Module 4 The Marketing Program Flashcards

Question

Competitive matching pricing objective

Answer 1

designed to match or beat competitors’ prices. The goal is to maintain the perception of good value relative to the competition.

Answer 2

sets high prices that are consistent with a prestige of high-status product. Prices are set with little regard for the firm’s cost structure or the competition.

Answer 3

maintains current prices in an effort to sustain a position relative to the competition.

Answer 4

* Customers’ sensitivity to changes in price * Relative impact on the demand for a product * Specific increases or decreases in the price charged for that product is given * Situations that increase price elasticity: * Availability of substitute products * Higher total expenditure * Noticeable price differences * Easy price comparisons * Situations that decrease price elasticity: * Lack of substitutes * Real or perceived necessities * Complementary products * Perceived product benefits * Situational influences * Product differentiation Price elasticity refers to customers' responsiveness or sensitivity to changes in price. A more precise definition defines elasticity as the relative impact on the demand for a product, given specific increases or decreases in the price charged for that product. Firms cannot base prices solely on price elasticity calculations because they will rarely know the elasticity for any product with great precision over time. Since the same product can have different elasticities in different times, places, and situations, firms often consider price elasticity in regard to differing customer behavior patterns or purchase situations.

Answer 5

* Availability of substitute products * Higher total expenditure * Noticeable price differences * Easy price comparisons 1. Availability of substitute products: when customers can choose among a number of different substitutes, they will be much more sensitive to price differences. This situation occurs very frequently among name-brand products and in markets where product offerings have become commoditized, such as airlines. 2. Higher total expenditure: As a general rule, the higher the total expense, the more elastic the demand for that product will be. This effect is actually easier to see if we look at a low-priced product (e.g., A 20% increase in the price of a newspaper, from $1.00 to $1.20 would not have a large impact on demand). 3. Noticeable price differences: Products having heavily promoted prices tend to experience more elastic demand. For example, an increase of 3 cents per gallon is only 45 cents more on a 15-gallon fill-up. However, many customers will drive several miles out of their way to find a lower price (often spending more in gas consumption than they save). Noticeable price differences sometimes occur at specific pricing thresholds. For example, many customers will not notice price increases until gas reaches $4.00 per gallon. At this price, these customers suddenly move from an inelastic mindset to an elastic mindset. The move from $3.80 to $3.90 may not have an impact on these customers, but the jump from $3.90 to $4.00 totally changes their mental framework. 4. Easy price comparisons: Regardless of the product or product category, customers will become more price sensitive if they can easily compare prices among competing products.

Answer 6

* Lack of substitutes * Real or perceived necessities * Complementary products * Perceived product benefits * Situational influences * Product differentiation 1. **Lack of substitutes**: when customers have few choices in terms of substitutes, they will be much less sensitive to price. Also, the more unique or specialized the product, the more customers will pay for it. 2. **Real or perceived necessities**: Food, water, medical care, and prescription drugs have extremely inelastic demand because customers have real or perceived needs for them. Some product categories are price inelastic because customers perceive those products as true necessities. It matters little whether a customer truly has a need for a specific product. 3. **Complementary products**: complementary products have an effect on the price sensitivity of related products. If the price of one product falls, customers will become less sensitive to the price of complementary products. For instance, when the price of a cruise goes down, the price of shore excursions becomes more inelastic. With more travelers on board, and each having more money to spend, excursion operators realize that travelers are less sensitive to the prices they charge. 4. **Perceived product benefits**: For some customers, certain products are just worth the price. For these purchases, the phrase “expensive but worth it” comes to mind, such as fine wines, imported coffee, or gourmet chocolates. Since these products do not comprise the bulk of our purchasing activities, customer rarely notice, or simply ignore, price increases. 5. **Situational influences**: the circumstances surrounding a purchase situation can vastly alter the price elasticity for a product. Many of these situational influences occur because time pressures or purchase risk increase to the point that an immediate purchase must be made (e.g., emergencies). Other common situational influences revolve around purchase risk, typically the social risk involved in making a bad decision. In a general sense, customers tend to be much less price sensitive when they purchase items for others or for gift giving. 6. **Product differentiation**: Differentiation reduces the number of perceived substitutes for a product. Product differentiation does not have to be based on real differences to make customers less price sensitive. Many times the differences are perceptual. For example, blindfolded, a person may not know the difference between Pepsi and Coke, but consumers do not buy or consume soft drinks blindfolded. The look of the can, the advertising, and prior experiences all come together to differentiate the product. In a strategic sense, product differentiation is the best way to ensure that customers are not sensitive to price changes. The ultimate goal of this effort is to differentiate the product so well that customers perceive that no competing product can take its place. When this happens, customers will become brand loyalty and the demand for the product will become very inelastic.

