Introduction to Business Processes
Introduction to Business Processes MIE 201
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CHAPTER 16 What is the new approach to customer communication through technology Social communication model is interactive and conversational today s audiences demand to be active participants in a meaningful conversation What are the strategic steps for the new world of interactive communications What are 5 communication activties that involve the purchasing cycle What is one of the most significant changes that the social communication model has brought to marketing Establish Communication Goals crafted with clear goals based on there the target audience is in the purchasing cycle 1 Generating awareness awareness advertising and similar efforts seek to introduce new companies or new products 2 Providing information and creating positive emotional connections to build logical and emotional acceptance for the company and its products 3 Building preference to encourage them to prefer it over all other products they may be considering 4 Stimulating action most critical step convincing the consumer or organization to act on that product preference to make a purchase using a compelling call to action 5 Reminding past customers past customers are often the best prospects for future sales so reminder advertising tells buyers that a product is still available or a company is ready to serve their needs Defining Customer Messages core message the single most important idea a advertiser hopes to convey to the target audience about its products or the company one of the most significant changes that the social communication model has brought to marketing is that companies now have far less control of their messages quot quot the Communication Mix other names media mix or promotional mix through some combination of advertising direct marketing personal selling sales promotion social media and public relations the six components of communication mix to assemble the best mix companies have to consider a range of product market and distribution channel factors product factors include type of product price range and stage in product life cycle market factors include type ofintended customers the nature of the competition and the size and geographic spread of the target market Push strategy producer focuses on intermediaries trying to persuade wholesalers or retailers to carry its products and promote those products to their customers Pull strategy the producer appeals directly to end customers MC integrated marketing communications is a strategy of coordinating and integrating all communication and promotional efforts to ensure clarity consistency and maximum communications impact Communication Laws and Ethics four legal aspects in marketing communication 1 Marketing and sales messages must be truthful and nondeceptive deceptive includes failing to include important information statements that are likely to mislead reasonable customers and the statements are an important part fthe purchasing decision implied claims are claims you don t explicitly make but that can be inferred from what you do or don t say 2 You must back up your claims with evidence you must still be able to support your claims with objective evidence such as a survey or scientific study 3 Marketing and sales messages are considered binding contracts in many states if you imply or make an offer and then can t fulfill your end of the bargain you can be sued for breach of contract 4 In most cases you can t use a person s name photograph or other identity without permission you can use images ofpeople considered to be public figures as long as you don t unfairly imply that they endorse your message NARC National Advertising Review Council whose members include advertisers agencies and the general public works with the Better Business Bureau to investigate and resolve complaints of deceptive advertising in order to foster public trust What are the four types of advertising 1 Product advertising the most common type promotes features and benefits of specific products 2 Comparative advertising is applied to ads that specifically highlight how one product is better than its competitors strong comparative messages can boost sales but the approach is risky 3 Institutional advertising designed to create goodwill and build a desired image for a company rather than to promote specific products 4 Advocacy advertising institutional ads that address public issues What are the types of advertising according to sponsors Advertising according to sponsors 1 National advertising is sponsored by companies that sell products on a nationwide basis 2 Local advertising is sponsored by a local merchant grocery store ads are a good example 3 Cooperative advertising involves a financial arrangement in which companies with products sold nationally share the costs oflocal advertising with local marketing intermediaries What are the types of advertising appeals and know examples of each Advertising appeal a key decision in planning a promotional campaign 1 logic the basic approach with a logical appeal is to make a claim based on a rational argument supported by solid evidence Ex Computer adverting or businessto business 2 Emotion an emotional appeal calls on audience feelings and sympathies rather than facts figures and rational arguments Range from sentimental to terrifying Ex owers or cards 3 Humor frequently used to capture people s attention Can be tricky Such as remembering the joke but not the product being advertised F Celebrity celebrity involvement in advertising is that people will be more inclined to use products endorsed by a celebrity because they will identify with and want to be like the person Ex Brett farve with wrangler jeans m sexoriented appeals are the most controversial types ofadvertising in terms of both social reaction and promotional effectiveness Problems sex doesn t always sell Music with its ability to create emotional bonds and quotembedquot itself in listeners memories music can be a powerful aspect of advertising Ex Old navy holiday jingle Scarcity ifa product is in limited supply or available only for a limited time advertisers can use this scarcity to encourage consumer responses 0quot Fquot What is the trend in advertising media Advertising media communication channels such as newspapers radio television and the World Wide Web two significant challenges 1 fragmentation of audiences into larger numbers of smaller 2 the growing clutter ofadvertising messages trend in advertising media in today s advertising economy it is constantly changing but in the past commercial advertisers could rely on national tv networks and popular magazines to quickly reach the majority of consumers in the US Today other media options seem to pop up every week The advertising plan a media plan outlines the advertising budget