Marketing Management Decisions
Lateral Product Diversification
Characterized by venturing into totally new markets that have no connection whatsoever to the previous operations of the company. Example: Disney went from movies to theme parks.
Criteria for the market definition
Companies (i.e. food product/company market), products (i.e. market for leisure activities), needs (i.e. market for mobility/agility), buyers (i.e. markets for wealthy private customers).
Components of a Product: Additional Features
Contribute to generating a benefit that is not included in the core function of the product.
The 4 Categories in "Methods to Accelerate the Innovation Process"
-Technology-based approaches - Organizational approach - Controlling approaches - Approaches in human resource management
Horizontal Product Diversification
characterized by an integration of products at the same market level with the aim to offer new services to previous customers or new customer groups. Example: Mcdonald's opened McCafe
Describe the Starting Phase of conversation of personal selling
- During this phase, the sales employee aims at creating an initial impression that conveys an image that is as favourable as possible - The sales employee should form a clear picture of the conversation situation
Single Brand Strategy (Brand Architecture)
- Each product or service as a single brand i.e., Ferrero with Hanuta, Nutella Procter & Gamble with Ariel, Pringles, etc
Pricing research in behavioral sciences
- Examines how customers perceive, assess, memorize and remember prices. - Emphasizes psychological aspects of customer decisions.
Brand Types: Type of Brand Owner (Brand Management - Typology Characteristics)
- Manufacturer brand (Pringles, iPod, Post-it) - Private label brand (St Michael by Marks & Spencer) - Service brand (TUI, ebay, HSBC)
Bunding Price Differentiation
A special form of price differentiation. If a company combines several products in a bundle (package) and sells it at a package price, it is called bundling. Price bundling aims at better leveraging the customer's willingness to pay than would be possible with individual prices. Depending on whether product-related objectives or price-related objectives are the primary motives of bundling, the terms product bundling and price bundling are used as well. The main objective of price bundling is increasing the sales within a product line.
Vertical Product Diversification
A supplier conducts activities in upstream or downstream stages of the value chain. Example: The H&M company opened COS, geared towards higher end fashion.
Generic Product Definition (in a Practical Example: Products in Financial Services)
Banks are often selected by the brand, the image of the company, and being able to relate to the employees. For this reason financial services are fully characterized by the generic product definition.
Assessment of Price Information - Internal Reference Price
Base on memorized price concepts, e.g.: Prices paid in the past Willingness to pay Prices perceived as fair Prices paid by other persons
Pulsing/Maintenance Advertising
Combines any of the above advertising policies with a low level of advertising during the "off" period, usually a maintenance level.
Process of communication budgeting based on communication objectives
Communication objectives -> communication measures -> implementation costs=provisional budget -> budget economically feasible? (if no, go back to beginning) -> budget approval
Objectives of marketing
Companies strive to actively exert a controlled influence on the behavior of both customers - or potential customers - as well as competitors to the benefit of the company and its stakeholders.
Components of a Product: Product Core
Comprises the core features of the product, which substantially determine the functionality of the product. This level generates core benefits.
Organizational approach (methods to accelerate the innovation process)
Concurrent engineering is based on the principle that tasks in the product development process are conducted in parallel. It aims at the simultaneous execution of the relevant activities. Compared to sequential processing concurrent engineering shall ensure effective and efficient development processes.
Ideal process of communication decisions
Definition of communication objectives and target groups Execution of budgeting and media planning Design of communication measures Monitoring of communication measures (pre-test) Implementation of communication measures Monitoring of communication impact (post-test) * See 216 for full chart
Temporal Price Differentiation
Different prices apply depending on the purchase date/time, examples include different prices depending on the time of day, the day of the week, or the season. Service providers often make extensive use of temporal price differentiation in order to sufficiently utilize their capacities even during periods of weak demand. e.g., Hotels during on/off season
Possible forms of sales contacts
Direct contact via personal selling - Sales force - trade shows Media-based personal contact - phone - video conference Media-based impersonal contact - tv - mailing - internet
Main Issues & objectives in the design of the relationship to sales partners and key accounts
Main issues: - Cooperation - Influencing the distribution of power - Managing conflicts - Design and structure of the contractual relationship Objectives of a cooperation: - Qualitative improvement of the business relationship (e.g., establishing trust and reducing conflicts) - Reduction of costs (e.g., order processing costs) - Increase in the effectiveness of the cooperation (e.g., in terms of quality aspects or join market success)
Management-oriented definitions
Marketing focuses on managing the company from a market perspective. Accentuation of the company's internal situational factors for market-related activities.
Integrative definition of Marketing
Marketing has a company-external and company-internet facet. Both external and internal approaches to marketing aim for designing and structuring customer relationships in line with company objectives.
The 2 Components of Sales Decisions in the Marketing Mix
Marketing-oriented, acquisition directed activities Sales logistical activities
Reference objects of marketing
Markets define the framework for marketing practiced by companies: customers, competitors, and other stakeholders are the major factors that determine the scope of marketing activities.
Basic Typology of Products
Tangible Goods: Consumer Goods vs Industrial Goods Services: Consumption-Related services vs Investment-related services
The vantage point for static analytical methods...
is the relationship between the communication budget (especially the advertising budget) and a communication objective. Frequently, this relationship is formally expressed by advertising response functions that are rather complex. One of the main reasons for this is that advertising has a significantly weaker impact on demand than prices have.
Formula for the law of experience curve
k(x)=a•x^(-b) where x=accumulated volume & k=average unit cost
Brand Management - Typology Characteristics
- Type of brand owner - Geographic reach of the brand - Vertical penetration of brand in value chain - Number of brand owners - Number of branded goods
Product Concept
A product concept is the more detailed version of the product idea. It is a statement about the expected product features that will generate specific benefits relative to already existing offerings.
Process of Strategy Development in Marketing
Analysis of initial strategic situation (environment, marketing, and company situation) -> formulation of alternative marketing strategies -> evaluation of alternative marketing strategies -> selection of marketing strategies -> strategy implementation and implementation monitoring.
Approaches in human resource management (methods to accelerate the innovation process)
Approaches in human resource management to process acceleration largely correspond to the approaches in human resource management that are related to interface management.
Components of a Product: Basic Services
Are those services the customers expect the company to provide when they purchase a product.
Phase Model of the Adoption of New Products by Customers
Awareness -> Interest -> Evaluation -> Trial -> Adoption
Target Positioning
Defining the target positioning for the new product in terms of relevant product features aims at distinguishing the product from competitor products in the customers' minds.
Process of Delphi Method
Definition of forecasting subject -> Selection of Delphi interview participants -> Individual interviews -> collection and (statistical) evaluation of answers -> Final analysis of answers
Market Segmentation
Demographic variables, Socioeconomic variables, Behavioral variables, Benefit variables, Psychographic variables.
Components of a Product: Value Added Services
Do not represent indispensable prerequisites for customers' purchase decisions, but offer additional benefits. By offering these additional services companies strive to stand out from the competition and to generate customer loyalty. Value added services can generate different types of benefits such as functional, economic, process-related, emotional, and social benefits.
Technology-based approaches (methods to accelerate the innovation process)
During the conceptual phase, the customer is presented with prototypes/simulations that illustrate the key features of the product and facilitate an evaluation of these features.
