Marketing Concepts: AIDA, Promotion Mix, and Pricing Strategies, Summaries of Marketing

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H. Nguyen,

Principles of marketing

Mktg300 – Fall 2016 Dr. Hieu Nguyen - Final review Ch15: Marketing Communications

1. Describe the communication process (264-6) a. Sender encodes the message i. Senders: the originator of the message in the communication process ii. Encoding: the conversion of a sender’s ideas and thoughts into a message, usually in the form of words or signs b. Message channel i. Channel/Vehicle: a medium of communication – such as a voice, radio, or newspaper ii. Noise: anything that interferes with, distorts, or slows down the transmission of information c. Receiver decodes the message i. Receiver: the person who decodes a message ii. Decoding: interpretation of the language and symbols sent by the source through a channel
2. The message is lost if the intending receiver doesn’t comprehend the intended message iii. Feedback: the receiver’s response to a message iv. Advertising Appeal: the way the advertiser connects with the consumers
3. What are the goals and tasks of promotion? (267-8) a. Inform: seeks to convert an existing need into a want or to stimulate interest in a new product i. Explain how the product works ii. Suggests new uses for a product iii. Building a company image b. Persuade: stimulate a purchase or an action i. Changing customer’s perception of product attributes ii. Influencing customers to buy now iii. Persuading customers to call c. Remind : keep the product and brand name in the public’s mind i. Reminding consumers that the product may be needed in the near future ii. Reminding consumers where to buy the product iii. Maintaining consumer awareness
4. Discuss components of the promotion mix (268-71) a. Promotion Mix: the combination of promotional tools used to reach the target market and fulfill the organization’s overall goals b. Advertising: any form of impersonal (one-way) paid communication in which the sponsor or company is identified i. Its ability to communicate to a large number of people at one time c. Public Relations: the marketing function that evaluates public attitudes, identifies areas within the organization the public may be interested in, and executes a program of action to earn public understanding and acceptance i. Helps an organization communicate with its customers, suppliers, and community in which it operates ii. Maintain a positive image but also to educate the public about the company’s goals and objectives, introduce new products, and help support the sales effort d. Personal Selling: a purchase situation involving a personal, paid-for communication between two people in an attempt to influence each other i. Emphasizes the relationship that develops between a salesperson and a buyer

2. Discuss major types of advertising (283-4) a. Institutional Advertising: advertising designed to enhance a company’s image rather than promote a particular product i. Advocacy Advertising: advertising in which an organization expresses its views on controversial issues or responds to media attacks b. Product Advertising: advertising that wants to enhance the sales of a specific good or service i. Pioneering Advertising: intended to stimulate primary demand for a new product or product category ii. Competitive Advertising: advertising designed to influence demand for a specific brand iii. Comparative Advertising: advertising that compares two or more specifically named or shown competing brands on one or more specific attributes
3. What is an advertising campaign? Appeal? What are common advertising appeals? What is a unique selling proposition? (285-6) a. Advertising Campaign: a series of related advertisements focusing on a common theme, slogan, and set of advertising appeals i. Laddering Technique: seeks to understand why people buy and use products and services b. Advertising Appeal: a reason for a person to buy a product i. Common Advertising Appeals: Profit, health, love or romance, fear, admiration, convenience, fun and pleasure, vanity and egotism, environmental consciousness c. Unique Selling Proposition: a desirable, exclusive, and believable advertising appeal selected as the theme for a campaign
4. Discuss common advertising executional styles (Exh. 16 - 2, 286 - 7) a. Slice-of-Life: depicts people in normal settings b. Lifestyle: how well the product will fit in the consumer’s lifestyle c. Spokesperson/Testimonial: feature a celebrity endorsing a product d. Fantasy: creates a fantasy for the viewer built around use of the product e. Humorous: use humor in their ads f. Real/Animated Product Symbols: create a character that represents the product in advertisements g. Mood or Image: builds a mood or image around the product h. Demonstration: shows consumers the expected benefit i. Musical: conveys the message of the ad through song j. Scientific: uses research evidence to give a brand superiority over competitors
5. Discuss different media types (pros and cons) (288-91) a. Medium: the channel used to convey a message to a target market b. Media Planning: the series of decisions advertisers make regarding the selection and use of media c. Media Types: i. Newspaper 1. Advantage: a. Geographic selectivity and flexibility b. Short-term advertiser commitment 2. Disadvantage: a. Little demographic selectivity b. Low pass-along rate 3. Cooperative Advertising: an arrangement in which the manufacturer and the retailer split the costs of advertising the manufacturer’s brand ii. Magazine
6. Advantage a. Good reproduction b. Demographic selectivity
7. Disadvantage a. Long-term advertiser commitments

