Mark 4110 exam 2
Purchase process model
describes how buyers purchase a particular product and defines the role of information Awareness->Consideration->Preference->Purchase At any point in time: -Different buyers are in different stages of the model -Each stage requires a different communication strategy
3 main channels
manufacturer wholesaler retailer
Budgeting Approaches (Competitive Parity)
-Balances the firm's and competitors' communication expenses -Expressed as a percentage of total advertising by all competitors in a market at a point in time -Uses advertising share of voice
Budgeting Approaches (Fixed Dollar Amount per Product unit)
-Budget equals the per-unit allocation multiplied by the number of units expected to be sold -Used by durable-goods manufacturers
Selective Demand
-Demand for a brand or product -Occurs later in the life cycle -Substitute products exist The message: -Focuses on the benefits of a specific brand or product -Differentiates the product from competitive ones
Joint Venture
-Domestic and foreign companies invest together to create a new entity in the host country -two firms share ownership, control, and profits -allows for combination of resources -may be trade barriers for other entry options -can be difficult to manage
Budgeting Approaches (All Available funds)
-Employed in introducing a new product for which maximum exposure is desired -Used by nonprofit organizations
Factors to consider when designing the communication mix
-Information requirements of buyers -Nature of Product -Nature of Target Markets -Capacity of organization
Budgeting Approaches (Percentage of Sales)
-Most Widely used approach -Past or anticipated sales are used as the basis -When sales rise, communication expenses rise -Simple to calculate -Which comes first—sales or communication? -Not flexible or market-oriented
Budgeting Approaches (Objective Tasks)
-Objectives are set for a communication program -Costs are based on the tasks to achieve the goals
5 types of Channel Power
-Reward -Coercive -Expert -Referent -Legitimate
Marketing Control Process
-Strategic adaptation to environmental change -Operational adaptation to production needs Strategic control: "Doing the right things" Operational control: "Doing things right"
Manufacturers can offer the following benefits to their intermediaries:
-Trade Discounts -Fill Rate Standards -Cooperative Advertising -Lead-Time Requirements -Product Exclusivity -Profit Margins
Customer Profitability Analysis
A profitable customer is a person, household, or company that, over time, yields a revenue stream that exceeds, by an acceptable amount, the organization's cost of attracting, selling, and servicing that customer
Channel Power
Ability of one channel member (A) to get another channel member (B) to do something it otherwise would not have done -A's potential to influence B Difficult to diagnose Hypothetical, speculative, and perceived Can exist in all relationships
Marketing Communication Mix (Definitions)
Advertising -Any form of paid, non-personal communication by an identified sponsor Public Relations -Maintain and enhance positive public image and minimize any factors that could create a negative image Sales Promotion -Short-term incentives to encourage immediate purchase of good or service Personal Selling -Direct communication between sales rep and prospective customer to make a sale and build relationship Direct Marketing -Message sent directly to targeted individual consumers to obtain an immediate response and cultivate a lasting relationship
Marketing Communication Mix
Advertising Sales Promotion Direct Marketing Public Relations Personal Selling
Variable-Cost Price Strategies (Assumptions)
Also known as Contribution Pricing -In short-term, relevant costs are variable, not total -Variable unit cost represents the minimum selling price -Any price above this minimum contributes to fixed costs and profit
Communication objectives must be
Articulated: For both the IMC program and the marketing communication tools Consistent: Among themselves and with other marketing elements Quantifiable: For measurement and evaluation purposes Attainable: With an appropriate amount of effort and expenditure Within a specific time frame
Operations Control
Assessing how well the firm actually performs marketing activities Assumes: -Direction (strategy) of the firm is correct -Operational effectiveness can be improved
Media timing strategies
Blitz Strategy: Concentrating on advertising dollars in a relatively short time period when new products are introduced Continuity Strategy: Spending advertising dollars over the long term to maintain continuity Pulse Strategy: Periods of concentrated advertising used routinely over a long period of time
Full-Cost Price Strategies (3 Things)
Break Even Pricing: Equals the per-unit fixed costs plus the per unit variable costs of a product Mark-up Pricing: Determined by adding a fixed amount to the cost of the product Rate-of-return Pricing: Obtain a pre-specified rate of return on ROI for the organization
*Buyer Requirement (Size and Variety)
Bulk Breaking: End-user's ability to buy a desired (possibly small) number of units Variety and Assortment: Breadth and Depth of brands or products available
*Buyer Requirement Satisfaction (aka: service outputs)
Buyer Requirement Satisfaction (aka: service outputs) -Information -Convenience -Size and Variety -Services
Pull Strategy
