MKT 300 STUDY GUIDE EX 3 - UA

What is sales promotion? What is it designed to accomplish and why has it gained importance?

Sales Promotion - an activity and/or material intended to induce resellers or salespeople to sell a product, typically in the short term. Designed to stimulate resellers' demand and effectiveness, increasing consumer demand, or both. Gained importance due to the expense of advertising.

What are the general advantages and disadvantages of sales contests and buy-back allowances?

Sales contest advantages -can achieve participation at all distribution levels. Sales contest disadvantages - positive effects may be temporary, prizes usually expensive. Buy-back advantages - foster cooperation during an initial sales promotion effort, stimulate repurchase afterward. Buy-back disadvantages - expense.

What is a target audience and how does it relate to segmentation?

Target Audience - the group of people whom advertisements are aimed. Advertisers research and analyze advertising targets to establish an information base to establish segmentation for a campaign.

What is team selling and why is it increasingly important?

Team Selling- the use of a team of experts from all functional areas of a firm, led by a salesperson, to conduct the personal selling process. More important today because of team buying (more people involved in the prospect's buying process), long time periods involved, and products and solutions are increasingly complex.

Order Lead Times

The average time lapse between placing the order and receiving it.

What are the typical criteria for qualifying prospects and turning them into leads?

To determine if prospects turn into leads sellers may ask: Does the prospect represent a good fit in our target market? Has the prospect indicated interest? And do they have the ability and authority to buy?

Competition-Matching

Trying to match competitors' advertising outlays (often with the goal of preserving market share).

Why is couponing the most common consumer sales-promotion technique, and what are the trends in coupon redemption rates?

Typical redemption rates of printed coupons range from 0.5%-2%. Average coupon redemption rates from email coupons via desktop channels are at 2.7%. Coupons via smartphone apps have rates between 8%-16%. Retailers who offer both email and SMS coupons see rates of 15%-25%. Couponing is the most common technique because it stimulates interest and encourages consumers to purchase products.

What is price competition?

Emphasizing price as an issue and matching or beating competitor's prices.

Exclusive What Circumstance Is It Most Appropriate?

Exclusive - using a single outlet in a fairly large geographic area to distribute a product. Suitable for products purchased infrequently, consumed over a long period of time, or that require a high level of customer service or information. Used for expensive, high-quality products with high profit margins and is not appropriate for convenience products and many shopping products.

What are the keys to effective sales contests (from in-class video)?

Focus on key activities, keep the contest short, talk about the concert. https://www.youtube.com/watch?v=52nM6OP6wAA&t=33s

What is required for price competition to be a successful strategy?

For this to be successful, you need to be the low-cost seller of the product and be able to change prices rapidly and aggressively.

What is franchising as a business model?

Franchising - an arrangement in which a supplier (franchisor) grants a dealer (franchisee) the right to sell products in exchange for some type of consideration.

What are advantages of (free) sampling? Why is it the most expensive sales-promotion method?

It is the most expensive because production and distribution entail high costs. Advantages include an increase in sales, potential new loyal customers.

Mail Order Wholesalers

Limited-service wholesalers that sell products through catalogs

Drop Shippers (Desk Jobbers)

Limited-service wholesalers that take title to goods and negotiate sales but never actually take possession of products

Truck Wholesalers (Jobbers)

Limited-service wholesalers that transport products directly to customers for inspection and selection

Cash and Carry Wholesaler

Limited-service wholesalers whose customers pay cash and furnish transportation (Limited-Service)

Logistics

Logistics is responsible for roles such as: moving goods from suppliers to buyers, moving finished goods to the customer, moving work-in-process materials within a firm, returning or recycling goods, and storing items along the way in supply chains.

Percentage of Sales

MOST COMMON METHOD Multiplying the firm's past and expected sales by a standard percentage (often an industry average).

What is a marketing "channel"?

Marketing Channel - a group of individuals and organizations that direct the flow of products from producers to customers within the supply chain.

What is markup as a pricing strategy?