Answer 7

* Critical since price may be the only cue to quality prior to purchase * Becomes important and difficult when: * Service quality is hard to detect prior to purchase * Costs are difficult to determine * Customers are unfamiliar with service process * Brand names are not well established * Customers can perform the service themselves * Advertising within the service category is limited * Total price of service is difficult to state beforehand When it comes to buying services, customers have a difficult time determining quality prior to purchase. Therefore, service pricing is critical because it may be the only quality cue that is available in advance of the purchase experience. If the service provider sets prices too low, customers will have inaccurate perceptions and expectations about quality. If prices are too high, customers may not give the firm a chance. In general, services pricing becomes more important and more difficult in the above situations.

Answer 8

* Service pricing * Helps balance supply and demand during peak and off-peak demand times * Yield management * Allows firms to simultaneously control capacity and demand * Control capacity by limiting available capacity at certain price points * Control demand through price changes and overbooking capacity * Allows service firms to segment markets based on price elasticity Due to limited capacity, service pricing is also a key issue with respect to balancing supply and demand during peak and off-peak demand times. Therefore, many service firms use yield management to balance pricing and revenue considerations with their need to fill unfilled capacity. Yield management allows the service firm to simultaneously control capacity and demand in order to maximize revenue and capacity utilization: 1. The service firm controls capacity by limiting the available capacity at certain price points. For example, airlines do this by selling a limited number of seats at discount prices three or more weeks prior to a flight’s departure. 2. The service firm controls demand through price changes over time and by overbooking capacity. These activities ensure that service demand will be consistent and that any unused capacity will be minimized. These practices are common in services characterized by high fixed costs and low variable costs. Since variable costs in these services are quite low, the profit for these firms directly relates to sales and capacity utilization. Consequently, these firms will sell some capacity at reduced prices to maximize utilization. Yield management systems are also useful in their ability to segment markets based on price elasticity. That is, yield management allows a firm to offer the same basic service to different market segments at different price points. For example, customers who are very price sensitive with respect to travel services-vacation travelers and families with children-can get a good deal on a hotel if they book it early. Conversely, business travelers book flights on the spur of the moment, so they are more forgiving of the higher prices just prior to departure. Other firms can reach different market segments with attractive off-peak pricing.

Answer 9

* Price skimming: occurs when a firm intentionally sets a high price relative to the competition. * Price penetration: occurs when a firm sets a relatively low initial price to maximize sales, gain widespread market acceptance, and capture a large market share quickly. * Prestige pricing: setting prices at the top end of all competing products in a category to promote an image of exclusivity and superior quality. * Value-based pricing (EDLP): setting reasonably low prices, but still offering high quality products and adequate customer services. * Competitive matching: focuses on matching competitors' prices and price changes. * Non-price strategies: building a marketing program around factors other than price. A firm's base pricing strategy establishes the initial price and sets the range of possible price movements throughout the product's life cycle. The above strategies are the base pricing approaches.

