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127 terms

Marketing 3000 Final

STUDY
PLAY
PLC Introduction
new product class, sales/profits are low, marketing effort (stimulate demand for PRODUCT TYPE/primary demand), target "innovators"
PLC Growth
Sales/profits grow, competition expands, differentiate product, stimulate demand for brand (secondary demand), target "early adopters"
PLC Maturity
Sales plateau/product is familiar, competition intense, new product and class competitors, differentiation continues (change color), promotion increases while price declines, target "early" and "late majority", try to remove risk
PLC Decline
Competition (increases outside product class, decreases within product class)
Awareness
consumer is first exposed to product innovation (David sees an ad for a new digital camera)
Interest
consumer is interested in the product and searches for additional info (David reads about the camera on the manufacturer's Web site, then goes to camera store near his office and has a salesman show him the camera)
Evaluation
consumer decides whether or not to believe that this product will satisfy the need (After talking with friend, David decides the camera should be able to provide him with the photos he needs for Powerpoint presentation)
Trial
consumer uses the product on a limited basis (David buys the camera from a dealer offering a 14-day full refund policy)
Adoption/Rejection
if trial is favorable, consumer decides to use the product on a full, rather than limited basis (David find that the camera is easy to use and the results are excellent, keeps camera)
Penetration Pricing
set price low to gain immediate sales/market share, scare off competitive entry
Negative of Penetration Pricing
set price low to gain immediate sales/market share, scare off competitive entry
When to use Penetration Pricing
low price elasticity, standard issues, examples= new airline route fares, Internet browsers
Price Skimming
set price high to achieve quick/large profits
When to use price skimming
technological change, entry barriers, examples= Apple, Intel's newest Pentium innovations always price high
Flexible Pricing
if a product is PERISHABLE, Foods-produce, bread/bakery items, etc, Services=airline flights, concerts and sports events, Short time demand=Christmas cards/wrapping paper, merchandising tie-ins, high-fashion clothing
Discriminatory pricing
legal as long as it doesn't substantially hinder competition. For it to work:
*Market must be segmented and segments must have different intensities of demand
*Members in low-priced segment must not be able to sell product to high-priced segment
*Cost of servicing different segments must not exceed profit generated by discrimination
*Must not breed resentment or ill will

-Victoria's Secret costs more in Orange County, CA than Boone County, MO
-Insurance companies charge younger people more for auto insurance
-Guys pay cover fee in bars while women do not
Intensive Distribution
provide offering in as many outlets as possible
-Maximize exposure in geographical area
ex=gum, cigarettes
Maximum coverage and no sale effort at point of purchase
Usually lower priced items
Selective Distribution
provide offering in selective outlets
-Restrict distribution in geographical area to intermediaries based on performance capability
ex=Compaq computers, Calphalon cookware
-Coverage/Sales effort trade-off
Middle ground= medium coverage and sales effort
Extensive Distribution
using only one outlet in geographical area
-Maximize "push" of distributor
ex=Ferrari, Rolex, Steinway pianos
-Coverage/sales effort trade-off
Maximum sales effort at point of purchase-minimum coverage
Advertising
paid form of non-personal communication, good for reaching people who are geographically dispersed
Personal Selling
two-way, personal (face-to-face) communication
Sales Promotion
short-term inducement of value to arouse interest
Public Relations
communications management that seeks to influence stakeholders
Introduction Phase
advertising (objective is to inform) - to stimulate demand,
personal selling to channel members
Growth Phase
(objective: persuade), advertising to differentiate brand, personal selling to channel members
Maturity Phase
(objective: remind), reminder advertising (Budweiser), sales promotion - to encourage switching
Push Strategy
(target channel members), personal selling (to inform/gain support), sales promotion (contests to motivate, discount allowances to support channel effort)
Pull Strategy
(target consumers/end users), advertising, Ex: Nicoderm "Ask your doctor"
(A)IDA
get the ATTENTION of the target market, involves right choice of media and message, distinctive & relevant message
A(I)DA
generate INTEREST of what you're selling, talk directly to the needs of your market
AI(D)A
desire - using logic and emotion, logic: show benefits and uses of product/service
AID(A)
action - get target market to act direct action - buy the product, try the product, send free info about product
indirect action
encode a thought or image-remember name of product, have positive image, associate product with benefit
Short-term activity to motivate buying
-usually by lowering price or adding value (Online coupons)
-internet's timeliness (contests, event info)
Premiums
an extra item offered with purchase (toy in cereal box)
Contests and sweepstakes
contests involve skill, sweepstakes involve luck only (McDonald's monopoly, HGTV Dream House Giveaway)
Point-of-purchase
displays set up at retail locations (shelf talkers, extenders, end-aisle displays)
trade allowances
price reduction to intermediaries
push money
contests or cash incentives for retail sales people
To help push through distribution channel
training or store demonstrations, free merchandise, conventions and trade shows
Publicity
efforts to capture media attention, Includes: press relations and product publicity, Key to good press release: avoid hyping the product, write like a journalist and keep it short
Main promo tools limitations
Clutter, Low credibility contexts and sophisticated/jaded consumers
Product Placement
paid integration of product communication into media, fastest growing promo expenditure (expected to grow at 30% rate through 2010)
-Where its growing fastest: Reality TV and niche learning channels (food, outdoor, learning cable outlets)
Which types of promotion have increased and decreased in recent years?