Buyers demand product from intermediaries, pulling product through a marketing channel Consumers->retailers->wholesaler->Producer
Variable-Cost Price Strategies (Used to Stimulate or Shift Demand)
Can lead to: Increased revenues Economies of scale Lower unit costs Greater profits Makes sense Because: -Fixed costs incurred whether or not product is sold -Covers incremental variable costs for each customer
*Buyer Requirement Satisfaction (Information)
Communicate with buyers through in-store displays, demonstrations, and personal assistance Important when buyers: Have limited knowledge Desire specific data about a product
Product Service Mix Analysis (Market share analysis)
Complements sales volume as a performance measure indicates whether a firm is gaining or losing ground as compared to competitors Can be computed by geographic area, product, customer, or channel
Marketing Channel Analysis
Consists of 2 complementary processes: Assess environmental and organizational factors that may alter the structure, conduct and performance of marketing channels Evaluate the profitability of marketing channels
Price as an Indicator of Value
Consumers pair price with the perceived benefits derived from a product to determine value Value is the ratio of perceived benefits to price: -Value= Perceived Benefits/Price
Price as an Indicator of Value Relationship
Consumers' perceptions of value also affected by substitutes that satisfy the same need Comparing the costs and benefits of substitute products gives rise to a "reference value" E.g., Private labels priced much lower than national brands can cause assumptions of lower quality
Licensing
Contract where a firm (licensee) is given the rights to intellectual property (patents, trademarks, trade secrets, etc) by the owner (licensor) in exchange for a royalty or fee
*Buyer Requirement Satisfaction (Services)
Customer services such as delivery, installation, credit, etc.
Primary Demand For Product
Demand for the product class Occurs early in the life cycle Message focuses on: -Introducing benefits of a product -Overcoming objections to a product
Profitability:
Determined by: -Margins earned (revenues-costs) for each channel member -channel length -extent to which channel members share costs
Sales Analysis
Direct attention to: Behavioral Aspect of Sales: Consists of sales effort and allocation of selling time Cost Aspect of Sales: Consist of expenses from the performance and administration of the sales function
Direct vs. Indirect Distribution
Direct distribution: Contact buyers directly Indirect distribution: Intermediaries to reach target markets
Global Market Segmentation and Targeting
Divide the globe or large regions of the world into distinct market segments that: -behave in the same way -have similar needs and preferences -purchase in a similar way
Direct Investment
Domestic firm invests in and owns a foreign subsidiary or division -riskiest option that requires most commitment -allows the firm to better understand the local market conditions -most profitable
4 modes of entry into foreign markets
Exporting Licensing Joint venture Direct investment
Price as an Indicator of Value Relationship (Again)
For premium or luxury goods, higher prices can symbolize quality and prestige As price increases, so do perceptions of value and thus demand for the product
Two categories of pricing strategies
Full Cost Price Strategy: Those that consider both variable and fixed costs Variable-Cost Price Strategies: Those that only take into account variable costs
Reason for Decisions to go Global
Gain Access to new buyers: -increased revenuew, profits, and long-term growth -Capitalize on firm's distinctive competencies and capabilities -achieve economies of scale
Dual Distribution
Going to market both directly and through channel intermediaries -Benefits are situational and depend on the relative strengths of manufacturers and retailers -If a manufacturer decides to distribute directly to ultimate buyers in a retailer's territory -If a retailer accounts for a significant sales volume, dropping the lines will negatively affect the firm
Global Brands and Positioning (Successful characteristics)
High-technology products with strong functional images High-image products with strong associations to fashionability, sensuality, wealth, or status Services and business-to-business products that emphasize corporate images in their global marketing campaigns Retailers that sell to upper-class individuals or specialize in a salient but unfulfilled need Brands positioned primarily on the basis of their country of origin Products that do not need customization or other special products to function properly
3 degrees of distribution density (Target Market Coverage)
Intensive Distribution: Firm's products are sold through as many retail outlets as possible Selective Distribution: limited number of retail outlets carry the firm's products Exclusive Distribution: One retail outlet in a geographic area or one retail chain sells the firm's offerings (Franchising)
Global Marketing
Involves the execution of activities needed to plan, price, promote, and direct the flow of an organization's products in more than 1 country, at a profit
Product Service Mix Analysis
Involves two interrelated tasks Assess performance of products via: sales volume analysis and Market share analysis
Channel Conflict (4 Types)
