BEFORE marketing exam 3

prior to getting study guide

marketing channel

path a product takes from manufacturer to the final consumer of business buyers

intermediaries

businesses/induvidual’s that help move products from manufacturers to buyers (wholesalers, retailers, distributors, agents and brokers)

why companies use intermediaries

reduce transaction and distribution costs

improve efficiency

handle transportation, storage and inventory

make products more accessible

help manufacturers reach more customers

direct distribution

manufactuer sells directly to consumer

(gives more control but may be less efficient)

indirect distribution

manufactuer uses intermedieries to reach consumers

3 main functions of distribution channels: transactional

contacting, communicating with and educating buyers

3 main functions of distribution channels: logistical

physically moving, storing, sorting and repackaging products

3 main functions of distribution channels: facilitating

supporting transactions through research and financing

bulk breaking

buying products in large quantities and selling them in smaller quantities

channel structures: B2C

products are sold to the final consumer.

typical structure:

Manufacturer → Wholesaler → Retailer → Consumer

channel structures: B2B

products are sold to another business.

typical structure:

Manufacturer → Industrial Distributor/Wholesaler → Business Buyer

dual (hybrid) distribution

manufacturer uses multiple distribution channels, such as selling directly to consumers and through third-party retailers.

example: Apple sells iPhones on its own website and through Best Buy.

advantages of dual distribution

greater market reach

more purchasing options

disadvantages of dual distribution

potential conflict between distribution channels including price competition and disagreements between retailers and manufactuers

3 market cover strategies: intensive distribution

sell through as many outlets as possible

3 market cover strategies: selective distribution

sell through carefully chosen group of retailers

3 market cover strategies: exclusive distribution

limit distribution to very few authorized sellers

push strategy

manufacturer offers incentives to channel members to encourage them to sell more of the product (PERSUADE MIDDLE MAN)

pull strategy

manufacturer targets consumers directly to encourage demand for a product (PERSUADE BUYER)

marketing communication

promotion component of the marketing mix (4 Ps), used to communicate with the target market

3 main purposes of marketing communication

inform: educate consumers about products and their benefits

persuade: convince customers to purchase a product

remind: keep a brand in customers mind

goals of marketing communications

awareness: make customers familiar with a brand or product

positive image: highlight the products value and create favorable perceptions

identify prospects: find potential customers

build channel relationships: strengthen relationships with distributors and retailers

retain customers: encourage repeat purchases

differentiate products: show why a product is different from its competitors

stabilize sales: maintain demand over time

promotional mix

different communication tools marketers use to reach customers

advertising

paid promotional messages

sales promotion

short term incentives to purchase

ex: coupon or rebate

personal selling

direct interaction with potential customers

public relations

managing brand reputation and public image

direct marketing

communicating directly with selected consumers

digital marketing

promoting products through online platforms

guerrilla marketing

unconventional promotional methods

product adoption process

stages consumers move through when deciding whether to adopt a product

steps of product adoption process

1. awareness

2. interest

3. evaluation

4. trial

5. decision

6. conformation

product adoption process step 1

awareness: customer discovers a product exists

product adoption process step 2

interest: customer becomes interested in learning more

product adoption process step 3

evaluation: customer considers whether the product meets their needs

product adoption process step 4

trial: customer tries the product

product adoption process step 5

decision: customer decided whether to adopt or purchase

product adoption process step 6

confirmation: customer evaluates or reinforces the decision after purchase

AIDA model

communication model that describes how promotions move consumers toward purchasing

AIDA model stages: attention

capture consumers attention

AIDA model stages: interest

build curiosity about the product

AIDA model stages: desire

make consumer want the product

AIDA model stages:action

encourage purchase or other desired action

institutional advertising

promotes companys image or reputation rather than a specific product

advocacy advertising

a type of institutional advertising that supports a cause or postion to enhance corporate credibility

product advertising

promotes a particular product or service

product advertising: pioneering

creates primary demand for an entire product category

product advertising: competitive

increases demand for a particular brand

product advertising: comparative

directly compares two or more brands

advertising scheduling

timing ads so exposure occurs when consumers are more likely to purchase

advertising scheduling strategy: continuity

advertising at a steady rate over time

advertising scheduling strategy: flighting

advertising during certain periods with breaks between campaigns

ex: heavy christmas advertising then stopping

advertising scheduling strategy: pulsing

continuous advertising with occasional increases

ex: regular ads plus extra holiday ads

reach

number or percentage of unique people or households exposed to advertising

unduplicated reach

counts each audience member only once, even if ad has been seen multiple times

duplicated reach

includes repeated exposures to the same audience members

frequency

how many times an individual or household is exposed to an advertisement

program rating

percentage of all tv households in a market watching a particular program (ALL TV HOUSEHOLDS)