Markup - the difference between the cost of a good and its selling price.

What are refund and rebates and loyalty ad frequent-user programs? What are their uses?

Money refunds - sales-promotion techniques that offer consumers a specified amount of money when they mail in a proof of purchase, usually for multiple product purchases. *****Used primarily to promote trial use of a product.* Rebates - sale-promotion techniques in which a consumer receives a specified amount of money for making a single product purchase. *****Used to reinforce brand loyalty and to encourage product purchase.* Loyalty Ad Frequent-user Programs - provides rewards for customers for spending money at a certain business seen as rewarding customers for their "loyalty" to the business. *****Used to track customer purchases, generates data to contribute information about consumers.*

When it comes to psychological pricing, what are the various forms of odd-even pricing and why do they seem to work?

Odd-Even Pricing - ending prices in odd or non-round numbers. .95 indicates normal selling price, .50 indicates sale. Numbers like $4.99 may be seen as $4 and the more specific the price the more consumers believe it's the lowest price possible.

What are off-price retailers?

Off-price Retailers - stores that buy manufacturers' seconds, overruns, returns, and off-season merchandise for resale to consumers at deep discounts.

What is premium money ("spiff")? What scenarios is it most effective?

Premium Money - extra compensation to salespeople for pushing a line of goods. Is appropriate when personal selling is an important part of the marketing effort.

What are premiums and when are they most effective?

Premiums - items offered free or at a minimal cost as a bonus for purchasing a product. Most effective when a brand has high equity and there is a good fit between the product and the premium.

Procurement

Processes to obtain resources to create value through sourcing, purchasing, and recycling including materials and information. Gives marketers a chance to obtain resources from companies that provide them with the best benefits (lower prices, fast accessibility, etc.).

What is product placement and what are its advantages and disadvantages for marketers?

Product placement - the paid inclusion of branded products or brand identifiers through audio and/or visual means, within mass media programming. Advantages: reaches target audience in subtle way, used to increase sales, increase brand awareness, and draw in customers. Disadvantages: expensive, difficult to monitor efficiency, often associated with actors.

Limited Service Wholesaler

A merchant wholesaler that provides some services and special in a few functions

Full Service Wholesaler

A merchant wholesalers that performs the widest range of wholesaling functions.

Source

A person, group, or organization with a meaning it tries to share with a receiver/audience.

Direct Mail Advantages/Disadvantages

Advantages: Little wasted circulation, highly selective, circulation controlled by advertiser, few distractions, personal, stimulates actions, use of novelty, relatively easy to measure performance, hidden from competitors. Disadvantages: Very expensive, lacks editorial content to attract readers, often thrown away unread as junk mail, criticized as invasion of privacy, consumer must choose to read the ad.

What is the difference between "push" and "pull" strategies and when is each best used?

Push strategies try to "push" products onto consumers which things like brand reps and displays. Pull strategies try to "pull" the consumer into the product by using things like coupons and contests/prizes.

Supply Chain

All the organizations and activities involved with the flow and transformation of products form raw materials through to the end customer. Affects how businesses produce products to sell to their target audience.

What are the five major modes of transportation?

Railroads, trucks, waterways, airways, and pipelines.

Sales Promotion Advantages/Disadvantages

An activity or material that acts as a direct inducement, offering added value or incentive for the product to resellers, salespeople, or customers. Fast growing area. Advantages: improves effectiveness of other promotion-mix ingredients. Disadvantages: expense.

What is co-operative ("co-op") advertising and how does it work for both manufacturers and retailers?

Cooperative Advertising - an arrangement in which a manufacturer agrees to pay a certain amount of a retailer's media costs for advertising the manufacturer's products. Retailer must show proof that advertisements did appear before the manufacturer pays the agreed-upon portion of the advertising costs.

General Merchandise

Have a wide product mix but limited depth within product lines. (Full-Service)

Stockouts

Shortage of products.

What are the costs of carrying too much inventory?

