Principles of Marketing Exam 3 Review (Professor Edward Meda)
Elements of the Promotion Decision Process
(1) Identifying the Target Audience (2) Specifying Promotion Objectives (3) Setting the Promotion Budget (4) Selecting the Right Promotional Tools (5) Designing the Promotion (6) Scheduling the Promotion
Cross-Channel Consumers
A consumer who shops online but buys offline, or shops offline but buys online.
Retailing Mix
The activities related to managing the store and the merchandise in the store, which include retail pricing, store location, retail communications, and merchandise.
Elements of the Promotion Decision Process: Selecting the Right Promotional Tools (IMC Tools)
∙ Once a budget has been determined, the combination of the five basic IMC tools can be specified. ▪ Advertising ▪ Personal Selling ▪ Sales Promotion ▪ Public Relations ▪ Direct Marketing
Off-Price Retailing
∙ Selling brand-name merchandise at lower than regular prices. For example: ▪ Ross and TJ Maxx Stores ▪ 𝐖𝐚𝐫𝐞𝐡𝐨𝐮𝐬𝐞 𝐂𝐥𝐮𝐛𝐬: - Sam's Club and Costco. Require an annual membership fee for the privilege of shopping there. And service is minimal. ▪ 𝐎𝐮𝐭𝐥𝐞𝐭 𝐒𝐭𝐨𝐫𝐞𝐬: - Nordstrom's Rack, Sack off 5th Avenue. Manufacturers use the stores to clear excess merchandise and to reach consumers who focus on value shopping. ▪ 𝐒𝐢𝐧𝐠𝐥𝐞 𝐏𝐫𝐢𝐜𝐞 𝐨𝐫 𝐄𝐱𝐭𝐫𝐞𝐦𝐞 𝐕𝐚𝐥𝐮𝐞: - Family Dollar, Dollar General.
Nonstore Retailing: Automatic Vending, Direct Mail and Catalogues, and Television Home Shopping (The First 3)
𝐀𝐮𝐭𝐨𝐦𝐚𝐭𝐢𝐜 𝐕𝐞𝐧𝐝𝐢𝐧𝐠: ∙ V-Commerce. Serves customers where stores cannot. 𝐃𝐢𝐫𝐞𝐜𝐭 𝐌𝐚𝐢𝐥 𝐚𝐧𝐝 𝐂𝐚𝐭𝐚𝐥𝐨𝐠𝐮𝐞𝐬: ∙ The store comes to the door 𝐓𝐞𝐥𝐞𝐯𝐢𝐬𝐢𝐨𝐧 𝐚𝐧𝐝 𝐇𝐨𝐦𝐞 𝐒𝐡𝐨𝐩𝐩𝐢𝐧𝐠: ∙ When consumers watch a shopping channel on which products are displayed; orders are then placed over the telephone or via the Internet. ▪ Currently the three largest channels are QVC, HSN, and ShopHQ.
Elements of the Promotion Decision Process: Designing the Promotion and Scheduling the Promotion
𝐃𝐞𝐬𝐢𝐠𝐧𝐢𝐧𝐠 𝐭𝐡𝐞 𝐏𝐫𝐨𝐦𝐨𝐭𝐢𝐨𝐧: The central element of the promotion program is the promotion itself. The design of the promotion will play a primary role in determining the message that is communicated to the audience. This step requires the most creativity. 𝐒𝐜𝐡𝐞𝐝𝐮𝐥𝐢𝐧𝐠 𝐭𝐡𝐞 𝐏𝐫𝐨𝐦𝐨𝐭𝐢𝐨𝐧: Determine the effective timing of the tools. The promotion schedule describes the order in which each promotional tool is introduced and the frequency of its use during the campaign
Encoding and Decoding
𝐄𝐧𝐜𝐨𝐝𝐢𝐧𝐠: The process of having a sender transform an idea into a set of symbols during the communication process. 𝐃𝐞𝐜𝐨𝐝𝐢𝐧𝐠: The process of having the receiver take a set of symbols, the message, and transform them back to an idea during the communication process. 𝐍𝐨𝐭𝐞: For the message to be communicated effectively the sender and receiver must have a mutually shared field of experience
Nonstore Retailing: Online Retailing, Telemarketing, and Direct Selling (The Last 3)
𝐎𝐧𝐥𝐢𝐧𝐞 𝐑𝐞𝐭𝐚𝐢𝐥𝐢𝐧𝐠: Allows consumers to search for, evaluate, and order products through the Internet with 24-hour asses. There are several different approaches incorporated. 𝐓𝐞𝐥𝐞𝐦𝐚𝐫𝐤𝐞𝐭𝐢𝐧𝐠: Using the telephone to interact with and sell directly to consumers. 𝐃𝐢𝐫𝐞𝐜𝐭 𝐒𝐞𝐥𝐥𝐢𝐧𝐠: Involves door-to-door selling such as Avon, Fuller Brush, Mary Kay, and Tupperware.