the schedule or when ads will appear and a discussion of the media mix media mix the combination of print broadcast online and other media to be used in the campaign to create it the advertising experts factor in the characteristics of the target audience the types ofmedia that will reach the larges audience in the most costeffective way and the strengths and weakness ofvarious media as they relate to the product and its marketing message Two trends in online media 1 the lines between advertising entertainment and valueadded content such as informative articles and howto videos will continue to blur Making commercials more entertaining to be watched Pr0duct Placement in which companies pay to have their products displayed or used in tv shows movies and video games 2 Technical innovations will continue to create new adverting tools and technigues including the behavioral targeting methods and more sophisticated tracking and pricing models that tie advertising costs to measureable results 3 Hybrid media it will grow such as interactive purchasing systems that combine product placement with direct response retailing so that consumers can use their TV remotes to buy products shown in a program ex Online video continues to expand How is direct marketing different from advertising Direct marketing direct communication other than personal sales contacts differs in three important ways 1 It uses personally addressable media such as letter and email messages to deliver targeted messages to individual consumers or organizational purchasers 2 It doesn t involve the purchase of time or space in other media the advertiser controls the delivery mechanism and decides when where and how the message is delivered 3 It has a direct response aspect that often isn t present in advertising PRIMARY EMPHASIS generating sales now What is a customer database What is its greatest appeal Customer database it s the heart of any direct marketing effort It contains contact histories purchase records and profiles of each buyer or potential buyer referred to as database marketing sometimes the data can range from basic demographic information to records of all customers contacts to detailed purchasing records and other behavioral data Measurability is one of its greatest appeals because direct responses are directly measureable direct marketing lends itself to constant experimentation and improvement ex Mail a yer to 1000 people amp 36 call to make an order you have a 36 response What are types and examples of direct marketing media 1 m direct mailprinted material addressed to an individual or a household its the key advantage to being able to put promotional materials ranging form simple letter and glossy catalogs to DVDs and product samples directly in the hands ofa target audience 2 Email the ability to send millions ofmessages in a matter of minutes at almost no cost made email a hit with direct marketersand practically destroyed email as a Viable communication medium of users who are tired of quotunwantedquot spam 3 Direct response online the interactive adaptable nature of websites allows them to go far beyond static advertising media to become direct personalized communication channels 4 Search engine marketing search advertising has become an important marketing medium It works in two basic ways Advertisers can par to display small ads whenever the keywords they select are used in a search These ads can also appear on the many websites that are in the search engine s advertising exchange or advertising network collection of websites that sell space on their pages for such ads 5 Telephone is a major promotional tool in both consumer and organizational markets and for both inbound when buyers call in to place orders and outbound when sellers contact potential buyers with sales offers marketing 6 Direct response television39 once limited to infomercials but now is used by many wellknown and respected companies major advantage the opportunity to demonstrate products and engage viewers in a way that isn t possible with 30 or 60 second commercials Define personal selling and contemporary personal selling Personal selling the oneonone interaction between a salesperson and a prospective buyer remains a fundamentally important part of the promotional miX in many consumer and organizational markets Contemporary personal selling the idea of the customeroriented marketing concept The steps to personal selling process 1 the process of finding and qualifying potential customers It involves 1 generating sales leads names of individuals and organizations that mightbe likely prospects for the company s products 2 identifying prospects potential customers who indicate a need or desire for the seller s product 3 qualifying prospects the process of figuring out which prospects have both the authority and the available money to buy Preparing create a prospect profile which includes the names of key people their role in the decision making process and other relevant information such as prospect s buying needs motive for buying and names of current suppliers Approaching the prospect first impressions can make or break a sale craft the appropriate appearance maintain behaviors and attitudes that are professional prepare opening lines that include a brief greeting and introduction 4 Uncovering needs and presenting solutions understand the customer s specific needs extreme formcanned sales pitch where the salesperson recites or even reads a stock message with no regard for the customer s unique circumstances 5 Handling objections salespeople need to be ready with answers to objections and alternatives 6 Closing receiving an affirmative purchase decision it can be difficult for those who lack confidence in what they are selling 7 Following up repeat sales and referrals from satisfied customers so following up after the sale to make sure customers are satisfied with their purchase N A What is sales promotion Sales promotion consists of shortterm incentives to build the reputation ofa brand encourage the purchaser of a product or simply enhance relationships with current and potential customers What are types of consumer promotions Contests and other audience involvement activities a chance for consumers to demonstrate cleverness or creativity is a great way to build energy around a brand 2 Coupons certificates that spur sales by giving buyers a discount when they purchase specified products 3 Rebates companies offer partial reimbursement of the price as a purchase incentive 4 Pointofpurchase is an instore presentation designed to stimulate immediate sales POP displays Samples and trialuse versions effective way to introduce a new productis by samples trial versions let customers try before buying product Specialevent sponsorship most popular sales promotion tactics Other promotions loyalty and frequency programs instore demonstrations