Marketing
research and channels
of marketing
Philip Kilter defines marketing as «asocial and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and values with others». Marketing research is used toassess the market's response to the firm's marketing inputs which include promotional activities such as price discounting, placement of in-store displays, multimedia advertising, and couponing; expanding distribution; and product development and enhancement. The goal of marketing research is to assist the firm in determining the most effective, i.e. most profitable, mix of marketing inputs given knowledge of the marketplace.
As a formal scientific discipline marketing research began in the early twentieth century with most analyses being based on survey data. In the 1930s, the A. C. Nielsen Company began collecting in-store data using manual audits.Today, with the advent of scanning technology, the amount of timely data available from stores and household panels has grown exponentially. Coincident with this data explosion, the data delivery systems and the techniques used to analyze the data have become increasingly sophisticated. Marketing research is an integral part of organizations in both the consumer durable and nondurable goods sectors, and in recent years the use of marketing principles has become increasing prevalent among nonprofit and government sectors.
Marketing research is interdisciplinary requiring the knowledge of economists, operations researchers, psychologists, and statisticians. For the economist, the economic theory of consumer behavior and the theory of the firm provide basic building blocks. Marketing research can be viewed as an operational or tactical activity and as a strategic activity. Although both activities require knowledge of the workings of the marketplace at both the macroeconomic and microeconomic levels, tactical analyses focus on monitoring a product's performance and testing the effectiveness of marketing programs relative to competitors. Strategic research involves selecting and optimizing marketing opportunities.
In order to understand the marketplace, the researcher must define the market in terms of both the geographic unit and the product class and collect data. Data on consumer purchases permit an analyst to determine what was sold and how particular brands performed relative to each other. In addition to sales and price information, causal data assist the analyst in understanding the reason that sales took place. Examples of causal data are newspaper advertising which indicates the extent of retailer advertising support, display activity, and coupon ads. Another important source of information for understanding the source of sales is television advertising. Measuring the effects of television advertising is relatively difficult owing to the dynamic effects such advertising has on consumer behavior, however.
Once the data are collected, the analyst may choose to evaluate the information by simply looking at the raw series together over time or compute straightforward measures such as market share in order to arrive at a qualitative assessment of market activity. Statistical models might be estimated in order to address issues such as temporary price reduction, effectiveness, the extent of cannibalization due to promotional activity, i.e.. the extent to which sales of one specific product decline as a result of promoting another similar product produced by the same manufacturer, the competitive effects of promotions, differences between markets, competitive pricing points, andlong-term price elasticity’s.
Forecasting is an activity likely to be undertaken by a business economist working in a marketing research department. Conventionally, business economists have been responsible for producing forecasts for the macroeconomic environment or for activity within industry groups. More recently, forecasting movements in mature product categories, in segments within categories, and in brands has increased in importance.
Forecasting the success or failure of new product introductions is also important. New product introductions require a considerable amount of a firm’s 
resources and failure to read the marketplace correctly and early in the development process can lead to costly errors. The development of a new brand begins with the identification of new market opportunities. Consumer survey research directed at identifying the market response to the brand concept and elements of the marketing mix, e.g., pricing, is typically conducted. On the basis of the survey a firm may decide to continue with the development plans for the brand, revise current plans in response to the survey results and re test, or cancel development plans completely. Comparisons may also be made between attitudes toward the new concepts and existing products.
Vocabulary
managerial - управленческий to assess - оценивать
promotional activities - действия по продвижению товара
price discounting - ценовые скидки; placement – размещение;
couponing - использование купонов; enhancement - увеличение, улучшение; survey data - данные осмотра,оценки audit - проверка advent - появление coincidence – совпадение; sophisticated – изощренный;
prevalent - преобладающий, превалирующий; competitor – конкурент;
extent - зд. масштаб; source - источник
market share - доля рынка; temporary price reduction - временное снижение цен; effectiveness – эффективность;long-term price elasticities - долгосрочная эластичность цен
success - успех failure - провал to cancel – отменять; comparison – сравнение;
General understanding:
l) How does Philip Kilter define marketing? 2)What is marketing research used for? 3) What is the goal of marketing research? 4) When did marketing research begin as a «formal scientific discipline»? 5) What knowledge does marketing research? require? 6)What are basic steps of marketing research? 7) According to the text, how can marketing research be viewed? 8)What are the sources of information marketing researcher?
1. What is not true about marketing research?
a) Marketing as a formal scientific discipline has its roots in Greece and Rome. b) Philip Kotler,a prominent economist, defined marketing research as «a social and managerial process».
c) Marketing research began in the early twentieth century.
d) Marketing research requires the knowledge of economists, operation researchers, psychologists and statisticians. e) The research must understand the location and
product class of a certain market in order to understand it. f) A person working in a marketing research department is a good forecaster.