Personalization and Permission Marketing
𝐏𝐞𝐫𝐬𝐨𝐧𝐚𝐥𝐢𝐳𝐚𝐭𝐢𝐨𝐧: The consumer-initiated practice of generating content on a marketer's website that is custom-tailored to an individual's specific needs and preferences. 𝐏𝐞𝐫𝐦𝐢𝐬𝐬𝐢𝐨𝐧 𝐌𝐚𝐫𝐤𝐞𝐭𝐢𝐧𝐠: The solicitation of a consumer's consent (called "opt-in") to receive e-mail and advertising based on personal data supplied by the consumer.
Three Forms of Product Advertising
𝐏𝐢𝐨𝐧𝐞𝐞𝐫𝐢𝐧𝐠 (𝐈𝐧𝐟𝐨𝐫𝐦𝐚𝐭𝐢𝐨𝐧𝐚𝐥): ∙ Used in the introductory stage of the product life cycle, pioneering advertisements tell people what a product is, what it can do, and where it can be found. 𝐂𝐨𝐦𝐩𝐞𝐭𝐢𝐭𝐢𝐯𝐞 (𝐏𝐞𝐫𝐬𝐮𝐚𝐬𝐢𝐯𝐞): ∙ Advertising that promotes a specific brand's features and benefits is competitive. ▪ The objective of these messages is to persuade the target market to select the firm's brand rather than that of a competitor. 𝐑𝐞𝐦𝐢𝐧𝐝𝐞𝐫: ∙ Reminder advertising is used to reinforce previous knowledge of a product.
Stages of the Consumer Journey
𝐏𝐫𝐞𝐩𝐮𝐫𝐜𝐡𝐚𝐬𝐞 𝐒𝐭𝐚𝐠𝐞: In the prepurchase stage, advertising is more helpful because it informs the potential customer of the existence of the product and the seller. 𝐏𝐮𝐫𝐜𝐡𝐚𝐬𝐞 𝐒𝐭𝐚𝐠𝐞: The importance of personal selling is the highest, whereas the impact of advertising is the lowest. 𝐏𝐨𝐬𝐭𝐩𝐮𝐫𝐜𝐡𝐚𝐬𝐞 𝐒𝐭𝐚𝐠𝐞: In the postpurchase stage, the salesperson is still important. In fact, the more personal contact after the sale, the more the buyer is satisfied. Advertising is also important to assure the buyer that the right purchase decision was made. Advertising and personal selling help reduce the buyer's post-purchase anxiety.
Push Strategy and Pull Strategy
𝐏𝐮𝐬𝐡 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐲: Directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product 𝐏𝐮𝐥𝐥 𝐒𝐭𝐫𝐚𝐭𝐞𝐠𝐲: Directing the promotional mix at ultimate consumers to encourage them to ask the retailer for a product
Basic Terms Used in Advertising
𝐑𝐞𝐚𝐜𝐡: The number of different or households exposed to the advertisement 𝐑𝐚𝐭𝐢𝐧𝐠: The percentage of households in a market that are tuned to a particular TV show or radio station. 𝐅𝐫𝐞𝐪𝐮𝐞𝐧𝐜𝐲: The average number of times a person in the target audience is exposed to a message or an advertisement. 𝐆𝐫𝐨𝐬𝐬 𝐑𝐚𝐭𝐢𝐧𝐠 𝐏𝐨𝐢𝐧𝐭𝐬 (𝐆𝐑𝐏𝐬): A reference number used by advertisers that are obtained by multiplying the reach (expressed as a percentage of the total market) by frequency. 𝐂𝐨𝐬𝐭 𝐏𝐞𝐫 𝐓𝐡𝐨𝐮𝐬𝐚𝐧𝐝 (𝐂𝐏𝐌): The cost of reaching 1,000 individuals or households with the advertising message in a given medium (M is the Roman numeral for 1,000).
Retailing
𝐑𝐞𝐭𝐚𝐢𝐥𝐢𝐧𝐠: Retailing includes all activities involved in selling, renting and providing product and services to ultimate consumers for personal, familiy or household use.
Store Location Types : Strip Mall and Its Variation
𝐒𝐭𝐫𝐢𝐩 𝐌𝐚𝐥𝐥: ∙ A retail location consisting of a cluster of neighborhood stores to serve people who are within a 5- to 10-minute drive. ▪ E.g. Gas stations, hardware, laundry, grocery, and pharmacy outlets are commonly found in a strip mall. 𝑷𝒐𝒘𝒆𝒓 𝑪𝒆𝒏𝒕𝒆𝒓: ∙ A variation of a strip mall, a retail location consisting of a huge shopping strip with multiple anchors (or national) stores. ▪ E.g. TJ Maxx, Ross Dress for Less, Ulta Beauty, or Pier 1 Imports.
The Communication Process
𝐓𝐡𝐞 𝐩𝐫𝐨𝐜𝐞𝐬𝐬 𝐨𝐟 𝐜𝐨𝐧𝐯𝐞𝐲𝐢𝐧𝐠 𝐚 𝐦𝐞𝐬𝐬𝐚𝐠𝐞 𝐭𝐨 𝐨𝐭𝐡𝐞𝐫𝐬 𝐭𝐡𝐚𝐭 𝐫𝐞𝐪𝐮𝐢𝐫𝐞𝐬 𝐬𝐢𝐱 𝐞𝐥𝐞𝐦𝐞𝐧𝐭𝐬: ∙ A source ∙ A message ∙ A channel of communication ∙ A receiver ∙ The processes of encoding and decoding.
