marketing 301: final exam
direct marketing - direct and digital marketing sales = $12 trillion
"you have 2 ears and 1 mouth. use them proportionally." DIRECT MARKETING: connecting directly with carefully targeted market segments or consumers, often on an interactive, one-to-one basis - can be used as primary marketing approach or a supplement to other approaches - aiming for IMMEDIATE response - companies use databases and tailor their marketing and communications efforts tot the needs of narrowly defined groups --> they know what to search for - the FASTEST growing form of marketing - increasingly more internet-based - BENEFITS TO SELLERS = 1. building strong customer relationships 2. target small, specific groups 3. collect information about customers and personalize products 4. collect feedback from customers - BENEFITS TO BUYERS = 1. convenience 2. ease and privacy 3. interactivity 4. immediacy 5. informative communications *diagram on page 18* CUSTOMER DATABASE: organized collection of comprehensive information about customers of prospects, including geographic, demographic, behavioral. and psychographic information - low cost and efficient - strong relationship-building tool - offers a 360-degree view of customers and customer behavior - database contains information about buying behavior, including preferences, recency, frequency, and monetary value of past purchases --> allows firms to personalize advertisements to individual consumers
advertising
*after identifying your advertising objectives, you want to determine what is most appropriate within the confines of the task, target audience, and timing* ADVERTISING - 3 key characteristics are: 1. paid 2. non-personal communication 3. identified sponsor ADVERTISING OBJECTIVE: a specific communication task to be accomplished with a specific target audience within a specified period of time 1. INFORMATIVE advertising - frequently used when a company is introducing a new product category. --> the objective is to build PRIMARY DEMAND from customers 2. REMINDER advertising - helps companies maintain customer relationships --> used for more MATURE products --> helps keep the product in the customer's mind --> increases FREQUENCY OF PURCHASES 3. PERSUASIVE advertising - company's objective is to build SELECTIVE DEMAND --> becomes more important as competition increases COMPARATIVE ADVERTISING (attack advertising): when a company directly to indirectly compares its brand to one or more other brands - companies must be careful to avoid inviting competitor responses - you can end up with an advertising war that no one can win ADVERTISING BUDGET: financial and other resources allocated to the advertising program for a company or product; there are 4 methods of setting the advertising budget - 1. affordable method - the company sets the promotion budge at the level management thinks it will be able to afford - the company starts with total revenues, deducts operating expenses and capital outlays, and then designates a portion o the remaining funds for advertising - disadvantage = this method completely ignores the effects of promotions on your sales numbers 2. precentage-of-sales method: the company sets the promotion budget at a certain percentage of current or predicted sales or as a percentage of the unit sales price - there is little to justify this method because it views sales as the cause of promotion instead of the result from promotion - based on availability of funds rather than opportunity - the average advertising PoS across industries in the US is 3.18% 3. Competitive-parity method: the company sets the promotion budget to match competitors' advertising outlays - although arguments for this method claim companies can benefit from the wisdom of the industry, opposing arguments posit that there is no reason to think that competitors know more about the right adveritsing budget 4. objective-and-task method: the company develops the promotion budget by doing the following - 1. defining specific objectives 2. determining the tasks that must be performed to achieve objectives 3. estimating the costs of performing the identified tasks - determining the budget based on the costs of the above factors - PROPER WAY TO DEVELOP BUDGET: --> difficult to do well without data --> best because ti works from the BOTTOM UP ADVERTISING STRATEGY: the plan you use to accomplish advertising objectives - THE "BIG IDEA" = the compelling creative concept you are looking for (derived from positioning strategy) MADISON AND VINE: a term that represents the merging of advertising and entertainment to break through the clutter and create new avenues for reaching consumers with more engaging messages - you are making advertisements more entertaining so that consumers want to watch your ads - ADVERTISEMENT: making ads so entertaining or so useful that people want to watch these ads --> example = ads that companies debut during the super bowl - BRANDED ENTERTAINMENT (brand integration): making the brand an inseparable part of some other form of entertainment --> ex: product placements within TV shows or movies --> ironman had 64 brand placements --> example: APPLE product placements in Modern Family --> example: STARBUCKS cups used on the Voice CREATIVE CONCEPT: the compelling big idea that companies feel will bring the advertising message strategy to life in a memorable and distinctive way ADVERTISING APPEALS - should have 3 characteristics: 1. they should be BELIEVABLE 2. they should be MEANINGFUL 3. they should be DISTINCTIVE MESSAGE EXECUTION: after a company identifies the creating concept and messages, it must develop a plan to execute that message --> the company must turn the BIG IDEA into actual execution - EXECUTION STYLE: approach, style, tone, words, and format used to execute an advertising message: styles include - 1. SLICE OF LIFE - shows one or more "typical" people using the product in a normal setting - shows a storyline progression where a product solves a problem 2. LIFESTYLE - shows how a product fits in with a specific lifestyle 3. FANTASY - creates a fantasy around the product or its use - ex: Old Spice 4. MOOD OR IMAGE - builds a mood or image around the product or service; makes few claims about the product, except through suggestion - uses very few words and try to build a mood of serenity or beauty 5. MUSICAL - shows people or cartoon characters singing about the product PERSONALITY SYMBOL: creates a character that represents that product - DO NOT confuse with a celebrity endorsement - a personality symbol is only a character for the brand - EX: progressives Flo or Geico's Gecko TECHNICAL EXPERTISE: shows the company's expertise in making the product SCIENTIFIC EVIDENCE: presents survey or scientific information asserting that the brand is better or better liked than other brands TESTIMONIAL EVIDENCE OR ENDORSEMENT: features a highly believable or likable source offering a product endorsement - example: Jared from SUBWAY = lost 245lbs from his Subway diet --> since criminal charges surfaced, jared would not be a good endorser at this time STRIVING FOR MODERATE INCONGRUITY: not too easy and not too hard - you want to be in the middle = happiness ^ those above are all about execution style
advertising appeals should be:
1. Meaningful 2. Believable 3. Distinctive
market penetration is used when...