Costs of carrying too much inventory include damage, theft/pilferage, obsolescence, excess capital invested, and freight and storage.

Prestige Product Demand Curve:

*(raising prices could lead to higher or lower quantities sold)* With a demand curve for prestige products, low prices may indicate that it is not as prestige as people think and may be considered a cheap quality, and high prices may be TOO high for people to afford or be willing to pay.

Normal Demand Curve:

*(raising prices leads to lower quantities sold)* In a normal demand curve, higher prices lead to less products sold because less people cannot afford it or are willing to pay the higher price.

Public Relations Advantages/Disadvantages

A broad set of communication efforts used to create and maintain favorable relationships between an organization and its stakeholders. Should be viewed as an ongoing program rather than a set of tools.

Coded/Decoded Messages

A coded message is the message from the source to the communications channel, a decoded message is the message given from the communication channel to the receiver. The process of coding messages involves converting your message into a series of signs or symbols. The source must consider certain characteristics of the receiver and needs to use signs or symbols that the receiver uses and understands. It also involves the decoding process which is where signs or symbols are converted into concepts and ideas.

Advertising Advantages/Disadvantages

A paid non-personal communication about an organization and its products transmitted to a target audience through mass media. Advantages: extremely cost-efficient when it reaches a vast number of people at a low cost per person and visibility gained can enhance an organization's image. Disadvantages: absolute dollar outlay can be high, rarely provides rapid feedback, often difficult to measure effect on sales, and less persuasive than personal selling.

Personal Selling Advantages/Disadvantages

A paid personal communication that seeks to inform customers and persuade them to purchase products in an exchange situation. Advantages: involves more specific communication than advertising, has greater impact on customers, and provides immediate feedback. Disadvantages: expense (hiring, training, commissions) and availability of talent.

What are the different roles of pre-tests and post-tests in creating and evaluating ad campaigns?

A pre-test is an evaluation of advertisements performed before a campaign begins. A post-test is an evaluation of advertising effectiveness after the campaign.

What are ad agencies? How do they work with companies and how do they get paid?

Ad agencies help organizations develop their advertising campaign. They handle copywriting, artwork, technical production, and formulation of the media plan. They are typically paid as a percentage (commission) of the money spent on media (standard 15% but is declining), sometimes agencies are paid fees for services such as research, consulting, etc.

What are the advantages and limitations of externally focused PR and publicity in the promotional mix?

Advantages - credibility, news value, significant word-of-mouth communications, a perception of media endorsement, and low cost compared to advertising. Limitations - media personnel must judge company messages to be newsworthy if the messages are to be published or broadcast at all, and there is no control over the content of the timing of the communication.

Outdoor Advantages/Disadvantages

Advantages: Allows for frequent repetition, low cost, message can be places close to point of sale, geographic selectivity, operable 24 hours a day, high creativity and effectiveness. Disadvantages: Message must be short and simple, no demographic selectivity, seldom attracts readers' full attention, criticized as traffic hazard and blight on countryside, much waster coverage, limited capabilities.

Magazines Advantages/Disadvantages

Advantages: Demographic selectivity, good reproduction, long life, prestige, geographic selectivity when regional issues are available, read in leisurely manner. Disadvantages: High costs, 30- to 90-day average lead time, high level of competition, limited reach, communication less frequently.

Newspapers Advantages/Disadvantages

Advantages: Each large audience, purchased to be read, geographic flexibility, short lead time, frequent publication, favorable for cooperative advertising, and merchandising services. Disadvantages: Not selective for socioeconomic groups or target market, short life, limited reproduction capabilities, large advertising volume limits exposure to any one advertisement.

Digital Media Advantages/Disadvantages

Advantages: Immediate response, potential to reach a precisely targeted audience, ability to track customers and build databases, highly interactive medium, real-time analytics. Disadvantages: Costs of precise targeting are high, inappropriate ad placement, effects difficult to measure, concerns about security and privacy.