Consumer Utilities Offered by Retailing
𝐓𝐢𝐦𝐞 𝐔𝐭𝐢𝐥𝐢𝐭𝐲 E.g. Stores open 24 hours 𝐏𝐥𝐚𝐜𝐞 𝐔𝐭𝐢𝐥𝐢𝐭𝐲 Convenient locations 𝐅𝐨𝐫𝐦 𝐔𝐭𝐢𝐥𝐢𝐭𝐲 E.g. customize purchases in the bakery, deli, and floral departments. 𝐏𝐨𝐬𝐬𝐞𝐬𝐬𝐢𝐨𝐧 𝐔𝐭𝐢𝐥𝐢𝐭𝐲 E.g. Several payments and credit options.
Merchandising: Category Management
An approach to managing the assortment of merchandise in which a manager is assigned the responsibility for selecting all products that consumers in a market segment might view as substitutes for each other, with the objective of maximizing sales and profits in the category.
Forms of Ownership
Distinguishes retail outlets based on whether independent retailers, corporate chains, or contractual systems own the outlet.
EDLP and EDLP 2.0
EDLP 2.0 expands on EDLP and enables consumers to reduce their price through product bundling and payment and shipping options.
Self Disclosure
In any type of social interaction, individuals want to make a positive impression to achieve a favorable image with others. This favorable image is affected by the degree of self-disclosure about a person's thoughts, feelings, likes, and dislikes.
Merchandising: Marketing Dashboards
Marketing dashboards include marketing metrics, product turnover, gross margin, and shrink driving sales per square foot and same-store sales growth
Social Media
Online media where users submit comments, photos, and videos - often accompanied by a feedback process to identify "popular" topics. Companies also refer to social media as "consumer-generated media."
Multichannel Retailing
Retailers that utilize and integrate a combination of traditional store formats and nonstore formats such as catalogs, television home shopping, and online retailing.
Online Consumer
The subsegment of all Internet users who employ this technology to research products and services and make purchases.
Retail Communication: Shopper Marketing
The use of displays, coupons, product samples, and other brand communications to influence shopping behavior in a store.
Media Richness
This involves the degree of acoustic, visual, and personal contact between two communication partners - face-to-face communications, say, being higher in media richness than telephone or e-mail communications.
The Four W's of a Promotion Program
• Who is the target audience? • What are the promotion objectives, budgets, and mediums? • Where should the promotion be run? • When should the promotion be run?
Performance Measures Linked to Inputs or Costs
∙ Cost Per Thousand (CPM) ∙ Cost Per Click (CPC) ∙ Cost Per Action (CPA)
Comparing Social Media and Traditional Media
∙ 𝐀𝐛𝐢𝐥𝐢𝐭𝐲 𝐭𝐨 𝐫𝐞𝐚𝐜𝐡 𝐛𝐨𝐭𝐡 𝐥𝐚𝐫𝐠𝐞 𝐚𝐧𝐝 𝐧𝐢𝐜𝐡𝐞 𝐚𝐮𝐝𝐢𝐞𝐧𝐜𝐞𝐬. ▪ Both kinds of media can be designed to reach either a mass market or specialized segments. ∙ 𝐄𝐱𝐩𝐞𝐧𝐬𝐞 𝐚𝐧𝐝 𝐚𝐜𝐜𝐞𝐬𝐬. ▪ Messages and ads in traditional media like newspapers or television generally are expensive to produce and have restricted access by individuals. In contrast, messages on social media are generally accessible everywhere, are available to anyone with a smartphone, a computer, or a tablet device, and can be produced cheaply. ∙ 𝐓𝐫𝐚𝐢𝐧𝐢𝐧𝐠 𝐚𝐧𝐝 𝐧𝐮𝐦𝐛𝐞𝐫 𝐨𝐟 𝐩𝐞𝐨𝐩𝐥𝐞 𝐢𝐧𝐯𝐨𝐥𝐯𝐞𝐝 ▪ Producing traditional media typically requires specialized skills and training and often involves teams of people. In contrast, sending messages on social media requires only limited skills, so practically anyone can post a message that includes words and images. ∙ 𝐓𝐢𝐦𝐞 𝐭𝐨 𝐃𝐞𝐥𝐢𝐯𝐞𝐫𝐲. ▪ Traditional media can involve days or even months of continuing effort to deliver the communication, and time lags can be extensive. In contrast, individuals using social media can post virtually instantaneous content. ∙ 𝐏𝐞𝐫𝐦𝐚𝐧𝐞𝐧𝐜𝐞. ▪ Traditional media, once created, cannot be altered. But social media message content can be altered almost instantaneously by comments or editing. ∙ 𝐂𝐫𝐞𝐝𝐢𝐛𝐢𝐥𝐢𝐭𝐲 𝐚𝐧𝐝 𝐒𝐨𝐜𝐢𝐚𝐥 𝐀𝐮𝐭𝐡𝐨𝐫𝐢𝐭𝐲. ▪ Individuals and organizations can establish themselves as "experts" in their given field, thereby becoming "influencers" in that field. But with social media, a sender often simply begins to participate in the "conversation," hoping that the quality of the message will establish credibility with the receivers, thereby enhancing the sender's influence.