Answer 10

* Discounting: using sales or other temporary price reductions to attract customers and create excitement. * Reference pricing: comparing the actual selling price to an internal or external reference price. * Price lining: occurs when a firm creates lines of products that are similar in appearance and functionality but are offered with different features and at different price points. * Odd pricing: prices are rarely set at whole, round numbers. * Price bundling: bringing together two or more complementary products for a single price. The above are about how to adjust base prices in consumer markets. 1. Discounting: customers love a sale, and that is precisely the main benefit of discounting. Virtually all firms, even those using value-based pricing, will occasionally run special promotions or sales to attract customers and create excitement. 2. Reference pricing: as an example, consumers’ experiences have given them a reasonable expectation of how much to pay for a combo meal at McDonald’s (internal reference). In other cases, the firm will state a reference price, such as “Originally $99, Now $49” (external reference). These comparisons make it easier for customer to judge prices prior to purchase. 3. Price lining: this strategy, where the price of a competing product is the reference price, takes advantage of the simple truth that some customers will always choose the lowest-priced or highest-priced product. For example, Sony can cut a few feature off its top-of-the-line Model A1 digital camcorder, and Model B2 can be on the shelf at $799 rather than the original $999. Cut a few more features and the price can drop to $599 for Model C3. Here, each model in the Sony line establishes reference prices for the other models in the line. 4. Odd pricing: for example, the concert tickets are $49.95, the breakfast special is $3.95, and the gallon of gas is $2.799. The prevalence of odd pricing is based mostly on psychology: Customer perceive that the seller did everything possible to get the price as fine (and thus as low) as he or she possibly could. 5. Price bundling: at its best, the bundled price is less than if a company sold the products separately. Slow moving items can be bundled with hot sellers to expand the scope of the product offering, build value, and manage inventory.

Answer 11

* **Trade discounts**: manufacturers will reduce prices for certain intermediaries in the supply chain based on the functions that the intermediary performs. * **Discounts and allowances**: business buyers can take advantage of sales and other price breaks including discounts for cash, quantity or bulk discounts, seasonal discounts, or trade allowances for participation in advertising or sales support programs. * **Geographic pricing**: selling firms often quote prices in terms of reductions or increases based on transportation costs or the actual physical distance between the seller and the buyer. * **Transfer pricing**: transfer pricing occurs when one unit in an organization sells products to another unit. * **Barter and countertrade**: in business exchanges across national boundaries, companies sometimes use products, rather than cash, for payments. * **Price discrimination**: it occurs when firms charge different prices to different customers. When this situation occurs, firms set different prices based on actual cost differences in selling products to one customer relative to the costs involved in selling to other customers. The above are about how to adjust base prices in business markets. * Trade discounts: in general, discounts are greater for wholesalers than for retailers because the manufacturer wants to compensate wholesalers for the extra functions they perform, such as selling, storage, transportation, and risk taking. * Geographic pricing: the most common examples of geographic pricing are uniform delivered pricing (same price for all buyers regardless of transportation expenses) and zone pricing (different prices based on transportation to redefined geographic zones). * Barter and countertrade: Barter involves the direct exchange of goods or services between two firms or nations. Countertrade refers to agreements based on partial payments in both cash and products, or to agreements between firms or nations to buy goods and services from each other. Price discrimination: it is a viable technique because the costs of selling to one firm are often much higher than selling to others.

Answer 12

* Marketing channels * Organized system of marketing institutions * Facilitate flow of products, resources, information, funds, or product ownership from point of production to final user * Physical distribution * Coordinating flow of information and products among members of the channel * Helps ensure that products are available in right places, in right quantities, at right times, and in a cost-efficient manner * Supply chain * Connection and integration of all members of the marketing channel Supply chain management is essentially invisible to customers because the process occurs behind the scenes. Customers take these processes for granted and only notice interruptions of the supply chain. The picture is drastically different from the firm's perspective. Supply chain concerns now rank at the top of the list for achieving a sustainable advantage and true differentiation in the marketplace. Supply chain management consists of two interrelated components: 1. Marketing channels: an organized system of marketing institutions, through which products, resources, information, funds, and/or product ownership flow from the point of production to the final user. 2. Physical distribution: coordinating the flow of information and products among members of the channel to ensure the availability of products in the right places, in the right quantities, at the right times, and in a cost- efficient manner. The term supply chain expresses the connection and integration of all members of the marketing channel. Creating an extended enterprise requires investments in and commitment to three key factors: connectivity, community, and collaboration (described in the next slide). The goal of channel integration is to create a seamless network of collaborating suppliers, vendors, buyers, and customers.

