CCT 322

Marketing Information Products & Services SECTION  D

For the section(s) taught by Prof. Tim Richardson

..

Section D deals with Chpt 12 and Chpt 13 in the CCT 322 text. Some parts of those chapters are relevant to learning about Marketing Information Products & Services, some parts are not - the parts that are not relevant are the parts dealing with Retailing since this is B2C and CCT 322 is mostly about B2B situations. However successfully B2B vendors must be aware of the B2C challenges since a B2B customer ultimate has to deal with the consequences of B2C success or failure. Sometimes the best way to sell a product or service from one business to another business is to provide convincing evidence as to how attractive the product will be to the final customer. WTGR

Chapter 12 Personal  Selling

Personal Selling selling powerpoint  7 steps in selling process   This screen capture comes from  series of powerpoints for another marketing textbook - but the outlay of the topics matches very well what we do in Chpt 12 of the CCT 322 text You should review this slides online . This screen capture shows the points in the Selling Process - there are entire 4 months courses devoted to learning about these 7 steps and how to do this in detail - you are required to simply understand that Selling involved more than just the "Presentation" - there is work you have to do to set up the sales call, and work you have to do after to make it successful

.

A special unit all about Search Engines see  www.witiger.com/ecommerce/searchengineranking.htm Things to Increase Your Ranking in Search Engines  This will be discussed at length in class. Ranking high in Search Engines in 2004 is a significant focus of companies that are marketing Information Products and Services

 
 

Chapter 13

Retailing One of the important things about Retailing is understanding the customer. To be successful Marketing Information Products & Services you need good information. The screen capture to the left shows a unit in intl business that applies to CCT 322 since the same souces of info are relevant

.

Chapter 13

Retailing - Direct Marketing ----- Direct Mail ----- Cataloque Retailing ----- Television Shopping ----- Internet Shopping (Online Marketing / AKA e-commerce / e-business) The CCT 322 text discusses Internet Shopping on page 399 - the subject of e-commerce is wide and complex and is addressed by a menu of topics on witiger's site at the screen capture below.   There are many topics on this list related to e-commerce, we will note just a few.

.
 

Chapter 14

Wholesaling - a consequence of many small and medium sized manufacturers not having the resources to have their own sales and marketing people Types of Wholesalers  o  Merchant Wholesalers                - take title on the goods - the largest segment of wholesalers  o  Manufacturers Sales Facilities  o  Agents and Brokers  o  Primary Product Dealers Multiple Distribution Channels - Factors effecting choice of channels  o  Market considerations  o  Product considerations  o  Channel member considerations  o  Company considerations

.

Chapter 14 Exporting

Distribution to Foreign Markets - see  www.witiger.com/universityoftoronto/MGTC44.htm Ways to enter foreign markets  www.witiger.com/internationalbusiness/outlineMGTC44f.htm exporting direct to customer through agents through trading house (Korea, Japan) importing direct from source through broker through trading house (Korea, Japan) foreign manufacturing wholly owned subsidiary joint venture franchising food service licensing branded clothing contract manufacturing strategic alliances

.

 .

Chapter 14

Supply Systems and Supply Chain Management

.
 

What is the Supply Chain?  www.supply-chain.org/Resources/faq.htm  "The supply chain -- a term now commonly used internationally -- encompasses every effort involved in producing and delivering a final product or service, from the supplier's  supplier to the customer's customer. Supply Chain Management includes managing supply and demand, sourcing raw materials and parts, manufacturing and assembly,   warehousing and inventory tracking, order entry and order management, distribution  across all channels, and delivery to the customer." Why is the supply chain important?   "In years past, manufacturers were the drivers of the supply chain -- managing the pace  at which products were manufactured and distributed. Today, customers are calling the shots, and manufacturers are scrambling to meet customer demands for  options / styles / features, quick order fulfillment, and fast delivery."

.

.

Supply Chain  Management an industry term !                   Supply Chain  Management an industry term !

Supply-Chain Management as explained in the FAQ of the  Center for Electronic Commerce  http://cism.bus.utexas.edu/resources/ecfaq/ecfaqc2.html Q. What is supply chain management? "A supply chain is a collection of inter-dependent steps that, when followed, accomplish a certain objective such as meeting customer requirements. Supply-chain management is a generic term that encompasses the coordination of order generation, order taking, and offer fulfillment/distribution of products, services, or information. Numerous, independent firms and customers are involved in a supply chain (e.g., manufacturers and parts suppliers; parcel shippers, senders and receivers; wholesalers and retailers). The WWW and extranets (connected intranets) have  shown a great potential in linking and managing these entities into a virtual organization." key points, as translated by witiger coordination of order generation order taking offer fulfillment distribution of products, services, or information who is involved suppliers (at three different levels) parcel shippers (documents) wholesalers - on the pull side retailers - on the pull side What might be missing from the definition above order taking and offer fulfillment can sometimes be considered "information" you also have to have some words noting the money required to make it all happen

.

.

