Chapter 4 advertising management

Price element

: in the marketing mix, the amount charged for the good or service—including deals, discounts, terms, warranties, and so on Key factors influencing price: • Market demand for the product • Costs of production and distribution • Competition and corporate objectives • Psychological pricing: influencing a consumer's behavior or perceptions using price

Pull strategy

: marketing, advertising, and sales promotion activities aimed at inducing trial purchase and repurpose by consumers

Brand

: combination of name, words, symbols or designs that identifies the product and its source and distinguishes it from competing products—the fundamental differentiating device for all products

Business markets

: directed towards people who buy goods and services for resale, for use in a business or organization or for manufacturing other products

Hidden differences

: imperceptible but existing differences that may affect the desirability of a product

Business markets:()

: organizations that buy natural resources, component products, and services that they resell, use to conduct their business, or use to manufacture another product Special characteristics

Product element

: the good or service being offered and the values associated with it—including the way a product is designed and classified, positioned, branded, and packaged.

Target market()

: the market segment or group within the market segment toward which all marketing activities will be directed

Based on a population's statistical characteristics with quantifiable factors including:

Gender • Age • Ethnicity • Occupation • Income

Psychographics:

Grouping of consumers into market segments on the basis of psychological makeup

Four considerations

Identification 2. Containment, protection, and convenience 3. Consumer appeal 4. Economy

Consumers are people

advertisers study how consumers think and act to better market to them

Consumers:

are the people who buy the products for their own or someone else's personal use

Process of market segmentation:

• identifying groups of people (or organizations) with shared needs • characteristics and aggregating (combining)

Steps involved in marketing segmentation:

• identifying groups with shared needs and characteristics • Aggregating (combining) the groups into larger segments through a marketing mix

Consumer markets:

• target of most advertising • usually sponsored by producers

three specialized types of business advertising:

• trade: targets resellers (wholesalers, dealers, and retailers) to promote greater distribution of their products. • professional: Advertising aimed at teachers, accountants, doctors, dentists, architects, engineers, lawyers, • agricultural: advertising to promote products and services used in agriculture to farmers and others employed in agribusiness.

Three specialized advertising types

• trade: targets resellers to promote distribution • Professional: targets professionals in a given industry • Agricultural: targets farmers and those employed in agribusiness

Market segmentation:

grouping consumers based on shared characteristics to tailor message to their needs and wants

Psychological pricing:

influencing a consumer's behavior or perceptions using price

target market:

A firm's marketing activities are always aimed at a particular segment of the population

Vms( vertical marketing source:

A system in which the main members of a distribution channel— producer, wholesaler, retailer—work together as a cooperative group

Major marketing tools include:

Advertising • Personal selling • Sales promotion • Direct marketing • Public relations

• professional:

Advertising aimed at teachers, accountants, doctors, dentists, architects, engineers, lawyers,

exchange:

Any transaction in which a person or organization trades something of value with someone else is an

Categories of market segmentation:

Behavioristic • Geographic • Demographic • Psychographic

Major activities include:

Design • Classification • Positioning • Branding • Packaging

product Special characteristics:

Employ professional buyers and use systematic purchasing procedures • Concentrated geographically • Small number of buyers

Introductory phase:

initial phase of the product life cycle when a new product is introduced, costs are highest, and profits are lowest

Market concentration:

Markets can be focused in specific regions or areas. • Fewer buyers in business markets

User status

Measured by categorizing consumers based on the varying degrees of loyalty to certain brands and products • Sole • Semisole • discount • aware nontriers • trail/ rejectors • repertoire users

Business purchasing procedures

More rigid and complex than the consumer purchase process • Buyers willing to pay more for favorite brands • Slow—making a sale can take weeks to years

Role of branding:

Offers recognition and identification of the product • Establishes standards of quality, taste, size, or satisfaction • Offers differentiation • Builds brand loyalty and brand equity: the totality of what consumers, distributors, dealers, and competitors feel and think about a brand over an extended period of time; the value of the brand's capital

select target markets in advertising Underlying principles:

People in the same neighborhood tend to be demographically similar. • Geographically separated neighborhoods can be placed in the same category based on similar population characteristics.

Purchase decisions depend on:

Price and quality • Product demonstrations • Delivery time • Terms of sale and dependability

The Values and Lifestyles (VALS) classification system groups consumers based on:

Primary motivation: the pattern of attitudes and activities that help people reinforce, sustain, or modify their social and self-image • Resources: the range of psychological, physical, demographic, and material capacities that consumers can draw upon, including education, income, selfconfidence, health, and eagerness to buy

Satisfaction leads to more exchanges:

Satisfied customers repurchase; and satisfied customers tell their friends.

Benefit segmentation:

Segments consumers based on the benefits being sought

Involves:

Selecting groups that have a mutual interest in the product's utility 2. Reorganizing and aggregating the groups into larger market segments based on their potential for sales and profit

Factors important for advertising success:

Strong primary demand trend • Potential for significant product differentiation • Hidden qualities important to consumers • Opportunity to use strong emotional appeals • Substantial funds available to support advertising

target audience

The particular group available to an advertiser through media

Advertising after the purchasing:

This is because advertising reinforces satisfaction by reminding customers why they bought the product, helping them defend the purchase against skeptical associates, and helping them to become brand advocates, which may persuade others to buy it.

