Unit 2 Marketing Exam

promotional pricing

- loss-leader pricing-a pricing strategy where a product is sold at a price below its market cost to stimulate other sales of more profitable goods or services - special event pricing - cash rebates -special customer pricing-->movies - low-interest financing - longer payment terms - warranties and service contracts

Pepsi Public Relations

-Pepsi didn't run a Super Bowl ad, it instead ran a refresh project where it gave money to charities -there was no change in sales -PR and advertising are not mutually exclusive

Focus Group

-a method of gaining qualitivative info about the product/ad/positioning of your product/brand -a small collection of people that are then asked a series of both open ended and pointed questions *moderator bias and group think

Hierarchy of Effects Theory

-a model of how advertising influences a consumer's decision to purchase or not purchase a product or service -awareness, knowledge, liking, preferance, conviction, purchase

Leveraging Product to Build Brand Equity

-a product is a tool for building brand equity -we are in business to create and capture value, not to sell products -a product is a crucial point of contact between the company and the customer -during the purchase and post purchase stage the consumer develops and solidifies opinions regarding a product and brand

customer acquistion

-activities designed to bring new customers to a brand or franchise -the first goal of any firm is to acquire customers-->due to attrition, firms must replace customers to sustain growth -activities include creating brand awareness, brand trial and product switching 1.brand awareness-commercial 2.brand trial-free sample, sign up offer ex:Netflix, Amazon prime 3.brand or product switching-discount

Geurrila Marketing

-an advertisement strategy to promote products or services on the streets or other public places with little money -getting attention from public -flashier and generally larger production value, still focuses on novelty ex:flash mobs, large installation structures key steps: -know your audience and locate where they are -make the effort to stand out and be unique/memorable -ensure the advertising is tied to your brand

Advertising

-any paid form of non personal presentation and promotion of ideas, g oods, or services by an identified sponser via print media(newspapers and magazines) broadcast media(radio and tv) network media(telephone,cable, sattelite, wireless) electronic media(audiotape, video tape, web) display media(billboards, signs,posters)

product

-anything we can offer to a market for attention, use or consumption that might satisfy a need or want -product includes core benefit, expected/basic benefit and augument benefit product decision-->how to improve the benefit component of consumer surplus

Cost Pricing Fallacy

-as the price goes up the number of units sold goes down and then the number of units produced goes down so the unit costs goes up -often leads to overpricing in weak markets and underpricing in strong markets

Media-Outdoor Advertising

-can be more than just a billboard -ex bus or bus stop

Why Channel?

-channel decisions constantly interact with other marketing mix decisions -a strong distribution system can be a competitive edge -channel decisions involve a long term commitment to other firms -in an aligned channel, members understand that their goal is to create and capture value for the end consumer

Parodies

-comedic imitations of someone else's work, usually paying respect to them

the future behavior pricing

-companies create a profile based on web history, demographic profile, loyalty programs

Franchising

-contractual arrangement between retailers(franchisee) and manufactuerers or distributers(franchiser) -franchisee rents the use of brand name that is shared across outlets -somewhere between market mediation and vertical integration Channel conflicts: 1.Horizontal free riding -franchisees share an asset: the reputation of the brand name -quality provision maintains this asset -however in cases where individual outlets do not fully benefit from quality/reputational investments, they will tend to undersupply quality ex:Mcdonalds employee fired after posting dirty photos of ice cream machines 2.Vertical free riding -franchisor earns only part of increased outlet profits(through royalty fees, and increased price for future franchises) -franchisor tend to undersupply advertising and quality provision(less than full incentive to maintain strong brand name) -occurs between different levels of the channel; the franchiser does not have full incentive to maintain strong brand name

Social Media: Viral Marketing

-creating advertising that leverages social media to increase brand awareness or other marketing objective through self replicating viral processes -a new word of mouth advertising

Product Positioning Guidelines

-defining and communicating the competitive frame of referance -defining a competitive frame of referance for a brand positioning is to determine category membership -the preferred approach to communication is to inform consumers of a product's membership before stating its point of difference in relationship to other category members -choosing and establishing POPs and PODs:

product risk

-either product variation or uncertain perceptions -risk averse customers will discount the benefit of a risky product-->higher risk yields a lower benefit -experience can reduce product risk

