Marketing 317 Final Exam Review

Front 1

Explain what a marketing channel is and why intermediaries are needed.

Back 1

A marketing channel is a business structure of interdependent organizations that reach from the point of product origin to the consumer with the purpose of physically moving products to their final consumption destination, representing ‘PLACE’ or ‘DISTRIBUTION’ in the marketing mix, and encompassing the processes involved in getting the right product to the right place at the right time.

Front 2

What role do members of the Marketing Mix play in the marketing channel?

Back 2

Members of the marketing mix create a continuous and seamless supply chain that performs or supports the marketing channel functions.

Front 3

What pivotal role do channel members play in the marketing channel?

Back 3

Channel members provide economies to the distribution process in the form of specialization of division of labour; overcoming discrepancies in quantity, assortment, time and space; and providing contact efficiency.

Front 4

What is a Marketing Channel (Channel of Distribution)

Back 4

a set of interdependent organizations that ease the transfer of ownership as products move from producer to business user or consumer

Front 5

What are Channel Members

Back 5

All parties in the marketing channel that negotiate with one another, buy and sell products, and facilitate the change of ownership between buyers and sellers in the course of moving the product form the manufacturer into the hands of the final consumer

Front 6

What is a Supply Chain

Back 6

The connected chain of all the business entities, both internal and external to the company, that perform or support the logistics (planning and implementation of a complex task) function

Front 7

What is Discrepancy (a distinct difference between two things) of Quantity

Back 7

The difference between the amount of product produced and the amount an end user wants to buy

Front 8

What is Discrepancy of Assortment

Back 8

The lack of all the items a consumer needs to receive full satisfaction from a product(s)

Front 9

What is Temporal Discrepancy

Back 9

A situation that occurs when a product is produced but a customer is not ready to buy it ie. Christmas or Halloween products are to be held in inventory until it’s appropriate to offer them to consumers

Front 10

What is Spatial Discrepancy

Back 10

The difference between the location of the producer and the location of widely scattered markets; this is overcome by making products available in locations convenient to consumers

Front 11

Who takes title in a supply chain and who does not?

Back 11

Retailers and merchant wholesalers take title; agents and brokers do not take title.

Front 12

What is the essential difference between channel intermediaries

Back 12

The most prominent difference separating intermediaries is whether they take title to the product (which means they own the merchandise and take control of the terms of sale).

Front 13

Define the types of channel intermediaries and describe their functions and activities.

Back 13

Merchant wholesalers are those organizations that facilitate the movement of products and services from the manufacturer to producer, resellers, governments, institutions, and retailers. (difference between manufacturer and producer, is that whoever deals with the raw materials would be considered the manufacturer, and whoever deals with assembly would be considered the producer)
Agents and brokers facilitate the exchange of ownership between sellers and buyers.
Channel intermediaries perform three basic types of functions: transactional functions, which include contracting and promoting, negotiating, and risk taking; logistical functions performed by channel members include physical distribution, storing, and sorting functions; channel members may perform facilitating functions ie. Researching and financing

Front 14

Simply explain the channel intermediary situation in a diagram version.

Back 14

Channel intermediaries (retailers, wholesalers, agents, brokers) → perform Channel Functions (transactional, logistical, facilitating

Front 15

Describe the channel structures for consumer and business products and discuss alternative channel arrangements

Back 15

Marketing channels for consumer and business products vary in degree of complexity
Consumer Channel (direct, retail, wholesaler, agent/broker)
Business Channel (direct, industrial, agent/broker, agent/broker industrial)
Alternative Channels (multiple, nontraditional, strategic alliances)

Front 16

What is a Direct Channel

Back 16

A distribution channel in which producers sell directly to consumers ie. Avon

Front 17

What is a Traditional Channel

Back 17

Manufacturer → wholesaler → retailer → Consumer

Front 18

What is a Corporate Channel (basically same as traditional)

Back 18

(basically same as traditional)
• Owned by one company (the manufacturer)
High degree of vertical alignment in the sales and distribution functions (vertically aligned tasks happens when tasks for a higher skill level are built on the behavior and knowledge gained in the performance of tasks at the lower skill level)

Front 19

What is a Contractual Channel

Back 19

• Rules, regulations, structures
• Tightly coordinated by formal procedures and pledges of ongoing exchange
• Some sort of written form that mandates (an official command or instruction from an authority) exchange of products

Front 20

What are Franchises

Back 20

McDonalds; no choice in products provided, prices, apparel

Front 21

What are Wholesaler Sponsored Voluntary chains

Back 21

Home Hardware

Front 22

What is a Retail Cooperative (Calgary Co-op)

Back 22

• All put in shares (usually one per person) and coordinate business operations ie. Agree upon sales promotion, distribution, warehouses, purchasing behaviour
• Can sell items at different prices

Front 23

What is an Administered Channel

Back 23

• Channel members operate based on agreed upon plans
• Channel Captain dominant channel member exerting its power ie. Goodyear Tire Proctor and Gamble
• Can be just one product; company as a whole has consistent power

Front 24

Reverse Channel

Back 24

• Consumer to retailer to wholesaler to manufacturer
• Ex. Recalls, recycling
• Designed to return goods to their users in better condition, which results in better systems

Front 25

Dual Distribution (multiple distribution)

Back 25

• The use of two or more channels to distribute the same product to target markets

Front 26

Strategic Channel Alliance

Back 26

• A cooperative agreement between business firms to use the other’s already established distribution channel

Front 27

Define supply chain management and discuss its benefits.

Back 27

Supply chain management coordinates and integrates all of the activities performed by supply chain members into a seamless process from the source to the point of consumption. This results in enhanced customer and economic value.

Front 28

What are the responsibilities of the supply chain manager.

Back 28

The responsibilities of the supply chain manager include developing channel design strategies, managing the relationships of supply chain members, sourcing and procurement of raw materials, scheduling production, processing orders, managing inventory and storing product, and selecting transportation modes. Supply chain manager is also responsible for managing customer service, and the information that flows through the supply chain.

Front 29

What are the benefits of supply chain management

Back 29

Benefits of supply chain management include reduced costs in inventory management, transportation, warehousing, and packaging, improved services through techniques like time-based delivery and make-to-order; and enhanced revenues, which result from such supply chain-related achievements as higher product availability and more customized products.

Front 30

Discuss the issues that influence channel strategy

Back 30

When determining marketing channel strategy, the supply chain manager must determine what market, product, and producer factors will influence the choice of channel. The manager must also determine the appropriate level of distribution intensity.

Front 31

What are the different types of distribution and what do they entail?

Back 31

Intensive distribution aimed at maximum market coverage.
Selective distribution is achieved by screening dealers to eliminate all but a few in any single area.
exclusive distribution; The most restrictive form of market coverage; only one or a few dealers within a given area.

Front 32

What is Intensive distribution

Back 32

• A form of distribution aimed at having a product available in every outlet where target customers might want to buy it
• Buyer is unwilling to search for the product, as if with convenience goods and operating supplies
• Product must be very accessible to buyers

Front 33

Selective distribution

Back 33

• A form of distribution aimed at having a product available in every outlet where target customers might want to buy it
• Selective distribution strategies are linked to a manufacturers desire to maintain a superior product image, to be able to charge a premium (the amount above its nominal value at which something such as a security sells) price

Front 34

Exclusive distribution

Back 34

• A form of distribution that establishes one or a few dealers within a given area
• Most restrictive form of distribution
• Confined to consumer specialty goods, a few shopping goods, and major industrial equipment
• Exclusive territories are granted to new companies (franchises) to obtain market coverage in a particular area; shields dealer from any competition and results in them being the main beneficiary of manufacturers promotion efforts
• May project an exclusive image for the product

Front 35

Explain channel leadership, conflict, and partnering

Back 35

Power control, leadership, conflict, and partnering are the main dimensions of marketing channel relationships. Channel power refers to the capacity of one channel member to control or influence other channel members

Front 36

When does channel control happen?

Back 36

Channel control occurs when one channel member intentionally affects another member’s behaviour.

Front 37

What is channel leadership

Back 37

Channel leadership is the exercise of authority and power ie. Channel captain

Front 38

What is channel conflict?

Back 38

Channel conflict occurs when there is a clash of goals and methods among the member of a distribution channel. Channel conflict can be either horizontal, between channel members at the same level, or vertical, between channel members at different levels of the channel.

Front 39

What is channel partnership; what happens when this occurs?

Back 39

Channel partnering is the joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage (CA). Collaborating channel partners meet the needs of consumers more effectively by ensuring that the right product reach shelves at the right time and at the lower cost, boosting sales and profits.

Front 40

Channel Power

Back 40

• The capacity of a particular marketing channel member to control or influence the behaviour of another channel member

Front 41

Channel Control

Back 41

• A situation that occurs when one marketing channel member intentionally affects another member’s behaviour

Front 42

Channel Leader (Channel Captain)

Back 42

• A member of a marketing channel that exercises authority and power over the activities of other channel members

Front 43

Channel Conflict

Back 43

• A clash of goals and methods between distribution channel members

Front 44

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Horizontal Conflict

Back 44

• A channel conflict that occurs among channel

Front 45

Vertical Conflict

Back 45

• A channel conflict that occurs between different levels in a marketing channel, most typically between the manufacturer and wholesaler or between the manufacturer and retailer

Front 46

Channel Partnering (Channel cooperation)

Back 46

• The joint effort of all channel members to create a supply chain that serves customers and creates a competitive advantage

Front 47

Describe the logistical components of the supply chain.