premiums free or bargainpriced items offered to encourage the consumer to buy a product and specialty advertising company s name on pens tshirts mouse pads and other items 5 gt19 What are types of trade promotions Trade promotions salespromotion efforts aimed at inducing distributors or retailers to push a producer s products 1 trade allowances involve discounts on product prices free merchandise or other payments such as retailing slotting fees commonly used when adopting a push marketing strategy bc they encourage the intermediaries to carry new products or to sell higher volumes of current products they however can create controversial preactive of forward buying in which a customer loads up on merchandise while the price is low 2 Dealer contests and bonus programs designed to motivate distributors or retailers to push particular merchandise Product samples are also common 539quot What is viral marketing buzz marketing and sentiment analysis Social media activities Viral marketing describes the effect of people spreading marketing messages mimicking the spread ofbiological viruses form person to person Buzz marketing tactics that try to generate buzz among customers so they ll be motivated to learn more about a particular product these techniques are probably better for consumer service rumor control research and relationship building than for blatant product production Sentiment analysis tracking social media with automated languageanalysis software that tries to take the pulse of public opinion and identify in uential opinion markets What are 5 guidelines for conversation marketing Conversation marketing approach to customer communication in which companies initiate and facilitated conversations in a networked community ofpotential buyers and other interested parties 1 oin existing conversations answer questions solve problems and respond to rumors and misinformation Facilitate community building make sure customers and other audiences can connect with the company and with each other Initiate and respond to conversations within the community marketers can start conversations by providing useful information to current and potential customers Equot 539quot 4 Identify and support champions champions are enthusiastic fans of a company and its products so they help spread the company s message Restrict conventional promotional efforts to the right time and right place Persuasive communication efforts are still valid for specific communication tasks but efforts to inject quotsalespeakquot into social media conversations will be rejected by the audience 5 What is the definition and examples of brand communities Brand communities people united by their interest in and ownership of particular products can be formal membership organizations EX Longstanding Harley Owners Groups HOG can be informal networks ofpeople with similar interests What is public relations What are the tools Public relations encompasses a wide variety of nonsales communications that businesses have with their many stakeholders including communities investors industry analysts government agencies and activists involve new media print broadcasts journals online press release a short message sent to the media covering topics that are of potential news interest a video news release is briefvideo clip sent to tv stations press conference used when a company has significant news to announce at which reporters can listen to company representatives and ask questions CHAPTER 15 Study Questions Define marketing channel distribution strategy and marketing intermediaries Marketing channel is an organized network of firms that work together to get goods and services from producer to customer Also known as Distribution channel Distribution Strategy is the overall plan for moving products to buyers it will play a major role in your success Marketing intermediaries is business people and organizations that assist in moving and marketing goods and services between producers and consumers Compare Wholesalers and retailers Intermediaries can be grouped into general types wholesalers and retailers Wholesalers sell to organizational customers including other wholesalers companies government agencies and educational institutions customers of wholesalers either resell the products or use them to make products of their own Retailers primarily sell products to consumers for personal use can operate out ofa physical facility department store gas station kiosk through vending equipment soft drink machine newspaper box automated teller from a virtual store via telephone catalog website The distinction is important because business strategies for wholesaling and retailing are dramatically different in many ways Consumers usually make purchases for different reasons because their motivations and expectations are different consumers reached by retailers amp organizations reached by wholesalers don t respond to marketing programs the same way What are the contributions of marketing intermediaries Wholesalers and Retailers create three of the four forms of utility provide the items customers need in a convenient location place utility they save customers the time of having to contact each manufacturer to purchase a good time utility they provide an efficient process for transferring products from the producer to the customer possession utility Matching buyers and sellers it reduces the number of transactions between producers and customers these customers are saved the time and trouble ofworking with multiple suppliers and the product suppliers get access to more customers than all but the very largest of them could ever hope to reach on their own quotcutting out the middleman is sometimes used as a promotional slogan Providing market information retail intermediaries collect valuable data about customer purchases who buys how often and how much Providing promotional and sales support assist with advertising in store displays and other promotional efforts for some or all of the products they well Some employ sales representatives who can perform a number of selling and customer relationship functions Gathering assortments of goods receive bulk shipments from producers and break them into more convenient units by sorting standardizing and dividing bulk quantities into smaller packages breaking bulk Transporting and storing products maintain inventories ofmerchandise that they acquire from producers so they can quickly fill customers orders Some cases retailers purchase this merchandise from wholesalers who in addition to breaking bulk may also transport the goods from the producer to the retail outlets Assuming risks when accepting goods from manufacturers they usually take on risks associated with damage theft product perishability and obsolescence Providing financing large intermediaries sometimes provide loans to smaller producers Completing product