Performance Measures Linked to Inputs or Costs
∙ 𝐔𝐬𝐞𝐫𝐬/𝐌𝐞𝐦𝐛𝐞𝐫𝐬: ▪ Individuals who have registered on a social networking site by completing the process involved, such as providing their name, user ID, and password, as well as answering a few questions (date of birth, gender, etc.). ∙ 𝐅𝐚𝐧𝐬: ▪ The number of people who have opted in to a brand's messages through a social media platform at a given time. ∙ 𝐒𝐡𝐚𝐫𝐞 𝐨𝐟 𝐕𝐨𝐢𝐜𝐞: ▪ The brand's share or percentage of all the online social media chatter related to, say, its product category or a topic. ∙ 𝐏𝐚𝐠𝐞 𝐕𝐢𝐞𝐰𝐬: ▪ The number of times a Facebook Page is loaded in a given time period ∙ 𝐕𝐢𝐬𝐢𝐭𝐨𝐫𝐬: ▪ The total number of visitors to a Facebook Page in a given time period; if someone visits three times in one day, she is counted three times. ∙ 𝐔𝐧𝐢𝐪𝐮𝐞 𝐕𝐢𝐬𝐢𝐭𝐨𝐫𝐬: ▪ The total number of unique visitors to a Facebook Page in a given time period; if someone visits three times in one day, he is counted only once. ∙ 𝐀𝐯𝐞𝐫𝐚𝐠𝐞 𝐏𝐚𝐠𝐞 𝐕𝐢𝐞𝐰𝐬 𝐏𝐞𝐫 𝐕𝐢𝐬𝐢𝐭𝐨𝐫: ▪ Page views divided by visitors in a given time period. ∙ 𝐈𝐧𝐭𝐞𝐫𝐚𝐜𝐭𝐢𝐨𝐧 𝐑𝐚𝐭𝐞: ▪ The number of people who interact with a Post (e.g. "like" or comment) divided by the total number of people seeing the Post. ∙ 𝐂𝐥𝐢𝐜𝐤-𝐓𝐡𝐫𝐨𝐮𝐠𝐡 𝐑𝐚𝐭𝐞 (𝐂𝐓𝐑): ▪ Percentage of recipients who have clicked on a link on the Page to visit a specific site. ∙ 𝐅𝐚𝐧 𝐒𝐨𝐮𝐫𝐜𝐞: ▪ Where a social network following comes from - with fans coming from a friend being more valuable than those coming from an ad.
Five Promotional Elements
𝐀𝐝𝐯𝐞𝐫𝐭𝐢𝐬𝐢𝐧𝐠: ∙ Any paid form of nonpersonal communication about an organization, product, service, or idea by an identified sponsor. 𝐏𝐞𝐫𝐬𝐨𝐧𝐚𝐥 𝐒𝐞𝐥𝐥𝐢𝐧𝐠: ∙ The two-way flow of communication between a buyer and seller, often in a face-to-face encounter, designed to influence a person's or group's purchase decision. 𝐏𝐮𝐛𝐥𝐢𝐜 𝐑𝐞𝐥𝐚𝐭𝐢𝐨𝐧𝐬: ∙ A form of communication management that seeks to influence the feelings, opinions, or beliefs held by customers, prospective customers, stockholders, suppliers, employees, and other publics about a company and its products or services. 𝐒𝐚𝐥𝐞𝐬 𝐏𝐫𝐨𝐦𝐨𝐭𝐢𝐨𝐧: ∙ A short-term inducement of value offered to arouse interest in buying a product or service. ▪ E.g. Coupons, rebates, samples, contests, and sweepstakes are sales promotions. 𝐃𝐢𝐫𝐞𝐜𝐭 𝐌𝐚𝐫𝐤𝐞𝐭𝐢𝐧𝐠: ∙ A promotional alternative that uses direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet. ▪ E.g. Face to face selling, direct mail, catalogs, telephone solicitations, direct response advertising (or television and radio in print), and online marketing.