Contractual Vertical Marketing System

-every member in the distribution channel works independently and integrate their activities on a contractual basis to earn more profits that are earned when working in isolation ex: franchising-the producer authorizes the distributor to sell its product under the producer's name against some annual license fee ex: Mcdonalds, pizza hut

Personal Selling

-face to face interaction with one or more prospective purchasers for the purpose of making presentations, answering questions, and procuring orders -most effective at later stages of the buying process, particularly in building up buyer preference and conviction and action -personal interaction-personal selling creates and immediate and interactive episode between two or more persons -cultiation-it also permits all kinds of relationships to spring up, ranging from a matter of fact selling relationships to a deep personal friendship -response-they buyer is often given personal choices and encouraged to directly respond -direct ties between firms is critical in the selling process -products are expensive/complicated/ infrequently purchased and require additional information for the consumer to consider

Media- Growth in Mobile

-great targeting-->when, where,how precision targeting, managers use real big data to improve customer value proposition for higher sales -mobile portability=real time access

High Involvement vs. Low Involvement

-high involvement:customer is willing to spend considerable amount of time searching between alterantives -relatively expensive, risky if a mistake is made, no prior knowledge about the category -low involvement:by contrast, low levels of thought -generally small purchases, low levels of risk, greater knowledge/experience in purchasing *impulse purchasing-low involvement-->no previous planning or prior thought *routine purchasing-low involvement, automatic purchase, or or previous info/experience

online retailers

-leverage cookies and other shopping behaviors to offer direct, individual specific pricing

crowd sourcing

-leverages advances in technology to help customers participate in product design--knowingly or unknowingly -believes in the voice of the market to come up with new products or position products better ex: chip flavor campaign

Location Choice

-locate where demand is (usually preoccupied) -issues: are near competitors do you want to share traffic with similar stores?

Moving the Consumer

-making consumer want the new product

Media:Product Placement

-marketers pay to (or sponsor) media production in exchange of product exposure, feature, and other rights -GM product placement in movie franchise Transformers -product needs to blend in

Advertising Media

-mobile will lead this year's rise in total ad spending -mobile will represent nearly 10% of all media and spending, surpassing newspapers, magazines, and radio for the first time to become the third largest advertising venue

Administered Vertical Marketing System

-no contact between members of production and distribution channel but their activities do not get influenced by the size and power of any of the member ex:P&G -powerful and influential members of the channel dominate the activities of other channel members

Corporate Vertical Marketing System

-one member of the distribution channel owns all the other members of the channel, thereby having all the elements of production and distribution channel under a common ownership

Fairness Effect

-pay what you want-->people give as much or as little as possible for the good or service -allows access to previously untapped people

Power of Free

-people see free as the greatest discount around and change their behavior in interesting ways -price quality/concerns-->give free service to customers to mantain quality image ex:free car services -free shipping

product attributes

-percieved utility/benefit determined by the set of attributes it possesses -how good an attributes is depends on the customer's preferances -linear attribute model

Advertising and Product Life Cycle

-product benefits(inform) -brand superiority(persuade) -brand image(rewind)

Brand

-products with a unique identity -a brand can have dimensions that differentiate it in some ways from other products designed to satisfy the same need -a series of labels that help the consumer identify and recall the characteristics associated with the product -brand functions-->memory aid, can be leveraged to signal superior product quality, locus of emotion -a good brand is a brand that consumers percieve as unique --> product and brand differentiation

catalina marketing

-selling the system that would enable manufacturers and retailers to indentify customer based on actual purchase behavior and distribute customized incentives at the point of sale -scanner based technoloy to retrieve and respond to consumer behavior ex:checkout coupons

How to Brand a Product

-tangible product features and intangible product features -the key to branding is that consumers percieve differences among brands in a product category *locate in minds of consumers

Number Effect

-the magic of 99 -consumers see an item priced at 299 as being in the 200 range rather than the 300 range -referance effect -suggests a discount or bargain

marketing communications

-the means by which firms attempt to inform, persuade, and remind consumers about the products and brands they sell -marketing communications represent the voice of the company -they are means by which the firm can establish a dialogue and build relatonships with consumers