Chapter 18   Global Manufacturing &  Supply Chain Mgmnt "a company's supply chain encompasses the coordination of materials information and funds from the initial raw material supplier to the ultimate customer"                      text p. 628 this definition is OK, on a general level, but it is not complete enough for a full understanding (our MGTC44 expanded version) "a company's supply chain encompasses the coordination of materials time of the materials arrival location related to the production process warehousing storage packaging of the materials inbound information information about materials quality price fluctuations currency exchange rate considerations and funds borrowing money from the bank to pay for  materials before they are assembled then sold labour to assemble the product from the initial raw material supplier to the ultimate customer"   . when we say "... from the initial raw material supplier to the ultimate customer"  - the suppliers are broken down into 3 categories.  These terms are used in all types of manufacturing industries but are particularly common in the automotive and electronic consumer products industries. third tier supplier - raw materials  (eg. the polyethylene [plastic] pellets which get heated, then blowmoulded into the shape of the fan blades) (eg. the company that takes the raw copper ingots and extrudes them into copper wire, which is used to make the motor) second tier supplier - subcomponents (eg. motor in the fan assembly) first tier supplier - complete components  (eg. cooling fan assembly in a computer) WTGR

.
 

JIT Just In Time

Industry activities to deal with enhancing effectiveness of Supply Chain Management  JIT Just in Time  quick response  vendor managed inventory  continuous replenishment  all of which are facilitated by e-business and the tools of the internet since 2000 information competitiveness What has changed in the millennium is the need to quickly share and disseminate information across the supply chain,  - this follows a shift from product orientation, to sales orientation to market orientation.  Pull versus Push Supply Chain models  - explained by WTGR on the blackboard with a diagram   - Pull based models require a lot of information about the customer   - the trend has been away from Push based systems to Pull based systems  . . If Pull based models require a lot of information about the customer, then one of the corollaries about the spread of Pull Supply Chain Models is the requirement for better intelligence about customers. One of the consequences, for international business, is a more sophisticated approach to gathering data on international customers in order to be more effective at Supply Chain management on a global basis - in turn to be more competitive WTGR .

.
 
 

Supply Chain Component Parts                   Supply Chain Component Parts                         Supply Chain Component Parts

Supply Chain Management as explained in the Schneider and Perry book,  Chapter 9 - the component parts Purchasing Activities Logistics Activities Support Activities,  Purchasing Activities include,  identifying people who will sell parts and materials to you evaluating those potential suppliers quality cost competitiveness delivery costs and time of delivery selecting particular parts and materials placing the order resolving issues that arise (ie. late shipment, parts missing, wrong colour etc.) Logistics Activities include,  managing the inbound movements of parts and materials outbound completed products warehousing inventory control vehicle scheduling Support Activities include,  HR resources ie. employee travel policies document storage finance payroll processing technology development larger firms are building some of these functions into their Intranet systems, like information to track customers who have not paid

.
 
 
 

A special unit all about Intranets and Extranets This is required reading for CCT 322 This "extends" information found about Supply Chain management in Chpt 14 of the CCT 322 text

 

..

Section E deals with Chpt 15 in the CCT 322 text. Some parts of those chapters are relevant to learning about Marketing Information Products & Services, some parts are not. The technologies of the Internet have created situations about pricing Information Products & Services which have not been "captured" in traditional marketing textbooks - we will look at some of these. WTGR

 

Chapter 15 Quality

Price proportionate to Quality Consumer perceptions of the Quality and the price they are willing to pay The text says "some consumer's perceptions of product and service quality vary directly with price. Typically the higher the price the better the quality is perceived to be". However striving for high quality is not so simple, there are things you might have to give up. as Dilbert suggests .  .. In Marketing Information Products & Services, it is challenging to explain the FABs in order to describe different quality levels of a product  - physical products, like a car, can be described in terms of cloth seats, leather seats etc. - so the higher or lower price can be easily understoo. In Marketing Information Products & Services, it is incumbent upon the vendor to do more explaining about the things which make their product a quality product and there are different techniques for doing this such as    o testimonials of existing customers    o detailed description of the tech support    o expanded descriptions of how to use advanced features of the service etc. WTGR .  see TQM page at  www.witiger.com/internationalbusiness/TQM.htm

.

"More managers are realizing that they should set prices by evaluating the effect of a price decision not only on the profit margin for a given item but also on demand..." p. 482 Shapiro   . The reason for considering the impact of demand is due to the fact that the "Competitive Environment" greatly influences prices. In the REAL WORD it is very rare for you to do a simple math calculation and say "OK, this is our price based on fixed and variable costs" - you must take into consideration that somewhere somebody is selling something similar to what you are selling, and probably for a different price. Globalization is making the world an increasingly small space and as a consequence, the "Competitive Environment" is becoming more intense. WTGR .

.

Chapter 15 Price and Productivity

.. The degree to which the Competitive Environment challenges your company to produce a product/service at a low price is the degree to which your company has to be highly productive or moderately productive WTGR .