Answer 13

* Connectivity * Informational and technological linkages among firms in the supply chain network. Connectivity ensures that firms can access real-time information about the flow in the supply chain network. * Community * Compatible goals and objectives among firms in the supply chain network. All firms must be willing to work together to achieve a common mission and vision. * Collaboration * Recognition of mutual independence among firms in the supply chain network. Collaboration goes beyond contractual obligations to establish principles, processes, and structures that promote a level of shared understanding. Firms learn to put the needs of the supply chain ahead of their own, because they understand that the success of each firm separately has a strong connection to the success of other firms, as well as entire supply chain

Answer 14

1. **Stability**: (1) reliability; (2) consistency; (3) long-term relationships 2. **Cooperation**: (1) commitment; (2) sense of fair play; (3) giving extra effort 3. **Mutual benefit**: (1) strategic advantages; (2) customer satisfaction; (3) reduced costs; (4) better prices; (5) reduced lead times 4. **Interdependence**: (1) shared technical information; (2) shared processes; (3) mutual goals and objective 5. **Trust**: (1) trustworthiness; (2) integrity; (3) reputation; (4) faith Supply chain integration and creating an extended enterprise are extremely challenging goals. In the most seamlessly integrated supply chains, the boundaries among channel members blur to the point where it is difficult to tell where one firm ends and another firm begins. As indicated above, this level of integration requires a tenuous balance of stability, cooperation, mutual benefit, interdependence, and trust in order to create mutual benefits.

Answer 15

* Basic benefit is contact efficiency * Marketing channel functions 1. Sorting 2. Breaking bulk 3. Maintaining inventories 4. Maintaining convenient locations 5. Provide services •All functions must be performed regardless of who does them The importance of the supply chain ultimately comes down to providing time, place, and possession utility for consumer and business buyers. However, the expense of distribution requires that firms balance customers' needs with their own need to minimize costs. There are give marketing channel functions 1. Sorting: manufacturers make one or a few products while customers need a wide variety and deep assortment of different products. Intermediaries overcome this discrepancy of assortment. 2. Breaking bulk: manufacturers produce large quantities of a product; however, customers typically want only one of a particular item. Intermediaries-particularly retailers-overcome this discrepancy of quantity. 3. Maintaining inventories: manufacturers cannot make products on demand, so the channel must store products for future purchase and use. Intermediaries overcome this temporal (time) discrepancy. This issue does not apply to services. 4. Maintaining convenient locations: since manufacturers and customers have a geographic separation, the channel must overcome this spatial discrepancy. 5. Provide services: channels add value to products by offering facilitating services and standardizing the exchange process. With the exception of highly tangible services, the fulfillment of these functions occurs in every marketing channel. Also, these functions must be fulfilled in order for the channel to operate effectively. It does not matter which intermediary performs these functions; the fact remains that they must be performed.

Answer 16

* Exclusive distribution * Giving one merchant or outlet sole right to sell a product within a defined geographic region * Selective distribution * Giving several merchants or outlets the right to sell a product within a defined geographic region * Intensive distribution * Making a product available to maximum number of merchants or outlets * Helps gain exposure and enhance sales opportunities Marketing channel strategies are complex and very costly to implement. However, a good distribution strategy is essential for success because once a firm selects a channel and makes commitments to it, distribution often becomes highly inflexible due to long-term contracts, sizable investments, and commitments among channel members. There are three basic structural options for distribution in terms of the amount of market coverage and level of exclusivity between vendor and retailer: * Exclusive distribution: the most restrictive type of market coverage, occurs when a firm gives one merchant or outlet the sole right to sell a product within a defined geographic region. * Selective distribution: a somewhat restrictive type of market coverage, occurs when a firm gives several merchants or outlets the right to sell a product in a defined geographic region. * Intensive distribution: the least restrictive type of market coverage, occurs when a firm makes a product available in the maximum number of merchants or outlets in each area to gain as much exposure and as many sales opportunities as possible.

