Marketing Exam 3 - Joel Poor

Who sells

***Everybody sells

The Four Keys

1. Permission -> Invite customers to engage rather than intrude them. Making consumers feel secure that you respect their privacy and safety is the critical first step. 2. Relevance-> Mobile enables brands to deliver relevant content that responds to consumer needs/wants at the precise moment of desire 3. Location -> Location-relevant content to your consumer, tailored to multiple locations, location-enabled ads thread content with context to produce unprecedented outreach 4. Convenience -> Removes the friction between desire and attainment, problem and solution; being accessible, keeping things simple and direct, and providing immediate solutions

Commercial Mobility

Consumer mobility is about efficiency, comfort, cost, and speed (so is commercial mobility) - automation is effecting delivery

Selective Distribution

Distributing a product in selected outlets within a geographic area - provides for some coverage with some expectation of sales effort Ex. Disposable camera -> unlikely to receive much help However for digital cameras; firms selectively distribute them (to Best Buy but not Target) need sales people to provide information and help sell the cameras - Retailers know when a product is being sold in every place in town and are less likely to help manufacturers sell their products (Well, I can go to Joes and get it for a lower price) - Ex of selectively distributed items: electronics, appliances, watches, and other "moderately" priced goods - Terms associated with selective distribution - some coverage and moderately priced (vague so difficult to categorize selective distribution) - More useful to think about these coverage strategies relative to competition or to how they change over time Ex. Godiva chocolate is more selectively distributed than Hershey's; or that a firm is moving toward a more intensive distribution strategy by offering their product in more stores Ex. $80 blender Objective : restrict distribution in geographical area to intermediaries based on performance capabilities (Ex. Compaq computers, Calphalon cookware, Swatch watches)

Mark-Up Pricing Calculation

Markup Price = Unit Cost / (1 - desired return on sales)*****

Push Strategy

Producer -> Intermediaries -> End Users

Newspapers

Strengths: 1. Offers local coverage 2. Flexible and timely Weaknesses: 1. Nonselectivity of audience 2. Short life 3. Expensive

Promotion

The coordination of all seller-initiated efforts to set up channels of information and persuasion to sell goods and services or to promote an idea. -* the communication function of marketing - Most communication with the marketplace takes place through carefully planned and controlled promotional program that integrates elements of the promotional mix to provide consistent messages - Ex. Coors Beer w/ Elvira (the witch)

Allowance pricing

Trade-in allowances -> price reductions given for turning in an old item when buying a new one Promotional allowances -> payments or price reductions to reward dealers for participating in advertising and sales support programs

Last mile startups

What3words 3x3 meters Nuro (driverless vehicles)

Viral Example: The Last Selfie

World Wildlife Fund (WWF) on Snapchat - emphasize that endangered species are disappearing just as selfies disappear from Snapchat in 10 seconds - catches attention because of the vibrant images, relatable taglines, and the way they manage to mesh something as meaningless as selfies next to animals that need our help - Use hashtags to bring it to other networks

Advertising

any paid form of nonpersonal communication about an organization, product, service, or idea by an identified sponsor - Communication from an unidentified sponsor is called propaganda - Political-issue advertisements by orgs with dubious names (Citizens for Responsible Government) - nature and purpose of ads differs from industry to industry and across situations as does its role and function in promotional mix - Classifications: national, retail/local, and direct-response ads as well as primary and selective demand ads *Most cost effective tool on a per person basis *Advertising Expenditure is highest and reminder advertising start running in maturity phase (Ex. Budweiser)term-92

Forms of retailing that penetrate foreign markets

catalogs, convenience and/or self-serve stores, discount stores, franchises

Distribution (Place)

decision involve managing the marketing channel which is the pipeline of organizations through which a product passes from producer to consumer

System Prices

those set on the sale of turnkey operations or a total systems package that includes some assortment of bundled products and services - "hardware" part of system is priced low because it is bundled with the purchase of high margin "software" - Customers may want to unbundle -> less advantageous to seller - Buyer could be dissuaded when unbundled components individual prices are not so attractive - When using bundling, producer may be able to negotiate special discounts with suppliers that they are not able to obtain when components are sold in an unbundled fashion

Mobile Changes What's Possible

- creates a seamless consumer experience that not only reinforces your brand, but also engages the consumer across every component (feel consistent)

Distribution Franchises

- dealerships and gas stations

Influencer Marketing

** Key is to match influencer to target market and product relevance

The customer relationship gap

** Reason why customer service is important

Classifications of Advertising Timing Patterns

*** Almost every advertisement is likely to use pulsing or bursting - More ads at some times and less ads at other times

Partnering

*** Based on shared trust and dependence (high level) *** Higher the dependence the greater the need for a partnership

Goal of relationship selling

*** Create a long term relationship

Non-Profit Marketing

***The donor benefit of personal benefit cannot be overstated

Delivery Vans

*Good where labor costs are high *Electronic vehicles are starting to be used (future of delivery)

generating an emotional response is key

*Key to forwarding is tapping an emotional response Tied to six primary emotions: - surprise, joy, sadness, anger, fear, and disgust

Post-Sales Service

*Most important phase of sales process - where building relationships begins - Once you help them you are seen as a trusted consultant more than a salesperson Ex. Broccoli grower full-page ad -> helped and never sold again

Percent of Sales

*Most popular method used by may small firms - a % is applied either to the previous years sales or to the forecasted ones for the upcoming year - Advantage = simplicity; however it is probably the worst method - If a cut in ad spending leads to decreasing sales the next year, the cycle only gets longer as sales and ad spending keep declining

Every Moment is Mobile

- 61% of people have better opinion of brands when they have good mobile experience - 90% of people move between multiple screens and devices to accomplish a goal - Present exact moment a consumer is seeking a solution Ex. Deposit a check, Yelp, SitorSquat - Mobile provides brands with opportunities at every touchpoint across the path to purchase (apps and optimized websites, push notifications, location based services, SMS coupons, etc.) - offers opportunities for integrated in-store experiences and increased sales conversions Ex. Macy's Magic Fitting Room - Forrester is predicting mCommerce to far exceed eCommerce and total retail growth yer-over-year at least through 2016 - Deloitte Digital says the biggest impact of smartphones is the influence they exert over traditional in-store sales to drive in-store conversion and in-store average order size * Mobile is an enabler of opportunity: There is almost no traditional business model which mobile cannot improve in some way

Global Market Entry Strategies

- Alternatives can be ranked on a continuum representing increasing levels of investment, commitment, and risk - Licensing can generate revenue flow with little new investment; can be a good choice for a company that possesses advanced technology, a strong brand image, or valuable intellectual property - Contract manufacturing and franchising are two specialized forms of licensing that are widely used in global marketing

Mobile Mindset: Understanding the Consumer

- Ask How is your target already using mobile to interact with your brand? - What is the consumer looking for in the space you are in? - ALSO: - What device are they on (Android, iOS, Phone or Tablet?) - Their current mindset? (now or later) - The activity their involved in (buying, comparing, browsing) - Their environment (home, work, on-the-go) - Employ tactics to bring your consumer from playlist to purchase

Competitive Parity

- Based on those of competitors in their industry - Assume that other companies in the industry know what they are doing and follow similar goals/strategies ("me too") - Fails to connect the budget to what is actually needed from advertising

