ASU MKT 300 Eaton Exam 4

4Cs

- Customer Value - Cost - Convenience - Communication

Stages for Establishing Prices

1. Develop pricing objectives 2. Assess target market's evaluation of price 3. Evaluate competitors' prices 4. Select a basis for pricing 5. Select a pricing strategy 6. Determine a specific price

Price Elasticity

Elastic - Consumers buy more or less of a product when the price changes Inelastic- An increase or decrease in price will not significantly affect demand

Complaint Behavior

Factors: level of dissatisfaction, personality of customer, amount of benefit to be gained Attribution Theory: how the satisfaction level of the consumer is affected by a company; is the service normally stable? internal(consumer)/external(provider) focus, blame? Controllability, could something have been done to prevent this?

Generating vs Qualifying Leads

Generating leads: cold calling, direct mail/telemarketing, web site Qualifying leads: Recognized need, buying power, receptivity and accessibility

Leader pricing (loss-leader pricing)

products priced below the usual markup, near cost, or below cost

Lifetime Value of a Customer

quantity purchased in a given time frame x price/unit

Marketing Communications Process

the way in which a sender encodes a marketing idea and conveys it through message and medium so receivers can decode and understand it, and then respond with feedback

Price bundling

Packaging together two or more complementary products and selling them for a single price

If price goes up for one product and the sales of a second product go up, are these substitutes or complements?

Substitutes

Single-price

all customers are charged the same price for all the goods and services offered for sale within that product category

Promotional Mix Elements

-Advertising: Strengths: cost-efficient per person, can enhance brand image, repeatable Weaknesses: total cost can be high, slow feedback, one-way message, not flexible -Personal Selling: Strengths: more influential, immediate feedback, flexible Weaknesses: high cost per person, time-intensive -Sales Promotion: Strengths: can be implemented quickly, help to move seasonal items, enhance the effectiveness of other promotional mix elements Weaknesses: Not good for luxury products -Public Relations: Strengths: publicity can help build brand image, support other promotional efforts Weaknesses: firm cannot control what news agencies and other outlets say -Direct Marketing: Strengths: messages can be tailored to match the consumer, many consumers request these materials Weaknesses: customers can feel as if their privacy has been invaded -Events/Experiences: Strengths: help build brand community and buzz around the brand Weaknesses: more skeptical consumers might see efforts as inauthentic

Budget Approaches

-Arbitrary Allocation Method: no system. seemed like a good idea at the time. -Percentage of Sales Method: set percentage of sales or amount per system -Competitive Parity Method: match competitor or industry average spending

Atmospherics

-Atmosphere -Emotional Response -Behavior

Evaluating Media

-Clutter: How many other ads will our customers see at the same time? -Impact: How credible is the medium? How credible is the source? How well does the product fit with the users of the medium? -Efficiency: How much does each impression cost? -Engagement: How much do customers pay attention to that form of media?

Media Selection Considerations

-Cost per Thousand(Contact) (CPM): Cost of Ad Space / Reach x 1000 M is the roman numeral for 1000 -Reach: The number of target consumers exposed to a commercial at least once during a time period -Frequency: The number of times an individual is exposed to a message during a time period -Audience Selectivity: The ability of an advertising medium to reach a precisely defined market

Additional Advertising Types

-Event Creation: Designing an event that features sponsorship -Guerilla Marketing o Unconventional promotions on a low budget o Generally thought of as for small businesses -Stealth Marketing: Undercover marketing -Branded Entertainment: The integration of brands or brand messages into entertainment media

Goals and Tasks of Promotion

-Informing (PLC Stage Introduction & Early Growth) -Reminding (PLC Stage Growth and Maturity) -Persuading (PLC Stage Maturity)

Common Execution Styles

-Lifestyle: exclusive, only coolest people can wear this brand -Slice-of-life: meant for everyone, inclusive, basic product such as orange juice -Scientific: third-party data is used, automobile company rated by JD Power

Flexible/variable pricing

-Off-peak cheaper prices -Different segments pay different rates

Sales Promotion Rates

-Redemption: Percentage of people responding to incentive -Displacement: Percentage of people who would buy at the regular price, would buy anyways -Acquisition: Percent of purchases by people who only bought because of the incentive -Conversion (best indicator of success): Number of people who would buy it at full price after trying it because of the sales promotion

Direct Marketing

-direct mail -catalogs and mail order -telemarketing

Direct Retailing

-door to door -office to office -home sales parties

Recency-Frequency-Monetary Analysis (RFM)

1. Identifies customers most likely to purchase again 2. Identifies and ranks "best customers" 3. Identifies most profitable customers

Market Pricing

1. Selling Price = $1,800, Cost = $600. What is markup %? 2. Cost = $100, markup % = 75%. What is selling price? 3. Selling Price = $300, markup % = 33.3%. What is cost? 1. 66.7% (cost is 1/3, so markup% must be 2/3) 2. $400 (3/4 of the selling price is markup, ¼ is cost) 3. $200 (cost must be 2/3 of $300 selling price)

Unique Selling Proposition

A desirable, exclusive, and believable advertising appeal selected as the theme for a campaign

Marketing Channel

A group of individuals and organizations directing the flow of products from producers to customers

Awareness Interest Desire Action (AIDA) Concept

A model that outlines the process for achieving promotional goals in terms of stages of consumer involvement with the message

Advertising Campaigns

A series of related advertisements focusing on a common theme, slogan, and set of advertising appeals

Customer Relationship Management (CRM)

Activities that are used to establish, develop, and maintain customer sales. Customizing product and service offerings based on data generated through interactions between the customer and the company

Pull Strategy (B2C)

Advertising and promotional strategies geared toward consumers to increase desire for the product

