MKT 300 Exam 4 Eaton
percentage of sales method
set percentage of sales or amount per unit
Message Recall and Presentation Order
primacy effect: more remember the earlier info recency effect: more remember the most recent (last) info
stages for establishing prices
1. Development of pricing objectives 2. Assessment of target market's evaluation of price 3. Evaluation of competitors' prices 4. Selection of a basis for pricing 5. Selection of a pricing strategy 6. Determination of a specific price
event creation
designing an event that features sponsorship -redbull
unique selling proposition
desirable, exclusive, and believable advertising appeal selected as the theme for a campaign -wendy's twitter acc
portfolio pricing
different levels of price points across a product category where consumers are willing to pay more for extras
Beyond a certain level of spending,
diminishing returns set in
Products that are price sensitive, have many substitutes, and relatively small decreases in price result in large increases in quantity demanded are price: a. elastic b. inelastic
elastic (E is greater than 1.0)
Persuasivw promotion
encourage brand switching, change customers' perception of product attributes, influence immediate buying decisions, persuade customers to call
odd-even pricing
ending the price with certain numbers to influence buyers' perceptions of the price or product - 0.99 cents
institutional advertising
enhance a company's image rather than promote a particular product
Customer relationship management
establish, develop, and maintain customer sales customizing product and service offerings based on data generated through interactions between the customer and the company
Lifestyle
exclusive, only the coolest people can wear this brand, drive this car, and be part of this in-group
Qualifying leads
find people that are far more likely to purchase your product -LinkedIn
Direct marketing
form of advertising where the firm contacts the customer personally to provide marketing info strengths: messages can be tailored to match the consumer weaknesses: customers can feel as if their privacy has been invaded
marketing channel
group of individuals and organizations directing the flow of products from producers to consumers
The marketing mix
group of marketing variables that a business controls with the intent of implementing a marketing strategy directed at a specific target market -promotion, place, price, product
Products that are less price-sensitive, have few substitutes, and large increases in price result in only a small decrease in quantity demanded are: a. elastic b. inelastic
inelastic (E is less than 1.0)
Goals and Tasks of Promotion
informing: PLC stages intro & early growth persuading: PLC stages growth & maturity reminding: PLC stage maturity
brand entertainment/product placement
integration of brands or brand messages into entertainment media
Levels of Distribution intensity:
intensive distribution, selective distribution, exclusive distribution
lifetime value of a customer
q x p
Program rating
rating = ( HH tuned to show ) / ( total US HH )
Consumer sales promotions
rebates, coupons, "buy one get one free" mentality, loyalty programs, premiums, contests, sweepstakes
Power of We
receive, reciprocate social norms
Reminder promotion
remind customers that product may b need, remind customers where to buy product, maintain customer awareness
Personal Selling
representatives of a company interacts directly with a consumer to provide information to help the consumer make. a buying decision about a product or service - one to one interaction: address specific customer needs, alter message, provide additional info
cost based pricing: profit =
revenue - costs -rev: price x units sold -cost: fixed costs + variable costs
Hold spending if
the increased cost is equal to the incremental (marginal) return
Increase spending if
the increased cost is less than the incremental (marginal) returrn
Decrease spending if
the increased cost is more than the incremental (marginal) return
Select a basis for pricing: new product
price skimming and penetration pricing
referencing pricing
pricing a product at a moderate level and positioning it next to a more expensive model or brand -retailers sometimes add higher priced items to extend the range of product price alternatives -also known as selling against the brand
Select a basis for pricing: competition competition-based pricing:
pricing influenced primarily by competitors' prices -method importance increased when: competing products are homogenous resulting in elastic demand; organization is serving markets in which price is a key consideration
Retailing Mix
pricing, merchandise, location (place or online), promotion, customer service, atmosphere (physical evidence) -missing notion of process
Relationship selling
win win approach -sell advice, assistance, counsel
Evaluating impact: source control vs. credibility