solutions producers rely on a class ofintermediaries often called valueadded resellers VARS or system integrators to complete or customize solutions for customers Facilitating transactions and supporting customers perform a variety of other functions that help with the selection purchase and use ofproducts What is a VAR valuableadded resellers or system integrators to complete or customize solutions for customers eX Irisink is a quotProvideo VAR for apple meaning it can combine apple computers with other hardware and software elements to create professional video production facilities for its clients it reaches a wider range of customers without the need to develop specialized expertise in multiple industries What are agents brokers and merchant wholesalers Give examples of full service merchant wholesalers and limited service Simple rule when a marketing intermediary is selling to individual consumers it s functioning as a retailer when an intermediary sells to any type of organization from a momandpop store to the Pentagon it s functioning as a wholesaler Merchant wholesalers independently owned businesses that buy from producers take legal title to the goods and then resell them to retailers or to organizational buyers includes a handful of multibilliondollar firms such as Grainger in industrial supplies Fullservice merchant wholesalers provide a wide variety of services such as storage selling order processing delivery and promotional support eX Rackjobbers fullservice merchant wholesalers that set up displays in retail outlets stock inventory and perform other services such as marking prices on merchandise displayed in a particular section ofa store Il39m139tedserv139ce merchants provide fewer services dr0p shippers a class of limitedservice wholesalers take ownership but not physical possession of the goods they handle natural resources such as lumber grain and coal are usually marketed through drop shippers Distributors sell goods to companies for use in their own products and operations are usually Agents and Brokers primary role is to bring buyers and sellers together they never actually own the product they handle manufacturers representatives type of agent sell various noncompeting products to customers in a specific region The majority of wholesalers are merchant wholesalers and most are M companies The difference between wholesalers and distributors is that wholesalers take legal title of goods they distribute and distributors sell products to organizational customers for internal operations or the production of other goods rather than to retailers for resale What are challenges of wholesaling What is integrated logistics management Define disintermediation Integrated logistics management the outsourcing trend contracting out certain business functions or operations to other companies is having an impact in the wholesaling sector as a thirdparty logistics firms continue to take over a wide range of tasks in supply chain management including not only traditional wholesaling activities but also order fulfillment product repair customer service and other functions Threat of disintermediation disintermediation of wholesalers meaning their role would be taken over by manufacturers on the upstream end or by customers retailers and other organizational buyers on the downstream end Unbundling of services the conventional way that merchant wholesalers generate revenue and earn profits is by purchasing products from manufacturers at a discount and reselling them to retailers or organizational buyers at a markup Industry consolidation large firms with economies of scale buy up or drive out smaller less competitive firms 5trategic sourcing they forge relationships with a smaller number of strategic distribution partners What is in store marketing or shopper marketing Shopper Marketing instore marketing refers to communication efforts directed at consumers while they are in the retail setting eX The degree to which decision making occurs in the store varies across product categories consumers and purchasing situations remodeling consumer know what they want to buy and others can be in uenced by labels and other categories Describe the wheel of retailing Wheel of retailing an innovative retailer with low operating costs attracts a following by offering low prices and limited service all retailing efforts are divided into storeformats based in physical store locations and nonstore formats which take place anywhere and everywhere outside of physical stores 11 retail store formats 1 Department store offers a wide variety of merchandise under one roof in departmentalized sections and many customer services ex Nordstrom 2 Specialty store offers a complete selection in a narrow range ofmerchandise often with extensive customer services ex Payless shoes 3 Category Killer type of specialty store focusing on specific products on a massive scale and dominating retail sales in respective products categories ex Lowe s 4 Discount Store offers a wide variety of merchandise at low prices with relatively fewer services ex Target 5 Offprice Store offers designer and brandname merchandise at low prices and with relatively fewer services ex T Maxx 6 Convenience Store offers limited range of convenience goods long service hours and quick checkouts ex 7eleven 7 FactoryZRetail outlet large outlet store selling discontinued items overruns and factory seconds ex Nike Outlet 8 Supermarket large selfservice store offering a wide selection of food and nonfood merchandise ex Kroger 9 Hypermarket Giant store offering both food and general merchandise at discount prices ex Walmart Super Centers 10 Warehouse club large warehousestyle store that sells food and general merchandise at discount prices some require club membership ex Sams s Online retailer Webbased store offering anything from a single product line to comprehensive selections in multiple product areas can be webonly or integrated with physical stores ex Amazoncom or REIcom H H What are the major issues for retailing outlook Overcapacity in too many categories there are simply too many stores to support current levels of business activity Continued growth in online retailing the growth rate of online retailing has outpaced storebased retailing in recent years and that trend is likely to continue Growth of multichannel retailing it re ects that today s consumers increasingly combine online and of ine shopping such as researching products online and then making the purchase in a physical store or the other way around m ultichannel retailing is a term for any coordinated effort to reach customers through more than one retail channel Format innovations they continue to experiment with retailing formats include hybrid stores combine different types of retailers or different retail companies in the same facility p0pup store exist for only a short time and are designed