.
.
PRICING OBJECTIVES
see  www.witiger.com/marketing/pricingobjectives.htm
.

Chapter 15 Trade Discounts page 475

Pricing Terms used in B2B 2/10 - net 30  in a business to business (B2B) situation it is common to have to extend credit to customers who are buying parts, materials and supplies. 2 is the % discount 10 is the number of days 30 is the maximum number of days in which you HAVE to pay 2/10 net 30 means if you may before 10 days, you get a 2% discount 5/10 net 60 if I pay in 10 days I get a 5% discount and, I have to pay all of it before 60 days

.
 

Price Setting in the Real World - Most price structures are built around list prices
	In the "Real World", most manufacturers create a cost sheet for each product, then combining the cost sheets leads to a price list for a group of products. If you click on the screen capture to the left you will see a real cost sheet used by a clothing manufacturing company - it is done in Excel so when various factors change, you can have the final cost calculation easily.
	If you click on the screen capture to the left you will see a real price list which has been composed from cost sheets. This Price List is the basics from which all price objectives come from - its is from the numbers on this list that you increase by 10%, 20% or 50% your price

.
 

Markups Markup percent is based on selling price In the clothing industry it is usually 100% - this means if your calculated mfg. cost price of a garment is $20 - it will wholesale at $40, the retailer will mark it up to $80, or even $90 depending on the category. "Mark-up Chain" - the sequence of mark ups that a product goes through from producer to retailer. - in some industries, the amount of increase is small, in some, like clothing, jewelry, the increase is enormous "High markups don't always mean big profits"    . Sometimes as the product passes from producer, to agent, to wholesaler, to retailer, there has to be a lot of advertising money spent at each level, which has to be recovered by the spender in a higher price passed on - this is particularly true for women's fashions, CD's, certain types of proceed foods and beverages, and specialty consumer products. Sometimes the mark-up is very low cause there is not a lot of advertising needed and the competitive environment (particular international competition) keeps pressure ot have the final retail price low. This is true for certain types of products like building materials, some unprocessed food products (ie. bags of rice), and non-perishable items that are not sold with a lot of promotion. (ie. windshield washer fluid) WTGR .  It is also important to note that the level of the mark-up depends on whether the product is a consumer product/service or an industrial product/service - BECAUSE,,,, consumer products/services often have more money spent on promotional expenses - therefore the need to recover this in a higher mark-up. level of the mark-up depends on whether the product is: Consumer Product softdrink  Consumer Service vacation Industrial Product screws, nuts and bolts Industrial Service advertising consulting fees

.
 

Stockturn rate (p. 485 Shapiro) If you spend a lot of money to acquire inventory - it will cost you cost you money you have to borrow from the bank to buy the materials to make the product cost you money to pay the warehouse to store it cost you money to pay your employees which all means that as soon as you have created your inventory of product, you want to sell it as quickly as possible so you get money to pay back the people you borrowed from to get started, and pay your employees, and have some profit for moving forward. One of the best things you can do is "turn over" your stock quickly. Once or twice a year is bad, four or five times a year is good. Cash flow is sometimes more important that an absolute profit. When you turn over the stock, you get cash flow.

.
 

Chpt 15 Total Costs

There are three kinds of total costs Total Fixed Cost - rent, utilities, agent commission, insurance - things that do not change no matter how much you produce Total Variable Cost - material, supplies, component parts, wages and salaries, shipping - things that increase, when you increase production Total Cost - the sum of Total Cost + Variable Cost When marketing people sell, they sell based on the individual cost per unit, so this means the person doing this planning for selling must know the Average Cost per Unit. Basically, it is calculated by taking the Total Cost and dividing by the quantity - but in real life - this might often end up with an amount too low cause there is always other costs that did not get factored in to your Total Cost. There are Three Kinds of Average Cost Average Cost Average Fixed Cost = total fixed cost divided by quantity Average Variable Cost = total variable cost divided by quantity  .  . The problem with Average Cost Pricing is it only works if you do indeed sell all the units. In many cases, this does not happen - so this means that your cost calculation will be incorrect and in fact the true cost will be higher. If your Average Cost Pricing meant you had a cost of $10,000 to produce 2,500 garments then your cost per item would be $4 - so if you sold all 2,500 and, say $5, you would have a profit. 2,500 x $5 would be $12,500 - but, in truth, you may only sell 1,900 at $5 so your sales would be $9,500 - this means you have a loss. Your cost was $10,000 - but you only sold $9,500, and you have 600 units left sitting in the warehouse. So it would be better to sell them at $6 cause you have a safer chance of breaking even. - which leads us to the question of calculating how to break-even WTGR .

.
.

witiger.com	CONTACTIMAIN PAGE I NEWS GALLERY IE-BIZ SHORTCUTS I INT'L BIZ SHORTCUTS  IMKTG&BUSINESS I TEACHING SCHEDULE  IMISTAKES ITEXTS USED IIMAGESIRANKI
	.