Psychographic variables
Private customers: Life-style, attitudes, interests
Aggregated Rebate
- (Annual) refund discount
Basic decisions regarding selling activities
- Mode of customer contacts - Intensity of customer contacts
Advantages of radio advertising (communication measures)
- Local segmentation - Low prices - High coverage - Radio as "anywhere-medium"
What is a two-step flow of communication?
the sender (i.e., the communicating company) initially addresses its message to "opinion leaders" who act as "multipliers" and forward the message to less active receivers. (pharmaceutical companies use doctors) However, in the course of forwarding the message, the original message can be changed, toned down, or intensified. These indirect effects should be taken into account when planning communication decisions.
What is a one-step flow of communication?
the sender gears the message directly towards the receiver. in this case, the sender (i.e., the communicating company) has a relatively large degree of control over the content of the communication being conveyed.
Multiplicative Demand Function
x=a*p^(-b) with b>0
Linear Demand Function
x=a-bp with b > 0
Potential Pioneer: Disadvantages
− Extensive resources needed for market development − Uncertainty with respect to development of demand − Lack of experience with regard to functionality of the product when used by the customer
Potential Pioneer: Advantages
− Temporary monopoly allowing premium price strategy − Cost advantages due to experience curve effects − Image/preference creation with buyers as well as development of customer loyalty − Establishment of barriers to switching on the part of customers − Securing of key distribution channels
Brand Positioning
(From outer ring of circle to inner/core) - Brand Personality --- What are my personal traits? - Brand Benefits --- What do I offer? - Brand Core --- Who am I?
Explain budgeting based on available monetary funds
(affordable method) the budget is calculated on the basis of available funds that remain after all costs to achieve the target profit have been covered.
How is the sales function implemented into the structure of the company? (Design of the sales system - organization)
(check 194/195 for charts) - Sales organization by products - Sales organization by regions - Sales organization by customers - Sales organization by distribution channel
Explain budgeting based on competitive activities
(competitive-parity method) the budget is based on the amount of competitors' budgets. according to this method, the company has to spend the same amount for communication activities as its competitors in order to maintain its own market share.
Explain budgeting based on the previous period's budget
(extrapolation method) the budget of the previous period is applied without change, or is increased or reduced by a certain amount
Components of a Product
(from outer square to inner square) Brand Value Added Services Basic Services Packaging/Design of Tangible Environment Additional Features Product Core (Core Product Features)
Components of a Product: Brand
(has to be mentioned as a product component.)
Explain budgeting based on communication objectives
(objective- and task method) the budget is derived from the communication objectives.
Explain budgeting based on sales/profit
(percentage of sales/-profit method) the budget is determined as a percentage of the sales or profits achieved in either the previous period or forecast for the current planning period.
Brand Types: Vertical Penetration of Brand in Value Chain (Brand Management - Typology Characteristics)
- "Invisible" preliminary product brand - Ingredient brand (Gore-Tex, Intel, Nutrasweet) - Finished product brand (Suit by Hugo Boss)
Multiple Umbrella Branding Strategy (Brand Architecture)
- A uniform brand is selected for a specific product group i.e., Ferrero's kinder range, Beiersdorf's Nivea ranges
Marketing-oriented, acquisition directed activities (part of The 2 Components of Sales Decisions in the Marketing Mix)
- Acquisition of customers - Willful causation of transactions - After Sales Support
Name and define the two types of methods for establishing contact (Communication Measures: Print Advertising)
- Activation Techniques & frequency techniques "Activation" refers to the stimulation ("mental activity") of receivers so that they assimilate impressions or information . Activation can be achieved through: -> Physically intensive stimuli -> Emotional stimuli -> Cognitive stimuli - Physically intensive stimuli refer to a large, loud and colorful stimulation. Examples include advertisements that use striking, bold colors in extra-large format ads.
Single Umbrella Branding Strategy (Brand Architecture)
- All products of a company are marketed under one brand i.e., Deutsche Bank, Siemens
Visual Elements (Aspects of the Design of the Communication Measures)
- Main components of the picture - Supplementary visual elements - Typographies - Colors - Font types, layouts and sizes
Precautionary behavior to avoid price wars
- Avoidance of overreactions to price reductions triggered by the competition - "Tit-for-tat" strategy, i.e., launching carefully measured counterblows (e.g., price reductions in another market or for a different product group) in order to communicate to the competing company that aggressive behavior on its part will only backfire - Thorough analysis of competitor responses to price changes made by the company - Systematic monitoring of the competition - Unambiguous communication prior to price changes in order to prevent misinterpretation on the part of competitors (e.g., notification that the intended price reduction is due to a planned inventory reduction) - Establishing complex price structures so that customers cannot easily compare prices - Product bundling in order to make direct price comparison more difficult - Creation of additional customer benefit(s) by means of product modifications - Product differentiation (e.g., launch of a lower-priced second brand on the part of a premium brand company).
Functional Discount
- Basic functional discount (for wholesale and retailing) - Discount for market cultivation (subsidy for advertising costs, special promotions) - Financing discounts (allowances, debt collection)
Examples for creativity methods (important sources for new product ideas)
- Brainstorming - Morphological box
Sales Logistical Activities (part of The 2 Components of Sales Decisions in the Marketing Mix)
- Bridging Geographical Distances - Securing the availability of products for the customers Decisions: - Cooperation with dealers regarding logistical activities - Definition of supply principles - Design of warehousing and routes of transportation
What are the heuristic budgeting methods?
- Budgeting based on the previous period's budget (extrapolation method) - Budgeting based on sales/profit (percentage of sales/profit method) - based on available monetary funds (affordable method) - based on competitive activities (competitive-parity method) - based on communication objectives (objective- and task method)
Alternative methods (important sources for new product ideas)
- Conjoint analysis - Quality Function Development (QFD) - Lead User approach
Sources outside the company for new product ideas
- Customers - Competitors - Market innovations in other markets - Technological developments - Experts - Findings from trend and market research institutes, business consultants - Advertising aagencies
3 Significant Influencing Factors when Deciding between Direct and Indirect Sales
- Customization and complexity level of the product (if a product is strongly aligned with the individual requirements of the customers -specificity-, the direct sales method is usually the most cost-efficient alternative. The same applies in the case of highly complex products. This clarifies why direct sales play such a large role in the industrial goods sector) - Number of customers/concentration of demand (when demand is concentrated on a relatively small number of customers, direct sales tend to be the more efficient option. on the other hand, indirect sales are usually the better alternative for a company with a large and diffuse customer base) - Monetary value of the product (products with a low monetary value are more often sold indirectly).
Potential indicators necessitating product variations
- Decreasing absolute sales - Decreasing prices - Decreasing (relative) market shares
Issues of interest if communication decisions are particularly directed towards objectives related to potential
- Degree of awareness as well as the image of the company and its products in the eyes of the customers - Attitudes of the customers with regard to the company and its products - Customers' intention to buy the company's products
Three related Pricing Approaches. Pricing can be...