Answer 17

* Basis of conflict in the supply chain: * Each firm is different and has its own goals and objectives * Mutual interdependence goes against natural tendency of firms to seek their own self-interests * Sources of power in a supply chain: * Legitimate power * Reward power * Coercive power * Information power * Referent power True supply chain integration requires a fundamental change in how channel members work together, including moving from a "win-lose" competitive attitude to a "win-win" collaborative approach. Each firm in a supply chain has its own mission, goals, objectives, and strategies. It is not surprising that firms often assess their own interests before considering others in the supply chain. Power can be defined as the influence one channel member has over others in the supply chain. * Legitimate power deals with the firm's position in the supply chain—this power balance shifted to large retailers in the 1990s. * Reward power involves the ability to help other parties reach their goals and objectives. * Coercive power stems from the ability to take positive outcomes away from other channel members, or the ability to inflict punishment on other channel members. * Information power comes from having and sharing knowledge among members of the supply chain. * Referent power is based in personal relationships and the fact that one party likes another party. Today, discount mass merchandise retailers—like Walmart, Costco, and Target hold the power in most consumer channels. Manufacturers typically must pay hefty fees, called slotting allowances, just to get a single product placed on store shelves.

Answer 18

* Technological improvements - _{Significant advancements in information processing and digital communication have created new methods for placing and filling orders for both business buyers and consumers. E-commerce now accounts for 52 percent of transactions in manufacturing, 26 percent of transactions in wholesaling, and 5.2 percent of retail transactions. Radio frequency identification (RFID) involves the use of tiny computer chips that can be attached to a product or its packaging.} * E-commerce * Radio frequency identification (RFID) * Outsourcing channel functions - _{Outsourcing has traditionally been used as a way of cutting expenses associated with labor, transportation, or other overhead costs. Today, the desire of many firms to focus on core competencies drives outsourcing decisions. Many firms have shifted to offshoring their own activities (rather than outsourcing) to maintain some control over operations. Information technology is the primary activity outsourced today.} * Outsourcing versus offshoring * Growth of nontraditional channels - _{Customer's demands for lower prices and greater convenience have put pressure on all channel intermediaries to justify their existence. When margins get squeezed, the channel typically evelves into a more direct form. The mmost obvious example of this evolution is the growth of e-commerce. Other forms of nontraditional channels:} _{1)Catalog and direct marketing} _{2)Direct selling} _{3)Home shopping networks} _4)Vending _{5)Direct response advertising} _{Dual distribution (the use of multiple channels to offer two or more lines of the same merchandise) is a direct outgrowth of the increased us of nontraditional channels. However, it often creates conflict between the manufacturer and its supply chanin members.} * Catalog and direct marketing * Direct selling * Home shopping networks * Vending * Direct response advertising In addition to the strategic supply chain, a number of trends have shaped the structure of marketing channels and the ways that supply chains function. Please refer to each memo in this slide to deeply understand each trend.

Answer 19

* Strategic, coordinated use of promotion * Used to create one consistent message across multiple channels * Ensures maximum persuasive impact on firm’s current and potential customers * Takes a 360-degree view of the customer * Importance * Fosters long-term relationships * Reduces or eliminates promotional redundancies * Technology helps target customers directly Integrated marketing communications (IMC) refers to the strategic, coordinated use of promotion to create one consistent message across multiple channels to ensure maximum persuasive impact on the firm's current and potential customers. IMC takes a 360-degree view of the customer that considers each and every contact that a customer or potential customer may have in their relationship with the firm. By coordinating all communication “touch points,” firms using IMC convey an image of truly knowing and caring about their customers that can translate into long-term customer relationships. Likewise, IMC reduces costs and increases efficiency because it can reduce or eliminate redundancies and waste in the overall promotional program. Many firms have embraced IMC because mass-media advertising has become more expensive and less predictable than in the past. Marketers are being forced to adopt new marketing strategies as advancing technology and customer preferences are threatening to make traditional forms of promotion obsolete. Many firms are also embracing technology in order to target customers directly through product placement and online promotion. This increased focus on individual customers requires that the overall promotional program be integrated and focused as well.