Advantages of Licensing

- Because licensee is typically a local business that will produce and market the goods on a local or regional basis, licensing enables companies to circumvent tariffs, quotas, or similar export barriers - Licensees are granted considerable autonomy and are free to adapt the licensed goods to local tastes

B2B Personal Selling

- Because the stakes are so high when you are selling to a business the priority for salespeople needs to be on improving the relationship rather than on any one particular sale Ex. Costco buys pizza from Red Baron; sales person promises 20% increase and they only get 10%; Trust is lost *Trust between B2B partners is critical - Important to keep an open door with them because there are limited opportunities to sell and todays noncustomer could become a profitable one

Addressing Consumer Privacy

- Brands must respect boundaries as instructed by audiences - If boundaries violated, risk damaging your relationship with consumers and harm the development of the mobile industry - Fundamental tenets are transparency and consumer choice - Transparency means you provide clear and meaningful notice to consumers about what you are doing with their data you have acquired via in-store tracking, mobile website, or mobile apps Consumer choice -> to opt-in or opt-out so they can decide whether they are comfortable with the use of their data in your marketing efforts *important if you use location and personal data - DAA made framework for online ads allowing consumer to opt-out of targeted ads; Online Behavioral Advertising is now being extended to mobile marketing and as efforts - being emulated by EU - May require express written consent from consumer - Understand privacy principles in the specific region of the world for your mobile strategy - Make sure you have proper legal coverage for your mobile experience ex. Privacy Policy, Terms and Conditions, Patents and Imprints

Message Strategy

- Built upon sound consumer motivation or behavior theory - For routine decision making products (soft drinks), the ad affect or the likeability of the ad itself will have a significant effect upon the consumers decision - Message needs to be consistent with the targeted markets interest and the brand positioning strategy - stress only the core concept (belief)and take advantage of the appropriate mediums strength

Selling Attitude

- Buyers trust is dependent on the expertise and the intent of the salesperson - Attitude must be on the success of the clients rather than then sales person - Helping the customer rather than selling needs to be a priority

Disadvantages of Personal Selling

- Can be expensive, with high cost per contact - Difficult to have consistent and uniform message delivered to all customers

Global Distribution

- Channel and distribution systems are very hard to globalize because of differing infrastructures, distribution networks, and responsibilities from country to country - Also difficult because logistics are closest to the individual customers - Decentralized distribution is believed to optimize customer satisfaction - Technology, competition, economic development, and converging lifestyles are combining to make globalized distribution more feasible, beneficial, and necessary - Number of people employed in wholesaling orgs and number of distribution levels varies across countries - US and Japan have same # of people employed (Japan has greater percentage of population) and they also have greater number of distribution levels relative to US and European markets - Japan has 3 levels of wholesalers making distribution system costly, time consuming, and complex - Large wholesalers with sizable financial resources and connections are becoming more common and exert a lot of power over channel structure - Many from increasing vertical integration in the value chain - ~1/5 or 1/4 of market is covered by smaller independent wholesalers (more local than global) - Integration spurred by technological innovations and drive for efficiency - Wholesalers reluctant to adapt often are usurped by aggressive retailers - Often many types of wholesalers in developed countries (wide range of services and practices or specialization in areas of particular strength and advantage) - Intermediary services is where most intra-country variation may be found - Taking title does not always mean the manufacturer can wash its hands of the product and bear no risk of return

Segmented or Discriminatory pricing

- Companies will adjust prices to allow for differences in customers, products, and locations - Segmented pricing -> company sells a product or service at two or more prices, even though the difference in prices is not based on difference in cost - Customer -segment pricing -> different customers pay different prices for the same product or service - Product form pricing -> different versions of the product are priced differently but not according to differences in their costs - Location pricing-> company charges different prices for different locations even though the cost of offering each location is the same - Time pricing -> firm varies its prices by the season, the month, the day, and even the hour * Legal as long as it doesn't hinder competition Ex. Texas Pharmaceuticals

Cost and Convenience

- Consumer are picky when it comes to deliveries *Urbanization and ecommerce Ex. in class of something consumers factor into delivery = time of delivery - 84% of consumer don't return to a brand if they faili to deliver on time

Cooperative Alliances

- Cooperative alliances known as Global Strategic Parternships (GSPs or strategic alliances) represent an important market entry strategy in the 21st century - GSPs are ambitious, reciprocal, cross-border alliances that may involve business partners in a number of different country markets - Well suited to emerging markets in Central and Eastern Europe, Asia, and Latin America - Western businesspeople should be aware of two special forms of cooperation found in Asia (Japan's keiretsu and South Korea's chaebol)

Advantages of Advertising

- Cost effective way of communicating; particularly with large audiences that are geographically dispersed - Valuable tool for creating and maintaining brand equity - Can be integrated with other promotional tools to help generate support from retailers and other trade members - ability to control message (what, when, and how something is said and where it is delivered)

Disadvantages of Advertising

- Cost of producing and placing ads, particularly television commercials can be very high - Can be difficult to determine the effectiveness of advertising - Credibility and image problems associated with advertising - Vast number of ads has created clutter problems, and consumers are not paying attention to much of the advertising they see and/or hear

Case Study Examples

- DB Schenker electric power bicycle - NY out of hours deliveries - Scania pilots electornic hybrid delivery trucks - FedEx adds 1000 electric vans - Google Wing: drone deliveries *Autonomous in 10-15 years

Types of Retailers

- Department stores - Discount stores - Warehouse stores - Category killer - Specialty or boutique stores - Supermarket - Convenience (mom and pop) stores

Advertising Budgeting

- Determines how much a firm should spend on marketing Methods: 1. All I Can Afford 2. Percent of Sales 3. Competitive Parity 4.The Objective and Task Approach

How does a brand become mobile ready?

- Find ways to align the brand's marketing objectives with meeting the consumers needs - Connect mobile strategy to marketing objectives - make mobile a priority by ensuring it has a strong voice that is heard at every level of your org (high-level initial strategy discussion, tactical planning, execution and measurement - fully resource mobile with funds and staff so no problem maintaining (save money in long run) - Foster cross-channel collaboration by finding and supporting internal evangelists across the company - Don't be afraid of taking calculated risks. Energize and sharing stories can help groups take action - Define your mission on what you want the consumer experience to feel like

Demand

- Firms try to determine the price elasticity (responsiveness of quantity demand to price changes) for their goods

Extensive

- High price - Exclusive or very selective - Personal Selling

3 Coverage Strategies

- Intensive - Selective - Exclusive

Decoding of Messages are Affected by

- Involvement - Mood - Experience - Personal Characteristics

Disadvantages of Joint Ventures

- Joint venture partners must share rewards as well as risks - There is the potential for conflict between partners

Disadvantages of Publicity

- Lack of control over what is said, and when, where and how it is said. - Can be negative as well as positive.