Public Relations

-todays major brands are born with publicity, not advertising -the practice of managing the spread of information between an individual or an organization and the public -public relations may include an organization or invidiual gaining exposure to their audiences using topics of public interest and news items that do not require direct payment -not paid media exposure -but earned media exposure-->story that has journalism interest, media are willing to report without sponsership -community involvement-->linking the company's brand with socially beneficial activities, corporate social responsibility -investor relations-->communication with shareholders and investors -crisis management-->responding to customer concerns about product/service problems

Zara

-vertically integrated apparel retailer -it controls most of the steps on the supply chain-it designs, produces, and distributes itself -produce more distinct products, -short product life cycle -focused its attention on understanding the fashion items that its customers wanted and then delivering them, rather than on promoting predicted season's trends via fashion shows and similar channels of influence, which the fashion industry traditionally used -items not sold well within the first week of introduction are withdrawn -by owning all off the supply chain they can quickly introduce new designs

The Got Milk ad example

-very effective because it is so simple and stood for something -it was integrated-->TV, print, billboard

Mission of Marketing Communications

-with an ideal campaign: 1. the right consumer is exposed to the right message at the right place and time 2. the campaign causes the consumer to pay attention 3. the campaign reflects consumer's level of understanding of the brand 4. the campaign positions points of difference and points of parity 5. the campaign motivates consumers to consider purchase(generate sales) 6. the campaign creates strong brand associatons

Understand Needs

-without a need-the entire process does not happen -needs-when the actual percieved state is lower than the desired state -desires-when the desired state is percieved as higher -marketer's job-figure out how to identify and create needs/desires

repositioning the competition

-you may be able to catch the competition off guard and capitalize on new customer sentiments or concerns ex: Pringles and Wise Chips -capitalizing on healthy living-->lists out 4 ingredients next to pringle's

Manipulating MA model

1. Altering Attributes -getting customers to consider new attributes ex: hotel trying to cater to medical tourists 2.Altering attribute weights 3.Altering Attribute Perception 4. Altering Consideration Set -make sure your product is still relevant to existing or make new competitors aware

Consumer Buying Process

1. Problem Recognition 2. Information Search 3. Alternative Evaluation 4. Purchase 5. Post Purchase -to expand size of awareness set -to collect more information about the products in consideration set

Perception Theory

1. exposure: how often do we encounter a given stimulus -context of our needs defines how well we tune into exposure, needs to very attention grabbing to work, tune into exposures based on needs 2.attention-required for a stimulis to be processed-->high vs low attention based on current cues or triggers 3.interpretation-making sense of stimulis-->based on previous experiences and personal characteristics 4.relevance-the more relevant to the consumer's current needs/wants, the more they will tune in 5.pleasant vs negative stimuli -pleasant beats negative ex: smoking ads 6. repetition-key feature of advertising 7.surprising stimuli-more likely to gain attention -new efforts in viral marketing -do something outrageous to get more people involved

Steps to develop effective communication

1. identify the target audience 2. set the communications objectives -establish need for category -build brand awareness -build brand attitude -influence brand purchase intention 3. design the communications -what to say, how to say it, who should say it 4. select the communications channels -personal communications or non personal channels 5. selecting the marketing communications mix

where do needs and desires come from?

1. reference group -a group(large/small) that is (formal/informal) that you (may/may not) be a part of 2.changed circumstances -life changes-->create differences in actual and desired states ex: pay raise, adopting puppy 3. marketing -brand image, commercial

Maslow's Hierarchy of Needs

1.Physiological -basic human needs -food,water 2.Safety -home security,alarms, insurance 3. Need-Belonging -friends and family-being part of group, having spouse/lover -dating websites, social media, religious groups 4.Esteem -achievement, mastery, respect, recognition ex:high fashion,luxury cars 5.Self Actualization -pursue innner talent, creativity

Company Based Pricing

1.estimate quantity to be sold 2.measure fixed costs 3.measure variable costs per unit 4.calculate average costs per unit 5.add a markup Pros:easy, with experience price chosen may be close to optimal one cons:ignores competition and consumer