- Demand-based - Competition-based - Cost-based
Price Differentiation: Forms of Implementation
- Demographic - Geographical - Temporal - Benefit-based - Quantity-based - Bundling
The 4 Main Decision Making Areas (Sales Decisions)
- Design and structure of the sales system - Design and structure of the relationships to sales partners and key accounts - Design of the selling activities - Development of the sales logistics system
Quantity Discount
- Discounts for single orders (depending on volume and composition) - Closing/finishing discount - Discounts depending on revenue
Discount conditioned by time
- Discounts when launching a product - Discounts for pre-orders - Seasonal discounts - Discounts for clearance sales
Importance of pricing in company practice
- Due to tendencies of saturation and overcapacities - Growth markets - Globalization - Assimilation of quality of products from competitors - Price transparency
What are the rules for designing communication measures/social engineering?
- Establish contact - Ensure the reception of the advertisement - Transfer emotions - Achieve understanding of the advertisement - Anchoring in memory
Communication Measures: Print Advertising. Techniques for creative work aim at:
- Establishing contact - Ensuring that the communication message is absorbed - Conveying emotional aspects - Promoting understanding - Embedding the message into the memory
Decisions regarding the product mix
- Expanding the product mix ----> Product variation ----> product differentiation ----> product diversification - Establishing synergies - Reduction ----> Elimination
With respect to the impact on demand caused by changes in the communication budget, we differentiate several dynamic response parameters, including?
- Firstly, we distinguish between immediate or delayed response. - Secondly, we distinguish between responses that manifest themselves at one point in time or successively. - Thirdly, we distinguish between persistent and decreasing advertising effectiveness and the extent of these wear-out effects as they can be observed partially or totally.
Types of discounts
- Functional Discount - Quantity discount - Discount conditioned by time - Aggregated rebate
The 4 Central Starting Points for distributing the power within the relationship with sales partners or key accounts
- Generating customer preference - Reducing the alternatives of the sales partner/key accounts - Enlargement of one's own action alternatives - Increase of one's own expertise
Key Areas of Pricing Decision-Making
- Generic new product pricing - Pricing the product portfolio - Price changes of products - Price differentiation - Design/structure of discount and bonus systems - Enforcement of prices
Effect of different methods of payment on spending and customer behavior
- Higher willingness to pay and less "pain" when paying with credit card than when paying by cash ("credit card effect") - The height of one's credit limit positively influences expense behavior - Payment depreciation (time lag between payment and consumption) leads to an increase in consumption of storable goods (e.g., chocolate). - Bundling can lead to decreasing consumption of a service that is already paid (e.g., usage of a theatre season ticket over time).
The Three Basic Types of Diversification
- Horizontal diversification - Vertical diversification - Lateral Diversification
Market Entry - Central Questions for Formulating a Market Entry Strategy: How?
- How should the product decisions be designed within the scope of market entry? − How should the pricing decisions be designed within the scope of market entry? − How should the communication decisions be designed within the scope of market entry? − How should the sales decisions be designed within the scope of market entry?
Observations: Monitoring the Impact - Possible Measurement Methods (see more 259)
- In addition to surveys, there's observation. A fundamental difference concerns whether behavioral processes or behavioral outcomes are observed. BEHAVIORAL PROCESSES can be observed by means of, e.g., videotaping customer responses to advertisements in retail stores Observations of BEHAVIORAL OUTCOMES are primarily concerned with observing purchase behavior and can be based on, e.g., scanner terminals or panels. There are various special instrumental measurement methods that facilitate the analysis of the communication impact and effectiveness by using observation techniques. These methods include non-verbal, psychobiological test procedures for measuring perceptions and attitudes in the form of physical reactions.
General Design Recommendations for Direct Marketing (Communication Measures)
- In general, addressed mailings arouse more interest. - With addressed mailings, the address quality is particularly important, i.e., complete and correct addresses. The mailing list can therefore be called a success factor of direct mailings. To reduce coverage waste in mailing campaigns microgeographic segmentation can be used to identify lifestyle and purchasing behavior based on housing and residential conditions. - If direct marketing activities are based on customer data, the addressing of customers in the target groups should be as specific as possible. By using customer data from the customer database communication contents can be developed that match the specific preferences and interests of the customers (e.g., an airline offering special destinations to customers based on data from the frequent flyer program). - With respect to the described adverse responses that customers have to direct marketing activities and in line with the permission marketing approach, persons who have opted against direct marketing contacts (e.g., by placing themselves on opt-out lists) should not be contacted.
Brand Types: Number of Brand Owners (Brand Management - Typology Characteristics)
- Individual brand (Red Bull) - Collective brand
Decision-making areas regarding product decisions
- Innovation management - Management of products already established in the market and - Brand management
The innovation adoption curve groups
- Innovators - Early adopters - Early majority - Late majority - Laggards
A Product Concept should include...
- Intended target group(s) - Unique selling proposition (USP) - Product features - Target positioning
Reception of Price Information (Elements of/what they mean) (Pricing Research in Behavioral Sciences)
- Interest in Price ----------------------------- - Search for Price • Actual efforts to obtain price informaiton about different products and to compare them: > between-store search: looking for prices in different stores > within-store search: looking for prices inside one store • Important Dimension: intensity of price search - often the customer does not invest much effort into comparing prices • Intensity of price search is rather high if: > Obtaining price information is easy and not too laborious > Price-performance risk is perceived as high > The price of the product is a relatively high expenditure for the customer > The customer perceives his own price knowledge as insufficient > The customer likes to look for price information and communicates them to other customers (price-mavenism-motive)
What are the 3 factors which cause differences in the effects of the Communication Measures
- Involvement - Modalities of influence - Number of repetitions
Content-related Elements (Aspects of the Design of the Communication Measures)
- Linguistic Components Example: slogans
Brand Types: Geographic Reach of the Brand (Brand Management - Typology Characteristics)
- Local Brand - National Brand - International brand (MasterCard, the North Face) - Global Brand (Coca-Cola)
Brand Reach
- Local brand strategy (brand development is intended for a specific country) - International brand strategy (brand is targeted at several - at least two - national markets) - Regional brand strategy (the brand targets multiple countries in geographic proximity) - Global brand strategy (brand is aimed at the entire world or at least a large portion of it)
Reasons for price wars
- Many companies exaggerate their focus on market shares, which often leads to an aggressive pricing behavior aimed at the elimination of competitors. - Persistent overcapacities in a market. Several manufacturers try to use their capacities by reducing prices, which can also lead to price wars. - In particular, price wars also arise due to a lack of product differentiation (e.g., in the case of commodity products). Such a scenario poses the risk that competition between manufacturers in based primarily on prices.
Assessment of Price Information - Special form of price acceptability judgment: price as quality indicator
- Many customers see prices as indicators of quality (especially when other, better criteria are not available) - "The more expensive the better" is, above all, true for image-products (perfume, cars...) - Theories: --> perceived risk of purchase --> cognitive dissonance - Empirically, however, high correlations between price and quality can not be found
Auditory Elements (Aspects of the Design of the Communication Measures)
- Music - Noises - Sound - Volume
Describe the preparatory phase of personal selling
- Participants in the discussion (e.g., objectives, expectations, competencies, and influence on purchase decision) - Company's situation from the customer's perspective (e.g., customer satisfaction, schedule for pending deliveries, unresolved customer complaints) - Customer purchase history (e.g., frequency of purchases, compliance with contractual regulations and agreements, outstanding customer accounts) - Customer potential (untapped tales potential with respect to the customer, customer's own new products, relationship of customer to competitors, business development and economic situation of the customer)
The three basic types of Oligopoly behavior (and what they mean)
- Peaceful economic behavior (Pricing decisions are not primarily intended to harm competitors, but rather to realize the company's own key objectives) - Cooperative pricing behavior (based on more or less explicit arrangements and agreements, companies avoid intensive price-based competition. Pricing is dominated by cooperation) - Aggressive pricing behavior (pricing aims at eliminating competitors from the market)
The 4 Main Phases of Personal Selling
- Preparatory phase - starting phase of a sales conversation - core phase - ending phase of a sales conversation
What are the primary public relation measures which should be mentioned?