Radio Advantages/Disadvantages

Advantages: Reaches 95% of consumers, highly mobile and flexible, very low relative costs, ad can be changed quickly, high level of geographic and demographic selectivity, encourages use of imagination. Disadvantages: Lacks visual imagery, short life of message, listeners' attention limited because of other activities, market fragmentation, difficult buying procedures, limited media and audience research.

TV Advantages/Disadvantages

Advantages: Reaches large audiences, high frequency available, dual impact of audio and video, highly visible, high prestige, geographic and demographic selectivity, difficult to ignore, on-demand capabilities. Disadvantages: Very expensive, highly perishable message, size of audience not guaranteed, amount of prime time limited, lack of selectivity in target market.

What are advantages and disadvantages of personal selling as part of the promotional mix?

Advantages: gives marketers the greatest freedom to adjust a message to satisfy customers' information needs, is the most precise of all promotional methods which enables marketers to focus on the most promising sales prospects, and is the most effective way to form relationships with the customers. Disadvantages: is generally the most expensive element in the promotion mix, and it's difficult to recruit, train, and retain an excellent sales team.

What are agents and brokers? What makes them different than wholesalers (do they ever take ownership of products)?

Agents - represent either buyers or sellers on a permanent basis Brokers - bring buyers and sellers together temporarily Different from wholesalers because they never take title to products like wholesalers do.

How do the five major modes of transportation compare in terms of speed, cost, and flexibility?

Airways are the most expensive right above trucks, while waterways are the cheapest right below pipelines. Trucks are the most flexible while pipelines are the most automated. Most Expense To Least Expense: 1. Airways 2. Trucks 3. Railroads 4. Pipelines 5. Waterways Trucks = Most Flexible Pipelines = Most Automated

Noise

Anything that reduces a communication's clarity and accurac.

Objective-and-Task

Budgeting for an advertising campaign by first determining its objectives and then calculating the cost of all the tasks needed to attain them.

What is bundle pricing?

Bundle Pricing - packaging together two or more complementary products and selling them for a single price. The single price is generally less than the sum of the prices of the individual products.

Limited-Line Wholesalers

Carry only a few product lines but many products within those lines. (Full-Service)

Specialty-Line Wholesalers

Carry only a single product line or a few items within a product line. (Full-Service)

What is category management in retailing?

Category Management - a retail strategy of managing groups of similar, often substitutable, products produced by different manufacturers. Important for developing a collaborative supply chain.

Differential Pricing

Charging different prices to different buyers for the same quality and quantity of product. To work, the market must consist of multiple segments with different price sensitivities.

What are common sources of prospects, and what is a "qualifying" prospect?

Common sources include company sales records, trade shows, databases, public records, responses to ads, seminars and meetings, referrals, etc. A qualifying prospect is someone who resembles the seller's ideal customer profile.

What are the three types of media scheduling patterns (continuous, flighting, pulsing) and what type of products are each best suited for?

Continuous - advertising runs at a constant level with little variation throughout the campaign period. For products and services consumed on a consistent basis throughout the year (ex. toothpaste). Flighting - advertisements run for set periods of time, alternating with periods in which no ads run. For products with distinct seasonal patterns (ex. chocolate Easter eggs). Pulsing - during the entire campaign, a portion of advertising runs continuously, and during specific time periods additional advertising is used to intensify the level of communication with the target audience. For products consumer year round but with some seasonality (ex. swimwear).

What is a distribution center and what types of purposes does it commonly serve for marketers?

Distribution Center - large, centralized warehouses that focus on moving rather than storing goods.

What are the primary advantages and disadvantages of the franchise model for franchisors and franchisees?