word of mouth: low source control, high credibility personal selling: average source control, average credibility advertising: high source control, low credibility
audience selectivity
ability of an advertising medium to reach a precisely defined market -cooking network, home garden network
Producer factors
ability to affect resources to generate revenue
distribution
activities involved in making products available to customers when and where they want to purchase them
Select a basis for pricing: cost cost-plus pricing
adding a specified dollar amount to the seller's cost
margin
adding to the price of the product a predetermined percentage of the total price
markup
adding to the price of the product a predetermined percentage of the variable cost
market share
adjust price levels so that the firm can maintain or increase sales relative to competitors' sales
cost =
(1 - markup on selling price)(selling price)
flighted media schedule
advertising is run heavily very other month or every two weeks 30-0-30-0
seasonal media schedule
advertising is run only when the product is likely to be used -sunscreen, cold medications
continuous media schedule
advertising is run steadily throughout the period 20-20-20
Promotional Mix
advertising, personal selling, sales promotion, public relations, direct marketing, events/experiences
Bait and switch advertising
advertising a price for a product that isn't available to consumers -draw in under false pretenses
Pull strategy
advertising and promotional strategies geared toward consumers to increase desire for the product -B2C -websites, tv, billboards
Push strategy
advertising and promotional strategies geared toward your distribution partners to encourage them to promote your product -B2B
pulsing media schedule
advertising combines continuous scheduling with flighting; never zero but fluctuates 20-10-20-10-20-10
Retailing
all activities involved in selling goods directly to the final consumer for their use -can be via mail, internet
single-price
all customers are charged the same price for all the goods and services offered for sale within that product category - $1 menu
leader pricing
also known as loss leader pricing; products priced below the usual markup, near cost, or below cost -black friday pricing
Sales Promotion
an activity or material that acts as a direct inducement, offering added value or incentive for the product -contests, games, sweepstakes strengths: can be implemented quickly, help to move seasonal items, enhance effectiveness of other promotional mix elements weaknesses: not good for luxury products
Unitary elasticity
an increase in sales exactly offsets a decrease in prices, and revenue is unchanged
Inelastic
an increase or decrease in price will not significantly affect demand
Direct retailing
bringing any opportunity directly to you (face to face) -girl scouts
Public relations
broad set of communications efforts used to create and maintain favorable relationships between an organization and its stakeholders strengths: publicity can help build brand image, support other promotional efforts weaknesses: firm cannot control what news agencies and other outlets say
which of the following is the best example of a captive pricing strategy?
buying a printer for your computer and needing to buy the print cartridges for that model
captive-product pricing
captive products are items designed specifically for use with another product; many captive products are necessary to the function of the core product -razor and blades mentality -consoles and videogames
Integrated marketing communications
carefully coordinating all promotional messages to assure the consistency at every touchpoint between a company and the consumer -southwest has consistent message -snickers "satisfies hunger"
price skimming
charging the highest possible price that buyers who desire the product will pay
product advertising: comparative
compares two or more competing brands' product attributes; used if growth is sluggish, or if competition is strong
puffery
concept of lying so much where no one possibly could believe this -redbull gives you wings
Omni-channel retailing
connected customers can shop for.purchase the same items across different channeels
Elastic
consumers buy more or less of a product when the price changes
Direct marketing
contacting consumers and users, not face to face -direct mail, catalogs, telemarketing
Product factors
controllable -product price, product life cycle
intensive distribution
convenience goods; found everywhere
selling price =
cost / (1 - markup on selling price)
Cost per contract
cost of reaching one member of the target market
select a basis for pricing: demand demand-based pricing:
customers pay a higher price when demand for the product is strong and a lower price when demand is weak -ex: uber fares, happy hour, student discount also knowns as flexible or variable pricing (different segments pay different rates)
If demand for a good is extremely elastic, raising the price of that good typically has what effect on total revenue?