2. Give definitions to the following:
a) marketing
b)promotional activities
c) couponing
d)tactical activity
e) strategic activity
f) statistical models g)business economist h)macroeconomic environment
3. Translate into Russian:
a) Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and values with others.
b) Marketing research is used to assess the market's response to the firm's marketing inputs.
c)Coincident with this data explosion, the data delivery systems and the techniques used to analyze the data have become increasingly sophisticated.
d) Marketing research can be viewed as an operational or tactical activity and as a strategic activity.
e) Forecasting the success or failure of new product introductions is very important.
4. Find equivalents in Russian for:
a) managerial process
b)promotional
c) activities
d)placement of in-store displays
e) multimedia advertising
f) durable and nondurable goods sectors g)product class
Questions for discussion:
l)Is it reasonable to use independent marketing reserch in small business? 2) What skills are of the most use for specialist in marketing? 3)How could marketing research be made less expensive?
Channels of marketing
Individual consumers and corporate/ organizational buyers are aware that thousands of goods and services are available through a very large number of diverse channel outlets. What they may not be well aware of is the fact that the channel structure, or the set of institutions, agencies, and establishments through which the product must move to get to them, can be amazingly complex.
Usually, combinations of institutions specializing in manufacturing, wholesaling, retailing, and many other areas joinforces in marketing channel arrangements to make possible the delivery of goods
to industrial users or customers and to final consumers. The same is true for the marketing of services. For example, in the case of health care delivery, hospitals, ambulance services, physicians, laboratories, insurance companies, and drugstorescombine efforts in an organized channel arrangement to ensure the delivery of a critical service. All these institutions depend on each other to cater effectively to consumer demands.
Therefore, marketing channels can be viewed as sets of interdependent organizations involved in the process of making a product or service available for use or consumption. From the outset, it should be recognized that not only do marketing channels satisfy demand by supplying goods and services at the right place, quantity, quality, and price, but they also stimulate demand through the promotional activities of the units (e.g., retailers, manufacturers' representatives, sales offices, and wholesalers) comprising them. Therefore, the channel should be viewed as anorchestrated network that creates value for the user or consumer through the generation of form, possession, time, and place utilities.
A major focus of marketing channel management is on delivery. It is only through distribution that public and private goods can be made available for consumption. Producers of such goods (including manufacturers of industrial and consumer goods, legislators framing laws, educational administrators conceiving new means for achieving quality education, and insurance companies developing unique health insurance coverage) are individually capable of generating only form or structural utility for their «products». They can organize their production capabilities in such a way that the products they have developed can, in fact, be seen, analyzed, debated, and. by a select few perhaps,digested. But the actual large-scale delivery of the products to the consuming public demands different types of efforts which create time, place, and possession utilities. In other words, consumers cannot obtain a finished product unless the product is transported to where they can gain access to it, stored until they are ready for it, and digested, exchanged for money or other goods or services so that they can gain possession of it. In fact, the four types of utility (form, time, place, and possession) are inseparable: there can be no «complete» product without incorporating all four into any given object, idea, or service.
Vocabulary
diverse - разнообразный
to be aware of - остерегаться чего-либо
channel structure - структура канала
establishment - установление, учреждение
to join - присоединяться
health care delivery - оказание медицинских услуг; physician - терапевт
insurance companies - страховые компании; drugstore – аптека;
to ensure - обеспечивать
can be viewed as - могут быть рассмотрены, как...
interdependent – взаимозависимый; orchestrated network - слаженная сеть
legislator – законодатель; to develop – развивать;
to digest - переваривать
General understanding:
l)What are individual consumers and corporate buyers aware of?
2)What combinations of institutions specializing in manufacturing, wholesaling, retailing usually do to maximize their profits?
3)What is an example of health care delivery used for?
4)What is the major focus of marketing channel management concentrated on? 5)What the verb «to digest» is used for in the text?
1. Which of the following is false:
1)Channel structure could be very complex. 2) Many partners coordinate their efforts to make possible the delivery of goods. 3) Channels of marketing are of the most
importance and effectiveness in health care delivery. 4) Marketing channels stimulate demand through the promotional activities of the units. 5) Public and private goods could be available for consumption only through distribution. 6)According to the author, legislators also use the channels of marketing to distribute their products - laws. 7) The only way to use marketing channel is to
digest them.
1. Define the following in English:
a) channels of marketing
b)channel structure
c) channel outlets
d)channel arrangement
e) marketing channel management
2. Find equivalent in Russian for:
a) consumer demand
b)ambulance services
c) interdependent organizations
d)network
e) public and private goods
f) four types of utility
3. Use the following to write sentences on
channels of marketing in the sphere which is
of interest and importance to you:
a)can be viewed as.... b)to be well aware of... c) to make smth. possible d)it should be recognized as... e)a major focus of... is on...
4. Summarize the text in 8-10 sentences. Use
the word patterns of the text. Dwell on the
strong and weak points of the theory.
Questions for discussion:
1) Does channel structure for individual consumers differ from that of organization? In what way?
2) Do you agree that laws of marketing could be applied to the sphere of politics? Why and why not? Give an example.