Franchisors advantages - gains fast and selective product distribution without incurring the high cost of constructing and operating its own outlets, the franchisee is likely to be very highly motivated to succeed, and success of the franchise means higher income for the franchisor. Franchisor disadvantages - gives up a certain amount of control when entering into a franchise agreement with an entrepreneur, individual establishments may not be operated exactly according to the franchisor's standards. Franchisee advantages - able to start a business with limited capital and benefits from the business experience of others, lower failure rates than independent retail establishments and are often more successful because they can build on the established reputation of the national brand, can obtain guidance and advice from the franchisor at little to no cost if there are problems, and received materials for local advertising and can benefit from national promotional campaigns sponsored by the franchisor. Franchisee disadvantages - franchisor can dictate many business aspects, franchisee must pay to use franchisor's name, products, and assistance, one- time franchise fee and continuing royalty and advertising fees (often collected as a percentage of sales), must often work very hard with long hours and days, franchise agreements are not uniform.

Rack Jobbers

Full-service, specialty-line wholesalers that own and maintain display racks in stores. (Full-Service)

As discussed in class: why do grocery stores carry products with a negative markup (mean that they lose money on the sale)?

Grocery stores carry products with a negative markup because it's typically a brand customers will come to the store for, and then they are inside to buy other products.

What is integrated marketing communication and why is it important for marketers?

IMC - a planning process designed to assure that all brand contacts received by a customer or prospect for a product, service, or organization are relevant to that person and consistent over time". It's important because having an awareness of IMC allows companies to create multi-pronged marketing campaigns that target wider audiences.

What is changing (trends) in the world of personal selling?

Increased professionalism, driven by data and buyer insights, AI and predictive analytics, more focus on alignment between sales and marketing.

What are the different roles of "inside sales" and "outside sales" on a sales team?

Inside sales take orders, follow up on deliveries, and provide technical information. Outside sales are more consultative and are built on developing long-term relationships.

Intensive What Circumstance Is It Most Appropriate?

Intensive - using all available outlets to distribute a product. Appropriate for products that have a high replacement rate, require almost no service, or are bought based on price cues. Must be available at a store nearby and be obtained with minimal search time.

What is inventory management?

Inventory management - developing and maintaining adequate assortments of products to meet customers' needs.

What does price elasticity of demand mean to marketers?

It can tell marketers how their demand will be affected by a change in price (which is the easiest to change of the product mix).

What does logistics involve?

It involves order processing, inventory management, materials handling, warehousing, and transportation.

What is price elasticity of demand (sometimes just called "elasticity")?

Price elasticity of demand is a measure of the sensitivity of demand to changes in price.

For "brick-and-mortar" retailers, what are the primary considerations for locating stores?

Primary considerations for locating stores are position of the firm's target market within the trading area, kinds of products being sold, availability of public transportation, customer characteristics, and placement of competitors' stores.

What is the difference between a private and a public warehouse?

Private warehouses are company-operated facilities for storing and shipping their own products. Public warehouses are storage space and related logistics facilities that can be leased by companies.

What are the differences between advertising and public relations? How can they work together?

Public relations is defined as communication efforts used to create and maintain favorable relations between an organization and it stakeholders. Advertising communicates to a target audience with the intent to inform, persuade, or to remind. They can work together to create one consistent message for the target audience.

What are reach, frequency, and gross rating points when it comes to measuring the impact of an advertising campaign?

Reach - How many people or what percentage of the target audience were exposed to our ads? Frequency - How many times, on average, were they exposed to our ads? Gross Rating Points - What is the total communication impact of the campaign, across media channels or over a particular channel?

What are the differences among recognition tests, unaided recall tests, and aided recall tests?

Recognition Test - A posttest in which respondents are shown the actual ad and are asked if they remember seeing or hearing it. Unaided Recall Test - A posttest in which respondents are asked to identify advertisements they have seen recently but are not given any recall clues. Aided recall test - A posttest that asks respondents to identify recent ads and provides clues to jog their memories.

What are the primary sources of value that retailers can offer?

Retailers: add value for customers by providing services and assisting in making product selections; can enhance customers' perception of the value of products by making buyers' shopping experiences easier or more convenient; can facilitate comparison shopping which allows customers to evaluate different options; have sales personnel who know how products can satisfy customer needs or solve problems; can add significant value to the supply chain; play a major role in creating time, place, possession, and (sometimes) utility; and perform marketing functions that benefit ultimate consumers.

