Marketing chapter 18

  1. Describe the promotional mix and the uniqueness of each component. (LO2)
    • There are five promotional alternatives
    • mass selling approaches: advertising, sales promotion, public relations
    • customized messages: personal selling, direct marketing

    • Advertising: high absolute costs, but reaches large numbers of people
    • Personal selling: high cost per contact but provides immediate feedback
    • Public relations: often difficult to obtain but is very credible
    • Sales promotion: influences short-term consumer behavior
    • Direct marketing: help develop customer relationships although maintaining a database can be very expensive
  2. Advertising
    • Any paid form of nonpersonal communication about an organization, good, service, or idea by an identified sponsor
    • Space for advertising message must be bought
    • Mass media is nonpersonal, doesn't have immediate feedback loop
    • Strengths: efficient means for reaching large numbers of people; attention-getting; company can control what it wants to say, to whom the message is sent, and when/how often to send message; send to all receivers in a market segment
    • Weaknesses: high absolute costs, difficult to receive good feedback
  3. Personal selling
    • Two-way flow of communication between a buyer and seller designed to influence a person's or group's purchase decision
    • Face-to-face communication between sender and receiver (customized)
    • Fees paid to salespeople as either salaries or commissions
    • Cost-per-contact basis most expensive
    • Strengths: immediate feedback; very persuasive; can select audience; can give complex information
    • Weaknesses: extremely expensive per exposure; messages may differ between salespeople
  4. Public relations
    • Form of communication management that seeks to influence the feelings, opinions, or beliefs held by customers, prospective customers, stockholders, suppliers, employees, and other publics about a company and its products or services
    • Publicity: a nonpersonal, indirectly paid presentation of an organization, good, or service
    • No direct payment to media
    • Strengths: often most credible source in the consumer's mind
    • Weaknesses: difficult to get media cooperation; user's lack of control
  5. Sales promotion
    • Short-term inducement of value offered to arouse interest in buying a good or service
    • Offered to intermediaries as well as to ultimate consumers
    • Wide range of fees paid, depending on promotion selected
    • Strengths: effective at changing behavior in short run; very flexible
    • Weaknesses: easily abused, can lead to promotion wars, easily duplicated
    • Advertising support needed to convert trial customer into long-term buyer
    • Sales promotions conducted continuously lose their effectiveness
  6. Direct Marketing
    • 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
    • Communication can be in any form: face-to-face selling, direct mail, telephone, direct response advertising, online marketing
    • Cost of communication through mail, telephone, or computer
    • Strengths: messages can be prepared and adapted quickly, facilitates relationship with customer; interactive communication
    • Weaknesses: declining customer response; database management is expensive
  7. Factors affecting promotional mix
    target audience for the promotion, the stage of the product's life cycle, characteristics of the product, decision stage of the buyer, channel of distribution
  8. Select the promotional approach appropriate to a product's target audience, life-cycle stage, and characteristics, as well as stages of the buying decision and channel strategies. (LO3)
    • Target audience: programs for consumers, business buyers, and intermediaries might emphasize advertising, personal selling, and sales promotion, respectively
    • Product life-cycle stages: Introduction stage (all promotional mix elements are used). Growth stage (advertising is emphasized). Maturity stage (utilizes sales promotion and direct marketing). Decline stage (little promotion used)
    • Product characteristics: level of complexity, risk, and ancillary services required will determine which element is needed
    • Customer's stage in buying process: Prepurchase phase (advertising and PR can create awareness). Facilitate purchase (personal selling and sales promotion). Postpurchase stage (advertising can help reduce anxiety)
    • Channel strategy: Push strategy (personal selling and sales promotions directed at channel members). Pull strategy (advertising and sales promotion directed at customers).
  9. Product characteristics
    • Complexity: refers to technical sophistication of the product and hence the amount of understanding required to use it
    • - More complex the product, the greater the emphasis on personal selling
    • Risk: in terms of financial risk, social risk, and physical risk
    • - Advertising helps, but greater risks require more personal selling
    • Ancillary services: degree of service or support required after the sale
    • - Advertising establishes seller's reputation; direct marketing describes how product or service can be customized to individual needs; personal selling essential to build buyer confidence and provide evidence of customer service
  10. Channel strategy
    • Push Strategy
    • - directing promotional mix to channel members to gain their cooperation in ordering and stocking the product
    • - Flow of demand simulation: wholesaler -> retailer -> consumer
    • - Flow of promotion (mainly personal selling directed to intermediaries)

    • Pull Strategy
    • - directs promotional mix at ultimate consumers to encourage them to ask the retailer for a product
    • - Flow of demand stimulation: derived demand
    • - Flow of promotion (mainly advertising directed to consumer)
  11. Describe the elements of the promotion decision process. (LO4)
    • The promotional decision process consists of three steps: planning, implementation, and evaluation
    • Planning consists of six elements: identify the target audience, specify the objectives, set the budget, select the right promotional elements, design the promotion, and schedule the promotion
    • Implementation includes pretesting the promotion and carrying out the promotion
    • Evaluation includes posttesting the promotion and making needed changes
  12. Planning the promotion program
    • Identifying the target audience
    • - group of prospective buyers toward which a promotion program is directed
    • - the more the firm knows about its target audiences (lifestyle, attitudes, values) the easier it is to develop a promotion program

    • Specifying promotion objectives
    • - hierarchy of effects: sequence of stages a prospective buyer goes through from initial awareness of a product to eventual action
    • - Awareness: consumer's ability to recognize and remember the product or brand name
    • - Interest: an increase in the consumer's desire to learn about some of the features of the product or brand
    • - Evaluation: consumer's appraisal of the product or brand on important attributes
    • - Trial: consumer's actual first purchase and use of the product or brand
    • - Adoption: favorable first trial experience -> consumer's repeat purchase and use of product or brand
    • - Objectives should possess three important qualities: be designed for a well-defined target audience, be measurable, cover a specified time period

    • Setting the promotion budget
    • - Percentage of sales budgeting: funds are allocated to promotion as a percentage of past or anticipated sales, in terms of either dollars or units sold
    • - - Advantages: simple, provides financial safeguard
    • - - weaknesses: may reduce promotion budget because of past down turns or anticipated downturn in sales, situations in which may need promotion the most
    • - Competitive parity budgeting: matching the competitor's absolute level of spending or the proportion per point of market share; matching competitors or share of market
    • - All-you-can-afford budgeting: money is allocated to promotion only after all other budget items are covered; fiscally conservative but shows inexperience in promotion objectives
    • - Objective and task budgeting: company (1) determines its promotion objectives, (2) outlines the tasks to accomplish these objectives, and (3) determines the promotion cost of performing these tasks

    • Selecting the right promotional tools
    • Designing the Promotion
    • Scheduling the Promotion
  13. Explain the value of direct marketing for consumers and sellers. (LO5)
    • The value of direct marketing for consumers is indicated by its level of use. (ie: 68% of them have made a purchase by phone or mail, 12 million people have purchased items from a tv offer)
    • The value of direct marketing for sellers can be measured in terms of three types of responses: direct orders, lead generation, and traffic generation
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Marketing chapter 18