Key Concepts in Marketing and Promotion Strategies

Promotion

Communication by marketers that informs, persuades, and reminds potential buyers of a product to influence an opinion or elicit a response.

Competitive Advantage

One or more unique aspects of an organization that cause target consumers to patronize that firm rather than competitors.

Interpersonal Communication

Direct, face-to-face communication between two or more people (ex: A salesperson at Best Buy explaining the features of a new laptop to a customer).

Mass Communication

The communication of a concept or message to large audiences (ex: Coca-Cola airing a commercial during the Super Bowl to promote its new flavor).

Noise in Marketing Communication

Anything that interferes with, distorts, or slows down the transmission of information (ex: A customer misinterprets a product promotion email because of poor wording and skips over the discount details).

Goals for Promotion

To inform the target audience, persuade the target audience, remind the target audience, connect the audience.

Promotional Mix

The combination of promotional tools—including advertising, public relations, personal selling, sales promotion, and social media—used to reach the target market and fulfill the organization's overall goals.

Advertising

Impersonal, one-way mass communication about a product or organization that is paid for by a marketer (ex: Nike runs a paid YouTube ad showcasing their new running shoes).

Publicity

Public information about a company, product, service, or issue appearing in the mass media as a news item (ex: A popular news outlet writes an article about how Tesla's new model could change the future of electric vehicles).

Sales Promotion

Marketing activities—other than personal selling, advertising, and public relations—that stimulate consumer buying and dealer effectiveness (ex: Target offers a 'Buy One, Get One 50% Off' deal on back-to-school supplies for one week only).

Personal Selling

A purchase situation involving a personal, paid-for communication between two people to influence each other (ex: A car salesperson gives a one-on-one demo of a vehicle's features to a potential buyer at the dealership).

Paid Media

Media you paid for to promote your brand (ex: A company pays Instagram to show their ad to users).

Earned Media

Free publicity when you get others to talk about your brand (ex: A popular YouTuber posts a positive review of a skincare product without being paid).

Owned Media

Media channels the brand controls (ex: A company posts product updates on its official website or Instagram page).

AIDA

The ___ model helps marketers plan promotional strategies by showing the steps to move a customer from awareness to purchase.

Product Life Cycle

The product life cycle shows the stages a product goes through from launch to decline: Introduction, Growth, Maturity, and Decline.

Introduction in PLC

Promotion is used to inform people the product exists.

Growth in PLC

Promotion targets new customers and builds brand preference.

Maturity in PLC

Competition is strong, so persuasive ads are used to stand out.

Decline in PLC

Promotion is reduced as sales drop.

Push strategy

The company 'pushes' the product through the channel to the customer by convincing sellers to carry it. (A toothpaste company gives bonuses to retailers who sell a lot of their product, so the retailers push it to customers)

Pull strategy

The company 'pulls' customers in by making them want the product, so retailers are pressured to stock it. (A skincare brand runs a TikTok campaign that goes viral. Customers ask for it in stores, so retailers order more.)

Measured media

Can be easily tracked and measured through standard media channels. (Network and cable TV newspapers, magazines, radio, outdoor and Internet)

Unmeasured media

Advertising spending that's harder to track because it happens in more personalized or indirect ways. (Direct mail, coupons, catalogs, product placement (like in movies), event marketing, and promotions)

Advertising response function

It's the idea that increasing advertising and sales promotion helps boost sales, but only up to a point. After a certain level, spending more doesn't lead to as big of an increase in sales.

Institutional advertising

A form of advertising designed to enhance a company's image rather than promote a particular product. (Coca-Cola runs a commercial showing its commitment to sustainability enhancing its overall brand image)

Advocacy advertising

A form of advertising in which an organization expresses views on controversial issues or response to media attacks. (Patagonia runs ads advocating for environmental conservation and the protection of national parks)

Product advertising

A form of advertising that touts the benefits of a specific good or service. (Apple runs an ad showing the features of the latest iPhone, highlighting its camera and design)

Pioneering advertising

A form of advertising designed to stimulate primary demand for a new product or product category. (Tesla advertises electric vehicles to educate consumers about electric cars and promote the shift away from gasoline vehicles)

Competitive advertising

A form of advertising designed to influence demand for a specific brand. (Pepsi runs ads comparing their soda taste to Coca-Cola, aiming to sway customers to choose Pepsi)

Comparative advertising

A form of advertising that compares two or more specifically named or shown competing brands on one or more specific attribute. (A mobile carrier compares its faster network speed with that of a competitor in a TV commercial)

Cost per thousand

Cost of reaching one member of the target market (newspaper)

Cost per click

The cost associated with a consumer clicking on a display or banner ad.

Reach

The number of target consumers exposed to a commercial at least once during a specific period, usually four weeks.

Frequency

The number of times an individual is exposed to a given message during a specific period.

Noise level

The amount of distraction experienced by the target audience in a medium.

Flexibility

Ability to schedule or alter an ad in a short amount of time.

Life span

How long the marketing message lasts.

Continuous Media Schedule

Ads run steadily throughout the year, especially for products in the later stages of their life cycle. (Coca-Cola advertises regularly throughout the year to maintain brand awareness, as their product is well-established.)

Flighted Media Schedule

Ads are run heavily during certain times (e.g., every other month or every two weeks) to create a stronger impact with increased frequency.