Latent Conflict: Channel members strive to retain their autonomy, and compete for limited resources Perceived Conflict:A channel member senses opposition of viewpoint, perceptions, or intentions Felt (or effective) conflict: A result of the negative emotions including anxiety, anger, frustration, and hostility Manifest Conflict:Expressed visibly through behaviors (e.g., blocking each other's initiatives and withdrawing support)
Make or Buy Decisions
Make: Perform the communication mix activity internally with own human resources Buy: Buy, contract, outsource, the communication mix activity externally to outside experts
Omni-Channel Marketing
Management of all physical and virtual channels in order to offer a seamless shopping experience that provides consistent brand engagement to consumers
Strategic Change Sources (4 Things)
Market Evolution: Results from changes in primary demand for a product class. Technological Innovation: Creates strategic change as newer technologies replace older ones. Market Redefinition: Results from changes in the products demanded by buyers or promoted by competitors Market Channel Change: Increased role of internet technology -Focus on reducing distribution costs -Power shifts within marketing channels
Operations Control (5 Things)
Marketing Cost Analysis Product Service Mix Analysis Sales Analysis Marketing Channel Analysis Customer Profitability
Budgeting Approaches
Percentage of Sales Fixed Dollar Amount per Product unit Competitive Parity All Available funds Objective Tasks
Product Service Mix Analysis (sales volume analysis)
Performance index based on : -Growth or decline in Unit Sales Volume -Proportion of Total firm sales from each offering
Considerations in Marketing Control
Problems Vs Symptoms: -Recognize the difference between root problems and surface symptoms -Must develop causal relationships between occurrences Effectiveness Vs Efficiency: -Effectiveness assesses whether the firm is achieving its intended goals given its constraints, capabilities, and environmental opportunities -Efficiency relates to productivity—the levels of output given a specified unit of input Data Vs. Information: -Data are essentially reports of activities, events, or performance -Information is the classification of activities, events, or performance designed to be interpreted and useful for decision making
Exporting
Producing products in one country and selling them in another -requires very little change in products, organization, and marketing practices (indirect and direct)
Market Penetration Strategy
Product introduced at a low price to maximize initial market share
Market Skimming Strategy
Product introduced at very high price and then reduced over time
Push Strategy
Product is pushed through a marketing channel to buyers in a sequential fashion Producer->wholesaler->retailers->consumer
Purchase Decision Roles
Purchaser Influencer Decision Maker Consumer -Possible to play more than one role -In a joint purchase decision, the roles may be played by different individuals
Cross-elasticity of demand
Related the price elasticity simultaneously to more than one product -measures the responsiveness of quantity demanded in product A to a price change in Product B -Products are considered complements (substitutes) if lowering (raising) the price of -Product A leads to an increase in the unit sales of Product B
*Buyer Requirement Satisfaction (Convenience)
Spatial Convenience: Increases consumers' satisfaction by reducing transportation requirements and search costs Waiting Time: Time that the end-user must wait between ordering and receiving the goods or post-sale service
Price War
Successive price cutting by competitors to increase or maintain sales or market share -If competitors match the lower price, market share, sales, and profit gains could be lost -Overall price level resulting from the lower price benefits none of the competitors
Retailer selection based on:
Target Market Coverage: Which retailers will provide the best coverage of the target market? Buyer Requirement Satisfaction:Which retailers will best satisfy the target market's buying requirements? Profitability:Which retailers will be the most profitable?
Integrated Marketing Communication
The practice of blending different elements of the communication mix in mutually enforcing ways to inform, persuade, and induce consumer action.
Marketing Cost Analysis
Trace, assign, or allocate costs to a specified marketing activity or segment The more joint costs there are, the less exact allocations will be Greater detail in cost allocation or traceability will provide more useful information
Multi-Channel Marketing
Utilization of multiple channels (typically both physical and electronic) to reach the firm's target markets
Hedgehog Concept 3 Things
What you can be the best in the world at (and, equally important what you cannot be the best in the world at) What drives your economic engine? Most of the good-to-great companies discovered a single driving denominator as profit per x, which had the greatest impact on their economics. For social sector, instead of economic, resource engine - which is broken into three parts as time, money, and brand. What you are deeply passionate about. The good-to-great companies focused on those activities that ignited their passion. The idea here is not to stimulate passion but to discover what makes you passionate.
Global Brands and Positioning
a global brand is a brand marketing under the same name in multiple countries with similar and centrally coordinated marketing programs, including positioning