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Ch 14/7, Pt. 2/1, Intro to Advertising
Terms in this set (100)
Customer Lifetime Value (CLTV) is used to assist marketers in determining
The dollar value associated with a long-term relationship with a customer, thus evaluating his or her worth.
The value in CLTV is used to determine whether or not
A customer should be acquired, as well as to optimize service levels to existing customers.
Companies use CLTV to assist them in assessing
Future revenues and profit streams from the customer, so that they can focus more on the satisfaction and retention of their more profitable customers.
With CLTV the company can focus more attention on
Profitable customers while spending less marketing effort on those with a low CLTV score.
A marketing technique used to determine quantitatively which customers are the best ones by examining how recently a customer has purchased (recency), how often they purchase (frequency), and how much the customer spends (monetary).
For direct-marketing programs that do not have an objective of generating a behavioral response, traditional
Measures of effectiveness can be applied.
Advantages of Direct Marketing
Selective Reach, Segmentation Capabilities, Frequency, Testing, Timing, Personalization, Cost, Measures of Effectiveness
Selective Reach (Advantages of Direct Marketing)
Direct marketing lets the advertiser reach a large number of people and reduces or eliminates waste coverage.
Intensive coverage in direct marketing may be obtained through
Broadcast advertising or through the mail.
A good list allows for minimal waste as
Only those consumers with the highest potential are targeted.
Segmentation Capabilities (Advantages of Direct Marketing)
Marketers can rent or purchase lists of recent product purchasers, car buyers, bank-card holders, and so on.
The lists that marketers purchase may allow segmentation on the basis of
Geographic area, occupation, demographics, and job title amongst others.
Combining the list information with the geocoding capabilities of PRIZM or VALS, marketers can develope
Effective segmentation strategies.
Frequency (Advantages of Direct Marketing)
Depending on the medium used, it may be possible to build frequency levels.
The programs vehicles used for direct-response TV advertising are usually the most
Inexpensive available, so the marketer can afford to purchase repeat times.
Frequency may not be so easily accomplished through the mail, since
Consumers may be annoyed to receive the same mail repeatedly.
Testing (Advantages of Direct Marketing)
Direct marketing allows for a strong ability to test the effectiveness of the overall program as well as specific elements.
Timing (Advantages of Direct Marketing)
While many media require long-range planning and have long closing dates, direct-response advertising can be much more timely.
Direct mail and e-mail can be put together very quickly and
Distributed to the target population.
TV programs typically used for direct-response advertising are
Older, less viewed programs that are likely to appear on the stations list of available spots.
One common strategy is to purchase available TV time slots at the
Last possible moment to get the best price.
Personalization (Advantages of Direct Marketing)
No other advertising medium can personalize the message as well as direct media.
Costs (Advantages of Direct Marketing)
While the CPM for direct mail may be very high on an absolute and a relative basis, its ability to specifically target the audience and eliminate waste coverage reduces the actual CPM.
Costs may be higher than in other media, but direct methods
May be more profitable.
Cost Per Customer Perchasing in direct mail, because of the low cost of media
Each sale generated can be very inexpensive.
Measures of Effectiveness (Advantages of Direct Marketing)
No other medium can measure teh effectivness of its effort as well as direct response.
With direct response marketing, feedback is often
Immediate and almost always accurate.
Disadvantages of Direct Marketing Include
Image Factors, Accuracy, Content Support, Rising Costs, Do Not Call Lists
Image Factors (Disadvantages of Direct Marketing)
The mail segment of the direct marketing industry is often referred to as junk mail.
Many people believe unsolicited mail promotes
Junk products and others dislike being solicited.
Direct-Response ads on TV are often low-budget ads for
Lower-priced products, which contributes to the image that something less than the best products are marketed in this way.
Telemarketing is found to be irritating to many consumers, as is
Spam or internet junk mail, which are some of the factors that created image problems for the direct-marketing industry.
Accuracy (Disadvantages of Direct Marketing)
The effectiveness of the methods used to target customers specifically depends on the accuracy of the lists used.
Factors contributing to inaccuracy of lists
People move, change occupations, and so on.
If marketing lists are not kept current
Selectivity will decrease.
Computerization has greatly improved the currency of lists and reduced the incidence of bad names; however
The ability to generate lists is becoming a problem, and the cost of generating a lead can range from a few dollars to as much as hundreds depending on its quality.