more as attentiongetting events than as ongoing retail operations Retail theater retail stores aren t just places to buy things they re becoming places to research new technologies learn about cooking socialize or simply be entertained for a few minutes while going through the drudgery of picking out the week s groceries Threat of Disintermediation if suppliers or customers don t think they add sufficient value or if other types of retailers can do the job better What is the distribution mix Distribution mix number and type ofintermediaries that varies widely from industry to industry and even from company to company within the same industry What are 5 considerations for the distribution strategies Customer needs and Expectations delivering value to customers so channel strategy decisions should start with customer needs and expectations Product Support Requirements products vary widely in the amount of skilled support they may require before and after the sale quot inn Targeting and Pnsitinnino39 marketing intermediaries make strategic marketing decisions regarding their own businesses Competitors Distribution Channels marketing managers must consider the distribution decisions that competitors have already made or are likely to make in the future 510tting allowance channel capacity is at such a premium that retailers can demand payments from producers in exchange for carrying their products for an agreed upon length of time Established Industry Patterns and Requirements all industries develop certain patterns of distribution What are 5 considerations in channel design and management Channel length distribution channels come in all shapes and sizes Four primary channels 1 Producer to consumer Producers that sell directly to consumers through catalogs telemarketing infomercials and internet are using the shortest simplest distribution channel 2 Producer to retailer to consumer many producers create longer channels by selling their products to retailers who then can resell them to consumers 3 Producer to wholesaler to retailer to consumer most manufacturers of supermarket and pharmaceutical items rely on longer channels when selling to such retailers as Walgreens 4 Producer to agentbroker to wholesaler to retailer to consumer this is where specialists are required to negotiate transactions or to perform interim functions such as sorting grading or subdividing the goods Marketing Coverage the number ofwholesalers or retailers that will carry a product depends on the number of factors in the marketing strategy 1 intensive distribution requires wholesalers and retailers of many types because it tries to place a product in as many outlets as possible 2 selective distribution it uses a limited number of carefully chosen outlets to distribute products 3 exclusive distribution it gives intermediaries exclusive rights to sell a product in a specific geographic area Distribution Costs it takes money to perform all functions that are handled by intermediaries Channel Con ict a disagreement over rights and responsibilities of the organizations in a distribution channel it may arise for a number of reasons such as when producers provide inadequate support to their channel partners Channel Organization and Control marketing systems arrangements by which channel partners coordinate their activities under the leadership 0 fone of the partners wnership when the production and distribution firms are owned by a single company contracts when the participants have formal agreements that specify their rights and responsibilities such as the franchising agreements conomic power when one player is so big that its economic presence is enough to encourage or even force cooperation from the other participants in the channel Describe physical distribution and logistics Physical Distribution encompasses all the activities required to move finished products from the producer to the consumer including forecasting order processing inventory control warehousing materials handling and transportation it is the most critical Logistics the planning and movement of goods and information throughout the supply chain What are the inhouse steps of physical distribution Forecasting to control the ow ofproducts through the distributions system a firm must have an accurate estimate of demand Order Processing involves preparing orders for shipment and receiving orders when shipments arrive includes activities such as checking the customer s credit recording the sale arranging items to be shipped and billing the customer Inventory Control decide how much product to keep on hand and when to replenish the supply of goods in inventory decide how to allocate products to customers if orders exceed supply Warehousing products held in inventory are physically stored here some warehouses are known as distribution centers serve as command posts for moving products to customers Materials Handling the movement of goods within and between physical distribution facilities storage method whether to keep supplies and finished goods in individual packages in large boxes or sealed shipping containers What are the six modes of transportationadvantages and disadvantages 1 Rail AD railroads can vary heavier and more diverse cargo and a larger volume of goods than other modes of transportation DIS constrained to tracks can rarely deliver goods directly to customers 2 Trucks AD offer convenience ofdoortodoor delivery and the ease and efficiency of travel on public highways DIS large loads are better handled by water or rail amp some perishable items may need to travel by air for the shortest possible delivery time over long distances 3 Ships and Barges AD cheapest method is via water and is preferred for such low cost bulk items as coal oil ore cotton and lumber DIS is slow and must be combined with another mode of delivery for most shipments 4 Pipelines AD for products such as gasoline natural gas and coal or wood chips DIS slow speeds and in exible routes 5 Digital networks AD any product that exists in or can be converted to digital format from books and movies to software to product design files can be transported over the Internet DIS the range of digital products is fairly limited but the Internet has certainly revolutionized industries such as entertainment and publishing Chapter 8 The Organizational Chart Diagram showing how employees and tasks are grouped and where the lines of communication and authority flow It depicts the official design for accomplishing tasks that lead to achieving the organization s goals a framework known as the formal organization Agile Organization company whose structure policies and capabilities allow employees to respond quickly to customer needs and changes in the business environment To identify the best structure for you organization managers need to identify the organization s core competencies clarify job