Learning

- Learning from your customer (ask questions and listen) - Effective listening -> staying present in the moment, focusing on what the client is literally saying (words etc.) and sustained concentration Finding out whether customer is a good fit involves: 1. Get out all the potential issues - Potential problem or opportunities that exist 2. Prioritize the issues - Problem area if eliminated would have biggest impact 3. Collect evidence and impact - Evidence defines problems and measures success Ex. 2-day delivery -> what would these mean to you in $ if this happened 4. Explore context and constraints: - how does it fit with firms overall mission, who or what else would be effected by this solution, what has stopped firm from doing this before - noncustomer learning required including your own firms products and solutions, industry knowledge, and technical skills

Routine

- Low price - Intensive distribution - Advertising

Trade Promotional Tools

- Manufacturers direct more sales promotion dollars towards retailers and wholesalers than to consumers - These tools can persuade resellers to carry a brand, give it shelf space, promote it in advertising, and push it to consumers - Can use consumer promotional tools however these are the ones specific to manufacturers and trade; 1. Discount off the list price -> for each case purchased during a stated period of time (also called price-off, off-invoice, or off-list) 2. Allowance -> (so much off per case) in return for for the retailers agreement to feature the manufacturers products in some way. - An ad allowance compensates the retailers for advertising the product - Display allowance compensates them for using special displays 3. Free goods -> extra cases of merchandise to resellers who buy a certain quantity or who feature a certain flavor or size 4. Push money -> cash or gifts to dealers or their sales forces to "push" the manufacturers goods

Disadvantages of Sales Promotion

- Many forms do not help establish or reinforce brand image and short-term sales gains are often achieved at the expense of long term brand equity - can be problem with clutter as consumers are bombarded with too many coupons, contests, sweepstakes, and other promotional offers - Consumers can become overly reliant on sales promotion incentives, which can undermine the development of favorable attitudes and brand loyalty - Promotion wars develop in some industries, where marketers use promotions extensively (results in lower profit margins and makes difficult to sell at full price)

Exclusive Distribution

- Maximizes sales effort while minimizing coverage - Exclusive distributed if offering is offered in only one outlet within a particular geographic area Ex. Waterworks (Connecticut firm specializing in bath parts); they offer their products in only one outlet in Denver so that it is exclusively distributed in Denver - Used by firms offering luxurious goods or specialty products - Typically goods are higher priced than competitive offerings Ex. Aston Martin (exclusive distributed in MO; only in STL) ; Chevy trucks (selectively distributed all throughout dealerships in MO) - Not only do exclusive distributor get all the sales for the product, the retailer may sell other products to customers who come to the store for the exclusively distributed item - Because of the profit and traffic delivered by an exclusive distributorship, retailers expend extraordinary effort in selling the exclusive products - This involves more than just pushing the product; it means the salespeople are trained to know the details about the product and spend time and effort providing this info to potential customers - Also means providing excellent "after-the-sale" service to the discerning purchasers of the product to ensure that the brand is favorably regarded Objective: maximize "push" of a distributor Ex. Steinway pianos, Ferrari cars, Rolex watches, Lazy-Boy, Porsche, Lamborghini, Gilson Guitars *High involvement

Advantages of Direct Investment, Acquisition, or Ownership

- May provide instant market access - Offers greater control than other market entry methods

Limited

- Moderate price - Selective Distribution - Balanced Promotional emphasis

Responding in Real Time

- Monitoring social media allows firms to respond in real time customer complaints or other issues Ex. Tricia Zimmer-Ferguson (Kaldi's owner) used social media to tweet about parking spot

Cycling Boom

- New urban mobility movement given its efficiency in tackling short journeys in highly dense and high traffic conditions * Bicycle sharing schemes is increasing and more common place because they are cost effective and ease of access (UberEats, CoolBlue)

Product Positioning and the Integrated Marketing Mix

- Not necessary or productive to fit every product into these categories - type of buying decision is dependent on target market characteristics Ex. Piano is routine for rich person, pizza is limited for college student Example 1: Taco Bell low cost strategy Example 2: Lochhead Vanilla high quality Example 3: New laptop that is the best value - difficult to find the right mix - marketing mix decisions require constant assessment ad fine tuning - Promotions and pricing combinations are adjusted in order to find a good fit that stimulates demand

Disadvantages of Licensing

- Offer limited market control; the agreement may have a short life if the licensee develops its own know-how and begins to innovate in the licensed product or technology area - Worst case scenarios, licensees (especially process technologies) can develop into strong competitors in the local market and eventually into industry leaders (Ex. Xerox licensed copying technology to Canon)

Global Promotional Issues

- Other tools directed at foreign or global markets: 1. Consumer and trade promotions 2. Publicity and media events 3. Public relations 4. Trade fairs 5. Personal Selling - Least adaptable to global standardization - The extent to which sales promotion is globalized or localized depends on the scale or scope of the sales promotion being discussed - Large global media events have been contrived to maximized company and brand exposure around the world (Microsoft Gala) - Global event not created by marketers bu capitalized in sponsorships are increasing due to their growing numbers and the media attention they receive (Super Bowl, Olympics, and other sport-related events) - Cross marketing is another technique for global exposure (tie-ins with movies) - Regulations differences is one of the barriers to greater globalization of sales promotion activities -Trade fairs are more common in Europe - Present many possible benefits to multinational firms with increasing global emphasis which include 1. identifying potential distributors for new markets 2. introducing the companys latest products and models 3. discovering industry trends and developments 4. spotting new competitive developments 5. creating press coverage and media publicity, nurturing fledgling or ongoing business relationships 6. building morale among local representatives

Other Methods Used to Improve Commercial Mobility

- Parcel Lockers (Walmart Silos) - Autonomous Ground Vehicles - Load Pooling - Route Optimization

Online Pricing Using AI

- Predicting market demand and micro-segmentation - Accumulating asymmetric information - Estimating "willingness to pay" - Shaping demand Ex. Alibaba Chatbot

AI in Online Pricing

- Pricing algorithms set prices by using algorithm rather than an actual person (Amazon uses this) - Increasing as automated systems have grown more affordable and easy to implement - Moved from rule-based programs to reinforcement-learning - Reinforcement learning is a subset of machine learning that uses penalties and rewards to incentivize toward a specific goal (AlphaGo) - Given a goal and then they play with different strategies - More autonomous - Training Phase-> algorithm actively experiments with the alternative strategies by playing against clones in simulated environments adopting strategies that work best, little external work, once best algorithm is found it is put to work - potentially could independently discover that if they are to make the highest profits they should avoid price wars; learn to collude (University of Bologna in Italy) -> learned to respond to one another - Drives up the price of goods and could hurt the consumers

Premiums Example

- Prize in a cereal box

Adverse Effects of Frequent Promotional Pricing

- Promotional pricing can have adverse affects - Using too frequently and copied by competitors can create "dealprone" consumers who just wait for the item to go on sale before buying them - Reduce prices can reduce brands value - Marketers sometimes use as quick fix instead of finding long-term strategies for building a brand - Can also lead to industry price wars and only works for a few players (the most efficient operations)

Advantages of Sales Promotion

- Provide extra incentive to consumers or middlemen to purchase or stock and promote a brand - a way of appealing to the price sensitive consumer - effects can often be more directly measured than those of advertising

Intensive Distribution

- Provides the widest coverage Ex. gum and soft drinks (in supermarkets, convenience stores, gift shops, vending machines) Ex. cigarettes * Most extreme example of intensive distribution = vending machine - Used for routine buying decisions where proximity to the customer is paramount Ex. Orbit chewing gum, might remember you chewed last piece and buy, might see it at check out and impulse buy -> the key is making sure the Orbit is there - Availability and intensive distribution are the most important for low-priced items that are purchased frequently because consumers want to minimize the effort involved in purchasing these items - so we pay a little extra for a soft drink in a vending machine instead of driving to a store for the exact same drink Ex. Snickers, chapstick, soda, magazines, Hershey's not Godiva, Ford, Chevy, Hyundai, Kia Maximum coverage and no sales effort at point of purchase *The place sells the product

