Marketin 300 ch 13 15 16

Promotion

is communicating information between the seller and potential buyer or others in the channel to influence attitudes and behavior. The promotion part of the marketing mix involves telling target customers that the right Product is available at the right Place at the right Price.

Personal selling

involves direct spoken communication between sellers and potential customers.

Mass selling

is communicating with large numbers of potential customers at the same time. It's less flexible than personal selling, but when the target market is large and scattered, mass selling can be less expensive.

Advertising

is any paid form of non-personal presentation of ideas, goods, or services by an identified sponsor. involves paid nonpersonal communication through various media with the purpose of informing or persuading members of a particular audience

Publicity

is any unpaid form of non-personal presentation of ideas, goods, or services. Of course, publicity people are paid. But they try to attract attention to the firm and its offerings without having to pay media costs.

Sales promotion

refers to promotion activities—other than advertising, publicity, and personal selling—that stimulate interest, trial, or purchase by final customers or others in the channel. Sales promotion may be aimed at consumers, at intermediaries, or at a firm's own employees.

Sales managers

are concerned with managing personal selling. Often the sales manager is responsible for building good distribution channels and implementing Place policies. In smaller companies, the sales manager may also act as the marketing manager and be responsible for advertising and sales promotion.

public relations

—communication with noncustomers, including labor, public interest groups, stockholders, and the government.

Sales promotion

managers manage their company's sales promotion effort. In some companies, a sales promotion manager has independent status and reports directly to the marketing manager.

integrated marketing communications

—the intentional coordination of every communication from a firm to a target customer to convey a consistent and complete message.

The AIDA model

consists of four promotion jobs: (1) to get Attention, (2) to hold Interest, (3) to arouse Desire, and (4) to obtain Action.

communication process

—which means a source trying to reach a receiver with a message.

source

—the sender of a message—is trying to deliver a message to a receiver —a potential customer.

receiver

—a potential customer. Customers evaluate both the message and the source of the message in terms of trustworthiness and credibility. For example, American Dental Association (ADA) studies show that Listerine mouthwash helps reduce plaque buildup on teeth. Listerine mentions the ADA endorsement in its promotion to help make the promotion message credible.

The noise

is any distraction that reduces the effectiveness of the communication process. Conversations and snack-getting during TV ads are noise. An industrial buyer reading a text message during a salesperson's presentation is noise.

Encoding

is the source deciding what it wants to say and translating it into words or symbols that will have the same meaning to the receiver.

Decoding

is the receiver translating the message.

This process can be very tricky. The meanings of various words and symbols may differ depending on the attitudes and experiences of the two groups. People need a common frame of reference to communicate effectively.

message channel

—the carrier of the message.

A source can use many message channels to deliver a message. The salesperson does it in person with voice and action. Advertising must do it with media such as magazines, TV, e-mail, or Internet websites. A particular message channel may enhance or detract from a message. A TV ad, for example, can show that Dawn dishwashing detergent "takes the grease away"; the same claim might not be convincing if it arrived in a consumer's e-mail.

feedback

—communication from the receiver back to the source.

Pushing (a product through a channel)

means using normal promotion effort—personal selling, advertising, and sales promotion—to help sell the whole marketing mix to possible channel members.

concentrate promotion on the next level of distribution, *consumer

Pulling

means getting customers to ask intermediaries for the product.

stimulate ultimate consumer interest so that consumers demand that product, *middlemen

adoption curve

shows when different groups accept ideas. It emphasizes the relations among groups and shows that individuals in some groups act as leaders in accepting a new idea.

innovators

are the first to adopt.

They are eager to try a new idea and willing to take risks. Innovators tend to be young and well educated. They are likely to be mobile and have many contacts outside their local social group and community. Business firms in the innovator group are often specialized and willing to take the risk of doing something new.

Early adopters

are well respected by their peers and often are opinion leaders. They tend to be younger, more mobile, and more creative than later adopters. But unlike innovators, they have fewer contacts outside their own social group or community. Business firms in this category also tend to be specialized.

