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BAMKET PF

Terms in this set (134)

I. Annual-plan control
II. Profitability control
III. Efficiency control
IV. Strategic control
Four types of marketing control needed by companies
I. Annual-plan control
is to ensure that the company achieves the sales, profits, and other goals established in its annual plan.
1. Management sets monthly or quarterly goals
2. Management monitors its performance in the market place.
3. Management determines the causes of serious performance deviations
4. Management takes corrective action to close the gaps between goals and performance.
annual plan control.
Four steps involved:
.Sales Analysis
consists of measuring and evaluating actual sales in relation to sales goals
1. Sales-variance analysis measures the relative contribution of different factors to a gap in sales performance.
2. Micro sales analysis looks at specific products, territories and so forth that failed to produce expected sales.
Sales analysis Two specific tools are used in sales analysis:
1. Overall market share is the company's sales expressed as percentage of total market sales.
2. Served market share is its sales expressed as a percentage of the total sales to its served market.
3. Relative market share can be expressed as market share in relation to its largest competitor.
Market share could be measured in three ways
• The assumption that outside forces affect all companies in the same way is often not true.
• The assumption that a company's performance should be judged against the average performance of all companies is not always valid.
• If a new firm enters the industry, then every existing firms market share might fall.
• Sometimes a market share decline is deliberately engineered to improve profits.
• Market share can fluctuate for many minor reasons.
A useful way to analyse market share movements is in the terms of four components:
Conclusions from market-share analysis, however, are subject to certain qualifications:
Customer penetration
Customer loyalty
Customer selectivity
Price selectivity
A useful way to analyse market share movements is in the terms of four components:
Customer penetration
is the percentage of all customers who buy from the company
Customer loyalty
is the purchases from the company by its customers expressed as a percentage of their total purchases from all suppliers from the same product.
Customer selectivity
is the size of the average customer purchase from the company expressed as a percentage of the size of the average customer purchase from an average company
Price selectivity
is the average price charge by the company express as a percentage of the average price charged by all companies
Market expenses to sales analysis
Annual plan control
requires making sure that the company is not over spending to achieve sales goals. The key ratio to watch is marketing expenses to sales.
Financial analysis
The expense to sales ratios should be analysed in an overall financial framework to determine how and where the company is making its money.
The return on networth
is the product of two ratios, the company's return on assets and its financial leverage.
The return on assets
is the product of two ratios, the profit margin and the asset turnover.
1. Increase the profit margin by increasing sales or cutting cost.
2. Increase the assets turnover byincreasing sales or reducing assets that are held against given level of sales.
The marketer can seek to improve performance in two ways:
1. Customer performance scorecard-
2. Stakeholder performance scorecard
Market based scorecard analysis
1. Customer performance scorecard-
records how well the company isdoing year after year on such customer
a. New customers
b. Dissatisfied customers
c. Lost customers
d. Target market awareness
e. Target market preference
f. Relative product quality
g. Relative service quality
Customer performance scorecard records how well the company is doing year after year on such customer based measures as:
2. Stakeholder performance scorecard
companies need to track the satisfaction of various constituencies who have a critical interest and impact on the company's performance
Profitability control
seeks to measure and control the profitability of various products, territories, customer groups, trade channels and order sizes.
Step 1 : identifying functional expenses
Step 2 : assigning functional expenses to marketing entities
Step 3 : preparing a profit and loss statement for each marketing entity
Marketing profitability analysis steps
• To what extend do buyers buy on the basis of type of retail outlets versus brand
• What are the trends with respect to the importance of these channels
• How good are the marketing strategies directed at the channels
Determining corrective action
The following questions need to be answered first:
1. Establish a special change for handling smaller orders
2. Give more promotional aid
3. Reduce the number of sales calls and the amount of advertising
4. To not abandon any channel as a whole but only the weakest retail units in each channel
5. Do nothing
On the basis of the answers, marketers can evaluate five alternatives:
Direct cost
Traceable common cost
Non traceable common cost
Three types of cost to have to be distinguished:
Direct cost -
these are cost that can be assigned directly to the property marketing entities
Traceable common cost -
these are cost that can be assigned only indirectly but on a plausible basis, to the marketing entities.
Non traceable common cost
these are cost whose allocation to the marketing entities is highly arbitrary
Efficiency control
focuses on finding ways to increase the efficiency of the sales force, advertising, sales promotion, and distribution.
