Marketing Test 2

*** AIDA Model

1. Get Attention 2. Hold Interest 3. Arouse Desire 4. Obtain Action

Pricing in different types of markets

**must understand the relationship between price and demand for the company's product, pricing freedom varies with different types of markets 1. pure competition-- the market consists of many buyers and sellers trading in a uniform commodity, no single buyer or seller has much effect on the going market price, sellers in these markets do not spend much time on marketing strategy 2. monopolistic competition-- the market consists of many buyers and sellers trading over a range of prices rather than a single market price, a range of prices occurs because sellers can differentiate their offers to buyers, sellers try to develop differentiated offers for different customer segments and, in addition to price, freely use branding, advertising, and personal selling to set their offers apart. 3. oligopolistic competition-- the market consists of only a few large sellers. Because there are few sellers, each seller is alert and responsive to competitors' pricing strategies and marketing moves 4. pure monopoly-- the market is dominated by one seller. The seller may be a government monopoly, a private regulated monopoly, or a private unregulated monopoly. Pricing is handled differently in each case.

Methods of Setting the Advertising Budget

*An advertising budget refers to the dollars and other resources allocated to a product or a company advertising program. There are four common methods used to set the total budget for advertising... 1. Affordable method - refers to setting the promotion budget at the level management thinks the company can afford 2. Percentage-of-sales method - refers to setting the promotion budget at a certain percentage of current or forecasted sales or as a percentage of the unit sales price 3. Competitive-parity method - refers to setting the promotion budget to match competitors' outlays 4. Objective-and-task method - involves developing the promotion budget by defining specific objectives, determining the tasks that must be performed to achieve these objectives, and estimating the costs of performing these tasks. The sum of these costs is the proposed promotion budget

Impact of Culture on Marketing Strategy

*Can help companies not only avoid embarrassing mistakes but also take advantage of cross-cultural opportunities >Companies that understand cultural nuances can: - Avoid expensive and embarrassing mistakes - Take advantage of cross-cultural opportunities >Elements of American culture have become omnipresent worldwide *Social critics contend that large American multinationals, such as McDonald's, Coca-Cola, and Starbucks are not just globalizing their brands, but they are Americanizing the world's cultures. Critics worry that countries around the globe are losing their individual cultural identities. Such concerns have sometimes led to a backlash against American globalization. Ex. In China, where McDonald's operates more than 80 restaurants in Beijing alone, nearly half of all children identify the chain as a domestic brand.

Sustainable Marketing Principles

*a company's marketing should support the best long-run performance of the marketing system, GUIDED BY 5 PRINCIPLES 1. Consumer-oriented marketing - Viewing and organizing a company's marketing activities from the consumer's point of view - Should work hard to sense, serve, and satisfy the needs of a defined group of customers, both now and in the future 2. Customer value marketing - Putting most of a company's resources into customer value-building marketing investments - By creating value for consumers, the company can capture value from consumers in return 3. Innovative marketing Seeking real product and marketing improvements 4. Sense-of-mission marketing - Defining a company's mission in broad social terms - Can serve the best long-run interests of both the brand and consumers 5. Societal marketing Making marketing decisions by considering: Consumers' wants Company's requirements Consumers' long-run interests Society's long-run interests

*** new product pricing strategies

*challenges faced with introducing a new product to the market--how will price it? 1. Market-skimming pricing (price skimming) Setting a high price to skim maximum revenues layer by layer from the segments willing to pay the high price, company makes fewer but more profitable sales CONDITIONS A. quality and image must support higher price, enough buyers must want to product at this price B. the costs of producing a smaller volume cannot be so high that they cancel the advantage of charging more C. competitors should not be able to enter the market easily and undercut the high price 2. Market-penetration pricing Setting a low price to attract a large number of buyers and a large market share CONDITIONS A. the market must be highly price sensitive so that a low price produces more market growth B. production and distribution costs must decrease as sales volume increases C. the low price must help keep out the competition, and the penetration price must maintain its low-price position. Otherwise, the price advantage may be only temporary

Legality of pricing policies

*firms can charge high prices as long as they do not conspire with competitors to fix prices or discriminate against some of their customers *Producers may set minimum retail prices. Manufacturers usually suggest a retail list price and leave it up to the retailers to decide what to charge in local markets. *Minimum prices are sometimes controlled. 1. unfair trade practice acts - put a lower limit on prices, especially at the wholesale and retail levels - they protect the viability of certain types of intermediaries, and indirectly benefit the consumer by providing more choices 2. price fixing - competitors getting together to raise, lower, or stabilize prices. It is considered conspiracy under the FTC Act and the Sherman Act. - Price fixing is illegal—you could go to jail! 3. dumping - pricing a product sold in a foreign market below the cost of producing it in its domestic market - Antidumping laws protect domestic producers from foreign competition 4. phony list prices - prices shown to consumers to suggest that the price has been discounted from list. - In the U.S., the Federal Trade Commission (FTC) tries to stop this practice, using the Wheeler-Lea Amendment, which bans "unfair or deceptive acts in commerce."