3)Do you agree that theory of marketing could be used in the field of medicine? Does it come into contradiction with ethics or morals?
Text
Manufacturers, wholesalers, and retailers, as well as other channel members, exist in channel arrangements to perform one or more of the following generic functions: carrying of inventory; demand generation, or selling;physical distribution; after-sale service; and extending credit to customers. In getting its goods to consumers orend users, a manufacturer must either assume all these functions or shift some of them or all to channel intermediaries.
The above discussion underscores three important principles in the structure of marketing channels:
1. One can eliminate or substitute institutions in
the channel arrangement.
2. However, the functions these institutions perform cannot be eliminated.
3. When institutions are eliminated, their functions are shifted either forward or backward in the channel and are therefore assumed by other members.
It is a truism that «you can eliminate an intermediary, but you cannot eliminate its functions».
To the extent that the same function is performed at more than one level of the marketing channel, the work load for the function is shared by members at these levels. For example, manufacturers, wholesalers, and retailers may all carry inventory. This duplication may increase distribution cost. However, the increase in cost is justifiable to the extent that it may be necessary to provide goods to customers at the right quantity, quality, time, and place.
A flow in the marketing channel is identical to a function. However, the term «flow» is somewhat more descriptive of movement, and, therefore, we tend to prefer Physical possession, ownership, and promotion are typically forward flows from producer to consumer. Each of these flows moves «down» the distribution channel— a manufacturer promotes a product to a wholesaler, who in turn promotes it to с retailer) and so on. The negotiation, financing, and risking flows move in both directions, whereas ordering and payment are backward flows.
In every marketing channel, the members that do business together have some kind of working relationships. On the extreme ends on the continuum of these relationships, there are purely transactional relationships on one side and purely collaborative ones on the other. Transactional relationships occur when the customer and supplier focus on the timely exchange of basic products for highly competitive prices. Collaborative relationships, or partnerships, occur through partnering, which is a process where a customer and supplier form strong and extensive social, economic, service, and technical ties over time. The intent in a strategic partnership or alliance is to lower total costs and/or increase value for the channel, thereby achieving mutual benefit. A strategic alliance can also denote horizontal partnerships that develop between two organizations at the same marketing level. Partnerships capitalize on the notion that marketing channels are vertical value-adding chains that create competitive advantage.
A trend that is an outgrowth of partnerships is the seamless channel. This concept is related to the concept of the seamless organization, which has all departments working together to serve the customer, thereby blurring the organizational lines that separate departments within the organization. The seamless channel blends the borders of channel members by having multiple levels in each organization work together with their counterparts in other channel organizations to deliver quality service to the customer. Partnerships contribute to the seamless channel by giving channel members a sense of being on the same team. The adversarial role that is so prevalent is replaced with one built on trust and cooperation.
Vocabulary:
manufacturer – производитель; wholesaler - оптовый продавец;
retailer - розничный продавец; generation – генерирование;
physical distribution - физическое распространение; end user - конечный потребитель; intermediary –посредник; to underscore – подчеркивать; arrangement - расположение, соглашение;to duplicate –дублировать; justifiable - оправданный, обоснованный; flow - течение, поток;
ownership - владение
to negotiate - проводить переговоры,договариваться; to denote - указывать, об означать; partnerships -товарищество,партнерство;
to outgrow - перерастать, вырастать; seamless – бесшовный;
to blend – смешивать; counterpart - коллега ;adversarial – противоборствующий; trust – доверие; cooperation -сотрудничество
General understanding:
l)What is the aim of manufacturers, wholesalers, and retailers? 2)What are three important principles in the structure of marketing channels? 3) What is referred to as «truism»? 4)What is meant by «flow»? 5) How does the author describe the relations
within the units on marketing channel? 6) What is a «seamless» channel? 7) What role is devoted to trust and cooperation?
1. Find equivalents in Russian:
a)purely transactional relationships b)to form ties over time
c) after-sale service
d)channel intermediaries
e) collaborative relationships
f) horizontal partnerships
2. Translate into Russian:
a) One can eliminate or substitute institutions in the channel arrangement. b)When institutions are eliminated, their functions are shifted either forward or backward
in the channel, c) The term «flow» is somewhat more descriptive of movement, and, therefore, we tend to prefer it.
d)Collaborative relationships, or partnerships, occur through partnering. e)A trend that is an outgrowth of partnerships is the seamless channel.
3. Use the following to summarize the text-
Try to argue with the author. Explain your
position. Give examples to illustrate it.
a) to extent that
b)however
c) on extreme ends d)a trend is that... e)smth. is related to smth. f) the intent is to...
Questions for discussion:
1) Do you agree with the proposed three «principles» in the structure of marketing channels? Can you add/delete any of them? Could they be combined in one general rule?
2)Do you think that «trust and cooperation» are an essential feature of any marketing channel?
3)Can you agree that these basic qualities are essential for any other business activity? Give an example of an activity which is based more on legal means of regulations.