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MAR 3023 Exam 4 - Brady

Terms in this set (107)

What is Promotion?
The link between manufacturer and the buyer, they are trying to influence the consumer and inform them about the benefits of the product and persuade them to buy the product
Promotion Mix
The levers and strategic tools that companies can use to turn the dial in terms of how you become aware and persuaded of a particular product
Advertising
a paid, non-personal communication about an organization and its products transmitted to a target audience through mass media
Personal Selling
a paid, personal communication that aims to inform customers and persuade them to purchase products in an exchange situation
Public Relations
a broad set of communication efforts used to create and maintain favorable relationships between an organization and its stakeholders
Sales Promotion
is an activity or material that acts as a direct inducement offering added value or incentive for the product to resellers, salespeople, or customers; free samples, games, rebates, sweepstakes, contests, premiums, and coupons
Integrated Marketing Communications
Coordination of promotion and marketing efforts for maximum impact
Goals of IMC
Consistent:
-Consistent message to customers
Coordinated:
-Coordinate/manage promotional efforts to be logically connected
Complementary:
-Synchronization to create a greater overall campaign
Continuity:
-Use more precisely targeted promotional tools over time
Two General Promo Strategies
-Push Policy
-Pull Policy
Push Policy
-The firm is targeting someone within the distribution network
-Promoting a product only to the next institution down the marketing channel
-The producer promotes the product to wholesalers, the wholesalers promote it to retailers, and the retailers promote it to consumers
-Trade shows and personal selling
-Push money: also known as "spiffs". An extra commission paid to retail employees to push products
Pull Policy
-Promoting a product directly to consumers to develop strong demand that pulls products through the marketing channel
-Children's toys
-Ford Australia only produces a car when one is ordered by a customer; Dell did the same thing
Communication Process
-The process that describes the exchange of information between two or more people
-Messages are sent through channels:
letters, email, in person
The Source
-the person or organization that has information to share
-Company
-Salesperson
-Celebrities Q-scores
Q-scores (Celebrities)
-The way celebs get paid for promotions
-Measure of familiarity and liking
-Consumers level of familiarity with a name - % who have heard of her/him
-The number of respondents who indicate that a person, program or character is a favorite
-The score is calculated by dividing the two numbers
-Some argue that Q is better than Nielsen
Encoding
-the process of putting words, thoughts, messages into symbolic form in such a way that they will be understood by the receiver/consumer
- symbols are particularly good for this
The Channel
how the communication travels from the source to the receiver
The Channel Two Types
Nonpersonal channels:
-no personal contact with consumer
-Print, broadcast
Personal channels:
-involves direct contact
-Direct selling
-Salespeople
-WOM
-"Buzz marketing"
Buzz Marketing
-a subset of "viral marketing" wherein companies hire socially active consumers to promote products to their friends, relatives, and acquaintances.
-consumers are typically unaware that the person is on the "payroll"
Decoding
-The process of transforming the message back into thought.
-The key is for the decoded message to resemble the encoded message.
-Problems can occur if there is too much
Noise
-Anything that interferes with or distorts the message
Feedback
-The final piece of the communications process
-The receiver's response to the message.
-Can be difficult to assess
-One way to get feedback from objective sources
Response Methods
Describe the process that receivers must go through before a desired behavior occurs
Each Model has three successive stages:
Cognitive stage:
-the "thinking" stage
-Where the receiver becomes aware of the message
Affective stage:
-the "feeling" stage
-Where the receiver forms a liking or preference for the ad object
Behavioral stage:
-the "doing" stage
-Where the receiver acts on the preference
AIDA Model (attention - interest - desire - action)
-developed for personal selling
-represents the stages a salesperson must take a customer through to induce purchase
What is Advertising?
-A paid form of nonpersonal communication that is transmitted to a target audience through mass media
-Effective advertising can influence customers' purchasing behavior throughout their lifetimes
-Most organizations, even nonprofits, engage in advertising
The First Ads
-Newspaper (1704)
-P&G Ivory Soap (1882 - $11,000)
-Coca-Cola (1886)
-Automobile (1898)
-Radio - Hawthorne Court Apts, Queens, NY (1922)
-Television (1941)
-Banner Ad (1994) - Wired.com
Advertising Mediums
Movies, TV, and Video Games:
-Product placement
-Mentions
-Interactivity
Newspaper, direct mail, magazines:
-Coupons
-Flyers
-Classified ads
Sports:
-Soccer
-Nascar
-Volleyball
Internet
-How many ads does the average American see each day?