Back 47

The logistics supply chain consists of several interrelated and integrated logistical components:
• Sourcing and procurement of raw materials and supplies
• Production scheduling
• Order processing
• Inventory control
• Warehousing and material handling
• Transportation

Front 48

What is the logistic information technology and how does it remain connected?

Back 48

Integrating and linking all of the logistics functions of the supply chain is the logistics information system.
Information technology connects the various components and partners of the supply chain into an integrated whole

Front 49

How do the logistical components of the supply chain connect the the other components of the supply chain?

Back 49

The supply chain team, in concert with the logistic information system, orchestrates the movement of goods, services and information from the source to the consumer.
Supply chain teams typically cut across organizational boundaries, embracing all parties who participate in moving product to market.

Front 50

What do the logistical components of the supply chain essential deal with?

Back 50

Procurement (obtaining of something, especially by effort) deals with the purchase of raw materials, supplies, and component according to production scheduling. Order processing monitors the flow of goods and information (order entry and order handling).
Inventory control systems regulate when, and how much to buy (order timing, and order quantity).

Front 51

Explain the logistical components of storage and transportation

Back 51

Warehousing provides storage of goods until needed by the customer while the materials-handling system moves inventory into, within, and out of the warehouse.
Finally, the major modes of transportation include railroads, motor carriers, pipelines, waterways, and airways.

Front 52

Logistics

Back 52

• The process of strategically managing the efficient flow and storage of raw materials, in process inventory, and finished goods from point of origin to point of consumption

Front 53

Logistics information system

Back 53

• The link that connects all of the logistics functions of the supply chain

Front 54

Supply Chain Team

Back 54

• An entire group of individuals who orchestrate the movement of goods, services, and information from the source to the consumer

Front 55

Mass customization (Built to order)

Back 55

• A production method whereby products are not made until an order is placed by the customer; products are made according to customer specifications

Front 56

Just-in-time production (JIT)

Back 56

• A process that redefines and simplifies manufacturing by reducing inventory levels and delivering raw materials just when they are needed on the production line

Front 57

Order processing system

Back 57

• A system whereby orders are entered into the supply chain and filled

Front 58

Electronic data interchange (EDI)

Back 58

• Information technology that replaces the paper documents that usually accompany business transactions, such as purchase orders and invoices, with electronic transmission of the needed information to reduce inventory levels, improve cash flow, streamline operations, and increase the speed and accuracy of information transmission

Front 59

Inventory control system

Back 59

• A method of developing and maintaining an adequate assortment of materials or products to meet a manufacturers or customers demand

Front 60

Material Requirement Planning (MRP) (Materials Management)

Back 60

• An inventory control system that manages the replenishment of raw materials, supplies, and components from the supplier to the manufacturer

Front 61

Distribution Resource Planning (DRP)

Back 61

• An inventory control system that manages the replenishment of goods from the manufacturer to the final consumer

Front 62

Materials-handling system

Back 62

• A method of moving inventory into, within, and out of the warehouse

Front 63

Discuss new technology and emerging trends in supply chain management

Back 63

Technology and automation are bringing up-to-date distribution information to the decision maker’s desk.
Technology is also liking suppliers, buyers, and carriers for joint decision making, and it has created a new electronic distribution channel

Front 64

What new method of coordinating supply chain management is entering the workforce?

Back 64

Many companies are saving money and time by outsourcing to third-party (and countries) carriers to handle some or all aspects of the distribution process.

Front 65

Outsourcing (Contract Logistics)

Back 65

• A manufacturer’s or supplier’s use of an independent third party to manage an entire function of the logistics system, such as transportation, warehousing, or order processing

Front 66

Electronic Distribution

Back 66

• A distribution technique that includes any kind of product or service that can be distributed electronically, whether over traditional forms such as fiber-optic cable or through satellite transmission of electronic signals

Front 67

Discuss channels and distribution decisions in global markets

Back 67

Global marketing channels are becoming more important to Canadian companies seeking growth abroad.
Manufacturers introducing products to foreign countries must consider these issues:
Global distribution expertise is also merging as an important skill for supply chain mangers as many countries are removing trade barriers

Front 68

Discuss the importance of retailing in the Canadian economy

Back 68

Retailing plays a vital role in the Canadian economy for two main reasons
• Retail businesses contribute to our high standard of living by providing a vast number of diversity of goods and services
• Retailing employs a large part of the Canadian working population
Retailing contributed to 11.2% of Canada’s employment and 33% of Canada’s GDP

Front 69

Retailing

Back 69

• All the activities directly related to the sale of goods and services to the ultimate consumer for personal, non-business use

Front 70

Explain the dimensions by which retailers can be classified

Back 70

Many different kinds of retailers exist. A retail establishment can be classified according to:
• ownership
• level of service
• product assortment
• price

Front 71

How can the level of ownership be differentiated?

Back 71

On the basis of ownership: retailers can be broadly differentiated as independent retailers, chain stores, or franchise outlets

Front 72

What are the different ways retailers can be classified?

Back 72

The level of service retailers provide can be classified along a continuum of high to low.
Retailers also classify themselves by the breadth and depth of their product assortments; some retailers have concentrated product assortments, whereas others have extensive product assortments.

Front 73

How do retailers position themselves within the marketplace?

Back 73

Retailers use level of service, product assortment and price to position themselves in the marketplace

Front 74

Independent Retailers

Back 74

• Retailers owned by a single person or partnership and not operated as part of a larger retail institution

Front 75

Chain Store

Back 75

• Stores owned and operated as a group by a single organization

Front 76

Franchise

Back 76

• The right to operate a business or to sell a product

Front 77

Gross Margin

Back 77

• The amount of money the retailer make as a percentage of sales after the cost of goods sold is subtracted

Front 78

What are the major types of retail operators?

Back 78

Department, specialty stores, supermarkets, drug stores, convenience stores, discount and restaurants

Front 79

what is a department store?

Back 79

• Department stores: a store housing several departments under one roof; carry a wide variety of shopping and specialty goods; offset higher prices by emphasizing customer service and décor

Front 80

What is a specialty store?

Back 80

• Specialty stores: a retail store specializing in a given type of merchandise; typically carry a narrow but deeper assortment of merchandise, emphasizing distinctive products and a high level of customer service

Front 81

What is a supermarket?

Back 81

• Supermarkets: a large departmentalized, self-service retailer that specialized in food and some nonfood items; large self service retailers

Front 82

What is a drugstore?

Back 82

• Drugstores: a retail store that stocks pharmacy-related products and services as its main draw; retail formats that sell mostly prescription and over-the-counter medications, health and beauty aids, cosmetics, and specialty items.

Front 83

What is a convenience store?

Back 83

• Convenience stores: a miniature supermarket, carrying only a limited line of high turnover (the amount of business transacted over a given period of time, especially when expressed as gross revenue) convenience goods

Front 84

what is a discount store and how can it be subdivided?

Back 84

• Discount stores: a retailer that competes on the basis of low prices, high turnover, and high volume; 4 types:
o Full-line discount stores: a retailer that offers consumers very limited service and carries a broad assortment of well-known, nationally branded “hard goods”
o Specialty discount store: a retail store that offers a nearly complete selection of single-line merchandise and uses self service, discount prices, high volume, and high turnover (Category Killer)
o Warehouse membership clubs: limited service merchant wholesalers that sell a limited selection of brand name appliances, household items, and groceries on a cash and carry basis to members, usually small businesses and groups
o Off-Price retailer: a retailer that sells at prices 25% or more below traditional department store prices because it pays cash for its stock and usually doesn’t ask for return privileges

Front 85

Explain the situation with restaurants.

Back 85

• Restaurants: straddle the line between the retailing and service industries; although they sell a product to consumers (food and drink) they are also considered service marketers because they provide customers with the service of preparing food and providing table service

Front 86

What is Scrambled Merchandising

Back 86

• The tendency to offer a wide variety of non-traditional goods and services under one roof ie. Chocolate at chapters, water at Reitman’s

Front 87

what is Mass Merchandising

Back 87

• A retailing strategy using moderate to low prices on large quantities of merchandise and lower level of service to stimulate high turnover of products

Front 88

What is a Supercenter

Back 88

• A retail store that combines groceries and general merchandise goods with a wide range of services

Front 89

Category Killers

Back 89

• Specialty discount stores that heavily dominate their arrow merchandise segment

Front 90

Factory Outlet

Back 90

• An off-price retailer that is owned and operated by a manufacturer

Front 91

Discuss non-store retailing techniques

Back 91

Non-store retailing, which is shopping outside a store setting has three major categories:
• Automatic vending: uses machines to offer product for sale
• Direct Retailing: sales transaction occurs in a home setting, typically through door-to-door sales or party plan selling
• Direct Marketing: refers to the techniques used to get consumers to buy from their hoes or place of business. Those techniques include: direct mail, catalogues, telemarketing, along with electronic retailing, which includes home shopping channels and retailing using the internet.