Sales force efficiency
1. Average number of calls per sales person per day
2. Average sales call time per contact
3. Average revenue per sales call
4. Average cost per sales call
5. Entertainment cost per sales call
6. Percentage of orders per 100 sales calls
7. Number of new customers per period
8. Number of lost customers per period
9. Sales force cost as a percentage of that sale
Sales managers need to monitor the following key indicators of efficiency in their territory:
Sales promotion
includes dozens of devices for stimulating buyer interest and product trial.
• Percentage of sales sold on deal
• Display cost per sales in peso
• Percentage of coupons redeemed
• Number of inquiries resulting from a demonstration
Management should watch the following statistics:
Distribution efficiency
Management need to search for distribution economist in inventory control, warehouse location, and transportation modes.
marketing effectiveness
lected in the degree to which it exhibits the five major attributes of marketing orientation:
• Customer philosophy
• Integrated marketing organization
• Adequate marketing information
• Strategic orientation
• Operational efficiency
Customer philosophy
• Integrated marketing organization
• Adequate marketing information
• Strategic orientation
• Operational efficiency
five major attributes of marketing orientation:
The marketing audit
is a comprehensive systematic, independent, and periodic examination of a company's marketing environment, objectives, strategies and activities with the view to determining problem areas and opportunities and recommending a plan of action to improve the company's marketing performance.
1. Comprehensive
2. Systematic
3. Independent
4. Periodic
Marketing audit's four characteristics:
The marketing excellence review
The ethical and social responsibility review.
Marketing review
Consumer Market Directed
Trade market directed
Business-to-business market directed
Types of Sales Promotion
Sales promotion
describes promotional methods using special short-term techniques to persuade members of target market respond or undertake certain activity.
1. Build product Awareness
2. Creating interest
3. Providing information
4. Stimulating demand
5. Reinforcing the brand
Objectives of Sales Promotion
Consumer Market Directed
- possibly the most well-known methods of sales promotion are those intended to appeal to the final consumer.
Trade market directed
trade promotions are initially used to entice channel members to carry a marketer's products and once products are stocked, marketers utilize promotions to strengthen the channel relationship.
Business-to-business market directed
a small but important sub-set of sales promotions are targeted to the B-to-B market.
Samples -
Coupons
Cash Refund Offers (rebates)
Price Packs (cents-off deals) -
Premiums (gifts) -
Prizes (contests, sweepstakes, games)
Free trials -
Product Warranties -
Tie-in promotions -
Cross-promotions -
Point-of-purchase (POP) Displays and Demonstrations -
- Major Consumer-Promotion Tools
Samples
offer a free amount of product or service delivered door to door, sent in email, picked up in a store, attached to another product, or featured in an advertising offer
Coupons
certificates entitling the bearer to a stated saving on the purchase of a specific product: mailed, enclosed in other products or attached to them, or inserted in magazine and newspaper ads.
Cash Refund Offers (rebates) -
provide a price reduction after purchase rather than at the retail shop: consumer sends a specified "proof of purchase" to the manufacturer who "refunds" part of the purchase price.
Price Packs (cents-off deals) -
offers to consumer of savings off the regular price of a product, flagged on the label or package.
Premiums (gifts
merchandise offered at a relatively low cost or free as an incentive to purchase a particular product.
Prizes (contests, sweepstakes, games) -
are offers of the chance to win cash, trips, or merchandise as a result of purchasing something.
Free trials
inviting prospective purchasers to try the product without a cost in the hope that they will buy the product.
Product Warranties
explicit or implicit promises by sellers that the product will perform as specified or that the seller will fix it or refund the customer's money during specified period.
Tie-in promotions
- two or more brands or companies team up on coupons, refunds and contests to increase pulling power.
Cross-promotions
using one brand to advertise another non competing brand.
11. Point-of-purchase (POP) Displays and Demonstrations -
POP displays and demonstrations take place at the point of purchase or sale.
• Price-off (off-invoice or off-list)
• Allowance
• Free Goods
Major Trade Promotion Tools
Price-off (off-invoice or off-list)
A straight discount off the list price on each case purchased during a stated time period.
Allowance
An amount offered in return for the retailer's agreeing to feature the manufacturer's products in some way.
