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MARK 4700: Exam 3
integrated marketing communications (IMC)
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-represents promotion
-encompasses a variety of communication disciplines--advertising, personal selling, sales promotion, public relations, direct marketing, and online marketing--in combination to provide clarity, consistency, and maximum communicative impact
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AIDA model
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-series of mental stages through which consumers move as a result of marketing communications
-awareness leads to interest, which leads to desire, which leads to action
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brand awareness
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a potential customer's ability to recognize or recall that the brand name is a particular type of retailer or product/service
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aided recall
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when consumers indicate they know the brand when the name is presented to them
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top-of-mind awareness
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-highest level of awareness
-consumers mention a specific brand name first when they are asked about a product
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interest
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consumers must be persuaded that the product is worth investigating
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desire
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move from "I like it" to "I want it"
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lagged effect
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a delayed response to a marketing communication campaign--generally takes several exposures to an ad before a consumer fully processes its message
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advertising
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entails the placement of announcements and persuasive messages in time or space purchased in any of the mass media by business firms, nonprofit organizations, government agencies, and individuals who seek to inform and/or persuade members of a particular target market or audience about their product, services, organizations, or ideas
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public relations
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the organizational function that manages the firm's communications to achieve a variety of objectives, including building and maintaining a positive image, handling or heading off unfavorable stories or events, and maintaining positive relationships with the media
-elements: publications, video and audio, annual reports, media relations, electronic media
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sales promotions
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special incentives or excitement-building programs that encourage the purchase of a product or service, such as coupons, rebates, contests, free samples, and point-of-purchase displays
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personal selling
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the two-way flow of communication between a buyer and a seller that is designed to influence the buyer's purchase decision
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direct marketing
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communicates directly with target customers to generate a response or transaction
-traditional: mail and catalogs
-modern: e-mail and mobile
-good for multicultural groups
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mobile marketing
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marketing through wireless handled devices, such as cellular telephones
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online marketing
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-websites
-blogs
-social media
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objective-and-task method
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determines the budget required to undertake specific tasks to accomplish communication objectives
-establish objectives first, then determine which media best reach the target market and how much it will cost
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rule-of-thumb methods
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use prior sales and communication activities to determine the present communication budget
methods:
-competitive parity
-percentage-of-sales
-available budget
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competitive parity
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communication budget is set so share of communication expenses equals share of the market
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percentage-of-sales
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the communication budget is a fixed percentage of forecasted sales
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available budget
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the difference between forecasted sales and expenses plus desired profit is reserved for the communication budget
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frequency
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measure of how often the audience is exposed to a communication within a specified period of time
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reach
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measure of consumers' exposure to marketing communications; percentage of target market exposed
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gross rating points (GRP)
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reach x frequency
-measure used for various media advertising
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search engine marketing (SEM)
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a type of web advertising where companies pay for keywords that are used to catch consumers' attention while browsing a search engine
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impressions
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number of times an ad appears in front of the user
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click-through rate (CTR)
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the number of times a user clicks on an online ad divided by the number of impressions
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relevance
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how useful an ad message is to the consumer doing the search
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return on investment (ROI)
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(sales revenue -advertising cost)/ advertising cost
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steps in planning and executing an ad campaign
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1. identify target audience
2. set advertising objectives
3. determine the advertising budget
4. convey the message
5. evaluate and select media
6. create advertisements
7. assess impact
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advertising plan
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subsection of the firm's overall marketing plan that explicitly analyzes the marketing and advertising situation, identifies the objectives of the advertising campaign, clarifies a specific strategy for accomplishing those objectives, and indicates how the firm can determine whether the campaign was successful
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pull vs. push strategy
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-pull: get consumers to pull the product into the marketing channel by demanding it (use for targeting consumers)
-push: designed to increase demand by focusing on wholesalers, retailers, or salespeople (use for targeting channel members)
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informative advertising
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communication used to create and build brand awareness, with the ultimate goal of moving the consumer through the buying cycle to a purchase
-inform about upcoming sales events or arrival of new merchandise
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persuasive advertising
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communication used to motivate consumers to take action
-occurs in growth and early maturity stages, when competition is most intense
-attempts to accelerate acceptance
-may be used to reposition
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reminder advertising
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used to remind or prompt repurchases, especially for products that have gained market acceptance and are in the maturity stage of their life cycle
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product-focused advertisements
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inform, persuade, or remind consumers about a specific product or service
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institutional advertisements
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inform, persuade, or remind consumers about issues related to places, politics, or an industry
-public service advertising (PSA): focus on public welfare (betterment of society)
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social marketing
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application of marketing principles to a social issue to bring about attitudinal and behavioral change among the general pubic or a specific population segment
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determining advertising budget
