mar exam 2

PRESENTATION

(Determine Format To Be Used) usually sprited by company Deliver Content Use of Visual Aids (Laptop) Product Demonstrations Handling Objections

COMMON SALESPERSON EVALUATION MEASURES

1. Conversion Rate # Sales / # Calls 2. Meeting Quota-common $ Actual Sales / $ Sales Goals

BDI example

100 Million Consumers in National Target Market National Category Sales of $350 Million National Brand Sales of $60 Million

Output measures often appear in a sales quota.

A sales quota contains specific goals assigned to a salesperson, sales team, branch sales office, or sales district for a stated time period.

illistrated message strategy: backpacking tents

Brand/model sierra designs / flasjhpoint notrthface / talus 2 marmot / Force

LOW INVOLVEMENT HIERARCHY: THINK-DO-FEEL" low involvement, cheap, low risk, coupons, free samples, etc

COGNITION (think) v CONATION (do) v AFFECT (feel)

Segment 9, lecture #28, #29

Ch 10

The marketing objective for the company at this stage is to create consumer awareness and stimulate trial—the initial purchase of a product by a consumer.

Companies often spend heavily on advertising and other promotion tools to build awareness and stimulate product trial among consumers in the introduction stage.

sources of promotion

Company Spokesperson e.g., Celebrity endorser

Other multibrand companies introduce new product brands as defensive moves to counteract competition. Called fighting brands, their chief purpose is to confront com- petitor brands.

Compared with the multiproduct strategy, advertising and promotion costs tend to be higher with multibranding. The company must generate awareness among consumers and retailers for each new brand name without the benefit of any previous impressions.

The growth of this sector is the result of increased demand for services that have GDP Services been available in the past and the increasing interest in new services.

Concierge services, for example, have long been popular in hotels

PACKAGING FUNCTIONS

Contain/ Protect Facilitate Use Communicate Fit Channel Needs Innovation

PROSPECTING

Finding Leads Qualifying Prospects Establish Need/Want Ascertain Ability to Purchase Determine Purchase Authority

Brand value

Function, emotional, participative benefits / price

PREAPPROACH

Gathering Information Setting Sales Call Goals Preparing Presentation PRACTICE, PRACTICE, PRACTICE!

"THINK-FEEL-DO"

HIGH INVOLVEMENT HIERARCHY OF EFFECTS

We all know the giant product and service successes. Yet the thousands of product failures every year that slide quietly into oblivion cost American businesses billions of dollars.

Ideally, a new product or service needs a precise protocol, a statement that, before product development begins, identi-fies (1) a well-defined target market; (2) specific customers' needs, wants, and preferences; and (3) what the product will be and do to satisfy consumers.

Stage 3: Screening and Evaluation: Screening and evaluation is the stage of the new-product process that internally and externally evaluates new-product ideas to eliminate those that warrant no further effort.

Internal Approach: External approach:

Once a salesperson has identified a qualified prospect, preparation for the sale begins with the preapproach. The preapproach stage involves obtaining further information on the prospect and deciding on the best method of approach.

Knowing how the prospect prefers to be approached and what the prospect is looking for in a product or service is essential, regardless of industry or cultural setting. The preapproach stage is especially important in international selling, where customs dictate appropriate protocol.

The life of an organization depends on how it conceives, produces, and markets new products (goods, services, and ideas).

Many examples involve small businesses facing the difficult task of launching a successful start-up.

THE SELLING PROCESS

Prospecting Preapproach Approach Presentation Close Follow-up

NEW MEDIA--DIGITAL SEARCH—SPONSORED LINKS DISPLAY ADS: BEHAVIORAL TARGETING E-MAIL: PERMISSION

SOCIAL MEDIA FACEBOOK YOUTUBE VIRAL TWITTER MOBILE

SALESFORCE COMPENSATION

Salary Straight Commission Combination Salary Plus Commission Salary Plus Bonus

Growth Stage The primary promotional objective of the growth stage marketing manager seeks to gain brand preference and solidify distribution.

Sales promotion assumes less importance in this stage, and publicity is not a factor because it depends on novelty of the product.

Sales plan implementation

Salesforce recruit- ment and selection Salesforce training Salesforce motivation and compensation

Organizing a selling organization is the second task in formulating the sales plan. Three questions are related to organization. First, should the company use its own salesforce, or should it use independent agents such as manufacturer's representatives?

Second, if the decision is made to employ company salespeople, then should they be organized according to geography, customer type, or product or service? Third, how many company salespeople should be employed?

Personal selling serves three major roles in a firm's overall marketing effort. First, salespeople are the critical link between the firm and its customers. This role requires that salespeople match company interests with customer needs to satisfy both parties in the exchange process.

Second, salespeople are the company in a consumer's eyes. They represent what a company is or attempts to be and are often the only personal contact a customer has with the company. Third, personal selling may play a dominant role in a firm's marketing program.

the purchase process: Many aspects of services affect the consumer's evaluation of the purchase. Because services cannot be displayed, demonstrated, or illustrated, consumers cannot make a prepurchase evaluation of all the characteristics of services.

Similarly, because service providers may vary in their delivery of a service, an evaluation of a service may change with each purchase.

MEDIA MIX:

THE ARRAY OF MEDIA USED IN AN AD CAMPAIGN

After setting the advertising budge you must designing the Advertisement. An advertising message usually focuses on the key benefits of the product that are important to a prospective buyer in making trial and adoption decisions.

The message depends on the general form or appeal used in the ad and the actual words included in the ad.

In contrast, sales for a low-learning product begin immediately because little learning is required by the consumer and the benefits of purchase are readily understood.

This product often can be easily imitated by competitors, so the marketing strategy is to broaden distribution quickly.

advertisers try to expose the audience to a message more than once. This is because consumers often do not pay close attention to advertising messages, some of which contain large amounts of relatively complex information.

When advertisers want to reach the same audience more than once, they are concerned with frequency, (478) the average number of times a person in the target audience is exposed to a message or advertisement.

CUSTOMER RETENTION

Why customers are more profitable over time

Inventory: Inventory of services is different from that of products. Inventory problems exist with products because many items are perishable and because there

are costs associated with handling inventory.

20 million sales people in the us

cisco, ibm microsoft oracle,have over 11k sales staff

Brand equity, in this instance, is represented by the premium a

consumer will pay for one brand over another when the functional benefits provided are identical.

Companies with successful direct marketing programs are sensitive to these issues and often use a combination of

direct marketing alternatives together, or direct marketing combined with other promotional tools, to increase value for customers.

Understanding the service characteristics that lead to repeat purchases can

help services managers allocate their resources to appropriate relationship marketing activities.

Modifying the Market: With market modification strategies, a company tries to find new customers,

increase a product's use among existing customers, or create new use situations. (p. 281)

some businesses are a mix of intangible service and tangible product factors.

it is useful to distinguish between their core offering— either a product or a service—and supplementary services.

elements. Four factors that trigger the need for a repositioning action are

reacting to a competitors position reaching a new market castching a rising trend change the value offered

a Product modification (p. 281) involves altering one or more of a product's characteristics,

such as its quality, performance, or appearance, to increase the product s value to the customer and increase sales

Customer value creation is made possible by relation- ship selling, the practice of building ties to customers based on a salesperson's attention and commitment

to customer needs over time. Relationship selling (534) involves mutual respect and trust among buyers and sellers. It focuses on creating long-term customers, not a one-time sale.

Occasionally a firm's Stage 1 activities can be blindsided by a revolutionary new product or technology that completely disrupts its business, sometimes called a "disruptive innovation." For example:

wikipedia digital photography personal computers

"BACKBONE OF THE PROMOTIONAL MIX"

"Everyone lives by selling something." Robert Louis Stevenson "Nothing happens until someone sells something." Anonymous

customer lifetime value

$$ per visit should be profit not revenue The value is an over estimate of CLV it should incorporate continous defection, and discount future money

A sales plan cannot be successfully implemented without motivated salespeople. Research on salesperson motivation suggests that

(1) a clear job description, (2) effective sales management practices, (3) a personal need for achievement, and (4) proper compensation, incentives, or rewards will produce a motivated salesperson.

Services can be classified according to whether they are delivered by

(1) people or equipment, (2) business firms or nonprofit organizations, or (3) government agencies.

The importance of compensation as a motivating factor means that close attention must be given to how salespeople are financially rewarded for their efforts. Salespeople are paid using one of three plans:

(1) straight salary, (2) straight commission, or (3) a combination of salary and commission.

Packaging and Labeling Challenges and Responses Package and label designers face four challenges. They are

(1) the continuing need to connect with customers; (2) environmental con- cerns; (3) health, safety, and security issues; and (4) cost reduction.

Colleges, hospitals, hotels, and even charities are facing an increasingly competitive environment. Successful service organizations, like successful product-oriented firms, must

(1) understand how the consumer makes a service purchase decision, (2) understand how the consumer evaluates quality, and (3) determine how to present a differential advantage relative to competing offerings.

Four Aspects of the Product Life Cycle Some important aspects of product life cycles are (1) their length, (2) the shape of their sales curves,

(3) how they vary with different levels of products, and (4) the rate at which consumers adopt products.

Qualifications for order-getting sales positions often mirror the expectations of buyers: (1) imagination and problem-solving ability, (2) strong work ethic, (3) honesty, (4) intimate product knowledge,

(5) effective communication and listening skills, and (6) attentiveness reflected in responsiveness to buyer needs and customer loyalty and follow-up.

Service organizations must manage the availability of the offering so that (1) demand matches capacity over the duration of the demand cycle

(for example, one day, week, month, or year), and (2) the organization's assets are used in ways that will maximize the return on investment (ROI).

Financially lucrative brand licensing opportunities arise from brand equity. Brand licensing (p. 285) is a contractual agreement whereby one company

(licensor) allows its brand name(s) or trademark(s) to be used with products or services offered by another company (licensee) for a royalty or fee.

The customer-based brand equity pyramid shows the four-step building process that forges strong, favorable, and unique customer associations with a brand.

(p. 285)

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Four alternative forms of institutional advertisements are often used:

1. Advocacy advertisements 2. Pioneering institutional advertisements, 3. Competitive institutional advertisements 4. Reminder institutional advertisements,

Carefully using the seven stages in the new-product process increases the chances of new-product success.

1. New-product strategy development 2. Idea generation 3. Screening and evaluation 4. Business analysis 5. Development 6. Market testing 7. Commercialization

COMPUTE THE RATIOS BETWEEN THE STEPS

100 / 80 = 1.25* 80 / 75 = 1.07 75 / 70 = 1.07 70 / 60 = 1.17 60 / 52 = 1.15

Setting schedules requires an understanding of how the market behaves. Most companies tend to follow one of three basic approaches: 1. Continuous (steady) schedule. When seasonal factors are unimportant, advertising is run at a continuous or steady schedule throughout the year.

2. Flighting (intermittent) schedule. Periods of advertising are scheduled between periods of no advertising to reflect seasonal demand. 3. Pulse (burst) schedule. A flighting schedule is combined with a continuous schedule because of increases in demand, heavy periods of promotion, or introduction of a new product.

1. Acknowledge and convert the objection. This technique involves using the objec- tion as a reason for buying. For example, a prospect might say, "The price is too high." The reply: "Yes, the price is high because we use the finest materials. Let me show you. . . . "

2. Postpone. The postpone technique is used when the objection will be dealt with later in the presentation: "I'm going to address that point shortly. I think my answer would make better sense then."

What percentage of chief executive offi cers in the largest U.S. companies have signifi cant sales experience in their work history? 20% 2. About what percentage of an average field sales representative's time each work- week is spent actually selling to customers by phone or face-to-face? 41%

3. "A salesperson's job is finished when a sale is made." False 4. About what percentage of U.S. companies include customer satisfaction as a measure of salesperson performance? 60 %

Lindsey Smith's selling orientation and customer relationship philosophy rest on four pillars: 1. A commitment to creating value for clients. Lindsey believes "every sales call and client interaction should create value for both the customer and the company." 2. Seek to serve clients as a trusted consultant. Lindsey emphasizes "being a resource for my customers by providing novel solutions for them."

3. Reinforce the company's competitive advantage. Lindsey continu- ally reinforces GE Healthcare Americas' competitive advantage: "I emphasize my company's value proposition and showcase the company's product innovation, solutions, and service." 4. Regard challenges as opportunities. Lindsey says, "I consider challenges as opportunities to provide innovative solutions and resources to customers and to build client trust and long-term relationships."

3. Agree and neutralize. Here a salesperson agrees with the objection, then shows that it is unimportant. A salesperson would say, "That's true. Others have said the same. But, they thought that issue was outweighed by other benefits."

4. Accept the objection. Sometimes the objection is valid. Let the prospect express such views, probe for the reason behind it, and attempt to stimulate further dis- cussion on the objection.

Video Creating the Actual Message Advertising agency 72andSunny designated Advertising Age magazine's U.S. Agency of the Year for using an optimistic and collaborative style to help shape its clients' voices for consumers.

72andSunny and other agencies use many forms of advertising to create their messages. A very popular form of advertising today is the use of a celebrity spokes- person.

RELATIONSHIP SELLING

A "Relationship Selling" approach is exemplified by a salesperson who... Listens Expresses genuine concern Keeps promises Uses knowledge to meet customer needs

A basic decision in marketing products is branding ()p. 283), in which an organization uses a name, phrase, design, symbols, or combination of these to identify its products and distinguish them from those of competitors.

A brand name (p. 283) is any word, device (design, sound, shape, or color), or combination of these used to distinguish a seller's products or services. Some brand names can be spoken, such as a Gatorade. Other brand names cannot be spoken, such as the white apple (the logotype or logo) that Apple puts on its machines and in its ads.

Under a straight salary compensation plan, a salesperson is paid a fixed fee per week, month, or year. With a straight commission compensation plan, a salesperson's earnings are directly tied to the sales or profit generated.

A combination compensation plan contains a specified salary plus a commission on sales or profit generated.

Percentage of Sales: In the percentage of sales budgeting approach, funds are allocated to promotion as a percentage of past or anticipated sales, in terms of either dollars or units sold.

A common budgeting method, this approach is often stated in terms such as, "Our promotion budget for this year is 3 percent of last year's gross sales."26 The advantage of this approach is obvious: It is simple and provides a financial safeguard by tying the promotion budget to sales.

Products in the decline stage tend to consume a disproportionate share of management and financial resources relative to their future worth.

A company will follow one of two strategies to handle a declining product: deletion or harvesting.

the stimulus response presentation format assumes that given the appropriate stimulus by a salesperson, the prospect will buy. With this format the salesperson tries one appeal after another, hoping to hit the right button.

A counter clerk at McDonald's is using this approach when he or she asks whether you'd like an order of french fries or a dessert with your meal. The counter clerk is engaging in what is called suggestive selling. Although useful in this setting, the stimulus-response format is not always appropriate, and for many products a more formalized format is necessary.

The United States has more than 27,800 radio stations. These stations consist of approximately 4,700 AM, 10,600 FM, and 12,800 HD and Internet stations. The major advantage of radio is that it is a segmented medium.

A disadvantage of radio is that it has limited use for products that must be seen. Another problem is the ease with which consumers can tune out a commercial by switching stations. Radio is also a medium that competes for people's attention as they do other activities, such as driving, working, or relaxing. Radio listening time reaches its peak during the morning drive time (7 to 8 a.m.), remains high during the day, and then begins to decline in the afternoon (after 4 p.m.) as people return home and start evening activities.

Newness from the Consumer's Perspective: discontinuous innovation

A discontinuous innovation involves making the consumer learn entirely new consumption patterns to use the product. So marketing efforts for this usually involve not only gaining initial consumer awareness but also educating consumers on both the benefits and proper use of the innovative product, activities that can cost millions of dollars

The more a firm knows about its target audience—including demographics, interests, preferences, media use, and purchase behaviors—the easier it is to develop a promotional program.

A firm might use a profile based on gender, age, and income, for example, to place ads during specific TV programs or in particular magazines. Similarly, a firm might use behavioral targeting—collecting information about your web-browsing behavior to determine the banner and display ads that you will see as you surf the Web.

One of the many functions the inter- mediaries perform is customer contact and selling for the producers they represent. Both retailers and wholesalers employ and manage their own sales personnel.

A manufacturer's success often rests on the ability of the reseller's salesforce to represent its products. Thus, it is in the best interest of the manufacturer to help train the reseller's salesforce.

The formula selling presentation format is based on the view that a presentation consists of information that must be provided in an accurate, thorough, and step-by-step manner to inform the prospect.

A popular version of this format is the canned sales presentation, which is a memorized, standardized message conveyed to every prospect. Used frequently by firms in telephone and door-to-door selling of consumer products (for example, Kirby vacuum cleaners), this approach treats every prospect the same, regardless of differences in needs or preferences for certain kinds of information.

