Marketing 320F Test #4

Telemarketing

* Using the telephone to "call" on customers or prospects -National Do Not Call Registry: people cannot be called except by nonprofits and a few other select groups. -In business markets, an "inside" sales force can often build profitable relationships with small or hard-to-reach customers the firm might otherwise have to ignore. -Companies that produce goods and service for final consumers also rely heavily on toll-free telephone lines to give final consumers easy access to customer service reps.

Sales Presentation

* a salesperson's effort to make a sale or address a customer's problem. -A marketing manager can choose two basically different approaches to making sales presentations: *The prepared approach/consultive selling approach *The selling formula approach, is a combination of the two.

Direct Type

* aims for immediate buying action

Allowances

* are given to final customers, business customers, or channel members for doing something or accepting less of something.

Technical Specialists

* are supporting sales people who provide technical assistance to order-oriented salespeople. -Often science or engineering graduates with the know-how to understand the customer's applications and explain the advantages of the company's product -More skilled in showing the technical details of their products than in trying to persuade customers to buy.

Job Description

* is a written statement of what a salesperson is expected to do. - 10-20 specific tasks -as well as routine prospecting and sales report writing This is critical to determine the kind of salespeople who should be selected- and later it provides a basis for seeing how they should be trained, how well they are performing, and how they should be paid.

Marginal Cost

* is the change in total cost that results from producing one more unit. -is the additional cost of producing one more specific unit. -By contrast, average cost is the average for all units (total costs divided by the number of units)

Comparative Advertising

* means making specific brand comparisons-using actual product names. -Many countries forbid comparative advertising.

Markup (percent)

* means percentage of selling price that is added to the cost to get the selling price. -to avoid confusion, it is important to state clearly which markup percent you're using

One-Price Policy

* offering the same price to all customers who purchase products under essentially the same conditions and in the same quantities. -Makes pricing easier -avoid a rigid, one-price policy -One reason for the growth of mass merchandisers is that conventional retailers rigidly applied traditional margins and stuck to them .

Indirect Type

* points out product advantages to affect future buying decision.

Order Getting

* seeking possible buyers with a well-organized sales presentation designed to sell a good, service, or idea. -Must know know what they're taking about, not just be personal contracts. -Normally paid well

Selling Formula Approach

* starts with a prepared presentation outline-much like the prepared approach- and leads the customer through some logical steps to a final close. -prepared steps are logical because we assume that we know something about the target customer's needs and attitudes. -The salesperson does most of the talking at the beginning of the presentation- to communicative key points early. -The salesperson brings the customer into the discussion to help clarify just what needs this customer has. -JOB: to discover the needs of a particular customer to know how to proceed. * once needs are clear, the salesperson comes back to show how the product satisfies this specific customer's needs and to close the sale.

Marginal Profit

* the extra profit on the last unit -At the point where marginal revenue (MR) equals marginal costs (MC) is near zero. -So when the firm is looking for the best price to charge, it should lower the price-to increase the quantity it will sell-as long as the last unit it sells will yield extra profit.

Status Quo Objective

*Don't rock the pricing boat objectives -Managers may say that they want to stabilize prices, or meet competition.

Order Takers

*Sell to the regular or established customers, complete mist sales transactions, and maintain relationships with their customers. -Order takers answer final questions and completes the scale.

Major Accounts Sales Force

*Sells directly to large accounts

Introductory Price Dealing

*Temporary price cuts to speed new products into a market and gets customers to try them. -The plan here is to raise prices as soon as the introductory offer is over. -By then, hopefully, target customers will have decided it is worth buying again at the regular price. -Should be part of the larger marketing strategy -Established competitors often choose not to meet introductory price dealing-as long as the introductory price deals with their own short-term sale prices to discourage customers from shopping around.

Rule of Maximizing Prfot

*The highest profit is earned at the price where marginal cost is just less than or equal to marginal revenue. -To maximize profit, a manger generally wants to lower the price and sell more units as long as the marginal revenue from selling them is at least equal to the marginal costs of extra units.

Pioneering Advertising

*Tries to develop primary demand for a product category rather than demand for a specific brand. -Usually done in the early stages of the product life cycle; it informs potential customers about the new product and helps turn them into adopters. -Explain basis of primary demand.

Copy Thrust

*What the words and illustrations should communicate -is the job of advertising specialist.

Team Selling

*When different people work together on a specific account.

Markup

*a dollar amount added to the cost of products to get the selling price

Sales Territory

*a geographic area that is the responsibility of one salesperson or several working together. -A territory might be a region of a country, a state, or part of a city, depending on the market potential. -Carefully set territories can reduce travel times and the costs of sales calls. -Carefully set territories can reduce confusion about who has responsibility for a set of sales tasks.

Trade-In Allowances

*a price reduction given for used products when similar new products are brought. -Trade-ins give the marketing manager an easy way to lower the effective price without reducing list price. -Proper handling when selling durable products.

Negotiated Price

*a price set based on bargaining between the buyer and seller. -Sometimes the customer asks for a bid and then singles out the company that submits the most attractive bid. -Is most common in situations where the marketing mix is adjusted for each customer-so bargaining may involve the whole marketing mix, not just the price level. -Through the bargaining process, the seller tries to determine what aspects of the marketing mix are most important- and worth the most- to the customer -Demand-oriented approach -here the seller analyzes very carefully a particular customer's position on a demand curve, or on different possible demand curves based on different offerings, rather than the overall demand curve for a group of customers.

Freight-Absorption Pricing

*absorbing freight cost so that a firm's delivered price meets that of the nearest competitor. -This amount to cutting list price to appeal to new market segments.

Average-Cost Pricing

*adding a reasonable markup to the average cost of a product. -Manager usually finds the average cost per unit by studying past records. -Dividing the total cost for the last year by all the units produced and sold in that period gives an estimate of the average cost per unit for the next year. -Problem: is doesn't consider cost variations at different levels of output. -In a typical situation, costs are high with low output, and then economies of scale set in- the average cost per unit drops as the quantity produced increases -this may lead to losses because there are a variety of costs

Corrective Advertising

*ads to correct deceptive advertising -If the FTC decides that a particular practice is unfair or deceptive, it has the power to require affirmative disclosures- such as health warning on cigs

Non Pricing Competition

*aggressive action on one or more of the Ps other than Price.

Noncumulative Quantity Discounts

*apply only to individual orders. -Such discounts encourage larger orders but do not tie a buyer to the seller after that one purchase.,

Cumulative Quantity Discounts

*apply to purchases over a give period and the discount encourage repeat buying by reducing the customer's cost for additional purchases. -This way to develop loyalty and ongoing relationships with customers. - A cumulative quantity discount is often attractive to business customers who don't want to run up their inventory costs. -They are rewarded for buying large quantities, even though individual orders may be smaller.

Stocking Allowances

*are given to an intermediary to get shelf space for a product. (sometimes called slotting allowances) -These allowances are used mainly to get supermarket chains to handle new products. -Supermarkets are more willing to give space to new product if the supplier will offset their handling costs and risks. -The intermediary makes extra profit-even if a new product fails and the product loses money.

