Marketing Exam #3

Price (CH.10)

the assignment of value, or the amount the consumer must exchange to receive the offering. - Includes money, goods, services, favors, votes, or anything else that has value to the other party - Opportunity costs must also be considered

Price Planning

Step 1: Set Pricing Objectives • Must support the broader objectives of the firm as well as overall marketing objectives. -Pricing Objectives - Profit: --• Setting prices for products that will guarantee money on each sale --• You determine your cost for manufacturing each product, then add a percentage for profit. (e.g., Fad products) -Pricing Strategy - Sales or Market Share: --• Seeking to boost volume or market share (e.g., price war) -Pricing Objective - Competitive Effect: --• To dilute the competition's marketing efforts --competitive-effect pricing/ market-based pricing --a firm may deliberately try to preempt or reduce the impact of a rival's pricing changes -Pricing Objective - Customer Satisfaction: --• Customers are satisfied with what they have paid for. But, satisfaction is based on customer expectations. --•( E.g., Walmart - "Save Money. Live Better") -Pricing Objective - Image Enhancement: --• Consumer use price to make inferences about the quality of a product. (e.g. Whole Foods, Luxury Brands) Step 2: Estimate Demand • Demand refers to customers' desire for a product. • The law of demand: As price goes up, quantity demanded goes down. -Shifts in Demand • Upward vs. downward shift • Marketers can stimulate shifts through effective marketing. • Price elasticity of demand= (the percentage change in unit sales / the percentage change in price.) -Cross-Elasticity of Demand -• Changes in the price of one product may affect the other product's demand. --• Positive: an increase in the price of one will increase demand for the other --> products are substitutes (ex: apple vs android) --• Negative: an increase in the price of one will decrease demand for another --> products are complements (ex: bread & butter) Step 3: Determine Costs • In order to ensure that product price will cover costs, marketers must determine - Variable Costs: --Per-unit costs of production that will fluctuate depending on how many units a firm produces (tied to volume) --ex) product materials, shipping/ delivery costs -- Fixed Costs: Costs that do not vary with the number of units produced (don't change with volume) --ex) salaries, rent/ leases, insurance -Break-Even Analysis -- tells marketers how many units must be sold in order to cover all costs --Contribution per unit = Sales Price per unit - Variable Costs per unit -Markups and Margins: Pricing through the Channel --• Markup is an amount added to the cost of the product to create a price at which the channel member will sell the product. -- Gross margin --> Includes retailer and/or wholesaler margin -- List price or manufacturer's suggested retail price (MSRP) -Vertical integration --> retail chains have their own distribution centers and move products to stores in their own trucks, saving money while maintaining greater control over the availability and delivery of products to their stores. Step 4: Pricing Environment -Economy • Consumers become more/less price sensitive when economic conditions appear bleak/positive. • Marketers must factor broad macroeconomic trends into pricing decisions. --• Economic growth: Recession, Inflation --• Consumer confidence -Other Factors • Competition --• The type of industry structure: monopoly, oligopoly, monopolistic, or perfect competition • Government regulation --• E.g., The Credit Card Responsibility & Disclosure Act (2009) - limiting credit card rates & fees • Consumer trends --• E.g., organic/locally grown foods, sharing economy • International environment --• Big Mac Index --• Bottom of Pyramid pricing Step 5: Pricing Strategies -Cost-Based Price Strategies: • Cost-plus pricing: very common --• Easy to calculate --• Relatively risk free • Cost-based approaches do not factor in key considerations, such as nature of target market and competitors. -Demand-Based Price Strategies: • Firm bases selling price on an estimate of volume it can sell in different markets at different prices. --• Target costing --• Yield management -Price Segmentation: • Practice of charging different prices to different market segments for the same product (e.g., early bird special, matinee, 10% discount for seniors) --• Peak load pricing or Surge pricing -Competition-Based Price Strategies: • Near, at, above, or below the competition's prices --• Price leadership strategy -Customer Needs-Based Price Strategies: • Value or everyday low pricing (EDLP) • High/low or promo pricing -New Product Pricing: • New products present unique pricing challenges! • In absence of reliable demand estimates and pricing norms... --• Skimming price: high --• Penetration pricing: low --• Trial pricing: limited time Step. 6: Develop Pricing Tactics -Individual Products • Two-part pricing --> a fixed fee + a "variable" charge • Payment pricing • Decoy pricing --> having a small value change, convincing for higher purchase (ex: small medium large popcorn simulation) -Multiple Products • Price bundling --> bundled prod. w/ lower prices of products (ex: Mcdonalds meal) • Captive pricing --> have to buy certain (other) products to utilize initial product (ex: printers) -Distribution-Based Pricing: • Distribution-based pricing for end-users -- F.O.B. (free on board) origin pricing -- F.O.B delivered pricing --> shipping -- Uniform delivered pricing -- Freight absorption pricing -Discounting for Channel Members • When setting prices for channel members, marketers may also use -- Trade or functional discounts -- Reduction from a list price that can vary for wholesalers, retailers, and customers. -- Quantity discounts -- Cash discounts (2% 10 days net 30) -- Seasonal discounts -Pricing and Electronic Commerce • Online environment provides even more pricing options. -- Dynamic pricing --> the seller can quickly and easily adjust prices to meet changes in the marketplace. -- Internet price discrimination -- Online auctions -- "Freemium" pricing models -- E.g., Spotify -Psychological Issues in Setting Prices • Consumers form expectations of what is fair prices for products, based on (1) internal reference prices and (2) price-quality inferences. --• Price too high = Bad deal --• Price too low = Suspect quality -Psychological Pricing Strategies • Odd-even pricing --> odd= cheaper (ex: Walmart) even= high-class (ex: fancy restaurant) • Price lining --> pricing tiers based off product • Prestige or premium pricing --> extreme prices based off luxury name Legal and Ethical Considerations in B2C Pricing • Bait-and-switch is illegal --• Advertise very low-priced item to lure customers to store (bait) --• Arriving customers find product is out of stock and are offered more expensive item (switch) • Loss-leader pricing --• Use very low prices to get customers into the store --• Making up the "loss" through sale of other products --• Some states have "unfair sales acts" forbidding lossleader pricing. Legal Issues in B2B Pricing: • Illegal B2B price discrimination --• Firms sell products to channel members at different prices in a way that "lessens competition." • Price-fixing (or Collusion) --• Two or more companies conspire to keep prices at a certain level. • Predatory pricing (undercutting) --• Firm sets very low price for purpose of driving rival out of business

