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Intro to Marketing Exam 3
Terms in this set (141)
The communication process consists of six key elements
slide 2 of integrates marketing comm
Field of Experience
a mutually shared understanding and knowledge that the a sender and receiver apply to a message so that it can be communicated effectively during the communication process
in the feedback loop, is the impact the message had on the receiver's knowledge, attitudes, or behaviors during the communication process.
Integrated Marketing Communications (IMC)
the concept of designing marketing communications programs that coordinate all promotional activities—advertising, personal selling, sales promotion, public relations, and direct marketing—to provide a consistent message across all audiences
(The Communication Process)
-inform prospective buyers
-persuade them to try
-remind them of the benefits
THE PROMOTIONAL ELEMENTS: ADVERTISING
TV, Radio, Mass Media
-easy to reach a large audience
-paid by company (less credible)
face to face selling situation
THE PROMOTIONAL ELEMENTS: PERSONAL SELLING
-can convey complex info
-expensive per exposure
-may differ across sales people
Seeks to influence opinions held by consumers, stockholders, employees via lobbying, annual reports, press conferences, social media
non-personal indirectly paid presentation of a product or service via news story, editorial, product announcement
THE PROMOTIONAL ELEMENTS
-Not paid by company—most credible (paid for indirectly through PR staff).
-Hard to get the media to cooperate
short term inducement of value offered to arouse interest in buying a product/service (coupons, rebates, samples, contests).
THE PROMOTIONAL ELEMENTS: SALES PROMOTION AND DIRECT MARKETING
-changes behavior in short run
-can lead to wars
-Two way communication
-Smaller firms and brands can be heard
-Customers can ask questions
(of lifestyle graph)
introduction phase promotional objective
introduction phase promotional activity
-salesforce calling on intermediaries
-sales promotion in the form of free samples
Growth Phase promotional objective
growth phase promotional activity
-personal selling to intermediaries
-advertising to differentiate brand attributes from those of competing brands
Maturity Phase promotional objective
Maturity Phase promotional activity
-sales promotion in the form of discounts and coupons
-limited personal selling
decline phase promotional activity
-little money spend on advertising
How the importance of promotional elements varies during the stages of the consumer purchase decision process
slide 15 IMC ppt
IMC: developing the promotional mix channel strategies
-pull strategy (direct to customer)
manufacturer to wholesaler to retailer to consumer
push strategy flow of promotion
mainly personal selling directed to intermediaries
consumer to retailer to wholesaler to manufacturer back to consumer (a loop unlike push)
pull strategy flow of promotion
mainly advertising directed to consumers
The promotion decision process includes
planning, implementation, evaluation (in that order)
Developing the promotion program
-identify target audience
-set the budget
-select the right promotional tools
-design the promotion
-schedule the promotion
executing the promotion program
-pretest the promotion
-carry out the promotion
-posttest the promotion
-make needed changes
developing an IMC program
-identify the target audience
-specify promotion objectives:
a. hierarchy of effects: awareness, interest, evaluation, trial, adoption
Percentage of Sales Budgeting
involves allocating funds to promotion as a percentage of past or anticipated sales, in terms of either dollars or units sold.
Competitive Parity Budgeting
involves allocating funds to promotion by matching the competitor's absolute level of spending or the proportion per point of market share. Also called matching competitors or share of market
involves allocating funds to promotion only after all other budget items are covered.
Objective and Task Budgeting
involves allocating funds to promotion whereby the company:
(1) determines its promotion objectives
(2) outlines the tasks to accomplish these objectives; and
(3) determines the promotion cost of performing these tasks.
EXECUTING AND ASSESSING
THE PROMOTION PROGRAM
Four approaches for selecting an approximate price level
1. demand-oriented approaches
2. cost-oriented approaches
3. profit-oriented approaches
4. competition-oriented approaches
target return on sales
target return on investment
above, at or below market
used when introducing a new or innovative product, and involves setting the highest initial price that customers really desiring the product are willing to pay.
involves setting a low initial price on a
new product to appeal immediately to the mass market.
ch 14 slide 6
involves setting prices a few dollars or cents under an even number.