Free Goods
Offers of extra cases of merchandize to intermediaries who buy a certain quantity or who feature a certain flavour or size.
1. Trade shows and convention
2. Sales contests
3. Specialty advertising
Major Business-Promotion Tools
1. Establishing Objectives
2. Selecting promotion tools
3. Developing the program
4. Pretesting the program
5. Implementing and controlling the program
6. Evaluating results
Major Decisions in Sales Promotion
For consumers
For retailers
For the sales force
in Establishing Objectives
For consumers
objectives include encouraging purchase of larger-size units, building trial among nonusers, and attracting switchers away from competitor's brands
For retailers
objectives include persuading retailers to carry new items and higher levels of inventory, encouraging off-season buying, encouraging stocking of related items etc.
For the sales force
objectives include encouraging support of a new product or model, encouraging more prospecting and stimulating off-season sales.
Determine the size of incentive
Establish conditions for participation
Duration of the promotion
Distribution vehicle
Timing of promotion
Determine the total sales-promotion budget
Developing the program
a. Sales data
b. Consumer surveys
c. Experiments
3 methods to measure sales-promotion effectiveness:
PRICING STRATEGY
Pricing is an important strategic issue because it is related to product positioning. Furthermore, pricing affects other marketing mix elements such as product features, channel decisions, and promotions.
1. Develop marketing strategy
2. Make marketing mix decisions
3. Estimate the demand curve
4. Calculate cost
5. Understand environmental factors
6. Set pricing objectives
7. Determine pricing
Steps in Developing New Product Price
Develop marketing strategy
Perform marketing analysis, segmentation, targeting and positioning.
Make marketing mix decisions
Define the product, distribution, and promotional tactics
Estimate the demand curve
Understand how quantity demanded varies with price.
Calculate cost
lnclude fixed and variable costs associated with the product.
Understand environmental factors
Evaluate likely competitor actions, understand legal constraints, etc.
Set pricing objectives
For example, profit maximization, revenue maximization, or price stabilization (status quo).
Determine pricing
.Using information collected in the above steps, select a pricing method, develop the pricing structure, and define discounts.
• Profit Maximization
• Revenue Maximization
• Maximize Quantity
• Maximize Profit Margin
• Quality Leadership
• Partial Cost Recovery
• Survival
• Status Quo
Pricing Objectives
• Profit Maximization
Seeks to maximize current profit, taking into account revenue and costs.
• Revenue Maximization
Seeks to maximize current revenue with no regard to profit margins.
Maximize Quantity
Seeks to maximize the number of units sold or the number of customers served in order to decrease long-term costs as predicted by the experience curve.
Maximize Profit Margin
Attempts to maximize the unit profit margin, recognizing that quantities will be low.
Quality Leadership
Use price to signal high quality in an attempt to position the product as the quality leader.
Partial Cost Recovery
A company that has other revenue sources may seek only partial cost recovery.
Survival
In situations such as market decline and overcapacity, the goal may be to select a price that cover costs and permit the firm to remain in the market.
Status Quo
The company may seek price stabilization in order to avoid price wars and maintain a moderate but stable level of profit.
• Premium Pricing
• Penetration Pricing
• Economy pricing
• Price skimming
• Psychological pricing
• Product line pricing
• Optional Product Pricing
• Captive Product Pricing
• Product Bundle Pricing
• Promotional Pricing
• Geographical Pricing
• Value Pricing
Pricing Methods
Premium Pricing
Use a high price where there is uniqueness about the product or service.
Penetration Pricing
The price charged for products and services is set artificially low in order to gain market share.
Economy pricing
This is a no frills low price.
Price skimming
Charge a high price because you have a substantial competitive advantage.
Psychological pricing
This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis.
Product line pricing
Where there is a range of product or services the pricing reflect the benefits of parts of the range.
• Optional Product Pricing
Companies will attempt to increase the amount customer spend once they start to buy.
Captive Product Pricing
Where products have complements, companies will charge a premium price where the consumer is captured.
Product Bundle Pricing
Here sellers combine several products in the same package.
Promotional Pricing
Pricing to promote a product is a very common application
Geographical Pricing
is evident where there are variations in price in different pans of the world.
Value Pricing
This approach is used where external factors such as recession or increased competition force companies to provide value products and services to retain sales
• Quantity discount
• Cumulative quantity discount
• Seasonal discount
• Cash discount
• Trade discount
• Promotional discount
Price Discounts
Quantity discount
Offered to customers who purchase in large quantities.
