Responding to Competitors Price Changes

How should a firm respond to a price cut that is initiated by a competitor In markets characterized by high product homogeneity, the firm should search for ways to enhance its augmented product, but if it cannot find any, it will have to meet the price reduction. If the competitor raises its price in a homogeneous product market, the other firms might not match it, unless the price increase will benefit the industry as a whole. By not matching it, the leader will have to rescind the increase....

Characteristics of Services and Their Marketing Implications

Services have four major characteristics that greatly affect the design of marketing programs intangibility, inseparability, variability, and perishability. Services are intangible. Unlike physical products, they cannot be seen, tasted, felt, heard, or smelled before they are bought. The person who is getting a face lift cannot see the exact results before the purchase, just as the patient in the psychiatrist's office cannot know the exact outcome before treatment. To reduce uncertainty, buyers...

Motivating Channel Members

The most successful firms view their channel members in the same way they view their end users. This means determining their intermediaries' needs and then tailoring the channel positioning to provide superior value to these intermediaries. To improve intermediaries' performance, the company should provide training, market research, and other capability-building programs. And the company must constantly reinforce that its intermediaries are partners in the joint effort to satisfy customers....

Growth of Direct Marketing and Electronic Business

Sales produced through traditional direct-marketing channels (catalogs, direct mail, and telemarketing) have been growing rapidly. Whereas U.S. retail sales grow around 3 percent annually, catalog and direct-mail sales are growing about 7 percent annually. These sales include sales to consumers (53 percent), business-to-business sales (27 percent), and fundraising by charitable institutions (20 percent). Annual catalog and direct-mail sales are estimated at over 318 billion, with per capita...

Public and Ethical Issues in Direct Marketing

Although direct marketers and their customers usually enjoy mutually rewarding relationships, a darker side occasionally emerges. Key public and ethical issues include Irritation Many people find the increasing number of hard-sell, direct-marketing solicitations by phone, television, and e-mail to be a nuisance. Unfairness Some direct marketers take advantage of impulsive or less sophisticated buyers. Television shopping channels and infomerciab extended-length, direct-response commercials that...

Composite of Sales Force Opinions

Where buyer interviewing is impractical, the company may ask its sales representatives to estimate their future sales. Each sales representative estimates how much each current and prospective customer will buy of each of the company's products. Few companies use their sales force's estimates without making some adjustments. Sales representatives might be pessimistic or optimistic, or they might go from one extreme to another because of a recent setback or success. Furthermore, they are often...