MKTG 409 Exam 4
allowance
- A concession in price to achieve a desired goal. - Promotional allowance, a price reduction granted to dealers for participating in advertising and sales support programs intended to increase sales of a particular item. - Trade-in allowance are price reductions granted for turning in a used item when purchasing a new one.
sales contest
- Designed to motivate distributors, retailers, and sales personnel by recognizing outstanding achievements.
characteristics of the product
- Generally, promotion mixes for business products concentrate on personal selling, whereas advertising plays a major role in promoting consumer goods. - Marketers of business products use some advertising to promote products and occasionally sales promotion.
base-point pricing
- Geographic pricing that combines factory price and freight charges from the base point nearest the buyer. - This approach to pricing has virtually been abandoned because of its questionable legal status.
communications audit
- May include a content analysis of messages, a readability study, or a readership survey.
F.O.B. destination
- Means the producer absorbs the costs of shipping the merchandise to the customer.
premium pricing
- Occurs when the highest-quality product, or the most-versatile and most desirable version of a product in a product line, is assigned the highest price.
cumulative discounts
- Quantity discounts aggregated over a stated time period.
demonstrations
- Sales promotion methods a manufacturer uses temporarily to encourage trial use and purchase of a product or to show how a product works.
approach
- The manner in which a salesperson contacts a potential customer—is a critical step in the sales process. - During the initial visit, the salesperson strives to develop a relationship rather than just push a product. - The salesperson who uses the "cold canvass" approach calls on potential customers without prior consent. This approach is decreasing. - Repeat contact is another common approach: when making the contact, the salesperson mentions a previous meeting.
financial price
- The measurement of value commonly used in exchanges.
developing a media plan- Media planners also consider the sizes and types of audiences that specific media reach.
- The media planner's primary goal is to reach the largest number of people in the advertising target that the budget will allow. - A secondary goal is to achieve the appropriate message reach and frequency for the target audience while staying within budget. - They first decide which kinds of media to use: radio, television, newspapers, digital or online advertising, magazines, direct mail, outdoor displays, or signs on mass transit vehicles. - They analyze location and demographic characteristics of consumers in the target audience. - Media planners also consider the sizes and types of audiences that specific media reach.
bundle pricing
- The packaging together of two or more products, usually of a complementary nature, to be sold for a single price.
average variable costs
- The variable cost per unit produced, is calculated by dividing the variable costs by the number of units produced.
consumer jury
- To pretest advertisements, marketers sometimes use a consumer jury, a panel of existing or potential buyers of the advertised product.
audience
- Two or more receivers.
four elements of the promotion mix
1. Advertising 2. Personal Selling 3. Public Relations 4. Sales Promotion
Threatt Production makes low-priced, convenience products that are widely available. It is most likely to focus its promotion efforts on
advertising
The use of a pull policy may require heavy expenditures for
advertising and sales promotion
As they walk to the car, Erin tells her sales representative, Joachin, that they may need to modify the price structure they just presented to the prospect. Erin bases her statement on the way the prospect folded his arms when Joachin quoted him the prices on the new system. Joachin says he didn't notice. Erin recommends a book on ____ communication to Joachin.
kinesic
You are working with a sales management consultant on ways to improve your company's sales performance. Your company sells high-end consumer products. You and the consultant agree your promotional activities need to include more direct interaction with your customers. Based on this information, which of the elements of promotion should you emphasize more?
personal selling
Word-of-mouth communications are most effective for _______________ products.
personal services
If the push policy is used in promoting a product, the firm
promotes only to the next marketing institution down the marketing channel.
To gain maximum benefit from promotional efforts, marketers must strive to
properly plan, implement, coordinate, and control communications.
Brandon walks around behind purchasing agent Shannon as she looks at the pamphlet describing Hyster's new conveyer system. Shannon stands up and walks to a table on the other side of her office. Brandon follows, but he does not understand the ____ communication Shannon is sending.
proxemic
Which of the following is a key factor used to determine a product's promotion mix?
push and pull channel policies
An advertisement from a ski lodge extolling the benefits of a summer getaway in the mountains uses promotion to
reduce sales fluctuations
When a marketer makes an effort in promotion to point out the strengths and benefits of a specific brand, it is an attempt to build ____ demand.
selective
Ashley is currently working on a video to introduce a new line of athletic wear for women. She is using signs and symbols to represent the concept and meaning of the new athletic wear. Ashley is most likely working on the ____ for this promotional video.
the coding process
Andrea receives an e-mail from her sister-in-law that is actually a recommendation for a website with a demonstration of a new home hair-coloring system. She later discovers that her sister-in-law received a free trial kit for passing Andrea's and four other friends' e-mail addresses along to the marketer. This is known as
viral marketing
public relations
- A broad set of communication efforts used to create and maintain favorable relationships between an organization and its stakeholders.
combat competitive promotional efforts
- A combative promotional objective is used most often by firms in extremely competitive consumer markets, such as the fast food, convenience store, and cable/Internet/phone markets.
external reference price
- A comparison price provided by others, such as retailers or manufacturers. - Less experienced buyers.
pricing strategy
- A course of action designed to achieve pricing objectives, which are set to help marketers solve the practical problems of setting prices.
dealer loader
- A gift to a retailer that purchases a specified quantity of merchandise. - Dealer loaders are often used to obtain special display efforts from retailers by offering essential display parts as premiums. (sterling silver tray)
demand curve
- A graph of the quantity of products expected to be sold at various prices if other factors remain constant. - Quantity demanded is greater, not less, at higher prices.
proxemic communication
- A less obvious form of communication used in personal selling situations, occurs when either person varies the physical distance separating them. When a customer backs away from a salesperson, for example, he or she may be displaying a lack of interest in the product or expressing dislike for the salesperson.
merchandise allowance
- A manufacturer's agreement to pay resellers certain amounts of money for providing promotional efforts like advertising or point-of-purchase displays. - Must show proof.