Distribution Planning

-process of developing distribution objectives, evaluating internal and external environmental influences on distribution, and choosing a distribution strategy. Step 1: Develop Distribution Objectives -develop objectives that support the organization's overall marketing goals. --the overall objective of any distribution plan is to make a firm's product available when, where, and in the quantities, customers want at the minimum cost. Step 2: Evaluate Internal and External Environmental Influences -consider their internal and external environments to develop the best channel structure. -Short channels with selective distribution = perishable products because getting the product to the final user quickly is a priority. -longer channels with more intensive distribution = best for inexpensive, standardized consumer goods that need to be distributed broadly and that require little technical expertise. Step 3: Choose a Distribution Strategy -decisions about the number of levels in the distribution channel. -distribution strategies also involve two additional decisions about channel relationships: (1) whether a conventional system or a highly integrated system will work best (2) the proper distribution intensity,--> the number of intermediaries at each level of the channel. Step 4: Develop Distribution Tactics -tactics for distribution necessary to implement the distribution strategy. --> the type of distribution system to use, such as a direct or an indirect channel or a conventional or an integrated channel. -Distribution tactics relate to two aspects of the implementation of these strategies: (1) how to select individual channel members (2) how to manage the channel.

Promotion Mix

-the communication elements that the marketer controls. -The elements of the traditional promotion mix include: -- advertising --sales promotion --public relations --personal selling --direct marketing

Key Types of Intermediaries

Agents or Brokers • Channel intermediaries may use brokers and agents in marketing their products. • No title or legal possession of the goods --• ex) food, real estates, insurance, fashion, etc. Distributors •Distributors frequently have a business (and, mostly exclusive) relationship with manufacturers that they represent. •The distributor becomes the manufacturer's direct point of contact. --ex) corona beer --> republic national distributing company Wholesalers • They buy merchandise in large quantities from manufacturers, process and store that merchandise, and sell it to retailers & others. -- Independent (ex: BJ's, Sam's Club) vs. Manufacturer-owned (ex: Ferguson--> show rooms for intermediaries) Retailers •Retailers consist of small and large for-profit businesses that sell products directly to consumers. --Ex) Target, Whole Foods, Macy's

