Marketing Exam 4: Ch. 14, 15, 16, 17

so ... ● Benefit:

"Propel fuels real women who are energized and empowered by physical activity and understand their needs to replenish, energize, and protect in all aspects of their lives."

● Attribute:

"With just 10 calories per serving, Propel hydrates and contains Vitamins C & E, B Vitamins, and antioxidants. Propel is conveniently available in both read-to-drink and powder form."

● The most underdeveloped skill that will determine your success in life is your ability to know and market your _________ __________ in any situation.

"unique value" ● Plan your work then work your plan. ● Planning takes time but the end results are worth it. ● Fail to plan...plan to fail.

● The four main discussion areas in advertising and sales promotion include:

(1) Advertising spending (2) Advertising strategy decisions (3) Advertising and the law (4) Publicity and communication (5) Sales promotion decisions

The Legality of Price Strategy ● The issues that limit pricing decisions include: (4)

(1) Unfair Trade Practices (2) Price Fixing (3) Price Discrimination (4) Predatory Pricing.

● Two basic decisions must be made in developing a compensation plan:

(1) the level of compensation (2) the method of payment. ○ Regarding the level of compensation, the amount of money a person can make should be at least comparable to competitors' compensation. ○ Compensation varies with the job and needed skills.

● Mass-merchandisers run in ________ company;

Fast they recognize the importance of stockturn rates and adjust their markups: FASTER-moving items have LOWER markups while SLOWER-moving items have HIGHER ones.

WAYS TO BRAND YOURSELF

- Articulate Your Unique Value - Know Your Purpose - Understand Your Path - Stay Focused - Network your Brand - Every Interaction Creates An Impression

- As a product you are divinely designed to solve someone else's problem ● When you ____________ that you are a ______________ ____________, your challenge is to ______________ ______ _______ and package your potential into a POWERFUL BRAND.

- As a product you are divinely designed to solve someone else's problem ● When you recognize that you are a Profitable Product, your challenge is to discover your value and package your potential into a POWERFUL BRAND.

● Producers' order getters

- find new market opportunities -- new prospects, new accounts, and new channels of distribution. ○ Good order getters are problem solvers. ○ Many producers give their order getters special training so they will understand their customers' needs and the products that need to be sold. -- "Solution selling"

● 'Passion'

---- will guide you towards your strengths and gifts that will produce fruit. --- is the "launch pad" of your brand's purpose for being.

1. Generating Leads (9)

1. Advertising 2. Publicity 3. Direct Mail and telemarketing 4. Cold calling 5. Internet web site 6. Referrals 7. Networking 8. Trade shows/ conventions 9. Company records ● Lead generation, or prospecting, is the identification of those firms and people most likely to buy the seller's offerings.

Setting Ad Objectives Is a Strategy Decision--- Advertising Objectives should be: (4)

1. Advertising objectives should be specific 2. They should be related to the overall marketing strategy 3. Should be to the promotion jobs assigned to advertising. 4. The marketing manager sets the overall direction for the advertising campaign

Fine-Tuning the Base Price Tactics: (3) ● Fine-tuning techniques include

1. Discounts 2. Geographic pricing 3. Special pricing tactics ● The base price is the general price level at which the company expects to sell a good or service. ○ The general price level is correlated with the pricing policy: above the market, at the market, below the market. ■ The fine step is to fine-tune the base price.

Geographic Pricing: (5)

1. FOB Origin Pricing 2. Uniform delivered pricing 3. Zone Pricing 4. Freight Absorption Pricing 5. Basing- Point Pricing

High Markups Don't Always Mean Big Profits

1. High markups may reduce demand for the product to a point where the seller actually loses money because too few items are sold.

What is Customer Service?: (3)

1. Not the Product 2. Part of promotion. ---- A firm should view customer service reps as a key part of personal selling. ---- Customers are more likely to tell other people about bad experiences with company's then good ones. 3. Reps are customer advocates: ---- Need to be effective communicators, have good judgment, and realize that they are advocates not only for their firm, but also for its customers. o EX: Verizon Cell phone bill, getting first month free. Get billed in the end. ---- Customers need an advocate to make things right.

Order Getters Develop New Business Relationships (3)

1. Producers' order getters find new opportunities 2. Wholesalers' order getters work closely with producers and retailers 3. Retail order getters influence consumer behavior

Personal Selling is more important than advertising and sales promotion when... (5)

1. Product = high value 2. Product = custom-made 3. Fewer customers 4. Product = technically complex 5. Customers = concentrated EX: insurance policies, custom windows, airplane engines

The Consultative Salesperson Salesperson must know everything about: (4)

1. Product of service 2. customers 3. competition 4. industry

Pricing Objectives: (3)

1. Profit Oriented a. Target return: sets a specific level of profit as an objective. b. Maximize profit: seek to get as much profit as possible. Can be socially responsible. 2. Sales Oriented: seeks some level of unit sales, dollar sales, or share of market-- without referring to profit. a. Dollar or unit sales growth b. Growth in market share: When many seek to gain a specific share (percent) of a market. = Popular 3. Status quo oriented: "don't-rock-the-pricing-boat" objectives. a. meeting competition: stabilizes market prices because no firm benefits from raising or lowering prices. ○ This objective is often used when the total market for a product is not growing. b. Non-price competition: aggressive action on one or more of the Ps other than price. Staying clear of price as a competitive "battleground." ○ Many speciality goods compete using nonprice competition aimed at the consumer who is seeking advantages other than price -- such as a prestige image or high quality.

What is Price? what effects it? : (3)

1. Sacrifice Effect of Price. ○ What is sacrificed to get a good or service ■ Money, Time, Dignity. 2. Information Effect of Price ○ Infer quality information based on price. ■ Higher quality = higher price. ■ Convey status. 3. Value Based upon Perceived Satisfaction ○ Reasonable Price = Perceived Satisfaction. ■ Exchange based on expectation of satisfaction.

Special Pricing Tactics

1. Single- Price Tactic: 2. Flexible Pricing: 3. Trade-ins: 4. Professional services Pricing: 5. Price lining: 6. Leader Pricing: 7. Bait Pricing: 8. Odd-Even Pricing: 9. Price Bundling: 10. Two-Part pricing: 11. Pay What You Want: ● Other pricing tactics are unique and defy neat categorization. ○ Managers use these tactics to stimulate demand for specific products, to increase store patronage, and to offer a wider variety of merchandise at a specific price point.

Skimming vs. Penetration

1. 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 2. Penetration price policy: tries to sell the whole market at one low price. A penetration policy typically aims at setting a price low enough to discourage competition. ■ If successful, large volume may help producers lower costs further, leading to still lower prices.

Advertising in Big Business: (3) Look on pg. 5

1. The total spending on advertising is big, and growing internationally. ○ As a country's economy develops, advertising expenditures increase. ○ By 2010, United States advertising spending was more than $200 billion. 2. Most Advertisers Don't spend that much: only accounts for a small percentage of what people pay for goods and services. ○ Advertising in the United States accounts for about 35% of worldwide ad spending. ---However, as highlighted in the exhibit, the percentage spent on advertising by producers varies across product categories. 3. Advertising doesn't emply that many people

Advertising and Market Share ○ Why?

1. beyond a certain level of spending, diminishing returns set in. ● Sales or market share decrease no matter how much is spent on advertising and sales promotion. 2. new brands tend to require higher spending to maintain a certain minimum level of exposure to measurably affect purchase habits.

● Retail order getters (2)

1. influence consumer behavior 2. help to move products from the market introduction stage to the market growth stage of the product life cycle --- especially for heterogeneous shopping products and unsought products.