free merchandise
- A manufacturer's reward given to resellers that purchase a stated quantity of products.
scan-back allowance
- A manufacturer's reward to retailers based on the number of pieces moved through the retailers' scanners during a specific time period.
everyday low prices (EDLP)
- A marketer sets a low price for its products on a consistent basis, rather than setting higher prices and frequently discounting them. - A company that uses EDLP benefits from reduced promotional costs, reduced losses from frequent markdowns, and more stable sales.
cost comparison indicator
- A means of comparing the costs of advertising vehicles in a specific medium in relation to the number of people reached.
press conference
- A meeting called to announce major news events.
advertising
- A paid nonpersonal communication about an organization and its products transmitted to a target audience through mass media, including television, radio, the Internet, newspapers, magazines, video games, direct mail, outdoor displays, and signs on mass transit vehicles. - Being highly flexible, advertising can reach an extremely large target audience or focus on a small, precisely defined segment. - At times, a firm tries to enhance its own or its product's image by including celebrity endorsers in advertisements.
source
- A person, group, or organization with a meaning it attempts to share with an audience.
internal reference price
- A price developed in the buyer's mind through experience with the product.
cash discount
- A price reduction given to buyers for prompt payment or cash payment.
seasonal discount
- A price reduction given to buyers for purchasing goods or services out of season.
determination of a specific price
- A pricing strategy will yield a certain price or range of prices, which is the final step in the pricing process.
market share
- A product's sales in relation to total industry sales. - Many firms establish pricing objectives to maintain or increase market share. - Google setting their Nexus tablet at half of what and iPad Mini costs. - High relative market shares often translate into high profits for firms. - A firm's sales volume can increase while its market share decreases if the overall market grows.
trade (functional) discount
- A reduction off the list price a producer gives to an intermediary for performing certain functions.
kinesic communication
- A salesperson and customer frequently use kinesic communication, or communication through the movement of head, eyes, arms, hands, legs, or torso. Winking, head nodding, hand gestures, and arm motions are forms of kinesic communication.
communication
- A sharing of meaning. - Essentially the transmission of information.
buy-back allowance
- A sum of money that a producer gives to a reseller for each unit the reseller buys after an initial promotional deal is over.
buying allowance
- A temporary price reduction offered to resellers for purchasing specified quantities of a product.
freight absorption pricing
- Absorption of all or part of actual freight costs by the seller.
cost-based pricing
- Adding a dollar amount or percentage to the cost of the product. - Two common forms of cost-based pricing are cost-plus and markup pricing.
cost-plus pricing
- Adding a specified dollar amount or percentage to the seller's cost. - Appropriate when production costs are difficult to predict. - Projects involving custom-made equipment and commercial construction are often priced using this technique.
markup pricing
- Adding to the cost of the product a predetermined percentage of that cost. - Commonly used by retailers. - There are two ways to look at the markup, as a percentage of cost or as a percentage of selling price. - Markup as a percentage of cost = markup / cost - Markup as a percentage of selling price = markup / selling price
premium money (push money)
- Additional compensation offered by the manufacturer to salespeople as an incentive to push a line of goods.
special-event pricing
- Advertised sales or price cutting linked to a holiday, a season, or an event.
dealer listings
- Advertisements promoting a product and identifying participating retailers that sell the product.
flighting schedule
- Advertisements run for set periods of time, alternating with periods in which no ads run. - For instance, an advertising campaign might have an ad run for 2 weeks, then suspend it for 2 weeks, and then run it again for 2 weeks.
identifying and analyzing the target audience
- Advertisers research and analyze advertising targets to establish an information base for a campaign. - Information commonly needed includes location and geographic distribution of the target group; the distribution of demographic factors, such as age, income, race, gender, and education; lifestyle information; and consumer attitudes regarding purchase and use of both the advertiser's products and competing products. - The more an advertiser knows about the target audience, the more likely the firm is to develop an effective advertising campaign.
evaluating advertising effectiveness
- Advertising can be evaluated before, during, and after the campaign.
continuous schedule
- Advertising runs at a constant level with little variation throughout the campaign period.
AIDA model
- Advertising should create AWARENESS, produce INTEREST, create DESIRE, and ultimately result in a purchase (ACTION).
assessment of the target market's evaluation of price
- After developing pricing objectives, marketers must assess the target market's evaluation of price. - The importance of price varies depending on the type of product, target market, and the purchase situation.
tactile communication (or touching)
- Also a form of communication, although less popular in the United States than in many other countries. Handshaking is a common form of tactile communication both in the United States and elsewhere.
relationship selling
- Also known as consultative selling, involves building mutually beneficial long-term associations with a customer through regular communications over prolonged periods of time. - Also beneficial in business-to-business marketing. - Instead of simply focusing on short-term repeat sales, relationship selling involves forming long-term connections that will result in sales throughout the relationship.
who develops the advertising campaign?
- An advertising campaign may be handled by an individual, a few people within a firm, a firm's own advertising department, or an advertising agency. - In very small firms, one or two individuals are responsible for advertising (and for many other activities as well). They usually depend on local media. - In certain large businesses, especially large retail organizations, advertising departments create and implement advertising campaigns. May consist of a few multiskilled individuals or a sizable number of specialists. - When an organization uses an advertising agency, the firm and the agency usually develop the advertising campaign jointly. Advertising agencies, because of their size and number of clients, have the ability to reach celebrities for sponsorship or endorsement.
cooperative advertising
- An arrangement in which a manufacturer agrees to pay a certain amount of a retailer's media costs for advertising the manufacturer's products. - The amount allowed is usually based on the quantities purchased. - Must show proof. - These payments give retailers additional funds for advertising. - A large proportion of all cooperative-advertising dollars is spent on newspaper advertisements.
pretest
- An evaluation performed before the campaign begins is called a pretest.
noise
- Anything that reduces the clarity and accuracy of the communication; it has many sources and may affect any or all parts of the communication process.