Defining consumer markets based on psychological variables including:

Values • Attitudes • Personality • Lifestyle

Resellers:

businesses that buy products from manufacturers or wholesalers and then resell the merchandise to consumers or other buyers

exchanges are facilitated

by marketing

Retail cooperative

group of independent retailers who establish a central buying organization (wholesaler) to acquire discounts from manufacturers and gain economies from joint advertising and promotion efforts

Primary demand

consumer demand for a whole product category

Product concept

consumer's perception of a product or service as a "bundle" of utilitarian and symbolic values that satisfy functional, social, psychological, and other wants and needs

Copy points

copywriting themes in a product's advertising

Family brand:

group of products that can help each other under one umbrella name.

Volume segmentation

defining consumers as light, medium, heavy users of products

Perceptible differences:

differences between products that are visibly apparent to consumers

Individual brand:

different brand name for each product a company makes

Induced differences:

distinguishing characteristics of products effected through unique branding, packaging, distribution, merchandising, and advertising

Contractual:

formal agreement between various levels

Marketing mix

four elements that every company has the option of adding, subtracting, or modifying in order to create a desired marketing strategy

Utility:

is the product's ability to satisfy both functional needs and symbolic (or psychological) wants

The ultimate purpose of marketing:

is to create exchanges that satisfy the perceived needs and wants of individuals and organizations.

Selective distribution:

limiting the number of outlets or dealers to reduce distribution and promotion costs

Exclusive distribution:

limiting the number of wholesalers or retailers who can sell a product in order to gain a prestige image, maintain premium prices, or protect other dealers in a geographic area

Intensive distribution:

making goods available at every possible location so that consumers can buy with a minimum of effort

Target market

marketing segment or group within the market segment towards which all marketing activites will be directed

Push strategy

marketing, advertising, and sales promotion activities aimed at getting products into the dealer pipeline and accelerating sales by offering inducements to dealers, retailers, and salespeople

North American Industry Classification System (NAICS) codes

method used by the U.S. Department of Congress to classify all businesses based on broad industry groups, subgroups, and detailed groups of firms in smaller businesses

Satisfaction:

must occur every time customers use the product, or people won't think they got a fair exchange.

Distribution channel:

network of all the firms and individuals that take title, or assist in taking title, to the product as it moves from the producer to the consumer

psychic utility

offers symbolic or psychological need satisfaction, such as status or sex appeal

Corporate:

one company owns multiple levels

Administered:

one member is dominant and calls the shots.

consumers:

people who buy the product fro their own or someone else's personal use

Growth stage:

period in a product life cycle marked by market expansion as more and more customers make their first purchases while others are already making their second and third purchases • This stage is characterized by rapid market expansion. • Competitors jump into the market, but the company with the early leadership position reaps the biggest rewards. • Advertising expenditures decrease as a percentage of total sales. • Individual firms realize first substantial profits.

Maturity stage

point in product life cycle when the market has become saturated with products, the number of new customers has dwindled, and competition is most intense • Profits diminish. • Selective demand: consumer demand for the particular advantages of one brand over another • Sales increase at expense of competitors. • Market segmentation, product positioning, and price promotion become more important.

National brands:

product brands marketed in several regions of the country

Four Ps:

product, price, place, and promotion

Utility:

products ability to satisfy both functional needs and symbolic or psychosocial wants

Private label:

products sold to distributors or dealers to be resold as their own brands at lower prices Licensed brands: brand names that companies can buy the right to use

Primary demand trend:

projection of future consumer demand for a product category based on past demand and other market influences

Early adopters

prospects most willing to try new products and services

satisfaction leads to

• higher repurchases • positive word of mouth satisfaction is reinforced by advertising

Franchising:

retail dealers pay a fee to operate under guidelines and direction of parent company or manufacturer

Behavior segmentation

segmenting consumers based on the benefits being sought

Purchase occasion

segmenting markets on the basis of when consumers buy and use a good or service • affected by frequency of need, fads, seasons benefits sought • Benefits: Product attributes offered to customers, such as high quality, low price, symbolism

Direct distribution:

selling directly to consumers without retailers • Advertising burden carried by manufacturer • Network marketing: individuals act as independent distributors for a manufacturer or private-label marketer

Indirect distribution

selling to customers through a distribution channel that includes a network of resellers

Cooperative (co-op) advertising:

sharing of advertising costs by the manufacturer and the distributor or retailer

target audience

specific groups of individuals to whome advertising message is directed

Decline stage:

stage in the product life cycle when sales begin to decline due to obsolescence, new technology, or changing consumer tastes • Cease promotions • Phase out the product

Agricultural:

targets farmers and those employed in agribusiness

Professional:

targets professionals in a given industry

• trade:

targets resellers (wholesalers, dealers, and retailers) to promote greater distribution of their products.

trade:

targets resellers to promote distribution

Usage rate:

the extent to which consumers use a product (light, medium, heavy)

brand equity

the totality of what consumers, distributors, dealers, and competitors feel and think about a brand over an extended period of time; the value of the brand's capital

Position:

the way in which a product is ranked in a consumer's mind by the benefits it offers, the way it is classified or differentiated from the competition, or by its relationship to certain target markets

business advertising

to reach people who buy goods and services for resale, for use in a business or organization, or for manufacturing other products.

Exchange

trading one thing for another thing of value

Marketing communications:

various efforts and tools companies use to communicate with customers and prospects

Consumer markets:

websites, social media, TV, radio, newspapers, and magazines advertisements

Ways marketing facilities exchanges:

• by developing goods and services we want • by pricing them attractively; • by distributing them to convenient locations; • by informing us about them through advertising and IMC.

Five types:

• form: provides a tangible good • Task: performs a task • possession: available when wanted • Time: available when wanted • Place: Available where wanted