program rating formula

(households watching program/ total tv households) * 100

share

percentage of households with their tvs turned on that are watching a particular program (ONLY HOUSEHOLDS USING TV AT THAT TIME)

share formula

(households watching program/households using tv) *100

number of households reached

rating (decimal) * total tv households

ex: a program has a 10% rating with 500,000 tv households

500,000 × 0.1 = 50,000

digital marketing

promoting products and services through online channels using data to target customers and measure results

main advatange over traditional media: greater targeting capabilities and measurability

3 categories of digital marketing: earned/organic

visibility gained without paying for view each week

3 categories of digital marketing: paid

paying for ad placement

3 categories of digital marketing: automated

software purchases digital ad space

search engine organization (SEO)

improving a website so it appears higher in unpaid (organic) search results

goal of SEO

attract visitors who are already searching for related info/products

three components of SEO: content

creating useful pages with relevant search terms and info

three components of SEO: technical

making websites fast, mobile friendly, secure and accessible

search engine marketing (SEM)

paid search advertising in which advertisers bid on keywords to appear in search results

how keyword bidding works

1. Advertiser chooses keywords.

2. Advertiser sets a maximum bid.

3. A search triggers an auction.

4. The auction determines ad placement.

5. Advertiser pays when someone clicks.

ad rank

bid * quality

banner advertising

banner ad= rectangular image or text ad placed in a designated loco on a website or app

Purpose: Build awareness and encourage clicks.

Common formats:

- Leaderboard: Wide banner, often at the top of a webpage.

- Medium rectangle: Common placement within a page or sidebar.

- Skyscraper: Tall, narrow advertisement.

display advertising

Visual advertisements shown across websites, apps, social platforms, and video platforms.

Includes:

• Image ads.

• Banner ads.

• Video ads.

• Rich media advertisements.

• Native and social advertisements.

Main purpose: Increase brand awareness, including among people who are not actively searching for the product.

types of display advertising: retargeting

advertising to people who previously visited or interacted with a website

types of display advertising: contextual

advertising related to the content of a webpage

types of display advertising: video

advertisement shown before or during an online video

types of display advertising: native

advertisement designed to blend with surrounding content

digital advertising metrics: impressions

number of times an advertisement is displayed.

digital advertising metrics: click-through rate (CTR)

percentage of impressions that result in clicks

CTR formula

(clicks/impressions) * 100

digital advertising metrics: cost per click (CPC)

amount advertisers pay for each click

digital advertising metrics: cost per mille (CPM)

cost per 1,000 impressions

programmatic advertising

automated buying and selling of digital advertising space using software and real-time auctions.

key concept: advertisements are purchased automatically, often one impression at a time, in fractions of a second.

publisher

website or app that offers advertising space

supply side platform (SSP)

technology publishers use to sell available advertising space

demand side platform (DSP)

tech advertisers use to bid on ad space

ad exchange

digital marketplace where advertisers and publishers participate in ad auctions

floor price

min acceptable bid for ad space

sales promotion

marketing communication activities that offer short-term incentives to motivate immediate purchases

sales promotion incentives work by

incentives work by:

• Reducing the price.

• Adding extra value.

• Encouraging customers to purchase sooner.

key characteristics

• Usually less expensive than advertising.

• Easier to measure through coupon redemptions or promotion participation.

• Often influences immediate purchasing behavior more than long-term attitudes.

trade sales promotion

targets wholesalers and retailers

encourages channel members to sell

associated with push strategy

consumer sales promotion

targets final consumers

encourages consumers to purchase

often supports pull strategy

trade allowance

price reduction manufacturers offer to intermediaries, such as wholesalers and retailers

push money

money offered to intermediaries to encourage them to actively promote or sell a manufacturer's product

sales contests

reward channel members for meeting sales goals

free merch

offer retailers extra products instead of discounts

training

teach retail employees about complex products

in store demonstrations

show how products work