Companies have had success getting messages attended to and passed on by:

- Providing something of value for free (ex. Hotmail, video clips, games, sweepstakes entry) - Exploiting existing networks (ex. making content that can be transferred via YouTube on Facebook) - Expanding the company or brand's network (ex. affiliate programs, links on other websites, blogs, RSS feeds)

Public Relations and Publicity

- Public relations has a generally broader objective than publicity; purpose is to establish and maintain a positive image of the company among its various publics (lobbying with government officials) - Publicity is an important communications technique used in PR, but only one of the several tools that may be used (nonpersonal communication about an org, product, service, or idea that is not directly paid for or run under identified sponsorship - pioneering firms in the introduction stage of the product life cycle have the advantage of newsworthiness which attracts media attention (very important for startup innovators because of its low cost)

Disadvantages of Direct Investment, Acquisition, or Ownership

- Requires most commitment in terms of managerial effort and investment - Foreign investment may breed resentment in targeted market (negative country of origin effect) Ex. Inbev's acquisition of Anheuser Busch and other iconic beer companies has been met with some negative feedback on social media so they've hired Melbourne IT company to "manage" their online reputation

Importance of Long Term Relationships with Customers

- Rising marketing costs make it imperative that customer loyalty is maintained over the long term - 4-10 times more expensive to obtain a new customer as opposed to keeping an existing one - If customer satisfaction can be maintained or increased over time, the total expenditures over that customers lifetime of loyalty or customer lifetime value (CLV) will greatly increase Ex. Credit card company signing up a student early on has a high CLV - Stronger relationships with customers also foster positive word of mouth (WOM) referrals attract new customers - Negative WOM from unsatisfied customers and higher marketing costs *Importance of building customer relationships is most important in the B2B world (stakes of sales are high and # of buyers are low) Ex. Boeing has to have good relations with American Airlines Procter and Gamble has to have good relations with Walmart * Personal selling is used to develop and strengthen relationships (P&G has salespeople in Bentonville, AR working with Walmart buyers)

The Integrated Marketing Mix

- Routine or low-involvement goods (chewing gum) are usually priced low, intensively distributed, and rely primarily on advertising as the main promotional tool - products that require an extensive or high-involvement buying decision (Steinway piano) generally have a high price, are exclusively or very selectively distributed, and emphasize personal selling as the prime promotional tool - the more important relationships are that distribution and promotion decisions require some balance - limited buying decisions require balance of everything

Barriers to communication

- Selective perception - psychological noise

Penetration Pricing

- Set price low to gain initial market share, scare off competition - Negative impact= slow recovery of investments Ex. new-airline route fares, Internet browsers

Listening and Responding to Consumers

- Social data from consumers conversations can provide brand, product, and consumer insights that you can apply to everyday marketing decisions - Social media provide new data source - Higher customer satisfaction with lower costs by managing customer support issues in social media - category leaders will be companies who create positive customer experiences on both the pre and post sale side - Phone support costs $10 to $23 to over $100 per inquiry (Cable TV), email $5-10 - Social Media cost $2/inquiry or $0 marginal cost

Building Relationships Using Social Media

- Social media is a cost effective way of communicating with consumers and hopefully strengthening relationships in the process

3 Characteristics of Strategic Alliances

- Strategic alliances exhibit 3 characteristics: 1. participants remain independent subsequent to the formation of the alliance 2. participants share the benefits of the alliance as well as control over the performance of assigned tasks 3. participants make ongoing contributions in technology, products, and other key strategic areas

The Future of Retailing

- about evolving notion of consumer engagement, in parallel with developments in technology and shifting economic realities -> these shifts have rewritten the shopping journey - consumers expect to extract value from a brand no only at the transaction, but before and after their purchase - New megatrend -> divergence between consumer buying and shopping creating a new urgency for companies to address this - Buying - the process of acquiring products the consumer is already familiar with and does not need to do additional research on, where convenience is highly valued - Shopping - a more experiential and often social process where the quality of the service and purchasing experience is prioritized

3 components of the future of retailing

- Strong shopping experience is essential in most markets, retailers must create experiences tailored to their brands to avoid being too similar to another player, retailers should carefully develop experiences that are enduring and will draw repeat traffic, avoid those that can be repeated online - As consumers have more direct access to manufacturers and info about pricing, value for money is very relevant, service before and after is becoming more and more used to create value - Even in convenience and discounters like Aldi's have moved into e-commerce with a partnership with Instacart and Dias click and collect - Personalization -> people expect offers, delivery, and products to be tailored around them, also looking to have greater control over how much data they share and greater control over info (49% of people "freely share personal info online")

Price

- The value placed on what is exchanged; basically, something of value is exchanged for satisfaction and utility - Exchange includes tangible (functional) and intangible (prestige) factors - Buyers must determine if the utility gained from the exchange is worth the buying power that must be sacrificed - Macroeconomics, price represents the value of a good or service to potential purchasers, and it ensures competition among sellers in an open market economy

Teaching

- To successfully teach you must challenge your customers assumptions Process for a teaching sales pitch: 1. Assess customer key problems 2. Offer different perspective that challenges assumption - This should be something that connects the other challenges mentioned to a bigger problem 3. Lay out the business case - Provide data, graphs, etc. - Goal is for your customer to see clear return on investment 4. Make it connect emotionally - Customer see problem applies directly to them - Different for some reason - Tell a story to make them reconnect emotionally and see that its applicable 5. Convince them of the solution - Point-by-point review of things in the solution - About getting to an agreement 6. Offer your solution - Explain why your firms solution is better than anyone elses *vital to stay away from offering solution until nature of the solution is agreed to

Coupons trend

- Use of coupons is declining - Use of online coupons is increasing - Use of on package coupons is increasing

All I Can Afford

- Used by smaller businesses due to its simplicity and because it ensures reasonable limits on ad spending - Set as a predetermined percentage of profits or "whatever is left" after other resources are allocated - Not best approach because no connection between opportunities to use effective advertising and what is "left over" Ex. If firm is entering new market or is threatened by new competition, there may be a need to increase ad expenditures

Sales Promotion to Industrial Customers (B2B)

- Used to generate business leads, stimulate purchases, reward customers, and motivate salespeople - Include many of the same for consumer and trade 1. Conventions or trade shows -> firms sell to an industry at these trade shows - vendors receive opportunities to find new sales leads, contact customers, introduce new products, meet new customers, sell more to present customers, and educate customers with publications and audiovisual materials - Reached many prospects not reached through sales force 2. Sales contest -> contest for salespeople or dealers to motivate them to increase their sales performance over a given period - Motivate and recognize good company performers

Retailing across countries

- Variety in retailing across countries is greater than that in wholesaling (types of retailing outlets and number of retailers) - US has many stores and many employees in retail while Europe has fewer stores and fewer employees per store, Japan has many stores but fewer employees per store - Variations are associated with different lifestyles in the countries being served - Since retailers deal with ultimate consumers and different infrastructures their services and structure are more localized - As economic development progresses, some aspects of lifestyle become more convergent and potential for retailing to become more globalized is greater - With differing infrastructures and channel alternatives, some methods of retailing for a given product may not be available or exist for competitive reasons - This requires new channel creation - Sometimes channel systems that have been replaced domestically are resurrected in foreign markets sue to their effectiveness Ex. Door-to-door selling that has declined in US (b/c of increased crime and dual-career families) but has had great success in Japan and other countries

