We began the second lecture by discussing how consumers select and interpret information, and how marketers make it easy for them to process information, feel good about their product,
and take action.

The Rule of 3s illustrates how consumers store and retrieve information in their long term memories. Savvy marketers find ways to get into their target market's "evoked set" of experiences.

The Hierarchy of Effects model defines 7 steps consumers go through from being totally unaware to actual product trial,
and what marketers must do to provide information and incentives.

During lunch, we explored how symbolism helps direct consumer behavior by using assigned meanings that consumers already have stored in their long term memories.

We learned that a product is not necessarily what it does, but what it delivers.
And the bundle of utilities must have the power to satisfy.

Steve asserted that marketers do not create brands. They only select names, images, sounds, words, etc; then invest time and money to consistently promote them to target audiences. It's only when consumers begin asking for the product by name that a brand is born.

We learned that place strategy basically involves getting the product from where its produced to where possession takes place (distribution). That process is called commercialization (distribution).

Marketers enroll channel members who provide any number of services (buying, selling, transportation, storing, sorting, financing, info sharing) based on their ability to perform these activities more effectively and efficiently than the marketer.

Integration is about gaining control (reducing risk) of a distribution channel, and guaranteeing exposure.

Horizontal integration means establishing control at any one stage along the commercialization schedule (as in owning a series of warehouses that makes it difficult for others to get to retailers without going through them).

In this example of horizontal  integration, if we owned/operated both wholesalers,
all 4  retailers would have to come to one of our wholesalers to obtain the product.
We control distribution.

Vertical integration means controlling at least one channel member at each stage of the commercialization schedule (as in having your own trucks to transport the product from your factory to your warehouses; then owning or operating a chain of retail outlets to ensure exposure of your product to the intended consumer).

In this example of vertical integration, we own/operate at least one member
along the complete commercialization schedule, thus ensuring exposure
for our product to the consumer. You'll also note that other retailers may elect
to purchase our product from our wholesaler, or at a competitor's wholesaler
(which we don't control).

The other side of place strategy is exposure: placing the product or delivering the service where the customer expect, wants, or desires to purchase it. Another facet of exposure is the degree of channel member (outlet) support needed or expected to properly move the product off the shelf/off the lot.

• Exclusive exposure not only limits the availability of your product to one source (store), it also means the customer must make an effort to acquire it. Because it's exclusive, employees at the store are trained and committed to selling and servicing the product.

• Selective exposure means more than one source for the product and requires those sources (outlets) to perform any number of marketing activities to help sell and service the product.

• Intensive exposure means the product needs to be available at most outlets where the consumer might expect to find it (such as grocery, drug, and convenience store; and mass merchandisers). Because these stores know the customer can get it at other locations at competitive prices, they rarely offer much marketing support other than putting it on the shelf.
  
  The marketer must either promote the product to drive consumers into the stores, or offer incentives to retailers to advertise their products (you see this in each week's supermarket flyers: each brand is paying for the space its product occupies in the flyer; department store TV ads for colognes and perfumes that appear just before major holidays are funded by co-op incentives based on percentage of purchases—Dillard's simply adds its logo at the end of the marketers' commercial.)

At our third and final lecture, we'll discuss push and pull strategies in detail.

To be marketing-oriented, all product and place mix decisions must come from and be based on behalf of the target market (what customers want; where they want it; and getting it there efficiently through the use of highly-skilled channel members).

That's what reduces risk. And that's where we left off with Lecture 2.

Reviews of major slides used for place strategy.

Attributes of a good product name (from lecture)

Vertical integration in the real world

Have you heard of Braum's Ice Cream and Diary Stores?

This family-owned business since 1968 is the classic example of a vertically integrated company.

The business is headquartered in Oklahoma City and operates 279 units within a 300-miles radius.
The Braum's operation started with a dairy herd and milk—with a business philosophy focused on freshness." Here's how vertical integration took place (notice the terms in bold that help Braum maintain control of its commercialization schedule).

	< A In Oklahoma and Kansas, Braum's owns the farms that the grain is grown to feed the dairy herd. Braum's owns approximate 40,000 acres where the grain is grown and is supplemented by purchases from local farms to supply the dairy herd.
	< B In Tuttle, Oklahoma, Braum's has a herd of 10,000 Holstein Dairy cows that are housed in barns built by Braum's employees. These cows are milked 3 times a day, 400 at a time. It is a pretty amazing operation to view. (Take a video tour.)
	< C The milk is then transferred to its own processing plant for the milk and other products made from the milk, including ice cream. At the processing plant, all plastic cartons for the milk are made on-site as are the containers for the retail gallon containers and square containers for the Fountains in their stores.
	< D Once the milk products are made, they are housed in Braun coolers or freezers for loading for the next delivery. It's ready for distribution in 24 hours to their stores.
	< E Braum's also has a bakery operation where they bake the buns used in the Grill operation of their stores. They also bake the ice cream cones that are used in their Ice Cream Fountains.
	< F Braum's has a frozen food business of items that are private labeled for them for simple meals. Its philosophy is freshness and one stop shopping. They also have private label soft drinks, condiments, jelly's, and all types of ice cream toppings.
	< G All products are delivered to the 279 company-owned stores, carried every other day by its own rolling fleet of trucks.
	< H Each of its company-owned stores has an Ice Cream fountain, a Grill for breakfast and burgers for lunch and dinner and a grocery where the milk, ice cream, bread, cookies and private label items are sold. All maintenance is also handled internally.

Braum's manages all the operations of the stores and has a corporate headquarters that handles all aspects of their business, including purchasing, payroll, operations, financing and marketing.