● →Selling Skills Can Be Learned ○ Most progressive companies know that sales training can pay off through...

1. more effective sales calls, 2. better listening to customers, 3. closing sales. ○ Well-trained, equipped, and supported salespeople give a firm a competitive advantage in the marketplace. ○ Sales training often starts in the classroom with lectures, case studies, and videotaped trial presentations and demonstrations. ■ Other parts of the training program may include on-the-job observation of effective salespeople and coaching from sales supervisors. ■ Sales meetings, conventions, electronic communications, and ongoing training sessions help to keep salespeople current.

Advertising and sales promotion = more important than PS (5)

1. product = low value 2. Standardized product 3. lots of customers 4. product = easy to understand 5. customers= geographically dispersed. EX: soap, magazines, subscriptions, cotton t-shirts

1. Order takers (3)

1. sell to regular customers 2. completing sales transactions 3. maintaining relationships ○ Order takers need to be highly trained, competent individuals. o After customer becomes interested in the product through an order getter or supporting salesperson, the order taker answers any final questions and completes the sale.

2. Order-taking (3)

1. the routine completion of sales made regularly to target customers. 2. activities can make the difference between keeping and losing a customer. 3. requires on going follow-up to make sure the customer is satisfied.

3. Producers' order takers

1. train 2. explain 3. collaborate (they work on improving the whole relationship with the customer.) 4. Even if computers handle routine reorders, someone has to perform basic tasks such as making adjustments, handling complaints, and keeping customers informed of new developments. -- Usually handle view items

Types of Demand-Oriented Pricing

1. → Psychological pricing attempts to discover the price range a customer prefers for a given product. ○ Price cuts within the range don't affect demand very much. 2. → Odd-even pricing sets prices to end in certain numbers: $49 (not $50), $24.95 (not $25), or $99 (not $100). 3. → Price lining sets a few price levels for a product line and then marks all items at these prices, so a few prices cover the field. ○ For example, groups of neckties may sell at $10, $15, or $20 each. 4. → Demand-backward pricing involves setting an acceptable final consumer price and working backward to what a producer can charge. ○ The keys to successful pricing are an accurate estimate of what constitutes an acceptable price and making sure that the firm can still cover its costs. 5. → Prestige pricing sets a rather high price to indicate high quality or high status. ○ Prestige pricing is common for luxury products, such as furs, jewelry, and perfume 6. Value-in-Use: If you find the product valuable, you will pay for it 7. Auction: 8. Sequential reduction: 9. Reference: Prices that buyers carry in their minds and refer to when they look at a given product. What you expect to pay

The importance of Personal Selling (5)

1. →Requires Strategy decisions. ○ Salespeople are communicators who build relationships. ○ Personal selling is important to all companies. ○ Salespeople must be able to meet customer needs and company expectations. ○ It's also economically important. In addition, salespeople and sales managers need to decide what specific personal selling techniques will be used in dealing with the organization's customers and prospects. 2. → Helping customers make good buying decisions is good selling. ○ In meeting customer needs, salespeople build lasting relationships with customers. 3. → Salespeople represent the whole company -- and customers too. ○ How the salesperson behaves is all many customers will ever know about the company. 4. → The sales force AIDS in the market information function, --providing feedback to the company on what customers think, feel, and want. 5. → Salespeople can be strategy planners -- making decisions every day about how to manipulate promotional mix elements to fit the needs of their customers.

Order Takers Nurture Relationships to Keep the Business Coming

1.. Producers' Order takers, Train, explain, and collaborate 2. Wholesalers' order takers Don't get orders but keep them 3. Retail Order takers are often poor sales clerks

- Branding is all about ...

ATTITUDE ● "Your attitude determines your altitude." ● If it's cloudy outside ... the sun is still shining above the clouds -- Attitude.

Coordinating Advertising:

Across The Channel To Achieve Objectives ● Producers sometimes want advertising efforts to be handled further down the channel. ○ Retailers may depend upon producers to provide support for their local advertising efforts.

1. Single- Price Tactic:

All goods offered at the same price EX: Dre$$ to the Nine$ sells all their dresses for $9

9. Price Bundling:

Combining two or more products in a single package EX: Purchase your telephone for 29.99/month or internet for 69.99/month or get both services for 89.99/month

2. Flexible Pricing:

Different customers pay different prices EX: You may pay $21,000 for your new Ford Escort but Sally got basically the same car for $20,499.

3. Trade-ins:

Exchanging one item for a credit towards another. Used often at car dealerships EX: We can allow you credit for your current car if you trade it in with the purchase of your new car.

5. Retail order takers

It's almost mechanical at this level. salesclerks perform poorly because they are not paid or trained well. ○ Knowledgeable, courteous, helpful salesclerks can play an important role in a retailer's marketing mix.

● Unfair Trade Practice Acts:

Laws that prohibit wholesalers and retailers from selling below cost. ○ In over half the state's, unfair trade practice acts as a floor under wholesale and retail prices, and selling below cost is illegal. ■ Wholesalers and retailers must take a certain minimum percentage markup on their combined merchandise cost and transportation cost. ○ The most common markup figures are 6% at the retail level and 2% at the wholesale level. ■ If a specific wholesaler or retailer can provide "conclusive proof" that operating costs are lower than the minimum required figure, lower prices may be allowed. ○ The intent of unfair trade practices is to protect small firms from retail giants like Walmart and Target, which operate efficiently on razor-thin profit margins. ■ State enforcement of unfair trade practice laws has generally been lax, because low prices benefit local consumers.

8. Odd-Even Pricing:

Odd- number prices imply bargain Eve-number prices imply quality -- Setting prices that end in certain numbers. For example, selling things that are $49.95 or $99 cents. EX: TVs $299.87, Recliners $499.87, Lamps $36.87

11. Pay What You Want:

Product price chosen by customers

Price Discrimination ● The six elements necessary for a violation of the __________-________ Act of _______ include:

Robinson-Patman Act of 1936 include: ○ 1. There must be price discrimination. ○ 2. Transaction must occur in interstate commerce. ○ 3. The seller must discriminate by price among two or more purchasers. ○ 4. Products sold must be commodities or tangible goods. ○ 5. Products sold must be of like grade and quality. ○ 6. There must be significant competitive injury.

6. Leader Pricing:

Sell a product near or below cost - A price that is set low to attract customers. Setting some very low price - real bargains to get customers into retail stores. EX: This week! 12pk Coca-cola cans B2G3F

5. Price lining:

Several line items at specific price points EX: Everything in the store is $10, $25, or $30.

7. Bait Pricing:

Urge customers through false or misleading price advertisements. -- Offer a steal, but sell under protest. Setting very low prices to attract customers but trying to sell more expensive models or brands once the customer is in the store. EX: Used 2005 Subaru WRX great condition! Just $1600 Hurry! Before it's Gone!

4. Professional services Pricing:

Used by professional with experience, training or certification EX: The charge for the rhinoplasty is $5000

New-Product Development Process: (5)

Starts with... 1. Establishing pricing goals 2. estimate demand, costs, and profits 3. Choose a price strategy 4. Fine-tune with pricing tactics RESULTS lead to the right price!! ● Setting the right price is a four-step process.

Zone Pricing

The U.S. is divided into zones, and a flat freight rare is charged to customers in a given zone.

FOB Origin Pricing

The buyer absorbs the freight costs from the shipping point ("free on board"

Basing- Point Pricing

The seller charges freight from a basing point, regardless of the city from which the goods are shipped.

Freight Absorption Pricing

The seller pays for all or part of the freight charges and does not pass them on to the buyer.

Uniform delivered pricing

The sellers pay the freight charges and bills the purchaser an identical, flat freight charge.