1. customers are price sensitive 2. production costs decrease with production 3. low price keeps out competition 4. the company can maintain a low price position
forms of direct marketing
DIRECT MAIL MARKETING: sending an offer, announcement, reminder, or other communication directly to an individual at a particular address - ADVANTAGES = 1. permits high target-market selectivity 2. can be personalized 3. flexible 4. yields better prospects than using mass marketing (advertising) 5. easy to measure results - DISADVANTAGES = 1. can be expensive 2. hard to track response rates - you can send to SPECIFIC zip codes/areas - you can customize yours mailings/content - represents 34% of US direct marketing spending - physical mail makes it REAL - EX: Ferrari - took photos of homes in wealthy suburban area with a Ferrari in the front of the house, then personalized each piece of mail to produce high response rates CONTEXTUAL MARKETING: text-based ads and links that appear along with search results CATALOG MARKETING: direct marketing through print, video, or digital catalogs that are sent directly to specific customers, made available in stores or offered online - WEB BASED catalogs growing in popularity/usage: 1. eliminates porinting and mailing costs 2. some companies are using scanning codes in their catalogs 3. EX: IKEA - does this so you can digitally view furniture at home - ADVANTAGES OF WEB CATALOGS = 1. cost saving 2. amount of space/merchandise 3. real-time merchandising 4. interactive features - ADVANTAGES OF PRINT CATALOGS = 1. customers can write on the catalogs 2. pass-along readership 3. inspiration - customers can pick them up and look through them 4. Neuroscience - customers experience more emotional processing and a deeper connection - DISADVANTAGES = 1. catalogs are passive 2. printed catalogs are expensive to create and distribute TELEMARKETING: using the phone to sell directly to customers - accounts for more than 17% of direct marketing sales - OUTBOUND = selling directly to customers and businesses - INBOUND = using toll-free numbers to receive orders from television and print ads, direct mail campaigns or catalogs - DO NOT CALL REGISTRY = created in 2003 and managed by the FTC --> controls how and when companies can call potential customers for selling --> but some sources estimate that 50% of all calls on cellphones are telemarketing DIRECT RESPONSE TELEVISION (DRTV): marketing through television; includes direct response television advertising, infomercials, and interactive television (ITV) advertising - DIRECT RESPONSE TELEVISION ADVERTISING = air television spots of 60-120 seconds to persuasively describe a product and offer a toll-free number and website for ordering --> media placement is cheaper than commercials on prime time TV --> easy to measure results --> cheaper than prime-time TV advertising --> EX: snuggie, ProActiv - INFOMERCIALS = like direct-response television advertising, but in 30 minute spots - INTERACTIVE TV = lets viewers interact with television programs and advertisements using their remote controls --> can lead to high response rates and customer involvement - HOME SHOPPING CHANNELS (HSN, QVC) = entire cable channels dedicated to selling multiple brands, items, and services KIOSK MARKETING: information and ordering machines companies place in kiosks in stores, airports, hotels, malls. college campuses, and other locations; and example of this would be Redbox
price adjustment strategies
DISCOUNT: when a company offers a straight reduction in price on purchases made during a specific period of time or when a larger quantities are purchased ALLOWANCE: when a company reduces the list price for buyer actions, such as trade-ins or promotional and sales support - EX: trade-in allowances with a new car purchase SEGMENTED PRICING: when a company sells a product or service at 2 or more prices, where the differences in prices is not based on differences in costs - CUSTOMER SEGMENTED PRICING = different age groups have different prices --> ex: college students on a budget are given different prices - LOCATION/TIME PRICING = cheaper movies in the morning or early afternoon --> movies cost more when you see them in the evenings PSYCHOLOGICAL PRICING: pricing that considers the psychology of price - not simply the economics - the price says something about the product - EX: the attorney who charges $500 per hour being perceived as being more skilled than the attorney who charges $50 per hour - Prices ending in "9" seem like a BARGAIN to consumers - prices ending in an "8" = soothing and feels like a bigger bargain to customers - prices ending in "00" = perceived as higher quality - the # "7" does NOT help sales = the # is angular and jarring - RELATIVE REFERENCE PRICE = the idea that saving $5 on a $20 product is more valuable than saving $5 on a $1,000 product --> our brain goes right to ratios and percentages rather than looking directly at dollar amounts REFERENCE PRICES: prices that buyers carry in their minds and refer to when they look at a given product - EX: when a grocery store sells its store brand of cereal next to comparable name-brand cereal so customers can see the price comparison PROMOTIONAL PRICING: temporarily pricing products below the list price, or even below cost, to increase short-run sales - includes: special event pricing, limited time offers, flash sales, low-interest financing, longer warranties, and free maintenance offers - can create excitement for the buyer - LOSS LEADERS = you lose money on one product but overprice on other products --> product is cheaper = company is willing to take a loss to gain sales on other products --> EX: COSTCO = loses money on gas but makes up for it by overpricing on mother bulk prices --> EX: COLA = is a cheaper product used as a loss leader PROTECT COMPETITORS FROM: 1. PRICE FIXING = talking with competitors to set a price 2. PREDATORY PRICING = selling below cost with the intention of punishing a competitor or putting them out of business PROTECT CONSUMERS FROM: 1. PRICE DISCRIMINATION = ensure same price to customers at given level of trade 2. PRICE MAINTENANCE = requiring dealers to charge a specified retail price 3. DECEPTIVE PRICING = seller states prices that may mislead consumers PRICE DISCRIMINATION: when sellers offfer a different price to different customers at a given level of trade - every retailer must be offered the same price from the manufacturer unless the product quality or other factors differ - NOT ILLEGAL but... 1. companies cannot discriminated based on age, sex, location or other similar characteristics 2. you can discount based on specific deals like buying in bulk 3. technically coupons can be a form of price discrimination RETAIL (RESALE) PRICE MAINTENANCE: when manufacturers require dealers to charge a specified retail price for its product = PROHIBITED *diagram on page 30* DECPTIVE PRICING: when a seller states prices or price savings that mislead customers or are not actually available to customers - includes scanner fraud and price confusion = PROHIBITED
human needs theory (Abraham Maslow, 1908-1970) - hierarchy of needs is used in marketing and cont. of advertising
