MKTG 351 Ch. 16-20 (Ole Miss, Sam Cousley)

Public Relations

- A broad set of communications efforts used to create and maintain favorable relationships between organizations and stakeholders - Should be viewed as an ongoing program during crises and good times

Reduce Sales Fluctuations

- A business cannot operate at peak efficiency when sales fluctuate widely - Promotional activities are often designed to stimulate sales during slumps

Elastic Demand (A)

- A change in price causes an opposite change in total revenue - An increase in price will decrease total revenue

Inelastic Demand (A)

- A change in price results in a change in the same direction as total revenue - An increase in price will increase total revenue

External Reference Price

- A comparison price provided by others - Manufacturer brand next to store brand - Show prices charged by other stores

Cost-Based Pricing

- A dollar amount to the cost of the product

Product Placement

- A form of promotion that strategically locates products or product promotions within entertainment media to reach a product's target market - In-program _____ _______ have become a successful method of reaching consumers, rather than relying on commercial breaks

Dealer Loader

- A gift given to a retailer that purchases a specified quantity of merchandise - Often used to gain special display efforts

The Demand Curve

- A graph of the quantity of products expected to be sold at various prices if other factors remain constant - Inverse relationship between price and quantity demanded (usually)

Merchandise Allowance

- A manufacturer's agreement to pay resellers certain amounts of money for providing special promo efforts (POP ex)

Scan-Back Allowance

- A manufacturer's reward to retailers based on the number of items they sell

Price Elasticity of Demand (A)

- A measure of the sensitivity of demand to changes in price

Publicity

- A non-personal communication in a news-story form about an organization, its products, or both - Transmitted through a mass media medium at no charge

Personal Selling

- A paid communication that seeks to inform customers and persuade them to purchase products

Advertising

- A paid non-personal communication about an organization and its products transmitted to a target audience through mass media - Internet and digital media aim at smaller, more targeted audiences

Publicity

- A part of Public Relations - Communication in news-story format about the organization and its products transmitted through mass media at no charge > News Release > Feature Article > Captioned Photograph > Press Conference

Source

- A person, group, or organization with a meaning it tries to share with a receiver or an audience

Communications

- A sharing of meaning through the transmission of information

Viral Marketing

- A strategy to get consumers to share a marketer's message, often through email or online video, in a way that spreads dramatically and quickly

Buy-Back Allowance

- A sum of money a producer gives to a reseller for each unit the reseller buys after a promotional deal expires (to re-stock shelves)

Buying Allowance

- A temporary price reduction offered to resellers for purchasing set quantities of a product

Advertising Disadvantages

- Absolute dollar outlay can be high - Rarely provides rapid feedback - Difficult to measure its effect on sales - Less persuasive than personal selling - Generally limited time exposure

Sales Promotion

- Activities or materials that act as a direct inducement, offering added value or incentive for the product to resellers, salespeople, or customers

Cost-Plus Pricing

- Adding a specified dollar amount to the seller's costs

Markup

- Adding to the price of the product a predetermined percentage of that price - Almost all resellers

Premium Money

- Additional compensation to salespeople offered by the manufacturer as an incentive to push a line of goods - Good method when personal selling is important to the marketing effort

Motivating Salespeople

- Additional efforts beyond compensation are necessary for _____ - Managers must identify their employees' needs and goals and strive to create a positive organizational climate - Incentives programs pay for themselves by making workers happier and more committed

Survival

- Adjust price levels so the firm can increase sales volume to match organizational expenses

Continuous Scheduling

- Ads run at a constant level

Flighting Schedule

- Ads run periodically, alternating with periods when no ads run

Dealer Listings

- Advertisements promoting a product and identifying the names of retailers that sell the product

Demographic Characteristics

- Affects consumers' media consumption patterns

Other Marketing Mix Variables

- All marketing mix variables are highly interrelated - Price affects demand - Perceived price/ quality relationships influence image of products or brands - Distribution is linked to price - Promotions vary by price of goods

Sales Promotion

- An activity or material that acts as an inducement to resellers or salespeople to sell a product or consumers to buy it

Cooperative Advertising

- An arrangement in which a manufacturer agrees to pay a certain amount of a retailer's media costs for advertising the manufacturer's products

Buzz Marketing

- An attempt to incite publicity and public excitement surrounding a product through a creative event