responsibilities define the chain of command and organize the workforce in a way that maximizes effectiveness and efficiency Core Competencies Activities that a company considers central and vital to its business in which they excel and have the potential to create competitive advantages Work 39 quot 39 quot39 39 inor labor Chain of Command pathway for the flow of authority form one management level to the next Responsibility the obligation to perform the duties and achieve the goals and objectives associated with theirjobs Accountability their obligation to report the results of their work to supervisors or team members and tojustify any quot quot39 for some portion ofan organization s overall work tasks aka division of outcomes that fall below expectations Authority the power to make decisions issue orders carry out actions and allocate resources Delegation is the assignment of work and the transfer ofauthority responsibility and accountability to complete that work Line and Staff organization organization system that has a clear chain of command but that also includes functional groups of people who provide advice and specialized services Span of Management quotspan of control when a large number of people report directly to one person that person has a wide span of management This situation is common in flat organizations with relatively few levels in the management hierarchy In contrast tall organizations have many hierarchical levels typically with fewer people reporting to each manager Centralization concentration of decisionmaking authority at the top of the organization Decentralization delegation or decisionmaking authority to employees in lower level positions Organizing the Workforce Functional Structure grouping workers according to their similar skills resource use and expertise l Grouping employees by specialization allows for the efficient use of resources and encourages the development of indepth skills 2 Centralized decision making enables unified direction by top management 3 Centralized operations enhance communication and the coordination ofactivities within departments onal Structure grouping departments according to similarities in product process customer or geography 1 Can react quickly to change 2 Divisions can often provide better service to customers because they focus on a limited number of products processes customers or locations Matrix Structures Structure in which employees are assigned to both a functional group and a project team Can allow big companies to function like smaller ones by allowing teams to devote their attention to specific projects or customers with out permanently reorganizing the company s structure Network Structures Structure in which individual companies are connected electronically to perform selected tasks for a small headquarters organization Stretches beyond the boundaries of the company to connect a variety of partners and suppliers that perform selected tasks for a headquarters organization Problemsolving team team that meets to find ways of improving quality efficiency and the work environment Selfmanaged team team in which members are responsible for an entire process or operation Functional team Team whose members come from a single functional department and that is based on the organization s vertical Stl UCtU re Crossfunctional team team that draws together employees from different functional areas Virtual Team team that uses communication technology to bring geographically distant employees together to achieve goals Team Member Roles Task Specialist Role focus on helping the team reach its goals Socioemotional Role focus on supporting the team s emotional needs and strengthening the team s social unity Characteristics of Effective Teams I Clear Sense of Purpose I Open and honest Communication I Creative Thinking I Accountability I Focus I Decision by consensus Chapter 9 System an interconnected and coordinated set ofelements and processes that converts inputs to desired outputs A company is made up of numerous individual systems in the various functional areas not only in manufacturing or operation but also in engineering marketing accounting and other areas that together constitute the overall system that is the company itself I Help everyone see the big picture I Understand how individual systems really work and how they interact I Understand problems before you try to fix them 0 Meaningful o Measurable I Understand the potential impact of solutions before you implement them I Don tjust move problems around solve them I Understand how feedback works in the system I Use mistakes as opportunities to learn and improve Value Webs Multidimensional networks of suppliers and outsourcing partners Advantages speed flexibility and the opportunity to access a wide range of talents and technologies that quickly assemble a team of designers manufacturing plants and distributors in far less time than it would take to build an entire company from scratch Risks control the company relies so heavily on other suppliers that it has a lack of control and target dates can be missed Outsourcing Vs Off shoring Outsourcing Contracting out certain business functions or operations to to her companies Off shoring Transferring part of all of a business function to a facility a different part of the company or another company entirely in another country Pros 0 Responsibility to share holder interests US competitiveness 0 Support for local customers around the world Cons o What jobs will be left 0 Hidden costs and risks long supply lines volitile fuel costs exchange rates the geopolitical risks 0 Responsiveness 0 Knowledge transfer and theft National Security concerns 0 Health and Safety Issues Supply Chain and Value Chain 0 Supply Chain is a part of the overall value chain that acquires and manages the goods and services needed to produce whatever it is the company produces and then deliver it to the final customer Everyone in the company is part of the value chain but not everyone is involved in the supply chain 0 0 Supply chain focuses on the upstream part of the process collecting the necessary materials and supplies with an emphasis on reducing waste and inefficiency 0 Value chain focuses on the down stream part of the process and on adding value in the eyes of customers Inventory goods and materials kept in stock for production or sale Inventory control Determining the right quantities of supplies and products to have on hand and tracking where those items are RFID Radio Frequency Identification uses small antenna tags attached to products of shipping containers special sensors detect the presence of the tags and can track the flow of goods through the supply chain Procurement the acquisition of the raw materials part components supplies and finished products required to produce goods and services MRP Material Requirements Planning helps a