Advertising Message

1.promote brand recall -repetition ads or ads with catchy slogans or jingles 2. link key attribtues to the brand -unique selling proposition-what makes the product unsual or stand out 3. persuade the customer -comparison ads -testimonial ads -information based -demonstration 4. affective association -linking a feeling to the brand -elaborates on a non product related benefit-feel good,humor 5. scare the consumer -fear based ad-->smoking 6. situate the brand socially 7. define the brand image -image ads(no real details about the brand except for the image they want to display)

Pricing

A marketing function that involves the determining and adjusting of prices to maximize return and meet customers' perceptions of value

price matching

A strategy in which a firm advertises a price and a promise to match any lower price offered by a competitor

conjoint analysis

A survey based statistical technique used in market research that helps determine how people value different attributes (feature, function, benefits) that make up an individual product or service.

Customer retention

Activities designed to help keep customers longer -a high retention rate indicates the overall health of the firm, product/service performance, customer loyalty -acquiring a customer costs 5 times more than retaining an existing customer -customer loyalty programs-->frequent flier miles -reminder advertising-coke or nike -continuity coupons-->incentives for multiple purchases -product development-line extensions and product improvements

Marketing communications mix

Advertising Sales promotion Events and experiences Public relations and publicity Online and social media marketing Mobile marketing Direct and database marketing Personal selling

Points of Parity

Associations that are not necessarily unique to the brand but may be shared with other brands category POP=necessary to earn category membership competitive POP=to negate competitor's PODs

AIDA Framework

Awareness/Attention-is the promotion relevant to your target market and able to grab their attention? Interest-provide infor or persuadate the target Desire-target emotion to move them from interest to desire Action-a clear call to action-->buy this product, call for more info

Reasons for a Distribution Channel

Demand -easy to search for products -adjustment for assortment:size, variety, stock up Supply: -specialization -economies of scale -fewer contact points

When is direct vs. indirect channels preferred?

Direct-product information needs are high, product customization is high, product quality assurance is important, logistics are important indirect channels-a broad assortment is essential, availability is critical, after service is important

Price-quality inferences

Many consumers use price as an indicator of quality. Image pricing is especially effective with ego-sensitive products such as perfumes, expensive cars, and designer clothing.

Public Relations and Social Media

PR can leverage Social media ex: jet blue twitter feed -be brief and not boring -be newsworthy -be helpful -be live

Product Positioning

Prereq: -identification of relevant attributes -locations of consumers and products in attribute space

Direct Sales Pros and Cons

Pros: -able to control the sales force directly -able to address complex concerns with customers -able to leverage sales expertise and generate additional revenue -direct contact with customers allows the firm to understand concerns/problems/benefits of the product/service offered cons: -costly to maintain -complex structure needed -potentially sending mixed signals-people may not trust the word of the sales force agent

Indirect Sales Pros and Cons

Pros: -good segmentation and established -proven experience in sales(if an established retailer/reseller) -shared marketing expenses -potentially sharing the cost of products -established markets/customer base Cons: -potentially reduces loyalty to the product -sales conflict -lack of direct control on sales processes -margin issues

Spiffs

Sales Performance Incentive Fund -money paid by the manufacturer to the retailer's sales person(directly) for selling their products -useful as a push strategy for a manufacturer without needing a salesforce -channel conflict problem-potential incompatible incentives: -sales person bonus from selling a manufacturer's products vs. mission of the company -potential backlash from the public

going-rate pricing

Setting price based largely on following competitors' prices rather than on company costs or demand ex:gas

Tips for Viral Marketing

Social Currency Triggers Emotion Public Practical Value Stories

Sales Promotions

Special incentives or excitement-building programs that encourage the purchase of a product or service, such as coupons, rebates, contests, free samples, and point-of-purchase displays. three functions--> induce trial in potential customers, capitalizae on price sensitivity of different market segments, create buzz about the brand and renew interest -always align the sales promotion with the rest of your marketing message

Consumer behavior

The study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants -influenced by cultural, social,personal factors and marketing stimuli