(1) estimating the price that ultimate consumers would be willing to pay for a product,
(2) working backward through markups taken by retailers and wholesalers to determine what price to charge wholesalers, and
(3) deliberately adjusting the composition and features of the product
to achieve the target price to consumers.
involves the marketing of two or more products in a single package price.
Yield management pricing
involves the charging of different prices to maximize revenue for a set amount of capacity at any given time. (airline seats)
1. Cost-Plus Percentage-of-Cost Pricing
2. Cost-Plus Fixed-Fee Pricing
Standard markup pricing
involves adding a fixed percentage to the cost of all items in a specific product class.
Cost-plus pricing involves
summing the total unit cost of providing a product or service and adding a specific amount to the cost to arrive at a price. High technical, few of a kind products
Experience curve pricing is a method of pricing based on the learning effect, which
holds that the unit cost of many products and services declines by 10 percent to 30 percent each time a firm's experience at producing and selling them doubles, resulting in possible rapid price reductions. Complements the skimming strategy. Japanese and Korean electronic firms.
refers to the difference between the selling price and the "cost" of a product or service.
Is expressed on a total volume or individual basis, dollar terms, or percentages.
3 types of margin
Gross margin (or gross profit) is:
Total sales revenue - total cost of goods sold or
On a per-unit basis,
unit selling price-unit cogs
Trade margin is:
Unit sales price - unit cost at each level of a marketing channel (manufacturerwholesalerretailer).
Frequently referred to as a markup or mark-on
by channel members, expressed as a percentage.
Differences in margin percentages show the importance of knowing the base (cost or selling price).
Trade margin percents are usually based on selling price.
Target profit pricing involves
setting an annual target of a specific dollar volume of profit.
Target return-on-sales pricing involves
setting a price to achieve a profit that is a specified percentage of the sales volume.
Customary pricing involves
pricing setting a price that is dictated by tradition, a standardized channel of distribution, or other competitive factors.
Above-, at, or below-market pricing involves
setting a market price for a product or product class based on a subjective feel for the competitors' price or market price as the benchmark.
Loss-leader pricing involves
deliberately selling a product below its customary price, not to increase sales, but to attract customers' attention in hopes that they will buy other products as well.
special adjustments to list or quoted price
3. trade (functional)
everyday low pricing
FOB origin pricing
uniform delivery pricing
-FOB with freight allowed
-basing point pricing
STEP 6: MAKE SPECIAL ADJUSTMENTS
TO THE LIST OR QUOTED PRICE
Discounts given to buyer to as a reward for some activity that benefits the seller.
Everyday low pricing (EDLP)
is the practice of
replacing promotional allowances with
lower manufacturer list prices.
Implications of price wars
Consumers benefit from lower prices
Reduces margins of all brands
May reduce profits for some/all brands
May affect brand perceptions
the farther away delivery guy has to drive, the higher freight the company will charge
Predatory pricing is the practice of
charging a very low price for a product with the intent of driving competitors out of business.
hard to establish
any intermediary bw manufacturer and end-user markets
agent or broker
any intermediary with legal authority to act on behalf of the manufacturer
any intermediary who sells to other intermediaries, usually retailers; term usually applies to consumer markets
any intermediary who sells to consumers
an imprecise term, usually used to describe intermediaries who perform a variety of distribution functions, including selling, maintaining inventories, extending credit, and so on; a more common term in business markets but may also be used to refer to wholesalers
a more imprecise term than distributer that can mean the same as distributer, retailer, wholesaler, and so forth
-Buying: purchasing products for resale or as an agent for supply of a product
-Selling: contacting potential customers, promoting products, and seeking orders
-Risk Taking: assuming business risks in the ownership of inventory that can become obsolete or deteriorate
-Assorting: creating product assortments from several sources to serve customers
-Storing: assembling and protecting products at a convenient location to offer better customer service
-Sorting: purchasing in large quantities and breaking into smaller amounts desired by customers
-Transporting: physically moving a product to customers
-Financing: extending credit to customers
-Grading: inspecting, testing, or judging products, and assigning them quality grades
-Marketing information and research: providing information to customers and suppliers, including competitive conditions and trends
slide 4 and 7
CHANNEL STRUCTURE & ORGANIZATION
MARKETING CHANNELS FOR
CONSUMER GOODS AND SERVICES
involves an arrangement whereby a firm reaches different buyers by employing two or more different types of channels for the same basic product.