Distribution Strategy

Choose a Distribution Strategy: • The number of levels in the distribution channel --• Direct vs. Indirect (how many levels?) • Choice of channel relationships: -• Conventional vs. Vertical vs. Horizontal marketing system -• Distribution intensity: # of intermediaries at each level Conventional Marketing System • Multilevel distribution channel in which members work independently -• Relationships limited to buying and selling from each other. -• Each recognizes self-interest is best served by fair dealing. Vertical Marketing Systems (VMS) • Administered VMS= Independent channel members voluntarily work together due to power of a dominant channel member. • Contractual VMS= Channel member cooperation enforced by contracts that spell out rights and responsibilities of each member. (e.g., franchising) • Corporate VMS= A single firm owns manufacturing, wholesaling, and retailing operations. (e.g., Apple) Horizontal Marketing System • Two or more firms at the same channel level agree to work together to get their product to the customer. --Ex) Target + Starbucks Intensive, Selective, or Exclusive Distribution • Intensive distribution= Maximize coverage by selling through as many outlets as possible. --• Ex) convenience products • Selective distribution= Seeks to strike a balance between intensive and exclusive distribution. -- Ex) Ralph Lauren --> department stores, own retail, etc. • Exclusive distribution= Limit distribution to a single outlet in a particular region. --• Ex) luxury or specialty products Dual or Multiple Distribution Systems - A system where producers, dealers, wholesalers, retailers, and customers participate in more than one type of channel hybrid marketing system = Instead of serving a target market with a single channel, some companies combine channels—direct sales, distributors, retail sales, and direct mail

Logistics

Implementation • Logistics is the process of designing, managing, and improving the movement of products through a supply chain. --• Inbound (e.g., raw materials, parts, components, and supplies) --• Outbound (e.g., finished products) • Reverse logistics= includes product returns, recycling, and material reuse, and waste disposal --• Closely related to sustainability Functions -Order processing --enterprise resource planning (ERP) system = software solution that integrates information from across the entire company, including finance, order fulfillment, manufacturing, and transportation -Warehousing = storing goods in anticipation of sale or transfer to another member of the channel of distribution -Material handling = moving of products into, within, and out of warehouses. -Transportation -Inventory control =developing and implementing a process to ensure that the firm always has sufficient quantities of goods available to meet customers' demands --radio frequency identification (RFID) = firms tag products with tiny chips that contain information about the item's content, origin, and destination

promotion mix (marketing communications mix)