Institutional Advertisements
𝐀𝐝𝐯𝐨𝐜𝐚𝐜𝐲 𝐀𝐝𝐯𝐞𝐫𝐭𝐢𝐬𝐞𝐦𝐞𝐧𝐭𝐬: ∙ State the position of a company on an issue. ▪ E.g. Chevron's "We Agree" campaign placed ads stating its position on issues such as renewable energy, protecting the planet, and community development. 𝐏𝐢𝐨𝐧𝐞𝐞𝐫𝐢𝐧𝐠 𝐈𝐧𝐬𝐭𝐢𝐭𝐮𝐭𝐢𝐨𝐧𝐚𝐥 𝐀𝐝𝐯𝐞𝐫𝐭𝐢𝐬𝐞𝐦𝐞𝐧𝐭𝐬: ∙ Used for announcements about what a company is, what it can do, or where it is located. ▪ E.g. KPMG uses pioneering institutional ads to inform people about its expertise with data and analytics. 𝐂𝐨𝐦𝐩𝐞𝐭𝐢𝐭𝐢𝐯𝐞 𝐈𝐧𝐬𝐭𝐢𝐭𝐮𝐭𝐢𝐨𝐧𝐚𝐥 𝐀𝐝𝐯𝐞𝐫𝐭𝐢𝐬𝐞𝐦𝐞𝐧𝐭𝐬: ∙ Promote the advantages of one product class over another and are used in markets where different product classes compete for the same buyers. ▪ E.g. America's mil processors and dairy farmers use their "Milk Life" campaign to increase demand for milk as it competes against other beverages. 𝐑𝐞𝐦𝐢𝐧𝐝𝐞𝐫 𝐈𝐧𝐬𝐭𝐢𝐭𝐮𝐭𝐢𝐨𝐧𝐚𝐥 𝐀𝐝𝐯𝐞𝐫𝐭𝐢𝐬𝐞𝐦𝐞𝐧𝐭𝐬: ∙ Simply bring the company's name to the attention of the target market again. ▪ E.g. The Army branch of the U.S. military sponsors a campaign to remind potential recruits of the opportunities available in the Army.
Choiceboards and Collaborative Filtering
𝐂𝐡𝐨𝐢𝐜𝐞𝐛𝐨𝐚𝐫𝐝𝐬: An interactive, digitally-enabled system that allows individual customers to design their own products and services by answering a few questions and choosing from a menu of product or service attributes (or components), prices, and delivery options. 𝐂𝐨𝐥𝐥𝐚𝐛𝐨𝐫𝐚𝐭𝐢𝐯𝐞 𝐅𝐢𝐥𝐭𝐞𝐫𝐢𝐧𝐠 A process that automatically groups people with similar buying intentions, preferences, and behaviors and predicts future purchases.
Seven Fundamental Website Design Elements
𝐂𝐨𝐧𝐭𝐞𝐱𝐭: Context refers to the website's aesthetic appeal. 𝐂𝐨𝐧𝐭𝐞𝐧𝐭: All digital information on the website. 𝐂𝐮𝐬𝐭𝐨𝐦𝐢𝐳𝐚𝐭𝐢𝐨𝐧: The ability of the site to modify itself, or to be modified by and for each individual user. 𝐂𝐨𝐧𝐧𝐞𝐜𝐭𝐢𝐨𝐧: The degree that the site is linked to other sites. 𝐂𝐨𝐦𝐦𝐮𝐧𝐢𝐜𝐚𝐭𝐢𝐨𝐧: The dialogue between the website and its users. 𝐂𝐨𝐦𝐦𝐮𝐧𝐢𝐭𝐲: User to user communication. 𝐂𝐨𝐦𝐦𝐞𝐫𝐜𝐞: The sites ability to enable commercial transactions.
The Retail Life Cycle
𝐃𝐞𝐟𝐢𝐧𝐢𝐭𝐢𝐨𝐧: ∙ The process of growth and decline that retail outlets, like products, experience, consists of the early growth, accelerated development, maturity, and decline stages. 𝐓𝐡𝐞 𝐑𝐞𝐭𝐚𝐢𝐥 𝐋𝐢𝐟𝐞 𝐂𝐲𝐜𝐥𝐞: ∙ 𝑬𝒂𝒓𝒍𝒚 𝑮𝒓𝒐𝒘𝒕𝒉 ▪ The stage of the emergence of a retail outlet. Market share rises, although profits may be low because of start-up costs. ∙ 𝑨𝒄𝒄𝒆𝒍𝒆𝒓𝒂𝒕𝒆𝒅 𝑫𝒆𝒗𝒆𝒍𝒐𝒑𝒎𝒆𝒏𝒕: ▪ Both market share and profit achieve their greatest growth rates. In this stage, some later competitors might enter. The key goal here is to establish a dominant position. ∙ 𝑴𝒂𝒕𝒖𝒓𝒊𝒕𝒚 ▪ Some competitors drop out of the market and new retail forms enter the market where stores try to maintain their market share, and price discounting occurs. ∙ 𝑫𝒆𝒄𝒍𝒊𝒏𝒆 𝑺𝒕𝒂𝒈𝒆𝒔 ▪ Where market share and profit fall rapidly.
The Wheel of Retailing
𝐃𝐞𝐟𝐢𝐧𝐢𝐭𝐢𝐨𝐧: A concept that describes how new forms of retail outlets enter the market. 𝐏𝐚𝐬𝐬𝐚𝐠𝐞 𝐨𝐟 𝐓𝐢𝐦𝐞: ∙ Outlet starts with low prices, low margins, and low status. ∙ Improves to higher prices, higher margins, and higher status. ∙ Improves again to still higher prices, still higher margins, and still higher status. ∙ A new form of outlet entering a retailing environment with the characteristics of the first outlet.