Inelastic Demand

- When demand is inelastic (price changes don't significantly affect quantity demanded) a price skimming strategy may be used - In price skimming, firms charge the highest price possible that buyers who most desire the product will pay (consistent with financial objectives that requires a degree of price insensitivity) Ex. New products that show significant improvements and when competition is minimized by technology or patent barriers (new pharmaceuticals and Intel microprocessors) * Ex in class: insulin, other drugs, gasoline ***

Advantages of Joint Ventures

- a company can limit its financial risk as well as its exposure to political uncertainty - can use JV experience to learn about a new market environment - allow partners to achieve synergy by combining different value chain strengths - may be the only way to enter country or region if government bid award practices routinely favor local companies, if import quotas are high, or if laws prohibit foreign control but permit joint ventures Ex. In China, only market entry method allowed to foreign automobile makers is to partner with a Chinese automobile company

Foreign Direct Investment

- a higher level of involvement outside the home country may involve foreign direct investment - can be used to establish company operations outside the home country through greenfield investment (constructing new operational facilities in a foreign country), acquisition of a minority or majority equity stake in a foreign business, or taking ownership of an existing business entity through merger or outright acquisition

Warehouse store

- a retail format which sells limited stock in bulk at a discounted rate - do not bother much about interiors of the store and the products are not properly displayed Ex. Costco, Sams Club

Distribution Context

- by 2030 60% of population will be urban - auto use, ecommerce and greenhouse gases are growing

Pricing Objectives

- can be financial or competitive

Promotional Mix

- consists of basic tools or elements that are used to accomplish an organizations communication objectives - Advertising - Sales Promotion - Public Relations and Publicity - Personal Selling

Target Market, Product Type, and Positioning

- difference in pricing importance according to target market (household of $500,000 a year as compared to $30,000) - price sensitivity varies across different products (necessary products vs luxury products) - Price perceptions are linked to positioning perceptions - If a firm wishes to position its product at the highest-quality position, the price should be relatively higher than that of the competition

Advantages of Personal Selling

- direct contact between buyer and seller allows for more communication flexibility. -message can be adapted to specific needs or to the situation of the customer. - allows for more immediate and direct feedback. -Promotional efforts can be targeted to specific markets and customers who are the best prospects.

Personal Selling

- direct, person-to-person communication whereby a seller attempts to assist and/or persuade prospective buyers to purchase a company's product or service or to act on an idea *Most effective promotional tool and the most expensive one - Associated with consumer contexts involving higher priced items (i.e. automobiles, real estate, every b2b promotional effort) * The need for personal selling increases with the level of involvement in the buying context (selling new flavor Trident gum to Walmart) *As cost, risk, and complexity of a situation increases, so does the need for personal selling

Financial objectives

- financial involve profit or some other financial target - profit objectives include satisfactory profit levels that are specified (target return) or profit maximization objectives - expressed as dollar amount or percentage change from the previous period Ex. of another financial objective-> cash flow objective (recover cash as fast as possible

Competitive Factors and Perishability

- firms are limited in what price they can set because of the availability of similar competitive offerings - Ex. Few people will pay 10 cents more for gas at station when its cheaper right across the street -Ex. airlines and personal computer industries have been hurt by "commoditization" or the perception of little distinct differences between alternatives - Competitor cuts price and others are forced to follow - On the other hand, if firm comes out with new distinct product that has no competition, ore pricing power - If product is perishable, may require flexible pricing strategy Ex. Fruits and vegetables are perishable and supermarket may mark down or bundle - Product can be perishable due to seasonal demand fluctuations Ex. Wrapping paper, swimsuits, candy corn - Services are also perishable Ex. After flight takes off, empty seats are an opportunity gone forever; Empty hotel rooms and unsold concert or sports tickets *Key in all situation is to come up with effective methods or varying prices according to demand

Transaction Selling

- focus on "making the sale" - repeat sale is unlikely and amount of dependence between buyer and seller is low Ex. Girl Scout cookies, Used Car

Relationship Selling

- focus on helping the customer and building the relationship as a result - repeat sales are critically important and the amount of dependence between buyer and seller is high

Instant Gratification

- gaining relevance for shoppers replenishing an item they have previously purchased - Omnichannel has emerged as one solution to minimizing time and friction - Stores act as fulfillment centres possibly leading to the growth of stores instead of the belief they are dying Ex. Brazilian retailer Magazine Luiza for how traditional retailer can thrive with omnichannel - 32% of their online purchase were purchased in store

Analyzing/Synthesizing

- goal is to design custom solution that fits customers need - focus on your strengths because if you provide the same solution as someone else they will pick the lowest cost - Unless your strength is low cost - Even if you don't have a direct solution you still might be able to convince your firm to customize a solution depending on your firms flexibility

Elastic Demand

- high degree of price sensitivity and a penetration pricing strategy (pricing lower than competition) may be used particularly when there is a market share objective (seen when competing technology standards are involved) - Firm introduce new product at low price to gain market share and weaken competition - The lower price sets up a barrier to entry for competitors Ex. Microsoft's Internet Explorer given away for free to take market share away from Netscape and to dominate the market

Alternative Formats

- line between online and offline is blurring with stores equipped with devices for online ordering Ex. Instagram's new in app purchasing abilities, growing options for consumers to rent items (Rent the Runway's renting of home goods and apparel) - Percentage of households that own a smartphone is likely to increase by 10% - Cost for technology has decreased and merchant incorporate more technology to improve the customer experience, make more engaging stores, and develop new business models - Changing values have also remained important factor in evolution of shopping - Time is a priority for most and most like shopping online - However, most connected consumers look to limit time use of technology ("digital detox") -> search for greater value -> dividing buying and shopping even more

Discount pricing

- many companies reward customers for early payments, volume purchases, and off-season buying - Cash discount -> a price reduction to buyers who pay their bill promptly Ex. 2/10, net 30 -> due in 30 days however 2% decrease if paid in 10 - Quantity discount -> price reduction to buyers who buy large volumes (incentive to buy more from one seller) - Noncumulative quantity discount-> given for a single purchase (Ex. buy three, get one free) - Cumulative quantity discount -> when discount is given over a number of purchases/over time (ex. free haircut after their 10th haircut (marked off card)) - Functional discount (trade discount) -> offered by seller to trade-channel members who perform certain functions such as selling, storing, and record keeping - Seasonal discount -> price reduction to buyers who buy merchandise or services out of season

Category killer

- marketing industry jargon for a retailer that discount, specialty, and department stores find it almost impossible to compete with because of their narrow focus - "big-box" chains that deal with one category of related merchandise and they all offer a wide selection of merchandise in these categories at relatively low prices Ex. ToysRUs, Home Depot, Best Buy

Countertrade

- more common method of exchange in emerging markets than in growth or mature markets - receiving payment for goods sold in some form other than cash Ex. simple barter (amount of one good is traded directly for an amount of another good), compensation deals, counter purchases, product buybacks, offset deals - Popular in emerging countries for variety of reasons: 1. the inconvertibility of their home currency (Soviet Union, companies may not have enough money to pay the full price of the purchase and may need to exchange other goods and services i.e. Coca-Cola, McDonald's and Ford)