10. Two-Part pricing:

Two separate charges to consume a single good -- A gym charges a monthly fee and an additional charge for using the racquetball courts.

3. Approaching the Customer and Probing Needs ● Needs Assessment:

a determination of the customer's specific needs and wants and the range of options a customer has for satisfying them. ○ Before approaching customers, the salesperson should learn as much as possible about the prospect's organization and its buyers.

● Cold Calling:

a form of lead generation in which the salesperson approaches potential buyers without any prior knowledge of the prospects' needs or financial status. We don't know this person. ○ Before the advent of more sophisticated methods of lead generation, most prospecting was done through cold calling.

● Advertising Campaign:

a series of related advertisements focusing on a common theme, slogan, and set of advertising appeals.

● Price Fixing:

an agreement between two or more firms on the price they will charge for a product. -- is illegal under the Sherman Act and the Federal Trade Commission Act.

● Order getters

are concerned with establishing business relationships with new customers and developing new business. ● must be experts about every aspect of their products

4. Wholesalers' order takers (5)

are involved NOT in getting orders but in KEEPING them. 1. May have to deal with thousands of items. 2. They often keep in contact with customers on a regular basis. 3. place orders, and checks to be sure the company promptly fills those orders. and fulfill any needs that arise, as opposed to selling any particular item. 4. handle any adjustments or complaints and generally acts as a liaisons between the company and it's customers

● → Cash discounts

are reductions in the net -the face value of the invoice due immediately- to encourage buyers to pay quickly. ○ 2/10 net 30: 2% off the price if the invoice is paid in 10 days, with the net due within 30 days, and an additional interest charge after 30 days.

● Order-getting

is seeking possible buyers with a well-organized sales presentation designed to sell a good, service, or idea. -- These sales people are normally paid well.

● Lower markups

can speed turnover and the stockturn rate: the number of times the average inventory is sold in a year. ○ Low stockturn rates INCREASE inventory carrying costs and tie up capital. ○ Bic, is an example of a product that relies on intensive distribution and sells in larger volumes offering retailers smaller markups.

○ → Price fixing:

competitors getting together to raise, lower, or stabilize prices. ■ It is a conspiracy under the FTC Act and the Sherman Act. ■ Price fixing is illegal -- you could go to jail.

Branding ● The key is to

develop, manage and market your "unique" self/brand/distinctive competency to impact others and leave your mark/brand. ● Each of you has the ability to create, package and present your product/brand... YOURSELF!

● → Seasonal discounts

encourage buyers to buy sooner. ○ Manufacturers use this policy to help shift the storing function down the channel and to stabilize demand.

● → Quantity discounts

encourage volume buying; the customer pays less per unit. ○ Cumulative quantity discounts: apply to all purchases in a given period. ○ Noncumulative quantity discounts: apply only to individual orders.

● Break-even analysis

evaluates whether the firm will be able to cover all of its costs at a particular price level. ● Break-even analysis shows the effect of cutting costs in relation to increasing profits. ○ It is helpful, but not a pricing solution. o It is a cost-oriented tool, not a demand-oriented one. ○ Managers usually face downward sloping demand curves, and break-even analysis does not factor in the effect of price on demand.

● → Cooperative advertising and how it helps: (2)

involves producers sharing in ad costs with wholesalers or retailers. ○ This practice helps: 1) the producer to get more promotion for the advertising dollar 2) It helps the intermediaries to compete locally.

● A markup

is a dollar amount added to the cost of products to get the selling price. ○ Markups guide pricing by intermediaries; they are necessary to cover the costs of distribution and allow intermediaries to make a profit.

● Personal selling

is a purchase situation involving a personal, paid-for communication between two people in an attempt to influence each other.

■ → Dumping

is pricing a product sold in a foreign market below the cost of producing it in its domestic market. ● Antidumping laws protect domestic producers from foreign competition.

Customer Service Promotes the Next Purchase: The focus of customer service is on the service that....

is required to solve a problem that a customer has with a purchase.

Price: ● Notes:

is that which is given up in an exchange to acquire a good or service. ○ Price is typically money exchanged for a good or service; however, it may include other costs such as time lost while waiting to acquire the good or service. ○ Consumers are interested in obtaining a "reasonable price," which means a "perceived reasonable value" at the time of the transaction. ■ The price paid is based on the satisfaction consumers expect to receive from a product and not necessarily the satisfaction they actually receive. ○ Price can relate to anything with perceived value, not just money. ■ When goods or services are exchanged, the trade is called barter,

Branding Lecture Notes ● Branding

is the ability to define, refine and craft your uniqueness that becomes a mark of Distinction and Adds Value. ○ We live in a salad bowl, everyone is related in some shape or form. ■ Everyone is unique in their own way. ○ Why did you come to UT? ■ Because the power of the brand. ■ We changed coaches because we needed to make sure the brand stayed strong

Average Cost Pricing Is Common and Can Be Dangerous ● Average-cost pricing Pg. 27

means adding a reasonable markup to the average cost of a product. ○ A manager usually finds the average cost per unit by dividing the total cost for the year by all the units produced and sold in that period. ● Average cost pricing is simple, but it's easy to lose money with average cost pricing, because it does not make allowances for cost variations as output changes. ○ Average cost tends to go DOWN as output INCREASES due to economies of scale, but average cost pricing doesn't consider this change.

Personal Selling = more important as the __________ of ___________ ______________ decreases, as the ______________ of the ______________ increases, and as the _______________ of the product ____________.

number of potential customers decreases, as the complexity of the product increases, and as the value of the product grows.

● → Job description: (3)

o A statement of what a salesperson is expected to do. ○ Should be specific and in writing. ○ Becomes a tool for recruiting candidates whose qualifications are a good match for the job.

Supporting Sales Force Informs and Promotes in the Channel: o Supporting salespeople (3)

o Help the order-oriented salespeople but they don't try to get orders themselves. ○ Do activities, such as providing specialized services and information, are aimed at enhancing the relationship with the customer and getting sales in the long run. o For the short-run they = ambassadors of good-will who may provide specialized services and information.

● → Advertising allowances:

price reductions to firms in the channel in hopes to encourage those channel members to promote the product. EX: Avery Denninson and Office Depot.

■ Phony list prices:

prices shown to consumers to suggest that the price has been discounted from list. ○ In the U.S., the Federal Trade Commission (FTC) tries to stop this practice, using the Wheeler-Lea Amendment, which bans "unfair or deceptive acts in commerce." ○ Regulators can set prices. ○ → You can't lie about prices.

■ Unfair trade practice acts:

put a lower limit on prices, especially at the wholesale and retail levels. ● These acts protest the viability of certain types of intermediaries, and indirectly benefit the consumer by providing more choices.

● → Sale prices

reduce list prices temporarily to encourage immediate buying; they can condition buyers and sellers to shop for sales and may erode brand loyalty.

● → Trade discounts:

reductions in list price given to channel members that perform one or more marketing functions for the producer.

● Many intermediaries use a ___________ ___________ _____________.

standard markup percentage. ○ Percentages often are the same within an industry, thus encouraging all players to increase efficiency and cut costs. ○ Markups are often related to the company's desired or expected gross margin -- net sales minus cost of goods sold.

● → Missionary salespeople:

supporting salespeople who work for producers by calling on their intermediaries and customers. ○ Can increase sales by creating goodwill, providing training, and performing other activities. ○ This position is often used as a training ground for new salespeople. o Sometimes called merchandisers or detailers. EX: Vick's cold remedy -- would visit a pharmacists during the cold season and encourage them to use a special end-of-aisle display for Vick's cough syrup and help set it up.