Sales Promotion • Sales promotions are programs designed to build interest in or encourage purchase of a good or service during a specified period. • How do SPs compare to advertising? --• Both are paid promotional activities with identifiable sponsors --• Differ in that sales promotions typically have a more immediate short-term objective. Types of Consumer Sales Promotion: • Priced-Based Promotions --Coupons --Price deals --Rebates --Frequency (or loyalty) Program --Special/bonus packs • Attention-Getting Promotion --Contests and sweepstakes --Premiums --Sampling Types of Trade Sales Promotion: • Discount Promotions -- e.g., merchandising allowance, case allowance -- Forwarding buying/diverting • Co-op Advertising (ex: Home Depot + Behr Paint) Other Sales Promotion to Increase Industry Visibility: •Trade shows •Promotional products •Point-of-purchase displays •Incentive programs Direct Marketing • Direct communication to a customer designed to generate a response (e.g., an order, an inquiry, or a visit) Mail Order: • Mail order comes in two forms: -- Catalog: a collection of products offered in book form -- Direct mail: a brochure/pamphlet offering a specific good or service at one point in time Telemarketing: • The use of the telephone to sell directly to consumers and business customers. -• Profitable way for B2B marketers to keep in touch with small clients. -• FTC established the National Do Not Call Registry to allow consumers to limit number of telemarketing calls they receive. Direct Response Advertising • Direct-response advertising allows consumer to respond by immediately contacting the provider with questions or an order. - -- Informercials -- Direct-response TV (DRTV): QVC, HSN, etc. M-Commerce: • Promotional and other e-commerce activities transmitted over mobile devices. -- Short-messaging system (SMS)/location- or weather-based marketing. Personal Selling • Personal selling occurs when a company rep interacts directly with a customer or prospective customer to communicate about a good or service. -• "Personal touch": Far more intimate form of promotion compared to mass-media material -• Salespeople are the eyes and ears of firm. Role of Personal Selling: • One-to-one marketing communications is essential for certain product types and business markets Technology and Personal Selling • Technology makes it easier for salespeople to do their jobs. --•Customer relationship management (CRM) software (e.g., Salesforce.com) --•Partner relationship management (PRM)= a new generation system that links information between selling and buying firms. --•VoIP systems (e.g., Skype, GoToMeeting, etc.) Two Approaches: -Transactional Selling: --Approach that focuses on making an immediate sale with little concern for developing a long-term relationship with the customer. --Completing sales transactions Relationship selling Process: -- by which a salesperson secures, develops, and maintains longterm, profitable customer relationships. -- Building mutual relationships The Creative Selling Process: • Every customer, every sales call, and every salesperson is unique. • Successful salespeople engage in a series of activities to create win-win sales encounters. • Seeking out potential customers, analyzing needs, determining how product attributes might provide benefits for the customer and then communicating that information. PS: Advantages: • Dealing directly with buyer • Can search and select potential buyers • Can choose the style and appeal -- Example, demonstration, information, etc. & Disadvantages: • High cost • Limited # of potential buyers and offer same time Public Relations • The communication function that seeks to build good relationships with an organization's publics (e.g., consumers, stockholders, legislators, etc.) --•When placed successfully, PR messages (or publicity: unpaid media exposure) are more credible than advertising. --•Crisis management= the process of managing a firm's reputation when a negative event threatens the organization's image Objectives and Tactics of Public Relations: • A public relations campaign is a coordinated effort to communicate with the firm's public(s) Guerrilla Marketing: •Guerrilla marketing = involves "ambushing" consumers with promotional content in places they don't expect to encounter such messages. --• Ex) Ambient advertising, "flash mobs" Buzz Marketing: • Buzz: word-of-mouth communication that customers view as authentic. • Buzz marketing: marketing activities designed to create conversation, excitement and enthusiasm about a brand. --• Makes PR a more important part of the promotion mix Viral Marketing • A popular form of buzz building • Marketing activities aimed at increasing brand awareness or sales by consumers passing a message along to other consumers. Ethical Problems in Buzz Marketing • Buzz marketing efforts create potential for ethically questionable behaviors. -• Activities designed to deceive consumers -•Directing buzz marketing at children or teens -• Buzz marketing activities that damage property --• Ex) Sock puppeting and paid influencer programs

Promotional Plan

Step 1: Identify the Target Audience(s) •Must communicate with members of the target market & other stakeholders influence the target market -•Consumers learn about products/services from --•News media --•Friends and family --•Producers of competitive products Step 2: Establish the Communication Objectives • Messages are designed to move the consumer closer to purchase, and hopefully, loyalty through a series of steps known as the hierarchy of effects Step 3: Determine the Marketing Communication Budget • Top-down budgeting techniques = managers establish the overall amount that the organization will allocate to promotion activities. --• Percentage-of-Sales method = budget is based on last year's sales or on estimates for the present year's sales --• Competitive-parity method = match whatever competitors spend • Bottom-up budgeting techniques =Identify promotion objectives and allocate enough money to accomplish them. --• Objective-task method = first defines the specific communication goals it hopes to achieve, then tries to figure out how much advertising it will take to meet that goal. • Push vs. Pull strategies --Push = company wants to move its products by convincing channel members to offer them and entice their customers to select these items --Pull =counting on creating consumer demand for its products with marketing communication aimed at the consumers. Step 4: Design the Promotion Mix • Designing the promotion mix involves: -- Determining communication tools to be used -- Specifying message to be communicated -- Determining the communication channels to be used. Step 5: Evaluate the Effectiveness of the Communication Program • A variety of ways to monitor and evaluate the company's communication efforts. • Various types of sales promotion are the easiest to evaluate as they often occur over a fixed, short period. • Advertising has lagged or delayed effects, more difficult to clearly link to sales. --• Measure brand awareness, recall of product benefits communicated, and image of the brand before and after an ad campaign.

steps of Advertising Campaign

Step 6) Evaluating the Advertising: -Posttesting =conducting research on consumers' responses to advertising messages they have seen or heard -Unaided recall = tests by telephone survey or personal interview whether a person remembers seeing an ad during a specified period without giving the person the name of the brand. -Aided recall = tests use the name of the brand and sometimes other clues to prompt answers. -Attitudinal measures = probe a bit more deeply by testing consumers' beliefs or feelings about a product before and after they are exposed to messages about it.