HUMAN NEEDS THEORY = - NEED: physiological or psychiological deficiency that a person must satisfy - HEIRARCHY: (starting at the top of the pyramid, moving down) 1. self-actualization - fulfillment and peak experience; give back to the world 2. esteem needs - respect, competence 3. social needs - love, belonging, family, friends, relationships 4. safety needs 5. Physiological (basic) needs - food, water, shelter --------------------------------------------------------- cont. advertising = - TONE: companies must always chose a tone for their advertising --> this can be positive, funny, edgy, etc - WORDS: the words chosen by the company for use in its advertising must be memorable and attention-getting - FORMAT: makes a difference in the ad's impact as well as its cost --> a small change in an ad can make a big difference in its cost and effect - CUSTOMER-GENERATED MESSAGES: companies are now tapping consumers for message ideas or actual ads --> companies can use social media and the internet to get this information and connect to customers --> EX: DORITOS = crash the super bowl ads ADVERTISING MEDIA: ways advertising messages are delivered to targeted audience - determining reach, frequency, and impact --> frequency = number of times a person in the target market is exposed t an ad --> reach = % of target market is exposed to an ad during a given period of time (ex: 60% of teens were exposed to an ad about drunk driving) --> media impact: qualitative value of an exposure through a given medium (advertisers want to choose media that will engage consumers and not simply reach them) - evaluating advertising effectiveness: 1. communication efforts 2. sales and profit effects 3. recall and attitude change - choosing among major media types: --> ex: television, newspaper, Internet, direct mail, magazines, radio, outdoor - selecting specific MEDIA VEHICLES --> ex: Sports Illustrated, Brides, Reader's Digest - choosing media timing --> CONTINUOUS = all advertising messages scheduled continuously throughout the period of the media plan --> FLIGHTING = advertising messages are scheduled to run during specific intervals of time, followed by a period where no ads are running --> PULSING = advertising pattern where there are always advertising messages planned, but there are times where these messages are heavier than others. MEDIA MULTITASKERS: people who consume/absorb more than one medium at a time - EX: someone who watches television while using their phone RETURN ON ADVERTISING INVESTMENT: the net return on advertising investment DIVIDED by the costs of the advertising investment - advertising ROI = Net Return on advertising investment / costs of advertising investment - advertisers should regularly evaluate two types of advertising results: 1. communication effects 2. sales and profits effects ADVERTISING AGENCY: a marketing services firm that helps companies as they plan, prepare, implement, and evaluate all or parts of their advertising programs - often used by large companies because of advantages offered - small companies might just use someone "in the sales department" for advertising INTERNATIONAL ADVERTISING DECISIONS: international companies face complexities when designing their overseas advertising - companies must decide how much to adapt their advertising to the unique characteristics of markets in other countries EVALUATING AD CAMPAIGNS: involves measuring communications efforts and measuring sales effects NARROWCASTING: dissemination of information to a narrow audience - also known as NICHE marketing or TARGET marketing
new product pricing strategies
MARKET-SKIMMING PRICING (PRICE SKIMMING): when a company invents new products and sets high initial prices to skim revenues, layer by layer, from the customers willing to pay the high price - company makes fewer sales buy has a higher profit margin - EX = APPLE does this with products like the iPhone MARKET-PENETRATION PRICING: when a company sets a low price for a new product to attract a large number of buyers and a larger market share - IKEA used penetration pricing to get into the Chinese market - allows firms to reduce per-unit costs through high volume
Managing the sales force
SALES FORCE MANAGEMENT: analyzing, planning, implementing, and controlling activities of the sales force TERRITORIAL SALES FORCE STRUCTURE: assigns each salesperson to an exclusive territory based on geography - the salesperson sells the company's full line within that territory - most pharmaceutical sales forces have a TERRITORIAL structure PRODUCT SALES FORCE STRUCTURE: salesperson specialize in selling only a portion of the company's products CUSTOMER (or market) SALES FORCE STRUCTURE: salesperson specialize in selling only a certain customers or industries - enabling specialization directed toward specific industries or customer relationships OUTSIDE SALES FORCE (FIELD SALES FORCE): salespeople travel to call on customers in the field INSIDE SALES FORCE: salespeople who conduct business from their offices and make contact by phone, by the internet, or by meeting people with prospective buyers in the office - provides support to the outside sales force COMPLEX STRUCTURE: a combination of several of the above structures - most commonly used in nationwide companies TECHNICAL SALES SUPPORT PEOPLE: provide technical information and answers to customers' questions SALES ASSISTANTS: provide administrative backup to outside salespeople TELEMARKETERS AND INTERNET SELLERS: inside salespeople who provide more than support - use the phone and the internet to find new leads and qualify prospects or sell directly to prospects TEAM SELLING: using teams of people from sales, marketing, engineering, finance, technical support, and even upper management to service large, complex accounts - you are using a team of people from a variety of specialized fields - this helps you BETTER handle complex clients and accounts RECRUITING/SELECTING SALESPEOPLE: the top 30% of salespeople are responsible for 60% of sales - poor selection results in expensive turnover, which also disrupts customer relationships. - good salespeople are good problem solvers and are able to understand customer needs - CAREFUL recruiting and selection of salespeople can increase overall sales force performance and minimize turnover - key talents of successful salespeople: 1. INTRINSIC MOTIVATION - motivated internally - they believe in the product and its values 2. DISCIPLINED WORK STYLE - know how to manage all of their customers' different needs 3. Ability to CLOSE A SALE 4. ability to build relationships with customers SELLING AND THE INTERNET: the internet is the fastest growing sales tech tool. Internet sales are changing personal selling but will not end personal selling SALES QUOTA: stipulates the amount a salesperson should sell and how sales should be divided among company products - POSITIVE INCENTIVES = method of increasing sales success among employees - SALES MEETINGS = provide social occasions, breaks from routine, chances for staff to meet and talk with "company brass" - SALES CONTESTS = spur the sales force to make a greater selling effort EVALUATING SALESPEOPLE: management must get information about its salespeople to assess their performance - information comes via sales reports, call reports, and expense reports - managers must look at this information to determine its return on sales investment (ROI) - salespeople are typically good at reporting some things, but NOT others: --> good at reporting = sales reports, contact reports --> BAD at reporting = competitive information, complete expense reports, details of promises made in call reports (also tend to focus on good stuff) - BETTER PERFORMERS - scored high on professionalism, needs analysis, benefits language, technical competence, answering concerns, and trust; only the top performers were rated consistently high on analyzing needs and trust - BOTH HIGH AND LOW PERFORMERS - can score high hon account service, asking for the prescription, compatibility - TOP PERFORMERS - scored LOW on pressure HOW SALESPEOPLE SPEND THEIR TIME: - 31% administration - 18% travel - 17% personal downtime - 14% problem solving - 10% prospecting - 10% active selling - salespeople spend too little time on active selling FOUNDATION IN SELLING: to be successful in today's global business environment, salespeople must have a solid relationship-building foundation - salespeople must: 1. be trustworthy 2. behave ethically 3. understand buyer behavior 4. possess excellent communication skillscost
sales promotion
