Marketing 3000 Joel Poor exam 3

Discount And Allowance Pricing

Adjustment Strategy where companies adjust their prices in order to reward customers (examples: early payment of bills, volume purchases, off-season buying)

Cash Discount

price reduction to those who pay in cash

Quantity Discount

Price reduction to buyers who buy large volume

Noncumulative quantity

given for a single purchase (Buy One Get One Free)

Cumulative quantity discount

Discount is given over a number of purchases (Get 9 hair cuts get the 10th free)

Functional Discount (AKA Trade Discount)

Offer given by the seller to trade-channel members who perform certain functions (selling storing, bookkeeping)

Seasonal Discount

Discount to buyers who buy merchandise out of season

Trade-in-allowance

Price reduction given for turning in an old item (phone, car)

Promotional Allowances

payments or price reductions to reward dealers for participating in advertising and sales support programs

Segmented/ Discriminatory Pricing

Companies adjust prices to allow for differences in customers, products, and locations

Customer Segment Prices

Different customers may pay different prices (Example: cars)

Product Form Pricing

Different versions of the product are priced differently (not variable to actual costs)

Location Pricing

Charges different prices for different locations

Time Pricing

Price Varies based on time (season, month, day, time)

In order to use segmented pricing...

1. Market Must Be segment-able

2. Segments must show different degrees of demand

3. Cost of segmenting and watching the market cannot exceed extra revenue obtained by price difference

4. Must be legal

Psychological Pricing

consider psychology of pricing not only economics (types reference pricing )

Reference pricing

Prices that buyers hold in their mind and what they refer to when looking at a given product (what you think the price is based on past prices)

Department store retailers mark-up prices and then offer discounted sales prices (50% off)

Anchoring and Adjustment

Odd Pricing

practice of using prices like $.99 $19.95 $99.99

(May also use Even prices like Nordstrom)

Promotional Pricing

Companies will temporarily mark their products below list price or cost in order to creating buying excitement and urgency (Black Friday)

Loss Leaders

products priced below cost

Special Event Pricing

Type of promotional pricing where prices vary in certain seasons (Back to school sale)

Low interest Finance

type of Promotional pricing where manufactures may offer longer warranties, free maintenance in order to reduce the consumers price

Industry Price Wars

Caused by frequent use of Promotional tools which result in few market leaders dominate market and constantly compete against each other

Geographical Pricing

Different Pricing for different part of country or world

FOB-origin pricing

practice that means goods are placed free on board

(producer pays for shipping)

Uniform Delivery Pricing

Company charges the same price plus freight to all customers regardless of location

Zone Pricing

Company sets up two or more zones and bases their pricing on what zone the purchaser is in

Basing Point Pricing

Seller selects a specific city and charges all customers the freight cost from that city to the customers location

Freight absorption pricing

Seller absorbs all or part of the actual freight charges in order to get the desired business

Countertrade

Receiving payment in some form other than cash

Transfer Prices

prices are set determining the cost of products shipped between headquarters and foreign markets

Dumping

Pricing products very cheap in foreign markets in order to increase sales in other markets

System Prices

Those set on sale of turkey operations or a total systems package (Bundling)

Chapter 10 Promortion

Promotion

coordination of all seller-affiliated efforts to set up channels of information and persuasion to sell goods and services or to promote an idea

Promotional Mix

Basic tools or elements that are used to accomplish an organizations communication objective

Advertising

Any paid form of non personal communication about an organization, product or service, or idea by identified sponser

Propoganda

Advertising from an unidentified sponser

*Advantages of Advertising*(4)

1. cost effective way of communicating with large audiences that are geographically diverse

2. creates and maintains brand equity

3. can be integrated with other promotional tools to generate support from retailers and other trade members

4. ability to control the message

*Disadvantage of Advertising* (4)

1. cost may be high (especially TV ads)

2. difficult to determine effectiveness

3. vast number of ads has created clutter problems

4. Credibility and image problems associated with advertising

Sales Promotion

short term marketing activity that provides extra value or incentive to sales force, distributors, or the ultimate consumer, and can stimulate immediate sales

*Advantages Of Sales Promotion*(3)

1. provide extra incentive to consumers or middlemen to purchase

2. way of appealing to the price sensitive consumer

3. its effects can be directly measured than those of advertising

*Disadvantage of Sales Promotion* (4)

1. many forms of promotion do not help establish or reinforce brand image and short term sales gains are often achieved at the expense of long term brand equity

2. Clutter as consumers are bombarded with too many coupons, contests, sweepstakes, and other promotional offers.

3. Consumers may become overly reliant on sales promotion incentives

4. Promotion wars develop in some industries(marketers use sales promotion incentives extensively) results in lower profit margin and difficult to sell products at full price

Public Relations

(Broad) establish and maintain a positive image of the company. (Management function that evaluates public attitude)

Publicity

communications technique used in public relations(Non personal communications)

*Advantages of Publicity*(3)

1. Credibility of Publicity is higher

2. Low cost method of communication

3. (Newsworthy)generates word of mouth discussion among consumers

*Disadvantages Of Publicity* (2)

1. Lack of Control

2. can be negative

Publicity is very beneficial for...

