Marketing 360 - Exam 3 Study Guide

What are the main goals for consumer sales promotions

"Who do we want to influence?" Loyal Customers, Competitor's Customers, Brand Switchers, and Price Buyers

What are the promotional mix tools and what are the characteristics and advantages/disadvantages of each?

- Advertising: Impersonal, one-way mass communication about a product or organization that is paid for by a marketer, giving the ability to reach a large number of people. - Sales Promotion: Generally, a short run tool used to stimulate immediate increases in demand which might include free samples, sweepstakes and/or vacation giveaways. - Public Relations: The marketing function that evaluates public attitudes, identifies areas within the organization the public may be interested in and executes a program of action to earn public understanding and acceptance. - Personal Selling: It attempts to persuade the buyer to accept a point of view to create a long term committed relationship based on trust, increased customer loyalty, and a continuation of the relationship. - Social Media: Facilitates customer empowerment and communication.

Creative decisions in advertising (we talked about benefits, advertising appeals, and USPs) and executional style (you should recognize the executional styles I showed in class)

- Benefit: attribute & benefit - Advertising Appeal: how ad is intended to connect w/ audience & identify reason to buy product (Rational or Emotional) - USP (Unique Selling Proposition): theme for campaign - Executional Style: Slice-of-life, Lifestyle, Spokesperson/Testimonial, Humorous, Demonstration

The main idea of the pricing tactics that I covered in class (bundling vs. unbundling, price lining and captive pricing, yield management systems (dynamic pricing), captive pricing)

- Bundling: one price for a package containing two+ services or products - Unbundling: charging for products/services previously included in bundles - Dynamic Pricing: demand for a product may change quickly overtime -> to maximize revenue, company should adapt prices often - Captive Pricing: relatively low price & profit margin for initial investment - higher prices & profit margins for supplies

What is the information effect of price? When do consumers make price-quality inferences, and what is prestige pricing?

- Compare prices to reference prices (internal & external) - Price: quality inference - it's the more expensive option, so it must be better - Prestige Pricing: implies using a high price to signal quality. This is a commonly used strategy for, e.g., perfumes, wines, and liquors, for which quality differences are not very clear.

The psychology of pricing: reference prices, odd-evening pricing. The "reference" price concept is not covered in the book but it is important for understanding consumers' behaviors.

- Consumers may use price info in relative ways

What CRM stands for (customer relationship management) and why companies are using this approach

- Customer Relationship Management - To identify customer relationships to better understand the customer base through capturing customer data. Marketers and salespeople can then leverage the information not only to develop deeper relationships but also to close more sales with loyal customers.

For Public relations: you need to know how PR differs from advertising, what is meant by publicity, and what the benefits are of publicity compared to other forms of communication

- How the company related to its publics such as stakeholders, employees, member, customers, local communities, shareholders, and other institutions. Often executed through publicity, company activities, messages, and/or negative events. - Low control of message - No identification of sponsor - Main benefit = unpaid media exposure

The selling process model

- Lead Generation: cold calling - less efficient than identifying potential buyers before initiating contact - Qualification Leads: which leads more likely to buy? - Approach: learn as much as possible about customer -> first contact, start of relationship building -> Needs Assessment: sales person needs to determine what products best fit customer needs - Developing and Proposing Solutions: sales person develops one or several solutions based on understanding of customer needs - Handling Objections: sales person needs to anticipate & prepare answers for objections - Closing the Sale: sales person needs to have strategy for how to close the sale - Following Up: sales person needs to make sure that the product & delivery met customer expectations

What are the characteristics from advertising that sets it apart from the other promotional tools?

- Low control of message - Very small and delayed amount of feedback

The risks of using price promotions

- May increase deal-proneness and erode brand loyalty. Consumers learn when and where promotions are offered. - Extensive use of sales promotions will hurt margins. - Revenues will drop if loyal customers are not buying more or number of customers doesn't increase

Legal aspects of pricing (you do not need to memorize the specific legal rules).

- Predatory Pricing: means it reduced prices below cost in order to drive competitors out of the market, and then increased prices once competitors had left the market - Price Discrimination - Price Fixing - Retail Price Maintenance (MSRP)

Price skimming vs. penetration pricing. What is the main approach for each strategy and when is either more appropriate?

- Price Skimming: sometimes called a "market-plus" approach to pricing because is denotes a high price relative to the prices of competing products - Penetration Pricing: new product is offered at a low price. The goal is to maximize market.

What are relevant advertising objectives?

- Product Advertising: focus on specific product, sometimes using direct comparisons - Institutional (corporate) Advertising: focus on corp's overall identity

What are the pros and cons of a standardized versus adapted marketing mix strategy?

- Standardization: economies of scale & cost savings; global brand image - Adaptation: unique local preferences; ability to pay may differ; distribution systems work differently; different regulations

What does Integrated Marketing Communication (IMC) mean and why is it important

- The careful coordination of all promotional messages for a product or a service to ensure the consistency of messages at every contact point at which a company meets the consumer. - IMC is largely a reaction to the scrutiny that marketing communications have come under. Particularly, to suggestions of uncoordinated promotional activity, leading to strategies that are wasteful and inefficient.

The AIDA model; what are the different steps and how does it affect promotional mix decisions

- The model proposes that consumers respond to marketing messages in a cognitive (thinking) effective (feeling) and cognitive (doing) sequence: 1. Attention/Awareness 2. Interest 3. Desire 4. Action - The AIDA Model doesn't explain how all promotions influence purchase decisions, it only measures how consumers progress from one stage to the next.