● Markup %:

the % of the selling price that is added to the cost to get the selling price. ○ This is a convenient rule, but tricky. ■ A 50-cent addition to a $1.00 item leading to a $1.50 price is a 33 ⅓ % markup (50 cents is ⅓ of $1.50) even though its 50% of the price paid by the intermediary.

● Break-even charts help find the break-even point (BEP):

the point where the total revenue from the quantity sold just equals the firm's total costs.

● Predatory Pricing: (2)

the practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market. ○ It is illegal under the Sherman Act and the Federal Trade Commission. ■ However, proving the use of this practice is difficult and expensive. ○ The Justice Department must show that the predator explicitly tried to ruin a competitor and that the predatory price was below the predator's average variable cost.

● Markup chain:

the sequence of markups firms use in channel pricing

● Each possible price has its own BEP. ○ Thus, break-even analysis allows the marketing manager to...

to compare the ramifications of different prices on the BEP. ○ A target profit can also be included in computing the BEP; the desired profit is added to the total fixed costs.

● People will pay more for a rare gem because it is

uncommon. ● You were born with this inherent value.. recognize it and develop it

● Wholesalers' order getters

work closely with producers and retailers. -- particularly the more aggressive manufacturers' agents and brokers ○ they almost hand the product to the customer. ○ Salespeople for agent wholesalers = order getters.

● → Customer service reps:

work with customers to resolve problems that arise after a purchase. ○ Marketing-oriented companies needs good people to handle customer service. o The key to building repeat business. o The salespeople who promote a customer's next purchase-- by being sure they customer is satisfied with a previous purchase.

● Your brand is the representation of ● Your brand is either: (3)

your distinct authentic identity. ● Your brand is either ○ Positive ○ Negative ○ Neutral ● Notes: ○ Think of Jordan Spieth, he's a powerful brand. ○ What about the Masters brand? ■ Our brand is so strong, people are going to buy our brand anyways.

○ Producers may set minimum retail prices.

■ Manufacturers usually suggest a retail list price and leave it up to the retailers to decide what to charge in local markets.

Strategy Decision for setting Ad Objectives-- types of objectives: (7)

■ Position brands: advertising can communicate product benefits to position the brand relative to others in the mind of the consumer. ■ → Introduce new products: advertising can make target market aware of new products and their benefits. ● Marketing managers can specify the percentage of the market that should be aware of the product after a certain period of time. ■ → Obtain outlets: advertising tells customers where they can buy the product and may help encourage merchants to carry it. ■ → Provide ongoing contact: advertising can be a "virtual salesperson," reminding customers about the product and keeping in touch with them. ■ → Prepare the way for salespeople: advertising may serve to "prime the pump" in advance of a sales call. ● Salespeople can then reference the ad in their presentations. ■ → Get immediate action: advertising can be a good way to announce time-dated deals, discounts, or other availability requiring immediate customer action. ■ → Maintain relationships: advertising can help maintain relationships with satisfied customers and confirm their original purchase decision. ■ → Build trusting relationships: advertising can help build more trusting relationship with customers.

○ Are stocking allowances unethical?

■ Some producers think so, calling them a form of extortion. ■ Small producers think that stocking allowances put them at a real disadvantage compared to larger producers with more resources. ■ Retailers, on the other hand, call stocking allowances an insurance against product failures. ● Producers must producer better products that consumers really want in order to secure shelf space.

Ch. 14: Personal Selling and Customer Service Four broad personal selling and customer service issues include: (4)

○ (1) The importance of personal selling; ○ (2) Personal selling tasks; ○ (3) Strategy decisions; ○ (4) The personal selling process.

Ethics portion of Lecture: ● Leadership Ethics is always a timely topic

○ 1. 1980s S&L Scandals ○ 2. 1990s and 2000s: Enron era scandals ○ 3. 2000s: Subprime Scandals ● Leaders are often tone deaf on ethical issues and ... have "uniquely self serving rationalizations for their unethical actions that often focus on their rights and crowd out any consideration or duties to or caring for others"

● So take it as a given that 1. ethical leadership is ... 2. Ethical conduct by leaders is...

○ 1. Ethical leadership is critical to shaping the ethical conduct of a firm; and ○ 2. Ethical conduct by leaders is a critical component of ethical leadership

● Seven basic steps in the personal selling process follow the AIDA concept and they include::

○ 1. Generate Leads ○ 2. Qualify Leads ○ 3. Probe Customer Needs ○ 4. Develop Solutions ○ 5. Handle Objections ○ 6. Close the Sale: Ask for the order ○ 7. Follow Up

● Moral Leadership has 2 aspects:

○ 1. Managing ■ Establishing ethical norms ■ Communicating them to employees ■ Punishing breaches ■ Rewarding compliance ○ 2. Walking the Walk ■ Live what you do

● → All Salespeople need some training At minimum, a company's sales training program should cover: (4)

○ 1. company policies and practices; ○ 2. product information; ○ 3. building relationships with customers; and ○ 4. professional selling skills.

● → Good salespeople are trained, not born. (2)

○ All salespeople need some training -- even those with "natural" ability. ○ Training is required to learn: selling methods, customer needs, organization skills, how to promote the product line, and how to constantly update this knowledge with new information.

Objectives Guide Implementation (Exhibit 15-3)-- Ad Adoption Process: (5)

○ As shown in the exhibit, the type of advertising that works for one stage of the adoption process may not work as well for other stages. ● → Awareness: pioneering ads and advertising jingles or slogans are among the popular methods used. ● → Interest: may result from the use of image-based ads, celebrity endorsements, or product demonstrations, among other methods. ● → Evaluation & trial: use Competitive ads featuring persuasive content, or comparative ads ● → Decision: use direct-response ads, point-of-purchase ads, and advertising containing price deals are all helpful. ● → Confirmation: use reminder ads and informative ads to help consumers justify their purchases and reduce post-purchase dissonance.

Advertising Response Function.

○ Beyond a certain level of spending, diminishing returns set in.

Chapter 17 (Price Setting in the Business World) ● There are two basic approaches to setting list prices:

○ Cost-oriented: the most common approach. ○ Demand-oriented: takes into account consumer demand in making price decisions.

7. Following Up--- the salesperson must ensure:

○ Delivery schedules are met. ○ Goods or services perform as promised. ○ Buyers' employees are properly trained to use the products. ● The goal of relationship selling is to motivate customers to purchase again by developing long-term relationships. ● Most businesses depend on repeat sales, and repeat sales depend on follow-up by the salesperson. ○ Furthermore, today's customers are less loyal to brands and vendors. ■ Therefore follow-up is critical in relationship building.

● Public Relations is the element in the promotional mix that: (3)

○ Evaluates public attitudes. ○ Identifies issues of public concern. ○ Executes programs to gain public acceptance. ● Marketing managers plan public relations campaigns that fit into the overall marketing plans and focus on targeted audiences. ● Publicity is the effort to capture media attention and is initiated through a press release that furthers the public relations plans.

Trends Influencing Price ● These trends include:

○ Flood of new products. ○ Increased availability of bargain-priced private and generic brands. ○ Price cutting as a strategy to maintain or regain market share. ○ Internet used for comparison shopping. ○ U.S. recession from late 2007 to 2009. ● Notes: ○ Consumers are using the Internet to make wise and more informed purchasing decisions. ○ Competition in general is increasing, and consequently many installations, accessories, and parts are being marketed like indistinguishable commodities.