Multichannel Distribution Systems

- A single firm sets up two or more marketing channels to reach customer segments Advantages - Expansion of sales and marketing coverage - Tailor-made products and services for the specific needs of customer segments Disadvantages - Harder to control - Generates conflict

Market Entry Strategies

- Exporting--simplest way to enter a foreign market >Indirect--involves less investment because the firm does not require an overseas marketing organization or network >Direct--sellers handle their own exports, investment and risk are greater in this strategy but so is the potential return - Joint venturing--entering foreign markets by joining with foreign companies to produce or market a product or service, 4 types... 1. Licensing--entering foreign markets through developing an agreement with a licensee in the foreign market 2. Contract manufacturing--occurs when a company contracts with manufacturers in a foreign market to produce its product or provide its service 3. Management contracting--domestic firm that supplies know-how to a foreign company that supplies the capital 4. Joint ownership--a cooperative venture in which a company creates a local business with investors in a foreign market, who share ownership and control - Direct Investment--entering a foreign market by developing foreign-based assembly or manufacturing facilities >Assembly facilities >Manufacturing * If a company has gained experience in exporting and if the foreign market is large enough, foreign production facilities offer many advantages. The main disadvantage is that the firm faces many risks, such as restricted or devalued currencies, falling markets, or government changes.

Rapid Growth of Direct and Digital Marketing

- Fastest-growing form of marketing - Direct marketing becoming more Internet-based - Digital marketing claims a surging share of marketing spending and sales, second-largest share of media spending behind only television, ex. Online display and search advertising, video, social media, mobile, e-mail

Multichannel Distribution System (model)

- The producer sells directly to consumer segment 1 using catalogs, telemarketing, and the Internet - It reaches consumer segment 2 through retailers. - It sells indirectly to business segment 3 through distributors and dealers - It sells to business segment 4 through its own sales force These days, almost every large company and many small ones distribute through multiple channels.

Integrated Marketing Communications (IMC)

- integrating and coordinating the company's many communications channels to deliver a clear, consistent, and compelling message about the organization and its products - illustrates how a company carefully integrates its many communications channels to deliver a clear, consistent, and compelling message about the organization and its brands Promotion Tools 1. Advertising 2. Direct and digital 3. Sales promotion 4. Public relations 5. Personal selling

Supply chain management

- involves managing upstream and downstream value-added flows of materials, final goods, and related information among 1. suppliers, 2. the company/producer, 3. resellers, and 4. final consumers (aka oversight of materials, information, and finances as they move in a process from...) - done by marketing logistics 1-2 inbound logistics 2-3 outbound logistics

Social Media Marketing Advantages and Challenges

1. Advantages Targeted and personal Interactive Immediate and timely Cost effective Engagement and social sharing capabilities 2. Challenges Still being experimented Difficult to measure results Largely user controlled

Political-Legal Environment

1. Considerations for a company to do business in a country: - Country's attitude toward international buying - Government bureaucracy - Political stability - Monetary regulations Most international trade involves cash transactions. Yet many nations have too little hard currency to pay for their purchases from other countries. They may want to pay with other items instead of cash. 2. International trade involves: Cash transactions Barter-- the direct exchange of goods or services

Sales Promotion Objectives

1. Consumer promotions - To urge short-term customer buying or boost customer brand involvement 2. Trade promotions - To get retailers to carry new items and more inventory, buy ahead, or promote the company's products and give them more shelf space 3. Business promotions - To generate business leads, stimulate purchases, reward customers, and motivate salespeople 4. Sales force promotions - To get more sales force support for current or new products and motivate salespeople to sign up new accounts

Vertical marketing systems (the two are opposites)