SALES PROMOTION: short-term incentives to encourage sales - encourages customers to BUY NOW --> invites and rewards quick customer response --> it is easier to shop NOW - effects are short-lived YOU CAN USE A WIDE ASSORTMENT OF TOOLS: the 9 types of CONSUMER PROMOTION = -targeted at final buyers - OBJECTIVES: --> urging short-term customer buying --> enhancing customers brand involvement 1. couponing - promote an early trial of a new bran or stimulate sales of a mature brand - coupon redemption rate has declined - higher income households use coupons MORE than lower-income households - -> WHY? = higher income households have the technology to access coupons - fewer coupons are being sent and they are targeted more carefully --> EX: coupons on cell phones --> EX: targeting coupons to pregnant women to encourage related purchases ("as long as the pregnant women does not feel she has been spied on, she will use the coupons") 2. GEOFENCING: you use GPS to target potential customers when they walk by your store and offer them a relevant coupon 3. GEOCONQUESTING: you use GPS to target customers when they walk by your store and offer them a relevant coupon 4. PREMIUMS: free items you give someone for coming into the store - also items you find in your cereal box 5. ADVERTISING SPECIALTIES: free with logos on them - items you receive at a career fair - EX: pens, key chains, mugs, bottles 6. POINT OF PURCHASE PROMOTIONS: in store sals - ex: coupons on display near products in store aisles 7. CONTESTS AND SWEEPSTAKES: contests require effort and sweepstakes and random drawings requiting no effort - a contest might involve posting a relevant photo on social media and using a specific hashtag 8. SAMPLING: low cost per unit, easily divisible 9. PATRONAGE REWARDS: loyalty programs (redeeming points for rewards) - frequent purchase, competition, levels, differentiable levels - stores often give you fobs/tags to add to your keychains - EX: GIANT grocery awards gas points for store purchases - EX: STARBUCKS reward program and reloadable cards - points convert to cash on future purchases --- cont. of "wide assortment of tools" TRADE PROMOTIONS: targeted toward retailers and wholesalers - objective = getting retailers to carry new items and more inventory, to buy ahead, or to promote the company's products - promotional tools = include straight discount (price off or off-invoice), free goods offer, promotions, contests, premiums, displays or push money BUSINESS PROMOTIONS: targeted toward members of the sales force - objectives = generating business leads, stimulating purchases, rewarding customers, and motivation salespeople - promotion tools = conventions, trade shows, sales contests EVENT MARKETING (event sponsorship): creating a brand-marketing event or serving as a sole or participating sponsor of events created by others *many marketers are moving their couponing and sampling efforts online*
internal and external considerations that affect price decisions
TARGET COSTING: pricing that starts with an ideal selling price and then explores possible product components and costs that will ensure that the price is met and provide consumer value DEMAND CURVE: a curve that illustrates the number of units the market will buy in a given period - takes into consideration different prices that might be charged - the downward sloping aspect of the demand cure, implies that as price increases, fewer purchases will be made - the opposite is also true PURE COMPETITION: market consists of many buyers and sellers trading in a uniform commodity; no single buyer or seller has a large effect on pricing - research and development, marketing research, and other costs are not really factors here - we frequently see this in agricultural contexts, when selling something like wheat or corn MONOPOLISTIC COMPETITION: market has many buyers and sellers that trade over a range or prices instead of a single market price OLIGOPOLISTIC COMPETITION: market has only a few large sellers - this means the seller is alert to competitors' pricing strategies and marketing efforts PURE MONOPOLY: market dominated by only one seller - this seller could be government (ex. USPS), a private regulated monopoly (ex. power company), or a private unregulated monopoly PRICE-DEMAND RELATIONSHIP: each price the company might charge will lead to a different level of demand - DEMAND CURVE = illustrates the relationship between the price charged and the resulting demand level --> the HIGHER the price, the LOWER the demand --> the LOWER the price, the HIGHER the demand PRICE ELASTICITY: measure of the sensitivity of product demand to the changes in product price - INELASTIC = demand hardly changes with a small change in price --> a company can increase total revenue by INCREASING the price - ELASTIC = demand changes greatly with a small change in price --> total revenue is DECREASED by an INCREASE in price - ELASTICITY = percentage change in Quantity Demanded / percentage change in price ECONOMY AS AN EXTERNAL FACTOR IN PRICING: economic conditions have a strong impact on a company's pricing strategy - economic factors = boom or recession, inflation, or interest rate fluctuations - the recession changes how customers view the price-value equation --> consumers are now more price-sensitive than before --> we call this "value conscious" - companies can respond to economy changes by lowering prices or offering discounts, but this is not a desirable and sustainable long-term response --> companies can hurt their brand image (make it seem cheap) or make consumers depend on cheap sales OTHER EXTERNAL FACTORS IN PRICING: - reactions to resellers to pricing - the government as an external influence - social concerns INTERNAL AND EXTERNAL CONSIDERATIONS AFFECTING PRICE DECISIONS: - overall marketing strategy, objective and marketing mix - organizational considerations - economy - government - social concerns - the market and demand
place / channels
WHY WE NEED CHANNELS: 1. improves efficiency 2. intermediaries help 3. specializes the selling process CONVENTIONAL MARKETING CHANNEL: - producer --> wholesaler --> retailer --> consumer - in the traditional supply chain, every company is working for itself VALUE DELIVERY NETWORK: includes the company, suppliers, distributors, and customers that partner with each other to improve the performance of the entire system - enables the system to deliver better customer value - producer/wholesaler/retailer (all agree and profit together) => consumer MARKETING CHANNEL (distribution channel): set of independent organizations that work together to make a product or service available for use by the consumer or a business user CHANNEL LEVEL: layer of intermediaries that helps bring the product and its ownership closer to the final buyer DIRECT MARKETING CHANNEL: marketing channel with no intermediary levels INDIRECT MARKETING CHANNEL: marketing channel that contains one or more intermediary levels CHANNEL CONFLICT: disagreement among channel members regarding goals, roles, or rewards CONVENTIONAL DISTRIBUTION CHANNEL: consists of one or more independent producers, wholesalers, and retailers - each is a separate business seeking to maximize its own profits TRADITIONAL MARKETING CHANNEL VERSUS VERTICAL MARKETING SYSTEM: - CONVENTIONAL MARKETING CHANNEL = producer --> wholesaler --> retailer --> consumer - VERTICAL MARKETING SYSTEM: producer/wholesaler/retailer --> consumer *diagram of this on page 32* VERTICAL MARKETING SYSTEM: producer/wholesaler/retailer => consumer - 3 TYPES = 1. corporate VMS - corporation owns production and distribution --> coordination and conflict through regular organizational channels (ex. grocery stores that own their own bakeries, dairies, food processing plants) --> other BENEFITS include: quality assurance, fewer transformation costs, creative control, ability to react quickly to changes in demand, communication enhancements, employee benefits --> Apple iPad is sold through corporate VMS 2. CONTRACTUAL VMS - individual firms join together through extensive contracts --> this includes