decreases
New brands with a small market share spend proportional _____ for advertising and sales promotion than those with a large market share
more
Personal selling process
practice used by salespeople to identify, research, and approach potential customers to sell products and services
misleading demonstrations
presenting something in a way that is deceptive or misleading
advertising campaign
series of related advertisements focusing on a common theme, slogan, and set of advertising appeals
Acquisition rate
% of purchases by non-regular buyers
Displacement rate
% of those who would buy anyways
Redemption rate
% responding to incentive -primarily for coupons, rebates
E (elasticity) =
(% change in quantity demanded for good A) / (% change in price of good A)
The Six Most Important Things to Remember from MKT 300
(6) when someone asks how to better reach customers, you automatically think "Segment, Target and Position" (5) When someone discusses customer demographics, you suggest investigating their psychographics (individual level) (4) marketing is knowing and connecting with your core customer and cultivating relationships (3) marketing is developing your brand with 55 minutes of strategy and 5 minutes of tactics (2) marketing is solving customer problems by creating, communicating and delivering value (1)You stay classy, sun devils
markup on selling price =
(selling price - cost) / selling price
Value =
Benefits - Costs
exclusive distribution
specialty goods, one option
assess target market's evaluation of price: importance of price
type of product, type of target market, purchase situation
guerilla marketing
unconventional promotions on a low budget; thought of for small businesses
stealth marketing
undercover marketing -didn't realize you were in a marketing situation
Market factors
understanding factors in the environment; they are outside of our control; uncontrollable -consumer, size of market, competition
When demand is unitary elasticity, price goes _______ and revenue goes _______.
up or down, stays the same
When demand is elastic, price goes _______ and revenue goes _______.
up, down and down, up
When demand is inelastic, price goes _______ and revenue goes _______.
up, up and down, down
designing a marketing channel system
-Analyze customer needs -Establish channel objectives -Identify major channel alternatives -Evaluate major channel alternatives
80% of profits comes from ___% of customers
20
no profits (loss) come from ___% of customers
20
20% of profits comes from ___% of customers
60
Cost per thousand (CPM) -M roman numeral for 1000
CPM = [ (cost of ad space) / (reach) ] x 1000
External factors that affect pricing decisions
Demand for your product Competition: competitor's price & strength of competition Economy: cost of components (natural resources) and economic conditions
Internal Factors that affect pricing decisions
Marketing Objectives: maximize profit or gain market share Marketing Mix Strategy: price needs to be consistent with other 3P's Costs: set optimal price
7P's 4C's
Product, price, place, promotion, people, physical, process Customer value, cost, convenience, communication
Excellent marketing: 4P's for Uber
Uber is a type of referral marketing Product: service; relevant and efficient Place: geographical segment is identified as friends refer to their friends and family (within the USA) Price: demand based pricing; pricing fluctuates depending on demand at certain times Promotion: word of mouth
objective and task method
here's my goal and figure out how to reach specific percentage
Generating leads
high traditional selling, low relationship selling
New brands require ______ spending to reach a minimum level of exposure needed to affect purchase habits
higher
highly effective service recovery can result in
higher levels of customer satisfaction than in cases where service failure didn't exist
Premium strategy: _______ quality & ______ price
higher, higher
Good-value strategy: _______ quality & ______ price
higher, lower
experiential marketing
how can we make something an experience? connect with customer provide the consumer with a total product experience that considers all the elements in an offering that encourage or inhibit consumers' interaction with the product
Impact
how credible is the medium? how credible is the source? how well does the product fit with the users of the medium?
Clutter
how many other ads will our customers see at the same time? will ours get lost in the mix?
Engagement
how much do customers pay attention to that form of media? do our product characteristics necessitate visuals? sound? story?
Efficiency
how much does each impression cost? -$5 mil super bowl ad
Price elasticity
how much the demand for a product will change with a change in price
CRM (customer relationship management) recency frequency monetary analysis
identifies customers most likely to purchase again, identify and rank best customers, identifies most profitable customers
Profit
identify price and cost levels that allow the firm to maximize profit per product
status quo
identify price levels similar to competitor average price
bait pricing (illegal)
illegal practice of advertising unrealistically low prices to bring customers into the store
Product line effects
impact the promotions have on related products
Informative promotion
increase awareness, explain how product works, suggests new uses, build company image
Atmosphere
layout, design, texture, senses
Factors influxing complaint behavior
level of dissatisfaction, attitude/personality of consumer toward complaining, amount of benefit to be gained, attribution theory
Overcharging strategy: _______ quality & ______ price (skimming)
lower, higher
Economic strategy: _______ quality & ______ price (penetration)
lower, lower
adjusting your price levels so that your company can maintain or increase sales relative to competitors' sales best described with pricing objective?
