BEFORE trends surface o Niche Markets § Short growth period, LONG maturity period § Small target markets, little competition, VERY specific customers o Seasonal Markets § High/quick growth period that drops quickly depending on the season 16 Chapter 15: Supply Chain and Channel Management Key Terms Marketing Channel Management— (also called supply chain management) refers to a set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers Wholesalers—those firms that are engaged in buying, taking title to, often handling goods in large quantities, then reselling the goods (usually in smaller quantities) to retailers or industrial or business users Supply Chain Management—refers to the set of approaches and techniques firms employ to efficiently and effectively integrate their suppliers, warehouses, stores, and transportation intermediaries into a seamless value chain where merchandise is produced and distributed in the right quantities, to the right locations, at the right times, as well as to minimize system wide costs while satisfying the service levels their customers require Distribution Center—a facility for the receipt, storage and redistribution of goods to company stores or customers, may be operated by retailers or manufacturers or distribution specialists Direct Marketing Channel—the manufacturer sells directly to the buyer Indirect Marketing Channels—when one or more intermediaries work with manufacturers to provide goods and services to consumers Universal Product Code (UPC)—the black-and-white bar code found on most merchandise Advanced Shipping Notice (ASN)—an electronic document that the supplier sends the retailer in advance of a shipment to tell the retailer exactly what to expect in the shipment Electronic Data Interchange (EDI)—the computer-to-computer exchange of business documents from a retailer to a vendor and back Vendor Managed Inventory (VMI)—an approach for improving the supply chain efficiency in which the manufacturer is responsible for maintaining the retailer’s inventory levels in each of its stores Push Marketing Strategy—designed to increase demand by motivating sellers—wholesalers, distributors, salespeople—to highlight the product rather than the products of competitors, and thereby push the product onto consumers Pull Marketing Strategy—designed to get customers to pull the product into the supply chain by demanding it Planners—in a retailing context, employees who are responsible for the financial planning and analysis of merchandise, and its allocation to stores Receiving—the process of recording the receipt of merchandise as it arrives at a distribution center or store Radio Frequency Identification Tags (RFID)—tiny computer chips that automatically transmit to a special scanner all information about a container’s contents or individual products Ticking and Marking—creating price and identification labels and placing them on merchandise Pick Ticket—a document or display on a screen in a forklift truck indicating how much of each item to get from specific storage areas Just-in-time (JIT) Inventory Systems— (also known as quick response (QR) systems) inventory management systems designed to deliver less merchandise on a more frequent basis than traditional inventory systems, the firm gets the merchandise “just in time” for it to be used in 17 the manufacture of another product, in the case of parts of components, or for sale when the customer wants it, in the case of consumer goods Quick Response— see just-in-time inventory systems—an inventory management system used in retailing—merchandise is received just in time for sale with the customer wants it Lecture Notes o Physical Supply Network—Inbound Marketing Channel—Outbound o “Supply chain” refers to everything that takes place between starting with raw materials and getting the product into the consumer’s hands o Place element: refers to the marketing channel, from manufactureràmiddle menàconsumer, determines if a transaction will take place at all, and determines if consumer will be happy with their purchase o Real value is determined by the end user (marketing channel puts customer front and center) • Channel Intermediaries o If we eliminate middle men, their functions must still be performed!!! o “only responsible for these 3…note difference between merchant wholesaler and agent/broker” o Retailer: sells mainly to final consumers o Merchant Wholesaler: buys and takes the goods from manufacturer, stores/ships/sells to other businesses, assumes risk of unsold merchandise o Agent and/or Broker: facilitates sale between manufacturer and others, “mouthpiece…go-between,” never takes ownership of goods, less risky • Marketing Channels o Marketing channels add value!!! They increase efficiency— “main takeaway” • Designing Marketing Channels o Direct marketing channels: environments that tend to have HEAVY sales forces lend themselves to disintermediation § Ex. Pharmaceuticals and industrial machinery • Levels of Distribution Intensity o US has a VERY complex distribution system o Intensive § Convenience goods, many intermediaries § Ex. Coke— “we want to put Coke in arms reach of everyone” o Selective § Shopping and some specialty goods, some intermediaries § Ex. Designers choosing which dept. stores will carry their goods 18 o Exclusive § Specialty goods, industrial equipment § Ex. JLO and Marc Anthony’s line exclusively at Kohl’s o “1 or two questions on exam where I will give you a product/situation and you’ll have to tell me what the distribution intensity is” • Trends in Channel Design o Disintermediation—elimination or reduction in number of levels of distribution o Increasing electronic channels • Factors in Deciding Number of Levels o Market characteristics § Size, geographic dispersion, buying patterns o Product factors § Complexity, cost, ease of movement o Company (manufacture) factors § Size, desire for control (Ex. Umano—not having control over brand presentation in Bloomingdales, utilizing hangtags