Pulsing Media Schedule

A combination of continuous ads year-round with increased ads during peak sales periods.

Seasonal Media Schedule

Ads are run only during the specific time of year when the product is most in demand.

Public Relations

A promotional strategy that helps a company manage image by understanding public attitudes and addressing concerns. (ex: Starbucks launches a sustainability campaign and partners with environmental groups to improve its brand image).

New-product publicity

Efforts to gain media attention through events or press releases to support the company's public relation goals after a product launch.

Product placement

A publication strategy where a product or brand is shown in movies, TV shows, or other media to increase visibility.

Sponsorship

A company supports an event that caused or issued to improve its brand awareness or corporate image.

Sales promotion

Short term, marketing activities to encourage consumers or retailers to buy immediately either by lowering the price or adding value.

Trade sales promotion

Promotions aimed at wholesalers or retailers to get them to sell more products.

Trade allowance

A price reduction given to retailers or wholesalers to encourage them to buy more products.

Push money

Money offered to retailers to encourage them to push or sell more of a product.

Consumer sales promotion

Promotions directly aimed at consumers to encourage them to buy products.

Coupon

A certificate that gives a consumer a discount when they buy a product.

Rebate

A cash refund given for buying a product within a certain time period.

Loyalty marketing program

A program that encourages repeat customers by rewarding them for their purchases.

Frequent-buyer program

A loyalty program where customers are rewarded for buying more of a specific product.

Price

That which is given up in an exchange to acquire a good or service.

Revenue

The price charged a customer is multiplied by the number of units sold.

Profit

Revenue minus expenses.

Profit Maximization

Setting prices so that total revenue is as large as possible relative to total cost.

Return on Investment (ROI)

Net profit, taxes, divided by total assets; measures management's overall effectiveness in generating profits with available assets.

Market Share

Company product sales as a percentage of total sales for the industry.

Status Quo Pricing

A pricing objective that maintains existing prices or meets the competition's prices.

Elasticity of Demand

Consumers' responsiveness or sensitivity to changes in price.

Elastic Demand

A situation in which consumer demand is sensitive to changes in price.

Inelastic Demand

A situation in which an increase or decrease in price will not significantly affect the demand for the product.

Factors Influencing Elasticity of Demand

Availability of substitutes, necessity versus luxury, time period, income, brand loyalty.

Dynamic Pricing

The ability to change prices very quickly, often in real time using software programs.

Surge Pricing

Occurs in a fluid market where demand changes rapidly, often hourly; when demand increases, so do prices, and vice versa.

Variable Cost

Cost that varies with changes in the level of output.

Fixed Cost

Cost that does not change as output is increased or decreased.

Markup

The cost of buying the product from the producer plus an amount for profit and for expenses not otherwise accounted for.

Key Stoning

The practice of marking a price by 100% or doubling the cost.

Breakeven

A method of determining what sales volume must be reached before total revenue equals total costs.

Skimming Pricing Strategy

A pricing policy whereby a firm charges a high introductory price often coupled with heavy promotion.

Penetration Pricing Strategy

A pricing policy whereby a firm charges a relatively low price for a product when it is first rolled out to reach the mass market.

Base Pricing

The general price level at which the company expects to sell the good or service.

Finetuning Base Pricing

Allows the firm to adjust for competition in certain markets, take advantage of unique demand situations, and meet goals.

Quantity discount

A price reduction offered to buyers buying in multiple units or above a specified dollar amount.

Cumulative quantity discount

A deduction from the list price that applies to the buyer's total purchase made during a specific period.

Noncumulative quantity discount

A deduction from the price that applies to a single order rather than to the total volume of orders placed during a certain period.

Cash discount

A price reduction offered to a consumer, industrial user, or marketing intermediary in return for prompt payment of a bill.

Functional discount

A discount for wholesalers and retailers for performing channel functions.

Seasonal discount

A price reduction for buying merchandise out of season.

Zero percent financing

A type of loan that enables purchases to borrow money to pay for products with no interest charge.

Single price tactic

A price tactic that offers all goods and services at the same price.

Leader pricing

A price tactic in which a product is sold near or even below cost in the hope that shoppers will buy other items once they are in the store.

Odd-Even Pricing

A price tactic that uses odd number prices to connote bargains and even numbered prices to imply quality.

Price Bundling

Marketing two or more products in a single package for a special price.

Two-Part Pricing

A price tactic that charges two separate amounts to consume a single good or service.

Geographic pricing

A pricing strategy where many sellers ship their ways to a nationwide or even worldwide market.

FOB pricing

A price tactic that requires the buyer to absorb the freight cost from the shipping point.

Uniform delivered pricing

A price tactic in which the seller pays the actual freight charges and builds every purchaser an identical flat freight charge.

Zone pricing

A modification of uniform delivered pricing that divides the market into segments or zones and charges a flat freight rate to all customers in the given zone.

Freight absorption pricing

A price tactic in which the seller pays all or part of the actual freight charges and does not pass them on to the buyer.

Basing point pricing

A price tactic that charges freight from a given basing point regardless of the city from which the goods are shipped.

Pricing fixing

An agreement between two or more firms on the price they will charge for a product.

Price discrimination

It's illegal for a company to sell the same product to two different buyers at different prices if it hurts competition.

Predatory pricing

The practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market.