Front 92

Non-store retailing

Back 92

• Shopping without visiting a store

Front 93

Automatic Vending

Back 93

• The use of machines to offer goods for sale

Front 94

Direct Retailing

Back 94

• The selling of products by representatives who work door-to-door, office-to-office, or at home parties

Front 95

Direct marketing (direct response marketing )

Back 95

• Techniques used to get consumers to make a purchase from their home, office, or another non-retail setting

Front 96

Telemarketing

Back 96

• The use of the telephone to sell directly to consumers

Front 97

Online retailing

Back 97

• A type of shopping available to consumers with personal computers and access to the internet

Front 98

Define franchising

Back 98

Franchising is a continuing relationship in which a franchiser grants to a franchisee the business rights to operate or to sell a product.

Front 99

describe franchising in its two basic forms.

Back 99

• In product and trade name franchising; a dealer agrees to buy or sell certain products or product lines from a particular manufacturer or wholesaler.

• Business format franchising is an ongoing business relationship in which a franchisee uses a franchiser’s name, format, or method of business in return for several types of fees; common in retailing, restaurant, food-service, hotel and motel, printing, and real estate franchises

Front 100

Franchiser

Back 100

• The originator of a trade name, product, methods of operation, and so on that grant operating rights to another party to sell its product

Front 101

Franchisee

Back 101

• An individual or business that is granted the right to sell another party’s product

Front 102

List the major tasks involved in developing a retail marketing strategy.

Back 102

Retail management begins with defining the target market, typically on the basis of demographic, geographic, or psychographic characteristics. After determining the target audience, retail managers must develop the 6 variables of the retailing mix: product, place, price, promotion, presentation and personnel (different for retailing)

Front 103

Explain the 6 variables to developing a retail marketing strategy.

Back 103

• Product: width and depth of product assortment
• Place: location and hours
• Promotion: Advertising, publicity, public relations
• Price: straight forward
• Presentation: layout and atmosphere
• Personnel: customer service and personal selling

Front 104

Retailing mix

Back 104

• A combination of the six P’s (product, place price, promotion, presentation, personnel) to sell goods and services to the ultimate consumer

Front 105

Product Offering

Back 105

• The mix of products offered to the consumer by the retailer; also called the product assortment or merchandise mix

Front 106

Destination Stores (freestanding stores)

Back 106

• Stores that consumers purposely plan to visit ie. Purr
• Increasingly popular

Front 107

Atmosphere

Back 107

• The overall impression conveyed by a store’s physical layout, décor, and surroundings

Front 108

Describe new developments in retailing

Back 108

Adding interactivity to the retail environment is one of the most popular strategies in retailing in recent years; both small and large national chains are using interactivity: ie. build a bears; interactivity gets consumers involved in the retail experience

M-Commerce (Mobile e-commerce) is gaining popularity; enables consumers to purchase goods and services using wireless mobile devices such as cell phones, pagers, PDA's, hand held computers

Front 109

What are some aspects of Store Design

Back 109

• Setting the stage
• Store layout
• Fixture type and merchandise density ie. Tables, displays, organization, manikins
o Is there a lot of space, or are the clothes jam-packed into shelves
• Music, colour, lighting
• The actors: store personnel; people working at the store should match the outlook ie. Winner’s vs. Holt Renfrew
• Pricing policy: reflective of store, the designs, customer experience
• Customer Service; customer has to do all the work: walmart vs Holt

Front 110

What are the most crucial aspects of retailing?

Back 110

• Location ***
• Breadth of product
o Number of product lines
• Depth of product offering
o Variety of choices for each product

Front 111

What are the different types of retail ownership?

Back 111

Independent, Corporate Chain, Voluntary Chain, Retail cooperative, franchise

Front 112

What is independent retail ownership?

Back 112

• One store
• 70% of Canadian retailers make less than $500,000 annum

Front 113

what is Corporate Chain retail ownership?

Back 113

• Owns two or more outlets with common ownership, centralized buying PURR

Front 114

What is Voluntary Chain retail ownership?

Back 114

• Wholesaler sponsored
• Bulk buying and collective merchandising

Front 115

What is Retail Cooperative ownership?

Back 115

• Group of independent retailers
• Establish centralized buying and promotion
• Board of directors

Front 116

What is Franchise retail ownership

Back 116

• License of trademark and process of royalties
• Number one franchise in the world: 7/11

Front 117

What are the different types of store locations?

Back 117

Free standing, unplanned center, planned centers, planned center communities, power centers, center business district, regional mall, super regional mall

Front 118

What is a Free standing store location

Back 118

building on its own ie. PURR

Front 119

what is a Unplanned centers store location

Back 119

cluster of retail stores within a city achieved by independent decisions of stores ie. Kensington: it just happened

Front 120

what is a Planned centers store location

Back 120

strip malls: stores aligned in a row, limited parking

Front 121

what is a Planned center community store location

Back 121

supposed to be malls, lack of anchor; traffic path; ie. Westhill’s, crowfoot crossing

Front 122

what is a Power Center store location

Back 122

large stores, attract and cater to members of entire population ie. Deerfoot Meadows → only one Ikea in Calgary

Front 123

what is a Central Business District store location

Back 123

Downtown, Steven Ave; Winners, McNally Robinson,

Front 124

what is a Regional Mall store location

Back 124

Serves larger area than conventional mall; ie. Southcentre

Front 125

What is a Super Regional Mall store location

Back 125

Chinook Center→ 5 Anchors; Cross-Iron Mills

Front 126

Discuss the role of promotion in the marketing mix.

Back 126

Promotion is communication by marketers that informs, persuades, and reminds potential buyers of a product in order to influence opinion or elicit (draw out) a response.

Front 127

What is promotional strategy?

Back 127

Promotional strategy is the plan for using the elements of promotion: advertising, public relations, personal selling, and sales promotion- to meet the firm’s overall objectives and marketing goals. Based on these objectives, the elements of the promotional strategy becomes a coordinated promotional plan.
The promotional plan then becomes an integral part of the total marketing strategy for reaching the target market along with product, distribution, and price.

Front 128

Define Promotion

Back 128

• Communication by marketers that informs, persuades, and reminds potential buyers of a product in order to influence an opinion or elicit a response

Front 129

define Promotional Strategy

Back 129

• A plan for the optimal use of the elements of promotion: advertising, public relations, personal selling and sales promotion

Front 130

Define a Competitive advantage

Back 130

• One or ore unique aspects of an organization that causes target consumers to patronize (support) that firm rather than competitors

Front 131

Discuss the elements of the promotional mix

Back 131

Elements of the promotional mix including advertising, public relations, personal selling and sales promotion.

Front 132

Discuss advertising

Back 132

Advertising is a form of impersonal, one-way mass communication paid for by the source

Front 133

Discuss PR

Back 133

Public Relations is the function of promotion concerned with a firm’s public image. Firms can buy good publicity, but they can take steps to create a positive company image.

Front 134

Discuss Sales Promotion

Back 134

Sales promotion is typically used to back up another components of the promotional mix by stimulating immediate demand

Front 135

Discuss personal selling

Back 135

Personal selling typically involved direct communication, in person or by telephone; the seller tries to initiate a purchase by informing and persuading one or more potential buyers.

Front 136

Define promotional mix

Back 136

• The combination of promotional tools: advertising, public relations, personal selling, and sales promotion- used to reach the target market and fulfill the organization’s overall goals

Front 137

Define Advertising

Back 137

• Impersonal, one-way communication about a product or organization that is paid for by a marketer
• Positive benefit: ability to communicate to a large number of people at one time; cost per contact is very low, although total cost to advertise is very high

Front 138

Define PR

Back 138

• 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

Front 139

Define Publicity

Back 139

• Public information about a company, product, service, or issue appearing in the mass media as a news item

Front 140

Define sales promotion

Back 140

• Marketing activities, other than personal selling, advertising, and PR that stimulates consumer buying and dealer effectiveness
• Used to stimulate immediate increase in demand; include free samples, contests, premiums, trade shows, vacation getaway’s; marketers use to improve the effectiveness of other elements of the promotional mix, especially advertising and personal selling

Front 141

Explain Personal Selling

Back 141

• A purchase situation involving a personal paid-for communication between two people in an attempt to influence each other
• Both buyer and seller have personal objectives they want to accomplish in this dyad
• Personal selling attempts to persuade the buyer to see a point of view
• Building a relationship between buyer and seller is common in B2B buying situations and has proven to be very effective win-win situation
• Becoming increasingly dependent on the internet: companies use their websites to draw in customers who seek out information on their products, to bring them into their physical store location, where personal selling takes over and close the sale

Front 142

Describe the communication process

Back 142

The communication process has several steps. When an individual or organization has a message it wishes to convey to a target audience, it encodes that message using language and symbols familiar to the intended receiver and sends the message through a channel of communication.
Noise in the transmission channel distorts the source’s intended message.
Reception occurs if the message falls within the receiver’s frame of reference
The receiver decodes the message and usually provides feedback to the source. Normally, feedback is direct for interpersonal communication (personal selling) and indirect for mass communication (advertising)

Front 143

Simply list the steps of the communication process.