illustrations
- Are often photographs but can also be drawings, graphs, charts, and tables. - Illustrations are used to draw attention, encourage audiences to read or listen to the copy, communicate an idea quickly, or convey ideas that are difficult to express.
reinforcement advertising
- Assures current users that they have made the right brand choice and tells them how to get the most satisfaction from that brand.
trade sales promotion methods
- Attempt to persuade wholesalers and retailers to carry a producer's products and market them more aggressively.
competitive advertising
- Attempts to stimulate demand for a specific brand by promoting the brand's features, uses, and advantages, sometimes through indirect or direct comparisons with competing brands.
arbitrary approach
- Budgeting for an advertising campaign as specified by a high-level executive in the firm. - Often leads to underspending or overspending.
objective-and-task approach
- Budgeting for an advertising campaign by first determining its objectives and then calculating the cost of all the tasks needed to attain them. - Most logical technique in determining advertising appropriation. - This approach has one main problem: Marketers sometimes have trouble accurately estimating the level of effort needed to attain certain objectives.
percent-of-sales approach
- Budgeting for an advertising campaign by multiplying the firm's past and expected sales by a standard percentage. - This approach, too, has a major flaw: It is based on the incorrect assumption that sales create advertising rather than the reverse.
cents-off offers
- Buyers pay a certain amount less than the regular price shown on the label or package.
prestige-sensitive
- Buyers who focus on purchasing products that signify prominence and status.
uniform geographic pricing (postage-stamp pricing)
- Charging all customers the same price, regardless of geographic location.
differential pricing
- Charging different prices to different buyers for the same quality and quantity of product. - Vendors can use differential pricing depending on the form of payment. - Differential pricing can occur in several ways, including negotiated pricing, secondary-market pricing, periodic discounting, and random discounting.
price skimming
- Charging the highest possible price that buyers who most desire the product will pay. - Used during the introduction stage of its life cycle. - Demand tends to be inelastic in the introductory stage of the product life cycle. - Benefits: can generate much-needed initial cash flows to help offset development costs. Protects the marketer from problems that arise when the price is set too low to cover costs. Help keep demand consistent with the firm's production capabilities. - Disadvantages: may make the product appear more lucrative than it actually is to potential competitors. A firm also risks misjudging demand and facing insufficient sales at the higher price.
pulsing schedule
- Combines continuous and flighting schedules: During the entire campaign, a certain portion of advertising runs continuously, and during specific time periods of the campaign, additional advertising is used to intensify the level of communication with the target audience.
promotion
- Communication that builds and maintains favorable relationships by informing and persuading one or more audiences to view an organization positively and accept its products.
factors independent of advertisement affect a firm's sales and market share
- Competitors' actions, regulatory actions, and changes in economic conditions, consumer preferences, and weather are only a few factors that might enhance or diminish a company's sales or market share.
artwork
- Consists of an advertisement's illustrations and layout.
advertising platform
- Consists of the basic issues or selling points that an advertiser wishes to include in the advertising campaign. - An advertising platform should consist of issues important to customers. - One of the best ways to determine those issues is to survey customers about what they consider most important in the selection and use of the product involved. - Because the advertising platform is a base on which to build the advertising message, marketers should analyze this stage carefully.
money refunds
- Consumers submit proof of purchase and are mailed a specific amount of money.
value-conscious
- Consumers who are concerned about both price and quality of a product.
fixed costs
- Costs that do not vary with changes in the number of units produced or sold. - Rent of a factory does not change when production is doubled.
variable costs
- Costs that vary directly with changes in the number of units produced or sold. - The wages for a second shift and the cost of twice as much paint are extra costs incurred when production is doubled.
advantages of publicity-based public relations tools
- Credibility, news value, significant word-of-mouth communications, and a perception of media endorsement. - The cost of publicity is low compared with the cost of advertising.
encourage product trial
- Customers may stall in the evaluation stage. - In this case, certain types of promotion—such as free samples, coupons, test drives, or limited free-use offers, contests, and games—are employed to encourage product trial.
demand-based pricing
- Customers pay a higher price at times when demand for the product is strong and a lower price when demand is weak. - The belief behind this pricing basis is that it is better to take a lower profit margin on a sale than no revenue at all.
quantity discounts
- Deductions from the list price for purchasing in large quantities. - Quantity discounts can be either cumulative or noncumulative.
defining the advertising objectives
- Determine what the firm hopes to accomplish with the campaign. - Advertising objectives should be stated clearly, precisely, and in measurable terms. - Precision and measurability allow advertisers to evaluate advertising success at the end of the campaign in terms of whether objectives have been met. - An advertising objective should also specify a time frame so that advertisers know exactly how long they have to accomplish the objective. - Some campaigns aim to increase product or brand awareness, make consumers' attitudes more favorable, heighten consumers' knowledge of product features, or create awareness of positive, healthy consumer behavior, such as nonsmoking.
competition-matching approach
- Determining an advertising budget by trying to match competitors' advertising outlays. - Although a marketer should be aware of what competitors spend on advertising, this technique should not be used alone because the firm's competitors probably have different advertising objectives and different resources available for advertising.
prospecting
- Developing a database of potential customers. - Most salespeople prefer to use referrals—recommendations from current customers—to find prospects. - After developing the prospect list, a salesperson evaluates whether each prospect is able, willing, and authorized to buy the product.
face-to-face communication
- During face-to-face communication, such as personal selling sales promotions, verbal and nonverbal feedback can be immediate. - This is why face-to-face communication is the most adaptive and flexible, especially compared to digital, web-based, or telephone communications.
channel capacity
- Each communication channel has a limit on the volume of information it can handle effectively. - This limit, called channel capacity, is determined by the least efficient component of the communication process.
consumer sales promotion methods
- Encourage or stimulate consumers to patronize specific retail stores or try particular products.