Distribution Channels

a chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer -can include wholesalers, retailers, distributors, and even the internet

deliverability criteria

a consideration for the company in establishing POPs and PODs; has to be feasible, profitable, preemptive, defensible, and difficult to attack

desirability criteria

a consideration for the consumer in establishing POPs and PODs; has to be personally relevant, distinct and superior, believable and credible

Points of Difference Associations

attributes or benefits that consumers strongly associate with a brand, positively evaluate, and believe that they could not find to the same extent with a competitive brand

Perceived value pricing

basing price on perceived value to customers, often used in conjunction with heavy promotion

repositioning the product

changes the place a product occupies in a consumer's mind relative to competitive products ex:clover butter is the best of both worlds between margarine and butter

Evaluation of Alternatives

consumer surplus=benefit-cost -consumer chooses the item from their consideration set that maximizes this surplus 2 areas-product attributes and product risk

Value Based Pricing Formula

consumer value-->price-->cost-->product -opposite of cost plus pricing

customer lifetime value

determining the economic value of a customer that they bring over their lifetime with the business

Direct vs Indirect Channels

direct-owned and operated by the manufacturer/firm, direct touch with the customer ex:apple, ll bean, Tesla indirect channels=independent -retailer/wholesaler that purchases a manufacturer's product and then resells to the customers ex: Walmart, best buy

Difference between indirect and direct channels?

direct=selling through personal contacts from the company to prospective customers by mail, phone, electronic means, in person visits and so forth indirect channels=selling through third party intermediaries such as agents or broker representatives, wholesalers or distributers, and retailers or dealers

Exclusive vs. Intensive Strategy

exclusive-have more brand control selective-in the middle ex:coach-->coach, Bloomingdales, macys, Nordstrom intensive-more sales outlets ex:cell phones-->best buy, Verizon, Costco

new product launch

firm confirms its target market, firm decides how the product will be positioned, firm finalized the remaining marketing mix variables for the new product

Retention dynamics/marketing funnel

identifying the level of the consumer's interest -user,nonuser,light user, moderate, heavy use,exclusive

Types of advertising

informative -to inform consumers or build primary demand Persuasive -to build selective demands Comparison -a special form of persuasive advertising -to compare one brand to another Remainder -to keep consumers thinking about a brand

every day low pricing

involves charging a constant everyday low price with few or no temporary price discounts

Product/Brand Positioning

is the way the product is defined by consumers on important attributes—the place the product occupies in consumers' minds relative to competing products 4 ways-repositioning, new product launch,moving the consumer,repositioning the competition

Bass Diffusion Model

model that predicts adoption and spread of a new product ; main idea is that there are 2 sources of sales, from innovators and from imitators

Determining a frame of reference

objective: to establish the ideal points of partiy and points of differences associations -marketers need to know who the target consumer is, the main competitors, and how the product is similar and different ex:Tesla positions itself as a premium sports car not electric car

Freemium

offers users a basic service for free and then charges a premium for upgrades or advanced features -used to build word of mouth/network effects/induce trial -successful in digital goods

Costs

price-always matters financial risk-is there a liability assumed with this product--> warranty search costs-time and money purchasing costs-taxes, delivery/return, convenience/speed, privacy use costs-installaton,training/learning, mantinence

hi lo pricing

pricing strategy that starts with a high price, then runs promotions to lower prices and increase demand; similar to price skimming -problems:deal prone customers, buyers only purchase product when it is on sale

reference prices

referance price-how much you believe is a fair price for a product or service -determined by your knowledge of competitor's prices, your own beleif about the quality of the company's product, history of the company's price promotions -discount stores will typically use comparative pricing to achieve sales-->nordstrom rack

test market

releasing a product to a smaller subset of your target market

Product Positioning Steps

segmentation determining frame of referance targeting

Value pricing/value in use

setting a fair price level for a marketing mix that really gives the target market superior customer value -need to find a measure of customer value -setting prices that will capture some of what customers will save by substituting the firm's product for the one currently being used ex:long lasting lightbulbs

Prestige Pricing

setting a rather high price to suggest high quality or high status -no discounting -no pricing tricks -need heavy investment in quality products and advertising to support this strategy