The early majority

avoids risk and waits to consider a new idea after many early adopters have tried it—and liked it. Average-sized business firms that are less specialized often fit in this category.

The late majority

is cautious about new ideas. Often they are older and more set in their ways, so they are less likely to follow early adopters.

primary demand

—demand for the general product idea—not just for the company's own brand.

selective demand

—demand for a company's own brand. The main job is to persuade customers to buy, and keep buying, the company's product.

task method

— basing the budget on the job to be done. It helps a marketing manager to set priorities so that the money spent on promotion produces specific and desired results.

advertising allowances

—price reductions to firms further along in the channel—encourage them to advertise or otherwise promote the firm's products locally.

Cooperative advertising

involves producers sharing in the cost of ads with wholesalers or retailers. This helps the intermediaries compete in their local markets. It also helps the producer get more promotion for its advertising dollars because media usually give local advertisers lower rates than national or international firms.

Product advertising

tries to sell a product.

institutional advertising

which promotes an organization's image, reputation, or ideas rather than a specific product.

Pioneering advertising

tries to develop primary demand for a product category rather than demand for a specific brand. Pioneering advertising is usually done in the early stages of the product life cycle; it informs potential customers about the new product and helps turn them into adopters.

Competitive advertising

tries to develop selective demand for a specific brand. Competitive advertising may be either direct or indirect.

The direct type of competitive advertising

aims for immediate buying action.

The indirect type of competitive advertising

points out product advantages to affect future buying decisions.

Comparative advertising

means making specific brand comparisons—using actual product names.


direct or indirect comparison to the competition
direct example: Verizon touted its superior coverage with ads showing maps that highlighted its service as compared to AT&T.
indirect example: when Wendys said "where's the beef" talking about McDonalds

Reminder advertising

tries to keep the product's name before the public. It may be useful when the product has achieved brand preference or insistence, perhaps in the market maturity or sales decline stages. It is used primarily to reinforce previous promotion.
*strives to reinforce previous promotional activity
Example: Hallmark often relies on reminder ads because most consumers already know the brand name and, after years of promotion, associate it with high-quality cards and gifts.
nike commercials not saying anything in ad but put nike symbol at end

institutional advertising

promotes a concept, an idea, a philosophy, or the goodwill of an industry, company, organization, person, geographical location or government agency

copy thrust

—what the words and illustrations should communicate. Carrying out the copy thrust is the job of advertising specialists.

Advertising agencies

are specialists in planning and handling mass-selling details for advertisers.

corrective advertising

—ads to correct deceptive advertising.

Example: Years ago the FTC forced Listerine to spend millions of dollars on advertising to "correct" earlier ads that claimed the mouthwash helped prevent colds.

Publicity

is any unpaid form of nonpersonal presentation of ideas, goods, or services. In recent years as consumers have become better at avoiding advertising, publicity has emerged as a more prominent promotion tool. press releases, celebrity endorsements, published articles in trade magazines, videos related to human interest stories

Price

is the amount of money that is charged for "something" of value. Of course, price may be called different things in different settings.

A target return objective

sets a specific level of profit as an objective. Often this amount is stated as a percentage of sales or of capital investment.

Example: A large manufacturer like Motorola might aim for a 15 percent return on investment. The target for Safeway and other supermarket chains might be a 1 percent return on sales.

profit maximization objective

seeks to get as much profit as possible. It might be stated as a desire to earn a rapid return on investment—or, more bluntly, to charge all the traffic will bear.

A sales-oriented objective

seeks some level of unit sales, dollar sales, or share of market— without referring to profit.

status quo objectives

Managers satisfied with their current market share and profits sometimes adopt \___________ —don't-rock-the-pricing -boat objectives.

nonprice competition

—aggressive action on one or more of the Ps other than Price.

For example, Zappos.com offers free shipping and guarantees that it will meet local shoe store prices. But it wins customers with its enormous selection of shoes, a website that makes it easy for customers to find what they want, and excellent customer service before and after the sale.

administered prices

Price policies usually lead to \__________—consciously set prices. In other words, instead of letting daily market forces (or auctions) decide their prices, most firms set their own prices.

