Final Exam Review

Marketing

Advertising

A PAID, NON-PERSONAL COMMUNICATION about an organization ant its products transmitted to a target audience through MASS MEDIA

Personal Selling

A PAID, PERSONAL COMMUNICATION that seeks 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

An activity or material that acts as a DIRECT INDUCEMENT offering

Integrated Marketing Communications

Coordination of promotion and marketing efforts for maximum impact

Traditional Promotion mix

Promotion and marketing efforts are separate between media channels, and it wasn't very consistent and did not communicate well

Consistent IMC

Keep a consistent message to customers that allows them to cut through the clutter

Coordinated IMC

Coordinate/Manage promotional efforts to be logically connected

Complementary IMC

Synchronized to create a greater overall campaign. Each promotion message builds on another.

Continuity IMC

Use more precisely targeted promotional tools over time. Have the same message over time.

The two general promotion strategies

Push Policy, Pull Policy

Push Policy

Business to Business (B2B), Promotes a product to only the next institution down the marketing channel. Producer to wholesaler, wholesaler to retailers, retailers to consumers.

Pull Policy

Promoting a product directly to consumers to develop strong demand. Companies target consumers.

Communication Process

Describes the exchange of information between two or more people.

Messages are sent through...

Channels

Communication Channels include

Letters, email, in person

7 Elements of Communication Process

Source, Encoding Information, Message Development, Communications Channel, Decoding the Message, Receiver, Feedback.

Noise

Constantly trying to interrupt the communication process in some way

The Source

The person or organization that has information to share.

Q Score

Measure of FAMILIARITY and LIKING. Familiarity - % who have heard of him/her. Liking - % that list the person is a favorite.

Encoding Information

The process of putting words, thoughts, messages into symbolic form in such a way that they will be understood by the receiver/consumer.

Communications Channel

How the communications travels from the source to the receiver

Two Types of Communications channels

Non personal channels, Personal channels

Non personal channels

no personal contact with consumer. Ex - Print or broadcast

Personal channels

Involves direct contact with consumer. Ex - Direct selling, salespeople, word of mouth, buzz marketing

Buzz marketing

Companies hire socially active consumers to promote products to friends, relatives, etc.

Decoding

The process of transforming the message back into thought

Feedback

The receivers response to the message.

Response Model

Describes the process that receivers must go through before a desired behavior occurs.

Cognitive response stage

The "thinking" stage where the receiver becomes aware of the message (Attention + Interest)

Affective response stage

The "feeling" stage where the receiver forms a liking or preference for the ad object (Interest + Desire)

Behavioral response stage

the "doing" stage where the receiver acts on the preference (Action)

AIDA Model

Attention, Interest, Desire, Action. The stages a salesperson must take a customer through to induce purchase.

Advertising Mediums

The way or channel by which we advertise. Movies, TV, Video Games, Newspaper, Direct mail, magazines, Sports

Product Advertising

Promotes the uses, features, and benefits of specific products.

Pioneer advertising

Focuses on a product category. Example - Got Milk? aims at a product category, not specific brands.

Competitive Advertising

Points out a brand's advantages relative to competing brands.

There types of competitive advertising

Comparative, Reinforcement, Advocacy

Reminder Advertising

Reminds customers of an established brand's characteristics and benefits. Mr. Clean on NY crosswalk.

Reinforcement advertising

Assures current users they have made the right choice. Coca cola puts their brand logo everywhere to reinforce consumers.

Advocacy Advertising

Conveys a firm's position on a public issue. Sweet Water beer promotes being environmentally friendly by being big on clean water.

Mobile Advertising

Advertisements sent to mobile phones or other wireless devices.

Current state of advertising

A lot of clutter, recall of a typical ad is only 10%

Advertainment

Getting you to watch entertaining content and put an ad at the end

Branded Entertainment

Branded entertainment retainment is 24%. AXE paid Maryland for college humor prank. In return, company was allowed to stream the video on their website and in conjunction with its brand that targets teens.

Continuous Advertisement

Runs steadily throughout the year. Milk, laundry detergent, etc.