Creative Decisions include: (4)

○ Identify product benefits ○ Develop and evaluate advertising appeals ○ Execute the message ○ Evaluate the campaign's effectiveness

Average Cost Pricing Is Common and Can Be Dangerous pg. 27 Example

○ In this example, the costs for the year include $30,000 in fixed overhead expenses and $32,000 in labor and materials. ■ If the company produced and sold 40,000 units, the total cost of $62,000 is divided by the 40,000 units to yield a cost of $1.55 per unit. ● → In this case, $18,000 divided by 40,000 units yields a markup of 45 cents per unit. To get the selling price per unit, the company adds the 45 cents of markup to the cost of $1.55, so the price is $2.00 per unit. ■ → In the second example, suppose the firm maintains a price of $2.00, but it only produces and sells 20,000 units. This change decreases the labor and materials costs, but fixed overhead expenses remain the same, so the total cost is $46,000. However, revenue from sales is only $40,000, so the firm loses $6,000.

Major Types of Advertising ● The different types include: (2)

○ Institutional Advertising: enhances a company's image rather than promotes a particular product. ○ Product Advertising: touts the benefits of a specific good or service. ● Notes: ○ The firm's promotional objectives determines the type of advertising it uses. ○ Institutional advertising is used to build up the image of the company. ○ In contrast, product advertising is used to enhance the sales of a specific good or service.

● Measuring Advertising effectiveness: (3)

○ It is important to remember that the different types of advertising do not always work toward the same goal. ○ Also, advertising effectiveness needs to be considered in relation to its specific objective. ■ For example, an ad campaign that is designed to increase awareness should not be judged a failure because it does not increase desire for the product. ● → Consider the total Marketing Mix: ○ The effectiveness of advertising is hard to separate from the effects of the other elements of the mix. ■ For example, a great advertisement cannot be faulted for failing to sell a poor product. ● → Research and testing can improve the odds: ○ Marketing managers should try variations on their overall advertising message to see which combination of message variables is the most effective. ● → Hindsight may lead to foresight. ○ What consumers tell marketers about ads, and what they remember -both good and bad- should be used as input into the refinement of subsequent advertisements.

Institutional Advertising -- Remember Our Name Two forms: (2)

○ It usually focuses on the name and prestige of an organization or industry. ○ It may seek to inform, persuade, or remind. -- Corporate Identity: promotes the corporation as a whole and is designed to establish, change, or maintain the corporation's identity. -- Advocacy advertising, typically used to safeguard against negative consumer attitudes and to enhance the company's credibility among consumers who already favor its position.

Training to Meet a Job Description (4)

○ Motivating salespeople is also important and requires careful assessment of the needs of the company and the individual when setting compensation. ● → Job description: ● → Good salespeople are trained, not born. ● → All Salespeople need some training: ● →Selling Skills Can Be Learned

● The BEP can be stated in dollars, too.

○ Multiplying the BEP in units times the selling price per unit yields the BEP in dollars.

- People Buy Your Brand Daily ● These Are Your Product/Personal Attributes: (8)

○ Personality ○ Demeanor ○ Humility ○ Deference ○ Knowledge ○ Commitment ■ "Doing the thing you said you would do long after the mood you said you would do it in has left." ○ Desire ○ Sincerity

Product Advertising ● Types of product advertising include: (3)

○ Pioneering: stimulates primary demand for new product or category. ■ Used in the PLC introductory stage. ○ Competitive: influences demand for brand in the growth phase of the PLC. ■ Often uses emotional appeal. ○ Comparative: compares two or more competing brands' product attributes. ■ Used if growth is sluggish, or if competition is strong. ● Notes: ○ The product's stage in its life cycle often determines which of the above types of product advertising is selected. ○ Pioneering advertising is used during the introductory stage of the PLC. ○ Competitive advertising is used during the growth phase of the PLC as competition increases. ○ Comparative advertising compares competing brands. ■ Before the 1970s, comparative advertising was allowed only if the competing brand was unidentified. ■ Care should be used with comparative advertising approach in global markets due to government regulations and cultural/social value sensitivity.

● Notes: ● Revenue vs. Profit:

○ Prices are the key to revenues, which are the key to profits for an organization. ○ Revenue is what pays for every activity of the company. ■ What's left over is profit. ● The price is set to earn a profit for the company. ○ Managers strive to charge a price that will earn a fair profit.

Common Types of Allowances: (4)

● Allowances are given to channel members or final consumers for doing something or accepting less of something. 1. Advertising: exchange something for something else: price reductions given to firms in the channel to promote the supplier's products locally. 2. Stocking: also called slotting allowances, these are given to intermediaries to get attention and shelf space for a product. ■ They are used mainly in supermarkets, where space is at a premium, forcing producers to pay for product placement. 3. Push Money: Manufacturers or wholesalers give this to retailers to be used as incentives for their salesclerks to aggressively push the targeted items. 4. Trade-ins: : the customer receives a price reduction for used products when similar new products are bought.

The three Ethical "Be"s :

● Be vigilant: keep your antennae up so you can spot ethical minefields before you enter them ● Be wary: remember that even the best intentioned people are prone to ethical missteps ● Be humble: Humility is the solid foundation of all virtues

Discounts, Allowances, Rebates, and Value-Based Pricing ● A base price can be lowered through the use of discounts and the related tactics. ● The most common tactics are: (8)

○ Quality discounts with lower prices for buying in multiple units of above a specified dollar amount. ○ Cash discounts offered for prompt payment of a bill. ○ Functional discounts (trade discounts) are offered when channel intermediaries perform a service for the manufacturer. ○ Seasonal discounts are lower prices for buying merchandise out of season. ○ Promotional allowances (or trade allowances) are payments to dealers for promoting the manufacturer's products. ○ Rebates are cash refunds given for purchasing a product within a specified period. ○ Zero percent financing offers no interest charge to increase sales. ■ However, it does cost the manufacturers. ○ Value-based pricing sets the price at a level that seems to the customer to be a good price compared to other prices. ■ The basic assumption with value-based pricing is that the firm is customer driven, seeking to understand the attributes customers want in the goods and services they buy and the value of that bundle of attributes to customers. ○ Discounts are used to encourage customers to do what they would not ordinarily do, such as pay cash, take delivery out of season, or performing certain functions within a distribution channel.

● Advertising strategies are organized around an advertising campaign. Steps of an Ad Campaign: (4)

○ The DAGMAR = (Define Ad Goals for measured Ad Results) approach is one method of setting objectives. 1. Define objectives 2. Make Creative and Media Decisions 3. Evaluate the campaign

● Where does the markup chain start?

○ The firm that brands a product is usually the one that sets its basic list price. ■ It is most often the producer, but could be another channel member as well. ● Some producers start with a cost figure and add a standard markup, or use a FORMULA such as: ○ Selling price = Average product cost per unit X 3 ■ A producer using this approach might develop rules and markups related to its own costs and objectives.

● How does one compute a break-even point?

○ The first thing to determine is the fixed-cost (FC) contribution per unit: the assumed selling price per unit minus the variable cost per unit. ○ To find the BEP in units, divide the total fixed costs (TFC) by the contribution per unit.

● Sales Presentation is...

○ a formal meeting in which the salesperson presents a sales proposal to a prospective buyer.

● Sales Proposal is...

○ a formal written document or professional presentation that outlines how the salesperson's product or service will meet or exceed the prospect's needs.

● → Technical specialists: (3)

○ provide technical know-how in support of order-oriented salespeople. ○ Are experts who know product applications, and they often have science or engineering backgrounds. ○ They are more concerned with providing technical details about products than in persuading customers to place orders.

● Personal selling is divided into three basic tasks including:

○ → 1. order-getting; ○ → 2. order-taking; and ○ → 3. supporting. ● Order getters and order takers obtain orders on behalf of a company. ● Supporting salespeople are not directly interested in orders; their function is to help the order-oriented salespeople. ● In some cases, a single salesperson will do all three tasks. ● In other cases, particularly in large companies that depend heavily on personal selling, the tasks are divided among a number of sales professionals.