A product item (p. 250) is a specific product that has a unique brand, size, or price. Each of the different product items represents a separate stock keeping unit (SKU), which is a unique identification number that defines an item for ordering or inventory purposes.

A product line is a group of product or service items that are closely related because they satisfy a class of needs, are used together, are sold to the same customer group, are distributed through the same outlets, or fall within a given price range. Each product line has its own marketing strategy.

Second, because the various promotional elements are often the responsibility of different departments, coordinating a consistent promotional effort is necessary.

A promotional planning process designed to ensure integrated marketing communications (IMC) can facilitate this goal.

Personal selling begins with the prospecting stage—the search for and qualification of potential customers. There are three types of prospects. A lead is the name of a person who may be a possible customer.

A prospect is a customer who wants or needs the product. If an individual wants the product, can afford to buy it, and is the decision maker, this individual is a qualified prospect.

In developing a public relations campaign, several methods of obtaining nonpersonal presentation of an organization, product, or service without direct cost—publicity tools—are available to the public relations director. Many companies frequently use the news release, consisting of an announcement regarding changes in the company or the product line. The objective of a news release is to inform a newspaper, radio station, or other medium of an idea for a story.

A second common publicity tool is the news conference. Nonprofit organizations rely heavily on public service announcements (PSAs), which are free space or time donated by the media.

There is no correct schedule to advertise a product, but three factors must be considered. First is the issue of buyer turnover, which is how often new buyers enter the market to buy the product. The higher the buyer turnover, the greater the amount of advertising required.

A second issue in scheduling is the purchase frequency; the more frequently the product is purchased, the less repetition is required. Finally, companies must consider the forgetting rate, the speed with which buyers forget the brand if advertising is not seen.

Some multiproduct branding companies employ subbranding, which combines a corporate or family brand with a new brand, to distinguish a part of its product line from others.

A strong brand equity also allows for brand extension: the practice of using a current brand name to enter a different product class.

In this way, as competitors rapidly enter, most retail outlets already have the innovator's product. It is also important to have the manufacturing capacity to meet demand.

A successful low-learning product is Gillette's Fusion razor. This product achieved $1 billion in worldwide sales in less than three years

a trade name (p.283) is a commercial, legal name under whcih a company does business.

A trademark (p. 284) identifies that a firm has legally registered its brand name or trade name so the firm has its exclusive use, thereby preventing others from using it.

The close itself can take several forms. Three closing techniques are used when a salesperson believes a buyer is about ready to make a purchase: (1) trial close, (2) assumptive close, and (3) urgency close.

A trial close involves asking the prospect to make a decision on some aspect of the purchase: "Would you prefer the blue or gray model?"

A second common trade promotion, a case allowance, is a discount on each case ordered during a specific time period. These allowances are usually deducted from the invoice.

A variation of the case allowance is the "free goods" approach, whereby retailers receive some amount of the product free based on the amount ordered, such as 1 case free for every 10 cases ordered.

Directed to ultimate consumers, consumer-oriented sales promotions, or simply consumer promotions, are sales tools used to support a company's advertising and personal selling.

A variety of consumer-oriented sales promotion tools may be used, including coupons, deals, premiums, contests, sweep- stakes, samples, loyalty programs, point-of-purchase displays, rebates, and product placements

MOST VALUABLE BRANDS: 2013

APPLE, GOOGLE, COCA-COLA, IBM MICROSOFT, GE, McDONALD'S, SAMSUNG, INTEL TOYOTA

services such as banking, consulting, and insur- ance are often delivered electronically, requiring no face-to-face customer interaction. While this approach can create value for consumers, a disadvantage of some self-service technologies such as

ATMs, grocery store scan- ning stations, and self-service gas station pumps is that they are perceived as being less personal.6

CHANNEL = MEDIUM

AUDIENCE = TARGET MARKET

HIERARCHY-OF-EFFECTS

AWARENESS COGNITION KNOWLEDGE "THINK" v LIKING AFFECT PREFERENCE "FEEL" v INTENT CONATION PURCHASE "DO"

Cold canvassing is often criticized by U.S. consumers and is now regulated. Re- search shows that 75 percent of U.S. consumers consider this practice an intrusion on their privacy, and 72 percent find it distasteful.13 The Telephone Consumer Protection

Act (1991) contains provisions to curb abuses such as early morning or late night call- ing. Additional federal regulations require more complete disclosure regarding solicitations, include provisions that allow consumers to avoid being called at any time through the Do Not Call Registry, and impose fines for violations.

Humorous appeals imply either directly or subtly that the product is more fun or exciting than competitors' offerings. As with fear and sex appeals, the use of humor is widespread in advertising and can be found in many product categories.

Advertisers believe that humor improves the effectiveness of their ads, although some studies suggest that humor wears out quickly, losing the interest of consumers. Another problem with humorous appeals is that their effectiveness may vary across cultures if used in a global campaign.

Each of the five elements of the promotional mix has strengths and weaknesses.

Advertising Personal selling Public relations Sales promotion Direct marketing

by paying for the advertising space, a company can control what it wants to say and, to some extent, to whom the message is sent.

Advertising also allows the company to decide when to send its message (which includes how often). The nonpersonal aspect of ad- vertising also has its advantages. Once the message is created, the same message is sent to all receivers in a market segment.

Direct marketing may be used to encourage first-time or repeat purchases. Combinations of many media alternatives are a necessity for some target audiences today.

Advertising directed to business buyers is used selectively in trade publications such as Restaurant Business magazine for buyers of restaurant equipment and supplies.

If the pictorial, text, and brand elements of an advertisement are properly pretested, an advertiser can ensure the ad's ability to capture consumers' attention and trust that the same message will be decoded by all receivers in the market segment.

Advertising has some disadvantages: the costs to produce and place a message are significant, and the lack of direct feedback makes it difficult to know how well the message was received.

stages of the buying decision: Postpurchase Stage: In the postpurchase stage, the salesperson is still important. In fact, the more personal contact after the sale, the more the buyer is satisfied.

Advertising is also important to assure the buyer that the right purchase was made. Advertising and personal selling help reduce the buyer's postpurchase anxiety.

Sales promotions cannot be the sole basis for a campaign because gains are often temporary and sales drop off when the deal ends.

Advertising support is needed to convert the customer who tried the product because of a sales promotion into a long-term buyer. If sales promotions are conducted continuously, they lose their effectiveness.

The guidelines for setting promotion objectives also apply to setting advertising objectives. This step helps advertisers with other choices in the promotion decision process, such as selecting media and evaluating a campaign.

Advertising with an objective of creating awareness, for example, would be better matched with a magazine than a directory such as the Yellow Pages.

it is clear that the promotion expenditures needed to reach U.S. households are enormous. Note that each of the companies spends a total of more than $2 billion annually on promotion.

After setting the promotion objectives, a company must decide how much to spend. Determining the ideal amount for the budget is difficult because there is no precise way to measure the exact results of spending promotion dollars.

charting the life cycle: maturity The maturity stage is characterized by a slowing of total industry sales or product class revenue.

Also, marginal competitors begin to leave the market. Most consumers who would buy the product are either repeat purchasers of the item or have tried and aban- doned it.

A second element is the degree of risk represented by the product's purchase. Risk for the buyer can be assessed in terms of financial risk, social risk, and physical risk.

Although advertising helps, the greater the risk, the greater the need for personal selling.

Canned sales presentations can be advantageous when the differences between prospects are unknown or with novice salespeople who are less knowledgeable about the product and selling process than experienced salespeople.

Although it guarantees a thorough presentation, it often lacks flexibility and spontaneity. More important, it does not provide for feedback from the prospective buyer—a critical component in the communication process and the start of a relationship.

Information and persuasive content can be combined in the form of an appeal to provide a basic reason for the consumer to act.

Although the marketer can use many different types of appeals, common advertising appeals include fear, sex, and humor.

Government Sponsored A third way to classify services is based on whether or not they are government sponsored.

Although there is no direct ownership and they are nonprofit organizations, governments at the federal, state, and local levels provide a broad range of services.

SUBLIMINAL ADVERTISING

Ambiguous stimuli Embedded stimuli Truly subliminal stimuli

3. Competitive institutional advertisements promote the advantages of one product class over another and are used in markets where different product classes compete for the same buyers.

America's milk processors and dairy farmers use their "Got Milk?" campaign, shown on the next page, to increase demand for milk as it competes against other beverages.

RELATIONSHIP MARKETING

An effort to develop a long-term, cost-effective link with individual customers for the mutual benefit of the customer and the organization.

Advertising that promotes a specific brand's features and benefits is competitive. The objective of these messages is to persuade the target market to select the firm's brand rather than that of a competitor.

An increasingly common form of competitive advertising is comparative advertising, which shows one brand's strengths relative to those of competitors. Firms that use comparative advertising need market research to provide legal support for their claims.

Price cuts and discounts can also significantly increase a mature brand's sales. The salesforce at this stage seeks to satisfy intermediaries.

An unsatisfied customer who switches brands is hard to replace.

An assumptive close entails asking the prospect to consider choices concerning delivery, warranty, or financing terms under the assumption that a sale has been finalized.

An urgency close is used to commit the prospect quickly by making reference to the timeliness of the purchase:

Competitive Products:

Analyzing the competition can lead to new-product ideas.

Advocacy advertisements state the position of a company on an issue. Chevron's "We Agree" campaign places ads stating its position on issues such as renewable energy, protecting the planet, and community development.

Another form of advocacy advertisement is used when organizations make a request related to a particular action or behavior, such as a request by the American Red Cross for blood donations.

Television's major disadvantage is cost:

Another problem with television advertising is the likelihood of wasted coverage— having people outside the market for the product see the advertisement.

Convection ovens for home use required consumers to learn a new way of cooking and alter familiar recipes used with conventional ovens.

As a result, these ovens spent years in the introductory period.

All You Can Afford: Common to many small businesses is all-you-can-afford budgeting, in which money is allocated to promotion only after all other budget items are covered.

As one company executive said in reference to this budgeting process, "Why, it's simple. First, I go upstairs to the controller and ask how much they can afford to give us this year.

Cost Reduction About 80 percent of packaging material used in the world consists of paper, plastics, and glass.

As the cost of these materials rises, companies are constantly challenged to find innovative ways to cut packaging costs while delivering value to their customers.

To learn marketing lessons and convert potential failures to successes, we can analyze why new products fail and then study several failures in detail.

As we go through the product process we can identify ways such failures might have been avoided—admitting that hind- sight is clearer than foresight.

At the next level is (1) a significant jump in innovation or technol- ogy or (2) a brand extension involving putting an established brand name on a new product in an unfamiliar market.

At the next level is (1) a significant jump in innovation or technology or (2) a brand extension involving putting an established brand name on a new product in an unfamiliar market.

defining retail service: Core Service: "The right product, at the right place, at the right price, at the right time" Expected Service: Customer expectations regarding dependability, courtesy, etc.

Augmented Service: J.C. Penney: "...it is the service the customer doesn't expect that endears..." Potential Service: Whatever! - e.g. "Just looking" buttons

COMPONENTS OF BRAND EQUITY

Awareness of brand Associations when thinking of brand Perceived Quality of the brand Loyalty to the brand

market penetration: BRAND DEVELOPMENT INDEX (BDI)

BDI j = $ BRAND SALES PER CAPITA IN TERRITORY J -------------------------------------------------------------- X 100 $ BRAND SALES PER CAPITA NATIONALLY

Not satisfying customer needs on critical factors: Overlapping somewhat with point 1, this factor stresses that problems on one or two critical factors can kill the product, even though the general quality is high.

Bad timing. This results when a product is introduced too soon, too late, or when consumer tastes are shifting dramatically. Bad timing gives new-product managers nightmares.

in the US, trademarks are registered with the U.S. Patent and Trademark Office and protected under the Lanham Act. A well-known trademark can help a company advertise its offerings to customers and develop their brand loyalty.

Because a good trademark can help sell a product, product counterfeiting, which involves low-cost copies of popular brands not manufactured by the original producer, is a serious problem.

Deletion Product deletion, or dropping the product from the company's product line, is the most drastic strategy.

Because a residual core of consumers still consume or use a product even in the decline stage, product elimination decisions are not taken lightly.

New-product development for services, such as buying a stock or airline ticket or watching a National Football League game, is often difficult. Why?

Because services are intangible and performance-oriented.

Intangibility: Services are intangible; that is, they can't be held, touched, or seen before the purchase decision. In contrast, before purchasing a traditional product, a consumer can touch a box of laundry detergent, kick the tire of an automobile, or sample a new breakfast cereal.

Because services tend to be a performance rather than an object, they are much more difficult for consumers to evaluate. To help consumers assess and compare services, marketers try to make them tangible or show the benefits of using the service.

BASIC BRANDING TERMINOLOGY

Brand Name: verbal label for product Brand Mark: non verbal label for mark Trade Character: personification (r. macdonald) Logo: least precise can be verbal or non verbal logos need to be refreshed overtime Trademark: any of the above as long as its been registered

Brand equity doesn't just happen. It is carefully crafted and nurtured by marketing programs that forge strong, favorable, and unique customer associations and experiences with a brand.

Brand equity resides in the minds of consumers and results from what they have learned, felt, seen, and heard about a brand over time. Marketers recognize that brand equity is not easily or quickly achieved. Rather, it arises from a sequential building process consisting of four steps

Increasingly, manufacturers are being held to implied warranties, which assign responsibility for product deficiencies to the manufacturer. Studies show that the type of warranty can affect a consumer's product evaluation.

Brands with limited warranties tend to receive less positive evaluations compared with full-warranty items. Warranties are also important in light of product liability claims.

A major characteristic of business products is that their sales are often the result of derived demand; that is, sales of business products frequently result (or are derived) from the sale of consumer products.

Business products may be classified as components or support products. Compo- nents are items that become part of the final product. These include raw materials such as lumber, as well as assemblies such as a Ford car engine.

Brand PLC may be under marketing control...

But product form PLC is often driven by changing technology or consumer tastes. (records, tape, cds to digital)

Encountering "groupthink" in task force and committee meetings: Someone in the new-product planning meeting knows or suspects the product concept is a dumb idea.

But that person is afraid to speak up for fear of being cast as a "nega- tive thinker," "not a team player," and then being ostracized from real participation in the group.

Sales promotions, such as case discount allowances (20 percent off the regular case price), are offered to stimu- late demand.

By pushing the product through the channel, the goal is to get channel members to push it to their customers.

market penetration: CATEGORY DEVELOPMENT INDEX (CDI)

CDI j = $ CATEGORY SALES PER CAPITA IN TERRITORY J ---------------------------------------------------------------- X 100 $ CATEGORY SALES PER CAPITA NATIONALLY

FAMILY BRANDING: all products go under same brand (nike) MULTIPLE BRANDING: produce and market products under different brand names (proctor & gamble)

CO-BRANDING: take or more brands together for synergy (taco bell/doritos, cheese/crayola) NATIONAL BRANDS: brand that is nation wide in major retailers PRIVATE LABEL BRANDS: local and store specific brands (great value) not the same thing as a generic brand

THE "GAP MODEL" OF SERVICE QUALITY look for specific problems and head them off at the pass

CUSTOMER EXPECTATIONS QUALITY GAP CUSTOMER PERCEPTIONS

THE EXTENDED GAP MODEL: SOURCES OF POOR QUALITY SERVICE

CUSTOMER EXPECTATIONS KNOWLEDGE GAP MANAGEMENT PERCEPTIONS STANDARDS GAP SERVICE SPECIFICATIONS DELIVERY GAP IMPLEMENTATION COMMUNICATIONS GAP COMMUNICATIONS CUSTOMER PERCEPTIONS

Reacting to a Competitor's Position One reason to reposition a product is because a competitor's entrenched position is adversely affecting sales and market share.

Catching a Rising Trend Changing consumer trends can also lead to product repositioning. Growing consumer interest in foods that offer health and dietary benefits is an example. Many products have been repositioned to capitalize on this trend. Changing the Value Offered In repositioning a product, a company can decide to change the value it offers buyers and trade up or down.

Segment 12, lecture #36, #37

Ch 20

For successful products, the ratio of repeat to trial purchases grows as the product moves through the life cycle.

Changes appear in the product in the growth stage. To help differentiate a company's brand from competitors, an improved version or new features are added to the original design, and product proliferation occurs.

segment 10, lecture #30, #31,

Chapter 12

A variation on brand extensions is the practice of co-branding: the pairing of two brand names of two manufacturers on a single product.

Co-branding benefits firms by allowing them to enter new product classes and capitalize on an already established brand name in that product class.

LEVELS OF MARKET OFFERING

Commodity Good (Product) Service Experience

Product Characteristics: The proper blend of elements in the promotional mix also depends on the type of product. Three specific characteristics should be considered: complexity, risk, and ancillary services.