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-role that advertising plays in their attempt to meet their overall promotional objectives
-expenditures vary over the course of the product life cycle
-nature of the market and the product influence the size of the budget
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unique selling proposition (USP)
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differentiating a product by communicating its key attributes--key slogan or theme
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informational appeals
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help consumers make purchase decisions by offering factual information that encourages consumers to evaluate the brand favorably on the basis of the key benefits it provides
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emotional appeal
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aims to satisfy consumers' emotional desires rather than their utilitarian needs
-fear/safety
-humor
-happiness
-love/sex
-comfort
-nostalgia
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media planning
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process of evaluating and selecting the media mix that will deliver a clear, consistent, compelling message to the intended audience
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media mix
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the combination of the media used and the frequency of advertising in each medium
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media buy
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actual purchase of airtime or print pages--generally largest expense in advertising budget
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mass media
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national newspapers, magazines, radio, and TV--ideal for reaching large numbers of anonymous audience members
-reach
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niche media
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channels are more focused and generally used to reach narrower segments, often with unique demographic characteristics or interests
-frequency
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choosing the right medium
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-TV: wide reach; sound & video
-radio: inexpensive; selectively targeted; wide reach
-magazines: very targeted; subscribers pass along
-newspapers: flexible; timely; able to localize
-internet: can be linked to detailed content; flexible and interactive; specific targeting
-outdoors: relatively inexpensive; repeat exposure
-direct marketing: highly targeted; personalized
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advertising schedule
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specifies the timing and duration of advertising
-continuous: runs steadily throughout the year--products that are consumed continually and require a steady level of persuasive or reminder advertising
-flighting: periods of high advertising followed by periods of no advertising--fluctuating demand
-pulsing: combination; maintains a base level of advertising but increases intensity during certain periods
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headline
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large type in an ad designed to draw attention
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subhead
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a smaller headline, provides more information through short and simple words
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body copy
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the main text portion of an ad
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brand elements
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identify the sponsor of a specific ad
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pretesting
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assessments performed before an ad campaign is implemented to ensure that the various elements are working in an integrated fashion and doing what they are intended to do
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tracking
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monitoring key indicators, such as daily or weekly sales volume, while the advertisement is running to shed light on any problems with the message or the medium
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posttesting
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evaluation of the campaign's impact after it has been implemented
-lift: additional sales caused by advertising
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federal agencies that regulate advertising
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-federal trade commission (FTC): enforces truth in advertising laws
-federal communications commission (FCC): regulates interstate and international communications by radio, TV wire, satellite, and cable
-food and drug administration (FDA)
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puffery
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the legal exaggeration of praise, stopping just short of deception, lavished on a product
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cause-related marketing
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commercial activity in which businesses and charities form a partnership to market an image, a product, or a service for their mutual benefit; a type of promotional campaign
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event sponsorship
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popular PR tool; corporations support various activities, usually in the cultural or sports and entertainment sectors
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coupons
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offer a discount on the price of specific items when they're purchased
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deals
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a type of short-term price reduction that can take several forms, such as a featured price, a price lower than the regular price, a buy one get one free, or a certain percentage more free offer contained in larger packaging
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premium
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offers an item for free or at a bargain price to reward some type of behavior, such as buying, sampling, or testing
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contest
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a brand-sponsored competition that requires some form of skill or effort
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sweepstakes
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offers prized based on a chance drawing of entrants' names
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sampling
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offers potential customers the opportunity to try a product or service before they make a buying decision
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loyalty programs
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specifically designed to retain customers by offering premiums or other incentives to customers who make multiple purchases over time
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point of purchase (POP) displays
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merchandise displays located at the point of purchase, such as at the checkout counter
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rebates
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a portion of the purchase price is returned by the seller to the buyer in the form of cash
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product placement
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marketers pay to have their product included in nontraditional situations, such as a TV show
(PR tool, not sales promotion)
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cross-promoting
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two or more firms join to reach a specific target market
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evaluating sales promotions
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-realized margin
-cost of additional inventory
-potential increase in sales
-long-term impact
-potential loss from switches from more profitable items
-additional sales by customers
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value added by personal selling
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-provide information and advice
-save time and simplify buying
-build relationships
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personal selling process
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1. generate and qualify leads
2. preapproach
3. sales presentation and overcoming reservations
4. closing the sale
5. follow-up
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leads
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potential customers
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qualify
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assessing the potential of sales leads
-current customers
-trade shows
-networking events
-the internet
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cold calls
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method of prospecting in which salespeople telephone or go see potential customers w/o an appointment
-telemarketing: occurs only over telephone
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preapproach
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occurs prior to meeting the customer for the first time and extends the qualification of leads procedure; salesperson conducts additional research and develops plans for meeting with the customer