Basic Sales Tasks

*are ordered-getting, order-taking, and supporting. Sales people: referring to their primary task- although one person may do all three tasks in some situations.

Missionary Salespeople

*are supporting salespeople who work for producers-calling on intermediaries and their customers. -sometimes called merchandisers or detailers. -Producers who rely on merchant wholesalers or e-commerce to obtain widespread distribution often use missionary salespeople. -The sales rep can give a promotion boost to a product that otherwise wouldn't get much attention because it's just one of many.

Wheeler Lea Agreement

*bands "unfair or deceptive acts in commerce"

Price Fixing

*competitors getting together to raise, lower, or stabilize profits -Completely illegal in the US. -It is considered "conspiracy" under the Sherman Act and the FTC mission Act. -To discourage price fixing, both companies and individual managers are held responsible. -Difficulties with pricing-and violations of price legislation- usually occur when competing marketing mixes are quite similar. When the success of an entire marketing strategy depends on price, there is pressure (and temptation) to make agreements with competitors (conspire).

Order Getters

*concerned with establishing relationships with new customer and developing new business

Administered Prices

*consciously set prices. -Instead of letting daily markets forces (or auctions) decide their prices, most firms set their own prices. -They may hold prices steady for long periods of time or change them more frequently if that's what's required to meet objectives. -If a firm doesn't sell directly to final customers, it usually wants to administer both the price it receives fro intermediaries and the price final customers pay. -Some firms don't even try to administer prices. They just meet competition-or worse, mark up their costs with little thought to demand. -Managers usually do have many choices. They should administer their prices, and they should do it carefully.

Seasonal Discounts

*discounts offered to encourage buyer to buy earlier than present demands requires. -If used by a manufacturer, this discount tends to shift the storing function further along in the channel. -It also tends to even out sales over the year. -Service firms that face irregular demand or excess capacity often use seasonal discounts.

Quantity Discounts

*discounts offered to encourage customers to buy in larger amounts. -Lets the seller get more of a buyer's business, or shifts some of the storing function to the buyer, or reduces shipping and selling costs- or all of these. -Two types: cumulative and noncumulative

Break-Even Analysis

*evaluates whether the firm will be able to break even- that is, cover all the costs- with a particular price. -Important because a firm must cover all costs in the long run or there is not much point being in business. -Method focuses on break even point (BEP)

Marginal Analysis

*focuses on the changes in total revenue and total cost from selling one more unit to find the most profitable price and quantity. -Shows how costs, revenue, and profit change at different prices. -the price that maximizes profit is that one that results in the greater differences between total revenue and total costs.

F.O.B: (Free On Board)

*free on board some vehicle at some place. his means that the seller pays the cost of loading the products onto some vehicle; then title to the products passes to the buyer. -Pricing names the place- often the location of the seller's factory or warehouse -The buyer pays the freight and takes responsibility for damage in transit.

Supporting Salespeople

*help the order-oriented salespeople, but they don't try to get orders themselves. -Their activities are aimed at enhancing the relationship with the customer and getting sales in the long run.

Consultative Selling Approach

*involves developing a good understanding of the individual customer's needs before trying to close the sale. -The salesperson is almost acting as a consultant to help identify and solve the customer's problem. -The sales rep makes some general benefit statements to get the customer's attention and interest. -Listens carefully to understand customer's needs. -Once the seller understands needs, the seller explains how the product fills those needs.

Prospecting

*involves following all the leads in the target market to identify potential customers. -Some companies provide prospect lists or a customer relationship management (CRM) database to make this part of the selling job easier.

Cooperative Advertising

*involves producers sharing in the cost of ads with wholesalers or retailers. -This helps intermediaries compete in their local markets. -Also helps the producer get more promotion for its advertising dollars because media usually give local advertisers lower rates than national or international firms.

Trade (functional) discount

*is a list price reduction given to a channel members for the job they are going to do.

Order-Taking

*is a routine completion of sales made certain that the customer is totally satisfied. -Usually requires ongoing follow-up to make certain that the customer is totally satisfied.

Sale Price

*is a temporary discount from the list price. -Sale price discounts encourage immediate buying -To get the sale price, customers give up the convenience of buying when they want to buy, instead buy when the seller wants to sell. -Quick way to respond to changing market conditions without changing the basic marketing strategy

Average Cost (per unit)

*is obtained by dividing total costs by the related quantity (that is, the total quantity that causes the total cost.)

Average Fixed Cost (per unit)

*is obtained by dividing total fixed costs by the related quantity

Average Variable Cost (per unit)

*is obtained by dividing total variable cost by the related quantity.

Price

*is the amount of money that is charged for "something" -Almost every business transaction in our modern economy involves an exchange of money-the ____- of something

Marginal Revenue

*is the change in total revenue that results from the sale of one more unit of a product.

Total Variable Costs

*is the sum of those changing expenses that are closely related to output ex. expenses for parts, wages, packaging material, outgoing freight, and sales commission. -At zero output, total variable cost is zero. As output increases, so does variable cost.

Total Fixed Cost

*is the sum of those costs that are fixed in total- no matter how much is produced. -ex. rent, depreciation, managers' salaries, property taxes, and insurance.

Robinson Patman Act (1936)

*makes it illegal an price discrimination if it injures competition -The law does not permit some price differences- but they must be based on 1. cost differences 2. the need to meet competition. -Both buyers and sellers are considered guilty if they know they're entering into discriminatory agreements.

Zone Pricing

*making an average freight charge to all buyers within specific geographic areas. -The seller pays the actual freight charges and bills each customer for an average charge. -reduces the wide variation in delivered prices that results from an FOB shipping point pricing policy. -Simplifies transportation charges.

Uniform Delivered Pricing

*making an average freight charge to all buyers. -A kind of zone pricing: an entire country may be considered as one zone- that includes the average cost of delivery in price Most often used when: 1. transportation costs are relatively low 2. the seller wishes to sell in all geographic areas at one price, perhaps a nationally advertised price.

Bid Pricing

*offering a specific price for each possible job rather than setting a price that applies for all customers. -When submitting this for a standardized product, the marketing manager may have to decide the firm's lowest acceptable price and how close to that price should be the bid. -A big problem on a complicated job is estimating all the costs that will apply. -A complicated bid may involve thousands of cost components. -Further, management much include an overhead charge and charge for profit.

Flexible-Price Policy

*offering the same product and quantities to different customers at different prices. -When computers are used to implement flexible pricing, the decisions focus more on what type of customer will get a price back.

Net

*payment for the face value of the invoice is due immediately. -These terms are sometimes changed to net 10 or net 30, which means payment is due within 10 or 30 days. -Usually is stated

Advertising Allowances

*price reductions given to firms in the channel to encourage them to advertise or otherwise promote the supplier's products locally.

Advertising Allowance

*price reductions to firms further along the channel-encourage them to advertise or otherwise promote the firm's products locally.