3000
Product Advertising
-Promotes the uses, features, and benefits of specific products
Pioneer Advertising
-Focuses on a product category
-Got Milk?, Beef?
Competitive Advertising
-Points out a brand's advantages relative to competing brands
-Three types of competitive ads
1.Comparative
-Compares two or more brands on one or more characteristics
2. Reminder advertising
-Reminds customers of an established brand's characteristics and benefits
3. Reinforcement
-Assures current users they have made the right choice
Advocacy Advertising
-Conveys a firm's position on a public issue
The Next Wave of Advertising
Mobile ads:
-advertisements sent to mobile phones or other wireless devices.
-First mobile ad was sent in 2000
-Now accounts for 2% of the advertising market
Scheduling Advertising
Continuous:
-runs steadily throughout the year
-Good for continuously used products
Flighting:
-runs in spurts
-Heavy/none
-Good for seasonal products
Pulsing:
-a combination
-Runs steadily but with bursts at certain times
Measuring Advertising
Reach:
-The percentage of consumers in the target audience exposed to a particular advertisement in a stated period
Frequency:
-The number of times these targeted consumers are exposed to the advertisement
Measuring Advertising Effectiveness
Pretest/Posttest
Pretest
-Evaluation performed before a campaign begins
-Consumer jury test (on your own)
Posttest
-Evaluation of advertising effectiveness after the campaign
-Recognition
-Aided Recall
-Unaided Recall
Recognition/Recall
Respondents shown a portion of an ad - or sometimes a memorable image and asked:
1. Do you recognize this ad? (recognition measure)
2. Please choose the sponsor of this ad from the following list (aided recall)
3. Please type in the sponsor of this ad (unaided recall measure)
Nielsen Ratings
-An audience measurement system designed to assess the size and composition of TV audiences
-Since there are an estimated 116,000,000 television households in the U.S.
-One ratings point represents 1% of that number - 1.16 million households
-Nielsen traditionally relied on a combination of data from the "audimeter" and consumer diaries.
-there were concerns over the accuracy of the diaries
-Nielsen now uses a "people meter" that has the capability to measure each household member's viewing habits.
-each family member has a separate button that is pushed.
-data are based on a nationwide sample of 10,000 "Nielsen families"
-Nielsen uses a sample of families in 55 markets to produce the overnight ratings
-Nielsen now also produces commercial ratings that measure commercial viewership, adjusted for DVR recordings.
-They measure zipping and zapping
Print Media
-Almost 80% of U.S. households subscribe to or purchase magazines
-The average household purchases 6 magazines per year
-54% of magazine revenues come from ads
-73% of business magazine revenue
Public Relations
-communication efforts used to create and maintain favorable relations between an organization and its stakeholders.
-Starbucks, Palm, Botox, and Segway were successfully launched this way
Publicity
-communication about the organization and/or its products transmitted through mass media at no charge.
-News release
-Feature article
-Captioned photograph
-Press conference
PR vs. Publicity
1. Publicity is more short term whereas PR extends over a period of time.
2. Publicity is largely out of the control of the firm.
Control: Ads.......PR.....Publicity
3. PR is designed to be positive whereas publicity may not be positive.
Tylenol - 1982, cleared the shelves after potassium cyanide poisonings
Perrier - Benzene cover-up in the 1990s
4. Publicity is considered to be more powerful than PR
Personal Selling
-Paid personal communication that informs customers and persuades them to buy products in an exchange situation
Nature of Personal Selling
-Gives marketers greatest freedom to adjust message
-Millions of people earn their living through personal selling
-Varies from firm to firm
GENERAL STEPS IN THE PERSONAL SELLING PROCESS
-Prospecting
-Preapproach
-Approach
-Making the Presentation
-Overcoming Objections
-Closing the Sale
Prospecting
-Developing a list of potential customers
-Names can be found in a variety of sources internal and external to the firm.
-Advertising can generate leads
-Customer referrals are a key source
Five Things for a Prospect to be Qualified:
-Do they need the product?
-Can they afford the product?
-Are they the real decision maker?
-Are they open to talking about the product?
-Are the qualified to buy the product?