Overcoming Objections

- Anticipate common objections - Be prepared to react - Maybe address them before the prospect raises them

Noise

- Anything that reduces communication's clarity and accuracy

Aided Recall

- Asks subjects to identify recently-seen ads and provides clues to jog their memories

Unaided Recall

- Asks subjects to identify recently-seen ads, but does not provide any clues

Missionary Salespeople

- Assist producer's customers in selling to their own customers

Reinforcement Advertising

- Assures current users that they have made the right choice and shows how to get the most satisfaction from the brand

Trade Sales Promotion Methods

- Attempt to persuade wholesalers and retailers to carry and aggressively market a producer's product - Pass along a discount to a price-sensitive market segment - Boost brand exposure among target consumers - Provide incentives to move excess inventory

Factors Affecting Elasticity of Demand

- Availability of substitutes - Percentage of income available spent on a good - Necessity is less elastic (medical care) - Brand Loyalty - Consumer sensitivity (gifts, special occasions) - Duration

Creating The Advertising Message

- Basic content and form of _________ __________ are a function of several factors; > Product's features, uses, and benefits > Target audience characteristics > Campaign objectives and advertising platform > Choice of media

Captive

- Basic product in a product line is low while related items are higher

Arbitrary Approach

- Budget specified by high-level executive in the firm; can lead to under, or over spending

Relationship Selling

- Building mutually beneficial long-term associations with a customer through regular communications over prolonged periods of time - Consultant selling; you are identifying and solving problems, not just selling products

Trade Allowances

- Buying - Buy-Back - Scan-Back - Merchandise

Personal Selling Advantages

- Can be targeted to specific individuals - Has greater impact on consumers - Provides immediate feedback

Product-Line Pricing Strategies

- Captive - Premium - Bait - Bait and Switch

Consumer Promotional Methods

- Cents Off - Bonus Packs - Premiums - Money Refunds/Rebates - Frequent-User Incentives - Point-Of-Purchase Materials - Demonstrations in Stores - Free Samples - Contests - Games

Change in Quantity Demanded

- Change along an existing demand curve

Price Skimming

- Charging the highest possible price that buyers who most desire the product will pay - Attracts competition

Value Focus

- Combines product's price and quality attributes - = Perceived Benefits - Cost

Pulsing Schedule

- Combining continuous and flighting

Promotion

- Communication that builds and maintains favorable relationships by informing and persuading one or more audiences to view an organization positively and to accept its products - Goal is to stimulate product demand and build customer relationships

Cost Comparison Indicator

- Compares the costs of ad vehicles within a specific medium relative to the number of people reached

Comparative Advantage

- Compares the sponsor brand with other brands on the basis of one or more product characteristics - Marketers must be careful not to misrepresent the characteristics of competing brands

Compensating Salespeople

- Compensation should be flexible, equitable, and easy to administer - Should reflect a salesperson's value to the company

Consumer Products

- Concentrate on convenience goods = advertising - Durable and expensive products = personal selling and advertising - Both = public relations

Business Products

- Concentrate on personal selling and sales promotion

IMC

- Consistent message to customers - Coordinate and manage promotional efforts - Synchronization of promotional elements - Use more precisely targeted promotional tools - Use of database marketing - Protect consumer privacy

Decoding Process

- Converting signs and symbols into concepts and ideas

Integrated Marketing Communications

- Coordination of promotion and other marketing efforts for maximum informational and persuasive impact - Fosters long-term relationships and efficient use of promotional resources

Advertising Advantages

- Cost-efficient when it reaches a large number of people at a low cost per person - It lets the source repeat the message several times - Visibility gained from _________ can enhance a firm's image

Promotion Objectives

- Create Awareness - Stimulate Demand - Encourage Product Trial - Identify Prospects - Retain Loyal Customers - Facilitate Reseller Support - Combat Competitive Promotional Efforts - Reduce Sales Fluctuations

Costs

- Crucial component of price - Ideally foods are sold above _____, exceptions: > Match competition > Relationship with other products > Generate cash flow > Increase market share

Order Getters

- Current- Customer Sales - New- Business Sales - More Highly Paid

CRM Software

- Customer database provides a foundation - Keep up with purchase patters - Personal notes - Reach out to customers regularly - Newsletters - Reward your most profitable customers

Demand-Based Pricing

- Customers pay a higher price when demand for the product is strong and a lower price when demand is weak