● Companies sometimes use institutional advertising to: (3)

○ → connect the various divisions of a large company in the consumer's mind; ○ → present the company in a favorable light; or ○ → advocate causes and ideas.

● Payment methods also vary and salespeople are typically compensated by: (3)

○ → straight salary: Offers the most security for the salesperson ○ → straight commission: a percentage of sales; offers the most incentive and is tied to results actually achieved. ○ → Combination of salary and commission: most popular method ■ These plans are the most common.

Identify Product Benefits: (4)

● "Sell the Sizzle, not the Steak." ○ A well-known rule of thumb in advertising is to "sell the sizzle, not the steak" by advertising a product's benefits instead of its attributes. ● Sell product benefits, not its attributes. ● A benefit should answer "What's in it for me?" ○ A benefit is what consumers will receive or achieve by using the product. ● Ask "So?" to determine if advertising offers attributes or benefits. ○ A quick test to determine whether you are offering attributes or benefits is to ask "So?".

- Branding History

● 1300 BC potters marked (brand) their pottery with their thumbprint. ● This allowed the artist to authenticate the work and charge premium price.

Too Much Price-Cutting Erodes Profits look on pg. 20

● A small price cut may not seem like much; but keep in mind that all of the revenue that is lost would go to profit. ○ Take the example of a company selling a product for $100. ■ → A 10% price cut reduces the price to $90. ■ In this example, let's assume the cost per unit is $80 and that means the 10% price cut results in a 50% drop in profit margin.

- Success in Life Requires: (4)

● A strong sense of purpose. ● A passionate pursuit of that purpose. ● A clear vision of purpose. ● A commitment to that purpose.

4. Developing and Proposing Solutions:

● After compiling information about the client's needs and wants, the salesperson develops a solution in which the salesperson's product or service solves the client's problem or need. ○ Typically presented as a sales proposal during a formal sales presentation. ■ Usually, there is only one opportunity to present solutions, and salespeople must be able to present the proposal and handle any customer objections confidently and professionally.

- Understand Your Path

● Clearly define where you are going. ● Authentic brands are always trail blazers. ● Be patient and have purpose ... doesn't happen overnight. ● Detours you encounter are the process of receiving the desired end result. ● Pain along the way is designed to authenticate you and helps you know yourself better. ● "No pain no gain... no guts no glory."

A Competitive Ad That's Comparative: 3 things to know

● Comparative advertising goes head-to-head with competitive products by making specific brand comparisons. 1. Even though comparative ads are common in the U.S., they are still banned in some other countries. 2. A key thing to remember in planning comparative ads in that the claims made about products should be supported by research. 3. Could be drawbacks to comparative ads: 1) if they are confusing to consumers, 2) if they focus on small, insignificant differences between products.

AIDA -- Attention, Interest, Desire, and Action

● Getting attention: is important but it is only the first stage of the AIDA model. ○ Putting Christmas trees up in November... Get ready for Christmas shopping ● → Holding interest: typically involves linking the ad message to something important to the consumer -- a reference group, core values of the target market, or a person's self-interest. is more difficult than getting attention. ● → Arousing desire.: This requires knowing how the customer thinks and makes decisions. , or moving the customer to really want the product, is one of an ad's most difficult jobs ○ Sometimes it is helpful to focus on one unique selling proposition -- something distinctive about the product that sets it apart from others. ● → Ads are designed to obtain action on the part of consumers in some form. ○ Some ads encourage consumers to do something that is less risky or demanding than actually making a purchase. ○ Get them to buy the product ● → Can global messages work? ○ Possibly, in cases where there are major similarities among consumers for the product all over the world. ○ Usually, more targeted ad messages work better than a mass-marketing approach.

Information Technology Provides Tools to Do the Job: (6) (NOT ON POWER POINT)

● Great changes in handling tasks. ● New software. ● New hardware. ● Technology can be a competitive advantage. ● What is done vs. how it's done. ● Good selection and training needed.

Key Pricing Policies: (4)

● Guided by the company's objectives, marketing managers must develop a set of pricing objectives and policies. ● The key pricing objectives and policies should spell out: 1. Price Flexibility 2. Price Level over product life cycle 3. Transportation Costs-- Who pays and How 4. Discounts & allowances-- To whom and when

Relationship (Consultative) Selling: (4)

● IS a sales practice that involves Building, Maintaining, and Enhancing interactions with customers in order to develop long-term satisfaction through mutually beneficial partnerships. -- Developing a good understanding of the customer's needs before trying to close the sale. ● Past = focused almost entirely on a planned presentation for the purpose of making a sale. ○ Modern = emphasize the relationship that develops between a salesperson and a buyer. ● The objective = to build long-term branded relationship with consumer/buyers. ○ The focus = building mutual trust between the buyer and seller. ● Salespeople become consultants, partners, and problem solvers as they strive to develop trust and long-term relationships.

- Every Interaction Creates An Impression

● In a world of clutter and competition you have to learn to separate yourself from the pack in a positive way.

Price-Level Policies Over the Product Life Cycle

● In administering prices over the product life cycle, marketing managers must set price level policies. ○ must consider where the product life cycle is -- and how fast it's moving. ○ must decide if their prices should be above, below, or somewhere in between relative to the market. ■ Price policies have strategic implications that must be supported with appropriate resources. ● In the digital camera industry, prices have declined regularly over the years. ○ At the same time, product quality has improved.

Sound Selection to Build a Sales Force

● It is important to hire good, well-qualified salespeople. ○ Progressive companies adopt a systematic approach to selecting a sales force. ● Selecting good salespeople takes judgment, plus other specific techniques. ○ Companies constantly update lists of possible job candidates. ○ They invite applications at the company's website. ○ They schedule candidates for multiple interviews, do background checks, and may even use psychological tests.

6. Closing the Sale (4)

● Keep an open mind: Ask! ● Look for customer buying signals ● Negotiate: plays a key role in closing the sale. ○ Negotiation is the process during which both the salesperson and the prospect offer special concessions in an attempt to arrive at a sales agreement. ○ A salesperson should emphasize value to the customer, rendering price a nonissue. ● Tailor to each market: In foreign markets, the sales efforts should be tailored to the appropriate way of doing business for that culture.

- Stay Focused

● Keep your eye on the price 'no matter what.' ● 'Position' yourself properly to make yourself memorable. ● The challenge is not always identifying the audience but in clarifying the message. ● Package yourself so you stand out, not blend in. ● Be repetitive to solidify your position and reinforce yourself.

- Articulate Your Unique Value

● Know your 'significant value.' ● It gives your life meaning. ● 'Differentiate' yourself from others. ● Direct your efforts toward specific people who will appreciate and embrace your brand and help you develop it. ○ Who do you think Jordan Spieth went to get advice from? ■ Ben Crenshaw (who went to UT); he went to him and asked how to read the greens. ● Have a "white hot" passion for what you do or want to do. ● Get up each day with purpose. ● Act on that purpose with Action Plans and Measure the Results.

Pricing Policies Combine to Impact Customer Value:

● Many of the traditional views of pricing emphasize the perspective of the marketing manager, However... ● → Look at price from the customer's viewpoint is also important to. ● → Value pricing: setting a fair price level for a marketing mix that really gives the target market superior customer value. ○ There are price choices in most markets. ○ The focus of value pricing is on the customer's requirements -- and how the whole marketing mix meets those needs. ○ Value pricers try to give the customer pleasant surprises because they increase value and build customer loyalty. ● → Define the target market and the competition. ○ For example, people may want low prices or exceptional service. ○ The market structure and dynamics mean that meeting competitors' prices may be necessary -- especially in an oligopoly. ● → Value pricing = Customer Value ○ It expands the definition of price beyond money and links it with customer-oriented value. ■ That way the desired value is what is actually received.