Phony List Prices

*prices customers are shown to suggest that the price has been discounted form list. -Some customers seem more interested in the supposed discount than in the actual price. -Most businesses, trade associations, and government agencies consider this unethical. -FTC tries to stop it

Dumping

*pricing an product sold in a foreign market below the cost of producing it or at a price lower than in its domestic market. -laws are usually designed to protect a country's domestic producers and jobs,

Institutional Advertising

*promotes an organizations image, reputations, or ideas rather than a specific product.

Unfair Trade Practice Acts

*put a lower limit on prices, especially at the wholesale and retail levels. -they have been passed in more then half the states in the US -Selling below cost in these states is illegal. -Wholesalers and retailers are usually required to take a certain minimum percentage markup over their merchandise-plus-transportation -the practical effect of these laws is to protect certain limited-line food retailers- such as dairy stores- from the kind of "ruinous" competition supermarkets might offer if they sole milk as a leader, offering it below cost for a long time.

Discounts

*reductions from list price given by a seller to buyers who either give up some marketing function or provide the function themselves. -useful in marketing strategy planning -Think about what function that buyers are giving up, or providing, when they get each of these discounts.

Cash Discounts

*reductions in price to encourage buyers to pay their bills quickly. -The term for these discount usually modify the net terms.

Rebates

*refunds paid to consumers after a purchase -are also used on lower-priced items -give a producer a way to be certain that final customers actually get the price reduction. -If the _____ amount were just taken off the price charged intermediaries, they might not pass the saving along to the customers.

Sales-Oriented Objective

*seeks some level of unit sales, dollar sales, or share of market- without referring to profit.

Profit Maximization Objective

*seeks to get as much profit as possible. -It might be stated as a desire to earn a rapid return on investment- or, more bluntly, to change all the traffic will bear.

Target Return Objective

*sets a specific level of profit as an objective. -Often the amount is stated as a percentage of sales or of capital investment. -Objective: has administrative advantages in a large company. Performance can be compared against the target. Some companies eliminate diving the target rate of return.

Value Pricing

*setting a fair price level for a marketing mix that really give the target market superior customer value. -The focus is on the customer's requirements and how the whole marketing mix meets those needs. -Companies that use this deliver on their promises. -Try to give customer's pleasant surprises because it increases value and build customer loyalty. -They return the price if the customer isn't completely satisfied. -They avoid unrealistic price levels. -Build relationships so customers will come back.

Price Lining

*setting a few price levels for a product line and then marking all items at these prices. -This approach assumes that customers have a certain reference price in mind that they expect to pay for a product. -has advantages other than matching prices to what consumers expect to pay. -Main advantage is simplicity: for both salesperson and customers. -More advantages: Sales may increase because of 1. they can offer bigger variety in each price class 2. it's easier to get customers to make decisions within one price class. -Stock planning is simpler because demand is larger at the relatively fewer prices.

Everyday Low Pricing

*setting a low list price rather than relying on frequent sales, discounts, or allowance.

Prestige Pricing

*setting a rather high price to suggest high quality or high statuses. -Most common for luxury products -Also common in service industries, where the customer can't see the product in advance and relies on price to judge its quality. -Target customers who respond to give the marketing manager an unusual demand curve. -Instead of a normal down sloping curve, the curve goes down for a while and then bends back to the left again.

Demand-Backward Pricing

*setting an acceptable final consumer price and working backward to what a producer can charge. -Is commonly used by producers of consumer products, especially shopping products such as women's clothing and appliances. -Producer starts with the retail (reference) price for a particular item and then works backward-subtracting the typical margins that channel members expect. -This give the approximate price the producer can charge. -Then the average or planned marketing expenses can be subtracted from this price to find how much can be spent producing the item.

Product-Bundle Pricing

*setting one price for a set of products. -Firms that use this usually set the over all price so that it's cheaper for the consumer to buy the products at the same time than separately. -This encourages customers to spend more and buy products that they might not otherwise buy- because the added cost of the extra is not as high as it would normally be, so the value is better. -Most firms that use this also set individual prices for the products. -This may increase demand by attracting customers who want one item in a product assortment but don't want to extras.

Full-Lining Pricing

*setting prices for a while line of products. -Used in two cases: -All products in the company's line are aimed at the same general target market, which makes it important for all prices and values t be logically related. *the difference among the prices and benefits should appear reasonable when the target customers are evaluating them. *a marketing manager sometimes adds a higher-priced items to an existing product line to influence customer reference prices. *The highest-priced product might not get many sales, but it makes the second-highest-product in the line appear less expensive by comparison -The different products in the line are aimed at entirely different target markets so there doesn't have to be an relation between the various prices.

Complementary Product Pricing

*setting prices on several products as a group. -this may lead to one product being priced very low so that the profit from another product will increase, thus increasing the product's group's total profits. -Differs from full-line pricing because different production facilities may be involved- so there's no cost allocation problem. -Instead, the problem is really understanding the target market and the demand curves for each of the complementary products.

Odd-Even Pricing

*setting prices that end in certain numbers. -Some marketers use this pricing because they think consumers react better to these prices- perhaps seeing them as "substantially" lower than the next highest even price. -Assume they have a jagged demand curve that slightly higher prices will substantially reduce quantity demand.

Psychological Pricing

*setting prices that have special appeal to target customers. -Some people think there are whole ranges of prices that potential customers see as the same. -So price cuts in these ranges do not increase quantity sold.

Bait Pricing

*setting some very low prices to attract customers by trying to sell more expensive models or brands once the customer is in the store -kinda like leader pricing; but the seller doesn't plan to sell many at the low price. -if successful, the demand for higher-quality products expands. -This approach may be sensible part of strategy to trade up customers. -Customers may be well served if-once in the store- they find a higher priced product offers features better suited to their needs. -Also criticized as unethical

Leader Pricing

*setting some very low prices to get customers into retail stores (bargains) -The idea is not only to sell large quantities of the leader items but also to get customers into the store to buy other products. -normally used with products for which consumers do have a specific reference price.

Push Money (or Prize Money) Allowances

*sometimes called PM's or spiffs- are given to retailers by manufacturers or wholesalers to pass on to the retailer's salesclerks for aggressively selling certain items. -Are used for new items, slower-moving items, or higher-margin items. -They are often used for pushing furniture, clothing, consumer electronics, and cosmetics.

Advertising Agencies

*specialists in planning and handling mass-selling details for advertisers. -Independent and have different view points from firm in need. -Can often do things more economically than the company's own department -ending relationships with an agency is serious. -Some full service agencies handle any activity related to advertising publicity, or sales. May even handle over all marketing objectives, marketing research, etc.

Fixed-Cost (FC) Contribution per unit

*the assumed selling price per unit minus the variable cost per unit. Formula: BEP = (Total Fixed Cost/ Fixed cost Contribution per unit) -To break even, we must cover total fixed costs. -Therefore, we must figure the contribution each unit will make to covering the total fixed costs (after paying for the variable costs to produce the item) -When we divide this per-unit contribution into the total fixed costs that must be covered, we have the BEP. -Note that once the fixed costs are covered, the part of revenue formerly going to cover fixed costs in now all profit.

2/10, net 30

*the buyer can take 2% discount off the face value of the invoice if the invoice is paid within 10 days. Otherwise, the full face value is due within 30 days. -Usually is stated or understood that an interest charge will be added after to 30 day-free credit period.