Cumulative quantity discount
A discount that increases as the cumulative quantity increases.
Seasonal discount
is based on the time that the purchase is made and designed to reduce seasonal variation in sales
Cash discount
is extended to customers who pay their bill before a specified date.
Trade discount
A functional discount offered to channel members for performing their roles.
Promotional discount
A short term discounted price offered to stimulate sales.
PUBLIC Relation's
The appeal of public relations and publicity
High credibility
Ability to catch buyers off guard
Dramatization
three distinctivequalities: of PR
1. Press Relations
2. Product Publicity
3. Corporate Communications
4. Lobbying
5. Counseling
Five Major Functions of Marketing Public Relations
1. Press Relations
Presenting news and information about the organization in the most positive light.
2. Product Publicity
Sponsoring efforts to publicize specific products.
3. Corporate Communications
Promoting understanding of the organization through internal and external communications.
4. Lobbying
Dealing with legislators and government officials to promote or defeat legislation and regulation.
5. Counseling
Advising Management about public issues and company position and image.
Marketing Public Relations
was publicity which was seen as the task of securing editorial space — as opposed to paid space — in print and broadcast media to promote or "hype" a product, service, idea, place, person, or organization.
• Assisting in the launch of a new product
• Assisting in repositioning a mature product
• Building interest in a product category
• Influencing specific target groups
• Defending products that have encountered public problems
• Building the corporate image in a way that reflects favorable on its product
Marketing Public Relations ....
• Build awareness
• Build credibility
• Stimulate the sales force and dealers
• Hold down promotion costs
• Build marketplace excitement before media advertising breaks
• Build a core consumer base
• Build a one-to-one relationship with consumer
• Turn satisfied customers into advocates
• Influence the "influentials"
Major Decisions in Marketing PR
Establishing the Marketing Objectives
MPR can contribute to the following objectives:
• Publications
• Events
• News
• Speeches
• Public Service Activities
• Identity Media
Choosing Media Vehicles
Implementing the Plan
Implementing public relations requires care. Consider placing sorties in the media: A great story is easy to place but most stories are less than great arid might not get past busy editors. PR people look at media editors as a market to satisfy so that these editors will continue to use their stories.
Evaluating Results
MPR's contribution to the bottom line is difficult to measure, because it is used along with other promotional tools if it is used before the other tools come into action, its contribution is easier to evaluate.
• Exposure Measure
The easiest measure of MPR effectiveness is the number of exposures carried by the media.
• Contribution to Sales and Profits
Sales and profit impact is the most satisfactory measure, if obtainable.
PERSONAL SELLING
is oral communication with potential buyers of a product with the intention of making a sale.
• Prospecting
• Communicating
• Selling
• Servicing
• Information gathering
• Allocating
What are the Main Roles of the Sales Force?
• Personal selling is a face-to-face activity; customers therefore obtain a relatively high degree of personal attention.
• The sales message can be customized to meet the needs of the customer.
• The two-way nature of the sales process allows the sales team to respond directly and promptly to customer questions and concerns.
• Personal selling is a good way of getting across large amounts of technical or other complex product information.
• The face-to-face sales meeting gives the sales force chance to demonstrate the product.
• Frequent meetings between sales force and customer provide an opportunity to build good long-term relationships.
Advantages of Personal Selling
Essential Selling Process
The selling process involves a series of steps that may appear to be a straight-line process but there is a lot of movement back and forth between the different steps that will ultimately lead to closing the deal.
1. The Meet and Greet
2. Qualifying the Customer's Needs
3. Presentation or Demonstration
4. Overcoming Objections
5.Closing
6. Follow Up
Six essential steps will help you close more deal:
1. The Meet and Greet
This initial introduction will set the stage for the rest of the
selling process.
2. Qualifying the Customer's Needs
This is the step where you ask Questions to help you identity what the customer wants.
3. Presentation or Demonstration
This is the step where the salesperson can show all they know about their products or services.
4. Overcoming Objections
This step is critical to the selling process since objections are usually the customers reasons for not buying your product or service.
5. Closing
After you have handled the objections that the customer presents you must ask for their business.
6. Follow Up
Now that the sale has been made, don't just let that hard work go to waste.
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