Preapproach
Before contacting prospects:
-Identify key decision makers
-Review account histories and problems
-Contact other clients for information
-Assess credit histories and problems
-Prepare sales presentations
-Identify product needs
-Obtain relevant literature
Approach
-The manner in which a salesperson contacts a potential customer
-Important to create a favorable first impression and build rapport with prospective customer
Typical approaches:
-Referral
-Cold Canvassing
-Repeat Contact
Making the Presentation
-Must attract and hold the prospect's attention
-Stimulate interest in and spark a desire for the product.
-Use influencing tactics matched to prospects:
-Information exchange
-Recommendations
-Threats
-Promises, ingratiation and inspirational appeals
Overcoming Objections
-Anticipate and counter them before the prospect raises them
-Handle objections as they arise
-CRC Technique for Handling Objections:
-Clarify
-Respond
-Confirm
Closing the Sale
Closing:
-The stage in the personal selling process when the salesperson asks the prospect to buy the product
-Should be a very natural part of the conversation
Closing Tactics:
-Trial close by asking questions that assume the prospect will buy.
-Attempt to close at several points during the presentation
Types of Salespeople
-Order Getter
-Order Taker
-Support Personnel
Order Getter
-Sells to new customers and increases sales to current customers
• Current-customer
• New-business
Order Taker
-Primarily seeks repeat sales
• Inside sales
• Field sales
Support Personnel
-Staff members who facilitate selling but usually are not involved solely with making sales
• Missionary
• Trade
• Technical
Selected Types of Selling
-Team Selling
-Relationship Selling
Team Selling
-The use of a team of experts from all functional areas of a firm, led by a salesperson, to conduct the personal selling process
Relationship Selling
-The building of mutually beneficial long-term associations with a customer through regular communications over prolonged periods of time
Managing the Sales Force
-Create
-Route/Schedule
-Control/Evaluate
-Establish Objectives
-Determine Size
-Recruit/Select
-Train
-Compensate
-Salary
-Commission
-Combination
Managing Sales Territories
Creating sales territories:
-Measurable sales potential
-Geographic size
Routing and scheduling salespeople:
-Geographic size/shape
-Number of customers
Controlling and Evaluating Sales Force Performance
Information for Managers:
-Call reports
-Customer feedback
-Invoices
Set Sales Objectives/Performance Indicators:
-Calls per day and cost per call
-Average sales per customer and gross profit per customer
-Actual sales vs. sales potential
-Number of new customer orders
Price
-The value paid for a product in a marketing exchange
Not always money:
-Rent
-Tips
-Deposit
-Dues
-Interest
-Taxes
-Tuition
-Premium
-Fine
-Fee
-Fare
-Toll
Barter
the trading of products
Price competition
emphasizing price as an issue and matching or beating competitor's prices
Nonprice competition
-emphasizing factors other than price to distinguish a product from competing brands
-Price is related to total revenue and profit:
Profit = Total Revenue - Total Costs
Profits = (Price x Quantity Sold) - Total Costs
-Price is a good control for demand
-Markup is the difference between the cost of a good and its selling price:
Grocery store markup average: 12%
Gas tends to be 5-15 cents
Pre-Cut Vegetables 40%
Coffee Shop Coffee 2900%
Movie Popcorn 900%
Price Elasticity of Demand
A measure of the sensitivity of demand to changes in price
Elastic Demand
A change in price causes an opposite change in quantity demanded
Elasticity Determinants
-Availability of substitutes:
Electricity versus Coca-Cola
-Percentage of income:
Gum versus a Car
-Necessity
-Time:
Eventually find a substitute/quit smoking/die
-Brand loyalty
Costs
-Crucial component of price.
-Ideally goods are sold above cost, exceptions:
Match competition
Generate cash flow
Increase market share
Break-Even Point
where the costs of producing a product equal the revenue made from selling the product.
Marginal Analysis
Examines what happens to a firm's costs and revenues when production or sales volume changes by one unit.
Marginal cost
an extra cost incurred for producing one more unit of product
Marginal revenue
-change in total revenue when a firm sells one additional unit of product
-To determine cost of production, a firm must distinguish between several types of costs
Fixed Costs
do not vary with change in number of units sold or produced
Average Fixed Costs
is fixed cost per unit produced (Fixed Costs/Units Produced)
Variable Costs
vary directly with changes in the number of units produced or sold
Average Variable Costs
variable cost per unit produced (Variable Costs/Units Produced)
Total Costs
sum of average fixed costs and average variable costs times the quantity produced.