Type of Merchandise Line
𝐃𝐞𝐩𝐭𝐡 𝐨𝐟 𝐏𝐫𝐨𝐝𝐮𝐜𝐭-𝐋𝐢𝐧𝐞: ∙ The store carries a large assortment of each item such as running shoes, dress shoes, and children's shoes. 𝐁𝐫𝐞𝐚𝐝𝐭𝐡 𝐨𝐟 𝐏𝐫𝐨𝐝𝐮𝐜𝐭-𝐋𝐢𝐧𝐞: ∙ Variety of different items a store carries like appliances and books. 𝐒𝐜𝐫𝐚𝐦𝐛𝐥𝐞𝐝 𝐌𝐞𝐫𝐜𝐡𝐚𝐧𝐝𝐢𝐬𝐢𝐧𝐠: ∙ Offers several unrelated product lines in a single store. ▪ E.g. Food, cosmetics, paper products, toys, hardware, etc.
Feedback and Noise
𝐅𝐞𝐞𝐝𝐛𝐚𝐜𝐤: In the feedback loop, the sender's interpretation of the response, which indicates whether a message was decoded or understood as intended during the communication process. 𝐍𝐨𝐢𝐬𝐞: Extraneous factors that can work against effective communication by distorting a message or the feedback received during the communication process. ▪ E.g. A simple error such as a printing mistake that affects the meaning of the newspaper advertisement or the use of words or pictures that fail to communicate the message clearly.
Elements of the Promotion Decision Process: Identifying the Target Audience
𝐈𝐝𝐞𝐧𝐭𝐢𝐟𝐲𝐢𝐧𝐠 𝐭𝐡𝐞 𝐓𝐚𝐫𝐠𝐞𝐭 𝐀𝐮𝐝𝐢𝐞𝐧𝐜𝐞: The first step in developing the promotion program involves identifying the target audience, the group of prospective buyers toward which a promotion program will be directed.
Steps to Developing the Advertising Program
𝐈𝐝𝐞𝐧𝐭𝐢𝐟𝐲𝐢𝐧𝐠 𝐭𝐡𝐞 𝐓𝐚𝐫𝐠𝐞𝐭 𝐀𝐮𝐝𝐢𝐞𝐧𝐜𝐞: ∙ All aspects of an advertising program are likely to be influenced by the characteristics of the prospective consumer. Understanding the lifestyles, attitudes, and demographics of the target market is essential. ▪ E.g. Mountain Dew is targeted at young males, while Kraft's Crystal Light Liquid is targeted at calorie-conscious women. 𝐒𝐩𝐞𝐜𝐢𝐟𝐲𝐢𝐧𝐠 𝐚𝐧 𝐀𝐝𝐯𝐞𝐫𝐭𝐢𝐬𝐢𝐧𝐠 𝐎𝐛𝐣𝐞𝐜𝐭𝐢𝐯𝐞: ∙ Creating Awareness 𝐒𝐞𝐭𝐭𝐢𝐧𝐠 𝐭𝐡𝐞 𝐀𝐝𝐯𝐞𝐫𝐭𝐢𝐬𝐢𝐧𝐠 𝐁𝐮𝐝𝐠𝐞𝐭: ∙ All advertising represents substantial financial commitments and requires a formal budgeting process. 𝐃𝐞𝐬𝐢𝐠𝐧𝐢𝐧𝐠 𝐭𝐡𝐞 𝐀𝐝𝐯𝐞𝐫𝐭𝐢𝐬𝐞𝐦𝐞𝐧𝐭: 𝑴𝒆𝒔𝒔𝒂𝒈𝒆 𝑪𝒐𝒏𝒕𝒆𝒏𝒕: Most advertising messages are made up of both informational and persuasive elements. These two elements are so intertwined that it is sometimes difficult to tell them apart. 𝐂𝐫𝐞𝐚𝐭𝐢𝐧𝐠 𝐭𝐡𝐞 𝐀𝐜𝐭𝐮𝐚𝐥 𝐌𝐞𝐬𝐬𝐚𝐠𝐞 𝐒𝐞𝐥𝐞𝐜𝐭𝐢𝐧𝐠 𝐭𝐡𝐞 𝐑𝐢𝐠𝐡𝐭 𝐌𝐞𝐝𝐢𝐚: ∙ Every advertiser must decide where to place its advertisements and choose a medium. ▪ Often advertisers choose a mixed medium.
Forms of Ownership
𝐈𝐧𝐝𝐞𝐩𝐞𝐧𝐝𝐞𝐧𝐭 𝐑𝐞𝐭𝐚𝐢𝐥𝐞𝐫: The independent business is owned by an individual. They offer convenience, personal service, and lifestyle compatibility. 𝐂𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐞 𝐂𝐡𝐚𝐢𝐧: ∙ Multiple outlets under common ownership. ▪ E.g. Macys operates 640 Macys' department stores in 43 states. Macys also owns Bloomingdale's and recently acquired Bluemercury. 𝐂𝐨𝐧𝐭𝐫𝐚𝐜𝐭𝐮𝐚𝐥 𝐒𝐲𝐬𝐭𝐞𝐦𝐬: Independently owned stores but ban together to act as a chain. For example, Ace Hardware.