Complexity refers to the technical sophistication of the product and hence the amount of understanding required to use it. the more complex the product, the greater the emphasis on personal selling.

promotion MIX ELEMENTS HAVE Different Tasks: trying to acheive different things

Consistency: to extent you have the same message across all channels Complementarity: use the media for what it is best for

emerging issues

Consumer-brand Relationships: (advocates) Brand Communities (harley davidson)

Because labels list a product's source, brands competing in the global marketplace can benefit from "country of origin or manufacture" perceptions.

Consumers tend to hold stereotypes about country-product pairings that they judge "best"

LEVELS OF INNOVATION: THE CONSUMER PERSPECTIVE

Continuous: there is no product innovation. requires no new learning. (new flavors, colors, product types) Dynamically Continuous: there is some product innovation. new product learning but still fills the same role (record, tape, cds to dvd, digital) Discontinuous: lots of product innovation. requires a lot of learning by consumer. significant differences in the products (new product categories) (tv vs radio)

The four types of consumer products differ in terms of (1) the effort the consumer spends on the decision, (2) the attributes used in making the purchase decision, and (3) the frequency of purchase.

Convenience products Shopping products Specialty products Unsought products

PACKAGING DISASTERS

Coors (can lids openings) Tropicana (image on bottle) sunlight dish detergent (misleading packaging)

BASIC FACTORS of spokespersons

Credibility Expertise Trustworthiness Attractiveness

Early-stage financing is almost always a problem for inventors and those starting a new business.

Crowdfunding is a way to gather an online community of supporters to financially rally around a specific project that is unlikely to get resources from traditional sources such as banks or venture capital firms. Kickstarter.com enabled Crowdrise. Charitable causes. Crowdtilt. Anything. Fundable. Early-stage financing for start-up businesses. Rally. Nonprofits, artists, musicians, entrepreneurs. GiveForward. Medical causes.

7 p's: people: Once internal marketing programs have prepared employees for their interactions with customers, organizations can better manage the services they provide.

Customer experience management (CEM), is the process of managing the entire customer experience with the company. CEM experts suggest that the process should be intentional and planned, consistent so that every experience is similar, differentiated from other service offerings, and relevant and valuable to the target market.

7 p's: People: Many services depend on people for the creation and delivery of the customer service experience. The nature of the interaction between employees and customers strongly influences the customer's perceptions of the service experience.

Customers will often judge the quality of the service experience based on the performance of the people providing the service. This aspect of services marketing has led to a concept called internal marketing.

SOME RELATIONSHIP MARKETING APPROACHES: Frequency Marketing: Share of Wallet, create lock in

Database Marketing Customer Relationship Management: Recency, Frequency, Monetary Value analysis (R.F.M.)

Encoding and decoding (p. 443) are essential to communication. Encoding is the process of having the sender transform an idea into a set of symbols.

Decoding is the reverse, or the process of having the receiver take a set of symbols, the message, and transform the symbols into an idea. Decoding is performed by the receivers according to their own frame of reference: their attitudes, values, and beliefs.

INTEGRATED MARKETING COMMUNICATION (IMC)

Designing marketing communication programs to coordinate all promotional activities and provide a consistent image across all audiences.

Another approach for generating leads is through cold canvassing or cold calling, either in person or by telephone. This approach simply means that a salesperson may open a directory, pick a name, and contact that individual or business.

Despite its high refusal rate, cold canvassing can be successful. However, cold canvassing is frowned upon in some cultures. For example, in most Asian and Latin American societies, personal visits, based on referrals, are expected.

Creating Customer Value and Competitive Advantage through Packaging and Labeling: Packaging and labeling cost U.S. companies about 15 cents of every dollar spent by consumers for products.

Despite their cost, packaging and labeling are essential because both provide important benefits for the manufacturer, retailer, and ultimate con- sumer. Packaging and labeling also can provide a competitive advantage.

ADAPTIVE SELLING FORMAT: best selling technique

Determine Customer Needs & Perceptions Devise Strategy To Satisfy Customer Needs rollout multi attribute attitude model

In a test of one mature consumer product, it was found that 80 percent of the product's sales at this stage resulted from sales promotions. Sponsoring events can also help maintain loyalty.

Direct marketing actions such as direct mail are used to maintain involvement with existing customers and to encourage repeat purchases.

The value of direct marketing for sellers can be described in terms of the responses it generates.

Direct orders are the result of offers that contain all the information necessary for a prospective buyer to make a decision to purchase and complete the transaction.

Also, a company often restricts the number of variations of the product to ensure control of product quality. As an example, the original Gatorade came in only one flavor—lemon-lime.

During introduction, pricing can be either high or low. A high initial price may be used as part of a skimming strategy to help the company recover the costs of develop- ment as well as capitalize on the price insensitivity of early buyers.

charting the life cycle: introduction The introduction stage of the product life cycle occurs when a product is introduced to its intended target market.

During this period, sales grow slowly, and profit is minimal. The lack of profit is often the result of large investment costs in product development, such as the millions of dollars spent by Gillette to develop the Gillette Fusion razor shaving system.

Stage 1: New-Product Strategy Development For companies, new-product strategy development is the stage of the new-product process that defines the role for a new product in terms of the firm's overall objectives.

During this stage, the firm uses both a SWOT analysis and environmental scanning to assess its strengths and weaknesses relative to the trends it identifies as opportunities or threats. The outcome not only defines the vital "protocol" for each new-product idea but also identifies the strategic role it might serve in the firm's business portfolio.

Salesforce automation exists in many forms. Examples of SFA applications include computer hardware and software for account analysis, time management, order pro- cessing and follow-up, sales presentations, proposal generation, and product and sales training.

Each application is designed to ease administrative tasks and free time for salespeople to be with customers building relationships, designing solutions, and providing service.

The third and highest level of innovation involves a radical invention, a truly revolutionary new product.

Effective new- product development in large firms exists at all three levels.

Organizational Inertia in New-Product Failures Organizational problems and attitudes can also cause new-product disasters. Two key ones are:

Encountering "groupthink" in task force and committee meetings. Avoiding the "NIH problem."

FOLLOW-UP`

Ensure On-time Delivery Ensure Customer Satisfaction Pursue Add-On Sales Build/Sustain Relationship

Delivery by People or Equipment: many companies offer services. Professional services include management consulting firms. Includes skilled and unskilled labor

Equipment-based services do not have the marketing concerns of inconsistency because people are removed from the provision of the service. A growing number of customers use self-service technologies such as Home Depot's self checkout, Southwest Airlines's self check-in, and Schwab's online stock trading without interacting with any service employees.

The five stages are: Awareness—the consumer's ability to recognize and remember the product or brand name. Interest—an increase in the consumer's desire to learn about some of the features of the product or brand.

Evaluation—the consumer's appraisal of the product or brand on important attributes. Trial—the consumer's actual first purchase and use of the product or brand. Adoption—through a favorable experience on the first trial, the consumer's repeated purchase and use of the product or brand.

A fashion product is a style of the times. Life cycles for fashion products frequently appear in women's and men's apparel.

Fashion products are introduced, decline, and then seem to return. The length of the cycles may be months, years, or decades.

7 p's: people: This idea suggests that employee development through recruitment, training, communication, coaching, management, and leadership is critical to the success of service organizations.

Finally, many service organizations, such as educational institutions and athletic teams, must recognize that individual customer behavior may also influence the service outcome for other customers. These interactions suggest that the people element in services includes employees and all customers.

Lead generation is the result of an offer designed to generate interest in a product or service and a request for additional information.

Finally, traffic generation is the outcome of an offer designed to motivate people to visit a business.

A firm's promotional mix is the combination of one or more of the promotional tools it chooses to use. In putting together the promotional mix, a marketer must consider two issues.

First, the balance of the elements must be determined. Should advertising be emphasized more than personal selling? Should a promotional rebate be offered? Would public relations activities be effective?can facilitate this goal.

When Test Markets Don't Work:Not all products can use test markets. Test marketing a service is very difficult because consumers can't see what they are buying.

For cars, reactions of potential buyers to mockups or one-of-a-kind prototypes are all that is feasible.

Reminder advertising is used to reinforce previous knowledge of a product. Another type of reminder ad, reinforcement, is used to assure current users they made the right choice.

For example, consider the tag line used in Dial soap advertisements: "Aren't you glad you use Dial? Don't you wish everybody did?"

The Value of Direct Marketing: One of the most visible indicators of the value of direct marketing for consumers is its increasing level of use in its various forms.

For example, in the past year, 52 percent of the U.S. population ordered merchandise or services by mail; more than 110 million people made purchases online; and consumers spent more than $147 billion on products available through television offers.

As the critical link between the firm and its customers, salespeople can create cus- tomer value in many ways.

For instance, by being close to the customer, salespeople can identify creative solutions to customer problems. Salespeople can create value by easing the customer buying process. Customer value is also created by salespeople who follow through after the sale.

7 p's: Promotion: Another form of promotion, publicity, has played a major role in the promotional strategy of many service organizations. Nonprofit organizations such as public schools, religious organizations, and hospitals, for example, often use publicity to disseminate their messages.

For many of these organizations, the most common form of publicity is the public service announcement (PSA) because it is free. however, using PSAs as the foundation of a promotion program is unlikely to be effective because the timing and location of the PSA are under the control of the medium, not the organization.

Service firms need to manage physical evidence carefully and systematically to convey the proper impression of the service to the customer. This is sometimes referred to as impression, or evidence, management.

For many services, the physical environment provides an opportunity for the firm to send consistent and strong messages about the nature of the service to be delivered.

Product class (p. 278) refers to the entire product category or industry, such as prerecorded music. Product form (p. 278) pertains to variations within the product class.

For prerecorded music, product form exists in the technology used to provide the music such as cassette tapes, compact discs, and digital music. the life cycles for these three product forms and the impact of technological innovation on sales.

Length of the Product Life Cycle: There is no set time that it takes a product to move through its life cycle. As a rule, consumer products have shorter life cycles than business products. For example, many new consumer food products such as

Frito-Lay's Baked Lay's potato chips move from the introduction stage to maturity in 18 months. The availability of mass communication vehicles informs consumers quickly and shortens life cycles. Also, technological change tends to shorten product life cycles as new-product innovation replaces existing products.

Other information consists of seals and symbols, either government-required or commercial seals of approval (such as the Good Housekeeping Seal).

Functional Benefits Packaging often plays a functional role—providing storage, convenience, or protection or ensuring product quality. Stackable food containers are one example of how packaging can provide functional benefits.

External Approach: Firms that take an external approach to screening and evaluation use concept tests, external evaluations with consumers that consist of preliminary testing of a new-product idea rather than an actual product.

Generally, these tests are more useful with minor modifications of existing products than with new, innovative products with which consumers are not familiar. Concept tests rely on written descriptions of the product but may be augmented with sketches, mockups, or promotional literature.

A good has tangible attributes that a consumer's five senses can perceive. A good also may have intangible attributes consisting of its delivery or warranties and embody more abstract concepts, such as becoming healthier or wealthier.

Goods also can be divided into nondurable goods and durable goods. A nondurable good is an item consumed in one or a few uses, such as food products and fuel. A durable good is one that usually lasts over many uses, such as appliances, cars, and smartphones. This classification method also provides direction for marketing actions.

WHY HAS SALES PROMOTION INCREASED?

Growing retailer power Increased promotion sensitivity Brand proliferation/ ad clutter Short-term focus/ accountability

Media Strategy

HOW TO DISTRIBUTE THE AD MESSAGE EFFECTIVELY

HOW DOES ADVERTISING WORK? THREE THEORIES

Hierarchy-of-Effects Low Involvement Dual Mediation

Key questions for concept testing include:

How does the customer perceive the product? Who would use it? and How would it be used?

If a company elects to employ its own salespeople, then it must choose an organizational structure based on (1) geography, (2) customer, or (3) product. A geographical sales organization is the simplest structure, where the United States, or indeed the globe, is first divided into regions and each region is divided into districts or territories.

However, if a firm's products or customers require specialized knowledge, then a geographical structure is unsuitable. When different types of buyers have different needs, a customer sales organization is used.

Each compensation plan has its advantages and disadvantages. A straight salary plan is easy to administer and gives management a large measure of control over how salespeople allocate their efforts.

However, it provides little incentive to expand sales volume. This plan is used when salespeople engage in many nonselling activities, such as account or customer servicing. A straight commission plan provides the maximum amount of selling incentive but can discourage salespeople from providing customer service.

Direct marketing can be used to describe how a product or service can be customized to meet individual needs.

However, personal selling is essential to build buyer confidence and provide evidence of customer service.

In practice this means that a different salesforce calls on each separate type of buyer or marketing channel The rationale for this approach is that more effective, specialized customer support and knowledge are provided to buyers.

However, this structure often leads to higher administrative costs and some duplication of selling effort, because several salesforces are used to represent the same products.

personal selling (p. 532) involves the two-way flow of communication between a buyer and seller, often in a face-to-face encounter, designed to influence a person's or group's purchase decision.

However, with advances in telecommunications, personal selling also takes place over the telephone and through video teleconferencing and Internet- enabled links between buyers and sellers.

Selling teams take different forms. In conference selling, a salesperson and other company resource people meet with buyers to discuss problems and opportunities. In seminar selling, a company team conducts an educational program for a customer's technical staff, describing state-of-the-art developments.

IBM and Xerox pioneered cross-functional team selling in working with prospective buyers. Since then, other firms have embraced this practice to create and sustain value for their customers as well, as described in the Marketing Matters box on the next page.

NEW PRODUCT PLANNING PROCESS: New Product Strategy

Idea Generation Screening and Evaluation Feasibility Screen Concept Testing Business Analysis Prototype Development Market Testing Commercialization

Stage 6: Market Testing: Market testing is a stage of the new-product process that involves exposing actual products to prospective consumers under realistic purchase conditions to see if they will buy.

If the budget permits, consumer packaged goods firms do this by test market- ing, which involves offering a product for sale on a limited basis in a defined area for a specific time period.

TACTICS - HOW TO SAY IT (APPEAL): Informational: convey information (print/digital) Comparative: compare to competition on specific dimension. (need evidence)

Image: better off with brand than not Fear: can be good and bad. Humor Sex

Direct marketing takes many forms and utilizes a variety of media. Several forms of direct marketing—direct mail and catalogs, television home shopping, telemarketing, and direct selling.

In addition, a form of advertising—direct response advertising— is an important form of direct marketing.

Television is a valuable medium because it communicates with sight, sound, and motion. Print advertisements alone could never give you the sense of a sports car accelerating from a stop or cornering at high speed.

In addition, television reaches more than 96 percent of all households—115.6 million, including 5 million "Zero TV" households that watch only through a broadband connection. There are also many opportunities for out-of-home TV viewing, as televisions are present in many bars, hotels, offices, airports, and college campuses.

Three of these elements—advertising, sales promotion, and public relations—are often said to use mass selling because they are used with groups of prospective buyers.

In contrast, personal selling uses customized interaction between a seller and a prospective buyer. Personal selling activities include face-to-face, tele- phone, and interactive electronic communication. Direct marketing also uses messages customized for specific customers.

The Life Cycle and Consumers: The life cycle of a product depends on sales to consumers. Not all consumers rush to buy a product in the introductory stage, and the shapes of the life-cycle curves indicate that most sales occur after the product has been on the market for some time.

In essence, a product diffuses, or spreads, through the population, a concept called the diffusion of innovation. Some people are attracted to a product early. Others buy it only after they see their friends or opinion leaders with the item.

Introduction Stage: Informing consumers in an effort to increase their level of awareness is the primary promotional objective in the introduction stage of the product life cycle.

In general, all the promotional mix elements are used at this time, although the use of specific mix elements during any stage depends on the product and situation.

Some companies, like Hyundai, offer express warranties, which are written statements of liabilities.

In recent years, the FTC has required greater disclosure on express warranties to indicate whether the warranty is a limited-coverage or full-coverage al- ternative.

With this approach, termed parallel development, cross-functional team members who conduct the simultaneous development of both the product and the production process stay with the product from conception to production. This approach enabled Hewlett-Packard to reduce the development time for notebook computers from 12 to 7 months.

In software development, fast prototyping uses a "do it, try it, fix it" approach—encouraging continuing improvement even after the initial design. To speed up time to market, many firms insulate their new-product teams from routine administrative tasks to keep them from bogging down in red tape.46

All of these tools can be used to (1) inform prospective buyers about the benefits of the product, (2) persuade them to try it, and (3) remind them later about the benefits they enjoyed by using the product.

In the past, marketers often viewed these communication tools as separate and independent. The advertising department, for example, often designed and managed its activities without consulting departments or agencies that had responsibility for sales promotion or public relations. The result was often an overall communication effort that was uncoordinated and, in some cases, inconsistent.