manufacturer get the correct materials where they are needed when they are needed without unnecessary stockpiling Managers us MRP software to calculate when certain materials will be required when they should be ordered and when they should be delivered so that storage costs will be minimal MRP II Manufacturing Resource Planning expands the MRP with links to the company s financial systems and other processes In addition to managing inventory levels successfully and MRP II system can help ensure that material costs adhere to target budgets Produces a company wide game plan that allows everyone to work with the same numbers ERP Enterprise Resource Planning extends the scope of resource planning and management even further to encompass the entire organization ERP software programs are typically made up of modules that address the needs of various functional areas from manufacturing to sales to human resources Lean systems Manufacturing systems that maximize productivity by reducing waste and delays JustlnTime Inventory management in which goods and materials are delivered throughout the production process right before they are needed TQM Total Quality Management A management philosophy and strategic management process that focuses on delivering the optimal level ofquality to customers by building quality into every organizational activity 0 Management commitment to supporting TQM at every level in the organization Clear focus on customers and their needs Employee involvement throughout the organization 0 0 Commitment to continuous improvement 0 Willingness to treat suppliers as partners 0 Meaningful performance measurements Six Sigma A rigorous quality management program that strives to eliminate deviations between the actual and desired performance of a business system 1 Define the problem 2 Measure current performance 3 Analyze the root causes 4 Improve the process 5 Control the process long term ISO 9000 concerns quality and customer satisfaction ISO 14000 concerns environmental issues Chapter 11 Contemporary Staffing Challenges Aligning the Workforce matching the right employees to the rightjobs at the right time can be a constant challenge Externally changes in market needs competitive moves advances in technology and new regulations can all affect the ideal size and composition of the workforce Fostering Employee Loylalty most companies cant guarantee longterm employment but they want employees to commit themselves to the company I Monitoring Workloads and Avoiding Employee Burnout as companies try to beat competitors and keep workforce costs to a minimum managers need to be on guard for employee burn out a stat of physical and emotional exhaustion that can result from constant exposure to stress over a long period of time I Managing Work Life Balance Efforts to help employees balance the competing demands of their personal and professional lives Two Elements of Job Analysis 1 Job Description a formal statement summarizing the tasks involved in the job and the conditions under which the employee will work Statement of the tasks involved in a given job and the conditions under which the holder of the job will work Job Specification Identifies the type of personnel a job requires including the skills education experience and personal Lquot attributes that candidates need to possess Statement describing the kind of person who would be best for a given job including the skills education and previous experience that the job requires Six factors HR managers use to Forecast Demand for Employees 1 Forecasted sales revenues 2 The expected turnover rate 3 The current workforce s skill level 4 Impending strategic decisions 5 Changes in technology 6 The company s current and projected financial status Retention efforts to keep current employees Contingent Employees nonpermanent employees including temporary workers independent contractors and fulltime employees hired on a probationary basis Alternative Work Arrangements I Flextime scheduling system that allows employees to choose their own hours within certain limits I Telecommuting working from home or another location using computers and telecommunications equipment to stay in touch with colleagues suppliers and customers helps employees balance their professional and personal commitments by spending less time in transit between home and work I Job Sharing lets two employees share a single fulltime job and split the salary and benefits Dimensions of Diversity Gender Sexism discrimination on the basis of gender Gender pay gap women earn 80 of what men earn Glass Ceiling implying that one can see the top but can t get there subtle discrimination that keep women and minorities out of the top positions in businesses Sexual Harassment unwelcome sexual advance request for sexual favors or other verbal or physical conduct of a sexual nature within the work place Race Religion Ability Diversity Initiatives programs and policies that help companies support diverse workforces and markets ex contracting with more suppliers owned by women and minorities targeting a more diverse customer base Recruitment Process 1 Select a small number of qualified candidates from all applications and resumes received N Recruiters then screen the candidates typically through phone interviews online tests or on campus interviews UJ Candidates who make it though screening are invited to visit the company for another round of interviews 4 The interview team compares notes and assesses the remaining candidates U39I Recruiting specialists check references and background 0quot The hiring manager selects the most suitable person for the job Rightsizing the organization is making changes in the workforce to match its business needs more precisely Downsizi g companies sometimes add workers in some areas even while they eliminate jobs in others Atwill Employment companies are free to fire nearly anyone they choose but they cannot discriminate in firing nor can they fire employees for whistleblowing filing a worker s compensation claim or testifying against the employer in harassment or discrimination lawsuits Wrongful discharge when an employee believes that any of the above were violated they can file a lawsuit against the employer For Cause include actions like committing crimes or violating company policy Chapter 13 Needs any time a difference or a gap exists between your actual state and your ideal state Wants specific goods services experiences or other entities that are desirable in light of a person s experiences culture and personality Utility power ofa good or service to satisfy a human need Form Utility ex fresh ready to eat dishes as an alternative to food ingredients Time Utility ex making their products available when they want to buy them Place Uti y ex making their products available where customers want to buy them Posession Utility ex the satisfaction that buyers get