The Product Life Cycle
𝐈𝐧𝐭𝐫𝐨𝐝𝐮𝐜𝐭𝐢𝐨𝐧 𝐒𝐭𝐚𝐠𝐞: ∙ Informing consumers in an effort to increase their level of awareness is the primary promotional objective in the introduction stage of the product life cycle. 𝐆𝐫𝐨𝐰𝐭𝐡 𝐒𝐭𝐚𝐠𝐞: ∙ The primary promotional objective of the growth stage is to persuade the consumer to buy the product rather than substitutes, 𝐌𝐚𝐭𝐮𝐫𝐢𝐭𝐲 𝐒𝐭𝐚𝐠𝐞: ∙ In the maturity stage, the need is to maintain existing buyers, and advertising's role is to remind buyers of the product's existence. 𝐃𝐞𝐜𝐥𝐢𝐧𝐞 𝐒𝐭𝐚𝐠𝐞: ∙ The decline stage of the product life cycle is usually a period of phaseout for the product, and little money is spent in the promotional mix.
Legacy Companies
𝐋𝐞𝐠𝐚𝐜𝐲 𝐂𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬: These are companies that trace their origins to the traditional marketplace, such as Procter & Gamble, Walmart, and General Motors. They consistently refine the role of digital technology in attracting, retaining, and building consumer relationships. 𝐃𝐢𝐠𝐢𝐭𝐚𝐥 𝐍𝐚𝐭𝐢𝐯𝐞𝐬: These are companies with marketspace origins like Amazon.com, Google, eBay, E*TRADE, and others. They are challenged to continually refine, broaden, and deepen their marketspace presence.
Merchant Wholesalers, Manufacturers' Agents, and Brokers
𝐌𝐞𝐫𝐜𝐡𝐚𝐧𝐭 𝐖𝐡𝐨𝐥𝐞𝐬𝐚𝐥𝐞𝐫𝐬: Independently owned firms that take title to the merchandise they handle. Sometimes called Industrial Distributors. 𝐌𝐚𝐧𝐮𝐟𝐚𝐜𝐭𝐮𝐫𝐞𝐫𝐬' 𝐀𝐠𝐞𝐧𝐭𝐬: Agents who work for several producers and carry non-competitive, complimentary merchandise in an exclusive territory. 𝐁𝐫𝐨𝐤𝐞𝐫𝐬: Independent firms or individuals whose principal function is to bring buyers and sellers together to make sales.
Elements of the Promotion Decision Process: Setting the Promotion Budget (Methods)
𝐏𝐞𝐫𝐜𝐞𝐧𝐭𝐚𝐠𝐞 𝐨𝐟 𝐒𝐚𝐥𝐞𝐬 𝐁𝐮𝐝𝐠𝐞𝐭𝐢𝐧𝐠: ∙ Allocating funds to promotion as a percentage of past or anticipated sales, in terms of either dollars or units sold. ▪ E.g. "Our promotion budget for this year is 3% of last year's gross sales." 𝐂𝐨𝐦𝐩𝐞𝐭𝐢𝐭𝐢𝐯𝐞 𝐏𝐚𝐫𝐢𝐭𝐲 𝐁𝐮𝐝𝐠𝐞𝐭𝐢𝐧𝐠: Allocating funds to promotion by matching the competitor's absolute level of spending or the proportion per point of market share. Also called matching competitors or share of market. 𝐀𝐥𝐥-𝐘𝐨𝐮-𝐂𝐚𝐧-𝐀𝐟𝐟𝐨𝐫𝐝 𝐁𝐮𝐝𝐠𝐞𝐭𝐢𝐧𝐠: Allocating funds to promotion only after all other budget items are covered. 𝐎𝐛𝐣𝐞𝐜𝐭𝐢𝐯𝐞 𝐚𝐧𝐝 𝐓𝐚𝐬𝐤 𝐁𝐮𝐝𝐠𝐞𝐭𝐢𝐧𝐠: Allocating funds to promotion whereby the company: (1) determines its promotion objectives; (2) outlines the tasks to accomplish those objectives; and (3) determines the promotion cost of performing those tasks.
Achieving a Meaningful Marketspace Presence
𝐑𝐞𝐠𝐚𝐫𝐝𝐥𝐞𝐬𝐬 𝐨𝐟 𝐨𝐫𝐢𝐠𝐢𝐧, 𝐚 𝐜𝐨𝐦𝐩𝐚𝐧𝐲'𝐬 𝐬𝐮𝐜𝐜𝐞𝐬𝐬 𝐢𝐧 𝐚𝐜𝐡𝐢𝐞𝐯𝐢𝐧𝐠 𝐦𝐞𝐚𝐧𝐢𝐧𝐠𝐟𝐮𝐥 𝐦𝐚𝐫𝐤𝐞𝐭𝐬𝐩𝐚𝐜𝐞 𝐩𝐫𝐞𝐬𝐞𝐧𝐜𝐞 𝐫𝐞𝐥𝐢𝐞𝐬 𝐨𝐧: ∙ (1) Its ability to design and execute a marketing program that capitalizes on the unique value creation. ∙ (2) The relationship-building capabilities of digital technology in delivering a favorable customer experience. ∙ (3) Place and Time Utility ▪ In the marketspace, the provision of direct on-demand information is possible from marketers anywhere to customers at any time. ∙ (4) Possession Utility ▪ Getting a product or service to a customer so they can own or use, is accelerated in the marketspace.