Some states now have restrictions on how and where data
On customers can be gathered.
Content Support (Disadvantages of Direct Marketing)
In direct-response advertising, mood creation is limited to the surrounding program and/or editorial content.
The abilitiy of magazines to create mood contributes to
The overall effectiveness of the ads they carry.
Direct-mail and online services are unlikely to create
A desirable mood.
Rising Costs (Disadvantages of Direct Marketing)
As postal rates, and print costs increase, direct-mail profits are immediately and directly impact.
The low cost of e-mail has led many companies
To switch to this medium.
Do Not Call Lists (Disadvantages of Direct Marketing)
They now exist for both landline and cell phones.
The monies previously allocated to traditional media are
Increasingly being moved to digital media.
Those managers who have been hesitant to move strongly into digital argue that it is necessary to establish concrete
Communications objectives to guide their media strategies and these objectives should be based on purchase decision models that guide the budget allocation to various media, and not just the fact that a particular media category is trending.
Unfortunately, many companies have difficulty with the most critical step in the promotional planning processes-
Setting realistic objectives that will guide the development of the IMC program.
Make the setting of marketing communications objectives "a job of creating order out of chaos"
Complex marketing situations, conflicting perspectives regarding what advertising and other promotional-mix elements are expected to accomplish, and uncertainty over resources.
Setting specific objectives should be an integral part of the planning process, however, many companies
Either fail to use specific marketing communications objectives, or set ones that are inadequate for guiding the development of the promotional plan or measuring its effectiveness.
Advertising and promotional objectives are needed for several reasons including
The functions they serve in communications, planning and decision making, and measurement and evaluation.
Specific objectives for the IMC program facilitate coordination of the
Various groups working on the campaign.
The advertising and promotional program must be coordinated within the company, inside the ad agency, and
Between the two.
Any other parties involved with the promotional campaign such as PR and/or sales promotion firms, research specialists, and media buying services, must also know
What the company hopes to accomplish through its marketing communications program.
Many problems can be avoided if all parties have written, approved objectives to
Guide their actions and serve as a common base for discussing issues related to the promotional program.
Specific promotional objectives guide development of the integrated marketing communications plan. All phases of a firm's promotional strategy should be based on
The established objectives, including budgeting, creative, and media decisions as well as marketing, public relations/publicity, sales promotion, and/or reseller support programs.
Meaningful objectives can also be a useful guide for decision making. Promotional planners are often faced with a
Number of strategic and tactical options in terms of choosing creative options, selecting media, and allocating the budget among various elements of the promotional mix.
Choices should be made based on how well a particular strategy matches
The firm's promotional objectives in regard to planning decision making in the budget.
Specific objectives provide a benchmark against which the
Success or failure of the promotional campaign can be measured.
Without specific objectives, it is extremely difficult to determine
What the firm's advertising and promotion efforts accomplished.
One characteristic of good objectives is that they are measurable
They specify a method and criteria for determining how well teh promotional program is working.
Integrated marketing communications objectives should be based on a thorough
Situation analysis that identifies the marketing and promotional issues facing the company or a brand.
The situation analysis is the foundation on which marketing objectives are determined and
The marketing plan is developed.
IMC objectives evolve from the company's overall marketing plan and are rooted in its
Advertising and promotional objectives are not the same
As marketing objectives (although many firms tend to treat them as synonymous)
Generally stated in the firm's marketing plan and are statements of what is to be accomplished by the overall marketing program within a given time period.
Marketing objectives are usually defined in terms of specific, measureable outcomes such as
Sales volume, market share, profits, or return on investment.
Good marketing objectives are quantifiable
The delineate the target market and note the time frame for accomplishing the goal (often one year)
Companies often have secondary marketing objectives that are related to
Actions they must take to solve specific problems and thus achieve their primary objectives.
Once the marketing communications manager has reviewed the marketing plan, they should understand
Where the company hopes to go with its marketing program, how it intends to get there, and the role advertising and promotion will play.
Marketing goals defined in terms of sales, profit, or market share increases are usually not
Appropriate promotional objectives as they are objectives for the entire marketing program and achieving them depends on proper coordination and execution of all the marketing-mix elements.
Integrated Marketing Communications Objectives
Statements of what the various aspects of the IMC program will accomplish.
Integrated Marketing Communications Objectives should be based on the
Particular communications tasks required to deliver the appropriate messages to the target audience.