-role playing: acting out buying situation
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presentation
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-establish where the customer is in their buying process--different based on different situations
-ask questions and listen to answers
-apply knowledge to help customer
-clarify reservations
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closing the sale
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obtaining a commitment from the customer to make a purchase
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service quality dimensions
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1. reliability
2. responsiveness
3. assurance
4. empathy
5. tangibles
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ethical and legal issues in personal selling
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-sales manager and sales force: manager must be equal
-sales force and corporate policy: conflict between what salespeople believe and what their company asks them to do
-salesperson and customer: salespeople have a duty to be ethically and legally correct in all their dealings with customers
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price
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overall sacrifice a consumer is willling to make to acquire a specific product or service--financial and nonfinancial
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5 Cs of pricing
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1. company objectives
2. customers
3. costs
4. competition
5. channel members
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profit orientation
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focus on target profit pricing, maximizing profits, or target return pricing
-target profit pricing: firms use price to stimulate a certain level of sales at a certain profit per unit
-maximizing profits: relies primarily on economic theory
-target return pricing: employ pricing strategies to produce a specific return on their investment, usually expressed as a percentage of sales
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sales orientation
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set prices very low to generate new sales and take sales away from competitors, even if profits suffer (market share, sales maximization)
-premium pricing: deliberately pricing a product above the prices set for competing products to capture customers who shop for the best or for whom price doesn't matter
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competitor orientation
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strategize according to the premise that they should measure themselves primarily against their competition
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competitive parity
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set prices that are similar to major competitors
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status quo pricing
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changes prices only to meet those of the competition
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customer orientation
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target market segment of consumers who highly value a particular product benefit and set prices relatively high
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demand curve
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shows how many units of a product consumers will demand during a specific period of time at different prices
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prestige products/ services
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consumers purchase for their status rather than functionality--demand increases as price increases up to a certain point
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price equilibrium
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price at which demand and supply are equal
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price elasticity of demand
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% change in quantity demanded/ % change in price
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elastic
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-price sensitive
-price elasticity < -1
-a 1% decrease in price produces more than a 1% increase in quantity sold
-lower price, higher demand, higher revenue
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inelastic
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-price insensitive
-price elasticity > -1
-1% decrease in price results in less than a 1% increase in quantity sold
-lower price, no change in demand, lower revenue
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income effect
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change in the quantity of a product demanded by consumers due to a change in their income
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substitution effect
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consumers' ability to substitute other products for the focal brand
-greater availability of substitute products, higher elasticity of demand
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cross-price elasticity
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the percentage change in the quantity of product A demanded compared with the percentage change in price in product B
-complementary: products whose demands are positively related
-substitute: changes in demand are negatively related
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variable vs. fixed costs
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-variable: vary with production volume
-fixed: remain the same level, regardless of changes in volume of production
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break-even analysis
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-determination of BE point
-BE units= fixed costs/ CM per unit
-units= (FC+profit)/ CM per unit
-BE units x SP = BE $
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monopoly
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one firm provides the product or service in a particular industry; low competition
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oligopolistic competition
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a few firms dominate; change prices in reaction to competition
-price war: two or more firms compete primarily by lowering prices
-predatory pricing: firm sets a very low price for one or more of its products with the intent to drive competition out of business
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monopolistic competition
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many firms competing for customers in a given market but their products are differentiated
-product differentiation rather than price competition
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pure competition
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large number of sellers of standardized products or commodities that consumers perceive as substitutable, such as grains, gold, meat, spices, or minerals
-price set according to supply and demand
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gray market
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employs irregular but not necessarily illegal methods; legally circumvents authorized channels of distribution to sell goods at prices lower than those intended by the manufacturer
-manufacturers must protect against
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everyday low pricing (EDLP)
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companies stress continuity of their retail prices at a level somewhere between the regular, non-sale price and the deep-discount sale prices their competitors may offer
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high/low pricing
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relies on promotion of sales, during which prices are temporarily reduced to encourage purchases
-reference price: price against which buyers compare the actual selling price of the product--facilitates their evaluation process
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market penetration strategy
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set the initial price low for the introduction of the new product or service
-build sales, market share, and profits quickly
-experience curve effect: as sales continue to grow, the costs continue to drop
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price skimming
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appeals to segments of customers who are willing to pay the premium price to have the innovation first--mainly technology
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deceptive or illegal price advertising
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-deceptive reference prices
-loss leader pricing: lowering price below the store's cost
-bait and switch: luring customers into store with a low advertised price, only to aggressively pressure to buy a higher priced model
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price discrimination
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when firms sell the same product to different resellers at different prices
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price fixing
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the practice of colluding with other firms to control prices
-horizontal: competitors that product and sell competing products or services collude to control prices, taking pricing out of consumer decision process
-vertical: parties at diff levels of the same marketing channel agree to control prices passed on to consumers (MSRP)
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