Reference Price
-The price stored in memory that helps to evaluate the actual price:
Serves as an anchor
Frames the purchase price
-Internal Reference Price:
Develops in buyer's mind through experience with product
-External Reference Price:
A comparison price provided by others
Price Strategies: Framing
-Anchoring price for consumers
-"MSRP", Competitor's Price, "You save
Price Strategies: Bundling
-Offering several products for sale in one
"package":
Cable, Phone, High Speed Internet
Microsoft Office
Unbundling
charging separately for previously bundled products/services
General Pricing Strategies
-Skimming
-Penetration
-Neutral
Skimming
-Useful with inelastic demand, early lifecycle stage
-Consulting, Health Care
Penetration
-Useful with elastic demand, long-term focus
-Fast Food, Dry Cleaning
Neutral
-Market-driven, "status quo" strategies
-Airlines, Retail Gas
Pricing Methods: New Products
Pricing Skimming:
-set a relatively high price at first and then lower it over time.
-Popular in electronics category (play station was originally $600)
-Encourages competition
Penetration Pricing:
-set a relatively low price to drive market share/value perceptions.
-Discourages competition
Pricing Methods: Promotional Pricing
Price/Loss Leader:
-selling products at or below cost.
-Low priced, every day products
Special Event Pricing:
-special prices linked to a holiday, season, or event.
-Black Friday
Pricing Methods: Product Line Pricing
Captive Pricing:
-the basic product is sold low; ancillaries (supporting products) are expensive.
-Cell phones / service contract
Price Lining:
-pricing products at several levels; prices are relatively inelastic within the different ranges.
Bait Pricing (a.k.a. "bait and switch"):
-a product is promised at a low price but is either not in stock or a less attractive product is sold.
-Unethical and Illegal
Pricing Methods: Psychological Pricing
Odd-Even Pricing:
-ending prices in odd or non-round numbers.
Best reason: Prices seem lower
-Limited processing capacity: $4.99 is stored in memory as $4.00 or maybe $4.90
-The more specific the price, the more consumers believe it's the lowest price possible
Reference Pricing:
-displaying a moderately priced product next to an expensive one.
EDLP:
-no sales, setting low prices on a consistent basis.
Customary Pricing:
-setting prices at a customary level.
Prestige Pricing
-Prices set at artificially high level to convey prestige or a quality image.
-Black Pearls: nobody would buy when they were first introduced
Online: Variable Pricing
-Retail website often offer different prices to different customers
Differs based on things like:
-Average income in your zip code
-Whether the consumer visited a price comparison site prior to landing on the page
-Whether you're shopping from a Mac (Mac users earn higher incomes)
-Staples, Discover Financial Services, Orbitz, Rosetta Stone, and Home Depot all do this
What is E-Marketing?
-The strategic process of distributing, promoting, pricing products, and discovering the desires of customers using digital media and digital marketing
-Also provides customers with the ability to ask questions, voice complaints, provide preferences
Addressability
-Digital technology makes it possible for visitors to identify themselves before making a purchase
-This "addressable channel" helps marketers address the specific customer needs, as opposed to a generic appeal
Interactivity
-E-marketing is about the conversation
-Interactivity helps marketers focus on high quality relationships
Accessibility(Brand)
-E-Marketing increases accessibility which provides the end user with much more information
-Branded Blogs
-Branded Mobile Apps
Accessibility-Branded Blogging
-Helps establish authority
-Helps drive traffic to your website
Connectivity
-E-Marketing connects customers to marketers and other customers
-Customer-to-customer interaction
-Brand Communities
Control
-With E-Marketing, customers have much more control over what information they see
-Increases the need for consumer-generated content
Consumer Generated Marketing
Consumer generated marketing exists because:
-Consumers now have a greater need to express their opinions
-Consumers trust other consumers over corporations
Platforms for Consumer Generated Marketing
-Social Networks
-Photo Sharing
-Video Sharing
Photo and Video Sharing
-YouTube is the number 2 search engine in the world
-1/3 of all internet activity involves watching videos
-Website visitors are 64% more likely to buy a product on an online retail site after watching a video
-Currently more than 10,000 photo sharing apps available
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