Stockturn Rate

*the number of times the average inventory is sold in a year. -A low stockturn rate may be bad for profits.

Reference Price

*the price consumers expect to pay -If a firm's price is lower than a customer's reference price, customers may view the product as a better value and demand may increase

Basic List Prices

*the prices final customers or users are normally asked to pay for products.

Break Even Point (BEP)

*the quantity where the firm's total cost will just equal its total revenue

Close

*the salesperson's request for an order.

Markup Chain

*the sequence of markups firms use at different level in a channel- determines the price structure in the whole channel. -The markup is figured on the selling price at each level of the channel.

Sales Quota

*the specific sales or profit objective a salesperson is expected to achieve. -often receive bonuses for meeting quota.

Total Cost

*the sum of total fixed and total variable costs -Changes in total cost depend on variations in total variable costs, since total fixed costs stay the same.

Competitive Advertising

*tries to develop selective demand for a specific brand. -A firm is forced into competitive advertising as the product life cycle moves along: to hold its own again competition.

Reminder Advertising

*tries to keep the product's name, before the public. -May be useful when the product has achieved brand preference or insistence, perhaps in the market maturity or sales decline stages.

Product Advertising

*tries to sell a product Three Categories 1. Pioneering: know 2. Competitive: like 3. Reminder: remember

Skimming Price Policy

*tries to sell the top (skim the cream) of a market- the top of the demand curve- at a high price before aiming at more price-sensitive customers. -May maximize profits in the market introduction stage for an innovation, especially if there are few substitutes or if some customers are not price sensitive. -Useful when you don't know very much about the shape of the demand curve. -Sometimes safer to start with a high price that can be reduced if customers balk.

Penetration Pricing Policy

*tries to sell the whole market at one low price. -This approach might be wise when the elite market- those willing to pay a high price- is small. -This is the case when the whole demand curve is fairly elastic -More attractive if selling larger quantities results in lower costs because of economies of scale. -may be wise if the firm expects strong competition very soon after introduction.

Prepared Sales Approach

*uses a memorized presentation that is not adapted to each individual customer. -Says that a customer faced with a particular stimulus will give the desired response: a yes answer -Firms may rely on this canned approached when only a short presentation is practical. -Sensible when salespeople aren't very skilled. -Company can control what they say and in what order. *Weakness: -It treats all potential customers alike.

Value In Use Pricing

*which means setting prices that will capture some of what customers will save by substituting the firm's product from the one currently being used. -The number of customers who have different levels of potential savings also provides some idea about the shape of the demand curve. -To capture the value created, the seller must convince buyers of the savings-and buyers are likely to be skeptical.

Customer Service Reps

*work with customers to resolves problems that arise with a purchase, usually after the purchase has been made -It's useful to think of customer service reps as the salespeople who promote a customer's next purchase-by being sure that the customer is satisfied with a pervious purchase.

How long to spend with whom?

- A sales rep must qualify customers- to see fi they deserve more effort. -By weighing the potential sales volume as well as the likelihood of a sale.

Selecting good sales people take judgement, plus

- It is important to hire well-qualified salespeople who will do a good job. -Managers may hire friends and relations, or whoever is available, because they feel that the only qualifications for a sales ob is friendly personality. *leads to poor sales. -One problem is selecting salespeople is that two different sales jobs with identical titles may involve very different selling or supporting tasks and require different skills.

Customer Service reps are customer advocates

- Regardless of whether the firm or customer causes the problem, customer service reps need to be effective communicators, have good judgements, and realize that they are advocates not only for the firm but also for its customers.

Sales people need training

- Sales training should be modified based on the experience and skills of the group is involved. -Sales training program should cover at least the following ares: 1. Company policies and practices 2. Product Information 3. Building Relationships with customer firms 4. Professional Selling skills.

Sales Promotion

- refers to those promotions activities that stimulate interest, trial, or purchase by final customer or other in the channel. -Generally used to complement the other promotion methods. -Last for a limited time period. -Can be often implemented quickly and get sales results sooner. -Short term action -For an intermediary, such an action might be a decision to stock a product, provide a special display space, or give the product extra sales emphasis. -For a customer, the desired action might be to try a new product, switch from another brand, or buy more of a product.

Combination Plan

- some salary and some commission. -offers security and incentive -bonuses, profit sharing, pensions, stock plans, insurance, and other fringe benefits.

Disadvantages of flexible pricing

-A customer who finds that other paid lower prices for the same marketing mix will be unhappy. -If buyers learn that negotiating is in their interest, the time needed for bargaining will increase. This can increase selling costs and reduce profits. -It can also frustrate customers.

Good salespeople are trained, not born

-A salesperson needs to be taught about he company and its products, about giving effective sales presentations, and about building relationship with customers.

Salary gives control-if there is close survision

-A salesperson on straight salary earns the same amount regardless of how he or she spends time. -The salaried salesperson is expected to do what the sales manager asks -The sales manager maintains control only by close supervision. - As a result, straight salary or large salary element in the compensation plan increases the amount of sales supervision needed.

Prices move down the demand curve

-A skimming policy usually involves a slow reduction price over time. -So as the price level steps down the demand curve, new Place, Product, and Promotion policies may be needed too.

Markup are related to gross margins

-A standard markup is often set close to a firm's gross margin -Managers see gross margins on their opening (profit and loss) statements. -The gross margin is the amount left-after subtracting the cost of sales (cost of goods sold) from net sales- to cover the expense of selling products. -Smart producers pay attention to the gross margins and standard markups of intermediaries in their channel

Ethical conflicts may arise

-Ad agencies usually work closely with their clients, and they often have access to confidential information -This can create ethical conflicts if an agency is working with two or more competing clients.

Some media hep zero in on specific target markets

-Advertisers direct more attention to reaching smaller, more defined target markets. -Even traditional media are becoming more targeted. -Radio has become more specialized medium. Some stations cater to particular ethnic groups such as hispanics, African Americans , and French. Other have markets in rock, country, classical. -Many magazines serve only special-interest groups. Standard Rate and Data provides a guide to the thousands of magazines now available in the US

Choosing the "Best" Medium- How to Deliver the Message

-Advertising Media are the various means by which the message is communicated to the target market -Effectiveness depends on how well the medium the medium fits with the rest of a marketing strategy.. depends on: 1. Your promotion objective 2. What target market you want to reach 3. The funds available for Advertising 4. The Nature of the media, including whom they reach, with what frequency, with what impact, and what costs.

Total spending is big and growing internationally

-Advertising in theUS accounts for 35% of worldwide ad spending -Europe accounts for 30 percent -Asia: 24% (thought spending is growing fast, especially in china) -The biggest marketers are investing ad dollars wherever they can find revenue or potential for growth- and thats not the US

Specialized media are small, but gaining

-Advertising specialists always look for cost-effective new media that will help advertisers reach their target markets -Some B2B advertisers are usually specialized media to target difficult to reach target markets.

Hindsight may lead to foresight

-After ads run, researchers may try to measure how much consumers recall specific products or ads. -Similarly, most Internet advertisers keep track of how many "hits" on the firm's website come from ads placed at other websites.