Push Strategy (B2B)

Advertising and promotional strategies geared toward your distribution partners to encourage them to promote your product

Sales Promotions

Advertising impacts attitudes, best at the beginning of the process (reason to buy) Sales Promotions impact behavior, best at the end of the process (incentive to buy) o Trade promotions: B2B Push, most money spent o Consumer promotions: B2C Pull, contests/sweepstakes, coupons, rebates, loyalty programs, premiums (bonus items)

Retailing

All the activities involved in selling goods directly to the final consumer for their use (could be nonstore via mail, internet, telephone) Trends: personalized experiences, convenience, privacy concerns over data, mobile wallet, omnichannel retail

Please describe an example of excellent marketing and using course concepts, explain *why* you find this marketing effort to stand out in a positive way

Apple's ads, at least the earlier ones, focused on visionaries and a common vision for the goal of their company rather than focusing solely on their products and their design. Many of those ads focused on an institutional image rather than a specific product, their brand derived from innovation. Their "Think Different" campaign is an example of this, a wonderful promotion strategy. Using successful leaders and scientists to create a strong image that you can connect with, personifying the brand of Apple. They focused on their advantage in product leadership

Attributes vs Benefits

Attribute: a characteristic of the product. Benefit: what's in it for me? customers buy benefits, not attributes.

Ethical Issues

Bait and switch: similar to bait pricing, telling someone a cheap price and switch it last second. Drawn in under false pretenses Puffery: Exaggerations with lies that an audience can tell are not true "not an option"

Captive-product pricing

Captive products are items designed specifically for use with another product (many are necessary for the core product to function properly)

Integrated Marketing Communications

Consistent, unified message -Sales Promotion -Personal Selling -Packaging -Communication -Customer Focused -Direct Marketing -Public Relations -Media Advertising

What happens to price/revenue when the demand is elastic/inelastic

Demand is... Price goes... Revenue goes... Elastic: ------Up ---------- Down Elastic: ------Down ------- Up Inelastic: ----Up ---------- Up Inelastic: ----Down ------- Down

Stages for Establishing Prices (Step 1 and 4)

Develop Pricing Objectives -Profit -Status Quo: Identify price levels similar to competitor average price -Market Share Selecting a Basis for Pricing -Cost: adding a specified dollar amount to the seller's costs (Markup and Margin) -Demand: Customers pay a higher price when demand for the product is strong and a lower price when demand is weak (same as flexible pricing) -Competition o competing products are homogeneous resulting in elastic demand o organization is serving markets in which price is a key consideration -New Product (Skimming and Penetration)

Portfolio Pricing

Different levels of price points across a product category where consumers are willing to pay more for extras

Experiential Marketing

How can we make something an experience? Connect with the customer

Bait pricing

Illegal practice of advertising unrealistically low prices to bring customers into the store

Marginal Analysis

Increase spending if: the increased cost is less than the incremental (marginal) return Decrease spending if: the increased cost is more than the incremental (marginal) return. Hold Spending level if: the increased cost is equal to the incremental (marginal) return

Major Types of Advertising

Institutional: Enhances a company's image rather than promotes a particular product Product: Touts the benefits of a specific good or service -Pioneering: Stimulates primary demand for new product or category (PLC Introductory) -Competitive: Influences demand for the brand, often uses emotional appeal (PLC Growth) -Comparative: Compares two or more competing brands' product attributes (Used when growth is sluggish or competition is strong)

Channel Strategies

Intensity of Distribution -Intensive: Uses all available outlets to distribute a product -Selective: Uses only some available outlets to distribute a product, several not everywhere. -Exclusive: Uses a single outlet in a fairly large geographic area to distribute a product Channel Choice Factors -Product factors -Producer factors -Market factors

Internal/External Factors of Price

Internal Factors of Price: 1. Marketing Objective 2. Marketing Mix Strategy 3. Cost External Factors of Price: 1. Demand for your product. 2. Competition 3. Economy

Source Control vs. Credibility (Promotional Mix)

Low----------Level of Control---------High-----> Word Mouth, PR, Pers. Selling, Sales Promo, Ads <--------High------Credibility--------Low---------

New Product Pricing Strategies

Market Skimming: charging the highest possible price that buyers who desire the product will pay - Premium - Overcharging Market Penetration: Setting prices below those of competing brands to penetrate a market and gain a significant market share quickly - Good-value - Economic

Multiple-unit pricing

Packaging together two or more identical products and selling them for a single price

Reference pricing (Selling against the Brand)

Pricing a product at a moderate level and positioning it next to a more expensive model or brand Retailers sometimes add higher-priced items to extend the range of product price alternatives

Message Recall

Primacy Effect - beginning Recency Effect - end

Pros and Cons of Advertising

Pros: cost-effective, creative, educate, unique selling, proposition. Cons: unnoticed, misinterpret, intrusive, offend.

Measuring TV Audiences

Rating: likability of the particular show over time HH tuned to show / Total U.S. HH Share: market share at a particular time in the day households (HH) tuned to show / HH using TV

Personal Selling (Push Strategy/B2B)

Representatives of a company interact directly with a consumer to provide information to help the consumer make a buying decision about a product or service One-to-one Interaction: • Address Specific Customer Needs • Alter Message • Provide Additional Information

Advertising/Sales Response Functions (Specifically S-Curve)

S-Curve exemplifies diminishing returns

Power of We

Seeing someone perform a certain action makes you more likely to behave in that same way.

Everyday Low Prices

Settling a low price for products on a consistent basis

Break-Even Pricing

Total Fixed Costs / (Selling price - Variable cost)

Service Recovery

what do you do when something goes wrong? listen to the customer, resolve problems quickly, provide a fair solution