Blog # 9 Marketing Channels

Marketing channels are the routes a product takes to get into consumers hands.  Or as our textbook states, it consists of individuals and firms involved in the process of making a product or service available for use.  These channels can be seen through different methods of intermediaries.  There are six types of marketing channels/ intermediaries and they are as follows:

Middleman- The middleman is the intermediary between the manufacturer and the end–user of a certain product. 

Agent or Broker- These individuals are intermediaries with legal authority to act on behalf of the manufacturer but do not take the ownership title to products.  An example of these can include real-estate agents.

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Wholesaler- Wholesalers are intermediaries who sell to other intermediaries.  An example of a wholesaler would be Costco

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Retailer- Is an intermediary who sells to consumers.  Retailers can include JC Penney and Sears.

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Distributor- This term can be used to define wholesalers but is also usually used to generally describe intermediaries who perform the actions of selling, maintaining inventories, and extending credit.

Dealer- A dealer can mean the same as a distributor, retailer, wholesaler, and so fourth.  We generally describe them with items such as automobiles, however they are also retailers.

Marketing channels consist of direct and indirect channels.  Direct channels are where the producers deal directly with consumers.  These can consist of insurance companies who sell directly to consumers.  Indirect channels are where intermediaries get involved between the producer and consumer.  An example of this would be a car dealership as they act as retailers for certain automobiles.  Another form of marketing channels is an electronic marketing channel.  These are channels that make products and services available electronically.  Sites such as Amazon and Orbitz are electronic marketing channels, Amazon selling books and Orbitz being a reservation service.

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A company can also use Multichannel marketing which is the blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers who shop and buy in traditional intermediaries and online.  This is not to be confused with Dual Distribution and arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product.

Marketing channels are the only ways products can get into the consumers hands.  Products must be sold and whether they go directly to consumers or through intermediaries, marketing channels are how those products or services reach their destination.  There is also lot of risk involved especially in indirect marketing channels.  This is because not only do the producers risk the product not selling well but so do the retailers and wholesalers.  They purchased the products from the producers; if those products don’t sell they too will be out of profit.  However even though it is risky it allows certain products to sell better from multiple places.  If a product is sold through different retailers and wholesalers it gives the consumers more way to buy the products, which can ultimately lead to higher profits especially for newer goods.

All definitions were found in the Kerin, Hartley, Rudelius, Marketing textbook

Blog Post 8: Marketing Simulation Game

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Hey guys!  So throughout this blog I have mentioned different projects that we have completed in class that have helped me better understand the concept of marketing.  One of those projects is the McGraw Hill Practice Marketing simulation.  This simulation is conducted by forming teams and working together to create a certain product.  The products the groups in our class created were backpacks.  The simulation allows each group to create the backpack starting essentially from scratch by choosing the material, the features and so on and essentially forming a company.   Below is a picture of the backpack created by my team; CityPack

ProductàAs with any product that a business creates they must choose a target market for that product.  The simulation allows each group to pick a target market and switch that market at any time.  The simulation gives facts about each market so each group can tailor their backpack to the specific needs/wants of the market.  For example our target market was “university students.”  They desired a backpack that was durable and environmentally friendly, so we took this into consideration and made our backpack from hemp, which is an environmentally sustainable material.  We also incorporated a university logo on our backpack to grab the attention of the students.

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MarketingàIn the simulation it allows the groups to choose how they want to market their backpack.  Whether it is through social media, television, magazines, radio shows, and more, a team can choose which route they would like to take.  Different ways prove profitable for different groups so it was good to play around with it and see which method worked the best.  Teams could also choose how they sold their product.  Teams could choose between online retailers, discount stores, outdoor stores, again it was like the marketing methods because teams had to figure out what worked best for their product and which method brought in the most profit.

The Numbersà The most interesting application that I found within this simulation were the financial numbers.  I thought that this gave the simulation more realistic approach because most of our decisions were based off of these numbers.  We looked at our total revenue, profit, total sales, market share, etc in order to see what we needed to do.  For example in our first turn we would have made more money if we did not spend so much money on marketing.  The numbers allowed is to notice this and we changed the amount we spent on advertising.  To me this is the foundation of selling a product because a company wants to make the most money they can while keeping total costs as low as possible.  By looking at financial statements a company can make decisions to maximize profits

Overall I found the Practice Marketing simulation to be a very helpful tool in my understanding of marketing.  It gave me a more realistic approach to marketing and made us work together as a group.  In the real world on will most likely have to work with others so by doing projects like this it sets us up for conducting business in the future.  The simulation allowed us to utilize certain techniques we did in class and see how they would actually work in real time.  I found this simulation helpful and useful to my knowledge of marketing in business.

CP

Blog 7: The Science of Price

           As I was reading chapter 13 of my Marketing textbook I was intrigued at the art of pricing a product.  Price is such an important part of a product in my mind because it essentially can be the make or break factor for a customer.  The following blog explains the idea behind this important factor by outlining the chapter within my marketing textbook.