1. Conventional distribution channel - Consists of one or more independent producers, wholesalers, and retailers - Each member is a separate business seeking to maximize its own profits even at the expense of profits for the system as a whole - No channel member has much control over the other members, and no formal means exists for assigning roles and resolving channel conflict 2. Vertical marketing system (VMS) - Producers, wholesalers, and retailers act as a unified system - One channel member owns the others, has contracts with them, or wields so much power that they must all cooperate - Types: 1. corporate-combines successive stages of production and distribution under single ownership 2. contractual-consists of independent firms at different levels of production and distribution that join together through contracts ~~ex. franchise--a channel member, called a franchisor, links several stages in the production-distribution process. Three types... a. manufacturer-sponsored retailer franchise system b. manufacturer-sponsored wholesaler franchise system c. service-firm-sponsored retailer franchise system 3. administered-coordinates successive stages of production and distribution through the size and power of one of the parties

Benefits of Direct and Digital Marketing to Buyers

Buyers - Convenient, easy, and private - Easy buyer-seller interaction - Quick access to products and relevant information - Brand engagement and community Sellers - Low-cost, efficient, and speedy - Build close, personalized, interactive, one-to-one customer relationships - Offer greater flexibility

Major Types of Retail Organizations

1. Corporate chain-two or more outlets that are commonly owned and controlled, Their size allows them to buy in large quantities at lower prices and gain promotional economies 2. Voluntary chain-independent retailers engaged in group buying and merchandising, sponsored by wholesaler 3. Retailer cooperative-group of independent retailers who jointly establish a central buying organization and conduct joint promotion efforts 4. Franchise organization-Contractual association between a franchisor and franchisees

Retail prices sometimes vary according to the location of the buyer

1. F.O.B.: free on board. - seller pays to have the product loaded on a transportation vehicle at which time the title is transferred to the buyer, who pays shipping and is responsible for the product at that point. - easy for the seller but may limit the range of the market 2. Zone pricing - smoothes delivered prices by applying an average freight charge to all customers in the same specified geographic area - simplifies billing and helps buyers know the delivery charges in advance 3. Uniform delivered pricing - charges one price to all buyers. - In effect, all buyers are in the same "zone," helping to open large-area markets. 4. Freight absorption pricing - the company pays the cost of shipping without changing the price in order to get the sale. - helps a distant company to compete on equal grounds in another territory.

Transportation

1. Factors affected by choice of transportation (all affect customer satisfaction) a. Pricing of products b. Delivery performance c. Condition of goods d. Customer satisfaction 2. Modes 6 ways--trucks, railroads, water carriers, pipelines, air carriers, and the Internet 3. Multimodal transportation - Combining two or more modes of transportation - Piggyback (rail and trucks), fishy back (water and trucks), trainship (water and rail), and air truck (air and trucks)

Possible Advertising Objectives - Informative

Communicating customer value Building a brand and company image Telling the market about a new product Explaining how a product works Suggesting new uses for a product Informing the market of a price change Describing available services and support Correcting false impressions

Key Functions Performed by Channel Members

1. Help to complete transactions Information (gathering and distributing information needed for planning and aiding exchange) Promotion (developing and spreading persuasive communications about an offer) Contact (finding and communicating with prospective buyers) Matching (shaping offers to meet the buyer's needs) Negotiation (reaching an agreement on price and other terms so that ownership or possession can be transferred) 2. Help to fulfill the completed transactions Physical distribution (transporting and storing goods) Financing (acquiring and using funds to cover the costs of the channel work) Risk taking (assuming the risks of carrying out the channel work)

Marketing's Impact on Individual Consumers

1. High prices - critics think the American marketing system causes prices to be higher than they would be under more sensible systems - three factors: : high costs of distribution, high advertising and promotion costs, and excessive markups 2. Deceptive practices - practices such as falsely advertising prices from a phony high retail list price - practices such as misrepresenting the product's features - involves exaggerating package contents in misleading terms - lead to the Wheeler-Lea Act, which gave the Federal Trade Commission (FTC) power to regulate unfair or deceptive acts or practices 3. High-pressure selling - persuades people to buy goods they had no thought of buying - too often products and services are not made well or do not perform well 4. Shoddy, harmful, or unsafe products -concern=product safety--many products deliver little benefit, or may even be harmful. 5. Planned and perceived obsolescence - planned obsolescence: causing their products to become obsolete before they need replacement - perceived obsolescence: continually changing consumer concepts to encourage more and earlier buying 6. Poor service to disadvantaged consumers - Critics accuse major chain retailers of redlining, drawing a red line around disadvantaged neighborhoods and avoiding placing stores there