market share
Factors affecting channel choice:
market, product, and producer factors
Sales promotion
marketer-controlled communication to stimulate immediate audience response by enhancing the value of an offering for a limited tim -impact behavior, not attitudes
setting price =
markup + cost
competitive parity method
match competitor or industry average spending
Slice-of-life
meant for everyone, inclusive, appeal to everyone with basic product
customer satisfaction
negative, neutral, positive
arbitrary allocation method
non system; seemed like a good idea at the time
Television households
number of HH that own a TV
Market sales potention
number of buyers (b) x the quantity purchased in a given time period (q) x the price/unit (p)
Conversion rate
number of future purchases by new customers
reach
number of target consumers exposed to a commercial at least once during a time period
frequency
number of times an individual is exposed to a message during a time period
Events/experiences
organizing activities and events where customers can meet each other and get to know the brand/firm -entertainment strengths: help build brand community and buzz around the brand weaknesses: more skeptical consumers might see efforts as inauthentic
AIDA concept (attention, interest, desire, action)
outlines process for achieving promotional goals in terms of stages of consumer involvement with the message -advertising, public relations, personal selling, sales promos -promos create awareness attention -time delay after seeing an ad
bundle pricing
packaging together two or more complementary products and selling them for a single price -shampoo and conditioner
multiple-unit pricing
packaging together two or more identical products and selling them for a single price -costco or sams club
Advertising
paid, non-personal communication about an organization and its products transmitted to a target audience through mass media (mass delivery) -inserts, billboards, print and broadcast ads strengths: cost-efficient per person, can enhance brand image, repeatable weaknesses: total cost can be high, slow feedback, one-way message, not flexible
Advertising
paid, non-personal communication of a marketing message by an identified sponsor through mass media
Personal selling
paid, personal communication that seeks to inform customers and persuade them to purchase products in exchange situation -sales presentations, samples strengths: more influential, immediate feedback, flexible weaknesses: high cost per person, time intensive
share of audience
percentage of HUT tuned to a show
program rating
percentage of TV HH tuned to a show -rating point = 1% off TV HH
households using TV (HUT)
percentage of homes in an area watching TV at a given time
Trends in retailing
personal in-store experience, convenience/speed, privacy concerns, mobil wallet usage, omni-channel retailing
Emotional response
pleasure, displeasure, heightened senses
Traditional selling
selling whether consumer needs it or not
Marketing communication process
sender encodes a marketing idea and conveys it through message and medium so receivers can decode and understand it, and then respond with feedback
everyday low pricing
setting a low price for products on a consistent basis -retailers winning on volume of sales not how much per sale
penetration pricing
setting prices below those of competing brands to penetrate a market and gain a significant market share quickly
Share of audience
share = ( HH tuned to show ) / (US HH using TV ) share number always higher than rating number
selective distribution
shopping goods, several options but not everywhere
False testimonials
someone making claims that aren't accurat
evaluate competitors' price
sources of competitors' pricing info: comparative shoppers importance of knowing competitors' prices: helps to know how important price is to customers and helps marketers in setting competitive prices for their products customer view of pricing and marketing: pricing above/below competition
return on investment method
spending is treated as a capital investment
attribution theory
stability focus controllability
product advertising: pioneering
stimulates primary demand for new product or category -intro stage
Behavior
time spent in store, affiliation with people, buying actions
Marketing at corporate level
to promote a culture of customer orientation and to be an advocate for the customer to assess market attractiveness to develop the firm's overall value proposition, the vision, and articulation of how it proposes to deliver superior value to customers
break even quantity =
total fixed costs / (selling price - variable cost)
product advertising
touts the benefits of a specific good or service
Trade sales promotions
trade allowances, trade shows, co-op advertising, sales contests, training -examples of push strategies
attribution
translates attributes to show how you solve problems
Scientific
use third party data
product advertising: competitive
vast majority of product advertising are competitive; influences demand for brand in growth phase of PLC; often uses emotional appeal
affordable method
what we have to spare; what's left to spend
service recovery
what you do if something goes wrong? what do you want as a customer?
Price
what you pay for something; value you exchange for the benefits of having or using the product/service
break even point
where a company produces the same amount of revenues as expenses