A one-price policy

means offering the same price to all customers who purchase products under essentially the same conditions and in the same quantities. The majority of U.S. firms use a one-price policy—mainly for administrative convenience and to maintain goodwill among customers.

But that is changing thanks to technology and the ability to identify different customer segments to which a firm wishes to charge higher or lower prices.

A flexible-price policy

means offering the same product and quantities to different customers at different prices. When computers are used to implement flexible pricing, the decisions focus more on what type of customer will get a price break.

Basic list prices

are the prices final customers or users are normally asked to pay for products.

Discounts

are reductions from list price given by a seller to buyers who either give up some marketing function or provide the function themselves.

Quantity discounts

are discounts offered to encourage customers to buy in larger amounts.

Cumulative quantity discounts

apply to purchases over a given period—such as a year—and the discount usually increases as the amount purchased increases. Cumulative discounts encourage repeat buying by reducing the customer's cost for additional purchases.

For example, a Lowe's lumberyard might give a cumulative quantity discount to a building contractor who is not able to buy all of the needed materials at once. Lowe's wants to reward the contractor's patronage and discourage shopping around.

Noncumulative quantity discounts

apply only to individual orders. Such discounts encourage larger orders but do not tie a buyer to the seller after that one purchase. Lowe's lumberyard may resell insulation products made by several competing producers. Owens-Corning might try to encourage Lowe's to stock larger quantities of its pink insulation by offering a noncumulative quantity discount.

Seasonal discounts

are discounts offered to encourage buyers to buy earlier than present demand requires. If used by a manufacturer, this discount tends to shift the storing function further along in the channel. It also tends to even out sales over the year.

For example, Kyota offers wholesalers a lower price on its garden tillers if they buy in the fall, when sales are slow.

Net

means that payment for the face value of the invoice is due immediately.

These terms are sometimes changed to net 10 or net 30, which means payment is due within 10 or 30 days of the date on the invoice.

Cash discounts

are reductions in price to encourage buyers to pay their bills quickly. The terms for a cash discount usually modify the net terms.

2/10, net 30

means the buyer can take a 2 percent discount off the face value of the invoice if the invoice is paid within 10 days. Otherwise, the full face value is due within 30 days. And it usually is stated or understood that an interest charge will be added after the 30-day free-credit period.

A trade (functional) discount

is a list price reduction given to channel members for the job they are going to do.

A sale price

is a temporary discount from the list price. Sale price discounts encourage immediate buying. In other words, to get the sale price, customers give up the convenience of buying when they want to buy and instead buy when the seller wants to sell.

every day low pricing

—setting a low list price rather than relying on frequent sales, discounts, or allowances. Some supermarkets use this approach.

Allowances

like discounts, are given to final consumers, business customers, or channel members for doing something or accepting less of something.

Advertising allowances

are price reductions given to firms in the channel to encourage them to advertise or otherwise promote the supplier's products locally. For example, Sony might give an allowance (3 percent of sales) to its retailers. They, in turn, are expected to spend the allowance on local advertising.

Stocking allowances

—sometimes called slotting allowances —are given to an intermediary to get shelf space for a product.

For example, a producer might offer a retailer cash or free merchandise to stock a new item. Stocking allowances are used mainly to get supermarket chains to handle new products. Supermarkets are more willing to give space to a new product if the supplier will offset their handling costs and risks.

Push money (or prize money) allowances

—sometimes called PMs or spiffs—are given to retailers by manufacturers or wholesalers to pass on to the retailers' salesclerks for aggressively selling certain items. PM allowances are used for new items, slower-moving items, or higher-margin items. They are often used for pushing furniture, clothing, consumer electronics, and cosmetics. A salesclerk, for example, might earn an additional $5 for each new model Panasonic DVD player sold.