FRANCHISE organizations --> EX: fast food restaurants like Burger King or McD's 3. ADMINISTERED VMS - leadership is established based on size and power of the dominant channel members (known as channel captains) --> ONE MAJOR controller making decisions --> problems arise when 2 leaders emerge and clash - FRANCHISE ORGANIZATION: contractual vertical marketing system in which a channel member (franchisor) links several stages in the production-distribution process --> a business owner pays franchise and other fees to own one or more locations of a specific chain of stores --> the franchise owner must follow certain rules set by the parent company --> VERTICAL MARKETING SYSTEMS bring cross coordination and value to the system (less conflict) --> "every company for themselves can be sub-optimal for the system" - HORIZONTAL MARKETING SYSTEM: two or more companies at one level join together to follow a new marketing opportunity --> enables players to match supply and demand --> EX: The Walmart and Subway relationship --> am onsite Subway feeds hungry Walmart customers, generating revenue for Subway while keeping customers on the Walmart property to continue to shop. MULTICHANNEL DISTRIBUTION SYSTEM: a single firm sets up two or more marketing channels to reach one or more customer segments MARKETING CHANNEL DECISIONS: include channel design, channel management, and marketing logistics (physical distribution) --> MARKETING CHANNEL DESIGN - designing effective marketing channels by analyzing customer needs, setting channel alternative, and evaluating channel alternatives --> MARKETING CHANNEL MANAGEMENT - choosing, managing, and motivating individual channel members and evaluating channel member performance over time --> MARKETING LOGISTICS - planning, delivering, and controlling of the flow of physical goods as well as marketing materials (flows from the PRODUCER (company) to the MARKET) EXCLUSIVE DEALING: when the seller requires that dealers not handle competitors' products EXCLUSIVE TERRITORIAL AGREEMENTS: the producer may agree not to sell to other dealers in a given area - this is often the result of dealers searching for less competition between other dealers holding the same product FULL-LINE FORCING: when the producers only sell to dealers if the dealers will take some or all of the line as well MARKETING INTERMEDIARIES: (physical distribution); planning, implementing, and control of the physical flow of materials, goods, and related information from points of origin to points of consumption in order to meet customer requirements while also making a profit; selective distribution, exclusive distribution, and intensive distribution. --> INTENSIVE DISTRIBUTION - stocking the product in as many outlets as possible - often used with convenience products like toothpaste, soap, and candy --> EXCLUSIVE DISTRIBUTION - giving a limited number of dealers that exclusive right to distribute the organizations' products in their territories - this is when producers develop exclusive channels for their products - allows a closer relationship; often used with luxury goods --> SELECTIVE DISTRIBUTION - using more than one (but less than all) of the intermediaries who are willing to carry the organization's products - we do this to maintain a proper image of the brand and to have closer relationships with fewer, more selective dealers SUPPLY CHAIN MANAGEMENT: managing upstream and downstream value-added flows of material, final goods, and related information among suppliers, the company, final consumers, and resellers GREEN SUPPLY CHAIN: choosing the supply chain in a manner that reduces the company's environmental footprint - being environmentally responsible DISTRIBUTION CENTER: large, highly-automated warehouse that receives goods from various plants and suppliers - it takes orders, efficiently fills orders, and delivers products to the consumer in a timely manner INTERMODAL TRANSPORTATION: when you combine 2 or more modes of transportation MAJOR LOGISTICS FUNCTIONS: include warehousing, inventory management, transportation, logistics information management = 1. WAREHOUSING - where you store your stuff 2. INVENTORY MANAGEMENT - keeping track of your stuff 3. TRANSPORTATION - moving your stuff from one place to another, including moving it to your customers or a retail location 4. LOGISTICS INFORMATION MANAGEMENT - the IT/computer systems that help you keep track of your supply chain INTEGRATED LOGISTICS MANAGEMENT: emphasizes teamwork, both inside the organization and between the marketing channel organizations, to maximize the distribution system performance THIRD-PARTY LOGISTICS (3PL) PROVIDER: expert logistics provider that performs any or all of the functions that get client's product to market - Providers include = Ryder, Penske, Logistics, FedEx, UPS - SEPARATE company KEY TRENDS IN RETAILING: - growth in non-store retailing - retail convergence/rise of mega-retailers - global expansion of major retailers - increased importance of technology - retail stores as communities and place to hang out DISINTERMEDIATION: eliminating marketing intermediaries from a channel - EX: Best Buy = fewer people are buying items in store --> must change target segment and leverage service product - EX: Netflix = has taken business from brick and mortar companies, resulting in disintermediation
laws addressing pricing practices of US companies
all of the following are laws affecting pricing and monopolies EXCEPT: a. Sherman Act b. Clayton Act c. Robinson-Patman Act d. Civil Rights Act of 1964 ANSWER = Civil Rights Act of 1964
what is push money?
money given in return for promoting a product
market skimming
setting a high price for a new product, to make maximum revenue before competing products appear on the market - the company makes FEWER sales but has HIGHER profit margins EX: when apple introduces a new device like the iPhone 6 or 6 Plus, it uses this product pricing strategy to sell tis product at the highest possible price to consumers willing to pay a premium for the new product
personal selling process - steps in the selling process 1. prospecting and qualifying 2. preapproach 3. approach 4. presentation and demonstration 5. handling objections 6. closing 7. follow up
selling process = the steps that salespeople follow when selling: 1. PROSPECTING AND QUALIFYING: identify qualified potential customers - includes cold calling, referrals, and directories - a successful sale depends upon good research and preparation - Qualifying is done through a SCREENING PROCESS - you identify the good prospects and screen out the bad (ex: you dont ask a poor person to donate to thon) - EX: THON envelopes = who should you send them to? How do you decide? 2. PREAPPROACH: learn as much as possible about a prospective customer before making the sales call - set call objectives - determine the best approach --> when and how should you contact prospect? - qualify prospect - decide how and when to contact the person 3. APPROACH: meeting the customer for the first time - you want to iron out presentational strategies here: --> your APPEARANCE - dress differently for different customers --> OPENING LINERS - practice what you will say --> key questions about your customers' needs --> show a display/sample to attract attention/curiosity - good listening and problem-solving skills are key 4. PRESENTATION AND DEMONSTRATION: tell the "story" to the customer - HIGHLIGHT BENEFITS to the customer - you need to know what matters to them - show how the company's offer solves the customer's problem --> NEED SATISFACTION-APPROACH --> also CONSUMER-SOLUTION approach --> looking for "MAGIC WAND" question: "if you can have anything..." or "how do you feel about..." 