Specialty or Boutique Stores

- narrow focus, but is smaller than category killers. - Apart from the specific range they tend to have a greater depth of the specialist stock than general stores and offer specialist product knowledge valued by the consumer - Pricing is usually not the priority when consumers are deciding upon specialty stores - Factors like branding image, selection choice, and purchasing assistance are seen as important Ex. Chloe (Paris), Build-a- Bear Workshop, Alcala's Western Wear (Chicago)

Channel Width

- number of outlets offering a product in a particular geographic area - selecting the channel width is an important strategic decision that is based on factors like consumer buying process and the brand's desired competitive position - 3 types of channel coverage strategies: intensive, selective, and exclusive - all relative to a particular area though firms use similar coverage strategies in all markets

Discount stores

- offer huge range of products to the end-users (like department) but at discounted rate - generally offer a limited range and quality in some instances might be a little inferior as compared to department stores - It is the lower price rather than sales help that is most important factor Ex. Walmart, Kmart, Target

department store

- offers a wide range of products to the end-users under one roof - consumers can get almost all the products they aspire tot shop at one one place - Wide range of options to fulfill all consumers shopping needs - Having helpful, well-trained sales people is key to success factor Ex. Nordstrom, Macy's, Bloomingdale's

Joint Venture

- partners (parents) share equity investment in an independent entity (child) - offer two or more companies the opportunity to share risk and combine complementary strengths - companies considering a joint venture must plan carefully, communicate with partners, and develop trust in order to avoid a "divorce"

Global Pricing Environment

- pricing in single foreign markets and attempting to coordinate prices across global markets are both challenging and complex undertakings - Company headquarters have to make decisions about several factors: 1. whether only the direct costs will be charged against products in foreign markets 2. whether to leave domestic prices to cover fixed overhead and administrative costs, or 3. what percentage of overhead and administrative costs those products should carry - Marginal cost coverage is often preferred when penetrating new markets or reducing excess inventory - Competitive parity is an approach used when comparing prices of other foreign product alternatives in the marketplace - a competitive price basis may be determined by assessing a products unique or competitive features or benefits package and adjusting price with a premium price differential - Demand is also considered in determining the market will bear - Unique product in a strong demand market has the ability to carry a high profit margin - commodity-type product in a soft demand market reduces markups significantly * Uniform prices across different markets with different demands s not realistic - Foreign governments affect price setting by inflating or deflating the values of their hoe currencies; can set price controls (setting price above predetermined level without governmental approval); different regulations across countries regulating price discrimination - Most governments take a stand against bribery

Psychological Pricing

- pricing that considers the psychology of prices and not simply the economics; the price is used to say something about the product (judge quality) - Reference prices -> prices that buyers carry in their minds and refer to when looking at a given product - Ex. Retailers using an inflated mark up retail price (Manufacturers Suggested Retail price) then discount the item (50% off); takes advantage of the anchor and adjustment bias -Odd pricing -> practice of choosing such prices as $19.95, $.99, $99.99; Used to emphasize low prices by putting an emphasis on the first digit; shows the retailer is trying to save the buyer some money - Even numbers -> lends an aura of quality to the product (Ex. Nordstrom and other high end retailers)

exchange rate fluctuations

- problem for exporters - prices quoted well in advance based on exchange rates at the time may result in a windfall profit or loss if difference between the two currencies becomes too large - Hedging protects one or more of the parties against these uncontrollable risks - Ex. forward purchasing of currencies, exchange of currencies, or other methods to insure the same "value" of exchange when the transaction is complete

Price escalation

- problem that plagues the exports marketer - prices in foreign markets are generally higher because of tariffs, import quotas, duties, exchange rate fluctuations, etc - costs are hard to estimate - must estimate what percentage of logistics the firm will assume - producers who obtain and offer favorable payments and terms for the buyer are able to charge a total price that is higher than competitors

Channel Depth

- refers to the number of intermediaries between the producer and the consumer - No depth in a direct marketing situation (producer to consumer) Ex. Dell -> sells directly to consumers over the internet - internet has allowed many entrepreneurs to sell goods they make directly Ex. Original art and jewelry sold on eBay - Smaller manufacturers use deep channels to distribute their goods (particularly when they want to distribute via small, independent retailers) Ex. Items sold through university bookstores are sold by many small firms that use wholesalers (Producer -> Wholesaler -> Retailer -> Consumer); about as deep as it gets - Could get deeper if international distribution is involved (add another intermediary like an import wholesaler in the non-domestic market)

Supermarket

- retail stores which generally sell food products and household items, properly placed and arranged in specific departments - Advanced form of the small grocery stores and caters to the household needs of the consumer - Various food products (meat, vegetables, dairy products, juices, etc. ) are all properly displayed at their respective departments to catch the attention of customers and for them to pick any merchandise depending on their choice and need Ex. HyVee, Albertson's, Piggly Wiggly

The Objective and Task Approach

- sales and communication objectives are set and then the advertising tasks to accomplish the objectives are defined - Advantages = logically connects advertising goals to the budget, forces planning/discipline, and it provides a means for learning how to make advertising more effective in the long term - Disadvantages = difficult to determine right, achievable objectives, time-consuming process, could result in a costly ad budget without the means to measure advertising's effectiveness Ex. He used to recommend this method because most effective - Smaller firms should rely on media representatives but only when the reps have the customers overall interest as a priority and the data to support their recommendations (still small firms should experiment with their expenditures)

Geographical Pricing

- setting prices for customers located in different parts of the country or world - FOB-origin pricing -> practice that means the goods are placed free on board a carrier; at that point the title and responsibility pass to the consumer who pays the freight from the factory to the destination - Uniform-delivered pricing -> opposite of FOB; company charges same price plus freight to all customers, regardless of location (set at average freight cost) - Zone pricing -> between these two; company sets up two or more zones; all customers within a given zone pay single total price; more distant the zone the higher the price - Basing-point pricing-> seller selects given city as "basing point" and charges all customers the freight cost from that city to the customer location regardless of city form where goods are actually shipped' can set up multiple basing points to create more flexibility (quoted from nearest to customer) - Freight-absorption pricing -> seller absorbs all or part of actual freight charges in order to get the desired business (anxious seller to do business with customer or area)

Competitive Objective

- short term pricing objectives - Market share objectives are used to increase or maintain market share, used as strategic response to specific industry conditions, survival may supersede profits in short term given deteriorating industry or economic conditions Ex. US airline industry -> firms lower prices based on competition in order to maintain marker share Ex. Apple gives away iTunes software for free, secures dominant MP3 software position

Sales Promotion

- short-term marketing activities that provide extra value or incentive to the sales force, distributors, or the ultimate consumer and can stimulate immediate sales *short term with distinct beginning and end - 2 categories: Consumer-oriented and trade-oriented activities Consumer-oriented examples; rebates, samples, coupons, and contests Trade-oriented activities ex; trade show exhibits, sales contests, and dealer pricing incentives - Promotion is part of marketing mix where firm communicates with their customers and sales promotion is part of sales promotion activities and defined by its short term nature

Convenience (mom and pop) stores

- small stores run by individuals in the nearby locality to cater to daily needs of the consumers staying in the vicinity - In cities, these are independently owned and operated - Offered only selected items, not high-end products, and are not at all organized - Size of store is not very big and depends on the land available to the owner - Large convenience stores also combine gasoline operations often particularly in suburban and highway locations Ex. 7-11, Circle K, Quick Tirp