Sales promotion for own employees

-Aimed at the company's own sales force might try to encourage providing better service, getting new customers, selling a new product, or selling the company's whole line. -Ongoing sales promotion work might also be aimed at the sales force- to help sales management.

Text ads for those who ask

-Among teens, texting is more popular -Some use this as a target point

Commissions can both motivate and direct

-An incentive compensation plan can help motivate salespeople, but incentives must be carefully aligned with the firm's objectives.

Smartphones know customers' locations.

-An opportunity comes from the GPS located in the smartphone, which has the ability to tell advertisers where a customer is located. -Works best for location based on activities

Sales Promotion is hard to manage

-Another problem is that sales promotion area is that it is easy to make big, costly mistakes. -Because sales promotion includes such a wide variety of activities, it's difficult for the typical company to develop skill in managing all of them. -Difficult because promotion is typically custom design and then used only once. -Making sales promotion work is a learned skilled, not a sideline for amateurs

Publicity

-Any unpaid form of non personal presentation of ideas, goods, or services. -Public relations (PR) person or staff might provide information that makes it easy for the press to write stories about the company, PR develops press kits that include promotional materials. -Can be used to help a firm sell more products, generate leads for the sales force, get contributions to a charitable cause, or encourage people to join an organization.

Ignoring demand is the major weakness of average-cost pricing

-Average-cost pricing works well if the firm actually sells the quantity is used to set the average-cost price. -Loss may result if actual sales are much lower than expected. -If sales are much higher than expected, then profits may be very good. -To use average cost pricing, a marketing manager must make some estimate of the quantity to be sold in the coming period. -Unless this quantity is related to price- that is, unless the firm's demand curve is considered- the marketing manager may set a price that doesn't even cover a firm's total cost. -In stable situations, prices set by this method may yield profits not not necessarily maximum profits. -Note that such cost baed prices may be higher than a price that would be more profitable for the firm. -When demand conditions are changing, average-cost pricing is even more risky.

Different Types of Advertising over Adoption Process Stages

-Awareness: *Teaser campaigns *Pioneering ads * jungles/slogans *Viral advertising *Announcements -Interest: *Informative/Descriptive ads *Image/Celebrity ads *Search ads *Email ads *Demonstration of benefits -Evaluation and Trial *Competitive ads *Persuasive Copy *Comparative Ads *Testimonials -Decision *Direction-action reatail ads *Point-of-Purchase ads *Price deals offers -Confirmation *Reminder ads *Informative "why ads"

Most Internet ads seek a direct reponse

-Banner Ad: which is a small rectangular box that usually includes text, graphics, and sometimes video to get attention and hold interest. -Pop-Up ad: opens in a new browser window (and blocks what the web user is trying to view) -A sponsored search ad also seeks a direct response

Some ads know where customers have been on the web

-Behavioral Targeting: delivers ads to consumers based on websites they have previously visited. -Some websites place a small file called a cookie on the computer of people who visit their sites -These cookies give an advertiser some information about the consumer.

Break-even analysis is helpful- but not a pricing solution

-Break-even analysis is helpful for evaluating alternatives. -It is also popular because it's easy to use. -the graph: with its straight-line total revenue curve-makes it seem that any quantity can be sold at the assumed price. -Like other cost-oriented approaches, it does not consider the effect of price on the quantity that consumers will want- this , the demand curve. -average-cost pricing does not take into account cost variations

"Deal-of-the-Dy" sites giving big discounts

-Businesses offering these big discounts hope to attract new customers who will make future purchases at regular prices, or purchase more than the amount on the certificate. -Many deal-seekers are only loyal to the next deal- and not the business offering it.

Coupons- more for less

-By presenting a coupon to a retailer, the consumer is give a discount off list price.

Click Fraud raises Ethical Concerns

-Click fraud: occurs when a person or software program automatically clicks on an ad without having any interest in the ad's subject. -The intent is to defraud the advertiser and make money for an unscrupulous website.

Demand must be considered too.

-Competition must be considered when adding in overhead and profit for a bid price. -Some bidders use the same overhead and profit rates on all jobs, regardless of competition, and then are surprised when they don't get some jobs.

Government agencies may say what is fair

-Differences in rules mean that a marketing manager may face very specific limits in different countries, and local expert may be required to ensure that a firm doesn't waste money developing ads that will never be shown or which consumers will think are deeper.

Holding Interst

-Difficult -If there is no relation between what got your attention and the marketing mix or the ad does not address your needs, you'll move on. -To hold interest, the tone and language of the ad must fir with the experiences and attitudes of the target customers and their reference groups. -ads that relate to specific emotions. -Hope that the good feeling about the ad will stick

Straight Salary

-Earns the same amount amount regardless of how he or she spends time. Expected to do what manager asks

Summary of Relationships among Quantity, Cost, and Price Using cost-Oriented Pricing

-Estimated Quantity Sold -Average Fixed Cost Per Unit * Variable Cost per unit -Average Total Cost Per Unit *Profit per unit -Cost-Oriented Selling Price per unit -Quantity Demanded at Selling Price -Cost oriented pricing requires an estimate of the total number of units sold. -That estimate determines the average fixed cost per unit and thus the average total cost. -Then the firm adds the desired profit per unit to the average total cost to get the cost-oriented selling price. -How customers react to that price determines that actual quantity the firm will be able to sell. -But the quantity may not be the quantity used to compare the average costs. *disadvantage: it ignores competitors' costs and prices.

Is bait pricing ethical?

-Extremely aggressive and sometimes dishonest advertising -Some store make it very difficult to buy bait items -The FTC considers this type of bait pricing a deceptive act and has banned its use in interstate commerce.

Salespeople can adjust prices to the situation

-Flexible pricing is most common in the channels, in direct sales of business products, and at retail for expensive shopping products. -Retail shopkeepers in less-developed economies typically use flexible pricing-shopkeepers start with high prices by bargain to try to make a sale at a price the customer will accept while still providing maximum profit to the seller. -Involve personal selling, not mass-selling. -The advantage of flexible pricing is that the salesperson can adjust price-considering prices charged by competitors, the relationship with the customer, and the customer's bargaining ability. -Flexible price policies often specify a range in which the actual price charged must fall.

Helping to buy is good selling

-Good salespeople don't just try to sell the customer. -Rather, they try to help the customer buy- by understanding the customer's needs and presenting the advantages and disadvantages of their -Helpfulness results in satisfied customers and long-term relationships

Research and testing can improve the odds.

-Ideally, advertisers should pretest advertising before it runs rather than relying solely on their own guesses about how good an ad will be. -Creative people often judge on basis of originality -Scanner sales data from retailers in those test markets can provide an estimate of how an ad is likely to affect sales *This approach will become even more powerful in the future as more cable systems allow viewers to provide immediate feedback to an ad as it appears on TV or on the Internet.

Compensating and Motivating Salespeople

-Ideally, sales reps should be paid in such a way that what they want to do-for personal interest and gain- is in the company's interest too. -Two basic decisions must be made in developing a compensation plan: (1) the level of compensation (2) the method of payment.