odd-even pricing
- Ending the price with certain numbers to influence buyers' perceptions of the price or product. - It aligns with the belief among many retailers that consumers respond more positively to odd-number prices, such as $4.99, than to whole-dollar prices, such as $5.
motivating salespeople
- Enjoyable working conditions, power and authority, job security, and opportunity to excel are effective motivators, as are company efforts to make sales jobs more productive and efficient. - Sales contests and other incentive programs can also be effective motivators. - Sales managers are relying on incentives more than ever. - The most common incentive offered by companies is cash, followed by gift cards and travel.
consumer sweepstakes
- Entrants submit their names for inclusion in a drawing for prizes.
negotiated pricing
- Establishing a final price through bargaining between seller and customer. - Consumers commonly negotiate prices for houses, cars, and used equipment.
product-line pricing
- Establishing and adjusting prices of multiple products within a product line. - The goal is to maximize profits for an entire product line rather than to focus on the profitability of an individual product item. - Several strategies of product-line pricing include captive pricing, premium pricing, bait pricing, and price lining.
posttest
- Evaluation of advertising effectiveness after the campaign is called a posttest. - These methods are costly, however. - In posttests, generalizations can be made about why advertising is failing or why media vehicles are not delivering the desired results.
marginal analysis
- Examines what happens to a firm's costs and revenues when production (or sales volume) changes by one unit. - Both production costs and revenues must be evaluated.
promotional pricing
- Examples of promotional pricing include price leaders, special-event pricing, and comparison discounting.
price competition
- Exists when consumers have difficulty distinguishing competitive offerings and marketers emphasize low prices. - A marketer emphasizes price as an issue and matches or beats competitors' prices.
support personnel
- Facilitate selling but usually are not involved solely with making sales. - They engage primarily in marketing industrial products, locating prospects, educating customers, building goodwill, and providing service after the sale. - There are many kinds of sales support personnel; the three most common are missionary, trade, and technical salespeople.
interpersonal communication
- Feedback occurs through talking, touching, smiling, nodding, eye movements, and other body movements and postures.
professional pricing
- Fees set by people with great skill or experience in a particular field.
pioneer advertising
- Focuses on stimulating demand for a product category (rather than a specific brand) by informing potential customers about the product's features, uses, and benefits. - Pioneer advertising is also employed when the product is in the introductory stage of the product life cycle.
create awareness
- For an organization that is introducing a new product or a line extension, making customers aware of the product is crucial to initiating the product adoption process.
demand
- For most products, the quantity demanded goes up as the price goes down, and the quantity demanded goes down as the price goes up. - Inverse relationship exists between price and quantity demanded.
technical salespeople
- Give technical assistance to the organization's current customers, advising them on product characteristics and applications, system designs, and installation procedures. - Technical sales personnel often sell technical industrial products, such as computers, heavy equipment, and steel.
environmental monitoring
- Identifies changes in public opinion affecting an organization.
profit
- Identify price and cost levels that allow the firm to maximize profit. - Tend to be set at levels that the owners and top-level decision makers view as satisfactory and attainable.
return on investment (ROI)
- Identify price levels that enable the firm to yield targeted ROI. - Generally requires some trial and error.
status quo
- Identify price levels that help stabilize demand and sales. - Can focus on several dimensions, such as maintaining a certain market share, meeting (but not beating) competitors' prices, achieving price stability, and maintaining a favorable public image. - Risks minimizing pricing as a competitive tool, which could lead to a climate of nonprice competition. - Accountants and attorneys.
social audit
- If an organization wants to measure the extent to which stakeholders view it as being socially responsible, it can conduct a social audit.
elastic demand
- If demand is elastic, a change in price causes an opposite change in total revenue: An increase in price will decrease total revenue, and a decrease in price will increase total revenue. - The less elastic the demand, the more beneficial it is for the seller to raise the price.
size of the target market
- If the size is limited, the promotion mix will probably emphasize personal selling, which can be very effective for reaching small numbers of people. - Organizations selling to industrial markets and firms marketing products through only a few wholesalers frequently make personal selling the major component of their promotion mixes. - When a product's market consists of millions of customers, organizations rely on advertising and sales promotion, because these methods reach masses of people at a low cost per person.
decoding process
- In the decoding process, signs or symbols are converted into concepts and ideas. - When the result of decoding differs from what was coded, noise exists.
point-of-purchase materials
- Include outdoor signs, window displays, counter pieces, display racks, and self-service cartons.
F.O.B factory
- Indicates the price of the merchandise at the factory, before it is loaded onto the carrier, and thus excludes transportation costs. - The buyer must pay for shipping.
consumer contests
- Individuals compete for prizes based on their analytical or creative skills. - Contestants are usually more highly involved in consumer contests than in games or sweepstakes, even though total participation may be lower.
consumer games
- Individuals compete for prizes based primarily on chance—often by collecting game pieces like bottle caps or a sticker on a carton of French fries. - No evidence to suggest that they affect a company's long-term sales.
price-conscious
- Individuals who strive to pay low prices.
determining sales force size
- Influences the company's ability to generate sales and profits. - Size of the sales force affects the compensation methods used, salespeople's morale, and overall sales force management. - Must be adjusted periodically. - Several methods can help determine optimal sales force size: - One method involves determining how many sales calls per year are necessary for the organization to serve customers effectively and then dividing this total by the average number of sales calls a salesperson makes annually. - A second method is based on marginal analysis, in which additional salespeople are added to the sales force until the cost of an additional salesperson equals the additional sales generated by that person.
pioneer promotion
- Informs potential customers about the product: what it is, what it does, how it can be used, and where it can be purchased. - Because pioneer promotion is used in the introductory stage of the product life cycle, meaning there are no competing brands, it neither emphasizes brand names nor compares brands.