5. HANDLING OBJECTIONS: seek out, clarify, and overcome customer objections to buying - you might need to ask the customer clarifying objections - TACTICS = --> salesperson is in control - use a script and knows which questions to ask --> establish a relationship with customer --> use emotion - be passionate and not robotic --> reference buyer's core values --> reduce risks associated with buying --> create a sense of urgency to buy - think about what is important at that moment 6. CLOSING: ask the customer for an order - recognize CLOSING signals ("If I purchase this, what documents will I need?") - TACTICS = --> directly ask for the order --> review points of agreement --> offer to help write up the order --> ask which model customer wants ("should I mail this to your home or work?" --> create urgency 7. FOLLOW UP: follow up after the sale to ensure customer satisfaction - you want to repeat business --------------------------------------------- TRENDS IN SELLING: include product advantages, customers purchasing power, customer information technology, communications volume and speed, customer quality expectations, business managers, sales strategy to customer process, constant pressure to cut costs, organizational renewal efforts, training CONSULTATIVE SELLING: helping customers reach their goals by using the organization's products, expertise, and service; selling organization is the business consultant, strategic orchestrator, and long-term ally TEN DIMENSIONS OF THE SALES MODEL: 1. account service 2. professionalism 3. analyzing needs 4. presenting benefits 5. technical competence 6. asking for the order 7. answering concerns 8. pressure 9. compatibility 10. trust TOTAL PRODUCT CONCEPT (TPC) aka THREE LEVELS OF PRODUCT = *diagram on page 15*
marketing ethics and society
AMA STATEMENT OF VALUES: 1. marketers must do NO harm 2. marketers must foster TRUST in the marketing system 3. marketers must embrace, communicate, and practice the fundamental ethical values that will improve consumer confidence in the integrity of the marketing exchange system AMA ETHICAL VALUES: 1. HONESTY = to be truthful and forthright in our dealings with customers and stakeholders 2. RESPONSIBILITY = to accept the consequences of our marketing decisions and strategies 3. FAIRNESS = to try to balance justly the needs of the buyer with the interest of the seller 4. RESPECT = to acknowledge the basic human dignity of all stakeholders 5. OPENNESS = to create transparency in our marketing operations 6. CITIZENSHIP = to fulfill the economic, legal, philanthropic, and societal responsibilities that serve stakeholder in a strategic manner Needs of Consumer (Now) and Needs of Business (Now) = marketing concept Needs of Consumer (Now) and Needs of Business (Future) = strategic planning concept Needs of Consumer (Future) and Needs of Business (Now) = societal marketing concept Needs of Consumer (Future) and Needs of Business (Future) = SUSTAINABLE MARKETING CONCEPT *diagram of this on page 36* ^ SOCIAL CRITICISMS OF MARKETING - INCLUDE: 1. individual = high prices, deception, high pressure selling, planned obsolescence, harmful products 2. Society = materialism, unreal expectations and desires, cultural pollution taking advantage of children, people of lower socioeconomic status, few social goods QUOTE OF THE DAY: "with Apple iPods, the battery cannot be removed easily by the consumers, forcing an expensive service request- inconveniently priced just below the replacement cost of the whole unit and encouraging a throwaway mentality." - (Planned obsolescence)
cost-based vs. competitive-based pricing
COST-BASED PRICING - TRADITIONAL: when a company sets prices based on the cost of producing, selling, and distributing the product PLUS a fair rate of return for the company's efforts and risks - calculate cost, add markup - you can make your profit margin TOO LOW - you have to look at VALUE as well as cost - LOW-COST PRODUCERS = companies with lower costs can set lower prices and have smaller profit margins --> these companies achieve a high volume through low prices, which minimizes the cost of production. COMPETITION-BASED PRICING - TRADITIONAL: when compabies set prices based on their competitors' prices, strategies, costs, and offerings - competition is already established --> EX: you won't pay the same price for a Chromebook as you would for a MacBook *No matter what price you charge, be certain to give customers superior VALUE for that price*
Integrated marketing communications
ELEMENTS IN THE COMMUNICATION PROCESS: 1. direct marketing - direct contact with carefully targeted individual consumers to get an IMMEDIATE response and build lasting customer relationships - fastest growing form of marketing - INCLUDES: catalogs, direct-response tv, kiosks, mobile marketing, a sales circular mailed directly to you 2. Integrated marketing communications (IMC) - carefully integrating and coordinating the company's many communications channels to deliver a clear and compelling message to customers about the company and its products --> message must be consistent EXAMPLE = WARNER LAMBERT - the maker of Benedryl - incorporates advertising and PR to create brand awareness - offers a toll-free number for customers to get health information - publishes a newsletter to help customers cope with allergy problems - these are all part of the company's INTEGRATES MARKETING COMMUNICATIONS
online marketing
ONLINE MARKETING: efforts to market products and services and build customer relationships via the Internet INTERNET: a vast web of computer network that connects users of all types to each other and a large information repository - 19% INCREASE in customer satisfaction when companies use Twitter for customer service CLICK-ONLY COMPANIES: dot-coms that operate ENTIRELY online - have no bring-and mortar-presence --> E-TAILERS = online stores like Zappos or Expedia.com --> SEARCH ENGINES AND PORTALS = online search sites like Google, Yahoo, and MSN (Google uses search engine optimization) --> TRANSACTION SITES = like Ebay and Craigslist --> CONTENT SITES = like espn.com and encyclopedia britannica --> ONLINE SOCIAL NETWORKS = like Facebook and Twitter CLICK-AND-MORTAR COMPANIES: brick-and-mortar companies that aded online marketing to their operations; this is VERY common - tend to have bigger online success than click-only competitors - combing an online and physical component creates a system that complements both the website and the physical store BUSINESS-TO-CONSUMER (B2C) ONLINE MARKETING: businesses selling goods and services online to final consumers - EX: WALMART - sells to consumers through its website - most businesses are B2C - AMAZON selling to customers BUSINESS-TO-BUSINESSES (B2B) ONLINE MARKETING: businesses selling online marketing to reach new business customers, serve current customers more effectively, and obtain buying efficiencies and better prices - EX: CISCO - provides services and training for businesses - businesses selling THROUGH Amazon CONSUMER-TO-CONSUMER (C2C) ONLINE MARKETING: online exchanges of goods and information between final consumers - EX: EBAY AND ETSY - allow customers to sell to other customers - C2B = customers giving feedback to company **diagram on page 21** BLOGS: online journals in which people post their thoughts, usually on a narrowly defined topic CONSUMER-TO-BUSINESS (C2B) ONLINE MARKETING: online exchanges in which consumers seek out sellers, learn about sellers' offers, initiate purchases, and possibly drive transaction terms CORPORATE (or brand) WEBSITE: website designed to build customer goodwill, collect customer feedback, and supplement other sales channels rather than sell the company's products directly MARKETING WEBSITE: engages customers to move them closer to a direct purchase or other intended marketing outcome - EX: amazon - tries to make sale rather than just promote the brand image --> THE 7 C'S OF EFFECTIVE WEBSITE DESIGN: include the following - 1. Context = layout and design 2. Content = text, pictures, video (information and substance matter) 3. Customization = allows user to customize site - ex: "your" daily deals on a website 