Types of Wholesalers

1. Merchant wholesalers - Independently owned wholesale business that takes title to the merchandise it handles - largest single group of wholesalers, accounting for roughly 50 percent of all wholesaling 2 types... A. Full-service wholesalers provide a full set of services. B. Limited-service wholesalers offer fewer services to their suppliers and customers. 2. Broker - Does not take title to goods - they generally specialize by product line or customer type - Functions A. Bringing buyers and sellers together B. Assisting in negotiation 3. Agents - Represent buyers or sellers on a relatively permanent basis -manufacturer's agents=most common - Perform only a few functions - Do not take title to goods 4. Manufacturers' and retailers' branches and offices - Wholesaling by sellers or buyers themselves rather than through independent wholesalers

Major Public Relations Tools

1. News 2. Special events- (ex. news conferences and speeches), programs designed to reach and interest target publics 3. written materials (like annual reports, brochures)-to reach and influence target markets. 4. autovisual materials (like DVDs and online videos) 5. Corporate identity materials-help create a corporate identity that the public immediately recognizes (ex. logos, stationary, signs) 6. public service activities-can improve public goodwill by contributing money and time to public service activities

Profiles of Major Media Types

1. Newspapers Pros-Flexibility, Timeliness, Good local market coverage, Broad acceptability and high believability Cons-Short life, Poor reproduction quality, Small pass-along audience 2. Direct Mail Pros-High audience selectivity, Flexibility, No ad competition within the same medium, Allows personalization Cons-Relatively high cost per exposure, Junk mail image 3. Magazines Pros-High geographic and demographic selectivity, Credibility and prestige, High-quality reproduction, Long life and good pass-along readership Cons-Long ad purchase lead time, High cost, No guarantee of position 4. Radio Pros-Good local acceptance, High geographic and demographic selectivity, Low cost Cons-Audio only, Fleeting exposure, Low attention, Fragmented audiences 5. Outdoor Pros-Flexibility, High repeat exposure, Low cost, Low message competition, Good positional selectivity Cons-Little audience selectivity, Creative limitations

Other Sales Force Strategy and Structure Issues

1. Outside sales force or field sales force - Travel to call on customers in the field 2. Inside sales force - Conduct business from their offices via telephone, the Internet, or visits from prospective buyers - Technical sales support people-people provide technical information and answers to customers' questions - Sales assistants-provide research and administrative backup for outside salespeople - Telemarketers and online sellers-use the phone, Internet, and social media to find new leads, learn about customers and their business, or sell and service accounts directly 3. Team selling - Teams of people from different departments used to service large, complex accounts Cons--> A. salespeople who are used to having customers all to themselves may have trouble learning to work with and trust others on a team B. selling teams can confuse or overwhelm customers who are used to working with only one salesperson C. difficulties in evaluating individual contributions to the team-selling effort can create some sticky compensation issues

Steps in the Selling Process

1. Prospect for new customers AND evaluate needs of established customers 2. Set effort priorities 3. Select target customer Identify who influences purchase decision and/or who is involved in buyer-seller relationship 4. Preplan sales call and presentation(s) Prepared presentation, Consultative selling approach, Selling formula approach 5. Make sales presentation Create interest, Overcome problems/objections, Arouse desire 6. Close the sale (get action) 7. Feedback - Follow up after sales call to establish relationship - Follow-up after the purchase to maintain and enhance relationship

Types of Shopping Centers

1. Regional Shopping Center - the largest and most dramatic shopping center. It has from 50 to more than 100 stores, including two or more full-line department stores 2. Community Shopping Center - contains between 15 and 50 retail stores. It contains a branch of a department store or variety store, a supermarket, specialty stores, professional offices, and sometimes a bank 3. Neighborhood Shopping Center - contain between 5 and 15 stores. These centers, which are close and convenient for consumers, contain a supermarket, perhaps a discount store, and several service stores—dry cleaner, drugstore, hardware store, local restaurant, or other stores 4. Power Center - huge unenclosed shopping centers consisting of a long strip of retail stores, such as Walmart, Home Depot, Costco, and Best Buy 5. Lifestyle Center - smaller, open-air malls with upscale stores, convenient locations, and nonretail activities, such as a playground, skating rink, hotel, dining establishments, and a movie theater