Push Strategy: a manufacturer uses a push strategy, directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product.

In this approach, personal selling and sales promotions play major roles. Salespeople call on wholesalers to encourage orders and provide sales assistance.

Order takers generally do little selling in a conventional sense. They engage in modest problem solving with customers. They often represent products that have few options, such as magazine subscriptions and highly standardized industrial products.

Inbound telemarketing is also an essential selling activity for more "customer service" driven firms, such as Dell. At these companies, order takers undergo extensive training so that they can better assist callers with their purchase decisions.

Insignificant point of difference: Research shows that a distinctive point of difference is the single most important factor for a new product to defeat competing ones—having superior characteristics that deliver unique benefits to the user.

Incomplete market and product protocol before product development starts: Without this protocol, firms try to design a vague product for a phantom market.

Inconsistency: Developing, pricing, promoting, and delivering services is challenging because the quality of a service is often inconsistent. Because services depend on the people who provide them, their quality varies with each person's capabilities and day-to-day job performance.

Inconsistency is much more of a problem in services than it is with tangible products. Tangible products can be good or bad in terms of quality, but with modern production lines the quality will at least be consistent.

Finding New Customers As part of its market modification strategy, companies must offer a new line of products to attract consumers outside of its traditional market.

Increasing a Product's Use by Promoting more frequent usage can be a strategy. Creating a New Use Situation by Finding new uses for an existing product can be a strategy

Another popular form of television advertising is the infomercial. Infomercials are program-length (30-minute) advertisements that take an educational approach to communication with potential customers.

Infomercials are increasingly popular because they can be both informative and enter- taining, and because the average cost of a 30-minute block of television time is only $425.

SOME OTHER IMC TOOLS: (intergrated marketing tools) Sponsorships: sponsing an event or activity to get product out there cheaper. (nascar) Product Placements: place a product in a media content. (movies, videos, tv, etc)

Infomercials: creating content to get the message across to the consumer Branded Entertainment AKA content marketing: trying to get more control over message by putting brand on an event. (commercials on web site, Webisodes)

Ad TASKS

Inform Persuade product advertising Institutional Advertising Sell Reinforce Remind

"CANNED" SELLING EXAMPLES:

Ingratiation: sucking up Foot-in-the-Door: enough of a pitch that you could get your foot in the door. (can i ask you a question) Door-in-the-Face: lead with unreasonable request, but then follow up with a more reasonalb erequest that seems tame.

CHARACTERISTICS OF SERVICES (THE 4 "I"s) Intangibility: services are hard to touch, feel, or sense. (college education, gas station) (solution: show tangle results) Inconsistency: to what degree do you get the same level of quality each time. (hair salon) (solution: remove human element)

Inseparability: the delivery is part of the service. (threat: because cant test quality of product) (opportunity: can do co creation: working with provider to craft the end result) (buger king: have it your way) (increase brand value) Inventory: supply and demand must be managed. (airlines: waiting lists, groupon)

The product manager, sometimes called a brand manager, manages the marketing efforts for a close-knit family of products or brands.

Introduced by Procter & Gamble in 1928, the product manager style of marketing organization is used by consumer good firms

7 p's: Promotion: The value of promotion, especially advertising, for many services is to show consumers the benefits of purchasing the service.

It is valuable to stress availability, location, consistent quality, and efficient, courteous service and to provide a physical representation of the service or a service encounter.

A high-learning product is one for which significant customer education is required and there is an extended introductory period

It may surprise you, but personal computers had this life-cycle curve. Consumers in the 1980s had to learn the benefits of owning the product or be educated in a new way of performing familiar tasks.

The Using Marketing Dashboards box on the next page shows how marketers measure actual market performance versus the goals set in new-product planning.

It shows that you have set a goal of 10 percent annual growth for the new snack you developed.

A company uses private branding, often called private labeling or reseller branding, when it manufactures products but sells them under the brand name of a wholesaler or retailer.

Its popular because typically produces high profits for manufacturers and resellers. Consumers also buy them. It is estimated that one of every five items purchased at U.S. supermarkets, drug- stores, and mass merchandisers bears a private brand.

An important variation of the customer organiza- tional structure is key account management—the practice of using team selling to focus on important customers so as to build mutually beneficial, long- term, cooperative relationships.

Key account management involves teams of sales, service, and often technical personnel who work with purchasing, manufacturing, engineering, logistics, and financial executives in customer organizations. This approach, which often assigns company personnel to a customer account, results in "customer specialists" who can provide exceptional service

loyal customers provide PROFIT FROM...

Larger/ More Purchases Reduced Operations Costs Referrals Price Premium

Order-Getting Salespeople: An order getter sells in a conventional sense and identifies prospective custom- ers, provides customers with information, persuades customers to buy, closes sales, and follows up on customers' use of a product or service.

Like order takers, order getters can be inside (an automobile salesperson) or outside (a Xerox salesperson). Order getting involves a high degree of creativity and customer empathy and is typically required for selling complex or technical products with many options, so considerable product knowledge and sales training are necessary.

Alternative structures of advertising agencies used to carry out the advertising program. Full-service agency: Does research, selects media, develops copy, and produces artwork; also coordinates integrated campaigns with all marketing efforts

Limited-service (specialty) agency: Specializes in one aspect of creative process; usually provides creative production work; buys previously unpurchased media space In-house agency: Provides range of services, depending on company needs

EXTENSION OF BRAND EQUITY

Line Extension: add on to product line (flavors) Category Extension: extend into a different category (brawn, zippo perfume)

A risk with line extension is that sales of an extension may come at the expense of other items in the company's product line.

Line extensions work best when they provide incremental company revenue by taking sales away from compet- ing brands or attracting new buyers.

APPROACH

Making a Good First Impression Building Rapport Asking Questions Listening! Discovering Needs

Product managers also engage in extensive data analysis related to their products and brands. Sales, market share, and profit trends are closely monitored.

Managers often supplement these data with two measures: (1) a category development index (CDI) and (2) a brand development index (BDI).

The goal in generating new-product ideas and strategies is to move from "what is" questions that describe the present situation to "what if" questions that focus on solutions and marketing actions.

Many firms obtain ideas externally using open innovation, in which they find and execute creative new-product ideas by developing strategic relationships with outside individuals and organizations.

Stage 2: Idea Generation Idea generation, the second stage of the new-product process, involves developing a pool of concepts to serve as candidates for new products, building upon the previous stage's results.

Many forward-looking organizations have discovered that they are not generat- ing enough useful new-product ideas. One internal approach for getting ideas within the firm is to train employees in the art and science of asking specific, probing questions.

Public relations (p.446) is a form of communication management that seeks to influence the feelings, opinions, or beliefs held by customers, prospective customers, stock- holders, suppliers, employees, and other publics about a company and its products or services.

Many tools such as special events, lobbying efforts, annual reports, press conferences, social media (including Facebook and Twitter), and image man- agement may be used by a public relations department, although publicity often plays the most important role.

EXTENDING PLCS

Market Penetration Market Development Product Modification Product Repositioning

Research shows that consumers assign personality traits to products—traditional, romantic, rugged, sophisticated, rebellious—and choose brands that are consistent with their own or desired self-image.

Marketers can and do imbue a brand with a personality through advertising that depicts a certain user or usage situa- tion and conveys emotions or feelings to be associated with the brand.

personal selling, direct marketing often consists of interactive communication. It also has the advantage of being customized to match the needs of specific target markets.

Messages can be developed and adapted quickly to facilitate one-to-one relationships with customers.

a company can engage in multibranding, which involves giving each product a distinct name. Multibranding is a useful strategy when each brand is intended for a different market segment.

Multibranding is applied in a variety of ways. Some companies array their brands on the basis of price-quality segments. (p.288)

Example

NC = 35,000 CF = 26 CL = .50 HOURS AST = 1400 HOURS NS = 35,000 X 26 X .50 / 1400 NS = 325

WORKLOAD METHOD NS = NC X CF X CL / AST

NS = NUMBER OF SALESPEOPLE NC = NUMBER OF CUSTOMERS CF = CALL FREQUENCY (# PER YEAR) CL = AVERAGE LENGTH OF SALES CALL AST = AVERAGE AMOUNT OF SALESPERSON SELLING TIME AVAILABLE ANNUALLY

The degree of "newness" in a new product affects the amount of learning effort consumers must exert to use the product and the resulting marketing strategy.

Newness from the Consumer's Perspective: A second way to define new products is in terms of their effects on consumption. This approach classifies new products according to the degree of learning required by the consumer.

Every advertiser must decide where to place its advertisements. The alternatives are the advertising media, the means by which the message is communicated to the target audience.

Newspapers, magazines, radio, and TV are examples of advertising media. Media selection is related to the target audience, type of product, nature of the message, campaign objectives, available budget, and the costs of the alternative media.

noise (p. 444) includes extraneous factors that can work against effective communication by distorting a message or the feedback received.

Noise can be a simple error, such as a printing mistake that affects the meaning of a newspaper advertisement or the use of words or pictures that fail to communicate the message clearly.

a major consideration in a company's strategy in this stage is to control overall marketing cost by improving promotional and distribution efficiency.

Numerous product classes and industries are in the maturity stage of their product life cycle today. These include carbonated soft drinks and DVD players.

charting the life cycle: decline The decline stage occurs when sales drop.

Numerous product classes or industries are in the decline stage of their product life cycle. Two prominent examples include analog TVs and desktop personal computers.

In the growth stage, it is important to broaden distribution for the product. In the retail store, for example, this often means that competing companies fight for display and shelf space.

Numerous product classes or industries are in the growth stage of the product life cycle today. Examples include smartphones, e-book readers, and other tablet devices such as the iPad.

WIDESPREAD ACCEPTANCE

OF PLC CONCEPT BY INDUSTRY UNDERSCORES IMPORTANCE OF NEW PRODUCT DEVELOPMENT

MESSAGE FACTORS

Objectives: what are goal Strategy: plan for achieving the goals Tactics: actions that implement strategy

The advantage of sales promotion is that the short-term nature of these programs (such as a coupon or sweepstakes with an expiration date) often stimulates sales for their duration.

Offering value to the consumer in terms of a cents-off coupon or rebate may increase store traffic from consumers who are not store-loyal.

The objective of institutional advertisements (471) is to build goodwill or an image for an organization rather than promote a specific good or service.

Often this form of advertising is used to support the public relations plan or counter adverse publicity.

Whatever objectives are set, they should be precise and measurable and specify the time period over which they are to be achieved.

Once established, these objectives serve as performance standards for the evaluation of the salesforce, the third function of sales management.

The stimulus-response and formula selling formats share a common characteristic: The salesperson dominates the conversation. By comparison, the need-satisfaction presentation format emphasizes probing and listening by the salesperson to identify the needs and interests of prospective buyers.

Once these are identified, the salesperson tailors the presentation to the prospect and high- lights product benefits that may be valued by the prospect. The need-satisfaction format, which emphasizes problem solving and customer solutions, is the most consistent with the marketing concept and relationship building.

A final trade promotion, the finance allowance, involves paying retailers for financing costs or financial losses associated with consumer sales promotions. This trade promotion is regularly used and has several variations.

One type is the floor stock protection program—manufacturers give retailers a case allowance price for products in their warehouse, which prevents shelf stock from running down during the promotional period. Also common are freight allowances, which compensate retailers that transport orders from the manufacturer's warehouse.

As more competitors launch their own products and the product progresses along its life cycle, company attention is focused on creating selective demand, the preference for a specific brand.

Other marketing mix variables also are important at this stage. Gaining distribution can be a challenge because channel intermediaries may be hesitant to carry a new product.

Order-Taking Salespeople: Typically, an order taker processes routine orders or reorders for products that were already sold by the company. The primary responsibility of order takers is to preserve an ongoing relationship with existing customers and maintain sales. Two types of order takers exist.

Outside order takers visit customers and replenish inventory stocks of resellers, such as retailers or wholesalers.

A third component of packaging and labeling is the per- ception created in the consumer's mind. Package and label shape, color, and graphics distinguish one brand from another, convey a brand's positioning, and build brand equity.

Packaging and labeling have been shown to enhance brand recognition and facilitate the formation of strong, favorable, and unique brand associations. Successful marketers recognize that changes in packages and labels can update and uphold a brand's image in the customer's mind.

Because media costs are high, promotion decisions must be made carefully, using a systematic approach.

Paralleling the planning, implementation, and evaluation steps described in the strategic marketing process, the promotion decision process is divided into (1) developing, (2) executing, and (3) assessing the promotion program.

The primary promotional element is advertising , which stresses brand differences.

Personal selling is used to solidify the channel distribution.

Seeing demand from ultimate consumers, retailers order the product from wholesalers and thus the item is pulled through the intermediaries.

Pharmaceutical companies, for example, now spend more than $3.4 billion annually on direct-to-consumer prescription drug advertising, to complement traditional personal selling and free samples directed only at doctors.

No economical access to buyers: Grocery products provide an example of this fac- tor.

Poor product quality: This factor often results when a product is not thoroughly tested. The costs to an organization for poor quality can be staggering and include the labor, materials, and other expenses to fix the problem—not to mention the lost sales, profits, and market share that usually result.

Different PLC levels

Product Class, category of products Product Form, the more specific characteristics of the product class Brand, for the brand itself

Product Item: A Specific Product, Identified by its Ordering Code, the Stock Keeping Unit (SKU)

Product Line: A Group of Closely Related Products Product Mix: The Set of Product Lines Sold by a Company

all product managers are responsible for managin existing products through the stages of the life cycle. Some are also responsible for developing new products.

Product managers' marketing responsibilities include developing and executing a marketing program for the product line described in an annual marketing plan and approving ad copy, media selection, and package design.

At this stage, advertising shifts emphasis to stimulating selective demand; product benefits are compared with those of competitors' offerings for the purpose of gaining market share.

Product sales in the growth stage grow at an increasing rate because of new people trying or using the product and a growing proportion of repeat purchasers—people who tried the product, were satisfied, and bought again.

Research and Development Laboratories Another source of new products is a firm's own research and development laboratories.

Professional R&D and innovation laboratories that are outside the walls of large corporations are also sources of open innovation and can provide new-product ideas.

Today's customers seek value from companies that provide leading-edge products, hassle-free transactions at competitive prices, and customer intimacy.

Promotion practices have changed dramatically to improve transactions and increase customer intimacy by (1) emphasizing long-term relationships and (2) increasing self-regulation.

Promotional programs are directed to the ultimate consumer, to an intermediary (retailer, wholesaler, or industrial distributor), or to both.

Promotional programs directed to buyers of consumer products often use mass media because the number of potential buyers is large. Personal selling is used at the place of purchase, generally the retail store.

PROMOTIONAL "MIX": Advertising: an paid for advertisement Personal Selling: interactions with sales associates spend 3 times money on personal selling B2B uses personal selling Sales Promotion: large collective term for efforts to increase short term sales of products and services in hope of maning you a long term customer

Public Relations: PR is unpaid corporate influence designed to present the product in a positive light. Direct Marketing: any attend to go directly to the customer with message. (mailers, spam) companies must manage direct mail. 85 billion peices of junk mail send yearly we get 9000 unsoliticted messages

Sales promotion in the form of coupons and direct marketing reminders can help encourage repeat purchases from satisfied first-time triers.

Public relations plays a small role in the postpurchase stage.

Advertising is particularly important as a means of reaching as many people as possible to build awareness and interest.

Publicity may even begin slightly before the product is commercially commercially ai vailable.

Salesforce evaluation

Quantitative assessment Behavioral evaluation

TRADITIONAL MEDIA: Television Network Spot Cable Syndicated

Radio Newspaper Magazine Outdoor

Whether valid or not, experienced salespeople know that objections do not put an end to the presentation.

Rather, techniques can be used to deal with objections in a courteous, ethical, and professional manner. The following six techniques are the most common:

Medium Media Vehicle

Reach Frequency

Because advertisers try to maximize the number of people in the target market exposed to the message, they must be concerned with reach. (478)

Reach is the number of different people or households exposed to an advertisement

To counteract counterfeiting, the U.S. government passed the Stop Counterfeiting in Manufactured Goods Act (2006), which makes counterfeiters subject to 20-year prison sentences and $15 million in fines. Consumers may benefit most from branding.

Recognizing competing products by distinct trademarks allows them to be more efficient shoppers. Consumers can recog- nize and avoid products with which they are dissatisfied, while becoming loyal to other, more satisfying brands. brand loyalty often eases consumers' decision making by eliminating the need for an external search.

SALES PLAN IMPLEMENTATION

Recruiting Training Motivating Compensating Evaluating

Salesforce Recruitment and Selection: Effective recruitment and selection of salespeople is one of the most crucial tasks of sales management. It entails finding people who match the type of sales position required by a firm.