Strategic Channel Alliances
is a practice whereby one firm's marketing channel is used to sell another firm's products.
The firm's offerings are sold through as many retail outlets as possible.
Intensive distribution is chosen when
-the offering is purchased frequently
-buyers wish to expend little effort purchasing it
The firm selects a few retail outlets in a specific area to carry its offerings.
One retail outlet in a geographic area or one retail chain sells the firm's offerings.
-is the defined trade area of the retailer
-some retailers sign exclusive distribution agreements with manufacturers
Exclusive and Selective distribution are limited-distribution strategies chosen when
-the offering requires personal selling at the point of purchase
(shopping and specialty goods)
Satisfying Buyer Requirements: Information
-is important when buyers have limited knowledge and desire specific data about an offering
-communicate with buyers through in-store displays, demonstrations, and personal selling
Satisfying Buyer Requirements: Convenience
-Has different meanings at buyers at different outlets: proximity, driving time, minimal time and hassle
Satisfying Buyer Requirements: Variety
-Reflects buyers' interest in having numerous competing and complementary items from which to choose.
-Is evident in both the breadth and depth of products and brands carried by intermediaries.
Satisfying Buyer Requirements: Attendant Services
Are an important buying requirement for products such as large household appliances that require delivery, installation, and credit.
Profitability channel costs include
distribution, advertising, and selling expenses associated with different types of marketing channels.
Profitability is determined by the
-Trade margins for each channel member
-Extent to which channel members share costs
The number of intermediaries involved in bringing a given product from the firm to the consumer
Influenced by 3 factors:
-Product's distribution density = intensive distribution requires longer channels
-Average order quantity = small order quantities require longer channels
-Availability of channel members = Japan has the longest channels leading to higher prices compared to US
slide 22, 23
Channel alignment and leadership
-The structure of the chosen channel members to achieve a unified strategy
-Especially important in international contexts
dominant member of the channel who frequently dictates terms of:
Mainly tend to be manufacturers and retailers in the US; wholesalers in Japan
Factors Influencing the Selection of Channel Members
1. product and product line
product and product line
-perishables= shorter channel necessary. A Greek firm, Delta dairy set up manufacturing in Switzerland to reduce transportation costs to France.
-Technical product = direct sales or highly technical channel partner
-Broader product line = easier to justify a more direct channel
who will control 4P's (better control thru direct sales)
Gaining Access to Distribution Channels
The "locked up" channel (international contexts)
The "locked up" channel (international contexts)
-Occurs when a newcomer cannot easily convince any channel member to participate
-Distributors may have exclusive agreements (contractual or informal)
-Distributors may be unwilling to take the risk of pioneering an unknown product
another company that sells to the same consumer segments takes on the new products
partnership typically between local firm with market access with a foreign firm with no local access
purchasing a local company with existing distribution system
Self-Reference Criterion (SRC)
an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions
refers to the notion that one's own culture or company knows best how to do things
Both the SRC and ethnocentrism impede the
ability to assess a foreign market in its true light
Culture is the sum of the "values, rituals, symbols, beliefs, and thought processes that are
learned, shared by a group of people, and transmitted from generation to generation"
cultural aspects slide 4 picture
1. refers to the preference for behavior that promotes one's self-interest
2. High IDV cultures reflect an "I" mentality and tend to reward and accept individual initiative : USA
3. Low IDV cultures reflect a "we" mentality and generally subjugate the individual to the group: China, Japan
4. Collectivism pertains to societies in which people from birth onward are integrated into strong, cohesive groups, which protect them in exchange for unquestioning loyalty
Origins of Culture: Geography
Geography --> Occupations
Solitary activities like hunting, fishing --> Individualism vs.