Marketing Communication Models

The One-to-Many Model • Mass Communication • Some elements of the promotion mix include messages intended to reach many prospective customers at the same time. --• Advertising --• Consumer sales promotion --• Public relations The One-to-One Model • Personal communication • Marketers may sometimes prefer to communicate on a personal level. --• Personal selling --• Direct mail --• Telemarketing --• Direct marketing Many-to-Many Model •Consumer looks to each other for information and recommendation. --Word-of-mouth communication --Buzz Building --Social Media (e.g., brand communities, product review sites, and social networking sites) Outbound marketing = It refers to messages that come from the organization and are intended for those who have agreed to receive them Inbound marketing = refers to linkages that come to the organization from others outside.

Social Media Marketing and Other Communication Tools

Trends • Marketers no longer are the only ones who talk about their products. -- Millions of consumers have the ability and desire to spread good (or bad) news about products. -- The many-to-many communication model is based on consumers talking to one another about goods, services, and organizations (i.e., groundswell) Social Media • Internet-based platforms that allow users to create their own content and share it with others who access these sites

Digital Media Ads

Types of Digital Media Ads • Website Ads • Email Ads • Social Media Ads • Search Ads • Mobile Ads • Video Sharing Ethical Issues in Digital Media Ads • Ad fraud/Click fraud: -- The use of automated browsers to falsify the number of views/click-throughs that the advertisers must pay for. -- Mobile hijacking: zombie apps → running ads in the background • Ad blocking -- Google's own ad blocker vs. 3rd party ad blockers

Media Scheduling

• A media schedule is a plan that specifies exact media to use and when to use it. --Reach is the percentage of the target market that will be exposed to the media vehicle. --Frequency is the average number of times a person in the target group will be exposed to a message. --Gross rating points (GRPs) = compare effectiveness of different media vehicles. --Cost per thousand (CPM) = the cost to deliver a message to 1,000 people or homes. • A continuous schedule = maintains a steady stream of advertising throughout the campaign period. • Flighting = runs advertising in short bursts with periods of little or no activity. • Pulsing schedule = combines flighting and continuous scheduling by using a low advertising all year round and heavy advertising when products are likely to be in demand.

Advertising

• Advertising is non-personal communication from an identified sponsor using mass media. • Changes in media landscape have slowed growth of traditional advertising ... --• But mass communications remains the way to reach a large audience --• "TV everywhere" (also known as authenticated streaming) Product Advertising: • Advertising messages that focus on a specific good or service. --E.x) Pass the Heinz Institutional Advertising -Promotes activities, personality, or point of view of an organization --Corporate advertising, Advocacy advertising, and Public service advertisements (PSAs) Retail and Local Advertising - Advertising that informs consumers about store hours, location, and products that are available or on sale. Who Creates Advertising? • Most brands hire outside agencies. -•Limited- vs. Full-service agency -• In executing ad campaigns, agencies pool services of many different groups of people. --• Account management --> Account executive & Account planner -• Creative services -• Research and marketing services -• Media planning/buying = problem-solving process that gets a message to a target audience in the most effective way --> electing the medium to deliver the message User-Generated Advertising Content • (UGC) includes the millions of product-related comments, reviews, photos, images, and videos posted online by consumers. Ethical Issues in Advertising • Advertising, more than any other aspect of marketing, has been criticized as unethical. •Advertising --> is manipulative and causes people to buy things they don't really need. --• is deceptive and untruthful, --• is offensive and in bad taste.