Primary Demand

- Demand for a product category rather than a specific brand

Selective Demand

- Demand for a specific brand

Advertising Campaign

- Designing a series of advertisements and placing them in various media to reach a certain audience - There are eight basic steps

Objective-And-Task Approach

- Determining campaign objectives and then attempting to list the tasks requires to accomplish them

Steps to Develop New Product Pricing

- Develop Marketing Strategy - Make Marketing Mix Decisions - Estimate Demand Curve - Calculate Cost - Understand Environmental Factors - Set Pricing Objectives - Determine Pricing

Internal Reference Price

- Develops in buyer's mind through experience with product

Techniques to Identify Prospects

- Direct-Response Information Form - Internet Registration - Email Inquiries - Toll-Free Number - The organization should follow up with these _________

Geographic Distribution

- Dispersed customers often rely more heavily on advertising

Price Elasticity of Demand (B)

- Divide the percentage change in quantity demanded by the percentage change in price (ratio)

Coupon Advantages

- Effective for brand awareness - Reward present users - Win back former users - Traceable to geographic market

Psychological Dimension of Price

- Emphasize quality and prestige - Emphasize bargains to attract customers

Nonprice Competition

- Emphasizing factors other than price to distinguish a product from competing brands - Allows the company to build customer loyalty - Loyal customers are not easily lured away by competitors' low prices - Only works when you can distinguish your product from competitors'

Price Competition

- Emphasizing price as an issue - Matching or beating competitors' prices - To compete effectively, firm must be the low-cost seller - Willing to make frequent price changes - Price wars are possible

Coding Process

- Encoding - Converting meaning into a series of signs or symbols

Posttest

- Evaluation after the campaign is over - Recognition - Unaided - Aided

Pretest

- Evaluation before a campaign begins

Pure Competition

- Every economic agent is so small that it cannot exert a perceptible influence on prices - Sellers think the demand curve is a horizontal line - Homogenous product. Buyers are indifferent as to the company can buy from - Free mobility of resources. Very easy to enter and exit the market - Perfect knowledge of prices, costs, and alternatives

Trade Shows

- Every industry has these - Commonly associated with conventions - Great place to find prospects - Brings buyers and sellers together in one place

Marginal Analysis

- Examines what happens to a firm's costs and revenues when production change by one unit

Coupon Disadvantages

- Expense of distribution and redemptions - Fraud potential - Many customers will not buy without a coupon - Brand loyalty diminished - Some customers will only redeem coupons for products they normally buy

Disadvantage of Personal Selling

- Expensive

Deceptive Pricing

- Federal Trade Commission Act - Wheeler-Lea Act

Advantages of Personal Selling

- Feedback: Judge Impact - Adjust Message - Precise: Focus on promising prospects - Opportunity to form personal relationships (CRM)

Negotiated

- Final price established through buyer/ seller bargaining

Trial Techniques

- Free Samples - Coupons - Test Drives - Contests - Games - Limited Free-Use Offers

Sales Promotion Tools

- Free Samples - Games - Rebates - Sweepstakes - Contests - Premiums - Coupons - Word of Mouth

Technical Salespeople

- Give technical assistance

Legal and Regulatory Issues

- Governmental Price Controls - Sherman Antitrust Act - Deceptive Pricing - Robinson-Patman Act

Customer Retention

- Having an effective _________ _______ plan - Identify the best customers - Track and sell more to the best customers

Status Quo

- Identify price levels that help stabilize demand and sales

Product Trial

- If customers stall in the evaluation stage, marketers can use methods to encourage product trial in order to move them to product adoption

Bait And Switch

- Illegal - Advertise low price but don't have adequate inventory; try to sell more expensive item

Break-Even Analysis

- In Units - The point at which the costs of producing a product equal the revenue made from selling the product - = Fixed Costs / Per-Unit Contribution to Fixed Costs

Change in Demand

- Increase or Decrease - Is a shift in the entire demand curve

Recognition Test

- Individual respondents are shown the advertisement and asked whether they recognized it

Personal Selling Limitations

- Is expensive - Is labor intensive and time consuming

Bait

- Low pricing on one item in line with intention of selling higher-priced item in line

Percent-Of-Sales Approach

- Marketers multiply the firm's past (plus a factor for growth or decline) by a standard percentage that the industry typically spends on advertising