Pioneering firms in the introduction phase (New Products)

Personal Selling

Direct, Person to Person communication whereby a seller attempts to assist or persuade prospective buyers to purchase the companies product

*Advantages of Personal Selling*(4)

1. direct contact between buyer and seller allows for more communication flexibility

2. Message can be adapted to specific needs or to the situation of the customer

3. It allows for more immediate and direct feedback

4. Promotional efforts can be targeted to specific markets and customers who are best prospects

*Disadvantages of Personal Selling* (2)

1. Expensive

2. difficult to have consistency and uniform message

Personal Selling is normally Associated with...

Higher priced (higher involvement) items such as

1. real-estate

2. car dealerships

3. B2B Selling

Global Specified Marketing Mix (5)

1. Consumer and Trade promotion

2. publicity and media events

3. Public Relations

4. Trade Fairs

5. Personal Selling

Global Events

Events not created by marketers but only mentioned as a sponsor (Super Bowl, Olympics)

Cross-Marketing

momentum from global exposure (Coca Cola- American Idol, Gatorade- Football/sports)

Trade Fairs (Benefits)

1. Identifying potential distributors

2. introducing the companies latest products and models

3. discovering industry trends and development

4. spotting new competitive developments

5. creating press coverage or media publicity

6. building morale among local representatives

Sales Objective (of Advertising)

Advertising is to result in a direct sale (Online, TV, Direct mail) short term

Communication Objective (of Advertising)

Doesn't necessarily increase revue in the short run, instead it increases brand awareness

aided recall

remember the add without being shown

unaided recall

remember the ad with image

Advertising Objective phrase

"We know that half of our advertising is wasted, we just don't know which half"

Types of Advertising Budgeting (4)

1. All I can afford

2. Percent of Sales

3. Competitive Parity

4. Objective and Task approach

All i can afford method

Used by smaller businesses due to its simplicity

use whatever is left in your budget after all other resources are paid for

Percent of Sales

% is applied either to the previous years sales or the projected sales in order(Worst method)

-Used by many smaller businesses

- takes hit in economic downturns when sales don't excede last years

Competitive Parity

advertising budgets are based on the competitors

Objective And Task Approach

-only large businesses can afford this method

+sales communication objectives are set and then the advertising tasks to accomplish the objectives are defined.

+ connects advertising goals to budget

- requires alot of funds for research

ad-affect

like-ability of the ad will have significant effect upon the consumers decision

Why is communication today very difficult?

1. Media Fragmentation-too broad of target audience

2. Increased Clutter- too many ads or messages

3. Critical Thinking Consumers- consumers are becoming less gullible

Reach

Is the number of different targeted audience members exposed to the ad

Frequency

How many times on average that those reached are exposed to the ad

Impact

Reach X Frequency

*TRYPES OF ADVERTISING* (CHART)

1. Internet

2. Outdoor

3. Magazines

4. Radio

5. Television

6. Direct Mail

7. Newspaper

Advantages of Internet Ads

1. Timely

2. Interactive

3. Low Cost

4. High info content

5. measurable

Disadvantages of Internet Ads

1. Low attention getting

2. Seen as Intrusive (POP-UPS)

3. Short message Life

Advantages of Outdoor Ads

1. No competing clutter

2. Flexibility

3. Repeat exposure

4. Relatively Inexpensive

Disadvantage of Outdoor Ads

1. Viewer Distraction

2. Non electively audience

3. creative Limitation

Advantages of Magazine Ads

1. high audience selectivity

2. color reproduction

3. pass along readership

4. high attention

Disadvantages of Magazine Ads

1. Long closing periods

2. wasted circulation

3. no guarantee of position without extra fee

Advantages of Radio ads

1. Low cost

2. Mass Use

3. Audience selectivity

4. Means of reaching low income people

Disadvantages of Radio ads

1. Low attention

2. Listener distractions

3. Audio only

4. Short Life

Advantages of TV ads

1. Offer sight and sound

2. attention getting

Disadvantage of TV ads

1. Expensive

2. Nonselective audience

3. short message life

Advantage of Direct Mail

1. audience selectivity

2. flexibility

3. No competing clutter

4. allows for personalization

Disadvantages of Direct Mail

1. High cost

2. Low attention getting (Thrown out)

Advantages of Newspaper Ads

1. Offers local coverage

2. Flexible and timely

Disadvantages of Newspaper Ads

1. Non selectivity of audience

2. short life

3. expensive

Sales Promotion

process of providing short term incentives to encourage purchase or sales of a product or service

Sales Promotion may be used to...

1. Increase short term sales or to build long term market share

Examples of sales promotion may be...

Getting retailers to provide shelf space or to buy ahead

Objectives of Sales Promotions may include...

1. getting more sales force support for newer products

2. gaining additional (new) accounts

Along with increasing short term sales, Sales Promotion should also be used in order to...

1. Reinforce products position

2. Help build Brand Equity

Consumer Promotional Tools

1. Samples

2. Coupons

3. Rebates

4. Contests, Sweepstakes & Games

5. Price Packs

6. Premiums

7. Point of Purchase (POP) promotions

Sample

+ offers of a trial amount of a product

+ most effective

- most expensive

Coupons

Certificates that give buyers a savings when they purchase specified products

Rebates

Cash-Refund offers (like coupons but price reduction occurs after the purchase rather than at the time of the purchase)

Contests, Sweepstakes, and games

Consumers have the chance to win something such as cash, a trip, or goods through luck or extra effort

Contests

Consumers submit an entry to be judged at a panel that will select the best entries

Sweepstakes

Consumers submit their names to a drawing (LUCK)

Games

Presents the consumer with something every time they buy that may or may not help them win a prize (Monopoly at McDonalds)