Answer 20

* Advertising: (1) print; (2) broadcast; (3) online/interactive; (3) mobile; (4) direct marketing * Public relations: (1) publicity; (2) press releases; (3) newsletter * Sales promotion: (1) consumer promotion; (2) trade promotion * Personal selling: (1) account management; (2) prospecting; (3) retail sales The key to IMC is consistency and uniformity of message across all elements of promotion as indicated above. Due to the many advantages associated with IMC, most marketers have adopted integrated marketing as the basis for their communication and promotion strategies.

Answer 21

* IMC requires clear promotional goals and objectives * AIDA model - _{The classic model for outlining promotional goals is the AIDA model:} _{a) Attention: the first major goal of any promotional campaign is to attract the attention of potential customers.} _{b) Interest: the firm must spark interest in the product by demonstrating its features, uses, and benefits.} _{c) Desire: good promotion will stimulate desire by convincing potential customers of the product's superiority and its ability to satisfy needs.} _{d) Action: promotion must push customers toward the actual purchase.} * Attention * Interest * Desire * Action * Promotional goals regarding supply chain - _{Pull strategy: firms use a pull strategy when they focus their promotional efforts toward stimulating demand among final customers, who then exert pressure on the supply chain to carry the product.} _{Push strategy: firms use a push strategy when they focus their promotional efforts when they focus their promotional efforts on members of the supply chain to motivate them to spend extra time and effort on selling the product.} * Pull strategy - Focus promotional efforts toward stimulating consumer demand * Push strategy - Focus promotional efforts toward supply chain When selecting elements to include in the IMC program, it is important to take a holistic perspective that coordinates not only all promotional elements but also the IMC program with the rest of the marketing program (product, price, and supply chain strategy). Taking this approach allows a firm to communicate a consistent message to target customers from every possible angle, thereby maximizing the total impact on those customers. For example, if the advertising campaign stresses quality, the sales force talks about low price, the supply chain pushes wide availability, and the website stresses product innovation, then what is the customer to believe? Not readily seeing that a product can deliver all these benefits, the customer is likely to become confused and go to a competitor with a more consistent message. All too frequently, firms rush to launch an intensive IMC campaign that has no clear promotional objectives. The vast majority of promotion activities do not create results in the short term, so firms must focus on long-term promotional objectives and have the patience to continue the program long enough to gauge true success. Ultimately, the goals and objectives of any promotional campaign culminate in the purchase of goods or services by the target market. The classic model for outlining promotional goals and achieving this ultimate outcome is the AIDA Model (Attention, Interest, Desire, and Action). For more detailed descriptions of each component, please refer to the memo in this slide. The firm must also consider its promotional goals with respect to the supply chain, such as pull strategy and push strategy. For more detailed description of each, please refer to the other memo in this slide. Coordinating promotional elements within the context of the entire marketing program requires a complete understanding of the role, function, and benefits of each element.

Answer 22

* One of the most visible elements of IMC program * Paid and non-personal communication transmitted via media * Cost efficient when used to reach a mass audience * Decline in traditional media has caused increase in the use of Internet-based advertising * Mobile advertising is the fastest growing segment * Challenges * High initial expense for advertising, especially for television * Difficulty in allocating advertising funds * Difficulty in evaluating effectiveness of advertisements * Permissibility of advertising content Advertising is paid, nonpersonal communication transmitted through mass media such as television, radio, magazines, newspapers, direct mail, outdoor displays, the Internet, and mobile devices. Online advertising is growing rapidly due to its ability to reach highly specialized markets at a relatively low cost. Though the initial expense for advertising can be quite high, it can be a cost-efficient means of reaching a large number of people. Setting the advertising budget too high will obviously result in overspending, waste, and lower profits. However, setting the budget too low may be even worse. Firms that do not spend enough on advertising find it very difficult to stand out in an extremely crowded market for customer attention. Evaluating the effectiveness of advertising is one of the most challenging tasks facing marketers: 1. Many of the effects and outcomes of advertising take a long time to develop. 2. The effect of advertising on sales is lagged in some cases, with the effect occurring long after the campaign has ended. Most marketers struggle with the fine line between what is permissible and not permissible in advertising.