instead), diversity in consumers/retailers o General Rule: shorter, more direct channel for complex, expensive, customized items (Ex. a lot of B2B products) o Longer, more indirect channel for low cost, standard items (Ex. most consumer products) • Walmart has “MASTERED” the art of moving products from suppliers o Core competency is electronic data interchange, not low prices! o Electronic Data Interchange is often the “backbone” of distribution channels • Push and Pull Supply Chains o Pull: jumpstarted by consumer demand o Push: jump started by what was done in the past • Logistics and Supply Chain Management CANNOT BE USED INTERCHANGEABLY! o Logistics is a part of supply chain management o Logistics: physical movement of goods o Ex. Cupcake ATMs • The Distribution Channel 19 o o Negotiation of shipping expenses puts weight on retailers—they can “flex their muscles in the situation” o Storing and Cross-docking § Cross-docking: moving product from one truck to the next at the distribution center, product never takes residency within the warehouse, associated with just-in-time (JIT)/quick response, lowers inventory carrying costs 20 Umano Presentation – 2/17/16 • Umano is Italian for “man kind” o “truthfully, was available in 2011” • Social entrepreneurship o Idea that “you don’t have to chose between doing good and doing well” o “way to solve world problems” o “ah-ha” moment when they decided on social entrepreneurship o one-word philosophy: “scale” – Umano’s ability to scale sets it apart from other companies like it • Present kid’s drawings as art • Every shirt bought donates a backpack with school supplies • 2011—idea / 2012—started manufacturing • Fashion foot first—product first, we want the product to be able to stand totally on its own, aside from the art, aside from the idea, we need a GOOD product o name of cloth developed: omobono o named after patron saint of cloth/fabrics • Limited color palette—eliminates all trend forecasting (white, black, grey) • Got into Bloomingdales a little over 2 years ago o printed out of parent’s garage for over a year for Bloomingdale’s § broke an ordinance, went to court, got put on probation o “pivot point” for Umano • Umano is kind-of nontraditional because they launched wholesale business first (to Blooms), but the end goal was to go straight to the consumer o Why? “we want to CONTROL the experience of how you shop with Umano” o Thing about wholesale: if our stuff doesn’t sell in stores, they send it back! Normally Umano keeps their inventory blank, but if stuff isn’t selling in stores and is sent back, now part of their inventory is already printed • Johnathan created the entire supply chain o Turkey, Haiti, Dominican Republic, all comes into the USA into Miami § Drive down, puck stuff up, turn around and bring it back all in one trip • Everything is screen printed by hand in Athens • Social aspect is “in our DNA” • Won Pandoland pitch competition for startups o Supposed to be for “tech” startups…Umano argued that because they had a website they were tech, so they should be let in o Surprisingly, it worked – even more shockingly, they won • Shark Tank o Allowed Umano to have their first “at-bat” with straight-to-consumer production through e-commerce o Another “pivot point” • Giving Goals o 10,000 backpacks were given in the first 3 years 21 o last goal was 10,000 backpacks in 1 year o current goal is 30,000 backpacks in one year o 10 million backpacks by 2020 o never lost a partner school, adding new schools every year • Backpacks o Current version is version 3 or 4, padded straps, padded back, very good quality, very small, “backpack that will last” • 2 biggest themes o put fashion foot first o develop staying power—set your brand up as an aspirational but attainable luxury • Wholefoods o Wholefoods approached Umano a year before Bloomingdale’s, “we said no” § Had to think: what effect will that have on our brand? If we are in a grocery store, can we get into a cool swanky boutique in Manhattan? Probably not…. if we are in a swanky boutique in Manhattan, can we get into a grocery store? Most likely, yes • Ultimate goal: become a lifestyle brand o Think: Nike. Nobody calls Nike a “tennis shoe company—our end goal is to not be known as a “t-shirt company’” • GRANTHAM’s Questions o Grow on a macro level with a micro approach o Buy local is big with Umano § Ex. Partnered with a Brooklyn school to produce a “capsule collection” all about the area— “New York city artwork by New York city kids” § Sold only in Bloomingdale’s in the area • Hangtags o Started as a 3-page hangtag o “we were watching people in stores during our launch flip the hangtag all around, read it, read it multiple times, spend like a whole minute reading it…but when we approached them asking about the brand, they still weren’t getting it” o Moment of panic—redesigned the hangtags immediately, simplified to 1 pg.— now a picture of the artist, a blurb about him, and a blurb about the artwork • “you get about 5 seconds of my attention free, you have to earn the next 30 seconds, earn the next minute, earn going to fitting room, etc.” • said working with his brother provides them a serious competitive advantage • RV Story—El Chato o Drive from Athens to Los Angeles, “knocking” on boutique doors, basically trying to get product in every store across the country that would carry Umano o Visited Toms store in LA (where it started, first store, same social entrepreneurship concept), met a girl who said Blake (founder) usually stops by in the mornings for coffee otw to work, they showed up every day at 6 am for days 22 o Finally one day, El Chato was parked out front of the store, covering the tiny store front and Blake walked in and was basically like “what the hell is that, tell me more” and Umano bros got to sit in on one of Blake’s senior leadership meetings to observe and get a little mentoring o Called this a “pivot point” for Umano 23


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