Group activities like Agriculture --> Collectivism
Origins of Culture: History
U.S. (early settlers in the US) --> Individualism
China (Confucianism) -->Collectivism
Origins of Culture: The Political Economy
U.S. (democracy) --> Individualism vs.
China (communism) --> Collectivism
Origins of Culture: Technology
1. Technological innovations also impact institutions and culture
2. Jet aircraft, air conditioning, televisions, computers, and the internet have all influenced culture
Origins of Culture: Social Institutions
(1) Family behavior varies across the world, e.g., extended families living together to Dad washing dishes
(2) Religious value systems
(3) School and education, and literacy rates affect culture and economic growth
(4) Media (magazines, TV, the Internet) influences culture and behavior
(5) Government policies e.g., the French government offers new "birth bonuses" of $800 given to women as an incentive to increase family size
(6) Corporations influence culture via the products they market, e.g., MTV
Social institutions continued
China/Japan: practices promoting collectivism
Co-sleeping, living in a group
Follow decisions made by others (to maintain group harmony)
Sharing possessions with others
U.S.: practices promoting individualism
Make individual decisions at an early age
Having individual possessions
Within US differences in Individualism-Collectivism
-African-Americans, Hispanic Americans are more collectivist (less individualist) than Caucasian Americans.
-People in big cities more individualistic (less collectivistic) than those in small towns.
Elements of Culture
Elements of Culture: Cultural Values
Differences in cultural values, which is found to exist among countries, affects consumer behavior
Elements of Culture: Cultural Values
Hofstede, who studied over 90,000 people in 66 countries, found that the cultures differed along four primary dimensions:
Elements of Culture: Cultural Values
Individualism/Collective Index (IDV), which focuses on self-orientation
Power Distance Index (PDI), which focuses on authority orientation
Uncertainty Avoidance Index (UAI), which focuses on risk orientation; and
Masculinity/Femininity Index (MAS), which focuses on assertiveness and achievement (not examined in detail)
The Individualism/Collective Index refers to the preference for behavior that promotes one's self-interest
High IDV cultures reflect an "I" mentality and tend to reward and accept individual initiative
Low IDV cultures reflect a "we" mentality and generally subjugate the individual to the group
Collectivism pertains to societies in which people from birth onward are integrated into strong, cohesive groups, which protect them in exchange for unquestioning loyalty
Power Distance Index:
The Power Distance Index measures power inequality between superiors and subordinates within a social system
Cultures with high PDI scores tend to be hierarchical and value power and social status
High PDI cultures the those who hold power are entitled to privileges
Cultures with low PDI scores value equality and reflect egalitarian views
Uncertainty Avoidance Index:
The Uncertainty Avoidance Index measures the tolerance of uncertainty and ambiguity among members of a society
High UAI cultures are highly intolerant of ambiguity, experience anxiety and stress, accord a high level of authority to rules as a means of avoiding risk
Low UAI cultures are associated with a low level of anxiety and stress, a tolerance of deviance and dissent, and a willingness to take risks
Mixed approach for
non-dictionary brands names
mixture of meaning and sound
product extension strategy
communication adaption strategy
product adaption strategy
dual adaption strategy
product invention strategy
can be same or adapt promotion
Countertrade as a Pricing Tool
-Countertrade is a pricing tool that every international marketer must be ready to employ
There are four distinct transactions in countertrading, which include:
Barter: is the direct exchange of goods between two parties in a transaction
Compensation deals: is the payment in goods and in cash
Counter-purchase or off-set trade: the seller agrees to sell a product at a set price to a buyer and receives payment in cash and may also buy goods from the buyer for the total monetary amount involved in the first contract or for a set percentage of that amount, which will be marketed by the seller in its home market
Buy-back: This type of agreement is made the seller agrees to accept as partial payment a certain portion of the output that are produced from the plant or machinery that are sold to the buyer
Why PURCHASERS Impose Countertrade Obligations
-to preserve hard currency
-to gain access to new markets
-to upgrade manufacturing capabilities
-to improve balance of trade
-to force reinvestment of proceeds
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