Recruitment and selection practices will differ greatly between order-taking and order-getting sales positions, given the differences in the demands of these two jobs.

FACTORS INFLUENCING RATE OF DIFFUSION

Relative Advantage Communicability Complexity Compatibility Risk

There are five dimensions of service quality.

Reliability Tangibility Responsiveness Assurance Empathy

DIMENSIONS OF SERVICE QUALITY: Rater

Reliability: consistancy of service Assurance: what degree of trust by customer (taglines) Tangibles: cleanliness, organization of sales floor, etc Empathy: understadling & empathy of customers Responsiveness:having the service availalbe, and how do you deal with service failures (service recovery)

COMMON SALES POSITIONS

Retail Sales # 1 Mfr. Sales Reps Insurance Sales Financial Sales Real Estate Sales Sales Engineers

SALES PLAN FORMULATION

Sales Objective Make or Buy? Organization Regional, Product Line, Type of Account Size of Salesforce

Selling must be managed if it is going to contribute to a firm's marketing objectives. Although firms differ in the specifics of how salespeople and the selling effort are managed, the sales management process is similar across firms.

Sales management consists of three interrelated functions: (1) sales plan formulation, (2) sales plan im- plementation, and (3) salesforce evaluation

stages of the buying decision: Prepurchase Stage: In the prepurchase stage, advertising is more helpful than personal selling because advertising informs the potential customer of the existence of the product and the seller.

Sales promotion in the form of free samples also can play an important role to gain low-risk trial. When the salesperson calls on the customer after heavy ad- vertising, there is some recognition of what the salesperson represents. This is particularly important in industrial settings in which sampling of the product is usually not possible.

Maturity Stage: In the maturity stage, the need is to maintain existing buyers, and advertising's role is to remind buyers of the product's existence.

Sales promotion, in the form of discounts and coupons offered to both ultimate consumers and intermediaries, is important in maintaining loyal buyers.

Two selling styles are common with the need-satisfaction presentation format. Adaptive selling involves adjusting the presentation to fit the selling situation, such as knowing when to offer solutions and when to ask for more information.

Sales research and practice show that knowledge of the customer and sales situation are key ingredients for adaptive selling. Many consumer service firms such as brokerage and insurance firms and consumer product firms like Rockport, AT&T, and Gillette effectively apply this selling style.

Internet technologies has transformed the sales function in many companies and made the promise of customer relationship management a reality.

Salesforce automation (SFA) is the use of these technologies to make the sales function more effective and efficient. SFA applies to a wide range of activities, including each stage in the personal selling process and management of the salesforce itself.

Setting objectives is central to sales management because this task specifies what is to be achieved. In practice, objectives are set for the total salesforce and for each salesperson.

Selling objectives can be output related and focus on dollar or unit sales volume, number of new customers added, or profit. Alternatively, they can be input related and emphasize the number of sales calls and selling expenses.

7 p's: people: Internal marketing is based on the notion that a service organization must focus on its employees, or internal market, before successful programs can be directed at customers.

Service firms need to ensure that employees have the attitude, skills, and commitment needed to meet customer expectations and to sustain customer loyalty. Employees with a commitment to mutually beneficial relationships with customers are most suitable for services today.

Classifying Services: Throughout this book, marketing organizations, techniques, and concepts are classi fied to show the differences and similarities in an organized framework.

Services can also be classified in several ways, according to whether (1) they are delivered by people or equipment, (2) they are for-profit or nonprofit, or (3) they are government sponsored.

Services (p. 248) are intangible activities or benefits that an organization provides to satisfy consumers' needs in exchange for money or something else of value.

Services have become a significant part of the U.S. economy, reaching almost 50 percent of its gross domestic product.

Tangible products such as clothing, jewelry, and furniture have search properties, such as color, size, and style, which can be determined before purchase.

Services such as restaurants and child care have experience properties, which can be discerned only after purchase or during consumption. Consumers use search, experience, and credence properties to evaluate services.

Sales plan formulation

Setting objectives Organizing the salesforce Developing account management policies

In modified rebuy or new-buy purchase situations in business-to-business selling, an order getter acts as a problem solver who identifies how a particular product may satisfy a customer's need.

Similarly, in the purchase of a service, such as insurance, an insurance agent can pro- vide a mix of plans to satisfy a buyer's needs depending on income, stage of the family's life cycle, and investment objectives.

7 p's: promotion: Personal selling, sales promotion, and direct marketing also can play an important role in services marketing. Service firm representatives, such as hotel employees handling check-in services or waitstaff in restaurants, are often responsible for selling their services.

Similarly, sales promotions such as coupons, free trials, and contests are often effective tools for service firms. Finally, direct marketing activities are often used to reach specific audiences with interest in specific types of services.

The nonpersonal component of advertising is also important. Advertising involves mass media (such as TV, radio, and magazines), which are nonpersonal and do not have an immediate feedback loop as does personal selling.

So before the message is sent, marketing research plays a valuable role; for example, it determines that the target market will actually see the medium chosen and that the message will be understood.

Customers begin to delay purchase until a coupon is offered, or they question the product's value.

Some aspects of sales promotions also are regulated by the federal government.

One potential shortcoming of this form of advertising is that the spokesperson's image may change over time, becoming becoming inconsistent inconsistent with the the image image of the company or brand.

Some companies are also using licensing agreements where the spokesperson's compensation is directly related to the success of the product they endorse.

Handling Objections: A critical concern in the presentation stage is handling objections. Objections are excuses for not making a purchase commitment or deci-sion.

Some objections are valid and are based on the characteristics of the product or service or price. However, many objections reflect prospect skepticism or indifference.

The Internet represents a relatively new medium for many advertisers, although it has already attracted a wide variety of industries. Online advertising is similar to print advertising in that it offers a visual message. It has additional advantages, however, because it can also use the audio and video capabilities of the Internet.

Sound and movement may simply attract more attention from viewers, or they may provide an element of entertainment to the message. Online advertising also has the unique feature of being interactive. Called rich media, these interactive ads have drop-down menus, built-in games, or search engines to engage viewers. One disadvantage of online advertising is that because the medium is relatively new, technical and administrative standards for the various formats are still evolving. Another disadvantage to online advertising is the difficulty of measuring impact.

Convenience products (p.249) are items that the consumer purchases frequently, conveniently, and with a minimum of shopping effort. Shopping products are items for which the consumer compares several alternatives on criteria such as price, quality, or style.

Specialty products are items that the consumer makes a special effort to search out and buy. Unsought products are items that the consumer does not know about or knows about but does not initially want. But how a consumer product is classified depends on the individual.

Leads and prospects are generated using several sources. For example, advertising may contain a coupon or a toll-free number to generate leads. Some companies use exhibits at trade shows, professional meetings, and conferences to generate leads or prospects.

Staffed by salespeople, these exhibits are used to attract the attention of prospective buyers and share information. Others utilize the Internet for generating leads and prospects. Today, salespeople are using websites, e-mail, and social net- works, such as LinkedIn, to connect to individuals and companies that may be interested in their products or services.

The advantages of this strategy are that each brand is unique to each market segment and there is no risk that a product failure will affect other products in the line.

Still, some large multibrand firms have found that the complexity and expense of implementing this strategy can outweigh the benefits.

Product managers recognize that brands offer more than product identification and a means to distinguish their products from those of competitors.

Successful and established brands take on a brand personality (p. 284), a set of human characteristics asso- ciated with a brand name.

The strategy is designed to encourage consumers to ask their doctor for a specific drug by name—pulling it through the channel.

Successful campaigns such as the print ad which says, "Ask your doctor if Zetia is right for you," can have dramatic effects on the sales of a product.

Firms use a variety of methods for evaluating prospective salespeople. Personal interviews, reference checks, and background information provided on application forms are the most frequently used methods.

Successful selling also requires a high degree of emotional intelligence. Emotional intelligence is the ability to understand one's own emotions and the emotions of people with whom one interacts on a daily basis.

CLOSE

Summarize Benefits Ask for the Sale Confirm the Sale Show Appreciation

Support products are items used to assist in producing other products and services. These include: Installations, such as buildings and fixed equipment. Accessory equipment, such as tools and office equipment.

Supplies, such as stationery, paper clips, and brooms. Industrial services, such as maintenance, repair, and legal services.

Relationship marketing provides several benefits for service customers, including the continuity of a single provider, customized service delivery, reduced stress due to a repetitive purchase process, and an absence of switching costs.

Surveys of consumers have indicated that while customers of many services are interested in being "relationship customers," they require that the relationship be balanced in terms of loyalty, benefits, and respect for privacy, and their expectations of the future benefits of the service influence the likelihood that they continue the relationship.

FREQUENCY:

THE AVERAGE NUMBER OF EXPOSURES TO ANY TARGET CONSUMER IN THE TIME PERIOD.

OBJECTIVE FORMULATION

THE HIERARCHY OF EFFECTS: effect that must happen for action to occur

(NET) REACH:

TOTAL NUMBER OF CONSUMERS IN TARGET MARKET EXPOSED TO AN AD CAMPAIGN AT LEAST ONCE IN A GIVEN TIME PERIOD.

TYPES OF SALES PROMOTIONS CONSUMER ("PULL") COUPONS REBATES SAMPLING PREMIUMS CONTESTS POINT OF PURCHASE DISPLAYS

TRADE ("PUSH") DEALER CONTESTS TRADE ALLOWANCES TRADE SHOWS CO-OP ADVERTISING

THE PLC chart is AN AID TO MARKETING PLANNING (plc is forward looking)

TYPICAL MARKETING MIX VARIES OVER STAGES OF THE PLC: transisition points are caused by changes in the market

The closing stage in the selling process involves obtaining a purchase commitment from the prospect. This stage is the most important and the most difficult because the salesperson must determine when the prospect is ready to buy.

Telltale signals indicating a readiness to buy include body language (prospect reexamines the product or contract closely), state-ments ("This equipment should reduce our maintenance costs"), and questions ("When could we expect delivery?").

4. Reminder institutional advertisements, like reminder ads for products, simply bring the company's name to the attention of the target market again.

The Army branch of the U.S. military sponsors a campaign to remind potential recruits of the opportunities available in the Army.

Global and domestic direct marketers both face challenging ethical issues today. Concerns about privacy, for example, have led to various attempts to provide guidelines that balance consumer and business interests.

The European Union passed a consumer privacy law, called the Data Protection Directive, after several years of discussion with the Federation of European Direct Marketing and the U.K.'s Direct Marketing Association

A limited-coverage warranty specifically states the bounds of coverage and, more important, areas of noncoverage. A full warranty has no limits of noncoverage.

The Magnuson-Moss Warranty/FTC Improvement Act (1975) regulates the content of consumer warranties and so has strengthened consumer rights with regard to warranties.

"Everyone lives by selling something," wrote author Robert Louis Stevenson a century ago. His observation still holds true today.

The U.S. Bureau of Labor Statistics reports that about 14 million people are employed in sales positions in the United States.

vacationers. In the high-demand season, groups are less desirable because guests who will pay high prices travel to Florida on their own.

The Using Marketing Dashboards box on the next page demonstrates how JetBlue Airways uses a capacity management measure called load factor to assess its profitability.

Services today are a significant component of the global economy—and one of the most important components of the U.S. economy.

The World Trade Organization estimates that, for all countries combined, exported merchandise and commercial services total $14.8 trillion and $3.7 trillion, respectively, despite one of the largest declines in 50 years due to the recession.

The Growth of Direct Marketing: The increasing interest in customer relationship management is reflected in the dramatic growth of direct marketing.

The ability to customize communication efforts and create one-to-one interactions is appealing to most marketers, particularly those with IMC programs, because it leads to more favorable attitudes from the recipients.

brand equity

The added value a given brand name provides a product

Stage 4: Business Analysis: Business analysis specifies the features of the product and the marketing strategy needed to bring it to market and make financial projections. This is the last checkpoint before significant resources are invested to create a prototype—a full-scale operating model of the product.

The business analysis stage assesses the total "business fit" of the proposed new product with the company's mission and objectives—from whether the product can be economically developed and manufactured to the marketing strategy needed to have it succeed in the marketplace. This process requires not only detailed financial projection but also assessments of the marketing and product synergies related to the company's existing operations.

Promotion represents the fourth element in the marketing mix. The promotional element consists of five communication tools, including advertising, personal selling, sales promotion, public relations, and direct marketing.

The combination of one or more of these communication tools is called the promotional mix. (p. 441) program.

Another promotional alternative, direct marketing, uses direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet.

The communication can take many forms, including face-to-face selling, direct mail, catalogs, telephone solicitations, direct response Like advertising (on television and radio and in print), and online marketing.

The competitor's budget level, however, should not be the only determinant in setting a company's budget.

The competition might have very different promotional objectives, which require a different level of promotion expenditures.

Products, like people, are viewed as having a life cycle. (p. 272)

The concept of the product life cycle describes the stages a new product goes through in the marketplace: introduction, growth, maturity, and decline

The U.S. Federal Trade Commis- sion (FTC) advises that the term new be limited to use with a product up to six months after it enters regular distribution.

The difficulty with this suggestion is in the interpretation of the term regular distribution.

Counterfeit products can steal sales from the original manufacturer or harm the company's reputation. U.S. companies lose about $250 billion each year to counterfeit products.

The five most counterfeited branded products are, in order, handbags and wallets, watches and jewelry, clothing and accessories, consumer elec- tronics, and shoes.

The flexibility of personal selling can also be a disadvantage. Different salespeople can change the message so that no consistent communication is given to all customers.

The high cost of personal selling is probably its major disadvantage. On a cost-per-contact basis, it is generally the most expensive of the five promotional elements.

Inseparability: A third difference between services and products, and related to problems of consistency, is inseparability. In most cases, the consumer cannot (and does not) separate the deliverer of the service from the service itself.

The interaction between the service provider and the consumer means that they often co-create value together. The amount of interaction between the consumer and the service provider depends on the extent to which the consumer must be physically present to receive the service.

With services, inventory carrying costs are more subjective and are related to idle production capacity (p. 303), which is when the service provider is available but there is no demand for the service.

The inventory cost of a service is the cost of paying the person used to provide the service along with any needed equipment.

It explains (1) to whom a salesperson reports, (2) how a salesperson interacts with other company personnel, (3) the customers to be called on, (4) the specific activities to be carried out, (5) the physical and mental demands of the job, and (6) the types of products and services to be sold.

The job description is then translated into a statement of job qualifications, includ- ing the aptitudes, knowledge, skills, and a variety of behavioral characteristics considered necessary to perform the job successfully.

Magazines have become a very specialized medium. In fact, there are currently more than 7,179 consumer magazines. Some 213 n n new magazines were introduced last year, including As If, a large-format quarterly magazine focusing on creative visionaries;

The marketing advantage of this medium is the great number of special-interest publications that appeal to narrowly defined segments. The cost of advertising in national magazines is a disadvantage, but many national publications publish regional and even metro editions, which reduces the absolute cost and wasted coverage. In addition to cost, another limitation to magazines is their infrequency. At best, magazines are printed on a weekly basis, with many specialized publications appearing only monthly or less often.

Reimbursing a retailer for extra in-store support or special featuring of the brand is a merchandise allowance. Performance contracts between the manufacturer and trade member usually specify the activity to be performed, such as a picture of the product in a newspaper with a coupon good at only one store.

The merchandise allowance then consists of a percentage deduction from the list case price ordered during the promotional period. Allowances are not paid by the manufacturer until it sees proof of performance (such as a copy of the ad placed by the retailer in the local newspaper).

source (p. 442) may be a company or person who has information to convey. The information sent by a source, such as a description of a new smartphone, forms the message.

The message is conveyed by means of a channel of communication such as a salesperson, advertising media, or public relations tools. Consumers who read, hear, or see the message are the receivers.

public relations is a form of communications management that seeks to influence the image of an organization and its products and services. Public relations efforts may utilize a variety of tools and may be directed at many distinct audiences.

The most frequently used public relations tool is publicity.

picking a good name: The name should suggest the product benefits. The name should be memorable, distinctive, and positive.

The name should have no legal or regulatory restrictions. The name should be simple and should be emotional The name should have favorable phonetic and semantic associations in other languages.

Quantitative assessments are based on input- and output-related objectives set forth in the sales plan. Input-related measures focus on the actual activities performed by salespeople such as those involving sales calls, sell- ing expenses, and account management policies.

The number of sales calls made, selling expense related to sales made, and the number of reports submitted to superiors are frequently used input measures.

Advertising (p. 444) is any paid form of nonpersonal communication about an organization, product, service, or idea by an identified sponsor.

The paid aspect of this definition is important because the space for the advertising message normally must be bought. An occasional exception is the public service announcement, where the advertising time or space is donated.

