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Advertising- A paid form of non-personal communication that is transmitted to a target audience through mass media- Effective advertising can influence customers’ purchasing behavior throughout their lifetimes- Most organizations, even nonprofits, engage in advertising- Part of the promotional mixExposures- It takes three exposures to remember somethingReinforcement Advertising- Assures current users they have made the right choice.- A type of competitive advertising Types of Scheduling AdvertisingA. Continuous - runs steadily throughout the year with little variationa. Good for continuously used products Flighting – runs in spurts, advertisements run for set periods of time, alternating with periods in which no ads run.a. Heavy/noneb. Good for seasonal productsB. Pulsing - a combination. Runs steadily but with bursts at certain timesTypes of Advertising1. Pioneer Advertisinga. Aka primary demandb. Focuses on a product categoryc. Primary demand is stimulated through pioneer promotion, which informs potential customers about the product: what it is, what it does, how it can be used, and where it can be purchased.a. Ex. Got Milk? b. Ex. Beef2. Advocacy Advertisinga. Conveys a firm’s position on a public issue 3. Comparative Advertisinga. A type of competitive advertisingb. Compares two or more brands on one or more characteristics Recognition/unaided recall- With all the advertising clutter, recall of a typical ad is only 10%- Recall of a “branded entertainment” episode is 24%- Posttesto Evaluation of advertising effectiveness after the campaign Recognition Unaided Recall Aided Recall- Recognition/Recall: respondents shown a portion of an ad – or sometimes a memorable image and asked:o Do you recognize this ad? (Recognition measure) Individuals are more likely to buy the product if they can remember an advertisement about it than if they cannot.o Please type in the sponsor of this ad (unaided recall measure)o Please choose the sponsor of this ad from the following list (aided recall)Ratings Formula1. Q-Scores (Q stands for quality) considers two factors:a. Consumers level of familiarity with a name - % who have heard of her/himi. ** Exam question b. The number of respondents who indicate that a person, program or character is a favoritec. The score is calculated by dividing the two numbers d. Example: 10% favorite/50% familiar = 20 Q ScoreElastic vs. Inelastica. Inelastic: demand does not respond much to price changesi. Necessitiesii. A vertical lineb. Elastic: demand responds a lot to price changesi. Close substitutes ii. Luxuriesiii. A horizontal linec. Elasticity is greater when:i. The market is defined more narrowly (food vs. ice cream)ii. In the long run- people are more free to adjust their behaviord. If it is…. Then it is… i. Less then one: inelasticii. Greater then one: elasticiii. Is One: unit elasticiv. Is zero: perfectly inelastic Substitute Products- Substitute products occur when demand is elastico Aka demand responds a lot to price changes- Ex. luxuriesBreak Even Formulaa. Break-Even Point: Where the costs of producing a product equal the revenue made from selling the product.b. Break Even Point = Fixed Costs / (Price – Variable Costs)Non-Price Competition- Emphasizing factors other than price to distinguish a product from competing brands- 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.- Builds consumer loyalty Pricing1. Reference Pricinga. Pricing a product at a moderate level and positioning it next to a more expensive model or brand.b. The price stored in memory that helps to evaluate the actual pricei. Serves as an anchorii. Frames the purchase pricec. Internal: Develops in buyer’s mind through experience with productd. External: A comparison price provided by others2. Penetration Pricing: setting the price lower than competing brands to penetrate a market and quickly gain a significant market sharea. Useful with elastic demand, long-term focusb. Volume over margin- discourages competition c. Fast Food, Dry Cleaning3. Odd/Even Pricing: ending prices in odd or non-round numbers ($2.99, $3.95)a. Women are more likely to respond then meni. Research has produced conflicting evidence on the efficacy of the pricing approach.b. Makes prices seem lowerc. Even prices give product an upscale or exclusive image4. Selling Price5. Captive Pricing: the basic product is sold low and ancillaries are higha. Printers and ink; cell phones and service contract; game consoles and games; razors and cartridge 6. Price Bundlinga. Offering several products for sale in one “package”i. Cable, Phone, High Speed Internetii. Microsoft Officeb. Unbundling – charging separately for previously bundled products/services7. Loss Leader: selling products at or below costa. Purpose is to stimulate sales of other, profitable productsb. Stimulates store traffic, promotes habitual buyingc. Low priced, every day products like milk, eggs, soda8. Price Elasticity: After identifying the target market’s evaluation of price and examining demand to learn whether price is inversely or directly related to quantity, the next step in pricing is to assess price elasticity of demand.i. Price elasticity of demand provides a measure of the sensitivity of demand to changes in price; it is formally defined as the percentage change in quantity demanded relative to a given percentage change in price. b. Setting a price is much easier if marketers can determine the price elasticity of demand.i. 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.c. An inelastic demand results in a parallel change in total revenue, and a decrease in price will decrease total revenue.i. Marketers cannot base prices solely on elasticity considerations; they must also consider the costs associated with different sales volumes and evaluate what happens to profits.Mark Up Formulas 1. As a Percentage of Costa. ((Price – Cost) / Price) x 1002. As a Percentage of Selling PricePrice Framing- Anchoring price for consumers- “MSRP”, Competitor’s Price, “You save”- How much did it cost to fly from New York to L.A. in 1949? (today it costs around $300)o Answer: $1,447 – after you adjust for


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FSU MAR 3023 - Notes

Documents in this Course
Marketing

Marketing

17 pages

Chapter 1

Chapter 1

48 pages

EXAM #3

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19 pages

Exam 4

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24 pages

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Exam 4

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10 pages

Exam 3

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12 pages

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19 pages

EXAM 2

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Exam 1

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19 pages

Exam 1

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5 pages

Marketing

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21 pages

EXAM 2

EXAM 2

5 pages

EXAM 1

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7 pages

Test 3

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18 pages

Notes

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6 pages

Marketing

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16 pages

Exam 1

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7 pages

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7 pages

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1 pages

Test 2

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Chapter 6

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34 pages

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8 pages

Marketing

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7 pages

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4 pages

Chapter 1

Chapter 1

51 pages

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15 pages

Exam 1

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16 pages

Exam 1

Exam 1

16 pages

Marketing

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13 pages

Exam 1

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16 pages

Exam 1

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5 pages

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Exam 4

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Lecture 1

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20 pages

Test 2

Test 2

20 pages

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