What is the role of "safety stock"?

Safety stock's role is to provide a safety net of inventory to prevent a firm from experiencing a stockout.

What are the roles of sales enablement, customer success teams, and account management?

Sales Enablement- provides salespeople with what they need to engage their target buyers including content that sales will provide to the buyer and the best practices, research, and tolls that sales will consume internally. Customer Success Teams - makes sure that a product helps customers achieve whatever goals they have Account Management - part of the sales effort, usually is responsible for customer retention, upsells, and cross-sales. First contact from customer who have a specific question or problem.

What is the difference between sales-based and communication-based objectives in advertising (and which advertising is generally most effective in achieving)?

Sales-based objectives focus on increasing sales or market share communication-based objectives focus on increasing product/brand awareness, consumers' knowledge and attitudes, and awareness of good consumer behavior.

Selective What Circumstance Is It Most Appropriate?

Selective - using only some available outlets in an area to distribute a product. Appropriate for shopping products. Desirable when a special effort, such as customer service from a channel member, is important to customers.

Price Skimming

Set a relatively high price at first and then lower it over time. Most popular with electronics, good for inelastic demand, encourages competition.

Penetration Pricing

Set a relatively low price to drive market share/value perceptions. Designed for high market share, good for elastic products, discourages competition.

Who are the "stakeholders" on PR? How do they compare to the target audience for ad campaigns?

Stakeholders can be employees in the company, the management/shareholders of the company, the community members, consumers, the target audience, and anyone else who has some sort of stake in the company. The target audience for an ad campaign are generally consumers while stakeholders include other groups of people.

What do stockout cost include?

Stockout costs include lost sales, future deals, and image and reputation.

Safety Stock

The amount of extra inventory a firm keeps to guard against stockouts resulting from above-average usage rates and/or longer-than-expected lead times.

Distribution

The decisions and activities that make products available to consumers when and where they want to purchase them. This impacts how marketers can get their products to their target audience.

What are the different roles and obligations of franchisors and franchisees?

The franchisor may receiver a percentage of total sales in exchange for furnishing equipment, buildings, management know-how, and marketing assistance to the franchisee. The franchisee supplies labor and capital, operates the franchised business, and agrees to abide by the provisions of the franchise agreement.

Receiver/Audience

The individual, group, or organization that decodes a coded message.

Reorder Point

The inventory level that signals the need to place a new order.

Channel Capacity

The limit on the volume of information a communication channel can handle.

What are the major marketing objectives of promotion?

The major objectives of promotion are to inform the market, increase demand, and differentiate a product.

Usage Rates

The rate at which a product's inventory is used or sold during a specific time period.

Feedback

The receiver's response to a decoded message. Can be verbal and nonverbal. Feedback can occur through talking, teaching, smiling, nodding, eye movements, and other body movements and postures.

Channel

The way in which a message is given to the receiver (commercial, ad, radio, etc.).

Wholesalers Common Functions

They are primarily responsible for physical distribution of products from manufacturers to retailers. They may also: establish information systems to help producers and retailers manage the supply chain; use information technology and the internet to share info among intermediaries, employees, customers, suppliers, and facilitating agencies; and make databases and marketing information systems available to their supply chain partners to facilitate order processing, shipping, and product development and to share information about changing market conditions and customer desires.

How can off-price retailers charge less while still making a profit?

They can charge less and still make a profit because they are buying their products at such a low price.

Wholesalers

Wholesalers - an individual or organization that sells products that are bought for resale, for making other products, or for general business operations.

What is the practical result of elastic versus inelastic demand when price changes?

With elastic demand, a slight decrease in price results in a relatively large increase in demand and with inelastic this is the opposite.

What is word-of-mouth marketing and which types of products is it most important for?

Word-of-Mouth Marketing - personal, informal exchanges of communication that customers share with one another about products, brands, and companies. Most effective for new-to-market and more expensive products.