advertising campaign
- Involves designing a series of advertisements and placing them in various advertising media to reach a particular target audience. - The major steps in creating an advertising campaign are: 1. Identifying and analyzing the target audience 2. Defining the advertising objectives 3. Creating the advertising platform 4. Determining the advertising appropriation 5. Developing the media plan 6. Creating the advertising message 7. Executing the campaign 8. Evaluating advertising effectiveness
tensile pricing
- Involves making a broad statement about price reductions, as opposed to detailing specific price discounts. (20 to 50% off or up to 70% off)
geographic pricing
- Involves reductions for transportation costs or other costs associated with the physical distance between buyer and seller. - Prices may be quoted as F.O.B. (free-on-board) factory or destination.
product placement
- Is a form of advertising that strategically locates products or product promotions within entertainment media to reach the product's target markets.
feature article
- Is a manuscript of up to 3,000 words prepared for a specific publication.
personal selling
- Is a paid personal communication that seeks to inform customers and persuade them to purchase products in an exchange situation. - Personal selling is most extensively used in the business-to-business market and also in the business-to-consumer market for high-end products such as homes, cars, electronics, and furniture. - Involves more specific communication directed at one or several individuals. - Provides immediate feedback. - Personal selling gives marketers the greatest freedom to adjust a message to satisfy customers' information needs. - It is the most precise of all promotion methods, enabling marketers to focus on the most promising sales prospects. - Personal selling is also the most effective way to form relationships with customers. - Despite these benefits, personal selling is generally the most expensive element in the promotion mix.
captioned photograph
- Is a photograph with a brief description explaining its contents.
viral marketing
- Is a strategy to get consumers to share a marketer's message, often through e-mail or online video, in a way that spreads dramatically and quickly.
sales promotion
- Is an activity or material that acts as a direct inducement, offering added value or incentive for the product to resellers, salespeople, or consumers. - Examples include free samples, games, rebates, sweepstakes, contests, premiums, and coupons. - Marketers spend more on sales promotion than on advertising. - Generally, when companies employ advertising or personal selling, they depend on these activities continuously or cyclically. However, a marketer's use of sales promotion tends to be irregular.
buzz marketing
- Is an attempt to incite publicity and public excitement surrounding a product through a creative event.
publicity
- Is communication in news-story form about the organization, its products, or both, transmitted through a mass medium at no charge.
publicity
- Is nonpersonal communication in news-story form about an organization or its products, or both, transmitted through a mass medium at no charge. - A few examples of publicity-based public relations tools are news releases, press conferences, and feature articles. - To generate publicity, companies sometimes give away products to celebrities in the hope that the celebrities will be seen and photographed with the product, and those photos will stimulate awareness and product trial among their fans.
word-of-mouth communication
- Is personal, informal exchanges of communication that customers share with one another about products, brands, and companies. - Most customers are likely to be influenced by friends and family members when they make purchases. - Seems to be most effective for new-to-market and more expensive products.
receiver
- Is the individual, group, or organization that decodes a coded message.
frequency
- Is the number of times these targeted consumers are exposed to the advertisement.
closing
- Is the stage in the personal selling process when the salesperson asks the prospect to buy the product. - A trial close allows prospects to indicate indirectly that they will buy the product without having to say those sometimes difficult words: "I'll take it."
premiums
- Items offered free or at a minimal cost as a bonus for purchasing a product. - Consumers appear to prefer premiums to discounts on products due to the perception that they are receiving something "free."
team selling
- Many products, particularly expensive high-tech business products, have become so complex that a single salesperson can no longer be an expert in every aspect of the product and purchase process. - Team selling, which involves the salesperson joining with people from the firm's financial, engineering, and other functional areas, is appropriate for such products.
evaluation of competitor's prices
- Marketers are in a better position to establish prices when they know the prices charged for competing brands, which is the next step in establishing prices.
perfect competition
- Marketers have no flexibility in setting prices.
disadvantages of publicity-based public relations tools
- Media personnel must judge company messages to be newsworthy if the messages are to be published or broadcast at all. - Media personnel alter length and content of publicity releases to fit publishers' or broadcasters' requirements and may even delete the parts of messages that company personnel view as most important. - Furthermore, media personnel use publicity releases in time slots or positions most convenient for them.
nonprice competition
- Occurs when a seller decides not to focus on price and instead emphasizes distinctive product features, service, product quality, promotion, packaging, or other factors to distinguish its product from competing brands. - Involves a focus on marketing-mix elements other than price. - A major advantage of nonprice competition is that a firm can build customer loyalty toward its brand. - Nonprice competition is effective only under certain conditions: A company must be able to distinguish its brand through unique product features, higher product quality, effective promotion, distinctive packaging, or excellent customer service. - The distinguishing features that set a particular brand apart from competitors should be difficult, if not impossible, for competitors to imitate. - Price remains a crucial marketing-mix component even in nonprice competition.
transfer pricing
- Occurs when one unit in an organization sells a product to another unit. - The price is determined by one of the following methods: - Actual full cost: calculated by dividing all fixed and variable expenses for a period into the number of units produced. - Standard full cost: calculated based on what it would cost to produce the goods at full plant capacity. - Cost plus investment: calculated as full cost plus, the cost of a portion of the selling unit's assets used for internal needs. - Market-based cost: calculated at the market price less a small discount to reflect the lack of sales effort and other expenses.
criticisms of promotion
- One common criticism of promotion is that it is deceptive and unethical. - Promotion is also criticized for raising prices, but in fact it can lower them. - Some critics of promotion claim that it manipulates consumers by persuading them to buy products they do not need, hence creating "artificial" needs. - Another frequent criticism of promotion is that it leads to materialism. - Finally, some critics of promotion, including consumer groups and government officials, suggest that certain products should not be promoted at all.
survival
- One of the most fundamental pricing objectives. - This generally involves temporarily setting prices low, at times below costs, in order to attract more sales.
noncumulative discounts
- One-time price reductions based on the number of units purchased, the dollar value of the order, or the product mix purchased.
geographic distribution of the target market
- Personal selling is more feasible if a company's customers are concentrated in a small area than if they are dispersed across a vast region. - When the company's customers are numerous and dispersed, regional or national advertising may be more practical.