Levels of Service
𝐒𝐞𝐥𝐟-𝐒𝐞𝐫𝐯𝐢𝐜𝐞: ∙ Customers perform many of the functions during the purchase process. 𝐋𝐢𝐦𝐢𝐭𝐞𝐝 𝐒𝐞𝐫𝐯𝐢𝐜𝐞: ∙ Provides some services such as credit and merchandise returns but not others like alterations. 𝐅𝐮𝐥𝐥 𝐒𝐞𝐫𝐯𝐢𝐜𝐞: ∙ Provides many services to the customer.
Showrooming and Webrooming
𝐒𝐡𝐨𝐰𝐫𝐨𝐨𝐦𝐢𝐧𝐠: The practice of examining products in a store and then buying them online for a cheaper price. 𝐖𝐞𝐛𝐫𝐨𝐨𝐦𝐢𝐧𝐠: The practice of examining products online and then buying them in a store.
Why Consumers Shop and Buy Online
𝐒𝐢𝐱 𝐑𝐞𝐚𝐬𝐨𝐧𝐬: 𝑪𝒐𝒏𝒗𝒆𝒏𝒊𝒆𝒏𝒄𝒆: Online shopping and buying is convenient. 𝑪𝒉𝒐𝒊𝒄𝒆: There are over 1 billion websites and choice assistance. 𝑪𝒖𝒔𝒕𝒐𝒎𝒊𝒛𝒂𝒕𝒊𝒐𝒏: Some customers desire one-of-a-kind products. 𝑪𝒐𝒎𝒎𝒖𝒏𝒊𝒄𝒂𝒕𝒊𝒐𝒏: ∙ This can take three forms: ▪ Marketer-to-Consumer (Email) ▪ Consumer-to-Marketer (Buying and Service Requests) ▪ Consumer-to-Consumer (Chat Rooms) 𝑪𝒐𝒔𝒕: Many popular items bought online can be purchased at the same price or cheaper than in retail stores. 𝑪𝒐𝒏𝒕𝒓𝒐𝒍: Buying online gives the consumer control over their shopping and purchase decision process. They seek information, evaluate alternatives, and make purchase decisions on their own time, terms, and conditions.
Elements of the Promotion Decision Process: Specifying Promotion Objectives
𝐒𝐩𝐞𝐜𝐢𝐟𝐲𝐢𝐧𝐠 𝐏𝐫𝐨𝐦𝐨𝐭𝐢𝐨𝐧 𝐎𝐛𝐣𝐞𝐜𝐭𝐢𝐯𝐞𝐬: 𝐇𝐢𝐞𝐫𝐚𝐫𝐜𝐡𝐲 𝐨𝐟 𝐄𝐟𝐟𝐞𝐜𝐭𝐬: 𝑨𝒘𝒂𝒓𝒆𝒏𝒆𝒔𝒔: The consumer's ability to recognize and remember the product or brand name. 𝑰𝒏𝒕𝒆𝒓𝒆𝒔𝒕: An increase in the consumer's desire to learn about some of the features of the product or brand. 𝑬𝒗𝒂𝒍𝒖𝒂𝒕𝒊𝒐𝒏: The consumer's appraisal of the product or brand on important attributes. 𝑻𝒓𝒊𝒂𝒍: The consumer's actual first purchase and use of the product or brand. 𝑨𝒅𝒐𝒑𝒕𝒊𝒐𝒏: Through a favorable experience on the first trial, the consumer's repeated purchase and use of the product or brand.
Store Location Types
𝐒𝐭𝐨𝐫𝐞 𝐋𝐨𝐜𝐚𝐭𝐢𝐨𝐧: A second aspect of the retailing mix is choosing a store location and deciding how many stores to operate. 𝑪𝒆𝒏𝒕𝒓𝒂𝒍 𝑩𝒖𝒔𝒊𝒏𝒆𝒔𝒔 𝑫𝒊𝒔𝒕𝒓𝒊𝒄𝒕: ∙ The oldest retail setting and is usually located in the community's downtown area. 𝑹𝒆𝒈𝒊𝒐𝒏𝒂𝒍 𝑺𝒉𝒐𝒑𝒑𝒊𝒏𝒈 𝑪𝒆𝒏𝒕𝒆𝒓𝒔: ∙ A retail location consisting of 50 to 150 stores that typically attracts customers who live or work within a 5- to 10-mile range. 𝑪𝒐𝒎𝒎𝒖𝒏𝒊𝒕𝒚 𝑺𝒉𝒐𝒑𝒑𝒊𝒏𝒈 𝑪𝒆𝒏𝒕𝒆𝒓𝒔: ∙ A retail location that typically has one primary store and often 20 to 40 smaller outlets, serving a population of consumers who are within a 10- to 20-minute drive.