Flighting Advertisement

Runs in spurts, good for seasonal products. Sunscreen

Pulsing Advertisement

A combination of continuous and flighting advertisement. Runs steadily but with bursts at certain times. Ex - Doritos, good all year but prevalent during super bowl. Candy - Halloween/Valentines day

Ways of Measuring Advertising

Reach, Frequency

Advertising Reach

The % of consumers in the target audience EXPOSED to a particular advertisement in a stated period

Advertising frequency

The \# of times the targeted consumers are exposed to the advertisement. More important than reach because it allows companies to better grasp attention through seeing multiple advertisements of the same product.

Pretest

Evaluation before a campaign begins. Ex. Consumer jury test

Posttest

Evaluation of advertising effectiveness after the campaign

Recognition

Base level awareness for an ad. Do you recognize it?

Aided Recall

Give you a picture of an ad and ask if consumers remember the ad

Unaided Recall

No picture given and asks consumers if they remember the ad

Neilson Ratings

Audience measurement system. Assesses the size and composition of TV audiences.

Program Rating \= Households tuned in/Total US Households

Share of Audience\= Households tuned in/US HH using TV

Zipping and Zapping

Adjustment made to ratings for DVR recordings

Print Media

Declining as average magazine reading is declining, however the number of magazines has stayed fairly constant over the years. AARP magazine is most popular.

Primary Circulation

Subscribers - Number of people who subscribe to a magazine and read it once

Pass-Along Readership

The number of people who read a magazine after the primary subscriber

Total circulation

Primary Circulation x the pass along readership circulation. 1 Million x Pass along of 2 \= 2 million total circulation

Publicity

Communication about the organization and/or its products transmitted through mass media at no charge (Positive of negative). More strong than PR, also more short term.

Public Relations

Designed to be positive, long term

Transactional Selling

Used when the sale isn't complex but consumers still need to go through sales channel

Consultative Selling

Used for more complex and expensive products where consumers need guidance

Strategic Selling

A sales process that incorporates selling products with a plan, purpose and focus

Relationship Selling

Selling yourself by building trust and relationships with consumers

Prospecting

Developing Lists of potential customers

Pre-Approach

Before contacting prospects: Review accounts, contact sources, assess credit history, identify product needs

Approach

Cold Calling- Telemarketing: Trying to sell consumers products randomly. Referrals - Someone you know recommends you (Warm call)

Need/Discovery Diagnosis

Where is the gap? Current vs. Ideal situation. Difficult because consumers don't admit their problems/needs

Straight Salary

Set Salary, could cause laziness

Straight Commission

Incentivizing but service varies

Combination Salary

Security and Incentive from fixed plus variable salary. Less predictable.

Price

The Value paid for a product in a marketing exchange. NOT always money.

Barter

The trading of products

Price competition

Emphasizing price as an issue and matching or beating competitors prices

Non-Price competition

Emphasizing factors other than price to distinguish a product from competing brands. Guarantees, Return policies

Profit \=

(Price x Quantity sold) - Total Costs

Prestige Products

High end products, Demand increases as price increases because of the luxury

Markup

Difference between cost of a good and selling price

Price Elasticity of Demand

Measure of the sensitivity of demand to changes in price

Elastic Demand

Q Demanded will change a lot with price change

Inelastic Demand

Q Demanded will not change much with change of price

Break-Even point

Costs of producing a product equal revenue from selling the product. \= Fixed Costs/(Price-Variable costs)

Marginal Analysis

What happens to costs and revenues when production or sales volume changes by one

Reference Price

The price stored in memory that helps to evaluate the actual price

Internal Reference price

develops in buyer's mind through experience with product

External Reference Price

A comparison price provided by others

Price Framing

Anchoring price for consumers, changing the context of price presentation without substantially changing the price itself in order to encourage more purchases. - MSRP, perception you're buying car for less than what it should be sold for

Bundling

Offering several products for sale in one package. Southwest - bags fly free

Unbundling

Charging separately

Sales Oriented strategy

Set prices low to maximize shares. New firms want to maximize market share.

Profit Oriented strategy

Focused on profits. Target profit pricing (products must have at least x profit margin), Maximize profits (Use mathematical models to maximize profits)

Customer Oriented strategy

Focused on providing value

Skimming

Price starts high, lowers over time. Useful with inelastic demand, early lifecycle stage. Consulting, Health Care, Technology (iPhones)

Penetration

Set price low and raise it over time. Useful with elastic demand to gain market share at start.

Neutral Pricing

Price products at levels your competitors charge. Market driven, status quo strategies.

Markup as % of cost

Markup/Cost