            First we will start out with the basics.  Price is the overall amount of money or considerations an individual must exchange to own the product.  The final price an individual must pay to own a product is computed in the following equation:

Final Price= (List Price)- (Incentives and Allowances)+(Extra Fees)

            In my mind, I always thought value was a mere word and that it fluctuated with each buyer, meaning different objects had different values to certain individuals.  In reality value is based off of the benefits to price ratio, which certain marketers use to create value pricing which is increasing value in products or services but maintaining or decreasing them in price.  Value can be computed with the following formula:

Value=Perceived Benefits/Price

            In order for a firm to set a price on a product they must consider many things such as profit and other associated factors.  When a company sets a price they go through a six-step process known as price in the marketing mix.  The steps are as follows:

1.     Identify pricing objectives and constraints

2.     Estimate demand and revenue

3.     Determine cost, volume, and profit relationships

4.     Select an approximate price level

A company’s objectives can vary depending on each firm.  Some objectives include profit, sales, market share, or social responsibilities.  All companies experience constraints such as demand, cost of production, and newness of the product.

A simple way to estimate demand for a product is through demand curves which relate the quantity of goods sold and the price at which said goods were sold for.  However economists also state that consumer tastes, availability, and consumer income can have a big impact on demand.  In order to estimate revenues companies utilize a revenue curve which is based off of total revenues which are found using the formula TR=PxQ or Unit price X quantity sold. 

Determining costs is a critical measure for any decisions based upon price.  The main costs that should be studied are total cost (TC), Fixed Cost (FC), Unit variable cost (UVC) and marginal cost (MC).

·       Total cost is the total expense a firm incurs whiling producing an item and is found by doing the following calculation: TC= FC+VC

·       Fixed Costs are expenses that do not change throughout the production of a product whereas variable costs are costs that can change.

·       Unit variable cost is variable cost except calculate don a per unit basis: UVC= VC/Q

·       Marginal cost is the change in total cost that results from producing one additional unit of a product or MC= Change in TC/1 unit increase in Q.

One calculation that I was recently introduced to was the break-even point formula.  We had to do this in our market simulations in order to determine the quantity in which to sell at where our total revenues equal total costs meaning the least we can sell without losing money.  This is found by doing the formula BEPQuantity= FC/P-UVC.

            Once all of these steps are completed we can at last determine a price for the product.  The reason this process is so extensive is that price truly is a major factor of marketing and can ultimately determine a products success rate, which will then reflect the success rate of a company.  In order for a company’s product to be successful for both consumers and the business it must be set at the right price.

The information above is an outline of Ch.13 in Marketing by Roger A. Kerin, Steven W. Hartley and William Rudelius, the 11^th Edition

Blog 6: Business Major to Firefighter

             Over the course of the past couple years I have been asked two questions.  What is your major?  And what do you hope to do with that major?  To answer these questions straightforward, I am a business major who wants to be a career firefighter.

Many are baffled at the fact that I would spend the money on college to get a degree that I potentially will never use after college.  I find this thought to be false.  For one firefighter jobs are hard to come by and if I get injured I will need a degree to fallback on.  Secondly firefighting can be a business and can utilize certain business skills.  One such skill is communication.  As a fire officer you need to be able to get through to your fellow firefighters whether that is during training or during an emergency communication skills are a must.  The presentations we do in marketing allow me to work on these communication skills and essentially “train” the class on my ad or Ted Talk.  Another aspect of firefighting is not found in marketing but in another form of business concentration, that being management.  Fire officers especially need to have good managerial skills in leading their fellow firefighters into emergencies and ultimately have a goal/plan and achieve said goal whether it is putting the fire out or saving a victim.  This goal/plan of firefighters is essentially no different than the five-step marketing research approach it is just made at a much faster pace.  A firefighter once on scene must define the problem at hand, quickly size-up the scene and create a plan based off of that size-up, and take the required actions to successfully complete that plan. 

These connections are not just seen on the fire scene; in fact it may be argued that the business aspect of firefighting is all in upper management with department chiefs and advisors.  These are the men who handle the budgets for the fire department, look at what products to purchase and what not to purchase and make sure every firefighter gets paid for his normal shift and overtime if needed.  Another aspect that would include business/marketing factors would be organizing fundraisers for the department.  Whether is marketing the fundraiser or actually being the brains behind it, many fire department related fundraisers are put together by the firefighters themselves and used to raise money for different things such as muscular dystrophy or cancer.

Lastly it is known that firefighters salaries are not very high.  By having a second degree it will allow me to have a second job.  This job would most likely be within the business field as I could start my own business or help run another.  Either way my degree will help in doing this

As you can see firefighting incorporates many aspects of business.  By obtaining a degree in business I will not only have a degree to fall back on in case I get injured but I will also gain certain skills that will make me a better firefighter.  These skills will most likely consist of leadership, management, and decision-making and will come from an array of courses from marketing to finance.  Overall I view my major in business as an asset both outside and within my aspiring career of becoming a firefighter.