reference pricing
- Pricing a product at a moderate level and physically positioning it next to a more expensive model or brand in the hope that the customer will use the higher price as a reference price. - Reference pricing is based on the "isolation effect," meaning an alternative is less attractive when viewed by itself than when compared with other alternatives.
bait pricing
- Pricing an item in a product line low with the intention of selling a higher-priced item in the line. - Bait and switch occurs when customers go to the store looking for the low-priced model and only find the high-priced model in stock. (unethical)
zone pricing
- Pricing based on transportation costs within major geographic zones.
competition-based pricing
- Pricing influenced primarily by competitors' prices.
customary pricing
- Pricing on the basis of tradition. - Less common than it was in the past.
psychological pricing
- Pricing that attempts to influence a customer's perception of price to make a product's price more attractive. - Used primarily for consumer products. - Several forms of psychological pricing: reference pricing, bundle pricing, multiple-unit pricing, everyday low prices (EDLP), odd-even pricing, customary pricing, and prestige pricing.
order takers
- Primarily seek repeat sales, generating the bulk of many firms' total sales. - There are two groups of order takers: inside order takers and field order takers.
price leaders
- Products priced near or even below cost. - Used often in supermarkets and restaurants.
pull policy
- Promotes directly to consumers to develop strong consumer demand for its products. It does so primarily through advertising and sales promotion. - Push and pull policies are not mutually exclusive, an organization can use both simultaneously.
institutional advertising
- Promotes organizational images, ideas, and political issues. - Institutional advertisements may deal with broad image issues, such as organizational strengths or the friendliness of employees. - They may also aim to create a more favorable view of the organization in the eyes of noncustomer groups, such as shareholders, consumer advocacy groups, potential shareholders, or the general public.
product advertising
- Promotes the uses, features, and benefits of products. - There are two types of product advertising: pioneer and competitive.
retain loyal customers
- Promotional efforts directed at customer retention can help an organization control its costs, because the costs of retaining customers are usually considerably lower than those of acquiring new ones. - Frequent-user programs, such as those sponsored by airlines, car rental agencies, and hotels, aim to reward loyal customers and encourage them to remain loyal.
price elasticity of demand
- Provides a measure of the sensitivity of demand to changes in price. - Price elasticity of demand = % change in quantity demanded / % change in price
soft selling
- Rather than spending large amounts of time marketing the benefits of their products, sales representatives are spending more time listening to the doctors.
recruiting and selecting salespeople
- Recruiting errors are expensive. - A sales manager establishes a set of qualifications before beginning to recruit - No set of generally accepted characteristics exists yet.
coupons
- Reduce a product's price and aim to prompt customers to try new or established products, increase sales volume quickly, attract repeat purchasers, or introduce new package sizes or features. - Coupons are the most widely used consumer sales promotion technique.
integrated marketing communications
- Refers to the coordination of promotion and other marketing efforts to ensure maximum informational and persuasive impact on customers. - A major goal of integrated marketing communications is to send a consistent message to customers.
reach
- Refers to the percentage of consumers in the target audience actually exposed to a particular advertisement in a stated period.
facilitate reseller support
- Reseller support is a two-way street: producers generally want to provide support to resellers to assist in selling their products, and in turn they expect resellers to support their products.
aided recall test
- Respondents are shown a list of products, brands, company names, or trademarks to jog their memories.
recognition test
- Respondents are shown the actual advertisement and asked whether they recognize it. If they do, the interviewer asks additional questions to determine how much of the advertisement each respondent read.
unaided recall test
- Respondents identify advertisements they have seen recently but are not shown any clues to help them remember.
inelastic demand
- Results in a change in the same direction as total revenue: An increase in price will increase total revenue, and a decrease in price will decrease total revenue.
establishing sales force objectives
- Sales objectives tell salespeople what they are expected to accomplish during a specified time period. - Sales objectives should be stated in precise, measurable terms; specify the time period and geographic areas involved; and be achievable. - Objectives for the entire force are normally stated in terms of sales volume, market share, or profit. - Sales objectives, or quotas, for individual salespeople are commonly stated in terms of dollar or unit sales volume.
straight salary compensation plan
- Salespeople are paid a specified amount per time period, regardless of selling effort. - Provides little incentive for them to boost selling efforts.
trade salespeople
- Salespeople involved mainly in helping a producer's customers promote a product. - Food producers and processors commonly employ trade salespeople.
combination compensation plan
- Salespeople receive a fixed salary plus a commission based on sales volume.
order getters
- Salespeople who sell to new customers and increase sales to current customers. - Order getting is frequently divided into two categories: current-customer sales and new-business sales.
straight commission compensation plan
- Salespeople's compensation is determined solely by sales for a given period. - Offers them little financial security, and it can be difficult for sales managers to maintain control over the sales force.
cash flow
- Set price levels to encourage rapid sales. - Good for products with a short product life cycle.
product quality
- Set prices to recover research and development expenditures and establish a high-quality image.
media plan
- Sets forth the exact media vehicles to be used (specific magazines, television stations, social media, newspapers, and so forth) and the dates and times the advertisements will appear.
comparison discounting
- Setting a price at a specific level and comparing it with a higher price.
multiple-unit pricing
- Setting a single price for two or more units of a product, such as two cans for 99 cents, rather than 50 cents per can
secondary-market pricing
- Setting one price for the primary target market and a different price for another market. - Often the price charged in the secondary market is lower. - Examples of secondary markets include a geographically-isolated domestic market, a market in a foreign country, and a segment willing to purchase a product during off-peak times
prestige pricing
- Setting prices at an artificially high level to convey prestige or a quality image.
penetration pricing
- Setting prices below those of competing brands to penetrate a market and gain a significant market share quickly. - Less flexible than price skimming. - Can be especially beneficial when a marketer suspects that competitors could enter the market easily.