4. Communication = user-site communication and user-user communication - asking the site for something - talking to other users 5. Community = user-to-user communication - leaving a review - getting feedback 6. Connection = site is linked to other sites 7. Commerce = you can actually purchase on the website OMNI-CHANNEL RETAILING: creates a seamless cross-channel experience - integrates in store, online, and mobile - EX: STARBUCKS mobile pickup --> seamless, automates key tasks, enhances the retail experience BRANDED COMMUNITY WEBSITES: presents brand content to engage customers - creates a customer-brand community - EX: ESPN SOCIAL MEDIA MARKETING: there are advantages and disadvantages: - ADVANTAGES = 1. targeted and personal 2. interactive 3. immediate and timely 4. cost-effective 5. engagement/social sharing capabilities - DISADVANTAGES = 1. effective usage is uncertain 2. difficult to measure results 3. largely controlled by USERS --> celebrities can influence how platforms do - influencers aren't as intense and frequency isn't as high - SHARED = reposting - OWNED = your own media - EARNED = a 3rd party posting about you ONLINE ADVERTISING: advertising that appears while consumers are exploring the web - companies want to appear higher on search engine results - overlaps with social media marketing now - sweet spot for influencers = 10k-100k followers - SEARCH RELATED (contextual ads) = ads that appear alongside search engine results --> text and links --> includes display ads, search-related ads, online classified, pop-up ads, virtual marketing, interstitials, search-related ads, content sponsorship, alliances, and affiliate programs - INSTAGRAM = people don't spend a lot of time on it (low-intensity) - VIRAL MARKETING = internet version of word-of-mouth marketing; a website, email, video, message, or other marketing event that is so infectious that the customers seek it out and pass it along to others --> EX: "Like a Girl" ad - 85 million views - THUMBREAKER = something that makes you stop scrolling --> encourages discontinuity EMAIL MARKETING: sending highly targeted, personalized email marketing messages to build relationships with customers - NOT the same as SPAM - highly effective when done correctly - RETURN is $42 for ever $1 spent --> EXTREME high rate of return SPAM: unsolicited, unwanted commercial email messages MOBILE MARKETING: marketing to on-the-go customers through cell phones, smartphones, tablets, and other mobile devices
Personal selling and sales promotion Quote of the day: "You are putting together and executing a plan to convince prospective customers to become new customers"
PERSONAL SELLING: personal presentations by a company's sales force to make sales and build customer relationships - practitioners are called salespeople, sales representatives, agents, district managers, account executives, sales, consultants, and sales engineers - most EXPENSIVE promotional tool - most EFFECTIVE tool for building customer relationships - personal interaction allows for feedback and adjustments - manufactures have had to seek new ways of breaking through sales promotion clutter via large coupon values, more dramatic POP displays, or use of interactive media SALESPERSON: can be anyone from order takers to order getters - ORDER TAKER - asking "do you want fries with that" is a kind of selling - individual representing a company to customers - performs one or more of these activities: prospecting, communicating, selling, servicing, information gathering, relationship building (we remember bad experiences) - represents customers to the company - BOUNDARY-SPANNING: represents the company to customers and brings information from the customers to the company (salespeople are always touching customers) - find and develop new customers - for many customers, the salesperson IS the company: --> poor relationships result in customers' poor impression of the company --> the salesperson is often the only tangible idea about the company that the customers can grasp - sales and marketing staff should work closely but often do not because companies treat them as separate functions - salespeople must be able to LISTEN SALES FORCE: the interpersonal arm of the promotion mix --> advertising is largely non-personal communication, but personal selling always involves interpersonal interactions TRANSACTION-FOCUSED SELLING: characterized by SHORT-term thinking - making the sale has priority over most other considerations - COMPETITIVE interactive between buyer and seller --> self-interest oriented salesperson - IGNORES customer equity RELATIONSHIP-FOCUSED SELLING: characterized by LONG term thinking - priority of relationship building over sales - buyer-seller interaction is COLLABORATIVE - CUSTOMER-ORIENTED salesperson 3 KINDS OF APPROACHES: 1. NEED-BENEFIT APPROACH - seller: - initiates conversation - assumes needs - presents features and benefits to assumed needs - trial closes - handles objections - closes; customer has the opportunity to accept or object throughout the approach 2. PRESENTATION APPROACH - seller: - initiates conversation - assumes needs - presents features and benefits to assumed needs - closes; customer has the opportunity to accept or reject at the CLOSING step 3. DIALOGUE APPROACH - seller: - initiates conversation WITH the customer - they work through exploring problems and needs - collaboratively identifying goals - discuss product-related solutions - resolve concerns - confirming that needs and problems have been addressed - seller then requests commitment from the customer, who has the opportunity to accept or reject
major price strategies
PRICE: customer cost - what you charge customers for a product or service - the sum of the values that customers give up in return for the benefits of having the product or service - the ONLY marketing mix element that produces REVENUE - one of the MOST FLEXIBLE elements in the marketing mix - biggest problem facing marketing executives (many companies do not handle pricing well) - a key strategic tool for capturing customer value and building customer relationships - INCLUDES = time, inconvenience, travel, delivery, installation, training, opportunity costs - LEFT DIGIT EFFECT = we encode a price of $7.99 as $7 VALUE: customers must believe that the value delivered is greater than the price before they will buy - must define what is being sold and assess its financial and emotional value to the customer PRICING STRATEGY: a company must choose a price that falls somewhere between too low to produce a profit and too high to produce customer demand - PRICE FLOOR = no profits BELOW this price; reflects product costs, fixed and variable - PRICE CEILING = no demand ABOVE this price; reflects consumer perceptions of value - EXTERNAL FACTORS = include competitors' strategies and pricing, marketing strategy and mix, and nature of the market and its demand *diagram on page 24* CUSTOMER VALUE-BASED PRICING: when companies set prices based on the BUYERS' PERCEPTIONS of product/service value rather than on the companies' cost VALUE-BASED PRICING: when companies offer the right combination of quality and good service at a fair price - MARKETERS LIKE THIS - fast food restaurants use this strategy with their value menus and meals - clothing companies do this by offering a lower-cost version of the higher-end products also available in the marketplace - EVERYDAY LOW PRICING = a type of value-based pricing in which companies charge a constant low price with few or no price reductions VALUE-ADDED PRICING: when a company attaches value-added features or services to a product to differentiate its offerings while also charging a higher price for products and services GOOD-VALUE PRICING: offering just the right combination of quality and good service at a fair price TYPES OF COSTS: - Fixed Costs + Variable Costs = Total Costs FIXED COSTS (OVERHEAD): costs that do not vary based on production or sales level - these costs include property, plant, and equipment VARIABLE COSTS: costs that vary related to the level of production - EX = the materials for an additional product would be additional variable costs, but would not increase costs like rent or equipment (because rent and equipment are fixed costs) TOTAL COSTS: sum of the fixed and variable costs for any given level of production COST-PLUS PRICING (MARKUP PRICING): adding a STANDARD MAKEUP to the product cost - this method often ignores consumer demand by somewhat arbitrarily increasing the retail price BREAK-EVEN PRICING (TARGET-RETURN PRICING): when companies set prices to break even on the costs of making and marketing a product - can also refer to when companies set a price to result in a target return - this is where total revenue equals total costs and the lines intersect