Viral Marketing

- technique that uses pre-existing social networks to spread communication through self-replicating viral processes, analogous to the spread of pathological and computer viruses (word) - Can be word of mouth but mainly the internet - Video or audio clips (YouTube), Flash games, branded software, images and even text messages or Twitter Ex. Hotmail (free email service offered by Microsoft) Ex. Barack Obama's presidential campaigns took advantage of viral marketing

Promotional Pricing

- temporarily pricing products below the list price, and sometimes even below cost to create buying excitement and urgency - Loss leaders (products priced below cost) to attract customers to the store in the hope that they will buy other items at normal markups (Ex. Supermarkets and department stores) - Sellers use special-event pricing to draw in more customers (Ex. Back to School Days Sale) - Manufacturers offer cash rebates to consumers who buy product form dealers within a specified time -> manufacturer sends rebate to consumer - Low-interest financing -> some manufacturers offer, as well as longer warranties, or free maintenance to reduce consumers "price"

Marketing Outside the Box

- thinking outside of the marketing paradigm to create innovative solutions Ex. Uber and Airbnb peer-to-peer business models

Advertising Objectives

- tied to sales or communications objectives - Sale objective used when the advertising is to result in a direct sale Ex. online, TV and direct mail ads that communicate a direct appeal (Buy Now) with a direct means to order (Call 1-800) -> Ad expenditures are tied directly to sales in short term - Communication objective (most) because indirect Ex. % of people exposed to the ad who can recognize the ad when shown (aided recall), recall without it being shown (unaided recall), have awareness of the brand when given the product category or associate the brand with a particular attitude (Honda and reliability) - Must use marketing research to correlate the linkage between increased sales and something we can measure with a communication objective *Although we may measure results of advertising using communication objectives, in the short term, ultimately advertising expenditures are always accountable to sales results in the long term

Mobile: The closest you can get to your consumers

- todays mobile communications technology is transformative - no other platform more personal, pervasive and proximity - can now align our needs to match consumer behavior - must align our company needs to that of our customer - created deeper forms of brand loyalty and paths to purchase - properly mobilized brand can immediately provide solutions that react and respond to consumers in real time and eventually predict their needs

How a Distributor Reduces the Number of Channel Transactions

- turns 9 transactions into 6 (middle man)

Last Mile of Delivery

-Captures the final leg of delivery- the transfer of the parcel or delivery package from a distribution centre to the doorstep of the customer - 28% of shipping costs - devising more efficient methods for B2C delivery is main focus for businesses *Least efficient part of delivery Ex. Bicycle sharing, electronic vehicles

Global Consensus on Climate change

-Need green policies - Vehicle restrictions create access hurdles for logistics firms Ex. World Wildlife Fund cities account for 70% of greenhouse gases

Sales Promotion

-Process of providing short-term incentives to encourage purchase or sales of a product or service - Offers reasons to buy now (coupons) - Stimulate reseller effectiveness - Grown in recent past because of pressure to increase sales, increased competition, and the declining efficiency of the other mass communication methods

Advantages of Publicity

-The credibility of publicity is usually higher than other forms of marketing communication. -It is a low-cost method of communicating. -It often has news value and generates word-of-mouth discussion among consumers.

AIDA

1. Attention (*must have right message and right media) Ex. Hardees and Katherine Webb 2. Interest - Generate interest and talk directly to needs of target market (Gatorade = Hydration) 3. Desire (Volvo trucks and Allstate Mayhem - Use logic and use emotion 4. Action - can be direct (buy the product) - can be indirect (thought or remembrance)

Objectives of Sales Promotions

1. Consumer promotions may be used to increase short term sales or to help build long term market share 2. Objectives for trade promotions include getting retailers to carry new items and more inventory, getting them to advertise the product and give it more shelf space, and getting them to by ahead 3. For the sales force, objectives include getting more sales force support for current or new products or getting salespeople to sign up new accounts *Should reinforce the products position and build long term customer relationships *Marketers are avoiding "quick fix" price-only promotions in favor of promotions designed to build brand equity - Used together with advertising, personal selling, or other promotion mix tools

Price-Adjustment Strategies

1. Discount pricing 2. Allowance pricing 3. Segmented or discriminatory pricing 4. Psychological pricing 5. Promotional pricing 6. Geographical pricing

2 reasons why firms don't always intensively distribute

1. Distribution costs go up as a firm widens the product's coverage Ex. Someone has to deliver all of the Orbit, costs go up Also increases channel depth which can be expensive Ex. If small firm decides it will sell to a few local outlets, it can do themselves however if they want to sell at every location in town, it might have to hire a wholesaler or distributor which adds to the channel depth and costs additional money 2. There is a tradeoff between coverage and sales effort on the part of channel members -The greater the number of outlets carrying a product, the lower the percentage of sales made by any one outlet - Lower sales mean less profits and lower sales attention given to any one product

3 Keys for Successful Press Release

1. Don't hype product (avoid hype words) 2. write like a journalist 3. keep it short Ex. Rebound (hangover pill)

Conditions for Segmented Pricing Strategy

1. Market must be segmentable and the segments must show different degrees of demand 2. The costs of segmenting and watching the market cannot exceed the extra revenue obtained from the price difference 3. The segmented pricing must also be legal (not be intended to destroy/limit competition)

5 Ms of Advertising

1. Mission 2. Money 3. Message 4. Media* (Impact = Reach x Frequency) 5. Measurement

Pricing based on Product Characteristics

1. Perishability (Ex. Holiday items) 2. Distinctiveness 3. Nature of Competition

Factors Affecting Pricing Decisions

1. Pricing Objectives 2. Target Market, Product Type, and Positioning 3. Demand 4. Competitive Factors and Perishability

The Traditional Sales Process

1. Prospecting - Locating and qualifying prospects 2. The Preapproach - Planning the sales call 3. The Approach - Making a good first impression 4. The Presentation - Presenting the value proposition - Uncovering and handling objections -Closing 5. Follow-up -Checking in with the customer right after the order (solution) is delivered *assumes a rather simplistic context that puts the focus on a one-shot effort to make the sale (B2B is usually a more complex process that requires several meetings/conversations

Consumer Promotion Tools

1. Samples -> offers of a trial amount of a product - Most effective but most expensive way to introduce a product - Some are free some aren't - Can be delivered door to door, sent by mail, handed out in a store, attached to another product, or featured in an ad - Can be combined into a sample pack 2. Coupons -> certificates that give buyers a savings when they purchase specified products - Can promote early trial of a new brand or stimulate sales of a mature brand - Because of coupon clutter, redemption rates have been declining in recent years - Marketers are using new outlets for distributing coupons (supermarket shelf dispensers, electronic point of sale coupon printers, internet) 3. Rebates -> Cash refund offers (after the sale rather than at the retail outlet) - Sends proof of purchase to manufacturer who refunds part of purchase price by mail 4. Contests, sweepstakes, and games -> - Contest = calls for consumers to submit an entry to be judged by a panel that will select the best entries - Sweepstakes= call for consumers to submit their names for a drawing - Game = presents consumers with something every time they buy that may or may not help them win a prize 5. Price packs-> also called cent -off deals; offer consumers savings off the regular price of a product - marked directly on label or package by producer - More effective (more so than coupons) at stimulating short term sales 6. Premiums -> goods offered either free or at a low cost an an incentive to buy a product - Inside the package (in-pack), outside the package (on-pack) or through the mail - Advertising specialties (promotional products) are useful articles imprinted with an advertiser's name, logo, or message that are given as gifts to consumers 7. Point-of-purchase (POP) promotions -> include displays and demonstrations that take place at the point of purchase or sale