free samples
- Stimulates trial of a product, increase sales volume in the early stages of a product's life cycle, and obtain desirable distribution. - Sampling is the most expensive sales promotion method.
types of pricing objectives a company might set
- Survival - Profit - Return on Investment - Market share - Cash flow - Status quo - Product quality
reminder advertising
- Tells customers that an established brand is still around and still offers certain characteristics, uses, and advantages.
periodic pricing
- Temporary reduction of prices on a patterned or systematic basis. - From the marketer's point of view, a major problem with periodic discounting is customers can predict when the reductions will occur and may delay their purchases until they can take advantage of the lower prices.
random discounting
- Temporary reduction of prices on an unsystematic basis. - This helps alleviate when customers will know when periodic discounting will occur. - Used to attract new customers and to draw attention to a relatively new product.
new-product pricing
- The base price can be set high to recover development costs quickly or provide a reference point for developing discount prices for different market segments. - Two strategies used in new-product pricing are price skimming and penetration pricing.
captive pricing
- The basic product in a product line is priced low, but the price on the items required to operate or enhance it are higher. - Gillette razor tools are not very expensive, but the blades are.
marginal revenue (MR)
- The change in total revenue resulting from the sale of an additional unit of a product. - Profit is the highest where MC = MR.
rebates
- The consumer is sent a specified amount of money for making a single product purchase.
marginal cost (MC)
- The extra cost incurred by producing one more unit of a product.
pricing objectives
- The first step in in setting prices. - Goals that describe what a firm wants to achieve through pricing.
average fixed costs
- The fixed cost per unit produced and is calculated by dividing fixed costs by the number of units produced.
selection of a basis for pricing
- The fourth step in establishing prices involves selecting a basis for pricing: cost, demand, and/or competition. - Marketers determine the appropriate pricing basis by analyzing the type of product, the market structure of the industry, the brand's market share position relative to competing brands, and customer characteristics.
target audience
- The group of people at whom advertisements are aimed.
news release
- The most common publicity-based public relations tool is the news release, sometimes called a press release, which is usually a single page of typewritten copy containing fewer than 300 words and describing a company event or product.
layout
- The physical arrangement of the illustration and the copy (headline, subheadline, body copy, and signature).
break even point
- The point at which the costs of producing a product equal the revenue made from selling the product. - It does assume, however, that the quantity demanded is basically fixed (inelastic) and that the major task in setting prices is to recover costs. - Focuses more on how to break even than on how to achieve a pricing objective.
price discrimination
- The practice of employing price differentials that tend to injure competition by giving one or more buyers a competitive advantage over other buyers.
push policy
- The producer promotes the product only to the next institution down the marketing channel. (producer > wholesaler > retailer > consumer) - A push policy normally stresses personal selling. Sometimes sales promotion and advertising are used in conjunction with personal selling to push the products down through the channel.
sales potential
- The quantity of a product that could be sold during a specific period.
feedback
- The receiver's response to a decoded message is feedback to the source. - Feedback is coded, sent through a communications channel, and decoded by the receiver, the source of the original communication.
recruiting
- The sales manager develops a list of qualified applicants for sales positions.
promotional budget
- The size of an organization's promotional budget affects the number and relative intensity of promotional methods included in a promotion mix. - If a company's promotional budget is extremely limited, the firm is likely to rely on personal selling because it is easier to measure a salesperson's contribution to sales than to measure the sales effectiveness of advertising. - Businesses must have sizable promotional budgets to use regional or national advertising.
price lining
- The strategy of selling goods only at certain predetermined prices that reflect explicit price breaks. - With price lining, the demand curve looks like a series of steps.
total costs
- The sum of average fixed and average variable costs times the quantity produced.
average total costs
- The sum of the average fixed cost and the average variable cost.
advertising appropriation
- The total amount of money a marketer allocates for advertising for a specific time period. - Advertising appropriations for business products are usually quite small relative to product sales, whereas consumer convenience items, such as the cosmetics sold by L'Oréal, generally have large advertising expenditures relative to sales.
barter
- The trading of products. - Barter among businesses, because of the relatively large values of the exchanges, usually involves trade credit.
price
- The value paid for a product in a marketing exchange. - Price is a key element in the marketing mix because it relates directly to the generation of total revenue. - Profit = total revenues - total costs - Profit = (price x quantity sold) - total costs
copy
- The verbal portion of an advertisement and may include headlines, subheadlines, body copy, and a signature. - Some copywriters have adopted guidelines for developing body copy systematically: 1. Identify a specific desire or problem 2. Recommend the product as the best way to satisfy that desire or solve that problem 3. State product benefits and indicate why the product is best for the buyer's particular situation 4. Substantiate advertising claims 5. Ask the buyer to take action
selective demand
- To build selective demand, demand for a specific brand, a marketer employs promotional efforts that point out the strengths and benefits of a specific brand. - Requires singling out attributes important to potential buyers. - Can be stimulated by differentiating the product from competing brands in the minds of potential buyers. - Can also be stimulated by increasing the number of product uses and promoting them through advertising campaigns, as well as through price discounts, free samples, coupons, consumer contests and games, and sweepstakes.
inquiries
- To measure advertising effectiveness during a campaign, marketers usually rely on "inquiries" or responses. - In a campaign's initial stages, an advertiser may use several advertisements simultaneously, each containing a coupon, form, toll-free phone number, QR code, social media, or website through which potential customers can request information.
communications channel
- To share a coded meaning with the receiver or audience, a source selects and uses a communications channel, the medium of transmission that carries the coded message from the source to the receiver or audience. - Transmission media include printed words (newspapers and magazines), broadcast media (television and radio), and digital communication.
coding process or encoding
- To transmit meaning, a source must convert the meaning into a series of signs or symbols representing ideas or concepts.
public relations audit
- Used to assess an organization's image among the public or to evaluate the effect of a specific public relations program.