Market share objectives are popular

-If a company has a large market share, it may have between economies of scale than its competitors. -A company with a longer-run view may aim for increased market share when the market is growing. The hope is that future volume will justify sacrificing some profit in the short run.

F.O.B pricing is easy

-If a firm wants to pay the freight for the convenience of customers, it can use FOB delivered or FOB buyer's factory. -the title does not pass until to products are delivered -If the seller wants title to pass immediately but is willing to prepay freight (and then include it in the invoice) FOB seller's factory- freight prepaid can be used. FOB shipping point pricing simplifies the seller's pricing-but it may narrow the market.

Meeting competitors' prices may be necessary

-In a mature market there is downward pressure on both pries and profit margins. -Differentiating the value a firm offers may not be easy when competitors can quickly copy new ideas. -There might be little choice about price in oligopoly situation. -Pricing at the market-meeting competition- may be the only sensible policy. -To raise prices might lead to a large loss in sales, unless competitors adopt the higher price too. -Cutting prices would probably lead to similar reductions by competitors- downward along an inelastic industry demand curve. -This can only lead to a decrease in total revenue for the industry and probably for each firm.

Institutional advertising-remember our name

-Institutional advertising usually focuses on the name and prestige of an organization industry. -Seek to inform, persuade, or remind. -Objectives: develop good will or improve an organization's relations with various groups. -Companies sometimes rely on institutional advertising to present the company in a favorable light, perhaps to overcome image problems. -Also used to advocate a special cause.

Getting attention

-Is the ad's first job

Wholesalers' order takers-not getting orders but keeping them

-Main job of wholesalers' order takers is to maintain close contact with customers, place orders, and check to be sure the company fills orders promptly. -Order takers handle any adjustments or complaints and generally act as between the company and its customers.

Producers may set minimum retail prices

-Manufactures usually suggest a retail price and then leave it up to retailers to decide what to charge in their local markets.

Big data helps managers make the most of flexible pricing

-Many firms use big data to more accurately identify target customers and offer them particular prices depending on the firm's marketing strategy. -Many sources of big data can be read in real-time, so pricing "experiments" can be run. -Dynamic Planning: offers products at a price that changes according to the level of demand, the type of customer, or the state of the weather. -Big data can be used to more accurately predict future demand and adapt prices to maximize revenue.

A rough demand estimate is better than note

-Marginal analysis encourages managers to think carefully about what they do know about cost and demand. -The focus is on getting an estimate of how profit might vary across a range of relevant prices.

A profit range is reassurng

-Marginal analysis focuses on the price that earns the highest profit. -There is usually a range of profitable prices. -So the effort of trying to estimate demand will probably lead to being some place in the profitable range. -In contrast, mechanical use of average-cost pricing could lead to a price that is much too high- or much too low.

Medium should fit promotion objective

-Medium should support the promotion objectives -Product benefits: Tv or Internet -Inform/ Telling a story: Internet -Business in local markets: Newspaper -Broad target audience in need of color: magazine.

There are price choices in most markets

-Most operate in monopolistic competition, where products and whole marketing mixes are not exactly the same.

AIDA

-Most sales presentations follow this AIDA sequence. -The time a sales rep spends on each of the steps varies depending on the situation and the selling approach being used. *get the attention and hopefully move to action

Payment terms and cash discounts set payment dates

-Most sales to business are made on credit. -The seller sends a bill (invoice) by mail or electronically, and they buyer's accounting department processes it for payment. -Some firms depend on their suppliers for temporary working capital (credit). -Therefore, it is very important for both sides to clearly state the terms of payment- including the availability of cash discounts- and to understand the commonly used payment terms.

Tie customer sales promotions to objective

-Much of the sales promotion aimed at final customers or users tried to increase demand, perhaps temporarily, or to speed ip the time of purchase. -Sales will continue at higher level after the promotion is over if satisfied customers make repeat purchases. Thus, they cost of the sales promotion in this situation might be viewed as a long-term investment. -Once a product is established, consumer sales promotion usually focuses on short-term sales increases.

Marketers want to be "found" when customers "search"

-Not all publicity relies on mass media message channels. -Customers can also find publicity though search, pass-along, or experience -This model recognizes that customers are not passive receivers of communication: in fact, they often seek out and select information that meets their needs. -Search engine optimization: refers to technical approaches that make websites more likely to come up high in search results

Commission Pay

-Offers the most incentive and is tied to results actually achieved. -Based on percentages of dollar sales, but it may be a financial incentive based on other outcomes- such as the number of new accounts, customer satisfaction ratings, or customer service problems resolved.

Advertising, Publicity, Sales Promotion, and Marketing Strategy Planning

-On a per-contact basis, these promotion methods provide a relatively low-cost way to inform, persuade, and activate customers. -Meets customer's needs -Unfortunately the results that marketers actually achieve with advertising publicity, and sales promotion are very uneven. -Mass selling can be exciting and involving, or it can be downright obnoxious -Publicity is unpaid media: low cost and more effective.

Arousing Desire

-One of the ad's most difficult jobs. -Must convince customers that the products can meet their needs. -Should focus on unique selling propositions that aims at an important unsatisfied need. -This can help differentiate the firm's marketing mix and position its brand as offering superior value to the target market.

Retail Order Getters Influence Consumer Behavior

-Order getters are also helpful for selling heterogeneous shopping products.

Producers' order takers- train ,explain, and collaborate.

-Order takers work on improving the whole relationship with their accounts, not just on completing a single sale. - Someone has to explain details, make adjustments, handle complaints, explain new prices or terms, place sales promotion materials, and keep customers informed of new developments. -Firms sometimes use order-taking jobs to train potential order getters and managers. -being alert is a good characteristic to have

Most Advertisers pay only if ads deliver

-Pay per click: advertiser's pay only when a customer clicks on the ad and link to the advertiser's website. -Pay per click advertising is a big shift from traditional media where firms pay for ads based on an estimate of how many people will see the ad. -Many firms lie this ability to directly track the cost of advertising and resulting sales.

Personal Selling is Important

-Personal selling is often a company's largest single operating expense.

Possible Pricing Objectives

-Pricing Objectives *Profit Oriented 1.Target Return 2. Maximize Profits *Sales Oriented 1. Dollar or Unit Sales Growth 2. Growth in Market Share *Status Quo Oriented 1. Meeting Competition 2. Non price Competition

Price Has Many Strategy Dimensions

-Pricing decision affect both the number of sales a firm makes and how much money it earns. -Price is what a customer must give up to get the benefit.

Objectives Should Guide Strategy Planning for Price

-Pricing objectives should be explicitly stated because they have a direct effect on pricing policies as well as the methods used to set prices.

Profit maximization can be socially responsible

-Pricing to achieve profit maximization doesn't always lead to high prices. Low prices may expand the size of the market and result in greater sales and profits. -If a firm is earning a very large profit, other firms will try to copy or improve on what the company offers. This can lead to lower prices.

List Price May Depend on Geographic Pricing Polices

-Retail listing prices sometimes include free delivery. - Or free delivery may be offered to some customers as an aid to closing the sale.