There are important advantages to personal selling. A salesperson can control to whom the presentation is made, reducing the amount of wasted coverage, or communication with consumers who are not in the target audience.

The personal component of selling has another advantage in that the seller can see or hear the potential buyer's reaction to the message. If the feedback is unfavorable, the salesperson can modify the message.

7 p's: Physical Environment: The appearance of the environment in which the service is delivered and where the firm and customer interact can influence the customer's perception of the service.

The physical evidence of the service includes all the tangibles surrounding the service: the buildings, landscaping, vehicles, furnishings, signage, brochures, and equipment.

Harvesting A second strategy, harvesting, is when a company retains the product but reduces marketing costs.

The product continues to be offered, but salespeople do not allocate time in selling nor are advertising dollars spent. The purpose of harvesting is to maintain the ability to meet customer requests.

Decline Stage: The decline stage of the product life cycle is usually a period of phase- out for the product, and little money is spent in the promotional mix.

The rate of decline can be rapid, as is the case when a product is replaced by an improved or lower-cost product, for example, or slow, as often happens when there is a loyal group of customers.

charting the life cycle: growth Several product classes are in the introductory stage of the product life cycle today. These include smart TVs and all-electric-powered automobiles.

The result of more competitors and more aggressive pricing is that profit usually peaks during the growth stage.

Formulating the sales plan is the most basic of the three sales management functions. According to the vice president of the Harris Corporation, a global communications company, "If a company hopes to implement its marketing strategy, it really needs a detailed sales planning process."

The sales plan (545) is a statement describing what is to be achieved and where and how the selling effort of salespeople is to be deployed. Sales plan formulation involves three tasks: (1) setting objectives, (2) organizing the salesforce, and (3) developing account management policies.

Because business buyers often have specialized needs or technical questions, personal selling is particularly important.

The salesperson can provide information and the necessary support after the sale.

Therefore, an analytical approach and experience are particularly important in this step of the promotion decision process.

The specific mix can vary from a simple program using a single tool to a comprehensive program using all forms of promotion

Open innovation helps organizations overcome the not-invented-here (NIH) barriers dis- cussed earlier.

The suggests methods of generating new-product ideas both internally and externally, the latter often using open innovation relationships: Employee suggestions, customer suggestions

Personal selling remains a highly human-intensive activity despite the use of technology. Accordingly, the people involved must be managed. Sales manage- ment involves (p.532) planning the selling program and implementing and evaluating the personal selling effort of the firm.

The tasks involved in managing personal selling include setting objectives; organizing the salesforce; recruiting, selecting, training, and compensating salespeople; and evaluating the performance of individual salespeople.

The sales plan is put into practice through the tasks associated with sales plan im- plementation. Whereas sales plan formulation focuses on "doing the right things," implementation emphasizes "doing things right."

The three major tasks involved in implementing a sales plan are (1) salesforce recruitment and selection, (2) sales- force training, and (3) salesforce motivation and compensation.

The selling process does not end with the closing of a sale; rather, professional selling requires customer follow-up. One marketing authority equated the follow-up with courtship and marriage by observing, "The sale merely consummates the courtship.

Then the marriage begins. How good the marriage is depends on how well the relationship is managed." The follow-up stage includes making certain the cus- tomer's purchase has been properly delivered and installed and addressing any difficulties experienced with the use of the item.

A final component for product consideration is the warranty (p. 293), which is a statement indi- cating the liability of the manufacturer for product deficiencies.

There are various types of product warranties with different implications for manufacturers and customers.

7 p's: Product: An important aspect of the product concept is branding. Because services are intangible, and more difficult to describe, the brand name or identifying logo of the service organization is particularly important when a consumer makes a purchase decision.

Therefore, service organizations, such as banks, hotels, rental car companies, and restaurants, rely on branding strategies to distinguish themselves in the minds of consumers. Strong brand names and symbols are important for service marketers, not only as a means of differentiation, but also to convey an image of quality.

Resellers often perform the important function of promoting the manufacturer's products at the local level. One common sales promotional activity is to encourage both better quality and greater quantity in the local advertising efforts of resellers through cooperative advertising.

These are programs by which a manufacturer pays a percentage of the retailer's local advertising expense for advertising the manufacturer's products.

Relationship Marketing: The contact between a service provider and a customer represents a service encounter that is likely to influence the customer's assessment of the purchase. The number of encounters in a service experience may vary.

These encounters represent opportunities to develop social bonds, or relationships, with customers. The relationship may also be developed through loyalty incentives such as airline frequent flyer programs.

Several product classes are in the introductory stage of the product life cycle today.

These include smart TVs and all-electric-powered automobiles.

The third task in formulating a sales plan involves developing account management policies (548) specifying whom salespeople should contact, what kinds of selling and customer service activities should be engaged in, and how these activities should be carried out.

These policies might state which individuals in a buying organization should be contacted, the amount of sales and service effort that different customers should receive, and the kinds of information salespeople should collect before or during a sales call.

For a totally new product, the sequence applies to the entire product category, but for a new brand competing in an established product category, it applies to the brand itself.

These steps can serve as guidelines for developing promotion objectives. Although sometimes an objective for a promotion program involves several steps in the hierarchy of effects, it often focuses on a single stage.

7 p's: Process: Process refers to the actual procedures, mechanisms, and flow of activities by which the service is created and delivered. The actual creation and delivery steps that the customer experiences provide customers with evidence on which to judge the service.

These steps involve not only "what" gets created but also "how" it is created. The customer contact audit is relevant to understanding the service process discussed here. The customer contact audit can serve as a basis for ensuring better service creation and delivery processes.

Customer sales support personnel augment the selling effort of order getters by performing a variety of services. For example, missionary salespeople do not directly solicit orders but rather concentrate on performing promotional activities and introducing new products.

They are used extensively in the pharmaceutical industry, where they persuade physicians to prescribe a firm's product. Actual sales are made through wholesalers or directly to pharmacists who fill prescriptions.

A fad product experiences rapid sales on introduction and then an equally rapid decline. These products are typically novelties and have a short life cycle.

They include car tattoos, sold in southern California and described as the first removable and reusable graphics for automobiles, and vinyl dresses and fleece bikinis made by a Minnesota clothing company.

Regardless of what the specific objective might be, from building awareness to increasing repeat purchases, promotion objectives should possess three important qualities.

They should (1) be designed for a well-defined target audience, (2) be measurable, and (3) cover a specified time period.

Brand name importance to a company has led to a concept called brand equity (p. 284), the added value a brand name gives to a product beyond the functional benefits provided.

This added value has two distinct advantages. First, brand equity provides a competitive advantage. A second advantage is that consumers are often willing to pay a higher price for a product with brand equity.

Competitive Parity: A second common approach, competitive parity budgeting, is matching the competitor's absolute level of spending or the proportion per point of market share.

This approach has also been referred to as matching competitors or share of market. It is important to consider the competition in budgeting. Consumer responses to promotion are affected by competing promotional activities, so if a competi- tor runs 30 radio ads each week, it may be difficult for a firm to get its message across with only 5 ads.

Multiproduct Branding Strategy With multi- product branding, a company uses one name for all its products in a product class.

This approach is sometimes called family branding or corporate branding when the company's trade name is used. (p. 288)

The Special Risks in Commercializing Grocery Products: New grocery products pose special commercialization problems. Because shelf space is so limited, many supermarkets require a slotting fee for new products, a payment a manu-facturer makes to place a new item on a retailer's shelf.

This can run to several million dollars for a single product. But there's even another potential expense. If a new grocery product does not achieve a predetermined sales target, some retailers require a failure fee, a penalty payment a manufacturer makes to compensate a retailer for devoting valuable shelf space to a product that failed to sell.

The level of ancillary services required by a product also affects the promotional strategy. Ancillary services pertain to the degree of service or support required after the sale.

This characteristic is common to many industrial products and consumer purchases. Who will provide maintenance for the plane? Advertising's role is to establish the seller's reputation.

Order getting by outside salespeople is also expensive. It is estimated that the average cost of a single field sales call on a business customer is about $350, factoring in the salesperson's compensation, benefits, and travel-and-entertainment expenses.

This cost illustrates why outbound telemarketing is popular. Outbound telemarketing is the practice of using the telephone rather than personal visits to contact current and pro- spective customers. A much lower cost per sales call (from $20 to $25) and little or no field expense accounts for its widespread appeal.

The lowest level of newness, which usually involves the least risk, is a product line extension. This is an incremental improvement of an existing product line the company already sells.

This has the potential benefit of adding new customers but the twin dangers of increasing expenses and cannibalizing products in its existing line.

Organizations that develop service-dominated offerings need to ensure that employees have the commitment and skills to meet customer expectations and sustain customer loyalty—an important criterion in screening a new-service idea.

This is the essence of customer experience management (CEM, p. 260), which is the process of managing the entire customer experience within the company.

Stage 7: Commercialization: Finally, the product is brought to the point of commercialization—the stage of the new-product process that positions and launches a new product in full-scale production and sales.

This is the most expensive stage for most new products. If competitors introduce a product that leapfrogs the firm's own new product or if cannibalization of its own existing products appears significant, the firm may halt the new-product launch.

the consumer population is divided into five categories of product adopters based on when they adopt a new product. Brief profiles accompany each category. For any product to be successful, it must be purchased by innovators and early adopters.

This is why manufacturers of new pharmaceuticals try to gain adoption by respected hospitals, clinics, and physicians. Once accepted by innovators and early adopters, successful new products move on to the early majority, late majority, and laggard categories.

Newness Compared with Existing Products: If a product is functionally different from existing products, it can be defined as new. Sometimes this newness is revolutionary and creates a whole new industry.

This proliferation of extra features—sometimes called "feature bloat"— overwhelms many consumers.

The presentation stage is at the core of the order-getting selling process, and its objective is to convert a prospect into a customer by creating a desire for the product or service.

Three major presentation formats exist: (1) stimulus-response format, (2) formula selling format, and (3) need-satisfaction format.

When reach (expressed as a percentage of the total market) is multiplied by frequency, an advertiser will obtain a commonly used reference number called gross rating points (479) (GRPs).

To obtain the appropriate number of GRPs to achieve an advertising campaign's objectives, the media planner must balance reach and frequency. The balance will also be influenced by cost. Cost per thousand (CPM) refers to the cost of reaching 1,000 individuals or households with the ad- vertising message in a given medium (M is the Roman numeral for 1,000).

The first step in developing the promotion program involves identifying the target audience, the group of prospective buyers toward which a promotion program will be directed.

To the extent that time and money permit, the target audience for the promotion program is the target market for the firm's product, which is identified from primary and secondary sources of marketing information.

To develop new products efficiently, companies such as General Electric and 3M use a specific sequence of steps to make their products ready for market. the new-product process (p.256), the seven stages an organization goes through to identify opportunities and convert them into salable products or services.

Today many firms use a formal Stage-Gate® process to evaluate whether the results at each stage of the new-product development process are successful enough to warrant proceeding to the next stage. If problems in a stage can't be corrected, the project doesn't proceed to the next stage and product development is killed.20

Poor execution of the marketing mix: brand name, package, price, promotion, distribution: Somewhere in the marketing mix there can be a showstopper that kills the product.

Too little market attractiveness: The ideal is a large target market with high growth and real buyer need. But often the target market is too small or competitive to warrant the huge expenses necessary to reach it.

Trading down (p. 283) involves reducing a product's number of features, quality, or price. For example, airlines have added more seats, thus reducing legroom, and limited meal service by only offering snacks on most domestic flights.

Trading down also exists when companies engage in downsizing—reducing the package content without changing package size and maintaining or increasing the package price. Companies are criticized for this practice,

In repositioning a product, a company can de- cide to change the value it offers buyers and trade up or down.

Trading up involves adding value to the product (or line) through additional features or higher-quality ma- terials. (p. 282)

An advantage of publicity is credibility. When you read a favorable story about a mix—advertising, public relations, and sales promotion. company's product (such as a glowing restaurant review), there is a tendency to believe it.

Travelers throughout the world have relied on Frommer's guides such as Frommer's France. These books describe out-of-the-way, inexpensive restaurants and hotels, giving invaluable publicity to these establishments. Such businesses do not (nor can they) buy a mention in the guide.

Consumer protection is another important function of packaging, including the de- velopment of tamper-resistant containers. Today, companies commonly use safety seals or pop-tops that reveal previous opening. However, no package is truly tamper resistant.

U.S. law now provides for maximum penalties of life imprisonment and $250,000 fines for package tampering. Consumer protection through labeling exists in "open dating," which states the expected shelf life of the product.

Aided Recall After being shown an ad, respondents are asked whether their previous exposure to it was through reading, viewing, or listening. The Starch test shown in the accompanying photo uses aided recall to determine the percentage of those who (1) remember seeing a specific ad (noted), (2) saw or read any part of the ad identifying the product or brand (seen-associated), (3) read any part of the ad's copy (read some), and (4) read at least half of the ad (read most). Elements of the ad are then tagged with the results, as shown in the photo.

Unaided Recall The unaided recall approach involves asking respondents a question such as, "What ads do you remember seeing yesterday?" without any prompt- ing to determine whether they saw or heard advertising messages.

The second major promotional alternative is personal selling (p. .445), which is the two-way flow of communication between a buyer and seller designed to influence a person's or group's purchase decision.

Unlike advertising, personal selling is usually face-to-face communication between the sender and receiver. Why do companies use personal selling?

A fourth promotional element is sales promotion (p. 447), a short-term inducement of value offered to arouse interest in buying a product or service.

Used in conjunction with advertising or personal selling, sales promotions are offered to intermediaries as well as to ultimate consumers. Coupons, rebates, samples, contests, and sweepstakes such as the M&M's promotion are just a few examples of sales promotions.

Focused on selling a good or service, product advertisements take three forms: (1) pioneering (or informational), (2) competitive (or persuasive), and (3) reminder.

Used in the introductory stage of the product life cycle, pioneering advertisements tell people what a product is, what it can do, and where it can be found.

The four I's differentiate services from products in most cases, but many companies are not clearly service-based or product-based organizations.

What compa- nies bring to the market ranges from the tangible to the intangible. This range of product-dominant to service-dominant offerings is referred to as the service continuum (p. 303)

PRODUCT STRATEGY

What is a Product? Not Just a Physical Entity... WHAT ARE YOU REALLY BUYING? you are buying a product for the benefit of the product not its features relate the features to the beneifts

For-Profit or Nonprofit Organizations: Many organizations involved in services also distinguish themselves by their tax status as for-profit or nonprofit organizations. In contrast to for-profit organizations, nonprofit organizations' excesses in revenue over expenses are not taxed or distributed to shareholders.

When excess reve- nue exists, the money goes back into the organization's treasury to allow continuation of the service. Based on the corporate structure of the nonprofit organization, it may pay tax on revenue-generating holdings not directly related to its core mission.

Fear appeals suggest to the consumer that he or she can avoid some negative experience through the purchase and use of a product or service, a change in behavior, or a reduction in the use of a product.

When using fear appeals, the advertiser must be sure that the appeal is strong enough to get the audience's attention and concern but not so strong that it will lead them to tune out the message.

Selecting the Right Promotional Tools: Once a budget has been determined, the combination of the five basic IMC tools— advertising, personal selling, sales promotion, public relations, and direct marketing— can be specified.

While many factors provide direction for selection of the appropriate mix, the large number of possible combinations of the promotional tools means that many combinations can achieve the same objective.

Development of the promotion program focuses on the four Ws:

Who is the target audience? ● What are (1) the promotion objectives, (2) the amounts of money that can be budgeted for the promotion program, and (3) the kinds of promotion to be used? ● Where should the promotion be run? ● When should the promotion be run?

Newness from the Consumer's Perspective: dynamically continuous innovation

With a dynamically continuous innovation, only minor changes in behavior are required. So the marketing strategy here is to educate prospective buyers on the product's benefits, advantages, and proper use.

Publicity (p. 446) is a nonpersonal, indirectly paid presentation of an organization, product, or service. It can take the form of a news story, editorial, or product announcement. A difference between publicity and both advertising and personal selling is the "indirectly paid" dimension.

With publicity a company does not pay for space in a mass medium (such as television or radio) but attempts to get the medium to run a favorable story on the company. In this sense, there is an indirect payment for publicity in that a company must support a public relations staff.

The Product Level: Class and Form The product life cycle is a total industry or generalized product class sales curve.

Yet, in managing a product it is often important to distinguish among the multiple life cycles (class and form) that may exist.

Often a company decides to reposition its product or product line in an attempt to bolster sales. Product repositioning changes the place a product occupies in

a consumer's mind relative to competitive products. A firm can reposition a product by changing one or more of the four marketing mix elements.