- Press releases and publications, websites and interviews are key MEDIA RELATIONS measurements. - EVENTS include press conferences, lectures, seminars, congresses, conferences and open house days. - The objective of RELATIONSHIP MANAGEMENT is to establish and maintain contacts, including contacts to opinion leaders and multipliers with media presence for the dissemination of public relations messages, industry meetings, lobbying, journalism, and donations. - CRISIS MANAGEMENT aims at protecting and enhancing corporate reputation and identity during a crisis with a focus on maintaing the credibility of the company by means of open communication.
Conjoint Analysis (Procedure and Objective)
- Procedure: The product is decomposed into the utility contributions of the individual product - Objective: To find a combination of attributes that customers prefer most
Basic Characteristics Pertaining to Pricing Decisions
- Quick implementation: Contrary to the majority of decisions concerning other elements of the Marketing Mix (e.g., the development and launch of a new product), pricing decisions can be implemented relatively quickly. - Hardly reversible: Once a price has been fixed, it functions as a point of reference that customers use to evaluate subsequent price changes. - Major impact: Pricing decisions have a major impact on customer behavior, since the price determines the "negative" component of the purchase decision process. - Fast impact: In many markets, customers and competitors respond quickly to price changes.
Company-internal sources for new product ideas
- R&D department employees - Field sales force employees - Customer service/service hotline employees - Complain information - Suggestions from employees in general
Assessment of Price Information - Reference Price: 3 Empirical Generalizations Concerning Reference Prices
- Reference prices play an important role in buying decisions - Prices paid in the past are an important influence on the reference price - Customers are loss averse. This means that they react stronger to an increase in prices relative to their reference price than to a reduction of the same absolute value. ---> Stronger reaction to "losses": current price > reference price ---> Weaker reaction to "gains": current price < reference price
Brand Types: Number of Branded Goods (Brand Management - Typology Characteristics)
- Single brand (Nespresso) - Umbrella brand (single) (Siemens) - Umbrella brand (multiple) (Nivea)
Elements of Brand Architecture
- Single branding strategy - Multiple Umbrella branding strategy - Single Umbrella branding strategy
Other Elements (Aspects of the Design of the Communication Measures)
- Smell - taste - Haptic Impressions - etc.
Communication Measures - Sponsoring (the four different forms & define)
- Sports sponsorship • promotion and support of individual athletes, teams or sports events • has the greatest economic significance among the forms of sponsorship which is primarily attributed to the intensive media coverage of sports events. - Program sponsorship • promotion and support of program contents, broadcasts, movies, series or talk shows in electronic media such as tv, radio or the internet. • the sponsor's name or a spot featuring the sponsor are shown before, during or after a TV or radio broadcast. - Cultural Sponsorship • promotion and support of cultural activities, including e.g., music, visual arts, performing arts, media art, literature, architecture, design or leisure culture, as well as individual artists, cultural events or foundations. • strives to positively influence the image of a sponsor by demonstrating the sponsor's socially responsible behavior - Social and environmental sponsorship • goal is to improve the image of the sponsor by promoting and supporting activities related to health care and social systems, science and education as well as the protection of nature and endangered species. • this form of sponsoring is also called public sponsoring.
Conjoint Analysis (Define)
- Statistical technique that involves measuring preferences at the individual customer level - Especially for new product evaluations customer preferences for different product ideas can be measured. - Also provides information about how the customer utility changes when certain attributes are modified. - Useful in gearing the new product development process towards generating customer benefits
Criteria requested from sales partners
- Strong financial situation - Professional handling of the market - Appropriate assortment - Excellent reputation - Wide coverage of market - Functional competence - Infrastructure (e.g., establishments) - Good management - Similar corporate culture - Company size
Defining the Product: Distinction between three different concepts...
- Substantial product definition - Expanded product definition - Generic product definition
Motives for employing Product Differentiation
- Tapping into additional market segments - Allowing for changing customer preferences - Realizing higher prices - Creating market entry barriers for competitors by means of occupying vacant market niches - Using the positive image of an established brand for additional product variants (image transfer)
Recommendations with regard to designing TV commercials (communication measures)
- The content of the storyline of the TV spot should correspond to the product being advertised, otherwise the audience could become irritated. - Humor can increase attention, especially if competitors do not use humor in their advertisements. - The individual scenes should not be too short, otherwise there is not a sufficient memory impact. To promote an effective memory impact, individual scenes should last a minimum of 1.5 seconds. - An advertising spot is more positively received in a cheerful environment. The greatest impact of a humorous TV commercial can be achieved when presented in a cheerful program environment. - While music is emotionally processed, text and voice messages are processed on a higher cognitive level. Therefore, music and jingles from TV spots are usually remembered more easily than pure text or voice commercials.
Communication Measures - Recommendations for the designing of events
- The contents and activities offered during the event should have an EMOTIONAL CHARACTER in order to attract the interest of the target group. - to create synergies, events should be integrated into the marketing mix. Depending on objectives and target groups, a combination of classic advertising in mass media (e.g., promoting an event within the scope of advertising activities), public relations (e.g., promoting an event in press releases) or direct marketing (e.g., personalized invitations for important customers) is particularly effective. - The theme of the event should correspond to the company or product being promoted, both for credibility purposes and to facilitate the desired IMAGE TRANSFER from the event to the product or company. An example in this context is a winter sport event organized by a fashionable wrist watch company that addresses a young, stylish, and hip target group.
Recommendations for designing outdoor advertisements (communication measures)
- The effectiveness of outdoor advertising depends on the quality of the location, especially with regard to traffic frequency and visibility. High traffic frequency and good visibility increase the OTS (opportunities to see) associated with the location. - The readability of the outdoor advertisements has the greatest impact on memory. Accordingly, outdoor ads should have large letters and an easy-to-read font. The colors used should also facilitate the readability. - Due to the short viewing period, outdoor advertisements should only convey limited information content.
Differentiation of creativity methods by... (important sources for new product ideas)
- The principle which releases the idea (association/modification vs confrontation) - The kind of creativity promotion (enforcement of the intuition vs systematic analytic procedure)
Morphological Box sequence
- The problem is broadly defined - The problem is divided into components (parameters) that influence the solution of the problem - For every component of the problem all known and possible characteristics (values of parameters) are searched for - The parameter and its values are combined into a matrix to create solutions - The idea solution is selected depending on the measurements of company-internal criteria
Competitive advantages accrue if... & With a marketing strategy...
- They are based on attributes relevant and important to customers - They can be perceived by customers - They are sustainable over time (i.e. they should not have the potential to be quickly or easily adopted or imitated by competitors) With a marketing strategy... - a given competitive advantage can be sustained over time - establish a new competitive advantage
Conjoint Analysis (idea)
- Total evaluation of complete products provides information about the significance of single attributes - Conclusions regarding the influence which the modification of single attributes has on perceived benefits - Quantification of the importance of single product attributes for customers - Identification of customers' willingness to pay for product improvement.