Break-Even Analysis

• Break-even analysis tells marketers how many units must be sold in order to cover all costs. • Contribution per unit = (Sales Price per unit - Variable Costs per unit)

Major Types of Channels of Distribution

• Channels differ by the number of members who participate • Choice influenced by market size, purchase frequency and intermediary availability Disintermediation • If intermediaries fail to provide unique value, they are at risk of disintermediation. -• Removing some layers of the channel of distribution -• New types of channel members displace traditional ones -->Ex) Kayak, Uber, Airbnb Online Distribution • The Internet has rendered some channel members obsolete and changed how channel members coordinate supply chains. -Challenges faced: • Use of the Internet as a distribution channel poses some challenges --•Online distribution piracy (e.g., thepiratebay.org) Ethics in the Distribution Channel •Slotting allowances= a fee in exchange for agreeing to place a marketer's products on retailers' premium shelf space. •Product diversion= the distribution of a product through one or more channels not authorized for use by the manufacturer of the product. --Diverter = the manufacturer's customers that purposefully overbuys product when it is offered at special promotional prices, holds it in inventory until the promotion is over, and then sells the product within the channel •Size of intermediaries= ((ex) Wal-Mart) can have detrimental effects on smaller retailers.

Functions of Distribution Channels

• Distribution channels: - Provide time, place, and possession utility - Provide logistics and/or physical distribution= the activities that move finished goods from manufacturers to final customers. -- Transportation and storage -- Facilitating functions =make the purchase process easier for customers and manufacturers (customer service) -- Risk-taking function = The chance retailers take when they buy from manufacturers, even if a product might sit on shelves -- Communication and transaction function = channel members develop and execute both promotional and other types of communication among members of the channel. - Create efficiencies by reducing the number of transactions -- Breaking bulk = Wholesalers and retailers purchase large quantities of goods from manufacturers but sell only one or a few at a time to many different customers. --creating assortment = provide a variety of products in one location so that customers can conveniently buy many different items from one seller at one time.

Distribution Tactics

• Distribution tactics relate to 2 key aspects of strategy implementation: 1. Selecting channel partners 2. Managing the channel 1) Channel Member Selections • In general, the greater intensity of distribution, the less emphasis on selection -- Ex., Intensive distribution --> based on the probability of paying the bills • Selective distribution -- Marketing Research -- Finding prospective channel members -- Applying the selection criteria (i.e., economic, competitive, relationship, and sustainability factors) -- Securing the prospective channel members 2) Channel Management • A process where marketers administer existing channels to secure the cooperation of channel members in achieving the distribution objectives. -• Chanel conflict management: training program, co-op advertising, expert advice etc.

the Creative Selling Process

• Every customer, every sales call, and every salesperson is unique. • Successful salespeople engage in a series of activities to create win-win sales encounters. • Seeking out potential customers, analyzing needs, determining how product attributes might provide benefits for the customer and then communicating that information. • The creative selling process details a sequence of seven steps. --•Begins with prospecting (i.e., identifying and qualifying leads) --•Ends with closing the sale and follow-up • Effective salespeople skillfully handle objections to move customers to a decision stage. Step 1: Prospect and Qualify • Prospecting is the process by which salespeople identify and develop prospect lists. --•Sources include: Directories and commercial databases, Web search engines, customer referrals, trade shows, and cold calling • Once prospects are identified, salesperson must then qualify leads Step 2: Preapproach • In the preapproach stage, salespeople develop information about prospective customers and plan the sales interview. -•Customer websites can provide rich information about a prospect's likely needs. -•Informal sources may include non-competing salespeople and the company's service employees. Step 3: Approach • Once preapproach is done, time to approach, or contact, the prospect • Several key events occur within first minutes: --• Salesperson tries to learn more about customer. --• Create a positive first impression. --• Build rapport. Step 4: Sales Presentation • The part of the selling process in which the salesperson directly communicates the value proposition to the customer and invites twoway communication. -• Lays out benefits of product and advantages over alternatives, including rivals. -• Focus should be on ways salesperson and their company can add value to the customer. Step 5: Handle Objections • Rarely does a prospect accept everything put forth by the salesperson without question. • Objections are reasons why a prospect is reluctant to make a commitment. --• Effective salespeople anticipate objections, and are prepared to respond with information or persuasive arguments. Steps 6 and 7: Close the Sale and Follow-Up • If salesperson has done earlier steps well, closing the sale is a natural conclusion to the dialogue. • Follow-up after the sale includes arranging for delivery, payment, and purchase terms. --Input measures= "effort" measures—things that go into selling ---such as the number and type of sales calls, expense account management, and a variety of non-selling activities, such as customer follow-up work and client service. --Output measures= the results of the salesperson's efforts --- include sales volume but also include things like the number of orders, size of orders, number of new accounts, level of repeat business, customer satisfaction, and quantity of particular key products sold.