Media Planning

- Must consider many factors; > Location and demographics of target audience > Sizes and types of audiences typical for each advertising medium > Think about alternative media like the Internet or product placement - Cost Comparison Indicator - Three basic types of media schedules

Competition

- Must know competitors' prices so it can adjust prices accordingly - Price adjustments must be assessed in terms of competitor's response - Regulated industries limit competitive pricing - Unregulated monopolies can set any price - Monopolistic competition leads to nonprice competition - Near-pure competition leads to price competition

Create Awareness

- Necessary (maybe not sufficient) - Need to at least be in the evoked set - Crucial to initiating the product adoption process for new products - For existing products, promotional efforts create increased awareness of brands, product features, image-related issues, or operational characteristics

Pricing Techniques

- Negotiated - Secondary-Market - Periodic Discounting - Random Discounting

Profit Maximization

- Notice that the maximum profit occurs when the slope of the total revenue curve is the same as the slope of the total cost curve - Slope of total revenue=marginal revenue - Slope of total cost= marginal cost - Profit is ______ when marginal revenue equals marginal cost

Defining the Advertising Objectives

- Objectives guide campaign development - Should be; > Stated clearly > Precise > In measurable terms - Stated in terms of; > Sales > Communication - Benchmarks help advertisers evaluate progress and success

Combat Competitive Promotional Efforts

- Offset or lessen a competitor's promotion - Does not necessarily increase sales or market share - Used most often in highly competitive markets

Target Market Size

- Often drives what promotional elements are chosen - Small target markets (B2B) often rely on personal selling

Secondary-Market

- One price for primary target market and different price for another

Types of Salespeople

- Order Getters - Order Takers - Support Personnel

Pricing Decision Factors

- Organizational and Marketing Objectives - Pricing Objectives - Costs - Other Marketing Mix Variables - Channel Member Expectations - Customer Interpretation and Response - Competition - Legal and Regulatory Issues

Personal Selling

- Paid personal communication that informs customers and persuades them to buy products in an exchange situation - Variety, not routine work - High earnings potential - Career track into sales management - Like being your own boss

Word-Of-Mouth Communications

- Personal and informal communication - Likely to be influenced by friends and family members when making purchases - Can rely on opinion leaders - Electronic _______ is becoming increasingly important

Sherman Antitrust Act

- Predatory Pricing - Price Fixing

Robinson-Patman Act

- Price Discrimination

Nature of Price

- Price does not always take the form of money - The oldest form of trade is barter - Financial price is the measure of value

Price to Marketers

- Price is a key element in the marketing mix - Price can be changed quickly in response to changing demand - Price is related to total revenue and profit - Price can determine quantity sold

Types of Pricing Objectives

- Prices are set consistent with the organization's mission and goals - Image and positioning - Profit - Return on investment - Market share - Lower prices - Raise cash quickly - Temporary price reductions

Penetration Pricing

- Prices set below competing brands to penetrate market and gain market share quickly - Does not attract competition

Premium

- Pricing highest-quality product higher than other models when you have multiple products

Competition-Based Pricing

- Pricing influenced primarily by competitors' prices - Increased use when: > Competing products are more similar > Price is a key consideration

Order Takers

- Primarily seek repeat sales - Inside ____ work in sales offices - Field ____ travel to customers

Institutional Advertising

- Promotes organizational images, ideas, and political issues - May be used to create a more favorable image of the organization (PR)

Pull Policy

- Promoting a product directly to consumers with the intention to develop strong consumer demand for products - Organizations may use both push and pull policies at the same time

Push Policy

- Promoting a product to the next institution down the marketing channel

Public Relations Tools

- Publicity - Advertising, Internet, Social Media - Personal Selling and Lobbying - Annual Reports - Brochures - Event Sponsorships - Sponsorship of socially responsible programs - Press Releases - Conferences - Feature Articles

Feedback

- Receiver's response to a decoded message

Psychological Pricing Techniques

- Reference Pricing - Bundle Pricing - Multiple-Unit Pricing - Everyday Low Prices - High-Low Pricing

Reminder Advertising

- Reminds customers that an established brand is still around and still offers certain characteristics and benefits

Executing The Campaign

- Requires extensive planning and coordination - Requires detailed schedules to ensure the various phases of the work are finished on time - Management should be monitoring the quality of the work and taking corrective measures when necessary