Assessment of Price Information - Effects of price fairness on behavior
- Unfair price increases have a negative influence on customers' purchase intentions - Fair price increases have a positive influence on customers' loyalty - Motive fairness is more important for satisfied than for unsatisfied customers.
Regulations for Morphological Box parameters
- Valid for all possible solutions - Factually independent from each other - Concerning essential constitutive solution criteria
Market Entry - Central Questions for Formulating a Market Entry Strategy: Where?
- What is/are the target group(s) for the product? − Who are the innovators/early adopters that should be particularly targeted in the initial phase of market entry? − What geographical markets should be targeted for the launch and in what order?
Market Entry - Central Questions for Formulating a Market Entry Strategy: When?
- When should the new product be launched? − To what extent should marketing activities be conducted prior to product availability (pre-marketing)?
Structural characteristics of the Product Mix
- Width of product mix - Depth of product mix - Consistency of the program (e.g., wide and plane product mix: department stores, convenience stores. narrow and deep product mix: online shops like shops for a certain brand or shops for tobacco)
Pricing Research in Behavioral Sciences: 3 Examples showing the differences to classical price theory
- Willingness to pay is influenced by price expectations and perceived fairness of the transaction - Relative price differences have greater influence on the assessment of price differences than absolute price differences - Non-linear transformation of objective prices into subjective prices
Recommendations for the design of public relations (communication measures).
- With regard to content, public relations should be integrated with other communication tools to create synergies. For example, a company can communicate its sponsoring activities via press releases or interviews and thus increase the impact and credibility of these activities. - It is recommended that the tasks and responsibilities of the PR department are clearly defined and managed separately from other marketing communication departments.
In addition to allocating the budget to the different products and countries, the... (budget allocation/media planning)
- allocation to various categories of communication media (media allocation) - allocation to individual communication media (media vehicle allocation) - allocation of the budget over time has to be specified
Product Diversification can be realized by...
- developing new products - forming strategic alliances with partners - acquiring other companies
Making product decisions includes all decisions concerning the...
- market-driven (adoption of customer needs) design - of the current and future range of products of a company - bearing in mind the corporate objectives
Sales situation is characterized by which factors? (design of selling activities - personal selling)
- seller and customer have direct visual contact - due to the personal contact, the seller can adjust particularly well to the customer as a discussion partner and to the customer's special situation - the seller can directly detect and assess the customer's verbal and non-verbal responses - the seller can repeat the sales arguments several times, if necessary
Marketing strategy includes all basic and long-term activities in the field of marketing that deal with...
- the analysis of the strategic initial situation of a company. - the formulation, evaluation and selection of market-oriented strategies. and therefore contributes to the goals of the company and its marketing objectives.
Describe the ending phase of the conversation of personal selling
- the key issues of the discussion as well as further steps and tasks are summarized again
Describe the core phase of personal selling
- this phase very strongly depends on the type of conversation - tactical negotiation considerations and selling techniques
When developing a new brand, a key decision is whether:
- to have the brand clearly indicate what the product is, or what it stands for. This is easier to build market awareness and gain trial but can limit flexibility as market conditions change (ex: Pizza Hut, Burger King) OR - to develop a brand whose meaning must be built (ex: BMW, Nestle). May be viewed as generic, boring and make it harder to build an image for and differentiate one's brand
Defining the Product: We consider a product...
...to be a bundle of features that aims at creating customer benefits.
Structure of a Multi-Step Communication Process
1st step: Sender --> (message encoding) message --> (message decoding) multiplier i.e., sender-> via tv -> receiver 2nd step: --> (message encoding) message --> receiver (message decoding) someone inbetween taking your message and spreading it, i.e., pharmaceutical industry uses doctors * Receiver and multiplier --feedback--> sender RISK: you're not controlling what the multiplier is saying
Concentrated Advertising
A very large share of the advertising budget is spent within a relatively short period of time. This type of communication budget allocation is particularly appropriate to advertise for products that have been newly launched in the market. Sometimes it is also referred to as "blitz policy"
Establish Contact (Social Engineering: General Rules for Designing Communication Measures)
Activation techniques: The higher the activating power of a commercial the higher the chance that it is recognized by the customer. (e.g., physically intensive stimuli, emotional stimuli, cognitive stimuli) Frequency techniques: The more often a commercial is inserted the higher the probability that it is recognized by the customer. (example: short but frequent commercial, refreshment commercials).
What is the important success factor for personal selling?
Adaptive selling -> recognition of a certain customer type via the customer typology The customer typology: High emotionality/high determination: expressiveness High emotionality/low determination: amiables Low emotionality/high determination: drivers low emotionality/low determination: analytics
Achieve understanding of the advertisement (Social Engineering: General Rules for Designing Communication Measures)
Adjustment of picture, text, and sound to the recipient (relevance of pictures approx. 60-70%; headline 20%) Detailed texts are only recommended in case of highly involved customers Hierarchical provision of information - clear design of the advertisement - arrangement of information according to importance - name of the brand should be recognized even at short glance
Advantages & Disadvantages of Direct sales channels
Advantages: Controlling your sales, immediate communication with consumers Disadvantages: Expensive, mass market distribution is hard
Advantages & Disadvantages of Indirect Sales channels
Advantages: Less expensive than direct, easier mass market distribution Disadvantage: Don't control your sales, no immediate communication with consumers
Differentiation brand positioning (points-of-difference positioning)
Aims are distinguishing the brand from competitor brands with respect to salient dimensions.
Pricing (definition)
As a component of the marketing mix, pricing comprises all decision-making aspects regarding the price to be paid by customers for a given product or service.
Categorization of communication objectives according to the AIDA model
Attention -> interest -> desire -> action (attention, interest & desire = objectives related to potential) (action = objective related to market success)
Geographical Price Differentiation
Based on geographic markets - represented by, e.g., national markets, regions or even cities. A particularly important form of geographical price differentiation is price differentiation between countries, which is used in many product categories. e.g., pharmaceutical industry
The role of brand personality
Brand personality describes the way in which a customer perceives the brand on dimensions that typically capture a person's personality - extended to the domain of brands.
3 Aspects within scope of brand strategy
Brand reach (coverage), brand positioning, brand architecture
Budgeting and Allocation of Budget (media planning): what are the basic questions for each?
Budgeting: - What are the total expenditures for all communication media? - What is the sales volume related to the communication budget? - Are there functional relationships, if so, how can they be measured? - What is the ideal communication budget? Allocation of budget (media planning) - How is the communication budget distributed? • over time • on communication media
Activity-oriented marketing definition
Bundle of market-driven activities practiced by companies. Accentuation of the Marketing Mix.
Influential stakeholders on market activities
Buyers, companies, sales partners, lobbyists, public institutions.
Criteria for the classification of markets
By types of goods sold (consumer goods, B2B goods, services), by distribution of power (buyer's markets, seller's markets), by degree of internationality (local markets, regional markets, global markets).
Assessment of Price Information - Central Drivers of Perceived Price Fairness
Central drivers of the perceived price fairness are the motives underlying a price increase assumed by the customer and the changes in the seller's profits: - It is seen as unfair if the company can enhance its profits through the price increase, - It is seen as fair if the price increase is caused by higher costs, so that the company's profit will not be enhanced or if they represent the reaction to a competitor raising his prices.