A trade-in allowance

is a price reduction given for used products when similar new products are bought. Trade-ins give the marketing manager an easy way to lower the effective price without reducing list price. Proper handling of trade-ins is important when selling durable products.

rebates

—refunds paid to consumers after a purchase.

Sometimes the rebate is very large. Some automakers offer rebates of $500 to $6,000 to promote sales of slow-moving models. Rebates are also used on lower-priced items, ranging from Duracell batteries and Memorex CD-Rs to Logitech webcams and Paul Masson wines. Rebates give a producer a way to be certain that final consumers actually get the price reduction. If the rebate amount were just taken off the price charged intermediaries, they might not pass the savings along to consumers.

F.O.B.

—which means free on board some vehicle at some place. Typically, F.O.B. pricing names the place—often the location of the seller's factory or warehouse—as in F.O.B. Taiwan or F.O.B. mill. This means that the seller pays the cost of loading the products onto some vehicle; then title to the products passes to the buyer. The buyer pays the freight and takes responsibility for damage in transit.

Zone pricing

means making an average freight charge to all buyers within specific geographic areas. The seller pays the actual freight charges and bills each customer for an average charge.

For example, a company in Canada might divide the United States into seven zones, then bill all customers in the same zone the same amount for freight even though actual shipping costs might vary.

Uniform delivered pricing

means making an average freight charge to all buyers. It is a kind of zone pricing—an entire country may be considered as one zone—that includes the average cost of delivery in the price.

Uniform delivered pricing is most often used when (1) transportation costs are relatively low and (2) the seller wishes to sell in all geographic areas at one price, perhaps a nationally advertised price.

freight-absorption pricing

which means absorbing freight cost so that a firm's delivered price meets that of the nearest competitor. This amounts to cutting list price to appeal to new market segments.

Value pricing

means setting a fair price level for a marketing mix that really gives the target market superior customer value. Value pricing doesn't necessarily mean cheap if cheap means bare-bones or low-grade. It doesn't mean high prestige either if the prestige is not accompanied by the right quality goods and services. Rather, the focus is on the customer's requirements and how the whole marketing mix meets those needs.

Unfair trade practice acts

put a lower limit on prices, especially at the wholesale and retail levels.

Dumping

is pricing a product sold in a foreign market below the cost of producing it or at a price lower than in its domestic market. These laws are usually designed to protect the country's domestic producers

Phony list prices

are prices customers are shown to suggest that the price has been discounted from list.

Wheeler Lea Amendment

which bans "unfair or deceptive acts in commerce."

price fixing

—competitors getting together to raise, lower, or stabilize prices—is common and relatively easy. But it is also completely illegal in the United States . It is considered "conspiracy" under the Sherman Act and the Federal Trade Commission Act.

Robinson- Patman Act (of 1936)

makes illegal any price discrimination —selling the same products to different buyers at different prices— if it injures competition. The law does permit some price differences—but they must be based on (1) cost differences or (2) the need to meet competition. Both buyers and sellers are considered guilty if they know they're entering into discriminatory agreements.

price discrimination

—selling the same products to different buyers at different prices

The communication model p. 25\***

Source and encoding --\> message vehicle --\> Receiver and decoding
^

The promotional effectiveness chart p. 27\***

AIDA Model:
a- awareness (attention)
i- interest
d- desire
a- action

arrow towards top left corner (advertising), line below is publicity, top right personal selling, line below sales promotion

New Product Pricing strategies p. 30\***

Market-skimming- set high
when demand is likely to be inelastic during introduction
the market can be broken into distinctive price segments
safer strategy when elasticity of demand is unknown
if there is a realistic perceived value in product service
if cash is needed to fund expansion into larger segments
Example: electronics xbox one costs more than the previous

Market-Penetration Pricing- set low
if demand is price sensitive
if the market cannot be broken into distinct price segments
if substantial savings in unit costs can be achieved by operating at a large volume
if product faces STRONG COMPETITION soon after introduction

Market-Competitive Strategy-
price your product fairly close to most competitor's products

Introductory Price Dealing-
Temporary price cuts to gain market share quickly
"get product in the door"

A skimming price policy

tries to sell the top (skim the cream) of a market—the top of the demand curve—at a high price before aiming at more price-sensitive customers.