Advertising Execution Format

• Execution format describes the basic structure of the message. --• Comparison =explicitly names one or more competitors --> best for brands that have a smaller share of the market and for firms that can focus on a specific feature that makes them superior to a major brand. --• Demonstration = shows a product "in action" to prove that it performs as claimed --• Brand Storytelling = like 30-second movies with plots that involve the product in a more peripheral way. --• Testimonial = shows people telling about their experience with a product. --• Slice of Life = includes a celebrity, an expert, or a "man on the street" stating the product's effectiveness. --• Lifestyle = shows a person or persons attractive to the target market in an appealing setting Tonality • Tonality refers to the mood or attitude the message conveys: --•Straightforward --•Humor --•Dramatic --•Romantic/Sexy --•Fearful Creative Tactics and Techniques: -Animation and art -Celebrities -Jingles -Slogans

Social Networks

• It connect people with other people. • Marketers can listen and learn. --• Influencer marketing (e.g, Fyre Festival) • Brand community --• Howard Shultz's interview Location-Based Social Networks • Location-based social networks integrate sophisticated GPS technology that enables users to alert friends of their exact whereabouts via their mobile phone (e.g., Foursquare's Swarm). Product Review Sites • Product review sites: Social media sites that enable people to post stories about their experiences with goods and services. Augmented Reality (AR) -a live direct or indirect view of a physical, real-world environment whose elements are augmented by computer-generated sensory input. Virtual Worlds • Highly engaging digital environments where avatars "live" and interact with other avatars in real time -• Over $38 billion a year to buy virtual goods (2017) --•Ex) Second Life, Disney's Club Penguin, Roblox, etc. The Internet of Things •Network of physical things, vehicles, buildings, devices which have embedded sensors, electronics, and network connectivity that can collect data and communicate it to each other—the many-to-many of things.

Price Elasticity of Demand

• Marketers need to know how customers are likely to react to a price change • Price elasticity of demand= (the percentage change in unit sales / the percentage change in price.) • Elastic demand-->when changes in price have large effects on the amount demanded (i.e., greater than 1 ). •Inelastic demand -->when changes in price have little or no effect on the amount demanded. • Price Change: $10 to $9 • Percent Price Change = ($1/$10) x 100 = 10% • Demand Change: 3000 units to 3600 units •Percent Demand Change = (600 units/3000 units) x 100 = 20% • Price Elasticity of Demand = 20%/10% = 2

Integrated Marketing Communications (IMC)

• Marketers unify all marketing communication tools to deliver a consistent message for the purpose of generating synergy effects. • Must use a multichannel promotion strategy which combines traditional, social media and other online activities.

channel of distribution (CH. 11)

• The process and partners that move a product from the producer to the customer • Direct vs. Indirect - Channel intermediaries (also known as place, channel distribution, distribution, and marketing)

The Marketing Channel Creates the Utility of

• Time = When • Place = Where • Possession = Access • Information = Communication

Roles of Marketing Communication

• informs consumers about products/services • reminds consumers to use certain brands • persuades consumers to choose one brand over others • builds relationships with customers

What the Ads Will Say

•Advertisers try to minimize mistakes by getting reactions to ad messages before they actually place them •Data from pretesting research may come from either quantitative (e.g., surveys) or qualitative (e.g., focus groups) sources --E.g., A/B testing Traditional Mass Media: • TV- often the medium of choice, but is expensive • Radio- flexible but is declining in use • Newspapers- excellent for local ads • Magazines- varied in scope and can target local markets with selective binding Support Media • Directory advertising is information-focused advertising such as the Yellow Pages • Out-of-home media • Place-based media transmits messages to captive audiences in public places (e.g., airports, stores, gyms, etc.) Branded Entertainment • A form of ad in which marketers integrate products into entertainment venues. --Advergaming is brand placements in games --Native advertising is an execution strategy that mimics the content of the website (i.e., MSN, buzzfeed) where the message appears

Advertising Appeals

•Emotional Appeals try to influence emotions •Informational Appeals satisfies consumers' practical need for information -- A Unique Selling Proposition (USP) focuses on one clear reason why a product is superior