Price discrimination-key issues

1. Robinson-Patman Act - ban price discrimination--selling the same products to different buyers at different prices--if it injures competition - differences in price have to be based on cost differences or the need to meet competition - Permits charging different prices for similar products if they are not of "like grade and quality." Therefore, producers wanting to sell several brands at different prices should probably build in physical or other differences that are really useful. - It allows price differences based on cost, such as quantity discounts. 2. "Proportionately Equal" Basis - If allowances and special promotion aids are not made available to all customers on proportionately equal terms, these special promotions might not be allowed. 3. Meeting Competition - Can a seller legally meet price cuts made by a competitor? Yes, if it is done in good faith. 4. Cost Differences - Can cost analysis justify price differences? Yes, but the justification must be developed before setting different prices. 5. "Like Grade & Quality" - if the physical characteristics of products are similar, then they are of like grade and quality (see #1)

Consumer Promotion Tools

1. Samples-Offers of a trial amount of a product Most effective and expensive 2. Coupons-Certificates that save buyers money when they purchase specified products 3. Rebates (cash refunds)-Price reduction occurs after the purchase Customer sends proof of purchase to the manufacturer, which then refunds part of the purchase price by mail 4. Price packs (cents-off deals)-Offer consumers savings off the regular price of a product 5. Premiums-Goods offered either free or at low cost as an incentive to buy a product 6. Advertising specialties-Useful articles imprinted with an advertiser's name, logo, or message that are given as gifts to consumers 7. Point-of-purchase (POP) promotions-Displays and demonstrations that take place at the point of sale 8. Contests, sweepstakes, and games-Give consumers the chance to win something 9. Event marketing (or event sponsorships)-Creating a brand-marketing event or serving as a sole or participating sponsor of events created by others

Levels of Service

1. Self-service retailers - Serve customers who are willing to perform their own locate-compare-select process 2. Limited-service retailers - Carry more shopping goods about which customers need information - Provide more sales assistance 3. Full-service retailers - Carry more specialty goods - Assist customers in every phase of the shopping process - ex. high-end specialty stores and first-class department stores

Channel Functions Performed by Wholesalers (how they add value)

1. Selling and Promoting-help manufacturers reach many small customers at a low cost 2. Buying and Assortment Building-save work 3. Bulk Breaking-save customers money 4. Warehousing-hold inventories, thereby reducing the inventory costs and risks of suppliers and customers 5. Transportation-can provide quicker delivery to buyers because they are closer to buyers than are producers 6. Financing-finance their customers by giving credit, and suppliers by ordering early and paying bills on time 7. Risk Bearing-by taking title and bearing the cost of theft, damage, spoilage, and obsolescence 8. Market Information-give information to suppliers and customers about competitors, new products, and price developments 9. Management Services and Advice-help retailers train their salesclerks, improve store layouts and displays, and set up accounting and inventory control systems

Major store retailer types

1. Specialty store-Carries a narrow product line with a deep assortment 2. Department-carries several product lines, each line is operated as a separate department 3. Supermarket-Large, low-cost, low-margin, high-volume, self-service operation 4. Convenience-Carries a limited line of high-turnover convenience products at slightly higher prices 5. Discount store-Sells goods at lower prices with lower margins and higher volumes 6. Off-price retailer-Sells merchandise bought at less-than-regular wholesale prices and sold at less than retail 7. Superstore-Very large store for routinely purchased items *An independent off-price retailer is either independently owned and run or is a division of a larger retail corporation. *A factory outlet is owned and operated by a manufacturer and normally carries the manufacturer's surplus, discontinued, or irregular goods. *Warehouse clubs sell a limited selection of brand name grocery items, appliances, clothing, and other goods at deep discounts to members who pay annual membership fees.

Consumer marketing channels

Consumer distribution channels 1. direct marketing channel-has no intermediary levels (company sells directly to consumers) 2. indirect marketing channels-containing one or more intermediaries Business distribution channels 1. The business marketer can use its own sales force to sell directly to business customers 2. it can sell to various types of intermediaries, which in turn sell to these customers

*** 8 stages in new product development

1. idea generation (START with good new ideas, must think of many to get a good one) (the remaining steps reduce the # of ideas and develop the best ones into profitable products) 2. idea screening 3. concept deviation and testing 4. strategy development 5. business analysis 6. product development 7. test marketing 8. commercialization

What are new products?

1. original products (aka new product) 2. product improvements 3. product modifications 4. new brands that the firm develops through its own research and development efforts

Economic Environment

2 Factors reflecting a country's market attractiveness: 1. Industrial structure--shapes its product and service needs, income levels, and employment levels - Subsistence economies--the vast majority of people engage in simple agriculture. They consume most of their output and barter the rest for simple goods and services. These economies offer few market opportunities - Raw material exporting economies--raw material exporting economies are rich in one or more natural resources but poor in other ways. Much of their revenue comes from exporting these resources - Emerging economies--fast growth in manufacturing results in rapid overall economic growth. As manufacturing increases, the country needs more imports of raw materials and fewer imports of finished products - Industrial economies--major exporters of manufactured goods, services, and investment funds. They trade goods among themselves and export them to other types of economies for raw materials and semifinished goods 2. Income distribution - Low-, medium-, and/or high-income households depending on the industrial structure of the nation -ex. countries with subsistence economies consist mostly of households with very low family incomes

How can a firm obtain new products?