Answer 23

* Part of firm’s corporate affairs * Goals * Track public attitudes * Identify issues that may elicit public concern * Develop programs to create and maintain positive relationships between a firm and its stakeholders * Uses * Promote the firm, its people, ideas , and image * Create an internal shared understanding among employees * Improve general brand awareness * Often confused with publicity, which is created to gain media attention Public relations is one component of a firm’s corporate affairs activities. It has particular goals that are indicated above. A firm uses public relations to communicate with its stakeholders for the same reasons that it develops advertisements. Public relations can be used for the above reasons (promotion, creation, and improvement). Because various stakeholders’ attitudes toward the firm affect their decisions relative to the firm, it is very important to maintain positive public opinion. Public relations can improve the public’s general awareness of a company and can create specific images such as quality, innovativeness, value, or concern for social issues.

Answer 24

* News (or press) releases - _{They are used to draw attention to a company event, product, or person affiliated with the firm. News releases can be submitted to newspapers, magazines, television contact, suppliers, key customers, or even the firm's employees.} * Feature articles - _{They are full-length stories prepared for a specific purpose or target audience. Feature articles typically focus on the implications or economic impact of a firm's actions. They are also very useful when responding to negative events or publicity.} * White papers - _{They are similar to feature articles; however, they are more technical and focus on very specific topics of interest to the sirm's stakeholders. White papers promote a firm's stance on important product or market issues and can be used to promote the firm's own products and solutions. White papers have been used extensively in the information technology firld where firms continually work to establish standards and keep up with technological innovation.} * Press conferences - _{They are a meeting with news media called to announce or respond to major events. Multimedia materials may be distributed to broadcast stations in hopes that they will air some of the activities that occurred at the press conference. Firms typically hold press conferences when announcing new products, patentss, mergers, or acquisitions, philanthropic efforts, orn internal administrative changes.} * Event sponsorship - _{It has become an entire industry in itself. Sponsorships can range from local events to international events. Another popular sponsorship strategy involves the naming of sports stadiums and venues.} * Employee relations - _{They are every bit as important as public and investor relations. Employee relations' activities provide organizational support for employees with respect to their jobs and lives. Employee relations can encompass many differenct activities including internal newsletter, training programs, employee assistance programs, and human resource programs.} Firms use a number of public relation methods to convey messages and to create the right attitudes, images, and opinions. Public relations is sometimes confused with publicity. Although publicity is one part of public relations, it is more narrowly defined to include the firm’s activities designed to gain media attention through articles, editorials, or news stories. By encouraging the media to report on a firm’s accomplishments, publicity helps maintain positive public awareness, visibility, and a desired image. Publicity can be used for a single purpose, such as to launch a new product or diminish the public’s opinion regarding a negative event, or it can be used for multiple purposes to enhance many aspects of the firm’s activities. Having a good publicity strategy is important because publicity can have the same effect as advertising, though typically with greater credibility. For more detailed descriptions about each method, please refer to memos in this slide.

Answer 25

* Paid personal communication * Informs customers about offerings and persuades them to buy * Most precise form of communication, but has very high cost per contact * Goals vary based on role in the IMC strategy * Has evolved to take on elements of customer service and marketing research * Frontline knowledge held by the sales force is one of the most important assets of the firm Personal selling is paid personal communication that attempts to inform customers about products and persuade them to purchase those products. Compared to other types of promotion, personal selling is the most precise form of communication because it assures companies that they are in direct contact with an excellent prospect. The most serious drawback of personal selling is the cost per contact. Because firms depend on repeat sales and ongoing customer relationships, personal selling activities must include elements of customer service and marketing research.