Anchoring in Memory (Social Engineering: General Rules for Designing Communication Measures)
Central goal when designing communication measures Methodology: - anchoring in memory by corporate design - building memory image, particularly dynamic commercials - catchy design and high number of repetitions - high degree of activation commercials need more repetition and therefore higher spreading costs
Media Planning: Cost-Per-Thousand (CPM)
Central question: What are the costs for reaching an average of 1,000 persons? CPM=(c/C)*1,000 where c= costs for using the medium and C=number of contacts realized with each use of the medium (reach)
The 4 Aspects of the Design of the Communication Measures
Content-Related Elements Visual Elements Auditory Elements Other Elements
Customer Relationship Management - Reasons for Customer Loyalty
Contractual reasons for loyalty Economical reasons for loyalty Psychological reasons for loyalty Technical/functional reasons for loyalty
Communication Measures - Public Relations (the categories of public relations objectives) (250)
Corporate Goals • Internal Focus --> Information --> Training --> Motivation --> Building corporate identity • External Focus - Public Affairs --> impact of trends --> public visibility --> information --> opinions --> attitudes --> corporate image --> build goodwill --> influence decision - Financial --> information --> credibility --> trust - Media --> Information --> opinions --> corporate image --> goodwill Marketing Goals - support marketing agenda - new products - sponsorship - events
Communication Measures - Corporate Identity (define and the 3 areas)
Corporate identity is a holistic concept that comprises various aspects of a company. As a comprehensive communication measure, the corporate identity represents all the internal and external communication processes of a company. Comprises of three areas: - Corporate Design - Corporate Communications - Corporate Behavior
Effect of mental accounting on spending and consumer behavior:
Effect of complete price: complete price leads to better assessment Effect of splitting discounts: splitting of discounts leads to more favorable price judgment Effect of increasing price: a few major price increases are more advisable than many small increases Effect of decreasing price: decreasing the price in many small steps has a more positive effect than decreasing it in a few big steps Effect of price smoothing: it is advisable to link increases in one price component to decreases in other price components Cash-effect: paying by cash is overrated Sunk-cost effect: what has been paid is consumed with more passion and satisfaction
What does it mean when elasticity is less than negative one, greater than negative one but less than zero, equal to zero, and equal to negative one.
Elasticity<-1 = elastic, the relative change in demand is larger than the relative price change -1 < Elasticity < 0 = inelastic, the relative change in demand is smaller than the relative price change Elasticity=0 = price changes do not affect the demand Elasticity=-1 = the relative change in demand corresponds to relative price change
Transfer emotions (Social Engineering: General Rules for Designing Communication Measures)
Emotional conditioning - Displaying the brand with emotional stimuli (e.g., cool children eat such and such) - mix of emotional stimulus and brand conveys a pleasant experience and links the emotions to the brand Requirements for transferring emotions - appearance of brand and stimulus at the same time - consistency of stimulus - mental passivity of the receiver - strong stimulus (biologically programmed, culturally stamped and target group specific pictures) - many repetitions
Number of repetitions (part of the 3 factors causing differences in the effects of the communication measures)
Example: cognitive reactions on repetitions of advertisements (see 236)
Memorization of Price Information - Knowledge of Prices: Explicit vs Implicit knowledge
Explicit Knowledge: price information is consciously remembered, i.e., directly brought to mind from memory (e.g., when asked, the customer knows that a pair of trousers of brand X costs $85) Implicit Knowledge: unconscious usage of stored price information (e.g., when buying trousers, the customer knows that $85 is a fair price for the trousers of brand X)
PIMS Project
Extensive database research project used for success factor research. The central objective was to obtain insights about the factors that influence the business success of an SBU. Studies identified three key influencing variables affecting ROI: relative product quality, relative market share, investment intensity.
Why is Branding important? Consumers & Sellers
For consumers: - Simplifies shopping - Facilitates the processing of information concerned with purchase options - Provides confidence that the consumer has made the right decision - Helps to ensure quality - Often satisfies certain status needs For sellers: - The effectiveness of their marketing programs - Brand loyalty - The opportunities for successfully launching brand extensions - Prices and margins resulting from a competitive advantage - Channel relationships
Relevant market (micro-environment) [regarding initial strategic situation]
General market characteristics (market volume, market growth), customers in the market (customer needs, customer behavior), competitors (objectives, strategies, behavior).
Analysis of the initial strategic situation
Global environment factors (macro-environment), relevant market (micro-environment), company situation.
Product Features (Product Concept)
In addition to the functional features of the product (core product features) formal aesthetic product features and the intended product image are also defined.
Product Diversification
In the course of diversification, a company integrates products into its product mix that are not directly related to the products already available in the product portfolio. Diversification thus increases the "width" of the product mix.
Communication Measures - Sponsoring (define)
Includes all activities aimed at promoting and supporting individuals or organizations in the area of sports, culture, social services, environmental protection or the media.
Expanded Product Definition (in a Practical Example: Products in Financial Services)
Includes services, but only refers to functional benefits and does not include psychological benefits.
What are some further communication measures?
Internet advertising Mobile marketing Direct marketing Sales promotion Public relations Trade fairs events corporate identity sponsoring product placement
Stages of the Life Cycle Model
Introduction, growth, maturity (sales maximum), saturation.
Involvement (part of the 3 factors causing differences in the effects of the communication measures)
Involvement: Purposeful form of activating a person regarding search, absorption, processing and storage of information. Low involvement: peripheral way of influencing is the most important, "liking" is more important than "understanding". High involvement: content of advertisement, credibility, argumentation, and promised benefit are important.
Assessment of Price Information - External Reference Price
Is made up in specific buying situations and is based on observed prices in the buying environment, e.g.,: Prices of similar products of the same or other providers Price recommendations on the packaging or special offer signs
Monitoring the Impact - Important Measurement Variables
It is important to determine what variables need to be measured in order to assess whether communication objectives have been met. Main variables: - activation effects (e.g., the creation of attention) - cognitive effects (e.g., short-term assimilation and understanding of the communicated message, evaluation of the credibility of the communicated message, storage of the communicated content in long-term memory) - emotional effects (e.g., attractiveness and acceptance of the communicated content, storage of emotional triggers in long-term memory) - attitude-related effects (e.g., attitude towards advertised brand). - behavioral effects (e.g., intention to purchase the advertised product)
TV Advertising (Communication Measures)
It is possible to quickly generate a high impact via TV advertising - Availability of the medium - Use of the medium The focused approach of target groups - especially of programs which are watched by many classes of population - is difficult. Lower social classes are reached above average.
Assessment of Price Information - Scheme of Judgment of Reasonability
Judgment of price reasonability means that the customer assesses a price based on a comparison with the reference price
Advantages and forms of Internet Advertising (Communication Measures)
Key advantages: - Individualization - Dialogue orientation Forms of internet advertising: - Banners: graphic images that can be integrated into a website - Pop-ups and interstitials: online ads that open automatically in a separate browser window. - Hover ads: layered over the content page and do not open in a separate window. Hover ads include floating ads, mouse-over banners, and sticky ads. - Search engine advertising: (also called search engine marketing or keyword advertising) advertising company purchases advertising space from search engine providers such as Google; the ads are then linked to specific search terms - Corporate blogs (short for web log): website where an organization publishes and manages content to attain it's goals.