2 ways... 1. acquisition--buying a company, patent, or license to produce someone else's product 2. a firm's own new product development efforts

Considerations in setting price

3 major pricing strategies 1. value based pricing 2. cost based pricing 3. competition based pricing If customers perceive that a product's price is greater than its value, they won't buy it. If the company prices the product below its costs, profits will suffer. Between the two extremes, the right pricing strategy is one that delivers both value to the customer and profits to the company. Price floor (no profits below this value) Price ceiling (no demand above this price) What to consider? - production costs - consumer perception of value - the market A. competitor's strategies and prices B. marketing activities C. market nature and demand

Product concept (stage 3)

A detailed version of the new product idea stated in meaningful consumer term Different than a... - A product idea--an idea for a possible product that the company can see itself offering to the market - A product image--the way a product is perceived by consumers

What does creating successful new products require?

A. understanding consumers B. understanding markets C. understanding competitors D. a focus on value to customers

Allowance Policies-how to create placement

Allowances: are given to channel members or final consumers for doing something or accepting less of something Advertising allowances--exchange something for something else; price reductions given to firms in the channel to promote the supplier's products locally Stocking allowances--given to intermediaries to get attention and shelf space for a product, used mainly in supermarkets where space is at a premium which forces producers to pay for product placement ~~~Are stocking allowances unethical? Some producers think so, calling them a form of extortion. Small producers think that stocking allowances put them at a real disadvantage compared to larger producers with more resources. Retailers, on the other hand, call stocking allowances an insurance against product failures. Producers must produce better products that consumers really want in order to secure shelf space. push money allowances--manufacturers or wholesalers give them to retailers to be used as incentives for their salesclerks to aggressively push the targeted items. trade-in allowances--the customer receives a price reduction for used products when similar new products are bought

Forms of Direct and Digital Marketing

BOTH build direct consumer engagement and community 1. Traditional direct marketing - Face-to-face selling - Direct-mail marketing - Catalog marketing - Direct-response TV 2. Digital and social media marketing - Online Marketing - Social Media marketing - Mobile Marketing

Cost based pricing

Based on the costs of producing, distributing, and selling the product plus a fair rate of return for effort and risk Types of costs: 1. Fixed costs (overhead) costs that do not vary with production or sales level 2. Variable costs vary directly with the level of production, same for each unit produced but the total varies with the number of units produced 3. Total costs sum of the fixed and variable costs for any given level of production, management wants to charge a price that will at least cover the total production costs at a given level of production. *Companies with lower costs can set lower prices that result in smaller margins but greater sales and profits. Other companies pay higher costs so that they can add value and claim higher prices and margins.

Discount policies--how to create demand

Basic list price: the price final consumers or users are normally asked to pay for products Discounts: reductions from list price given to buyers who either give up a marketing function or provide it themselves. 1. Quantity discounts-->encourage volume buying, customer pays less per unit Cumulative: apply to all purchases in a given period Noncumulative: apply only to individual orders 2. Seasonal discounts-->encourage buyers to buy sooner, shift storing down the channel to stabilize demand 3. Cash discounts-->reductions in the net (the face value of the invoice due immediately) that encourage buyers to pay quickly *2/10 net 30--2% off the price if the invoice is paid in 10 days, with the net due within 30 days, and an additional interest charge after 30 days 4. Trade discounts-->encourages channel cooperation, reductions in list price given to channel members that perform one or more marketing functions for the producer 5. Sale prices-->reduce list prices temporarily, encourage immediate buying, they can condition buyers and sellers to shop for sales and may erode brand loyalty 6. Everyday low pricing-->low list prices rather than relying on frequent sales, discounts, or allowances

Possible Advertising Objectives - Persuasive

Building brand preference Encouraging switching to a brand Changing customer perceptions of value Persuading customers to purchase now Creating customer engagement Building brand community