Product placement is the fastest growing
Direct marketing-increase
Informative Advertising
Build primary demand (Introduction stage of PLC)
Persuasive Advertising
Build selective demand (Growth)
Comparison Advertising
Compares one brand to another (Maturity)
Reminder Advertising
Keeps consumers thinking about a product (Decline)
Television Advantages
wide reach and incorporates sound and video
Television Disadvantages
high cost, cluttered airwaves and more potential spillover
Radio Advantages
relatively inexpensive, selectively targeted and wide reach
Radio Disadvantages
no video limits presentation, consumers give less focused attention than TV and exposure periods are short
Magazine Advantages
very targeted and subscribers pass along to others
Magazine Disadvantages
relatively inflexible and has long lead times
Newspapers Advantages
flexible, timely and can localize
Newspaper Disadvantages
expensive in some markets, involves potential loss of control over placement, advertisements have short lifespans
Internet Advantages
linked to detailed content, highly flexible and interactive and allows for specific targeting
Internet Disadvantages
costs not easily comparable to other media, becoming cluttered and blocking software prohibits delivery
Outdoors Advantages
relatively inexpensive, offers opportunities for repeat exposure and is flexible
Outdoors Disadvantages
not easily budgeted, has placement problems in some markets and exposure time is very short
Direct Mail advantages
highly targeted, flexible and allows for personalization
Direct Mail Disadvantages
relatively expensive, cluttered environment, often considered "junk mail"
Brand Leadership -Vision of the Mass Market
Constant monitoring, MR of changing tastes, Ex- Pampers
Brand Leadership - Managerial Persistence
committing effort over long periods of time
Brand Leadership - Financial Commitment
Strong brands require high marketing costs, New product development, marketing research and advertising
Brand Leadership - Relentless Innovation
Products must be updated constantly, Gilette- 20 new products in portfolio, P&G look at Crest, Tide, etc.
Brand Leadership - Asset Leverage
Using strong position in one category to establish leadership in another, related category, Coca Cola
Challenges to managing Brands: Brand Proliferation
Growth in new competitors and line extensions, Example- Crest toothpaste
Challenges to managing Brands: Media Fragmentation/Decreased Ad Efficiency
Growth in # stations (network buys not enough), Growth in ad clutter, Technologies to avoid advertising (remotes, TiVo)
Challenges to managing brands:Smarter/Variety-Seeking Consumers
More info available (Consumer reports, websites)
Challenges to managing brands: Successful new product Development
Consumers more trusting of new brands and line extensions, Dilutes brand equity, Example- Tide
Brand Salience
awareness through linking brand elements to product categories (usage situations)
Depth of Brand awareness
likelihood and ease with which brand comes to mind
Breadth of brand awareness
Range of purchase and usage situations in which brand comes to mind, Ex. Morton's salt used for sore throats (gargle)
Brand resonance
psychological brand bond between consumer and brand
Attitudinal attachment
strong, personal attachment (Apple, Nike)
Sense of Community
desire to affiliate with others associated with brand
Active engagement
willingness to invest resources outside of purchase
Trading Up (Upmarket)
Adding a higher-priced product to a line to attract a higher-income market and improve the sales of existing lower-priced products, Product could flop, Ex. Purina (Purina One Dog Food), Kia, Titleist
Trading Down (Down-market)
Adding a lower priced item to a line of prestige products to encourage purchases from people who cannot afford the higher-priced product, but want the status, Could be bad associations because of lower priced item, Ex. Smirnoff selling Popov, Ipod (shuffle), Mercedes (C-Class)
Add Value in Packaging: Functional value
protect contents and add usage benefit, Ex. Squeezable ketchup bottle, tubes of fish paste, Sun Chips (biodegradable bags), Happy Meal Boxes, Steam bags for veges
Add Value in Packaging: Attention getting
Ex. Fresh Start detergent in clear plastic bottle, Mrs. Buttersworth
Add Value in Packaging: Provide information
functional information, usage ideas, benefits, Ex. pictures of completed kit on legos box, recipe for rice krispie treats, camping equipment
Transaction Selling
customers are sold to and not contacted again, ex. Wal-mart
Relationship Selling
the seller contacts customer after the purchase to determine if they are satisfied and have future needs, Ex. cell phone companies
Partnering (Selling)
he seller works continually to improve its customers' operations, sales, and profits (what good financial advisers will do), Ex. Edward Jones
(Consultative Selling) Team Leader