Memorization of Price Information - Knowledge of Prices
Knowledge of prices refers to the customer's ability to remember prices. - Prices are rather recognized (price recognition) than remembered exactly (price recall) - Searching for prices has a positive influence on knowledge of prices By trend price information is rather learnt, if it: - refers to products the customers prefer (subjective relevance) - can be obtained without much effort - is especially memorable - is stable over a longer period
Vertical Marketing (design and structure of the relationships to sales partners and key accounts)
Manufacturers and sales partners jointly plan and sometimes perform marketing activities. (Check 196)
Media Planning: Differentiation between Message, Measures and Medium
Message of the communication: information that should be delivered to the audience (e.g., "our products are of high quality) Communication measures: Measures to present the message of the communication. (e.g., advertising spot) Communication medium: adopted medium, that is used to communicate a certain message to the receiver of the communication. (e.g., via tv - communication medium, an advertising spot - communication measure, and a message respectively - message, is brought to the receiver).
Categories of Factors Influencing Pricing Decisions
Middle circle: Price. Arrows into price: Competition, costs, demand. Ring around price: Marketing mix, legal framework conditions, marketing strategy
Relationship-oriented definitions
Object of marketing = establishment, maintenance and strengthening of customer relationships. Accentuation of customer relationships.
SOR-Model of Price Information Processing
Objective Price -> (Reception of objective price-> interpretation and assessment-> subjective price-> memorization of subjective price-> attitude towards subjective price dependent on influencing factors)-> purchase, non purchase
SR-Model of Classical Price Theory
Objective price -> Utility Maximization -> Purchase, Non-Purchase
The "Classics" of Strategic Success Factor Research
PIMS Project, Experience Curve Model, Life Cycle Model
Diffusion Process
Part of the Market Entry Strategy. The spread of a new idea from its source of invention or creation to its ultimate users or adopters.
Company-external facet
Part of the integrative definition of Marketing. Marketing = conception and implementation of market-related activities that are practiced by a company and geared towards buyers or potential buyers of its products. Such market-related activities include the systematic acquisition of information about market conditions as well as the design of the product portfolio, pricing, communication, and sales (=Marketing Mix).
Company-internal facet
Part of the integrative definition of Marketing. Marketing= Creation of necessary prerequisites and conditions within the company in order to facilitate effective and efficient implementation of market-related activities. This includes especially managing the entire company according to the notion of market orientation.
Global Environment factors (macro-environment) [regarding initial strategic situation]
Present and potential developments in: society, macroeconomics, politics, law, and technology.
Assessment of Price Information - Scheme of Price Acceptability Judgments
Price acceptability judgments are basing on the price-performance ratio of a product.
Assessment of Price Information - Judgment of price fairness
Price fairness is the perception of conditions for and procedure of transactions. It is consciously or unconsciously based on considerations of fairness.
What are some classic communication measures?
Print advertising TV- and cinema advertising Radio advertising Outdoor advertising
Benefit variables
Private customers: Price benefit, quality benefit, image benefit, service benefit Business customers: price benefit, quality benefit, image benefit, service benefit
Demographic variables
Private customers: gender, age, marital status, residence. Business customers: headquarters, duration of business relationship
Socioeconomic variables
Private customers: income, education and profession Business customers: revenue, industry
Behavioral variables
Private customers: outlet selection, product selection, purchasing frequency Business customers: distribution channel selection, purchasing frequency Price sensitivity, Information Selection
Communication Measures - Public Relations (define)
Public relations help to identify, establish and maintain relationships between the company and various public target groups that may have an impact on the company's success.
Stages of Pricing Research in Behavioral Science
Reception of Price Information -> Assessment of Price information -> Memorization of price information -> Spending and Consumer Behavior ALSO POSSIBLE: Reception of Price Information -> Assessment of Price Information -> Spending and Consumer Behavior -> Memorization of Price information
Pulsing Advertising
Refers to the spending of a relatively large share of the advertising budget at regular intervals. In the interim between these advertising campaigns, advertising expenditure and activities are scaled down to zero. This method of allocation is especially appropriate for products associated with seasonal demand.
Price Elasticity of Demand
Relative change in demand divided by relative price change. Mathematically: [dx(p)/x]/[dp/p] = [dx(p)/dp] * [p/x]
Sales Channels & Design of Sales Channels
Sales Channels emerge from the selection and combination of sales entities that are involved in delivering value to the customer. In terms of the design of a sales channel, there are two basic alternatives: direct and indirect (dealers).
List all the parts of Sales Entities
Sales Entities: Company-internal sales entities - organization units --> field sales force --> office sales force --> administrative back office --> sales back office --> call center --> e-commerce department --> customer service -individual persons --> manager --> key accounts manager --> head of sales department --> field sales force employees Company-external sales entities (sales partners) - affiliated sales entities --> authorized dealers --> franchise system partners - sales entities independent from the company -->facilitators --> commercial agents --> commission agents --> broker --> sales agency --> logistics service providers --> intermediaries --> wholesalers --> retailers
Four Components of the Marketing Mix
Sales decisions (place), product decisions, pricing decisions, communication decisions (promotion).
Communication Measures - Sales Promotion (define)
Sales promotion is "action communication" which aims at increasing sales in the short run from both, existing and new customers on the basis of a temporary incentive or deal.
Assessment of Price Information - Threshold Prices
Simplification of price perception through category orientation (e.g., cheap, normal, expensive). - Absolute threshold price: How high is the minimum price for a product and what is the maximum price respectively? - Relative threshold price: How much do two prices have to differ from each other for the customer to essentially discriminate between them? - In practice, especially relevant concerning price increases.
Single-tier Sales channel vs. Two-tier sales channel
Single-tier: manufacturer-> retailer Two-tier: manufacturer-> wholesaler-> retailer
Company Situation [regarding initial strategic situation]
Situation of the customers in the market: image, awareness. Competitive environment: market share, own strengths and weaknesses.
Generic New Product Pricing & What they mean
Skimming Strategy: During market entry phase, the products are sold at comparably high prices. -> Take advantage of the buyers' willingness to pay. -> Rapid amortization of investments in the new product. Penetration Strategy: Initially, prices are relatively low. -> Rapid diffusion of the product. -> Gain high market shares.
Demographic Price Differentiation
Specific customer characteristics are used as differentiation criteria, including age, gender, income situation, or job related factors. e.g., Deutsche Bank: special prices for students
Formulation of Marketing Strategy: Central Strategic Questions
Strategic marketing objectives/target groups addressed by marketing strategy Customer benefits and positioning as compared to competition Innovation orientation Customer relationship management Competitive and cooperative conduct Basic design and structure of marketing mix
Similarity Positioning (points-of-parity positioning)
Strives for a positioning in which the brand has the same characteristics as the competitor brand(s) with regard to the relevant positioning dimensions. With this positioning approach companies attempt to profit from the halo effects of extremely strong brands.