Back 143

Source → Encoding → Message Channel → Decoding → Receiver → Feedback → Noise

Front 144

What happens when an individual/organization has a message to convey to a target audience?

Back 144

it encodes that message using language and symbols familiar to the intended receiver and sends the message through a channel of communication.

Front 145

What is noise?

Back 145

Noise in the transmission channel distorts the source’s intended message.

Front 146

What happens when the message falls upon the receivers frame of reference?

Back 146

Reception occurs if the message falls within the receiver’s frame of reference
The receiver decodes the message and usually provides feedback to the source. Normally, feedback is direct for interpersonal communication (personal selling) and indirect for mass communication (advertising)

Front 147

Define communication

Back 147

• The process by which we exchange or share meanings through a common set of symbols

Front 148

define interpersonal communication

Back 148

• Direct, fact-to-face communication between two or more people ie. Personal selling, even sales promotion

Front 149

define mass communication

Back 149

• The communication of a concept or message to large audiences

Front 150

Define the Sender

Back 150

• The originator of the message in the communication process

Front 151

Define encoding

Back 151

• The conversation of a sender’s ideas and thoughts into a message, usually in the form of words or signs

Front 152

Define a channel

Back 152

• A medium of communication- such as a voice, radio, or newspaper- for transmitting a message

Front 153

Define noise.

Back 153

• Anything that interferes with, distorts, or slows down the transmission of information

Front 154

who is the receiver

Back 154

• The person who decodes a message

Front 155

What is decoding

Back 155

• Interpretation of the language and symbols sent by the source through a channel

Front 156

What is feedback

Back 156

• The receiver’s response to a message

Front 157

What are corporate blogs?

Back 157

• Blogs that are sponsored by a company or one of its brands and maintained by one or more of the company’s employees

Front 158

what are non-corporate blogs?

Back 158

• Independent blogs that are not associated with the marketing efforts of any particular company or brand

Front 159

Explain the goals and tasks of promotion

Back 159

The fundamental goals of promotion are to induce (encourage), modify, or reinforce behaviour by informing, persuading, and reminding.

Front 160

What is informative promotion, when does it come into play?

Back 160

Informative promotion explains a good’s or service’s purpose and benefits.
Promotion that informs the consumer is typically used to increase demand for a general product category or to introduce a new good or service.

Front 161

What is persuasive promotion, when does it come into play?

Back 161

Persuasive promotion is designed to stimulate (inspire) a purchase or an action. Promotion that persuades the consumer to buy is essential during the growth stage of the product life cycle, when competition becomes fierce.

Front 162

What is reminding promotion, when does it come into play?

Back 162

Reminding promotion is used to keep the product and brand name in the publics mind. Promotion that reminds are generally used during the maturity stage of the product life cycle

Front 163

Discuss the AIDA concept and its relationship to the promotional mix

Back 163

AIDA model outlines the four basic stages in the purchase decision making process; which are initiated and propelled by promotional activities.

Front 164

Discuss the Attention component of the AIDA model.

Back 164

• Attention: uses all four aspects of the promotional mix: advertising, public relations, sales promotion and personal selling, with huge emphasis on ADVERTISING and PERSONAL SELLING

Front 165

Discuss the interest component of the AIDA model.

Back 165

Interest: uses advertising, pubic relations, and sales promotion and personal selling, with huge emphasis on ADVERTISING, PR, and PERSONAL SELLING

Front 166

Discuss the desire component of the AIDA concept.

Back 166

Desire: includes advertising, PR, sales promotion, and personal selling; huge emphasis on PR, SALES PROMOTION, and PERSONAL SELLING

Front 167

Discuss the Action component of the AIDA model.

Back 167

Action: HUGE EMPHASIS on PERSONAL SELLING PERSONAL SELLING!!

Front 168

How do advertising, personal selling and sales promotion tie into the AIDA concept?

Back 168

Adverting is a good tool for increasing awareness and knowledge of a good or service.
Sales promotion is effective when consumers are at the purchase stage of the decision making process.
Personal selling is effective in developing customer interest and desire.

Front 169

Define the AIDA concept.

Back 169

• A model that outlines the process for achieving promotional goals in terms of stages of consumer involvement with the message the acronym stands for: attention, interest, desire, action

Front 170

What factors affect the promotional mix.

Back 170

Promotion managers consider many factors when creating promotional mixes. These factors include the nature of the product, PLC stage, target market characteristics, the type of buying decision involved, availability of funds, and feasibility of push or pull strategies.

Front 171

What happens when a good/service is customized/tailored to the consumers needs/wants?

Back 171

Because most business products tend to be custom-tailored to the buyer’s exact specifications, the marketing manager may choose a promotional mix that relies more heavily on personal selling.

Front 172

What happens with a consumer good that is mass produced (like most are)

Back 172

On the other hand, consumer products are generally mass produced and lend themselves more to mass promotional efforts such as advertising and sales promotion

Front 173

what is the relationship between a products position within the PLC and their particular promotional mix?

Back 173

As products move through different stages of the PLC, marketers will chose to use different promotional elements. For example; advertising is used more in the introductory stage of the of the PLC than in the decline stage.

Front 174

what other aspects effect the promotional mix?

Back 174

Characteristics of the target market such as geographic location of potential buyers and brand loyalty, influence the promotional mix as does whether the buying decision is complex or routine.

Front 175

What helps determine the promotional mix.

Back 175

The amount of funds a firm has to allocate to promotion may also help determine the promotional mix. Small firms with limited funds may rely more heavily on PR whereas larger firms may be able to afford broadcast or print advertising.

Front 176

What happens when a firm uses the push strategy to promote their good/service?

Back 176

the marketing manager may choose to use aggressive advertising and personal selling to wholesalers and retailers.

Front 177

What happens when a firm uses pull strategy to promote their good/service?

Back 177

then the manager often relies on aggressive mass promotion, such as advertising and sales promotion, to stimulate consumer demand.

Front 178

Define the push strategy.

Back 178

• A marketing strategy that uses aggressive personal selling and trade advertising to convince a wholesaler or retailer to carry and sell particular merchandise
o Manufacturer promotes to the wholesaler
o Wholesaler promotes to the retailer
o Retailer promotes to the consumer
o Consumer buys from retailer

Front 179

Define the pull strategy.

Back 179

• A marketing strategy that stimulates consumer demand to obtain product distribution
o Manufacturer promotes to consumer
o Consumer demands product from retailer
o Retailer demands product from wholesaler
o Wholesaler demands product from manufacturer; who actually carries product

Front 180

Define an asymmetrical communication strategy.

Back 180

only focus on positive aspects of the product

Front 181

Define a symmetrical communication strategy.

Back 181

balance: provide balanced view of the product’s attributes ie. Buckley’s “ tastes awful, and it works”

Front 182

Define one-way communication.

Back 182

sender to receiver

Front 183

Define two-way communication

Back 183

some information that provides with feedback; provides an avenue to give feedback ie. Link to a website, address to mail in comments

Front 184

Define push promotion

Back 184

pushes through marketing strategies; manufacturer → wholesaler →Retailer → Consumer
o Personal selling

Front 185

Define pull promotion

Back 185

top (manufacturer) from bottom (consumer); request for product (ex. Children’s toys) gets pulled through the supply chain; from consumer to retailer to wholesaler to manufacturer because of advertisements placed on TV or print.

Front 186

Discuss the concept of integrated marketing communications (IMC)

Back 186

IMC is the careful coordination of all promotional messages for a product or service to assure the consistency of messages at every contact point where a company meets the consumer- advertising, sales promotion, personal selling, PR as well as direct marketing, packaging, and other forms of communication

Front 187

What role does IMC play with Marketing Managers

Back 187

Marketing managers carefully coordinate all promotional activities to ensure that consumers see and here one message. IMC has received more attention in recent years due to the proliferation (increase) of media choice, the fragmentation of mass markets into more segmented niches and the decrease in advertising spending in favour of promotional techniques that generate an immediate sales response.

Front 188

Define the integrated marketing communication (IMC)

Back 188

• The careful coordination of all promotional messages for a product of service to assure the consistency of messages at every contact point where a company meets the consumer

Front 189

From the message source, encoding occurs. What is encoding?

Back 189

image, symbol, indicates what message is from sender

Front 190

What is a message channel?

Back 190

literally what the message is; few sentences; Channel: where the message is coming from; how are they coming across with particular message

Front 191

What is decoding?

Back 191

how well the receiver understands the message; encode symbols that receiver can decode; they’ll know right away what the symbol represents

Front 192

Who is the receiver?

Back 192

who the message is intended for; whoever the target market is

Front 193

what is feedback, why is it important?

Back 193

formally only cared about what they were saying, not how it was interpreted; developed through website to tell where to go; track, find a way to get feedback

Front 194

what is noise, what role does it play in the IMC?

Back 194

can come with message/communication itself; it is something that distracts the receiver from interpreting the message clearly; can receive noise from brand competitors

Front 195

Discuss the effects of advertising on market shares.

Back 195

Advertising helps marketers increase or maintain brand awareness and, subsequently, market share.

Front 196

what is the difference in advertising between new brands and older brands

Back 196

Typically, more is spent to advertise new brands with a small market share than to advertise older brands. Brands with a large market share use advertising mainly to maintain their share of the market.

