Marketing Bmkt 161 Final

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promotional mix

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The combination of one or more of the communication tools

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integrated marketing communications (IMC)

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The concept of designing marketing communications programs that coordinate all promotional activities toprovide a consistent messageacross all audiences.

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communication

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The process of conveying a message to others; it requires six elements: a source, a message, a channel of communication, a receiver, and the processes of encoding and decoding.

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advertising

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Any paid form of nonpersonal communication about an organization, product, service, or idea by an identified sponsor.

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personal selling

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The two-way flow of communication between a buyer and seller, often in a face-to-face encounter, designed to influence a person’s or group’s purchase decision.

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five elements ofthe promotional mix

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public relations

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A form of communication management that seeks to influence the feelings, opinions, or beliefs held by customers, potential customers, stockholders, suppliers, employees, and others about a company and its products or services.

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publicity

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A nonpersonal, indirectly paid presentation of an organization, product, or service.

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sales promotion

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A short-term offer designed to arouse interest in buying a product or service.

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direct marketing

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Promotional element that uses direct communication with consumers to generate a response in the form of an order, a request for further information, or a visit to a retail outlet.

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Channel Strategies

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push strategy Directing the promotionalmix to channel members toencourage them to order andstock a product.

pull strategy Directing the promotionalmix at ultimate consumers toencourage them to ask theretailer for the product.

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hierarchy of effects

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The sequence of stages a prospective buyer goes through: awareness, interest, evaluation, trial, and adoption.

Awareness—the consumer’s ability to recognize and remember the product orbrand name. Interest—an increase in the consumer’s desire to learn about some of the featuresof the product or brand.

Evaluation—the consumer’s appraisal of the product or brand on importantattributes.

Trial—the consumer’s actual first purchase and use of the product or brand.

Adoption—through a favorable experience on the first trial, the consumer’s repeated purchase and use of the product or brand.

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BEP Brake Even Point

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BEP= Fixed Cost / (Net Price - Unit Variable Cost)

A technique that examines therelationship between totalrevenue and total cost todetermine profitability atdifferent levels of output.

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4 P of Marketing

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Product Price Place and Promotion

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products

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durable/non-durable/services

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Uniqueness of services

The Four I of services

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Intangibility, Inconsistency, Inseparability, Inventory

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Consumer and Business Products

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Consumer products are direct to end user

Business products are are

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Branding about and types

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generic/family/brand equity

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Brand protection

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copyrights/trademarks/ patents

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Extending the product lifecycle

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Modifying the Market

Repositioning the Product

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Type of consumer products

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convenience/shopping/specialty/unsought

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Pricing about and General Approaches

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A key for a marketing manager setting a price for a product is to find an approximateprice level to use as a reasonable starting point. Four common approaches used to findthis approximate price level are (1) demand-oriented, (2) cost-oriented, (3) profit-oriented, and (4) competition-oriented approaches (see Figure 11–2). Although theseapproaches are discussed separately below, some of them overlap, and an effectivemarketing manager will consider several in selecting an approximate price level.

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Demandoriented

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penetration/skimming/prestige

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Cost oriented

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With cost-oriented approaches, a price setter stresses the cost side of the pricing prob-lem, not the demand side. Price is set by looking at the production and marketing costsand then adding enough to cover direct expenses, overhead, and profit.

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Profitoriented

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A price setter may choose to balance both revenues and costs to set price using profit-oriented approaches. Thesemight either involve a target of a specific dollar volume of profit or express this target profit as a percentage of sales or investment.

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Competitionoriented

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Rather than emphasize demand, cost, or profit factors, a price setter can stress whatcompetitors or “the market” is doing.

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Demand Curve; movement and shift, elasticity

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predatory pricing

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Predatory pricing is the practice of charging a very low pricefor a product with the intent of driving competitors out of business. Once com-petitors have been driven out, the firm raises its prices. Proving the presence ofthis practice has been difficult and expensive because it must be shown that thepredator explicitly attempted to destroy a competitor and the predatory price wasbelow the defendant’s average cost.

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Profit

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The reward to a business firmfor the risk it undertakes inmarketing its offerings.