Surveys: Monitoring the Impact - Possible Measurement Methods (see more 258)
Surveys and observations are discussed as measurement methods. - In SURVEYS, questions assessing attitudes and recall questions play a key role. - Measuring the communication impact and effectiveness by ASSESSING ATTITUDES aims at identifying and recording the attitudes of the target persons with regard to the advertised product or the advertising activity itself. - In contrast, RECALL QUESTIONS aim at determining to what extent a person recalls certain aspects of an advertisement. Of particular relevance here is the differentiation between AIDED RECALL and UNAIDED RECALL. Whereas recall refers to the retrieval of information about the advertisement from memory, RECOGNITION is the ability to remember having seen the advertisement before. The validity of methods for recall and recognition measurement is limited by SPILL-OVER EFFECTS.
Quantity-based Price Differentiation
The average price per unit varies depending on the quantity purchased - i.e., customers benefit from volume discounts. This type of price differentiation can be used to increase customer loyalty: the more loyal a customer, the better the offered price.
Even Advertising
The communication budget is spent at a constant level over the planning period. This form of budget allocation is particularly appropriate for products that are already established in the market and of which the target groups should be continuously reminded (e.g., everyday necessities).
Benefit-based Price Differentiation
The company modifies the service/comfort related product benefits. An example of this is when airlines differentiate between economy, business, and first class.
Brand Management - Idea and Functions of the Brand
The definition of the brand concept can be based on both: - a formal perspective - a perspective related to the effect of branding. Functions of the brand: - Standpoint of the brand owner (e.g., establishment of preferences, differentiation) - Standpoint of the intermediary (e.g., image transfer, risk reduction) - Standpoint of the buyer (e.g., quality, orientation)
Unique Selling Proposition (Product Concept)
The unique selling proposition relevant for the target group should be defined. The USP will also help to differentiate the product from competitors.
Experience Curve Model
The model is based on the development of product costs over time and on the notion that the more often a task is performed the lower the costs of performing this task become. More specifically, this effect leads to a reduction in costs depending on the amount of "experience" accumulated over time.
Assessment of Price Information - Weber's Law
The perceivableness of differences between two intensities of stimuli is proportional to the absolute level of these stimuli. This means, the higher the intensity, the higher the difference has to be in order to be noticed (check formula) Transferred to the assessment of prices: at a high price-level the same price difference is less "noticeable" than at lower levels.
Modalities of influence (part of the 3 factors causing differences in the effects of the communication measures)
The processing of impulses is carried out in different ways. Therefore: Language: argue rationally Image: impress emotionally
Components of a Product: Packaging/Design of the Tangible Environment
The term "packaging" primarily refers to physical products. Packaging serves various functions such as protecting the product, handling properties as well as facilitating transport.
Five Forces Model
Threats of new entrants Bargaining power of buyers Threats from substitute products Bargaining power of suppliers ALL GO INTO: Intensity of rivalry among existing competitors
Ensure reception of the advertisement (Social Engineering: General Rules for Designing Communication Measures)
Time to process information is short (for some ads: below 3 seconds) Storage of information: for pictures, ca. 50% is remembered, for texts around 2%) Mind habits (text in the upper left corner is recognized more easily, the lower and lower right parts of pictures often remind unnoted) Use contacts effectively (big, colorful advertisements, easement of cognition)
Communication Measures - Trade Fairs (define and categorizations)
Trade fairs are measures of personal communication and closely related to personal selling. Can be categorized using the following dimensions: - Width of offering (e.g., universal vs. specific) - Focal points of sales (e.g., consumer goods vs industrial) - Function (e.g., information vs. sale) - Coverage (e.g., local vs international) - Direction of sales (e.g., export vs import) - Target groups (e.g., dealer vs consumers)
Communication Measures - Sales Promotion (the two basic categories and the objectives)
Two categories: • price-based sales promotions • non-price-based sales promotions Objectives of the Sales Promotion: (249) Demand effects with end customers • Short term demand/sales effects --> First purchase of the product --> repeat purchase of the product/product switch --> increased consumption of the product --> switchover to the store promoting the product • Long-term demand/sales effects --> early product purchases --> increased loyalty towards the product --> increased loyalty towards the store
Vertical vs. Horizontal Product Differentiation
Vertical product differentiation exists if product variants of different quality are offered at different prices. Horizontal product differentiation exists if product variants with different functions but comparable quality and price levels are offered. More: http://www.econ.ucdavis.edu/faculty/ bonanno/teaching/121/Prod_dif.pdf
Substantial Product Definition (in a Practical Example: Products in Financial Services)
Views the core product as a package of physical-technical features and, therefore, does not include financial services (giro account, loans, insurances..)
Intended Target Group(s) (Product Concept)
When developing the product concept, the intended target group(s) for the product(s) should be identified.
When planning communication decisions, the company...?
When planning communication decisions the company conveys information aiming at influencing the recipients of the communication message in terms of their knowledge, attitudes, expectations, and behavior in favor of the communication objectives.
Difference between Product Differentiation and Product Variations
With product variation, the original product is modified and thus no longer present in the market. With product differentiation, the original product continues to exist. Product differentiation results in an increased depth or, in some cases, increased width of product mix.
Along with the budget allocation based on the selection of media and media vehicles a decision has to be made on how to spend the budget over time: Ad placement dates and an advertising schedule have to be determined. In this regard, the advertising spending policy can be...
a) concentrated b) even c) pulsing or d) pulsing/maintenance
Communication Measures: Outdoor advertising (define and characteristics)
advertising placed in public areas. The most important characteristics are: - Poster advertisements - Transit advertisements Due to the higher likelihood of exposure, especially young people are reached with outdoor advertisements.
Communication Measures: Print Advertising (examples & what is critical?)
covers advertising in printed media like: - Newspapers - Popular magazines - Professional journals - Other print media: supplements (e.g., tv-programs in newspapers), advertising paper, customer magazines or phone books. Critical for the selection of the medium is the match between the readers and the target group.
Direct Marketing (Define)
comprises all market-related activities that use a one-step flow of (i.e. direct) communication to specifically address individual target groups. Means of communication include media such as advertising letters, advertising postcards, mail, faxes or e-mail. (standardization vs customization. bulk mail from a lottery company/address field: to any household needing more money would be on the standardization end, with costs per contacted person, likelihood of response, and precision of target lower but target group size higher. mailing from an airline to frequent flyer customers/individual address and customized content more customization end, with costs per contacted person, likelihood of response, and precision of targeting higher but target group size lower. see more: 247).
Budget allocation (aka media planning)
concerned with the optimal distribution of the communication budget.
Controlling approaches (methods to accelerate the innovation process)
include planning, budgeting, controlling, and monitoring systems. The design of such systems can facilitate the acceleration of processes by, e.g., incorporating both cost-related and time-related aspects into innovation controlling.
Product Variation
refers to modification of the characteristics and features of an already existing product without changing the core function of the product.
Product differentiation
refers to the addition of new product variants to an already established product.
Product Mix
refers to the entire range of products and items supplied by a company or a seller at a given point in time.
Price Differentiation
refers to the situation in which companies offer identical or similar products to different customers (or segments) at different prices. We speak of price differentiation if a company offers identical or slightly differing products at varying prices to different customer segments. The products do not have to be completely identical since such a price differentiation concept would be too restrictive. For example, price differentiation also exists if the products offered to various customer segments show minor differences in terms of their features.
Dynamic analytical methods are especially relevant because...
the impact of advertising on sales is often/usually delayed. These carry-over-effects in demand are the result of the goodwill created by advertising activities in the past.