Front 197

Discuss the effects of advertising on consumers.

Back 197

Advertising affects consumers’ daily lives as well as their purchases. Although advertising can seldom change strongly held consumer attitudes and values, it may transform a consumer’s negative attitude towards a product into a positive one.
when consumers are highly loyal to a brand, they may buy more of that brand when advertising is increased

Front 198

How does advertising effect consumers view of brand attributes?

Back 198

By emphasizing different brand attributes, advertisers can change their appeal in response to consumer’ changing needs or try to achieve an advantage over competing brands.
Essentially, the more money you spend on advertising the higher the return, in sales or market shares.

Front 199

Generally, what can advertising accomplish?

Back 199

• Change negative attitudes to positive
• Reinforce positive attitude: humor more effective when positive attitude already in place
• Affect how consumers rank brand attributes ie. Car manufacturers used to advertise how roomy and how fast the car can go; now they advertise other attributes such as safety and versatility to emphasize the many attributes their brand has to offer

Front 200

What are advertising objectives

Back 200

To inform
To persuade
To remind

Front 201

When is informative adverting used?

Back 201

New product, price changes, building image = inform as a strategy

Front 202

When is persuasive advertising used?

Back 202

Building brand preference, encourage switching, inform of product attributes

Front 203

When is reminder advertising used?

Back 203

Maintaining awareness; remind where to purchase

Front 204

What are advertising appeals?

Back 204

Central idea to the advertisement; the approach you use to generate interest in product and attract attention

Front 205

What is a rational advertising appeal?

Back 205

o Focuses on practical and functional needs
o Attributes: “do things better” ie. Safe

Front 206

What is an emotional advertising appeal?

Back 206

o Social and psychological needs
o Use emotional appeal when there is lots of competition in field
• Sensory: needs
• Social: individual, unique
• Ego satisfaction: feed on people’s ego, make them feel unique
• Fear, sex, recognition, comfort

Front 207

what's an execution style?

Back 207

you have your appeal (either rational or emotional) how are you going to portray your message? Options include:
-slice of life
-lifestyle
-straight sell
-musical
-fantasy
-technical expertise
-scientific expertise
-testimonial
-personality symbol

Front 208

What is the slice of life execution style

Back 208

• Common with proctor and gamble
• Cross section of someone’s life; bring product in; saves the day by solving problems and issues; product solves problem

Front 209

What is a lifestyle execution style

Back 209

More you know about psychographics, better and easier to implement product

Front 210

What is a straight sell execution style

Back 210

• Business to business
• Very rational

Front 211

What does a musical execution style entail?

Back 211

• Jingle
• Apple
• Make sure music adds something

Front 212

What is a technical expertise execution style?

Back 212

• Doctor recommendations

Front 213

What is a scientific expertise execution style?

Back 213

• Providing something that proves it is legit; work with technical expertise

Front 214

What does a fantasy execution style entail?

Back 214

• Take product/consumer and put them in a fantastic situation

Front 215

What does a testimonial execution style entail?

Back 215

• Someone has used the product: giving feedback; evidence of its ability to satisfy needs

Front 216

What does a personality symbol execution style entail?

Back 216

• Use celebs to use products and confirm its excellence

Front 217

What is an advertising response function?

Back 217

• A phenomenon in which spending for advertising and sales promotion increases sales or market share up to a certain level but then produces diminishing returns

• New brands with small market share tend to spend proportionately more on advertising and PR than brands that have substantial market share, because beyond a particular level of spending for advertising and PR, diminishing returns; sales and market share decreases no matter how much you spend.

Front 218

Identify the major types of advertising.

Back 218

Advertising is any form of non-personal, paid communication in which the sponsor or company is identified.
The two major types of advertising are institutional advertising and product advertising: institutional is non-product orientated, it’s purpose is to foster a positive company attitude amongst the general public, investment community, customers and employees.

Front 219

Further explain the product advertising.

Back 219

Product advertising is designed to mainly promote goods/services, and is classified into three main categories: pioneering, competitive, and comparative. A products place in the PLC is a major determinant of the type of advertising used to promote it.

Front 220

Further explain the correlation between product advertising and its place within the PRODUCT LIFE CYCLE?

Back 220

Introduction: Pioneering- stimulate demand
Growth: Mainly use competitive: influence demand for specific brand; peaks near the end of the growth stage
Maturity: at the beginning of maturity: still use competitive; after which use comparative: influence demand by heightening the weaknesses of competitors
Decline: don’t advertise at all.

Front 221

What is institutional advertising

Back 221

• A form of advertising designed to enhance a company’s image rather than promote a particular product

Front 222

What is product advertising

Back 222

• A form of advertising that touts the benefits of a specific g/s

Front 223

What is advocacy advertising

Back 223

• A form of adverting in which an organization expresses its views on controversial issues or responds to media attacks: politics

Front 224

What is pioneering advertising?

Back 224

• a form of advertising designed to stimulate primary demand for a new product or product category

Front 225

What is competitive advertising?

Back 225

• A form of advertising designed to influence demand for a specific brand

Front 226

What is comparative advertising?

Back 226

• A form of advertising that compares two or more specifically named or shown competing brands on one or more specific attribute

Front 227

Discuss the creative decisions in developing an advertising campaign.

Back 227

Before any creative work can begin on an advertising campaign, it is important to determine what goals or objectives the advertising should achieve. The objectives of a specific advertising campaign often depends on the overall corporate objectives and the product being advertised

Once objective are defined, creative work can begin on the advertising campaign. Creative decisions include identifying the product’s benefits, developing possible advertising appeals, evaluating and selecting the advertising appeals, executing the advertising message, and evaluating the effectiveness of the campaign

Front 228

what is an adverting campaign

Back 228

• A series of related advertisements focusing on a common theme, slogan, and set of advertising appeals

Front 229

What are advertising objectives

Back 229

• A specific communication task that a campaign should accomplish for a specified target audience during a specified period
• Objective of a specific advertising campaign often depends on the overall corporate objective and the product being advertised
• DAGMAR: Defining Advertising Goals for Measured Advertising Results
o All advertising objectives should precisely define the target audience, desired percentage change in some specified measure of effectiveness, and the time frame in which that change is to occur

Front 230

What is an advertising appeal?

Back 230

• A reason for a person to buy a product

Front 231

What is a unique selling proposition?

Back 231

• A desirable exclusive, and believable advertising appeal selected as the theme for a campaign

Front 232

Further explain defining the benefits of a particular good/service

Back 232

Defining product attributes that result in product benefit: Marketing research and intuition are usually used to unearth the perceived benefits of a product and to rank consumer’ preferences for these benefits.

Front 233

Explain what goes into developing an advertisement for a firm.

Back 233

Set Advertising Objectives using DAGMAR (defining advertising goals for measured adverting results) → Identify the benefits of product/service → develop appeal (unique selling proposition) → Execute the message → evaluate campaign results [Evaluating results helps marketers adjust objectives for future campaigns]

Front 234

Describe media evaluation

Back 234

Media evaluation and selection makes up a crucial step in the advertising campaign process.
Major types of advertising media includes newspaper, magazines, radio, television, outdoor advertising, ie. Billboards, bus panels, and the internet

Front 235

What are selection techniques that a marketing managers use when developing an advertisement

Back 235

Promotion managers choose the advertising campaign media mix on the basis of the following variables: cost per contact, reach, frequency, characteristics of the target audience, flexibility of the medium, noise level, and the life span of the medium. After choosing the media mix, a media schedule designates when the advertisement will appear and the specific vehicle it will appear in.

Front 236

What is a medium

Back 236

• The channel used to convey a message to a target market ie. Print, TV, radio, internet

Front 237

What is media planning?

Back 237

• The series of decisions advertisers make regarding the selection and use of media, allowing the marketer to optimally and cost effectively communicate the message to the target audience

Front 238

What is corporate advertising?

Back 238

• An arrangement in which the manufacturer and the retailer split the cost of advertising the manufacturer's brand

Front 239

What is an infomercial?

Back 239

• A 30 minute or longer advertisement that looks more like a TV talk show than a sales pitch

Front 240

What is advergaming?

Back 240

• Placing advertising messages in Web-based or video games to advertise or promote a product, service, organization, or issue

Front 241

What is media mix?

Back 241

• The combination of media to be used for a promotional campaign

Front 242

What is cost per contact

Back 242

• The cost of reaching one member of the target market

Front 243

What is reach?

Back 243

• The number of target consumers exposed to a commercial at least once during a specific period; usually 4 weeks

Front 244

What does frequency mean?

Back 244

• The number of times an individual is exposed to a given message during a specific period

Front 245

What is audience selectivity?

Back 245

• The ability of an advertising medium to reach a precisely defined market

Front 246

What is a media schedule?

Back 246

• Designation of the media, the specific publications or programs, and the insertion dates of advertising

Front 247

What is a continuous media schedule?