Managers must be able to translate general marketing goals into
Communications goals and specific promotional objectives.
Sometimes companies do not have a formal marketing plan, and the information needed may not be readily available. In this case, the promotional planner
Must attempt to gather as much information as possible about the product and its markets from sources both inside and outside the company.
After reviewing all the information, the promotional planner should see how integrated marketing communications fits into
The marketing program and what the firm hopes to achieve through advertising and other promotional elements.
After seeing how IMC fits into the marketing program and what the firm hopes to achieve through advertising and other promotional elements, the next step is to
Set objectives in terms of specific communications goals and tasks.
To many managers, the only meaningful objective for their promotional program is sales. They take the position that
The basic reason a firm spends money on advertising and promotion is to sell its product or service.
Promotional spending represents an investment of a firm's resources that
Requires an economic justification. Though determining the specific return on advertising and promotional dollars is often quite a difficult task.
Just as teh quarterback is but one of the players on the football team, promotion is but
One element of the marketing program, and there are many reasons why the targeted sales level was not reached.
Advertising can make consumers aware of and interested in the brand but
It can't make them buy it, particularly if it is not readily available or is priced higher than a competing brand.
All the marketing elements must work together if
A successful plan is to be implemented.
The effects of advertising often occur
Over an extended period.
Monies spent on advertising do not have immediate impact on sales.
Advertising may create awarenss, interest, and/or favorable attitudes toward a brand, but
These feelings will not result in an actual purchase until the consumer enters the market for the product, which may occur later.
The carryover effect adds to the difficulty of
Determining the precise relationship between advertising and sales.
Sales Objectives offer little guidance to those responsible for planning and developing the promotional program. The creative and media people working on the account
Need some direction as to the nature of the advertising message the company hopes to communicate, the intended audience, and the particular effect or response sought.
Communications objectives are recommended because they provide
Operational guidelines for those involved in planning, developing, and executing the advertising and promotional program.
Certain types of promotion efforts seek direct action in nature; they attempt to
Induce an immediate behavioral response from the prospective customer.
The direct-response advertiser generally sets objectives and
Measures success in terms of the sales response generated by the ad.
Objectives for and the evaluation of a direct response ad on TV are based on
The number of orders received each time a station broadcasts the commercial.
Sales-oriented objectives are used when advertising plays a dominate role in
A firm's marketing program and other factors are relatively stable.
Many packaged-goods companies view advertising and sales promotion as the
Key determinants of a brand's sales or market share so it may be possible to isolate the effects of these promotional-mix variables.
Many companies have accumulated enough market knowledge with their advertising, sales promotion and direct-marketing programs to have
Considerable insight into the sales levels that should result from their promotional efforts.
Advertising and promotional programs tend to be evaluated in terms of sales, particularly when expectations
Are not being met.
Marketing and brand managers under pressure to show sales results often take a short-term perspective in evaluating advertising and sales promotion programs, and they are often looking for
A quick fix for declining sales or loss of market share.
Marketers looking for a quick fix to declining sales or loss of market share ignore the pitfalls of
Making direct links between advertising and sales, and campaigns, as well as ad agencies, may be changed if sales expectations are not being met.
Many companies want their agencies to accept incentive based compensation systems tied to sales performance, thus
While sales ma not be an appropriate objective in many advertising and promotional situations, managers are inclined to keep a close eye on sales and market share figures and make changes in the promotional program when these numbers become stagnant or decline.
The primary role of an IMC program is to
Communicate and that planning should be based on communications objectives.
Advertising and other promotional efforts are designed to achieve such communications as
Brand knowledge and interest, favorable attitudes and image, and purchase intentions.
Consumers are not expected to respond immediately in a good IMC program; rather
Advertisers realize they must provide relevant information and create favorable predispositions toward the brand before purchase behavior will occur.
Advocates of communications-based objectives generally use some form of the hierarchal models when setting advertising and promotional objectives. In all the models consumers pass through three successive stages
Cognitive (thinking), Affective (feeling) and Conative (Behavioral). As consumers proceed through these stages, they move closer to making a purchase.
THIS SET IS OFTEN IN FOLDERS WITH...
Ch. 13/14, Pt. 3/1, Intro to Marketing
Ch. 13, Pt. 2, Intro to Advertising
Ch. 13, Pt. 1, Intro to Advertising
Ch. 7, Pt. 2, Intro to Advertising
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