A product is

a good, service, or idea consisting of a bundle of tangible and intangible benefits

Pull Strategy: In some instances, manufacturers face resistance from channel members who do not want to order a new product or increase inventory levels of an existing brand.

a manufacturer may elect to implement a pull strategy by directing its promotional mix at ultimate consumers to encourage them to ask the retailer for a product.

GREATER DISSATISFACTION WITH SERVICES THAN PRODUCTS

a reason is inconsistancy.

For the message to be communicated effectively, the sender and receiver must have a mutually shared field of experience (p. 443)—

a similar understanding and knowledge they apply to the message.

communication (p. 442) is the process of conveying a message to others, and it requires six elements:

a source, a message, a channel of communication, a receiver, and the pro- cesses of encoding and decoding

Therefore, recruitment and selection begin with a carefully crafted job analysis and job description followed by a statement of job qualifications. A job analysis is

a study of a particular sales position, including how the job is to be performed and the tasks that make up the job. Information from a job analysis is used to write a job description, a written document that describes job relationships and requirements that characterize each sales position.

Simulated Test Markets To save time and money, companies often turn to sim-ulated (or laboratory) test markets (STM),

a technique that somewhat replicates a full- scale test market. STMs are often run in shopping malls, to find consumers who use the product class being tested.

Assessing Service Quality: Once a consumer tries a service, how is it evaluated? Primarily, a consumer assesses service quality by comparing expectations

about a service offering to his or her actual experience with the service. Differences between the consumer's expectations and experience are identified through gap analysis. (p. 308)

Product Classes, Forms, Items, Lines, and Mixes: Most organizations offer a range of products and services to consumers. Each set of offerings can be categorized

according to the product class or industry to which they belong, like the iPad, which is classified as a tablet device. Products can exist in various product forms within a product class

Sales promotion is a key element of the promotional mix today; it now accounts for more than $70 billion in annual expenditures. In a recent forecast by ZenithOptimedia, sales promotion expenditures

accounted for 19 percent of all promotional spend- ing.The two major kinds of sales promotions, consumer- oriented and trade-oriented, are discussed below.

As an approach to sales, partnership selling relies on cross-functional business specialists who apply their knowledge and expertise to

achieve better customer solutions, lower cost, and greater customer value. Partnership selling complements the supply partnerships

The advertising decision process does not stop with executing the advertising program. The advertisements must be evaluated to determine whether they are

achieving their intended objectives, and results may indicate that changes must be made in the advertising program.

goal of sponsprship: the event to be somthing the customer cares about investment has to be big enbough that event would not happen if not for sponsorship

activation, what you are selling needs to be activated in the minds of customers. (pepsi lounge, selfie station) need linkage between sponsorship and product

7 p's: process: Most services have a limited capacity due to the inseparability of the service from the service provider and the perishable nature of the service. For example, to "buy" an appendectomy, a patient must be in the hospital at the same time as the surgeon and only one patient can be helped at that time. Similarly, no

additional surgery can be conducted tomorrow because of an unused operating room or an available surgeon today—the service capacity is lost if it is not used. So the service component of the marketing mix must be integrated with efforts to influence consumer demand. This is referred to as capacity management. (p. 315)

To communicate with consumers, a company can use one or more of five promotional alternatives:

advertising, personal selling, public relations, sales promotion, and direct marketing.

Recent studies suggest that customers who experience a "service failure" will increase their satisfaction if the service provider makes a highly interactive service recovery effort,

although they may not increase their intent to repurchase. In addition, service operators can increase customer satisfaction by explaining the cause of the service failure and letting customers choose between several recovery options.

To determine whether the advertisement communicates the intended message or to select

among alternative versions of the advertisement, pretests (486) are conducted before the advertisements are placed in any medium.

Salesforce Training Whereas the recruitment and selection of salespeople is a one-time event, salesforce training is

an ongoing process that affects both new and seasoned salespeople. Sales training covers much more than selling practices.

Services (p. 300) are intangible activities or benefits (such as airline trips, financial advice, or automobile repair) that

an organization provides to satisfy consumers' needs in ex- change for money or something else of value.

There are several advantages to a firm using advertising in its promotional mix. It can be attention-getting

and also communicate specific product benefits to prospective buyers.

The three main kinds of test markets are (1) standard, (2) controlled, and (3) simulated.43 Because standard test markets are so time-consuming and expensive

and can alert competitors to a firm's plans, some firms skip test markets entirely or use controlled or simulated test markets.

When specific knowledge is required to sell certain types of products, then a product sales organization is used. The advantage of this structure is that salespeople can develop expertise with technical characteristics,

applications, and selling methods associated with a particular product or family of products. However, this structure produces high administrative costs and duplication of selling effort, because two company sales- people may call on the same customer.

In addition, firms with a market orientation are more likely to implement an IMC program, and firms with support from top management have more effective IMC programs. To facilitate the transition,

approximately 200 integrated marketing communications agencies are in operation. In addition, some of the largest agencies are adopting approaches that embrace "total communications solutions."

Expectations are influenced by word-of-mouth communications, personal needs, past experiences, and promotional activities, while actual experiences

are determined by the way an organization delivers its service. The relative importance of the various dimen- sions of service quality varies by the type of service.

fiscally concervative, this approach has little else to offer. using this budgeting philosphy, a company acts

as though it doesnt know anything about a promotion sales relationship or what its promotional objectives are

meaningless differencition

attach a name or logo to a product to protect the trademark

Behavioral measures are also used to evaluate sales- people. These include assessments of a salesperson's attitude,

attention to customers, product knowledge, selling and communication skills, appearance, and professional demeanor.

Three levels of product

augemented (outer layer), are feature dont expect the product to have but it appears to have during use /\ Expected (middle), features and benefit the consumers expect the product to have /\ Core (center), features & beneifts that is what the customer is buy the product for.

individual level product adoption

awareness: aware of product interest: willing to try product evaluation: evaluate the pros and cons to try trial: use of the product adoption: continued use of product

Much of the growth is the result of creative forms of outdoor advertising and the conversion to digital billboards, which allow advertisers to quickly present conditional content. Conditional con- tent ads are

based on current events, weather, business conditions, and even sports scores. Radio stations, for example, can display the title of the song currently playing on their station, newspapers can display current headlines, and retailers can advertise umbrellas or sunscreen based on the weather forecast.

inventory carrying costs can be significantly lower or nonexistent because the idle production capacity can

be cut back by reducing hours or having no salary to pay because of the commission compensation system.

Executing the advertising program involves pretesting the advertising copy and actually carrying out the advertising program. Evaluation is done usually at two separate times:

before and after the advertisements are run in the actual campaign. Several methods used in the evaluation process at the stages of idea formulation and copy development are discussed below.

To discourage competi- tive entry, a company can price low, referred to as penetration pricing. This pricing strategy helps

build unit volume, but a company must closely monitor costs.

Simple marketing research should have revealed the problems in these new-product disasters. Developing successful new products may sometimes involve luck,

but more often it involves having a product that really meets a need and has significant points of difference over competitive products.

Trade-oriented sales promotions, or simply trade promotions, are sales tools used to support a company's advertising and personal selling directed to wholesalers, retailers, or distributors. Some of the sales promotions just reviewed are used for this purpose,

but three other common approaches are targeted uniquely to these intermediaries: (1) allowances and discounts, (2) cooperative advertising, and (3) training of distributors' salesforces.

The promotion decision process can be applied to each of the promotional elements. Advertising, for example,

can be managed by following the three steps (developing, executing, and evaluating) of the process.

sales presentation formats: can be considered a continuum

canned or formula v outline presentation v adaptive selling (market orientation)

seg 8 lecture #22 , #23, #26, #27, #28

ch 11

seg 8

ch 11 book notes

Segment 13, lecture #38

ch 18, 19

segment 11, lecture # 32, #33, #34, #35

chapter 17

participative benefits are made through

cocreation with service provider

Some companies have taken relationship selling a step further and forged partnerships between buyer and seller organizations. With partnership selling (534), sometimes called enterprise selling, buyers and sellers

combine their expertise and resources to create customized solutions; commit to joint plan- ning; and share customer, competitive, and company information for their mutual benefit and, ultimately, the benefit of the customer.

While direct marketing has been one of the fastest-growing forms of promotion, it has several disadvantages. First, most forms of direct marketing require

comprehensive and up-to-date database with information about the target market. Developing and maintaining the database can be expensive and time consuming.In addition, growing concern about privacy has led to a decline in response rates among some customer groups.

idea generation (p. 257) , the second stage of the new-product process, involves developing a pool of

concepts to serve as candidates for new products, building upon the previous stage's results.

the concept of designing marketing communications programs that coordinate all promotional activities—advertising, personal selling, sales promotion, public relations, and direct marketing—to provide a

consistent message across all audiences is referred to as integrated marketing communications (IMC). (p. 442) By taking consumer expectations into consideration, IMC is a key element in a company's customer experience management strategy.

Supplementary services often allow service providers to differentiate their offering from competitors, and they may add value for consumers. While there are many potential supplementary services, key categories of supplementary services include

consultation, finance, shipping, installation, maintenance, and upgrades. Innovation in core services today often relies on the creative efforts of the organization. Understanding the impact of supplementary services, however, may be best accomplished through input from customers.

Newness from the Consumer's Perspective: continuous innovation

consumer dont need to learn a new behavior. The benefit of this simple innovation is that effective marketing mainly depends on generating awareness, not reeducating customers.

7 p's: promotion: Increasingly, service firms are adopting an integrated marketing communications approach, similar to the approach used by many

consumer packaged goods firms, to ensure that the many forms of promotion are providing a consistent message and contributing to a common objective.

Publicity is particularly effective when

consumers lack prior knowledge of the product or service.

The marketing of Gatorade illustrates

continuous product development and masterful brand management in a dynamic marketplace.

Intermediaries are often the focus of promotional efforts. As with business buyers, personal selling is the major promotional ingredient. The salespeople assist intermediaries in making a profit by

coordinating promotional campaigns sponsored by the manufacturer and by providing marketing advice and expertise. Intermediaries' questions often pertain to the allowed markup, merchandising support, and return policies.

A common approach for determining the size of a salesforce is the workload method (547). This formula- based method integrates the number of

customers served, call frequency, call length, and available selling time to arrive at a figure for the salesforce size.

For companies, new-product strategy development (p. 257) is the stage of the new-product process that

defines the role for a new product in terms of the firm's overall objectives.

Marketers must consider employees' interactions with customers so that the new services are consistently

delivered and experienced, clearly differentiated from other service offerings, and relevant and valuable to the target market.

Customer Contact and Relationship Marketing: Consumers judge services on the entire sequence of steps that make up the service process. To focus on these steps, or "service encounters," a firm can

develop a customer contact audit (p. 309)—a flowchart of the points of interaction between con- sumer and service provider. This is particularly important in high-contact services such as hotels, educational institutions

Rather, it arises from a sequential building process consisting of four steps

develope positive brand awareness establish meaning elicit proper response create consumer brand connection

In a standard test market, a company develops a product and then attempts to sell it through normal distribution channels in a number of test-market cities. Test-market cities must be demographically representative of markets targeted for the new product, have cable TV systems that can deliver

different ads to different homes, and have retailers with checkout counter scanners to measure sales. A distinguishing feature of a standard test market is that the producer sells the product to distributors, wholesalers, and retailers, just as it would do for other products.

EAR service model

empathy attention respect

The inventory carrying costs of airlines are high because of high-salaried pilots and very expensive equipment. In contrast, real estate agencies and hair salons have

employees who work on commission and need little expensive equipment to conduct business. One reason service providers must maintain production capacity is because of the importance of time to today's customers.

partnership selling: going to work in close partnership with buyer to figure out joint value is and try to increase it.

enterprise selling or complex selling: takes selling process and flips it. its the buy who knows what they want and have sellers make proposals

a growing interest in sustainability and "green" businesses is also changing the services industry. This trend began when consumers became aware of the

environmental impact of many products such as automobiles, appliances, and cleaning solutions. Today, this trend has expanded to include consumers' assessment of services.

A CRUCIAL DISTINCTION: FEATURES VS. BENEFITS

features tell what the product is. benefits says what the product will do you the customer

Most advertising messages are made up of both informational and persuasive elements. These two elements are so intertwined that it is sometimes difficult to tell them apart. For example, basic information such as the product name, benefits,

features, and price can be presented in a way that tries to attract attention and encourage purchase. On the other hand, even the most persuasive advertisements have to contain at least some basic information to be successful.

services provided by specialized professionals such as medical diagnoses and legal services have credence properties, or characteristics that the consumer may

find impossible to evaluate even after purchase and consumption. To reduce the uncertainty created by these properties, service consumers turn to personal sources of information such as early adopters, opinion leaders, and reference group members during the purchase decision process.

These indexes help to identify strong and weak market segments (usually demographic or geographic segments)

for specific consumer products and brands and provide direction for marketing efforts.

LICENSING

give permission to others to manufacturer, market and sell a product

A controlled test market involves contracting the entire test program to an outside service. The service pays retailers for shelf space and can therefore

guarantee a specified percentage of the test product's potential distribution volume. In some cases the effectiveness of different TV commercials and other direct-to-consumer promotions can be measured.

THREE POSSIBLE STRATEGIES: rating change

importance rating change: focus on your relative impact add new attribute

Connecting with Customers Packages and labels must be continually updated to connect with customers. The challenge lies

in creating aesthetic and functional design features that attract customer attention and deliver customer value in their use

stages of the buying decision: Purchase Stage: At the purchase stage, the importance of personal selling is highest, whereas the impact of advertising is lowest. Sales promotion in the form of coupons, deals, point-of-purchase displays, and rebates can be very helpful

in encouraging demand. In this stage, social media can play an important role in the final deci- sion by delivering promotions and giving consumers control of the process. Research indicates that direct marketing activities shorten the time consumers take to adopt a product or service.

Trade promotions often focus on maintaining or increasing inventory levels in the channel of distribution. An effective method for encouraging such

increased purchases by intermediaries is the use of allowances and discounts. However, overuse of these price reductions can lead to retailers changing their ordering patterns in the expectation of such offerings.

To develop an effective advertising program, advertisers must identify the target audience. All aspects of an advertising program are likely to be

influenced by the characteristics of the prospective consumer. Understanding the lifestyles, attitudes, and demographics of the target market is essential.

Both marketing and nonmarketing factors contribute to new-product failures. Using the research results from several studies on new-product success and failure, we can identify critical marketing factors—which sometimes overlap—that often separate new-product winners and losers:

insignificante points of difference incomplete market and product protocolbefore product developement not satisfying customer needs on critical factors bad timing no economical access to buyers poor quality poor execution of marketing mix too little attractiveness

Product Modification strategy means:

instead of mining existing consumer company changes the product features to expand market share

Market Development strategy means:

instead of mining existing consumer company goes loooking for new markets (exporting, or different segment)

There are four unique elements to services—(p.301)

intangibility, inconsistency, inseparabil- ity, and inventory—referred to as the four I's of services.

2. Pioneering institutional advertisements, like the pioneering ads for products dis-cussed earlier, are used for announcements about what a company is, what it can do, or where it is located. Recent Bayer ads stating, "We cure more headaches than you think," are

intended to inform consumers that the company produces many products in addition to aspirin. Bridgestone uses pioneering institutional ads in its "One Team. One Planet" campaign to inform people about its rubber tree farms, tire recycling, and environmentally friendly factories.

THE PRODUCT LIFE CYCLE (PLC) The life of a product over four stages:

introduction, introducing the brand (awareness) growth, more customers are buying (competition) maturity, product has reached it peak (extend cycle) decline, brand disappear from market (to kil or not)

NEW PRODUCT DEVELOPMENT (npd):

is THE PROCESS OF INNOVATION

service providers use this strategy: Speed as a Factor in New-Product Success Companies have discovered that speed or time to market (TtM)

is often vital in introducing a new product. Recent studies have shown that high-tech products coming to market on time are far more profitable than those arriving late.

JOINT VALUE CREATION (JVC)

is the idea that you are looking to figure out what the potential value. Just in time tools

In the early part of the 20th century, the courts protected companies. The trend now is toward "strict liability" rulings, where a manufacturer is

liable for any product defect, whether it followed reasonable research standards or not. This issue remains hotly contested between companies and consumer advocates.

Several factors affect such decisions: the target audience for the promotion, the stage of the product's

life cycle, the characteristics of the product, the decision stage of the buyer, and even the channel of distribution.

SALESFORCE MANAGEMENT

making a sales plan

Sales increase at a decreasing rate in the maturity stage as fewer new buyers enter the market. Profit declines due to fierce price competition among many sellers, and the cost of gaining new buyers at this stage rises.

marketing attention in the maturity stage is often directed toward holding market share through further product differentiation and finding new buyers.