Skimming may maximize profits in the market introduction stage for an innovation, especially if there are few substitutes or if some customers are not price sensitive. Skimming is also useful when you don't know very much about the shape of the demand curve. It's sometimes safer to start with a high price that can be reduced if customers balk.

A penetration pricing policy

tries to sell the whole market at one low price.

This approach might be wise when the elite market—those willing to pay a high price—is small. This is the case when the whole demand curve is fairly elastic. A penetration policy is even more attractive if selling larger quantities results in lower costs because of economies of scale. Penetration pricing may be wise if the firm expects strong competition very soon after introduction.

introductory price dealing

—temporary price cuts—to speed new products into a market and get customers to try them.

*However, don't confuse these temporary price cuts with low penetration prices. The plan here is to raise prices as soon as the introductory offer is over.

Product-Mix Pricing strategies p. 31\***

product line pricing (price lining)- set price for line of product to differentiate

optional- product pricing- options in product

captive-product pricing- charge reasonable price for product, paying for extras
example: printer ink cartridges

by-product pricing- making money on byproducts
example: lumberyard wood chips

Product bundle pricing- group products and sell as bundle

Segmented pricing\***

selling a product at two or more prices even though the difference in prices is not based on the difference in costs
1. customer-segment pricing- give different prices to different customers for the exact same product, example: health insurance *age
2. Location pricing- example: bsu- instate vs. out of state, stadium pricing
3. time pricing- example: movie theaters

Promotional Pricing strategies p. 32\***

1. leader pricing- means setting some very low prices—real bargains—to get customers into retail stores. The idea is not only to sell large quantities of the leader items but also to get customers into the store to buy other products.
Loss Leader-An item priced at or below cost to draw customers into a store.

2. Bait pricing- set the price of a certain model of a product low and then you put better and more expensive product next to it, "trade you up"
Bait and switch- claim their "sold out" and then offer more expensive product

Missionary salespeople

are supporting salespeople who work for producers—calling on intermediaries and their customers. They try to develop goodwill and stimulate demand, help intermediaries train their salespeople, and often take orders for delivery by intermediaries.

also called merchandisers or detailers. supporting order getters to check inventory

Supporting salespeople

help the order-oriented salespeople, but they don't try to get orders the m selves. Their activities are aimed at enhancing the relationship with the customer and getting sales in the long run. For the short run, however, they are ambassadors of goodwill who may provide specialized services and information. There are three types of supporting salespeople: missionary salespeople, technical specialists, and customer service reps.

technical specialists

know every detail of product, knows technical details

supporting sales- people who provide technical assistance to order-oriented salespeople. Technical special- ists are often science or engineering gradu- ates with the know-how to understand the customer's applications and explain the ad- vantages of the company's product. They are usually more skilled in showing the technical details of their product than in tr y ing to per- suade customers to buy it.

Order takers

sell to the regular or established customers, complete most sales transactions, and maintain relationships with their customers. After a customer becomes interested in a firm's products through an order getter or supporting salesperson or through advertising or sales promotion, an order taker usually answers any final questions and completes the sale. Order-taking is the routine completion of sales made regularly to target customers. It usually requires ongoing follow-up to make certain that the customer is totally satisfied.

simply sit in office who take orders via calling/internet orders

Order getters

are concerned with establishing relationships with new customers and developing new business. Order-getting means seeking possible buyers with a well- organized sales presentation designed to sell a good, service, or idea. Order getters must know what they're talking about, not just be personal contacts. Order-getting salespeople normally are well paid—many earn more than $100,000 a year!

seek orders- face-to-face, skyping, emailing, telemarketing

Customer service reps

work with customers to resolve problems that arise with a purchase, usually after the purchase has been made.

Media scheduling

setting the timing and sequence for a series of advertisements

reach

the \# of different people or households exposed to an advertisement at least once during a certain time period