Back 247

• A media scheduling strategy in which advertising is run steadily throughout the advertising period; used for products in the latter stages of the product life cycle MATURE

Front 248

What is a flighted media schedule

Back 248

• A media scheduling strategy in which ads are run heavily every other month or every two weeks, to achieve a greater impact with an increased frequency and reach at those times

Front 249

What is a pulsing media schedule

Back 249

• A media scheduling strategy that uses continuous scheduling throughout the year plus a Flighted schedule during the best sales periods

Front 250

What is a seasonal media schedule

Back 250

• A media scheduling strategy that runs advertising only during times of the year when the product is most likely to be used ie. Back to school and Staples Inc

Front 251

What are the different types of media

Back 251

Magazine
Newspaper
Radio
TV
Outdoor
Internet
Alternative

Front 252

Explain the different aspects of media concentration

Back 252

Mix → how much of each?
Cost per contact → how much per person?
Reach → how many people?
Frequency → how often?
Audience Selectivity → how targeted is audience?
Flexibility
Noise
Life Span
Fragmentation

Front 253

Discuss the role of public relations in the promotional mix.

Back 253

PR is a vital part of a firm’s promotional mix. A company fosters good publicity to enhance its image and promote its products. Popular PR tools include new-product publicity, product placement, consumer education, event sponsorships, issue sponsorships, and internet websites. An equally important aspect of PR is managing unfavourable publicity in a way that is least damaging to a firm’s image.

Front 254

Define product placement

Back 254

• A PR strategy that involves getting a product, service, or company name to appear in a movie, TV show, radio program magazine, newspaper, video game, etc..

Front 255

Define sponsorship

Back 255

• A PR strategy in which a company spends money to support an issue, cause, or event that is consistent with corporate objectives, such as improving brand awareness or enhancing corporate image

Front 256

Define cause-related marketing

Back 256

• A type of sponsorship involving the association of a for-profit company and a non-for-profit organization through the sponsorship the company’s product or service is promoted, and money is raised for the nonprofit

Front 257

what is crisis management

Back 257

• A coordinated effort to handle all the effects of unfavourable publicity or of another unexpected unfavourable event

Front 258

Essentially, what is a press release?

Back 258

• “news release”
• document containing an element of a story
• summarize what’s going on in a given situation
• demonstrates newsworthiness

Front 259

What are the 6 steps of an AD critique?

Back 259

1. Targeted audience
2. communication objective
3. communication strategy
4. communication tactics (appeals)
5. creative execution
6. evaluation

Front 260

In an AD critique, what is the targeted audience?

Back 260

• should be clear who is being targeted

Front 261

In an AD critique, what is the communication objective?

Back 261

• inform, persuade, remind

Front 262

In an AD critique, what is the communication strategy?

Back 262

• Push VS pull, one-way VS two-way, symmetrical VS asymmetrical

Front 263

In an AD critique, what is the communication tactic, ie. the appeal?

Back 263

• appeal, execution style

Front 264

In an AD critique, what is the creative execution

Back 264

• is content appropriate for audience, objectives, strategy

Front 265

In an AD critique, what does the evaluation entail?

Back 265

• is there a way to track responses to the Advertisement?

Front 266

Define sales promotion

Back 266

Sales promotion consists of those marketing communication activities, other than advertising, personal selling, and PR, in which a short term incentive motivates consumers or members of the distribution channel to purchase a good or service immediately, either by lowering the price or by adding value.

Front 267

State the objectives of sales promotion

Back 267

The main objectives of sales promotion are to increase trial purchases, consumer inventories, and repeat purchases.
Sales promotions are also used to encourage brand switching and to build brand loyalty.
Sales promotions support advertising activities

Front 268

What is the goal of sales promotion

Back 268

GOAL: drive immediate purchases; sales promotion influences behaviour not attitudes

Front 269

What is consumer sales promotion

Back 269

• Sales promotion activities targeting the ultimate consumer

Front 270

What are trade sales promotion

Back 270

• Sales promotion activities targeting a marketing channel member, such as a wholesaler or retailer

Front 271

Discuss the most common forms of consumer sales promotion

Back 271

Consumer forms of sales promotion include coupons and rebates, premiums loyalty marketing programs, contests and sweepstakes, sampling, and point of purchase displays.

Front 272

Explain coupons role in sales promotion

Back 272

Coupons are certificates entitling customers to an immediate price reduction when they purchase a product or service. Coupons are a particularly good way to encourage a product trial and brand switching.

Front 273

Explain Rebates' role in sales promotion

Back 273

Similar to coupons, rebates provide purchasers with a price reduction, although it is not immediate. To receive a rebate, consumers generally must mail in a rebate form with a proof of purchase.

Front 274

Explain premiums and their role in sales promotion

Back 274

Premiums offer an extra item or incentive to the consumer for buying a product or service. Premium reinforce the consumer’s purchase decision, increase consumption, and persuade non-users to switch brands.

Front 275

What role to loyalty marketing programs have in sales promotions

Back 275

. Rewarding loyal customers is the basis of loyalty marketing programs.
Loyalty programs are extremely effective at building long term, mutually beneficial relationships between a company and its key customers.

Front 276

How doe contests and sweepstakes play a part in sales promotion?

Back 276

Contests and sweepstakes are generally designed to create interest, often to encourage brand switching. Because consumers perceive risk in trying new products, sampling is an effective method for gaining new customers

Front 277

What are point of purchase displays and what role do they play in sales promotion?

Back 277

Point of purchase displays set up at the retailer’s location build traffic, advertise the product and induce impulse buying.

Front 278

Define coupons

Back 278

• A certificate that entitles consumers to an immediate price reduction when they buy the product

Front 279

Define Rebates

Back 279

• A cash refund given for the purchase of a product during a specific period

Front 280

Define premiums

Back 280

• An extra item offered to the consumer, usually in exchange for some proof of purchase of the promoted product

Front 281

Define loyalty marketing programs

Back 281

• A promotional program designed to build long-term, mutually beneficial relationships between a company and its key customers

Front 282

Define frequent buyers programs

Back 282

• A loyalty program in which loyal consumers are rewarded for making multiple purchase of a particular good or service

Front 283

Define Sampling

Back 283

• A promotional program that allows the consumer the opportunity to try a product or service for free

Front 284

Define point of purchase displays

Back 284

• A promotional display set up at the retailer’s location to build traffic, advertise the product, or induce impulse buying

Front 285

List the most common forms of trade sales promotion

Back 285

Manufacturers use many of the same sales promotion tools used in consumer promotions, such as sales contests, premiums, and point of purchase displays. In addition, manufacturers and channel intermediaries use several unique promotional strategies: trade allowances, push money, training programs, free merchandise, store demonstrations, and meetings, conventions, and trade shows

Front 286

Define Trade Allowance

Back 286

• A price reduction offered by manufacturers to intermediaries, such as wholesalers and retailers

Front 287

Define Push Money

Back 287

• Money offered to channel intermediaries to encourage them to “push” products; to encourage other members of the channel to sell the products

Front 288

Describe Personal Selling

Back 288

Personal selling is direct communication between a sales representative and one or more prospective buyers in an attempt to influence each other in a purchase situation. Broadly speaking, all business people use personal selling to promote themselves and their ideas

Front 289

What are the benefits of personal selling

Back 289

Personal selling allows salespeople to thoroughly explain and demonstrate a product. Salespeople have the flexibility to tailor a sales proposal to the needs and preferences of individual customers. Personal selling is more efficient than other forms of promotion because salespeople target qualified prospects and avoid wasting efforts on unlikely buyers.
Personal selling affords greater managerial control over promotion costs. Finally, personal selling is the most effective method of closing a sale and producing satisfied customers.

Front 290

What are the advantages of personal selling

Back 290

• Detailed exploration or demonstration
• Variable sales message
• Directed at qualified prospects
• Controllable adjustable selling costs
• Effective at obtaining sale and gaining customer satisfaction

Front 291

Discuss the key differences between relationship selling and traditional selling.

Back 291

Relationship selling is the practice of building, maintaining, and enhancing interactions with customers in order to develop long term satisfactions through mutually beneficial partnerships.
Traditional selling, on the other hand is transaction focused (Making sales). That is the salesperson practicing relationship selling spend more time understanding a prospect’s needs and developing solutions to meet those needs.

Front 292

Explain the correlation between sales and the difference between traditional and relationship selling.

Back 292

With Traditional selling: you will attain an initial sale and potentially a repeat sale; but with relationship selling you will get successive sales also: Sales increase as a result of creating value. Value is attained but not to its fullest with the initial sale; by creating value through relationship selling, you will increase sales through repeat and then successive sales.

Front 293

Define Relationship Selling (consultative Selling)

Back 293

• A sales practice that involved building, maintaining, and enhancing interactions with customers in order to develop long term satisfaction through mutually beneficial partnerships

Front 294

List the steps in the selling process.