The process of communication is not always a successful one. Errors in communication can happen in several ways. The source may not adequately transform the abstract idea into an effective set of symbols, a properly encoded message

may be sent through the wrong channel and never make it to the intended receiver, the receiver may not properly transform the set of symbols into the correct abstract idea, or finally, feedback may be so delayed or distorted that it is of no use to the sender.

These qualities are important for adaptive selling and

may spell the difference between effective and ineffective order- getting salespeople.

Ad industry

media producer/ clients imc firms (advertizing firms) full service agents: provide all ad services limited or boutique: specialized in a media in-house ad production (for smaller furms)

Research reveals how difficult it is to produce a single commercially successful product, especially among consumer packaged goods (CPG) that appear on shelves one month and are gone forever a few months later.

merican families buy the same 150 items over and over again—making it difficult to gain buyers for new prod- ucts. So less than 3 percent of new consumer packaged goods exceed first-year sales of $50 million—the benchmark of a successful CPG launch.

Research indicates that consumers search for much more information when trying to evaluate services with credence properties. In response to this need for

more information, the Mayo Clinic uses an organized, explicit approach called "evidence management" to present customers with concrete and convincing evidence of its strengths.

In addition, 57 percent of social media users say that they are

more likely to purchase a product after seeing a positive post.

Branding Strategies Companies can choose from among several different branding strategies, including

multiproduct branding, multibranding, private branding, and mixed branding (p. 287)

To create a service advantage, a car rental agency—like any service company—

must create a competitive advantage in the sequence of interactions with the customer.

Many firms engage in cross-functional team selling (537), the practice of using an entire team of professionals in selling to and servicing major customers.Team selling is used when specialized knowledge is

needed to satisfy the different interests of individuals in a customer's buying center. A selling team might consist of a salesperson, a sales engi- neer, a service representative, and a financial executive, each of whom would deal with a counterpart in the customer's firm.

is negative publicity bad? it depends

negative publicity can be good in the short term (new authors and book reviews)

A new version of the law, called the General Data Protection Regulation, will address

new developments such as social networks and cloud computing and is scheduled to take effect in 2016.

7 p's: Price: In service businesses, price is referred to in many ways. Pricing of services goes beyond the traditional tasks of setting the selling price. When customers buy a service, they also consider

nonmonetary costs, such as the mental and physical efforts required to consume the service. Service marketers must try to minimize the effort required to purchase and use the service.Pricing also plays a role in balancing consumer demand for services.

in marketing, an idea is a thought that leads to a product or action, such as a concept for a new invention or getting people out to vote. product generally includes

not only physical goods but ser- vices and ideas as well. When product is used in its narrower meaning of "goods," it should be clear from the example or sentence.

Consultative selling focuses on problem identification, where the salesperson serves as an expert on problem recognition and resolution. With consultative selling, problem solution options are

not simply a matter of choosing from an array of existing products or services. Rather, novel solutions often arise, thereby creating unique value for the customer. Consultative selling is prominent in business-to-business

The final function in the sales management process involves evaluating the salesforce. It is at this point that salespeople are assessed as to whether sales

objectives were met and account management policies were followed. Both quantitative and behavioral measures are used to tap different selling dimensions.

This plan is common when nonselling activities are minimal. Combination plans are most preferred by salespeople and attempt to build on the advantages

of salary and commission plans while reducing the potential shortcomings of each. A majority of companies use combination plans today.

For services, business analysis involves using capacity management to find ways to match the availability of the service offering to when it is needed. For example, airlines and mobile phone service providers use

off-peak pricing to charge different prices during different times of the day or during different days of the week to help match the supply and demand for their services.

Sales engineers specialize in identifying, analyzing, and solving customer problems. These salespeople bring know-how and technical expertise to the selling situation but

often do not actually sell products and services. Sales engineers are popular in selling business products such as chemicals and heavy equipment.

Inside order takers, also called order clerks or salesclerks, typically answer simple questions, take orders, and complete transactions with customers. Many retail clerks are inside order takers. Inside order takers are

often employed by companies that use inbound telemarketing, the use of toll-free telephone numbers that customers can call to obtain information about products or services and make purchases. In business-to-business settings, order taking arises in straight rebuy situations

Carrying out the promotion program can be expensive and time-consuming. One re- searcher estimates that "an organization with sales less than $10 million can successfully implement an IMC program in one year,

one with sales between $200 million and $500 million will need about three years, and one with sales between $2 billion and $5 billion will need five years."

Personal selling assumes many forms based on the amount of selling done and the amount of creativity required to perform the sales task. Broadly speaking, three types of personal selling exist:

order taking, order getting, and customer sales support activities. While some firms use only one of these types of personal selling, others use a combination of all three.

There are many adantages to multiproduct branding. Capitalizing again on brand equity, consumers who have a good experience with the product will transfer this favorable attitude to

other items in the product class with the same name. Therefore, this brand strategy makes possible product line extensions, the practice of using a current brand name to enter a new market segment in its product class.

Avoiding the "NIH problem": A great idea is a great idea, regardless of its source. Yet in the bureaucracy that can occur in large organizations, ideas from

outside often get rejected simply because they come from outside— what has been termed the "not-invented-here (NIH) problem."

However, several methods can be used to set the promotion budget.

percent of sales competitave parity all you can afford budgeting

As traditional media have become more expensive and cluttered, advertisers have been attracted to a variety of nontra ditional advertising options called out-of-home advertising, or place-based media. Messages are

placed in locations that attract a specific target audience such as airports, doctors' offices, health clubs, theaters (where ads are played on the screen before the movies are shown), grocery stores, storefronts, and even the bathrooms of bars, restaurants, and nightclubs.

Newness from the Organization's Perspective: Successful organizations view newness and innovation in their products at three levels.

product line extention tech boost or brand extention revolutionary product

The concept of an expanded marketing mix for services has been adopted by many service- marketing organizations. In addition to the four Ps, the services marketing mix includes people, the physical environment, and the process, or the seven Ps of services marketing. (p. 311)

product or service price place promotion people physical environment process

Stage 5: Development: Development is the stage of the new-product process that turns the idea on paper into a prototype. This results in a demonstrable, producible

product that involves not only manufacturing the product efficiently but also performing laboratory and consumer tests to ensure the product meets the standards established for it in the protocol.

Channel Strategies: the channel flows from a producer to intermediaries to consumers. Achieving control of the channel is often difficult for the manufacturer, and promotional strategies can assist in moving a

product through the channel of distribution. This is where a manufacturer has to make an important decision about whether to use a a push strategy, pull strategy, or both in its channel of distribution.

Two broad categories of products widely used in marketing relate to the type of user. Consumer products (p.248) are products purchased by the ultimate consumer, whereas business products (also called B2B products or industrial products) are

products organizations buy that assist in providing other products for resale. Some products can be considered both consumer and business items. Each classification results in different marketing actions.

However, there is a major fallacy in this approach, which implies that sales cause promotion. Using this method, a company may reduce its

promotion budget because of a downturn in past sales or an anticipated downturn in future sales— situations in which it may need promotion the most.

Internal Approach: In this approach to screening and evaluation, a firm's employees evaluate the technical feasibility of a

proposed new-product idea to determine whether it meets the objectives defined in the new-product strategy development stage.

market testing (p. 262) is a stage of the new-product process that involves exposing actual products to

prospective consumers under realistic purchase conditions to see if they will buy.

transactional marketing: we care in terms of this transaction or purchase only

relational marketing: we care in terms of the lifetime of the customer values

industrialization of service

remove the places where human can mess up the services

Noise can also occur when a salesperson's message is misunderstood by a prospective buyer, such as when a

salesperson's accent, use of slang terms, or communication style make hearing and understanding the message difficult.

Selling, and particularly order getting, is a complicated activity that involves building buyer- seller relationships. Although the salesperson-customer interaction is essential to personal selling, much of a

salesperson's work occurs before this meeting and continues after the sale itself. The personal selling process (539) consists of six stages: (1) prospecting, (2) preap- proach, (3) approach, (4) presentation, (5) close, and (6) follow-up

For services, improving the delivery of customer service is critical. This involves analyzing the entire

sequence of steps or "service encounters" to improve the interactions between consumers and the service provider.

These costly slotting fees and failure fees are further examples of why large grocery product manufacturers use regional rollouts. Companies selling consumer products using regional rollouts introduce a product

sequentially into geographical areas of the United States to allow production levels and marketing activities to build up gradually, to minimize the risk of new-product failure. Grocery product manufacturers and tele- phone service providers use this strategy.

sex appeals suggest to the audience that the product will increase the attractiveness of the user. Sex appeals can be found in almost any product category, from automobiles to toothpaste.

sexual content does not always lead to changes in recall, recognition, or purchase intent. Experts suggest that sexual content is most effective when there is a strong fit between the use of a sex appeal in the ad and the image and positioning of the brand,

Customer Contact and Relationship Marketing: The interactions identified in a customer contact audit often serve as the basis for developing relationships with customers. Recent research suggests that employees' competence and the authenticity and

sincerity of their interactions affect the success of their customer rela- tionships. Another version of a customer contact audit, called a service blueprint, includes all employee actions and acknowledges that services are designed to be "experiences."

Five categories and profiles of product adopters. Innovators Venturesome; higher educated; use multiple information sources Early majority Deliberate; many informal social contacts Early adopters Leaders in social setting;

slightly above average education Laggards Fear of debt; neighbors and friends are information sources Late majority Skeptical; below average social status

Smaller Firms, Universities, and Inventors: Many firms look for outside visionaries that have inventions or innovative ideas that can become products. Some sources of this open innovation strategy include:

small non traditional firms universities inventors

PROMOTION IS COMMUNICATION

source (encoding occures) message channel audience (decoding occurs)

The approach stage involves the initial meeting between the salesperson and the prospect, where the objectives are to gain the prospect's attention,

stimulate interest, and build the foundation for the sales presentation itself and the basis for a working relationship.

The disadvantage of publicity relates to the lack of the user's control over it. A company can invite media to cover an interesting event such as a

store opening or a new-product release, but there is no guarantee that a story will result, that it will be positive, or that the target audience will receive the message.

how do you work out product placements

straight placement fee barter system

Shape of the Product Life Cycle: The product life-cycle sales curve is the generalized life cycle, but not all products have the same shape to their curve. In fact, there are several life-cycle curves, each type

suggesting different marketing strategies. The shape of life-cycle sales curves for four different types of products: high-learning, low-learning, fashion, and fad products.

marketers are trying permission marketing:

taking message directly to the customer with their permission, and only given them relavant ads opt in approach-consumer gives permission opt out approach-requires action to opt out not in.

The essence of marketing is in developing products and services to meet buyer needs. A product (p. 248) is a good, service, or idea consisting of a bundle of

tangible and intangible attributes that satisfies consumers' needs and is received in exchange for money or something else of value. Let's clarify the meanings of goods, services, and ideas.

A fourth branding strategy is mixed branding, where a firm markets products under its own name(s) and

that of a reseller because the segment attracted to the reseller is different from its own market. (p. 290)

Advertising and promotion expenditures in the introduction stage are often made to stimulate primary demand,

the desire for the product class rather than for a specific brand, since there are few competitors with the same product.

7 p's: Place (Distribution) Place, or distribution, is a major factor in developing a service marketing strategy because of the inseparability of services from the producer. Rarely are intermediaries involved in the distribution of a service;

the distribution site and the service deliverer are the tangible components of the service. Until recently, customers generally had to go to the service provider's physical location to purchase the ser-vice. Increased competition, however, has forced many service firms to consider the value of convenient distribution and to find new ways of distributing services to customers.

Personal selling and sales management have undergone a technological revolution with

the integration of salesforce automation into customer relationship management processes.

The packaging component (p. 290) of a product refers to any container in which it is offered for sale and on which label information is conveyed. A label (p.290) is an integral part of the package and typically identifies

the product or brand, who made it, where and when it was made, how it is to be used, and package contents and ingredients. To a great ex- tent, the customer's first exposure to a product is the package and label, and both are an expensive and important part of marketing strategy.

5. Denial. When a prospect's objection is based on misinformation and clearly un- true, it is wise to meet the objection head on with a firm denial. The closing stage involves obtaining a purchase commitment from

the prospect. Read the text to learn how the close itself can take several forms. 6. Ignore the objection. This technique is used when it appears that the objection is a stalling mechanism or is clearly not important to the prospect.

feedback loop, consists of a response and feed- back. A response (p. 444) is the impact the message had on the receiver's knowledge, attitudes, or behaviors. Feedback is the sender's interpretation of

the response and indicates whether the message was decoded and understood as intended. pretesting, ensures that messages are decoded properly.

business and stimulated industry sales of casual pants, shirts, and blouses. A common approach to product modification to increase a product's value to consumers is called product bundling

the sale of two or more separate products in one package. For example, Microsoft Office is sold as a bundle of computer software, including Word, Excel, and PowerPoint.

publicity is an important element of most promotional campaigns, al- though the lack of control means that it is rarely the primary element. Research related to

the sequence of IMC elements, however, indicates that publicity followed by advertising with the same message increases the positive response to the message.

two factor model

the source the receiver

Often advertisers use a mix of media forms and vehicles to maximize the exposure of the message to

the target audience while at the same time minimizing costs. These two conflicting goals are of central importance to media planning.

creeping featurism or featuritis

the tendency to add features with each iteration of a product without any though to the benefits the consumer gets. (software, microsoft) should not add features that conflict with core benefits

more than 46 percent of the U.S. gross domestic product (GDP) now comes from services, exceeding goods and

the three other components of GDP—business investment, government spending, and net exports

Many service businesses use off-peak pricing (p. 312), which consists of charg- ing different prices during different times of the day or during different days of

the week to reflect variations in demand for the service. Airlines, for example, offer discounts for weekend travel, while movie theaters offer matinee prices.

Relationship and partnership selling represent another dimension of customer rela- tionship management. Both emphasize the importance of first learning about customer needs and wants and

then tailoring solutions to customer problems as a means to customer value creation. Recent research suggests that a salesperson may have a genetic predisposition to create customer value.

duel mediation theory

there are two processes that occur with advertising

the best approach to budgeting is objective ans task budgeting, where by the company determins its promotional objectives, outlines the tasks it will undertak to accomplish those objectives and determines the promotional cost of performing this tasks

this method takes into accountwhat the company wants to accomplish and requires that objectives be specified, strengths of other budgeting methods are intergrated into this approach because each previous methods strength is ties to the objectives

A major benefit of packaging is the label informa- tion it conveys to the consumer, such as directions on how, where, and when

to use the product and the source and composition of the product, which is needed to satisfy legal requirements of product disclosure.

Output- and input-related objectives are used for the salesforce as a whole and for each salesperson. A third type of objective that is behaviorally related is

typically specific for each salesperson and includes his or her product knowledge, customer service satisfaction ratings, and sell- ing and communication skills.

Functional features of packaging also can affect product quality. Pringles, with its cylindrical packaging, offers

uniform chips, minimal breakage, and for some consum- ers, better value for the money than chips packaged in flex-bags

Several factors affect whether a consumer will adopt a new product or not. Common reasons for resisting a product in the introduction stage are usage barriers (the product is not compatible with existing habits),

value barriers (the product provides no incentive to change), risk barriers (physical, economic, or social), and psychologi- cal barriers (cultural differences or image).

Environmental Concerns Because of widespread global concern about the growth of solid waste and the shortage of

viable landfill sites, the amount, composition, and disposal of packaging material continue to receive much attention.

event market, a sponsorship is

where a company sets up the event themselves you have control of media. (flutag, red bull)

An advertisement may go through posttests (488) after it has been shown to the target audience to determine

whether it accomplished its intended purpose. Five approaches common in posttesting are discussed here.47

Many firms offer a product mix (p. 250),

which consists of all of the product lines fered by an organization.

Tv and radio stations describe their reach using the term rating (478),

which is the percentage of households in a market that are tuned in to a tv or radio station

After the target audience has been identified, a decision must be reached on what the promotion should accomplish. Consumers can be said to respond in terms of a hierarchy of effects, (p. 454)

which is the sequence of stages a prospective buyer goes through from initial awareness of a product to eventual action (either trial or adoption of the product).

managing the product life cycle: An important task for a firm is to manage its products through the successive stages of their life cycles. This section describes the role of the product manager,

who is usually responsible for this, and presents three ways to manage a product through its life cycle: modifying the product, modifying the market, and repositioning the product.

7 p's: Product: A service firm with a well-established brand reputation

will also find it easier to introduce new services than firms without a brand reputation.

Market Penetration strategy means:

you are doing the right thing you need to just do more of it through: wallet share (how much $$ goes to your company), loyal and frequent behavior through loyalty programs. Think broadly about what you are selling.

Product repostioning strategy means:

you change where the brand sits in the customers mind without changing the actual product. (changes in packaging)