iii. Radio

1. Advantage a. Low cost b. Immediacy of message
2. Disadvantage a. No visual treatment b. Short-advertising life of message iv. Television
3. Advantage a. Ability to reach a wide, diverse audience b. Low cost per thousand
4. Disadvantage a. Short life of message b. High campaign cost
5. Infomercial: a 30 - minute or longer advertisement that looks more like a tv talk show than a sales pitch v. Outdoor Media
6. Advantage a. Repetition b. Moderate cost
7. Disadvantage a. Short message b. High “noise” level distracting audience vi. Internet
8. Advantage a. Ability to reach a narrow target audience b. Fastest-growing medium
9. Disadvantage a. Difficult to measure ad effectiveness and return on investment b. Not all consumers have access to the internet
10. What are media selection considerations? (292-3) a. Media Mix: the combination of media to be used for a promotional campaign b. Cost per Contact: the cost of reaching one member of the target market c. Reach: the percentage of the target audience that has been exposed to the ad d. Frequency: the amount of times the target audience has been exposed to the ad (in a certain time frame) e. Impact: how big of an impact the ad is f. Audience Selectivity: the ability of an advertising medium to reach a precisely defined market
11. Discuss different media scheduling strategies (293-4) a. Media Schedule: designation of the media, the specific publications or programs, and the insertion dates of advertising i. Continuous Medial Schedule: advertising is run steadily throughout the advertising period ii. Flighted Media Schedule: advertising in run in intervals iii. Pulsing Media Schedule: advertising is run steadily throughout the year but increases frequency during peak seasons iv. Seasonal Media Schedule: advertising is run only during times of the year when the product is most likely to be used
12. What is PR? What are major PR tools? (294-7) a. Public Relations: the element in the promotional mix that evaluates public attitudes, identifies areas within the organization the public may be interested in, and executes a program of action to earn public understanding and acceptance

b. Premiums: an extra item offered to the consumer, usually in exchange for some proof that the promoted product has been purchased c. Loyalty Marketing Programs: a promotional program designed to build long-term, mutually beneficial relationships between a company and its key customers i. Frequent Buyer Program: a loyalty program in which loyal consumers are rewarded for making multiple purchases of a particular good or service d. Contests and Sweepstakes e. Sampling: a promotional program that allows the consumer the opportunity to try a product or service for free f. Point-of-Purchase Promotion: a promotional display set up at the retailer’s location to build traffic, advertise the product, or induce impulse buying g. Online Sales Promotion Ch17: Personal Selling & Sales management

1. What are the advantages and limitations of personal selling over other forms of promotion? (303-4) a. Personal Selling: direct communication between a sales representative and one or more prospective buyers in an attempt to influence each other in a purchase situation i. Advantage: 1. Provides a detailed explanation or demonstration of the product 2. Sales message can be varied according to the motivation and interests of each prospective customer 3. Directed only to qualified prospects 4. Costs can be controlled by adjusting the size of the sales force in one-person increments 5. More effective than other forms of promotion in obtaining a sale and gaining a satisfied customer
2. What is relationship selling vs. transactional selling? (304) a. Relationship/Consultative Selling: a multistage process that emphasizes personification and empathy as key ingredients in identifying prospects and developing them as long-term satisfied customers i. Focus: creating the best solution for the customer’s problem b. Transactional Selling: focuses on one single transaction and maximize the financial value of that transaction
3. Discuss steps in the selling process (306-312) a. Selling Process: the set of steps a salesperson goes through to sell a particular product or services i. Generating Leads (Prospecting): the identification of the firms and people most like to but the seller’s offerings 1. Lead: potential customers 2. Referral: a recommendation from a customer or business associate

3. Networking: using friends, business contacts, coworkers, acquaintances, and fellow members in professional and civic organizations to identify potential clients ii. Qualifying Leads: determining whether the prospect has three things: a recognized need, willingness to see a salesperson, and buying power iii. Approaching the Customer and Probing Needs
4. Preapproach: describes the “homework” that must be done by the salesperson before contacting the prospect
5. Needs Assessment: a determination of the customer’s specific needs and wants, and the range of options the customer has for satisfying them iv. Developing and Proposing Solutions
6. Sales Proposal: a written document that outlines how the company’s product or service will meet or exceed the client’s needs
7. Sales Presentation: a formal meeting in which the salesperson has the opportunity to present the sales proposal v. Handling Objectives vi. Closing the Sale
8. Negotiations: the process during which both the salesperson and the prospect offer special concessions in an attempt to arrive at a sales agreement vii. Following Up: the salesperson ensures that delivery schedules are met, that the goods or services perform as promised, and that the buyers’ employees are properly trained to use the products 1. Sales Person a. Features b. Advantages c. Benefits
9. What are the responsibilities of sales management? (313-5) a. Defining sales goals and sales process i. Quota: simply a statement of the salesperson’s sales goals b. Determining the Sales Force Structure c. Recruiting and Training the Sales Force d. Compensating and Motivating the Sales Force e. Evaluating the Sales Force Chapter 18: Social Media and Marketing
10. Review class notes on Mekanism and the ingredients of their “secret sauce” for viral marketing (story telling, platform management, influencer network, and measurement) a. Mekanism: a company that specializes in viral ads