Traditional Rights

Consumerism--an organized movement of citizens and government agencies designed to improve the rights and power of buyers in relation to sellers. 1. Seller's Rights a. To introduce any product in any size and style with proper warnings and controls, if necessary b. To charge any price for the product without any discrimination c. To spend any amount to promote the product if competing fairly d. To use any product message that is not misleading or dishonest e. To use buying incentive programs that are not unfair or misleading 2. Buyer's Rights a. To buy a product that is offered for sale b. To expect the product to be safe c. To expect the product to perform as claimed

*** Value-Based Pricing versus Cost-Based Pricing

Cost based--product driven 1. The company designs what it considers to be a good product 2. It adds up the costs of making the product 3. sets a price that covers costs plus a target profit 4. convince buyers of value Value based--reverses cost based pricing 1. assesses customer needs and value perceptions 2. sets its target price based on customer perceptions of value 3. determines costs that will be incurred 4. design product to deliver desired value at target price

Product development (stage 6)

Develop the product concept into a physical product, ensure that the product idea can be turned into a workable market offering (develop and test one or more physical versions of the product concept) Goal--design a prototype that will satisfy and excite consumers and that can be produced quickly and at budgeted costs Need the marketing mix (4 p's)--product, place, promotion, price

Concept development (stage 3 continued)

Developing a new product into alternative product concepts THEN... - find out how attractive each concept is to consumers - choose the best one

Compensating Salespeople

Elements of compensation 1. Fixed amount-usually a salary, gives the salesperson some stable income 2. Variable amount-might be commissions or bonuses based on sales performance, rewards the salesperson for greater effort and success. 3. Expenses 4. Fringe benefits Types of compensation plans 1. Straight salary 2. Straight commission 3. Salary plus bonus 4. Salary plus commission

Catalog Marketing

Print, video, or digital catalogs that are mailed to select customers, made available in stores, or presented online - a form of direct marketing - Eliminates printing and mailing costs - No space constraints - Broader assortment of presentation formats - Real-time merchandising capabilities--products and features can be added or removed as needed, and prices can be adjusted instantly to match demand

International Trade System

If looking to go abroad, must understand the international trade system. A. Trade barriers - Tariffs or duties-->taxes on certain imported products designed to raise revenue or protect domestic firms, used to force favorable trade behaviors from other nations - Quotas and exchange controls--> Quotas--limits on the amount of foreign imports that they will accept in certain product categories. The purpose of a quota is to conserve on foreign exchange and protect local industry and employment. Exchange controls--limit the amount of foreign exchange and the exchange rate against other currencies - Nontariff trade barriers >Biases against the bids >Restrictive product standards >Excessive host-country regulations or enforcement

Possible Advertising Objectives - Reminder

Maintaining customer relationships Reminding consumers that the product may be needed Reminding consumers where to buy Keeping the brand in a customers mind during off-buying seasons

Direct and digital marketing (IMC 2)

More targeted and interactive Immediate and personalized from direct mail, catalogs, and telephone marketing to online, mobile, and social media Well suited to highly targeted marketing efforts, creating customer engagement, and building one-to-one customer relationships

Personal selling (IMC 5)

Personal interaction between two or more people Allows all kinds of customer relationships to spring up Buyer feels a greater need to listen and respond Most expensive promotion tool

Indicators of Market Potential

Possible global markets should be ranked on several factors, including market size, market growth, the cost of doing business, competitive advantage, and risk level. The goal is to determine the potential of each market, using indicators (seen below). Then the marketer must decide which markets offer the greatest long-run return on investment. 1. Demographic Education Population size an d growth Population age composition 2. Geographic Climate and size Population density Transportation structure 3. Economic GDP size and growth Income distribution Infrastructure Natural and human resources 4. Sociocultural Consumer lifestyles and values Business norms Cultural and social norms Languages 5. Political/legal Political stability Government support of business Monetary and trade policies

price elasticity of demand

Price elasticity: the measure of the sensitivity of demand to changes in price Inelastic demand: Demand hardly changes with a small change in price. Elastic demand: Demand changes greatly with a small change in price.

*** Push versus Pull Promotion Strategy (promotion strategies)

Push--calls for using the sales force and trade promotion to push the product through channels. The producer promotes the product to channel members that in turn promote it to final consumers Pull--calls for spending a lot on consumer advertising and promotion to induce final consumers to buy the product, creating a demand vacuum that pulls the product through the channel *Business-to-consumer companies pull more, putting more of their funds into advertising, followed by sales promotion, personal selling, and then public relations. Business-to-business marketers tend to push more, putting more of their funds into personal selling, followed by sales promotion, advertising, and public relations.