Back 294

1. generating leads
2. qualifying leads
3. approaching the customer and probing needs
4. developing and proposing solutions
5. handling objections
6. closing the sale
7. follow up

Front 295

Define Sales process (sale cycle)

Back 295

• The set of steps a salesperson goes through in a particular organization to sell a particular product or service

Front 296

Define Lead generation (prospecting)

Back 296

• Identification of those firms and people most likely to buy the seller’s offerings

Front 297

Define a referral

Back 297

• A recommendation to a salesperson from a customer or business associate

Front 298

Define networking

Back 298

• A process of finding out about potential clients from friends, business contacts, coworkers, acquaintances, and fellow members in professional and civic organizations

Front 299

Define Cold Calling

Back 299

• A form of lead generation in which the salesperson approaches potential buyers without any prior knowledge of the prospects’ needs or financial status

Front 300

Define lead qualification

Back 300

• Determining of sales prospect’s 1) recognized need 2) buying power 3) receptivity and accessibility

Front 301

What is the Pre-Approach

Back 301

• A process that describes the “Home-work” that must be done by a salesperson before he or she contacts a prospect

Front 302

What is a needs assessment

Back 302

• A determination of the customer’s specific needs and wants and the range of options the customers has for satisfying them

Front 303

What is a sales proposal

Back 303

• A formal written document or professional presentation that outlines how the salesperson’s product or service will meet or exceed the prospect’s needs

Front 304

What is a sales presentation

Back 304

• A formal meeting in which the salesperson presents a sales proposal to a prospective buyer

Front 305

Define negotiation

Back 305

• The process during which both the salesperson and the prospect offer special concessions in an attempt to arrive at a sales agreement

Front 306

Define the follow-up

Back 306

The final step of the selling process, in which the salesperson ensures that delivery schedules are met, that the goods or service perform as promised, and that the buyers’ employees are properly trained to use the products

Front 307

What are the different types of price approaches

Back 307

• price to seller: willing to pay in order to conduct business: it is a revenue and profit source
• price to buyer: it is the cost of something
• price to market: it is how resources are allocated

Front 308

Discuss the importance of pricing decisions to the economy and to the individual firm.

Back 308

Pricing plays an integral role in the economy by allocating goods and services among consumers, governments, and businesses. Pricing is essential in business because it creates revenue, which is the basis of all business activity.
In setting prices, marketing managers strive to find a level high enough to produce a satisfactory profit.

Front 309

What is the revenue formula?

Back 309

price X sales units sold = revenue

Front 310

What is the profit formula?

Back 310

profit = revenue - costs

Front 311

What is the importance of profit?

Back 311

Profit drives growth; salary increases; corporate investment increases

Front 312

Define price.

Back 312

• That which is given up in an exchange to acquire a good or service

Front 313

Define Revenue

Back 313

• The price charged to customers multiplied by the number of units sold

Front 314

Define Profit

Back 314

• Revenue minus expenses

Front 315

List the variety of pricing objectives

Back 315

Establishing realistic and measurable pricing objectives is a critical part of any firm’s marketing strategy. Pricing objectives are commonly classified into three categories: Profit orientated, sales orientated, status quo.

Front 316

What is profit orientated pricing?

Back 316

Profit orientated pricing is based on profit maximization, a satisfactory level of profit, or a target return on investment. Goal: generate as much revenue as possible in relation to cost. Often, a more practical approach than profit maximization is setting prices to produce profits that will satisfy management and stockholders. The most common profit-oriented strategy is pricing for a specific return on investment relative to a firm’s assets.

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What is sales orientated pricing?

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Sales orientated: focuses on either maintaining a percentage share of the market or maximizing dollar or unit sales.

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What is status quo pricing

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Status Quo: Aims to maintain the status quo by matching competitors’ prices.
AKA parity pricing

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How can profit orientated pricing be broken down?

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-Profit maximization
-Satisfactory profits
-Targeted Return on Investment

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With regards to profit orientated pricing, what does profit maximization entail?

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o Drive down cost
o Increase revenue

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With regards to profit orientated pricing, what does satisfactory profits mean?

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reasonable level of profits that are satisfactory to managers and stockholders; level of profit consistent with the level of risk an organization faces

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What is the difference in satisfactory profits between risky and low risky industries?

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risky industry: 35% profit
low risk industry: 7% profit

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In profit orientated pricing, what does targeted return on investments entail?

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o Measures managements overall effectiveness in generating profits with the available assets; higher the return, better off they are… many firms use ROI as their main pricing goal.

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What is the Return on Investment formula?

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o ROI = net profits after taxes/total assets

o Percentage that puts a firm’s profits into perspective by showing profits relative investment
o Firms seek ROI’s in the 10-30% range

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What can marketing managers do to increase profits?

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• To maximize profits managers can expand revenues by increasing customer satisfaction (proven to be the most successful), or operating more efficiently, or do both.

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what does sales orientated pricing mean?

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• Market share
o Unit
o Revenue
• Sales maximization
o Generate Cash

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What does status quo orientated pricing mean?

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• Maintain existing price
o Meet the competition
o Passive policy

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Define return on investment

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• Net profit (total revenue minus expenses) after taxes divided by total assets

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Define market share

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• A company’s product sales as a percentage of total sales for that industry

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Define status quo pricing

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• A pricing objective that maintains existing prices or meets the competition’s prices

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What is cost-plus pricing

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• Contract under which a contractor is reimbursed for the costs incurred, and is paid an agreed upon percentage of such costs as contractor's profit.
• Simple to do: add $ amount or %
• More a production based approach- internal to the firm

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What are the drawbacks of cost plus pricing?

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• Completely ignores demand- price is determined by demand
• Fails to account for competition (external aspect)
• It treats fixed cost on a per unit basis; fixed cost does not change with the number of units sold

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Understand the concept of yield management systems.

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Yield management systems use complex mathematical software to profitably fill unused capacity. The software uses techniques such as discounting early purchases, limiting early sales at these discounted prices, and overbooking capacity. These systems are used in service and retail businesses and are substantially raising revenues.

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Define Yield Management Systems

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• A technique for adjusting prices that use complex mathematical software to profitably fill unused capacity by discounting early purchases, limiting early sales at these discounted prices, and overbooking capacity
• YMS varies price to fill capacity
o Adjusts price to increase demand to meet supply
o Situation 1: price = $x
o Situation 2 (Using YMS) price = $x - y%

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Describe cost orientated pricing strategies

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The other major determinant of price is cost. Marketers use several cost-orientated pricing strategies. To cover their own expenses and obtain a profit, wholesalers and retailers commonly use markup pricing: They tack an extra amount onto the manufacturer’s original price.
Another pricing technique is to maximize profits by setting price where marginal revenue equals marginal cost

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Define the Break even analysis

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• Tells what sales level you need for a particular price to be profitable
Break even sales = fixed cost/(selling price-variable cost)
• A method of determining what sales volume must be reached before total revenue equals total costs

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Define Variable Cost

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• A cost that varies with changes in level of output ex. Electricity

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Define a fixed cost

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• A cost that does not change as output is increased or decreased ex. Rent

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Define average variable costs

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• Total variable costs divided by quantity of output

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Define average total costs

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• Total costs divided by quantity of output

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Define marginal costs

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• The change in total costs associated with one unit change in output

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Define mark up pricing

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• The cost of buying the product from the producer plus amounts for profit and for expenses not otherwise accounted for ie. Purr attributes 2.2% of distributor price for the actual retail price

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Define Keystoning

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• The practice of marking up prices by 100%, or doubling the cost

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Define profit maximization

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• A method of setting prices that occurs when marginal revenue equals marginal cost

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Define marginal revenue

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• The extra revenue associated with selling an extra unit of output OR the change in total revenue with a one unit change in output

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Demonstrate how the product life cycle (PLC) can affect price.

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The price of a product normally changes as it moves thought he life cycle and as demand for the product and competitive conditions change. Management often sets a high price at the introductory stage, and the high price tends to attract competition.

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Demonstrate how competition can affect price.

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Competition tends to drive price down because individual competitors lower prices to gain market share.

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Demonstrate how distribution can affect price.

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Adequate distribution for a new product can sometimes be obtained by offering a larger than usual profit margin (Indicates what portion of sales contribute to the income of a company) to wholesalers and retailers

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Demonstrate how the internet can affect price.

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The internet enables consumers to compare products and prices quickly and efficiently. Price is also used as a promotional tool to attract customers. Special low prices often attract new customers and entice existing customers to buy more. Large buyers can extract price concessions from vendors. Such demands can squeeze the profit margins of suppliers.

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Demonstrate how perceptions can affect price.

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Perceptions of quality can also influence pricing strategies. A firm trying to project a prestigious image often charges a premium price for a product. Consumers tend to equate high prices with high quality.

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Define Selling against the brand

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• Stocking well-known branded items at high prices in order to sell store brands a discounted prices

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Define extranets.

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• A private electronic network that links a company with its suppliers and customers

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Define prestige pricing.

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• Charging a high price to help promote a high quality image

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Describe the procedure for setting the right price.

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The process of setting the right price on a product involved four major steps:
• Establishing pricing goals
• Estimating demand, costs and profits
• Choosing a price policy to help determine a base price
• Fine-tuning the base price with pricing tactics

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What is a pricing strategy and what are the three main pricing policies?

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A price strategy establishes a long term pricing framework for a good or service. The three main types of pricing policies are price skimming, penetration pricing, and status quo pricing.

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What is price skimming policy?

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A price skimming policy charges a high introductory price, often followed by a gradual reduction

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What is a prestige price policy?

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Penetration pricing offers a low introductory price to capture a large market share, and attain economies of scale.

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What is status quo price policy?

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Status Quo pricing strives to match competitors price.