when they actually possess a product both legally and physically Marketing Concept approach to business management that stresses customer needs and wants seeks longterm profitability and integrates marketing with other functional units within the organization Product concept the focus on the production of goods and counting on customers to figure out which products they need and take the steps to find an purchase them Sales Concept emphasizes building a business by generating as many sales transactions as possible Relationship Marketing a focus on developing and maintaining longterm relationships with customers suppliers and distribution partners for mutual benefit Goals Customer loyalty degree to which customers continue to buy from a particular retailer or buy the products of a particular manufacturer or service provider Customer Relationship Management CRM type of information system that captures organizes and capitalizes on all the interactions that a company has with its customers Social commerce the creation and sharing of productrelated information among customers and potential customers Marketing research The collection and analysis of information for making marketing decisions Consumer Market Individuals or households that buy goods and service for personal use 1 Need recognition 2 Information Search 3 Evaluation of Alternatives 4 Purchase 5 Postpurchase Evaluation Cognitive Dissonance Tension that exists when a person s beliefs don t match his or her behaviors a common example is buyer s remorse when someone regrets a purchase immediately after making it 5 Influences in Purchases I Culture I Socioeconomic Level I Reference groups I Situational factors I Selfimage External Environment I Economic Conditions I Natural environment I Social and Cultural Trends I Laws and regulations I Technology Strategic Marketing Planning l Examining your current Marketing Situation a Reviewing your past performance b Evaluating your competition c Examining you internal strengths and weaknesses d Analyzing the external environment Lquot Assessing your Opportunities a Market Penetration Selling more ofa firm s existing products into the markets it already serves b Product Development creating new products for a firm s current markets c Market Development Selling existing products to new markets d Diversification Creating new products for new markets 3 Developing a marketing strategy to reach those objectives Market A group of customers who need or want a particular product and have the money to buy it Market Segmentation Division of a diverse market into smaller relatively homogeneous groups with similar needs wants and purchase behaviors Demographics Psychographics Geography Behavior Marketing Mix The four key elements of marketing strategy Product Price Placedistribution and Promotion customer communication Chapter 14 Toothbrush Core benefit brush teeth get them clean Actual Product brand name crest quality level Packaging Design cross action brissels Features electric Augmented Product After sale service Accessories Warranty Installation Upgrades Delivery and credit Consumer Products Convenience Products Everyday goods and services that people buy frequently usually without much conscious planning Shopping Products fairly important goods and services that people buy less frequently with more planning and comparison Specialty Products Particular brands that the buy especially wants and will seek out regardless of location or price Unsought Products life insurance cemetery plots Expense Items Inexpensive products that organizations generally use within a year of purchase Capital Items More expensive organizational products with a longer useful life ranging from office and plant equipment to entire factories Raw Material iron ore crude petroleum Components demiconductors and fasteners Supplies pencils nails lightbulbs Installations factories power plants Equipment desks computers Business Services landscaping and cleaning The Product Life Ncle 1 Introduction 2 Growth 3 Maturity 4 Decline The NewProduct Development Process 1 Idea Generation a Trend watchers monitor social media to spot shifts in consumer tastes b Crowdsourcing invite the public to submit ideas 2 Idea Screaning a Feasibility study the product s features are defined and its workability is tested b Concept Testing asking potential customers what they thing 3 Business Analysis 4 Prototype Development preproduction samples of products used for testing and evaluation 5 Test Marketing product development stage in which a product is sold on a limited basis to gauge its market appeal 6 Commercialization large scale production and distribution ofa product Brand Equity the value that a company has built up in a brand Brand Loyalty the degree to which customers continue to purchase a specific brand Brand awareness people are likely to buy a product because they are familiar with it Brand Preference people will purchase the product if it is available although they may still be willing to experiment with alternatives if they cannot find the preferred brand Brand lnsistence when buyers will accept no substitute Brand names portion of a brand that can be expressed orally including letters words or numbers Brand mark portion ofa brand that cannot be expressed verbally Logo a concise graphical and or textual representation of a brand name Trademarks brands that have been given legal protection so that their owners have exclusive rights to their use National Brands brands owned by the manufacturers and distributed nationally Private Brands Brands that carry the label ofa retailer or a wholesaler rather than a manufacturer Generic Products products characterized by a plain label with no advertising and no brand name Product Line A series of related products offered by a firm Product Mix complete list of all products that a company offers for sale Pricing Strategies I Marketing Objectives I Government Regulations 0 Price fixing 0 Price discrimination o Deceptive pricing I Customer Perceptions I Market Demand I Competition Break Even Point Fixed Costs Selling price Variable costs per unit CostBased Pricing method of setting prices based on production and marketing costs rather than conditions in the market place Valuebased pricing Method of setting prices based on customer perceptions of value Optimal Pricing Computerbased pricing method that creates a demand curve for every product to help managers select a price that meets specific marketing objectives Skim Pricing charging a high price for a new product during the introductory stage and lowering the price later Penetration Pricing introducing a new product at a low price in hope of building sales volume quickly Lossleader Pricing selling one product at a loss as a way to entice customers to consider other products Participative Pricing Allowing customers to pay the amount they think a product is worth