2. What is demand? Supply? Price equilibrium? Elasticity of demand? Unitary elasticity? (344-5; class notes) a. b. Supply: the quantity of a product that will be offered to the market by a supplier at various prices for a specified period c. Price Equilibrium: the price at which demand and supply are equal d. Elasticity of Demand: refers to consumers’ responsiveness or sensitivity to changed in price i. Elastic Demand: occurs when consumers buy more or less of a product when the price changes ii. Inelastic Demand: an increase or a decrease in price will not significantly affect demand for the product Demand Elasticity = Change in Quantity Change in Price Change in Quantity/Price = Quantity/Price (2) – Quantity/Price (1) Quantity/Price (1) If E>1, demand is elastic If E<1, demand is inelastic If E=1, demand is unitary e. Unitary Elasticity: increase in sales exactly offsets a decrease in prices, so total revenue remains the same
3. What are factors that affect elasticity? (345) a. Availability of Substitutes: when many substitute products are available b. Price Relative to Purchasing Power: if price is so low that it is an inconsequential part of an individual’s budget c. Product Durability d. Product’s Other Uses: the greater the number of different uses for a product, the more elastic demand tends to be e. Rate of Inflation: a country’s inflation rate affects demand elasticity
4. What is fixed cost? Variable cost? Markup pricing? Keystoning? Break-even pricing? (347-8) a. Fixed Cost: a cost that does not change as output is increased or decreased b. Variable Cost: a cost that varies with changes in the level of output c. Markup Pricing: the cost of buying the product from the producer plus amounts for profit and for expenses not otherwise accounted for Retail Pricing = Cost. 1 – Desired Return d. Keystoning: the practice of marking up prices by 100 percent, or doubling the cost e. Break-even Pricing: a method of determining what sales volume must be reached before total revenue equals total costs Break Even = Total Fixed Cost Unit Price – Unit Variable Cost
5. What are the other determinants of price? (348-352) a. Stages in the Product Life Cycle i. Introductory Stage: high prices ii. Growth Stage: prices begin to stabilize iii. Maturity Stage: prices begin to decrease iv. Decline Stage: price further decreases b. The Competition c. Distribution Strategy i. Selling Against the Brand: stocking well-known branded items at high prices in order to sell store brands at discounted prices d. The Impact of the Internet i. Picking a product to buy online

ii. Internet Auctions e. Promotion Strategy f. Guaranteed Price Matching g. Demands of Large Customers i. Shrink the Goods ii. Cut out the middleman iii. Go local h. The Relationship of price to quality i. Prestige Pricing: charging a high price to help promote a high-quality image

6. What is price skimming? Penetration pricing? Status quo pricing? (353-4) a. Price Skimming: a pricing policy whereby a firm charges a high introductory price, often coupled with heavy promotion b. Penetration Pricing: a pricing policy whereby a firm charges a relatively low price for a product initially as a way to reach the mass market c. Status Quo Pricing: seeks to maintain existing prices or to meet the competition’s prices
7. What is price fixing? Price discrimination? Predatory pricing? (354-5) a. Price Fixing: an agreement between two or more firms on the price they will charge for a product b. Price Discrimination : when a company charge different prices for the exact same product to different customers in order to under the competition c. Predatory Pricing : the practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market
8. What is value-based pricing? FOB origin pricing? Uniform delivered pricing? Single-price? Price lining? Leader pricing? Bait pricing? Odd-even pricing? Price bundling? Two-part pricing (357-60). a. Value-Based Pricing: setting the price at a level that seems to the customer to be a good price compared to the prices of other options b. FOB Origin Pricing: a price tactic that requires the buyer to absorb the freight costs from the shipping point c. Uniform Delivered Pricing: a price tactic in which the seller pays the actual freight charges and bills every purchaser an identical, flat freight charge d. Single-Price: a price tactic that offers all goods and services at the same price (or perhaps two or three prices) e. Price Lining: the practice of offering a product line with several items at specific price points f. Leader Pricing: a price tactic in which a product is sold near or even below cost in the hope that shoppers will buy other items once they are in the store g. Bait Pricing: a price tactic that tired to get the consumer into a store through false or misleading price advertising and then uses high-pressure selling to persuade the consumer to buy more expensive merchandise h. Odd-Even Pricing: a price tactic that uses odd-numbered prices to connote a bargain and even- numbered prices to imply quality i. Price Bundling: marketing two or more products in a single package for a special price j. Two-Part Pricing: a price tactic that charges two separate amounts to consume a single good or service All readings and videos shown are fair game for the final exam.