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Define Pricing strategy

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• A basic, long term pricing framework that establishes the initial price for a product and the intended direction for price movements over the product life cycle

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Define price skimming

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• A high introductory price, often coupled with heavy promotion

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Define penetration pricing

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• A firm charges a relatively low price for a product initially as a way to reach the mass market
-trying to penetrate he market, trying to get into it

Front 362

. Identify the legal and ethical constraints on pricing decisions

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Government regulations help monitor four major areas of pricing:
• Unfair trade practices
• Price fixing
• Predatory pricing
• Price discrimination

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What have some provinces done to make competition between smaller firms and large corporations?

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Some provinces have enacted unfair trade practice regulations that protect small businesses from large firms that operate efficiently on extremely thin profit margins; the act prohibits charging below-cost prices. The federal government’s competition Act prohibits both price fixing, which is an agreement between two or more firms on a particular price, and predatory pricing, in which a firm undercuts its competitors with an extremely low prices to drive them out of business, and makes it illegal for firms to discriminate between two or more buyers in terms of price.

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Describe the procedure for setting the right price.

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The process of setting the right price on a product involved four major steps:
• Establishing pricing goals
• Estimating demand, costs and profits
• Choosing a price policy to help determine a base price
• Fine-tuning the base price with pricing tactics

Front 365

What is a pricing strategy and what are the three main pricing policies?

Back 365

A price strategy establishes a long term pricing framework for a good or service. The three main types of pricing policies are price skimming, penetration pricing, and status quo pricing.

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What is price skimming policy?

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A price skimming policy charges a high introductory price, often followed by a gradual reduction

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What is a prestige price policy?

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Penetration pricing offers a low introductory price to capture a large market share, and attain economies of scale.

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What is status quo price policy?

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Status Quo pricing strives to match competitors price.

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Define Pricing strategy

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• A basic, long term pricing framework that establishes the initial price for a product and the intended direction for price movements over the product life cycle

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Define price skimming

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• A high introductory price, often coupled with heavy promotion

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Define penetration pricing

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• A firm charges a relatively low price for a product initially as a way to reach the mass market
-trying to penetrate he market, trying to get into it

Front 372

. Identify the legal and ethical constraints on pricing decisions

Back 372

Government regulations help monitor four major areas of pricing:
• Unfair trade practices
• Price fixing
• Predatory pricing
• Price discrimination

Front 373

What have some provinces done to make competition between smaller firms and large corporations?

Back 373

Some provinces have enacted unfair trade practice regulations that protect small businesses from large firms that operate efficiently on extremely thin profit margins; the act prohibits charging below-cost prices. The federal government’s competition Act prohibits both price fixing, which is an agreement between two or more firms on a particular price, and predatory pricing, in which a firm undercuts its competitors with an extremely low prices to drive them out of business, and makes it illegal for firms to discriminate between two or more buyers in terms of price.

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Define deceptive pricing

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• Promoting a price or price saving that is not actually available

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Define resale price maintenance

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• Attempts by a producer to control a store’s retail price for the product

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Define price fixing

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• An agreement between tow or more firms on the price they will charge for a product

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define predatory pricing

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• Charging a very low price for a product with the intent of driving competitors out of business or out of a market

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. Explain how discounts, geographic pricing, and other pricing tactics can be used to fine-tune the base price.

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Techniques for fine-tuning a price can be divided into three main categories:
• Discounts, allowances, rebates, value-based pricing
• Geographic pricing
• Other

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Explain discounts, rebates, and value based pricing.

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Discounts, allowances, rebates, and value-based pricing gives lower prices to those that pay promptly, order a large quality, or perform such functions for the manufacturer. Value based pricing starts with the customer, considers the competition and costs, and then determines a price. Additional tactics in this category include seasonal discounts, promotion allowances, and rebates (cash refunds).

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Explain geographic pricing.

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Geographic pricing tactics (FOB origin pricing, uniform delivered pricing, zone pricing, freight absorption pricing, and basing point pricing) are ways of moderating the impact of shipping costs on distant customers.

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Explain the other pricing methods.

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A variety of “other” pricing tactics stimulate demand for certain products, increase store patronage, and offer more merchandise at specific prices.
More and more customers are paying price penalties, which are extra fees for violating the terms of a purchase contract. The perceived fairness or unfairness of a penalty may affect some consumers’ willingness to patronize a business in the future.

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Define base price

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• the general price level at which the company expects to sell the good or service

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define quantity discount

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• a price reduction offered to buyers buying in multiple units or above a specified dollar amount

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Define cumulative quantity discount

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• a deduction from list price that applies to the buyer’s total purchases made during a specific period

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define non-cumulative quantity discount

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• a deduction form list price that applies to a single order rather than to the total volume of orders placed during a certain period

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define cash discount

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• A price reduction offered to a consumer, an industry user or a marketing intermediary in return for prompt payment of a bill

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Define functional discount (trade discount)

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• a discount to wholesalers and retailers for performing channel functions

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define seasonal discount

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• a price reduction for buying merchandise out of season

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define promotional allowance (Trade allowance)

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• A payment to a dealer for promoting the manufacturer’s products

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Define a rebate

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• a cash refund given for the purchase of a product during a specific period

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define value based pricing

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• setting the price at a level that seems to the customer to be a good price compared to the prices of other options

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define FOB origin pricing

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• the buyers absorbs the freight costs from the shipping point (“free on board”)

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define uniform delivered pricing

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• The seller pays the actual freight charges and bills every purchaser an identical, flat freight charge

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define zone pricing

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• A modification of uniform delivered pricing that divides the total market into segments or zones and charges a flat freight rate to all customers in a given zone

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define freight absorption pricing

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• the seller pays all or part of the actual freight charges and does not pass them on to the buyer

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define base point pricing

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• charging freight from a given (basing) point, regardless of the city from which the goods are shipped

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define single price tactic

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• offering all goods and services at the same price (or perhaps two or three prices)

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define flexible pricing (variable pricing)

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• Different customers pay different prices for essentially the same merchadise bought in equal quantities

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define price lining

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• Offering a product line with several items at specific price points

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define leader-pricing (loss leader pricing)

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• A product is sold near or even below cost in the hope that shoppers will buy other items once they are in the store

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define bait pricing

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• A price tactic that tries to get consumers into a store through false or misleading price advertising and then uses high-pressure selling to persuade consumer to buy more expensive merchandise

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define odd-even pricing (psychological pricing)

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• odd-numbered prices to connote bargains and even numbered prices to imply quality

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define price bundling

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• marketing two or more products in a single package for a special price

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define price un-bundling

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• Reducing the bundle of services that comes with the basic product

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define two-part pricing

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• charging two separate amounts to consume a single good or service

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define consumer penalty

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• an extra fee paid by the consumer for violating the terms of the purchase agreement

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discuss product line pricing.

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Product line pricing maximizes profits for an entire product line. When setting product line prices, marketing managers determine what type of relationship exists among the products in the line: complementary, substitute, or neutral. Managers also consider joint (shared) costs among products in the same line.

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define Product line pricing

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• Setting prices for an entire line of products

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define joint costs

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Costs that are shared in the manufacturing and marketing of several products in a product line

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Describe the role of pricing during periods of inflation and recession

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Marketing managers employ cost-oriented and demand oriented tactics during periods of economic inflation.

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Describe cost orientated pricing tactics

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Cost orientated tactics include dropping products with a low profit margin, using delayed-quotation pricing and escalator pricing, and adding fees.

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Describe demand orientated pricing tactics

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Demand-orientated pricing methods include price shading (sales people are given the authority to vary the price by a certain amount or percentage) and increasing demand through cultivating selected customers, creating unique offerings, changing the package size and heightening buyer dependence.

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How do marketing managers stimulate demand during a recession

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To stimulate demand during a recession, marketers use value-based pricing, bundling, and unbundling. Recessions are also ago do time to prune unprofitable items from product lines. Managers strive to cut costs during recessions in order to maintain profits as revenues decline. Implementing new technology, cutting payrolls, and pressuring supplier for reduced prices are common techniques used to cut costs. Companies also create new value-added products.

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Define delayed quotation pricing

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• a price tactic used for industrial installations, and many accessory items, in which a firm price is not set until the item is either finished or delivered.

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define escalator pricing

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• The final selling price reflects cost increases incurred between the time the order is placed and the time delivery is made

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define price shading

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• The use of discounts by salespeople to increase demand for one or ore products in a line

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Define price skimming

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price higher than competition ‘skimming over the top’
o Products highly desirable offers unique benefits
o Reasons: patents, quality, image, brand, segmentation
o Target market smaller because of increased price
o If priced too high, might miss out
o Hard to price higher and come back down again
o Those with a strong brand image use price skimming

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Define parity pricing (Status Quo)

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price about the same as competitors; goal: find range that consumers already find appropriate
o Look at range of prices within the market: go with the price of the industry leader
o Not external (not a reflection of cost or demand)
o Parity pricing is a survival tactic of smaller firms; how they get their bearings; if competitors are large, they are able to bring their cost down and oust you out of market

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Define penetration pricing

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pricing lower than competitors
o Used to get people to try new product; start low, go for sales, and market share
o Hard to price lower and then go higher if you go too low to begin with