Answer 26

* Effective sales management process includes: * Developing sales force objectives * Determining sales force size * Recruiting and training salespeople * Controlling and evaluating the sales force * Impact of technology on personal selling: * Reduction in size of sales force * Difficult to reduce costs and increase productivity while maintaining personalized, one-to-one client relationships Because the sales force has a direct bearing on sales revenue and customer satisfaction, the effective management of the sales force is vital to a firm’s marketing program. In addition to generating performance outcomes, the sales force often creates the firm’s reputation, and the conduct of individual salespeople determines the perceived ethicalness of the entire firm. The strategic implementation of effective sales management requires the following activities: 1. Developing sales force objectives: objectives must be fully integrated with the objectives and activities of other promotional elements. 2. Determining sales force size: size is a function of many variables, including the type of salespeople used, specific sales objectives, and the importance of personal selling within the IMC program. 3. Recruiting and training salespeople: should be a continuous activity as firms must ensure that new salespeople are consistently available to sustain the sales program. 4. Controlling and evaluating the sales force: requires a comparison of sales objectives with actual sales performance. [Exhibit 6.12] Many sales activities are now done through sales automation systems and customer relationship management (CRM) systems to push integrated customer, competitive, and product information to the sales force. By automating many repetitive selling tasks, sales technology can actually increase sales, productivity, and one-to-one client relationships at the same time. By pushing integrated customer, competitive, and product information toward the salesperson, technology can increase salesperson productivity and sales revenue by allowing the sales force to serve customers’ needs more effectively.

Answer 27

* Accounts for the bulk of promotional spending in many firms * Activities that create buyer incentives to purchase a product * Add value for buyer or the trade * Universal goal * To induce product trial and purchase * Used to support other promotional activities rather than as a stand-alone promotional element Despite the attention paid to advertising, sales promotion activities account for the bulk of promotional spending in many firms. This is especially true for firms selling consumer products in grocery stores and mass-merchandise retailers where sales promotion can account for up to 70 percent of the firm’s promotional budget. Sales promotion involves activities that create buyer incentives to purchase a product or that add value for the buyer or the trade. Sales promotion can be targeted toward consumers, channel intermediaries, or the sales force. Roughly a third of all sales promotion expenditures are targeted toward the trade (wholesalers and retailers). Direct main comprises the next largest expense at between 15 and 20 percent. Regardless of the activity and toward whom it is directed, sales promotion has one universal goal: to induce product trial and purchase. Most firms use sales promotion in support of advertising, public relations, or personal selling activities rather than as a stand-alone promotional element. Advertising is frequently coordinated with sales promotion activities to provide free product samples, premiums, or value-added incentives.

Answer 28

* Coupons * Rebates * Samples * Loyalty programs * Point-of-purchase promotion * Premiums * Contests and sweepstakes * Direct mail For more detailed descriptions of each method, please refer to this note: * **Coupons** are used to reduce the price of a product and encourage customers to try new or established brands. * **Rebates** are similar to coupons except that they require much more effort on the consumer's part to obtain the price reduction. Most firms prefer rebates to coupons. * **Samples** stimulate trial of a product, increase volume in the early stages of the product's life cycle, and encourage consumers to actively search for a product. * **Loyalty programs** reward loyal customers who engage in repeat purchases. * **Point-of-purchase promotion** includes displays, counter pieces, display racks, or self-service cartons that are designed to build traffic, advertise a product, or induce impulse purchases. * **Premiums** are items offered free or at a minimum cost as a bonus for purchasing a product. * **Contests and sweepstakes** encourage potential consumers to compete for prizes or try their luck by submitting their names in a drawing for prizes. * **Direct mail**, which includes catalog marketing and other printed material mailed to individual consumers, is a unique category because it incorporates elements of advertising, sales promotion, and distribution into a coordinated effort to induce customers to buy.

Answer 29

* Trade allowances * Free merchandise * Cooperative advertising * Training assistance and sales incentives For more detailed descriptions of each method, please refer to this note: * **Trade allowances** include both merchandise and price allowances for bulk buying or for special promotional considerations. * **Free merchandise** is sometimes offered to intermediaries instead of quantity discounts. * **Cooperative advertising** is an arrangement where a manufacturer agrees to pay a certain amount of an intermediary's media cost for advertising the manufacturer's products. * **Training assistance and sales incentives** are sometimes offered to intermediaries. Sales incentives come in two general forms: push money and sales contests.

Module 4 The Marketing Program Flashcards

(55 cards)