Pricing Objectives

1. Segmentation and Positioning 2. Signal of Product Quality 3. Profit Goals 4. Market Share Goals 5. Social Responsibility Ex. Amazon can dominate with their network externalities

Setting Pricing Policy

1. Selecting the Pricing Objective 2. Determining Demand 3. Estimating Costs 4. Analyzing Competitors' Costs, Prices, and Offers 5. Selecting a Pricing Method 6. Selecting the Final Price

Message Problems

1. Selective attention (Ex. Budweiser Horse, Old Spice) 2. Selective distortion (Ex. Pharmaceuticals, Perfume, Abercrombie and Fitch, Lincoln, Progressive) 3. Selective retention (Ex. repeat for a lot; insurance)

Functions of Channel Members

1. Transactional - include contacting and promoting products to potential customers Ex. Best Buy running ad in Sunday newspaper, making customers aware of the availability of certain electronic products as well as pricing 2. Logistical - provided through the physical distribution, storing, and sorting of goods Ex. Eggs -> need to be transported from various farms and stored into different sizes and grades of quality before being transported to supermarkets 3. Facilitation - include both research and financing - Research includes the collection and dissemination of information to and from the producer and the consumer Ex. Best Buy sales manager communicate preference trends on digital cameras to Nikon representative (consumers are cutting back this holiday season); at the same time Best Buy sales force providing potential customers with product feature info about Nikon Ex. Intermediaries, like Best Buy, also provide financing to help move the product through the channel to the consumer

Intermediary Functions (wholesalers and retailers)

1. Transactional -> buying and selling; risk taking (Hong Kong NBA basketballs, flooding retailer and ruin, tornado, fire, target therft rate) 2. Logistical -> Concentration; Storing; Physical distribution 3. Facilitating -> Financing(Walmart layaway, GMC/Ford, Macy's credit cards); Grading (eggs) 4. Informing -> marketing research (to companies); providing information (to consumers)

3 keys of successful crisis management

1. having plans in place (top man) 2. good media relations 3. *** Tell the truth and address problem directly

Consulting Process

1. learning 2. analyzing/synthesizing 3. teaching

Promotional Pricing

1. loss leader pricing (have product take loss in hopes people buy other marked up items ) Ex. iceberg lettuce 2. Special - event pricing Ex. Toyota Sale a thon 3. Cash Rebates (Manufacturers) 4. Low-interest financing (Walmart, Best Buy) 5. Longer payment terms (retailers) 6. Warranties and service contracts 7. Psychological discounting (deceptive reference pricing) (department stores)

Principles Behind Viral Marketing

2 goals: 1. consumers to take action as a result of viral message (i.e. buy) - shared by other marketing communication mechanisms and depends on the ability to reach target markets with persuasive messages (communicate a point of difference on significant attribute) 2. forward the message - real power in viral marketing - Makes them both cost-effective and credible (received from a friend, not a company)

Drop ins Example

Case IH Redzone

Franchise

Ex. Andy's, Chikfila, Starbucks, McDonalds, Dominos, Jimmy Johns

Category Killer

Ex. Best Buy, Cabelas/Bass Pro, Safeway (grocery), Piggly Wiggly, Wyndixies

Consultative Selling

Ex. McKinsey and Company; Accenture 3 Roles: 1. Team leader coordinate 2. Consultant gives advice and service 3. Long-term ally -> create win - win ** If you help a a customer you don't have to sell them ever again (Broccoli supplier)

4 Types of Advertising Objectives

Informative (build primary demand), Persuasive (Build selective demand), Comparison (Compares one brand to another), Reminder (Keep them thinking about product) 1. Introduction 2. Growth 3. Growth 4. Maturity

One type of strategic alliance

Joint Venture

Radio

Strengths: 1. Low cost 2. Mass Use 3. Audience Selectivity 4. Means of reaching low-income people Weaknesses: 1. Low attention 2. Listener distractions 3. Audio only 4. Short life

Pull Strategy

Producer -> End User -> Intermediaries

Crowdsourced delivery (pros and cons)

Pros: - allows for more delivery flexibility - More efficient delivery Cons: - Potential lack of service quality - Generally small deliveries only Ex. Amazon, Walmart, Postmates, Grubhub *Successful in same day deliveries

Advertising Media

Selecting the advertising media mix for communication can be very difficult because: 1. Media Fragmentation -> at any time, a targeted audience may be split over hundreds of tv channels and thousands of internet sites 2. Increased Clutter-> number of messages consumers are subject to is growing. Advertising is becoming more prevalent in virtually every medium, so each ad has more competition 3. Critical-thinking Consumers -> Advertising is examined and not just accepted today. Particularly among millennial's, authenticity is valued over hype - Establish reach and frequency goals - Reach is the number of different targeted audience members exposed to the ad at least once within a given time frame (month) - Frequency is the number of times on average that those reached are exposed to the ad over a given time frame *Reach x Frequency = Impact

Outdoor

Strengths: 1. No competing clutter 2. Flexible 3. Repeat exposure 4. Relatively inexpensive Weaknesses: 1. Viewer distractions 2. Nonselectivity of audience 3. Creative limitations

Television

Strengths: 1. Offers sight, sound, and motion 2. Attention getting Weaknesses: 1. Expensive 2. Nonselectivity of audience 3. Short message life

Internet

Strength: 1. Timely 2. Interactive 3. Low cost 4. High info content possible 5. Measurable results (i.e. click through rates) Weaknesses: 1. Low attention getting 2. Seen as intrusive (pop ups) 3. Short message life

Direct Mail

Strengths: 1. Audience Selectivity 2. Flexible 3. No competing clutter 4. Allows personalization Weaknesses: 1. High cost 2. Low attention (i.e. many just see as junk and throw away)

Magazines

Strengths: 1. Color reproduction 2. Pass-along readership 3. High-attention Weaknesses: 1. Long closing periods (i.e ads must be ready 4-6 weeks before publication) 2. Wasted circulation 3. No guarantee of position without extra fee

Mark-Up Pricing Unit Cost

Unit Cost = Variable Cost Per Unit + (Fixed Costs/Unit Sales) ****

Channel Members

distributors, intermediaries, resellers (ore middlemen), wholesalers (who sell to other intermediaries), and retailers (who sell to consumers)

Advertising Appeals

fear, humor, wow experience, abrasive advertising, sex in advertising, audience participation * High ad affect

Major Advertising Decisions

objectives setting, budget decisions, message decisions, media decisions, campaign evaluation

Transfer Prices

prices set determining the cost of products shipped between headquarters and foreign subsidiaries - important in determination of duties and related fees and huge impact on subsidiary - Have been set low to avoid taxation in home country and high to avoid repatriating profits - Should be ideally set an "arms length" -> commensurate with open market prices so the buyer obtains the accurate feedback needed to make the most efficient resource allocations and purchase selections - Used to encourage subsidiaries to buy from low-cost sources in open market, influence subsidiaries pricing actions in foreign marketplace, or to support the position in the marketplace (careful to avoid accusation of dumping)

Supply Chain

the network of business entities that support or perform marketing channel functions

Retailing

the sale, and all activities directly related to the sale of goods and services *small retailers succeed through personalized service Ex. Tony's restaurant -> screwed up ice cream "you treat every night like its your first night"