Advertising (IMC 1)

Reaches masses of buyers at a low cost per exposure Builds a long-term image for a product Can trigger quick sales Has a public nature and is viewed as legitimate Very expressive Impersonal and lacks the direct persuasiveness of salespeople

Business analysis (stage 5)

Review of the sales, costs, and profit projections for a new product to determine whether the projections satisfy the company's objectives (business attractiveness of the proposal)

Direct Mail Marketing

Sending an offer, announcement, reminder, or other item directly to a person at a particular address - Tangible and creates emotional connection with customers - easy measurement of results - Effective component of a broader integrated marketing campaign - Direct and personalized - Sent to consumers who want to receive it - do not want to be perceived as junk mail

Break even analysis chart

Shows the total cost and total revenue expected at different sales volume levels, shows how pricing can help the company to determine the minimum prices needed to cover expected costs and profits **See word document for chart and extra explanation

Types of cost based pricing

Simplest--> 1. cost based pricing (markup pricing)--Adding a standard markup to the cost of the product Why good? A. sellers are more certain about costs than about demand, so seller simplify pricing B. when all firms in the industry use this pricing method, prices tend to be similar and price competition is minimized 2. Break-even pricing (target return pricing)--Setting price to break even on the costs of making and marketing a product, or setting price to make a target return, uses the break even chart, **they do not take the price-demand relationship into account

Major International Marketing Decisions *

Six major decisions in international marketing... 1. Looking at the Global Marketing Environment 2. Deciding Whether to Go Global 3. Deciding which Markets to Enter 4. Deciding How to Enter the Market 5. Deciding on the Global Marketing Program 6. Deciding on the Global Marketing Organization

Concept testing (stage 3 continued)

Testing a group of target consumers to find out the degree of consumer appeal toward the concepts, decide which concept has the strongest appeal Methods: - presenting the concepts to consumers symbolically or physically or with a word or picture description - asking customers about their reactions to the concepts (more concrete increases reliability of the test)

Distributor model vs. Direct Distribution

The difference shows how using intermediaries can provide economies. The direct distribution model shows three manufacturers, each using direct marketing to reach three customers. This system requires nine different contacts. The distributer model--shows the three manufacturers working through one distributor, which contacts the three customers. This system requires only six contacts. In this way, intermediaries reduce the amount of work that must be done by both producers and consumers.

Test marketing (stage 7)

The product and its proposed marketing program are introduced into realistic market settings, gives the marketer an experience with marketing a product before the introduction, tests the product and its marketing program Cons--expensive, time consuming (opportunities may slip by and competitors may gain an advantage)

Designing the Sales Force Strategy and Structure

Types of sales force structures: 1. Territorial-refers to a sales force organization that assigns each salesperson to an exclusive geographic territory in which that salesperson sells the company's full line 2. Product-refers to a sales force organization in which salespeople specialize in selling only a portion of the company's products or lines 3. Customer (or market)-refers to a sales force organization in which salespeople specialize in selling only to certain customers or industries Salespeople can be specialized by: Customer and territory Product and territory Product and customer Territory, product, and customer Order getters (persuades a customer to make a purchase) VS. order takers (book customer orders and pass on the information to relevant people in the company)

Public Relations (IMC 4)

Very believable to readers Can dramatize a company or product Reaches many prospects Effective and economical when well thought out

Sales Promotion (IMC 3)

Wide assortment of tools (ex. coupons) with unique qualities Attracts consumer attention Offers strong incentives to purchase Used to dramatize product offers and boost sales Invites and rewards quick response Short-lived effects; less effective than advertising or personal selling in building long-term relationships

Strategy development (stage 4)

designing an initial marketing strategy for a new product based on the product concept 3 parts... 1. describes the target market, the planned value proposition, and the sales, market-share, and profit goals for the first few years. 2. outlines the product's planned price, distribution, and marketing budget for the first year 3. describes the planned long-run sales, profit goals, and marketing mix strategy

Idea screening (stage 2)

screening new product ideas to find good ones and drop poor ones as soon as possible; ways of screening new ideas--> 1. new idea write-up reviewed by committee (describes the product or the service, the proposed customer value proposition, the target market, and the competition; It makes some rough estimates of market size, product price, development time and costs, manufacturing costs, and rate of return) 2. R-W-W framework (is it real? can we win? is it worth doing?)

Idea generation (stage 1)

systematic search for new products Internal idea sources: research and development, intrapreneurial programs, internal social networks (encourage employees to develop new product ideas) External idea sources: competitors, customers, distributers and suppliers