Lower markups can speed turnover and the stockturn rate

-Retailers and wholesalers realize that a business runs up costs over time. -If they can sell a much greater amount in the same time period, they may be able to take a lower markup and still earn higher profits at the end of the period.

Consumers say "charge it"

-Retailers usually accept credit cards from services like Visa and pay a percent of the revenue for each credit sale for the service. -Aggressive promotions to sign up customers for their own credit cards because customers that carry a store's credit card may spend more money at the store. -However, credit easily exposes retailers to the risk of losses when the economy turns down.

Where does the markup chain start?

-Rule of thumb Selling Price = Average production cost per unit X 3 -the first step, selecting the appropriate cost per unit to build on

Wholesalers' Order Getters-Almost Hand It To The Customer

-Sales people for agent wholesalers are often order getters. (manufactures and brokers) -Once the order-getting is done and the customers become established and loyal, producers may try to eliminate the agents and save money with their own order takers.

Salespeople Can Be Strategy Planners Too

-Sales people have choices about 1. Which customers to target 2. which particular products to emphasize 3. which intermediaries to rely on or help 4. what message to communicate and how to use promotion money 5. how to adjust prices

**set effort priorities

-Select target Customer *Identify who influences purchase decision and/or who is involved in buyer-seller relationship -Preplan Sales Call and Presentations * Prepared presentation * Consultative Selling Approach * Selling Formula Approach -Make Sales Presentation *Create Interest *Overcome Problems/Objections *Arouse Desire -Close Sales (get Action) -Follow up after the sales call to establish relationship (customer acquisition) - Follow up after the purchase to maintain and enhance relationships (customer retention)

Advertising objectives must be specific

-Should grow out of the firm's overall marketing strategy and the promotion jobs assigned to advertising. -Advertising objectives should be more specific than personal selling objectives. -Advantages of Personal Selling: 1. The sales person can shift the presentation for a specific customer. *but it must reflect thousands or millions of them

Demand estimates involves "if-then" thinking

-Since the price determines what quantity will be sold, a manager needs an estimate of the demand curve to compute total revenue.

Big data tells advertisers even more about customers

-Social targeting: delivers ads to consumers based on the conversations and behaviors they exhibit in social media and more generally surfing the web. -Together this big data can be linked to individual consumers and give advertisers detailed insight about consumer wants and needs -Social targeting firms begin by identifying customers who have purchased a particular brand.

Does sales promotion erode brand loyalty?

-Some argue that the effects of most sales promotions is temporary and that money spend on advertisng and personal selling help the firm more over the long term. -When the market is not growing, sales promotion may just encourage :deal-prone" customers to switch back and forth among brands. -It also increases the prices that consumers pay because it increases selling costs. -One escape from this competitive rat race is for the marketing manager to seek new opportunities-with a strategy that doesn't rely solely on short-term sales promotions for competitive advantage.

Success depends on the total marketing mix

-Some break though ads do have a very direct effect on a company's sales-and they advertising literature is filled with success stores that "prove" advertising increases sales. -The total marketing mix-not just advertising-is responsible for the sales result. -Sales results also affected by what competitors do and by other changes in the external market environment.

Special promotion allowance might not be allowed

-Some firms violate Robinson-Patman Act by providing push money, advertising allowances, and other promotion aids to some customers and not other. -The act prohibits such special allowances, UNLESS THEY ARE MADE AVAILABLE TO ALL CUSTOMERS ON "PROPORTIONATELY EQUAL" TERMS.

Some just want satisfactory profits

-Some managers aim for only satisfactory returns. -They just want returns that ensure the firm's survival and convince stockholders they're doing a good job. -Small business aim for a profit that will provide a lifestyle. -Many private and public nonprofit organizations set a price level that will just recover costs. AKA their target return figure is zero. -Firms that provide critical public services sometimes pursue only satisfactory long-run targets. -They are well aware that the public expects them to set prices that are in the public interest. -They may also have to face public or government agencies that review and approve prices.

Retail order takers-often they are poor salesclerks

-Some retail clerks perform poorly because they aren't paid much-often only the minimum wage. -Customers expect prompt and friendly service.

Regulators can set prices

-Sometimes a national government will impose temporary price controls, usually in effort to control inflations. -In countries with market-directed economies, these types of price controls are selective.

Customers Experience branded services

-Sometimes it's a customer's experience with a brand that grabs attention-such as when brands offer everyday services that improve customer's lives.

Can cost analysis justify price differences?

-The Robinson-Patman Act allows price differences if there are cost differences -The justification must be developed before different prices are set.

What does "like grade and quality" mean?

-The Robinson-Patman Act alls marketing manager to change different prices for similar products if they are not of :like grade and quality". -But the FTC says that if the physical characteristics of a product are similar, then they are of like grade and quality.

Most advertisers aren't really spending that much

-The advertising spending as a percent pf sales dollars varies significantly across product categories. -Producers of consumer products generally spend a larger percent than firms that produce business products.

Match you market with the media

-The audience for media that do reach your target market may also include people who are not in the target group. -Advertisers pay for the whole audience the media delivers, including those who aren't potential customers.

Some sellers use sequential price reductions

-The basic idea is that the seller starts with a relatively high price and sells as much of the product as possible at the same price, but plans for the start on a series of step-by-step price reductions until the product is sold out. -This approach is most commonly used with products that have a short life or are in short supply, but which would just run up inventory costs if they are not sold. -However, sellers hope if they offer the right products they'll never get to price reductions (which earns lower margins). -Rather, they prefer to be bringing in the next round of products to start the process over again.

Break-even charts help find the BEP

-The chart is based on a particular selling price. -The chart has lines that show total costs (total variable plus total fixed costs) and total revenues at different levels of production. -The difference between the total revenue and total cost at a given quantity is the profit.

Evaluating the customer's price sensitivity

-The first is the most basic. When customers have substitute ways of meeting a need, they are likely to be more price sensitive. -The impact of substitutes on price sensitivity is greatest when it is easy for customers to compares prices. -People tend to be less price sensitive when someone else pays the bill or shares the cost. -Customers tend to be more price sensitive the greater the total expenditure. -Customers tend to be more price sensitive the significance of the end benefit. -Customers are sometimes less price sensitive if there are switching costs: costs that a customer faces when buying a product that is different from what has been purchases or used in the past. *switching costs can be quite high for some business customers. * but switching costs can apply to final consumers as well. ,

Size of sales force depends on workload

-The first step is estimating how much work can be done by one person in some time period. -Then the sales manager can make an educated guess about how many people are required in total.

Customer service is not the product..

-The focus is on the service that is required to solve a problem that a customer encounters with a purchase.

Incentives should link efforts to results

-The incentive portion of a sales rep's compensation should be large only if there is a direct relationship between the salesperson's efforts and results. -Otherwise, a salesperson is a growing territory might have rapidly increasing earnings, while the sales rep in a poor are will have little to show for the same amount of work.

Marginal revenue can be negative

-The lower price required to sell the larger quantity may reduce total revenue. -therefore, it's important to evaluate the likely effect of alternative prices on total revenue and profit.