Promotion Mix Elements

- Resources, Objectives, Policies - Characteristics of the Target Market - Characteristics of the Product - Cost and Availability of Promotional Methods - Push and Pull Channel Policies

Combination Compensation

- Salespeople are paid a fixed salary plus commission based on sales volume

Straight Salary Compensation

- Salespeople are paid a specified amount regardless of effort

Cash Flow

- Set price levels to encourage rapid sales

Product Quality

- Set prices to recover research and development expenditures and establish a high-quality image

Media Plan

- Sets forth the exact media vehicles to be used and the dates and times the advertisements will appear

Straight Commission Compensation

- Solely by sales in a given period

The Communication Process

- Source - Coded Message - Communications Channel - Decoded Message - Receiver or audience

Support Personnel

- Staff members facilitate selling but are not involved solely with making sales

Facilitate Reseller Support

- Strong relationships with resellers are important to an organization's ability to maintain a sustainable competitive advantage - Various promotional methods help achieve this goal

Periodic Discounting

- Systematic temporary price reduction

Creating The Advertising Platform

- The basic issues or selling points an advertiser wishes to be included in the advertising campaign - Should consist of issues important to consumers - Is the base on which a marketer builds the message and should be carefully constructed

Target Audience

- The group of people at whom advertisements are aimed - Advertisers must research the; > Location, geographic distribution > Demographics > Consumer attitudes of the advertiser's and competing products

Receiver

- The individual, group, or organization that decodes a coded message

Channel Capacity

- The limit on the volume of information a channel can handle effectively

Communication Channel

- The medium of transmission that carries coded message from the source to the receiver

Media Plan Frequency

- The number of times a typical targeted consumer is exposed to the message (usually per week)

Elastic Demand (B)

- The percentage change in quantity demanded is greater than the percentage change in price - The ratio will have an absolute value greater than one

Inelastic Demand (B)

- The percentage change in quantity demanded is less than the percentage change in price - The ratio will have an absolute value less than one

Media Plan Reach

- The percentage of consumers in the target audience exposed to particular advertisements in a stated period

Resources, Objectives, and Policies

- The size of an organization's promotional budget affects the number and intensity of promotional methods used - A company's _______ and _______ influence the types of promotions used

Closing The Sale

- The stage in the personal selling process when the salesperson asks the prospect to buy the product

Determining Advertising Appropriation

- The total amount of money a marketer allocates for advertising during a period of time - _________ for business products is small relative to sales, and the opposite is true for convenience products

Price

- The value paid for a product in a marketing exchange

Channel Member Expectations

- To receive profit - Compensated with discounts for large orders and prompt payments - Provide support activities such as training, service, and promotions

Competition-Matching Approach

- Trying to match competitors' advertising appropriations

Terms to Describe Price

- Tuition - Premium - Fine - Fee - Fare - Toll - Rent - Tips - Deposit - Dues - Interest - Taxes

Importance of Price Depends on

- Type of product - Type of target market - Purchase situation

Random Discounting

- Unsystematic temporary price reduction

Sales Contests

- Used to motivate distributors, retailers, and sales personnel through the recognition of outstanding achievements

Team Selling

- Using a team of experts, led by a salesperson, to conduct the personal selling process

Coupons

- Written price reductions used to encourage consumers to try specific products - Most widely-used consumer sales promotion technique - Produces results in specific time-frame

5 Crisis Management Truths

1- Be honest 2- Act quickly and decisively 3- Take responsibility 4- Treat people with respect 5- Good behavior pays dividends

3 Basic Types of Media Schedules

1- Continuous 2- Flighting 3- Pulsing

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

8 Steps of Advertising Campaigns

1- Identify and Analyze Target Audience 2- Define Advertising Objectives 3- Create Advertising Platform 4- Determine Advertising Appropriation 5- Develop Media Plan 6- Create Advertising Message 7- Execute Campaign 8- Evaluate Advertising Effectiveness

4 Elements of The Promotion Mix

1- Personal Selling 2- Public Relations 3- Sales Promotion 4- Advertising

The Personal Selling Process

1- Prospecting 2- Preapproach 3- Approach 4- Making The Presentation 5- Overcoming Objections 6- Closing The Sale 7- Following up

Profits

= (Price x Quantity Sold) - Total Costs

Profit

= Total Revenue - Total Costs