product mix pricing strategies
PRODUCT LINE PRICING: setting the price steps between various products in a product line based on cost differences between products, competitors' prices, and customers' evaluations of different features - EX: APPLE shows its mac models with the prices increasing from left to right and shows the differences between each model/price point offered OPTIONAL PRODUCT PRICING: how the company prices optional or accessory products to go with the main product - EX: iClickers at PSU CAPTIVE PRODUCT PRICING: when the company sets a low price for a main product to lure customers into the product bundle, effectively holding customers captive - EX: include replacement blades for a razor --> companies must take care to find the right balance between the main-product pricing and the captive-product pricing - EX: Wii or PS3 - the gaming console is relatively inexpensive, but the games you must buy for it are priced fairly high - EX: Printers - they are relatively inexpensive, but the ink or toner you need to use them is more expensive PRODUCT BUNDLE PRICING: combining several products at a reduced, bundled price - EX: Comcast does this when offering discounts to customers who purchase television, internet, home security, and voice services as a package - encourages customers to use aspects of the product bundle they wouldn't otherwise have used - EX: McDonald's value meal is cheaper than buying the individual items separately from the menu BY-PRODUCT PRICING: setting a price for by-products to make the main product's price more competitive - used to offset costs of disposing of by-products to make the main products price more competitive - this in turn reduces the main product's price - EX: customers will pay for animal excrement to use as fertilizer
Public relations Quote of the day: "If I had one dollar left, I'd spend it on PR." - Bill Gates
PUBLIC RELATIONS: building good relationships with the company's various publics - your ULTIMATE GOAL = to generate awareness - BRIDGING THE GAP BTWN CUSTOMERS AND MEDIA - obtain favorable publicity - build a good corporate image (part of BRANDING) - handle unfavorable rumors, stories, and events - be credible - staff is paid to develop and circulate media and manage events (here you are not paying for space or time in advertising, so it is cheaper than advertising) PR DEPARTMENT FUNCTIONS: includes press releases, press agency, product publicity, public affairs, lobbying, investor relations, development - firms use PR to connect with the media and customers - media uses publicity to connect with customers IMPACT OF PR: PR is important because it can impact public awareness at a lower cost than advertising - staff can develop a good story, circulate it, and generate attention for the company or product - has been describes as marketing's stepchild because of its limited and scattered use - marketing managers and PR staff do not always speak the same language because marketing staff is thinking about brand building and sales, while PR staff is focused on simply communication MAJOR PR TOOLS: PR uses various tools to find or create favorable news about the company and its products; tools include - 1. special events - THON, speeches, press conferences, grand openings, press tours 2. written materials - brochures, technical reports, articles, company newsletters 3. Audiovisual materials - DVDs, online videos 4. Corporate identity materials - logos, stationary, brochures, signs 5. Public service activities 6. Internet - website, blogs, social networks 7. Buzz marketing - (ex: I <3 NY) 8. corporate websites UNDERCOVER MARKETING: aka STEALTH marketing - can also be called BUZZ marketing --> you are creating buzz and getting people talking about the product - marketing to people who do not know they are being marketed to - EXAMPLE: using a new product in STARBUCKS and having people watch you use it - EXAMPLE: strangers starting up conversations about products using fake tourists to spread the word (asking people to take pictures of them) - ADVANTAGES = 1. cost-effective 2. people dont put up a wall to avoid advertisements because they aren't expecting them
Promotion - advertising and public relations
QUOTE OF THE DAY: "we dont bend; we #Break" - Kit Kat - promotion: "give me a break" tagline/jingle - owned by Nestle/Hershey - this tagline/commercial campaign is also an example of OWNED MEDIA
advotainment
a company creates an ad for placement at the beginning of videos on YouTube. The ad itself is like a short movie. It goes viral because viewers enjoy it so much. This is an example of advotainment.
the promotion mix
you are putting together and executing a plan to CONVINCE PROSPECTIVE CUSTOMERS TO BECOME NEW CUSTOMERS. *model on page 2* PROMOTION MIX (marketing communications mix) - specific blend of promotion tools that: 1. persuasively communicate customer value 2. build customer relationships 3. deliver a CLEAR and compelling message - SHORT TERM PROMOTIONS (ex) = Coupons, sales - LONG TERM PROMOTIONS (ex) = brand image work, Blogs, Twitter --> these still can be influenced by the macroenvironment --> ex: COVID19 influencing promotions of all kinds (McDonalds ad about ordering food during COVID19) - 4 TYPES OF MEDIA: 1. PAID - company literally pays for advertising --> your company is purchasing advertising --> Ex: KitKat = "Give Me a Break" 2. OWNED - company pages, like FB and IG --> your company manages these pages/accounts 3. EARNED - 3rd party mentions --> other people mention your company/product 4. SHARED - retweet, republish --> other people retweet or republish your work that your company has created or published -TERMS: 1. advertising - any paid presentation and promotion of ideas, goods, or services by company 2. sales promotion - short term incentives that encourage customers to buy your product 3. Personal selling - company representatives getting out there and personally selling the products to your target audience 4. Public relations (PR) - building good relationships by: - getting good publicity - building up a good corporate image - handling or heading off problems (like negative rumors, stories, or events) - PR INCLUDES: press releases, sponsorships, events and websites - EX: NYC used "I <3 NY" campaign to change its public image - EX: APPLE used pr to promote new products --> Steve Jobs made speeches to encourage people to buy apple products - EX: companies use pink breast cancer tie-in to promote their products and awareness - role of publicity = the company uses PR targeted at the media to reach customers 5. direct marketing - direct contact with carefully targeted individual consumers MAJOR DECISIONS IN ADVERTISING: 1. objective setting = communication sales 2. Budget decisions = affordable approach, % of sales, Competitive Parity, Objective and Task 3. Message Decisions = Message strategy, message execution 3. Media decisions = reach, freq, impact, Major media types, Media vehicles, media timing (it is with the message decisions) 4. Advertising evaluation = communication, impact, sales and profit, impact, return on advertising