Costs are complicated in full-line pricing

-The marketing manager must try to recover all costs on the whole line- perhaps by pricing quite low on more competitive items and much higher on ones with unique benefits. -However, estimating costs for each product is a challenge because there is no single right way to assign a company's fixed costs to each of the products. -To avoid mistakes, the marketing manager should judge demand for the whole line as well as demand for each individual product in each target market.

Price-Level Policies: Over the Product Life Cycle

-The price level decision should focus first on the nature of the market demand. -High price may lead to higher profit from each sales but to fewer units sold. -Lower price might appeal to more potential customers

Credit cards raise ethical and legal concerns

-The problem becomes worse when an unpaid balance on a credit card carries a very high interest rate. -This can increase the price a customer pays. -Even worse, it leave many low-income consumers trapped in debt.

Salespeople Represent the Whole Company-and Customers too

-The salesperson is often a representative of the whole company- responsible for explaining its total effort to customers rather than just pushing products. The sales person may provide information about products, explain company policies, and even negotiate prices or diagnose technical problems. -the sales person also represents the customer back inside the selling firm

Buying on credit changes consumer behavior in developing countries

-This creates opportunities for products of more expensive products. -Consumers often pay for the benefits of buying on credit with inflated prices.

Compensation varies with job and needed skills

-To build a competitive sales force, a company must pay at least the going market wage for different kinds of salespeople.

One-way Communication

-Tools for one-way comm with business customers. because business customers often search the internet for solutions to real business problems, they often turn to "thought leaders" -webinars, white pages, case studies -may be used for interactive communication -Social networks

Selling skills can be learned

-Training can also help salespeople learn how to be more effective in cold calls on new prospects, in listening carefully to identify a customer's real objections, in closing the sale, and in working with customers in difficult customer service situations. -But a complete training program adds on-the-job observation of effective salespeople and coaching from sales supervisors.

Customer viewing moves to new screen

-Two new screens: the computer and phone

Can you legally meet price cuts?

-Under the Robinson-Patman Act, meeting a competitor's price is permitted as a defense in price discrimination cases. -A major objective of antimonopoly laws is to protect competition, not competitors. -"meeting competition in good faith" still seems to be legal.

The Biggest agencies handle much of the advertising

-Vast majority of advertising agencies are small, with 10 or fewer employees -mega-agency can offer varied services

Producers' order getters- find new opportunities

-^Producers use order getters to locate new prospects, one new accounts, seek new opportunities, and help establish and build channels -Top level customers are interested in ways to save or make more money than in technical details. -Good order getters carter to this interest. -They help the customer identify ways to solve problems; then they sell concepts and ideas, not just physical products . -Order getters for professional services- and other products where service is a crucial element of the marketing mix- face a special challenge. -The customer usually can't inspect a service before deciding to buy. -The order getter's communication and relationship with the customer may be the only basis for evaluating the quality of the supplier.

Coupons, deals, and rebates can segment the market

-can help marketing managers attract new customers or move customers who are interested in a product to take action and buy. -To appeal to both groups and maximize profits, many firms now offer a variety

Ethical Conflicts

-ethical conflicts are more likely when the sales rep's personal outcomes (ex commission income) or the selling firm's profits hinge on making sales to customers whose needs are only partially met by the firm's offering.

Pass Along

-occurs when one person suggests that other read or watch something. -People are more likely to pay attention to content recommended by a person they know.

Why cash discounts are given and should be evaluated

-smart buyers carefully evaluate cash discounts. -A discount of 2/10 net 30 may not look like much at first. But the buyer earns a 2 percent discount for paying the invoice just 20 days sooner than it should be paid anyways. -By not taking the discount, the company in effect is borrowing at an annual rate of 36 percent. -That is, assuming a 360 day year and dividing it by 20 days, there are 18 periods during which the company could earn 2 %- and 18 times 2 equals 35 percent a year

Ethical issues in cost-plus bid pricing

-some unethical sellers give bid prices based on cost-plus contracts a bad reputation by faking their records to make costs seem higher than they really are.

Sales Promotion for intermediaries

-sometimes called trade promotion -Emphasizes price-related matters. -Objective: to encourage intermediaries to stock new items, buy in larger quantity, buy early, or stress a product in their own promotion efforts. -Tools: merchandise allowances, promotion allowances, and sales contests to encourage retailers or wholesalers to sell specific items or the company's whole line. -half of the sales promotion spending targeted at intermediaries has the effect of reducing the price that they pay for merchandise.

BEP can be stated in dollars too

-the easier way to compute the BEP in units and then multiply by assumed per-unit price.

Pricing Objectives

-these objectives drive decisions about key pricing policies 1. How flexible prices will be 2. The level of prices over the product life cycle 3. To whom and when discounts and allowances will be given 4. How transportation costs will be handled.

Let AIDA help guide message planning

-use the AIDA concept: *Getting Attention *holding Interest *arousing Desire *obtaining Action

Three types of Supporting Salespeople

1. Missionary salespeople 2. Technical Sales people 3. Customer Service reps

Three Basic Methods of Payment

1. Straight Salary 2. Straight Commission (incentive) 3. a combination plan

Decision Marketing Managers and Advertising Managers have to make

1. What they want to achieve through advertising 2. Who the target audience is 3. What kind of advertising to use 4. Which media t use to reach target customers 5. What to say (the copy thrust) 6. Who will do the work

Internet

Advantages: Ads link to more detailed website, can contain video/animation and audio, can have direct feedback, some "pay for results", easier to track results. Disadvantages: Hard to compare costs with other media, technology can make it easy to skip ads, only reaches computer users.

Outdoor and Cinema

Advantages: Captive audience, can select geographic areas, low costs, high visibility. Disadvantages: Outdoor- "glance" medium, must be a simple message. Cinema: primarily a younger audience.

Television

Advantages: Demographics, images building, good attention, wide reach, cable can be selective Disadvantages: "clutter" ads compete for attention, expensive, technology can make it easy to skip ads.

Newspaper

Advantages: Flexible, timely, local market, ads can be saved by consumers, low cost. Disadvantages: "Clutter"- ads compete for attention, poor photo reproduction, declining readership

Magazine

Advantages: High reader involvement, high-quality images possible, very targeted, good detail, can convey complex messages. Disadvantages: Inflexible, long lead times, cost can be high, declining readership.

Direct Mail

Advantages: Highly targeted, flexible, message can be longer and more complex, can personalize. Disadvantage: expensive per contact, poor image "junk mail", hard to retain attention.

Yellow Pages and Other Directories

Advantages: Reaches local customers ready to buy, relatively inexpensive, local Disadvantages: Many competitors listened in same place, hard to differentiate, new directories raise costs.

Radio

Advantages: Wide reach, segmented audience, inexpensive, can target local market. Disadvantages: Weak attention, many different rates, short exposure, no visual element, difficult to convey complex messages.

Obtaining Action

Direct response ads can sometimes help promote action by encouraging interested consumers to do something even if they are not ready to make a purchase.

Key Steps in the Person Selling Process

Prospect for new customer--> Set effort priorities--> Evaluate needs of established customers and business opportunity.