single pricing
- Using a single price has several benefits. - A primary advantage is simplicity. - Easily understood by both employees and customers. - Disadvantages are if the single price is too high, some potential customers may be unable to afford the product. And if it is too low, the organization loses revenue from those customers who would have paid more had the price been higher.
missionary salespeople
- Usually employed by manufacturers, assist the producer's customers in selling to their own customers. - Manufacturers of medical supplies and pharmaceuticals often use missionary salespeople, called detail reps, to promote their products to physicians, hospitals, and pharmacists.
regional issues
- Versions of a magazine that differ across geographic regions.
advocacy advertising
- When a company promotes its position on a public issue—for instance, a tax increase, sustainability, regulations, or international trade coalitions—institutional advertising is referred to as advocacy advertising.
primary demand
- When an organization is the first to introduce an innovative product, it tries to stimulate primary demand—demand for a product category rather than for a specific brand of product.
mass communication
- When mass communication like advertising is used, feedback is often slow and difficult to recognize.
comparative advertising
- Which compares the sponsored brand with one or more identified competing brands on the basis of one or more product characteristics.
storyboard
- Which depicts a series of miniature television screens showing the sequence of major scenes in the commercial. - Beneath each screen is a description of the audio portion to be used with that video segment. - Technical personnel use the storyboard as a blueprint when producing the commercial.
preapproach
- Which involves identifying key decision makers, reviewing account histories and problems, contacting other clients for information, assessing credit histories and problems, preparing sales presentations, identifying product needs, and obtaining relevant literature.
general steps in the personal selling process
1. Prospecting 2. Preapproach 3. Approach 4. Making the presentation 5. Overcoming objectives 6. Closing the sale 7. Following up
eight general areas of sales management
1. establishing sales force objectives 2. determining sales force size 3. recruiting and selecting salespeople 4. training sales personnel 5. compensating salespeople 6. motivating salespeople 7. managing sales territories 8. controlling and evaluating sales force performance.
Slow feedback, high absolute-dollar outlay, and difficulty in measuring effects on sales are disadvantages of which promotion mix ingredient?
advertising
Some critics, including consumer groups and government officials, suggest that certain products should not be promoted because they
are potentially harmful
When Yoplait Yogurt gives a portion of its profits to Breast Cancer Research, it is using
cause-related marketing
For many consumers, the pages near the back of magazines with dozens of very small black and white advertisements exceed their
channel capacity
H&M, a clothing company, communicates to its target customers by advertising in magazines, offering clothing information on its website, creating a periodic online newsletter, Facebook, and Twitter. These vehicles through which the coded message is transmitted from the source, H&M, to the receiver, the prospective customer, is called a(n)
communication channel
Retro64 distributes free downloadable versions of its computer games for a very short time. These efforts have a primary promotional objective of
encouraging product trial
Promotion helps consumers because it
informs consumers and places them in a position to specify the products that they seek.
Chris sees a television commercial for Arby's promoting its roast beef sandwiches at 5 for $5.95. Later that day he goes to the nearest Arby's for a roast beef feast, but is told that the special offer is not available at that location. Arby's seems to lack
integrated marketing communications
The coordination of promotion and other marketing efforts for maximum informational and persuasive impact defines
integrated marketing communications
When encoding the message, the source should use signs that have
meanings that the target market will understand
Michael is planning a promotional program for AirFam. AirFam is a supplier of new energy-saving engines used to produce air conditioners. His company needs to promote these engines to manufacturers of air conditioners, so he is most likely to use ___, because it provides immediate feedback. The disadvantage is that it is _____ than advertising to reach one customer.
personal selling; more costly
Use the following to answer the questions. The manufacturers of Whizz, a new laundry detergent, are developing their promotional plan for the first year. They know they want to use an integrated communications strategy and are considering the use of advertising through TV and magazines, coupons, public relations, sales promotion, and viral marketing. They are not sure when to use each of these methods however, and have asked for your advice. Refer to Scenario 16.2. Since Whizz is a new product, which of the following promotional methods would you least recommend?
price-reduction sales promotion
You are the marketing manager for a company that makes and markets designer sunglasses. Recently, your boss suggested to you that the company should try to get its sunglasses worn by more actors and actresses in movies. He asked you to look into what it would take to make that happen. Which of following promotion activities is your boss referring to with this idea?
product placement
Use the following to answer the questions. The manufacturers of Whizz, a new laundry detergent, are developing their promotional plan for the first year. They know they want to use an integrated communications strategy and are considering the use of advertising through TV and magazines, coupons, public relations, sales promotion, and viral marketing. They are not sure when to use each of these methods however, and have asked for your advice. Refer to Scenario 16.2. If the manufacturers of Whizz were to partner with Whirlpool to place a bottle of Whizz in each new washer that is purchased during the first year, this would be an example of
sales promotion
Use the following to answer the questions. When introducing a new vehicle targeted to the under-30 population, Toyota used several different methods of communication. First, it did research in several large cities to find out who the opinion leaders were in that age group. By visiting the local nightlife, one or two people in each city were selected and given a new vehicle to drive for two weeks. They were told to share information about this new vehicle with their friends. After a few weeks, then a television campaign was launched with commercials introducing the new vehicle. Toyota also placed ads in magazines that were targeted to the under-30 age group, and used drive-by billboards in the large cities near the nightclub areas. Refer to Scenario 16.1. Suppose that Toyota has decided to contract with the producer of the next James Bond 007 movie to use one of its new vehicles in a chase scene. This would best be an example of
sales promotion
Latisha works for a promotional consultant who develops sweepstakes, games, coupons, and rebate plans for various marketers. Latisha is developing which of the following?
sales promotion techniques
When Sears promotes the benefits and strengths of its Kenmore brand appliances, it is attempting to build
selective demand
The overall role of promotion is to ________________and to build and enhance relationships with current and potential customers.
stimulate product demand
Which of the following is a major goal of integrated marketing communications?
to send a consistent message to consumers