Other Price-Level Policies

● Marketing managers have several other options in setting price levels including: 1. Introductory price dealing: uses a temporary low price to attract customers to new product launches or new versions of products. ■ For example, in this ad, Lean Cuisine offers consumers $1.00 off on the purchase of the new Asian style cuisine meal. 2. There may be different price-level policies throughout the channel. ■ When selling to members of a channel of distribution, prices must allow for the intermediaries to make a profit. 3. The price of money may affect the price level. ■ As more firms compete internationally, exchange rate changes can have a significant effect on price level policies. ■ Fluctuations in exchange rates subsequently affect the demand for products in international markets.

Lecture Notes: Chapter 15-- Strategy Planning Advertising, Publicity, and Sales Promotion:

● Mass selling -advertising and sales promotion- play a central role in the promotion blend for many firms, especially in consumer markets. ○ Marketing managers must make specific advertising strategy decisions to guide the work done by the firm and/or its advertising agency. ○ Similarly, sales promotion objectives must be clear. ● The marketing manager should be very specific about the target audience the company is trying to reach. ○ Advertising campaigns can appeal to very specific groups of people through careful selection of words, images, and symbols. ○ Marketers must provide advertisers with accurate target market information.

The Effects of Advertising on Consumers: (3)

● May change a consumer's negative attitude toward a product, or reinforce a positive attitude. ● Can affect consumer Ranking of a brand's ATTRIBUTES. ● The influence of advertising on the U.S. socioeconomic system has been the subject of extensive debate in nearly all corners of society.

Discount Policies: Reductions from List Prices. From List Price:

● Most prices start with a basic list price: the price final consumers or users are normally asked to pay for products. ○ Discounts are reductions from list price given to buyers who either give up a marketing function or provide it themselves. 1. Quantity 2. Seasonal 3. cash 4. Trade Sale

- Network Your Brand

● Networking Meetings ● Meet Everyone and Anyone Who May Be Able to Help. ● See the World As Your Domain.

Advertising and Market Share ● New brands with a small market share spend proportionally _______ for advertising and sales promotion than those with a large market share.

● New brands with a small market share spend proportionally MORE for advertising and sales promotion than those with a large market share.

Price Exchanged for Something of Value Look on pg. 18

● On the price side, discounts, allowances, transportation, and taxes may alter the list price, although they may operate somewhat differently than in the consumer market. ○ For example, quantity discounts and trade-in allowances are typically more important to channel members than to final consumers. ● → Again, the price ultimately paid equals the value component. ● As shown, this component may encompass elements of each of the four Ps. ○ Since the final consumer does not have to resell the product, certain elements of the four Ps have greater or lesser importance to channel members. ○ For example, the expected profit margin on resale is a critical issue for channel members, as is packaging that facilitates shipping and handling farther down the line in the channel.

● Our value is not what ___ ___ but ____ ____ __________ who we are.

● Our value is not what we do but how we package who we are. ● When we know our value we can present our 'innate gifts' to the world and people will recognize it and want it.

The Effects of Advertising: (4)

● Over 30 companies spend more than $1 billion each year on advertising. ● 1.4 million people work in various marketing positions including media advertising such as newspapers, magazines, television, radio, and internet media. ● More than 100 companies spend over $300 million annually on advertising. ● Notes: ○ Advertising, defined as any form of impersonal, paid communication in which the sponsor is identified, is a popular form of promotion especially for consumer packaged goods and services. ○ Advertising expenditures were almost $125.3 billion in 2009. ○ The top five spenders on advertising are Procter & Gamble, Verizon, AT&T, General Motors, and Pfizer.

Chapter 16: (Pricing Objectives and Policies) Strategy Planning and Pricing Objectives and Policies (Exhibit 16-1)

● Price is one of the four major variables a marketing manager controls. ● Price-level decisions are especially important because they affect both the number of sales a firm makes and how much money it earns.

Price Exchanged for Something of Value -- View of Consumer or User (Exhibit 16-2) (pg. 18)

● Price is the amount of money that is charged for "something" of value. ○ The things for which prices are charged range from purely physical products, to products with substantial service components, to pure services. ○ College tuitions, apartment rents, hotel room rates, country club dues, bank interest rates, airline fares, and attorneys' fees are all examples of price. ● In the above image: ○ On the price side, discounts, allowances, rebates or coupons, transportations, and taxes may alter the list price. ○ The price ultimately paid equals the value component. ● → As shown, this component may be much more than a purely physical good, and may encompass intangible value assessments, such as the assurance of quality.

The Importance of Price To consumers and Sellers

● Price means one thing to the consumer and another to the seller. ○ To the consumer: the price is the cost of something o To the seller: price is the source of profits. -- Marketing managers find the task of setting prices a challenge.

Key Differences between Traditional Selling and Relationship Selling

● The end result of relationship selling tends to be loyal customers who purchase from the company time after time. ○ A relationship selling strategy focused on retaining customers cost a company less than prospecting and selling to new customers.

1. Functions of Public Relations (7)

● The functions of Public Relations include: (1) Press relations (2) Product publicity, (3) Corporate communication, (4) Public affairs, (5) Lobbying, (6) Employee and investor relations (7) Crisis management.

● Cooperative Advertising:

● The main sources of newspaper ad revenue are local retailers, classified ads, and cooperative advertising. an arrangement in which the manufacturer and the retailer split the costs of advertising the manufacturer's brand. --It encourages retailers to devote more effort to the manufacturer's lines.

Price Policies: Most Firms Set Specific Pricing Policies to Reach Objectives Look on pg. 19 NOTES:

● Price policies usually lead to administered prices -- consciously set prices. ○ This practice is difficult with indirect distribution, but administered prices help achieve pricing objectives. ○ One key decision is about price flexibility policies. 1. One-price policy: the same for everyone. ■ It is common with frequently purchased, inexpensive items. ■ It can be... a. more convenient, b. entail lower transaction costs c. maintain goodwill with customers. 2. Flexible-price policy: offering different prices for different customers. ■ Pricing databases: a. make flexible pricing easier, b. less costly c. less time consuming, because they contain information about different customers. ■ Salespeople can also adjust prices to take into account the competition, the firm's relationship with a customer, and the customer's bargaining ability. ● However, too much price-cutting may erode profits (see exhibit 17-5). ○ A flexible-price policy may prompt resentment by customers who do not get the lowest price. ○ Channel conflict may also result, or an unauthorized "gray" channel may evolve if customers buy in large quantities, say, to get a price break, and then resell what they don't need.

Advantages of Personal Selling (5)

● Provides detailed explanation/demonstration of product. ● Message can be varied according to motivations of each customer. ● Can be directed only to qualified prospects. ● Can purchase personal selling in small increments. ● Most effective promotion form in obtaining sale and satisfying customers.

2. Public Relations Tools

● Public Relations tools include: ○ (1) New product publicity, ○ (2) Product placement, ○ (3) Consumer education, ○ (4) Sponsorship ○ (5) Company Web sites.

Reminder Advertising: (2)

● Reinforces a Favorable Relationship -- tries to keep the product's name before the public. ● Useful for supporting successful products well into the market maturity and sales decline stages of the product life cycle. EX: ○ M&M's is a well-known brand with a 69-year history. ○ M&M's are candies produced by Mars, incorporated.