Coordinates all of the information, resources, and activities needed to support customers before, during, and after the sale
(Consultative Selling) Business Consultant
Gives advice and service using internal and external resources to gain an understanding of the customers business and market place
(Consultative Selling) Long Term Ally
creates a "win-win" situation(as the customers sales and profits grow, so do the salesperson's), takes interest beyond the sale in the customer, the ability of a salesperson to fulfill the role of long-term ally is a pivotal factor in determining whether a sales transaction is just a transaction or the beginning of a relationship
Selling Process 1: Prospecting
locating and qualifying prospects(do they have resources, can they pay)
Selling Process 2: Pre-approach
obtaining interview, Planning - determining sales call objective, developing customer profile, customer benefit program, and sales presentation strategies
Selling Process 3: Approach
meeting prospect and beginning customized sales presentation
Selling Process 4: Presentation
further uncovering needs, Relating product benefits to needs using demonstration, dramatization, visuals, and proof statements
Selling Process 5: Trial Close
asking prospects opinions during and after presentation
Selling Process 6: Objections
uncovering objections
Selling Process 7: Meet Objections
satisfactorily answering objections
Selling Process 8: Trial Close
asking prospect's opinion after overcoming each objection and immediately before the close
Selling Process 9: Close
bringing prospect to the logical conclusion to buy
Selling Process 10: Follow Up/Service
serving customer after the sale, Most important step: ask about their experiences
Routine Buying Process
Low price, Intensive distribution, Promotion → advertising (pulling product through the channel)
Limited Buying Process
Competitive price, Selective distribution, Promotion → advertising, sales promotion, personal selling (push and pull)
Extensive Buying Process
High price, Exclusive distribution, Promotion →personal selling (push product)
Goal of promotions
reinforce the products position and build long-term customer relationships
Characteristics of Samples
are the most effective yet most expensive way to introduce a new product
Price Packs
more effective than coupons and stimulating short term sales
Trade Promotion Tools
persuade resellers to carry a brand, give it shelf space, promote it in advertising and push it to consumers
discount off the list price
"price -off" given during a stated time period
allowance
so much off per case in return for the retailers agreement to feature the product in some way.
free goods
extra cases of merchandise to resellers who buy a certain quantity or who feature a certain flavor or size
push money
cash or gifts to dealers or their sales forces to "push" the manufacturer's goods
sales contest
contest for salespeople which motivates them to increase their performance over a given time period.
Way to measure brand equity
the extent to which customers are willing to pay more for the brand
Because consumers expect stores to carry the brand
the company has more leverage in bargaining with resellers
Because the brand name carries high credibility
the company can more easily launch line and brand extensions
customer equity
the value of the customer relationships that the brand creates
Brands should include the following:
suggest benefits, short and simple, distinctive, extendable, easy to translate, legal protection
Sponsorship Options: National Brand
product launched as manufacturer's brand
Sponsorship Options: Store Brand
manufacturers sell to resellers who give it a private brand
Fastest Growing Licensing category
corporate brand licensing
Advantages of Co-Branding
offers broader consumer appeal/equity, allows company to expand existing brand into category it might otherwise have difficulty entering alone
Limitations of Co-Branding
relationships involve complex legal contracts, must carefully coordinate advertising, must trust each other
Developing Brands: Line Extensions
company introduces additional items in a given product category under the same brand name, low cost, low risk, can command more shelf space
Line Extensions Risks
overextended brand name might lose specific meaning, confusion, sales of an extension may come at the expense of other items in the line
Developing Brands: Brand Extension
gives new product instant recognition, saves advertising costs
Brand Extension Risks
if it fails, it may harm consumer attitudes toward the other products under the same name
Developing Brands: Multi-branding
offers a way to establish different features and appeal to different buying motives. Allows company to lock up more reseller shelf space. Major drawback, each brand might only obtain small market share and have little profit.
Developing Brands: New Brand
when it enters new product category for which none of the company's current brand names is appropriate