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Intermediaries about and basic functions of

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Individuals and firms involvedin the process of making aproduct or service availablefor use or consumption byconsumers or industrial users.

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Marketing Channel structure

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Direct Channel Channel A represents a direct channel because the producer andthe ultimate consumers deal directly with each other. Many products and services aredistributed this way. Many insurance companies sell their services using a direct chan-nel and branch sales offices.

Indirect Channel The remaining three channel forms in Figure 12–3 are indi-rect channels because intermediaries are inserted between the producer and consum-ers and perform numerous channel functions.

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cross channel shopper

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An online consumer whoresearches products onlineand then purchases them at aretail store.

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Vertical Marketing systems

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Professionally managed andcentrally coordinatedmarketing channels designedto achieve channel economiesand maximum marketingimpact.

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Corporate vertical marketing systems; forward/backward integration

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The combination of successive stages of production anddistribution under a single ownership is a corporate vertical marketing system. Forexample, a producer might own the intermediary at the next level down in the channel.This practice, called forward integration, is exemplified by Ralph Lauren, which man-ufactures clothing and also owns apparel shops

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Channel Design consideration; intensive/exclusive/selective distribution

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intensive distribution When a firm tries to place itsproducts or services in asmany outlets as possible.

exclusive distribution When only one retail outlet ina specific geographical areacarries the firm’s products.

selective distribution When a firm selects a fewretail outlets in a specificgeographical area to carryits products.

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Consumer Advocacy Funnel

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Steps in the IMC

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Business portfolio analysis; cash cows/dogs

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A technique that managersuse to quantify performancemeasures and growth targetsof their firms’ strategicbusiness units.

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SWTO

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Strength Weaknesses (internal) Threats Opportunities (external)

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Product Life Cycle

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The stages a new product goesthrough in the marketplace:introduction, growth, maturity,and decline.

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word of mouth

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People influencing eachother in personalconversations.

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product placement

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A consumer sales promotionthat uses a brand-nameproduct in a movie, televisionshow, video, or commercialfor another product.

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Competition based pricing; penetration

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Setting a low initial price on a new product to appeal im-mediately to the mass market is penetration pricing, the exact opposite of skimmingpricing.

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Competition based pricing; customary

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For some products where tradition, a standardized channelof distribution, or other competitive factors dictate the price, customary pricing isused. Candy bars offered through standard vending machines have a customary priceof 75 cents, and a significant departure from this price may result in a loss of sales forthe manufacturer. Hershey typically has changed the amount of chocolate in its candybars depending on the price of raw chocolate rather than vary its customary retail priceso that it can continue selling through vending machines.

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Deceptive pricing.

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Price deals that mislead consumers fall into the category ofdeceptive pricing. Deceptive pricing is outlawed by the Federal Trade Commis-sion. Bait and switch is an example of deceptive pricing. This occurs when a firmoffers a very low price on a product (the bait) to attract customers to a store.Once in the store, the customer is persuaded to purchase a higher-priced item(the switch) using a variety of tricks, including (1) degrading the promoted itemand (2) not having the promised item in stock or refusing to take orders for it.

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Price discrimination

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The Clayton Act as amended by the Robinson-Patman Actprohibits price discrimination—the practice of charging different prices to differ-ent buyers for goods of like grade and quality. However, not all price differencesare illegal; only those that substantially lessen competition or create a monopolyare deemed unlawful.

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horizontal price fixing

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For example, six foreign vitamin companies recentlypled guilty to price fixing in the human and animal vitamin industry and paidthe largest fine in U.S. history: $335 million.21 Vertical price fixing involvescontrolling agreements between independent buyers and sellers (a manufacturerand a retailer) whereby sellers are required to not sell products below a mini-mum retail price.

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Price fixing.

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A conspiracy among firms to set prices for a product is termedprice fixing. Price fixing is illegal under the Sherman Act. When two or morecompetitors collude to explicitly or implicitly set prices, this practice is called

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price elasticity of demand

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The percentage change in thequantity demanded relative toa percentage change in price. Price elasticity of demand 􏰀 Percentage change inquantity demanded E 􏰀 Percentage change in price