Common Geographic Policies: (4)

● Retail prices sometimes vary according to the location of the buyer relative to the seller. ○ For many industries, geographic pricing policies are an important component of the price variable in the marketing mix. ● Common geographic policies include: ○ → F.O.B.: free on board (freight on board?) ■ The seller pays to have the product loaded on a transportation vehicle at which time the title is transferred to the buyer, who pays shipping and is responsible for the product at that point. ■ F.O.B. pricing is easy for the seller but may limit the range of the market. ○ → Zone pricing smoothes delivered prices by applying an average freight charge to all customers in the same specified geographic area. ■ This simplifies billing and helps buyers know the delivery charges in advance. ○ → Uniform delivered pricing charges one price to all buyers. ■ In effect, all buyers are in the same "zone," helping to open large-area markets. ○ → Freight absorption pricing: the company pays the cost of shipping without changing the price in order to get the sale. ■ Freight absorption helps a distant company to compete on equal grounds in another territory.

The Importance of Price to Marketing Managers

● Revenue vs. Profit: ○ Revenue: the price charged to customers multiplied by the number of units sold. ○ Profit: revenue minus expenses.

Legality of Pricing Policies Key Issues: (4)

● Some pricing decisions are limited by government legislation including: ○ Minimum prices are sometimes controlled. 1. Unfair trade practice acts 2. dumping 3. phony list prices 4. Price Fixing

Retail Ad Spending (Exhibit 15-2b) pg. 5

● Some types of retailers spend more on advertising as a percentage of sales than do other types. ● Total advertising expenditures are large, but the industry is not very big in terms of the number of people employed in advertising. ○ In the United States, only about 462,000 people work directly in advertising. ■ Only about half of these people work for advertising agencies.

What is the Right Structure that helps Assign Responsibility? (6):

● Team Selling: The sales manager must organize the sales force so that all necessary tasks are performed well. ○ → If different people handle different sales tasks, firms often rely on team selling -- when different people work together on a specific account. o Producers of big-ticket items often use team-selling (EX: IBM) ● Different target markets need different selling tasks: ○ Managers often have different sales forces for different target markets who have different support or information needs. ● Major Accounts Sales Force: o Sells directly to large accounts ○ For example, big accounts often get special treatment from a major accounts sales force. Like Lowe's or other major retail chains that carry plumbing fixtures. ● Telemarketing: ○ Some salespeople specialize in telephone selling. ○ Telemarketing is quick and inexpensive and can provide a way to serve customers who would otherwise be too expensive to support. o Big advantage of telephone selling by an inside group is that it saves time and money for the seller, and it gives customers a fast and easy way to solve purchasing problems. o telephone contacts may supplement a good website. ● Sales Territories: Where tasks are done. ○ Sales territory: a geographic area that is the responsibility of one salesperson or several working together. ○ Managers must weigh distance, number of customers, the complexity of account service, and the potential profitability of setting up sales territories. o Carefully set territories can reduce travel time and cost of sales calls. o EX: Hyatt Hotel chain ● Sales Force Size and Workload: The size of the sales force depends on workload per salesperson. ○ Assessing the workload evaluates the time required for sales tasks as well as the number of customers and other important market factors.

- Some Famous Brands

● The University of Texas @ Austin (Longhorns), Dallas Cowboys, Colt McCoy, IBM, Xerox, Starbucks, Coca Cola, Accenture, Andrew Vo, Microsoft, Toyota, Disney, BMW, Sony, Dell, & Mercedes Benz

More on leaders and how they impact organizations:

● The adverse effects of these scandals make one thing clear: ethical behavior is essential to the effective functioning of American capitalism ● Most adults do not have an adequate moral compass and therefore "look outside themselves for guidance in moral dilemma situations" ● Empirical evidence establishes that few things impact a firm's overall ethical climate more than the actions of its leaders ● Leaders must make their expectations of others' ethical conduct explicit and they must hold all of their followers accountable for ethical conduct every day through attention to ethics in the performance management systems

Steps in the Selling Process

● The sales process, or sales cycle, is the set of steps a salesperson goes through to sell a product or service. ● Completing a sale requires several steps. ○ It can be unique for each product or service, depending on the features of the product, characteristics of customer segments, and internal processes within the firm, such as how sales leads are generated.

Compensating and Motivating Salespeople: (pg. 374)

● To recruit and keep good salespeople, a firm must design an attractive compensation package that also motivates salespeople to become top performers. ○ The key is to match what people want to do and what interests them with the needs of the company. -- Compensation varies with job and needed skills -- Salary gives control-- if there is close supervision -- Commission can both motivate and direct -- Incentive should link effort to results -- Commissions reduce need for working capital -- Compensation plans should be clear -- Sales managers must plan, implant, and control

5. Handling Objections (7)

● View objections as requests for information. ● Anticipate specific objections. ● Investigate the objection with the customer. (What are they going to ask you? Something about price?) ● Be aware of competitor's products. ● Stay calm. (Key, don't let them see you sweat.) ● Use the objection to close the sale. ● Don't take objections personally, as confrontations or insults. ○ Instead, objections should be handled as requests for information, and could be used in a positive way to close the sale.

- Know Your Purpose

● What mark will I make with the people I meet today? ● What divine appointments will I encounter that will help me reach my goal? ● What is my "DNA" (Distinct and Notable Attributes) that will propel me to reach greater heights?

2. What is Qualifying Leads ● Lead qualification involves determining whether the prospect has three things including:

● When a prospect shows interest in learning more about a product, the salesperson has the opportunity to qualify the lead. ○ 1. Recognized need: Do they have a need? ○ 2. Buying Power: The authority to make the purchase decision and access to funds to pay for it. ○ 3. Receptivity and accessibility: to the salesperson. (Can we market the product to them?)

● In a world of clutter and competition what will be your indelible mark?

● You are the product/brand that has Priceless value. ● "I am priceless. I have great value." ○ Say it 7 more times and it will be permanently imprinted in your brain. ● It is not your career, education, position -- these are just extensions of who you are.

- Your circumstances can't contain you.

● Your current/future job can't compensate you for what you are truly worth. ● The key question is will you tap into this truth about who you are and build a powerful brand?

o Three types of supporting salespeople: (3)

● → Missionary salespeople: ● → Technical specialists: ● → Customer service reps:

Comparing Advertising Media (pg. 14): (8)

● → Television: -- Advantages: provides a way to demonstrate products, is a good medium for getting attention, it offers wide reach, and cable can be selective. -- Disadvantages: include expense, competition among lots of ads -- "clutter." ● → Direct mail: -- is very flexible, can be personalized, and is very selective. ○ Disadvantages include expense per contract, "junk mail" image, and difficulty retaining attention. ● → Newspapers -- offer flexibility, timely placement, and good local market coverage. ○ Some disadvantages are expense (for some markets), short life, and no "pass along" readership. ● → Radio -- offers wide reach, low cost, and it appeals to highly segmented audiences. ○ Disadvantages include weak attention, short exposure, and varying rates. ● → Yellow Pages -- reach local customers who are seeking purchase information. ○ However, competitors are also listed there and differentiation is difficult. ● → Magazines -- are very targeted, provide good detail and excellent graphics, have high "pass-along" rates, and long shelf life. ○ Disadvantages include inflexibility and long lead times. ● → Internet -- ads link to more detailed website information, some with "pay for results" offers to the advertiser. ○ However, it is difficult to compare total costs with other types of media. ● → Outdoor & Cinema: -- advertising is flexible, inexpensive, and offers repeat exposures. ○ However, exposure is very short and there is a lack of market segmentation. ○ Can go after a younger audience ○ Cinema has a younger appeal.