What characterizes the five methods of entering global markets and when would each be used (exporting; licensing)

1. Exporting (low risk/low return): Selling domestically produced products to buyers in other countries as a company decides to enter the global market. This method is also the lowest in risk. 2. Licensing/Franchising: The legal process whereby a licensor allows another firm to use its manufacturing process, trademarks, patents, trade secrets or other proprietary knowledge. 3. Contract Manufacturing: Private label manufacturing by a foreign company. The foreign company produces a set amount with the domestic firm's brand name on the goods while the domestic company usually handles marketing. 4. Joint Venture: Where a domestic firm buys a part of a foreign company or joins with a foreign company to create a new entity. 5. Direct Investment (high risk/high return): An active ownership of a foreign company or of overseas manufacturing. They have the greatest amount of reward and risk. A firm can build new facilities in the foreign country or by acquiring an existing company.

Steps in CRM process (need to understand keywords like touch-point and cross-selling)

1. Identify customer relationships 2. Understand interaction w/ current customer base 3. Capture customer data based on interactions 4. Store & integrate customer data using IT 5. Identify best customers 6. Leverage customer info - Touch-point: every potential opportunity for customer contact - Cross-selling: Cross-selling means marketing products to customers that they are currently not buying. With CRM it is easy to keep track of what types of products a particular customer is buying and based on this knowledge the company can suggest other types of products.

Four main goals/objectives of Promotion

1. Inform: create awareness; stimulate interest in new product; explain new product benefits 2. Persuade: change customers' perceptions; create brand preference, brand switching 3. Remind: reinforce brand awareness; remind that brand may be needed 4. Connect: form relationships w/ customers

Social media objectives we discussed, the general benefits of using social media marketing, social media metrics, as well as the risks I talked about in class.

1. Listen & Learn 2. Build Relationships & Awareness 3. Promote Products & Services 4. Manage Reputation 5. Improve Customer Service

When is an example of push strategy being used?

A retailer uses displays or aggressive pricing, such as Walmart.

How pricing influences consumers value perceptions as well as the company's bottom-line?

Benefits/Price = Value

What is the main purpose of sales promotions and how are these are used with a push vs. pull strategy

Consists of marketing communication activities other than advertising, personal selling, and public relations, in which short term incentive motivates consumers or members of the distribution channel to purchase a good or service immediately, either by lowering the price or by adding value

What are environmental factors the company has to take into account when marketing in other countries?

Culture, Economic, Development, Global Economy, Political Structure, Actions, Demographic Make-Up, and Natural Resources

Communication Model & How they apply to marketing communication

Maximize Correct Decoding, Reduce Noise, and Obtain Feedback (Sender -> Message -> Receiver)

Advantages and disadvantages of the main advertising media, and media selection considerations

Newspapers: + flexible; short-time lead; geographic selectivity - limited reproduction; low pass-along rate Magazines: + good reproduction; good selectivity; high pass-along rate - long lead times; lack of urgency Radio: + low cost; good immediacy; flexibility; short-time lead - no visions; high repetition needed Television: + wide reach; vivid & creative messages; highly selective channels - high total cost; long lead-times Outdoor Media: + flexibility; geographic selectivity; low-moderate cost - limits scope of messages; high level of clutter Internet: + very selective; relatively short lead-time; moderate cost - difficult to measure effectiveness

Difference between paid, earned and owned media

Paid media: A category of promotional tactics based on the traditional advertising model whereby a brand pays for media space. Earned media: A category of promotional tactics based on a public relations or publicity model that gets customers talking about products or services. Owned media: A new category of promotional tactics based on brands becoming publishers of their own content in order to maximize the brand value to customers.

The advantages of personal selling and in what situations companies typically use it

Personal selling provides a detailed explanation or demonstration of the product. Costs can also be controlled by adjusting the number of people in the sales team. It's more effective than other forms of promotion in obtaining a sale and a satisfied customer.

What are the main trade sales promotion tools

Primarily directed to members of the marketing channel such as wholesalers and retailers. Tools include: Discounts, Trade allowances, Push Money, Training, and Store Demos.

Push and pull strategies; what are they and when are they used? (You should be able to recognize if a particular communication effort represents a push or a pull strategy)

Push: A marketing strategy that uses aggressive personal selling and trade advertising to convince a wholesaler or retailer to carry and sell particular merchandise. Pull: A marketing strategy that stimulates consumer demand to obtain product distribution.

When is an example of pull strategy being used?

Social media invites the consumer to experience the product on to hopefully get them to buy the product.

How does the AIDA Model help the marketer understand consumer reactions?

The promoters task is to determine where on the purchase ladder most of the target customer are located and design a promotion plan to meet their needs.

How costs are included in pricing decisions: variable vs. fixed costs, the concept of mark-up pricing, and the main idea and approach for break-even analysis

VC + FC = TC Mark-up Pricing: adding percentage to cost Break-Even Analysis: how much do we need to sell to cover fixed costs + variable costs for that quantity?

Political and legal considerations of global trade? (Purpose of WTO, NAFTA, EU)

WTO: To increase trade among nations. NAFTA: To create the worlds then largest free trade zone. The pact removed a web of Mexican licensing requirements, quotas, and tariffs that limited transactions in U.S. goods and services.(Free Trade Agreements) EU: It's a free trade zone encompassing 28 European countries. It guarantees the freedom of movement of people, goods and services and capital between members.

How demand affects pricing decisions: the demand curve, price elasticity of demand and factors that influence price elasticity.

When Price increases, Demand decreases Elasticity: Higher price = lower quantity demanded Inelastic: higher price doesn't effect quantity demanded