Introduction to Marketing Final Exam

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Marketing is about delivering value and benefits and fulfilling needs.
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Marketing Management Philosophies Evolution – Production – Sales – Market – Societal
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Production- “if you build it they will come,” focus on efficient production Sales- weakened demand requires more aggressive selling techniques (A & P &PS) Market- consumers need centric, researching, creating goods and services to fill needs Societal- satisfying customer needs and wants while enhancing individual and societal well-being (sustainability, child labor, etc.)
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Ansoff’s Strategic Opportunity Matrix – Market Penetration – Market Development – Product Development – Diversification
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Market Penetration – a marketing strategy that tries to increase market share among existing customers. (Starbucks sells more coffee to customers who register their reloadable Starbucks cards.) Market Development – a marketing strategy that entails attracting new customers to existing products. (Starbucks opens stores in Brazil and Chile.) Product Development – a marketing strategy that entails the creation of new products for present markets. (Starbucks develops powdered instant coffee called Via.) Diversification – a strategy of increasing sales by introducing new products into new markets. (Starbucks launches Hear Music and buys Ethos Water.)
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BCG Portfolio Matrix-resource allocation – Star – Cash Cow – Problem Child (Question Mark) – Dogs
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Star – in the portfolio matrix, a business unit that is a fast-growing market leader. (For example, the iPad is Apple’s current star) Cash Cow – in the portfolio matrix, a business unit that generates more cash than it needs to maintain its market share. (Personal computers and laptops OR Heinz has two cash cows: ketchup and Weight Watchers frozen dinners) Problem Child (Question Mark) – in the portfolio matrix, a business unit that shows rapid growth but poor profit margins. (Gore-Tex guitar strings originally marketed to Disney, but re-positioned and marketed to musicians, who have loved the strings ever since) Dogs – in the portfolio matrix, a business unit that has low growth potential and a small market share. Most dogs eventually leave the marketplace (BlackBerry’s smartphone line)
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Sustainability
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Socially responsible companies will outperform their peers. It is in business’s best interest to find ways to attack society’s ills. We co-exist. We need healthy consumers, employees, stockholder and economic environment.
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The Marketing Environment
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“Big Chart” Ch. 4 Social factors: American values; the growth of lifestyle components (fitness enthusiast); social media Demographic factors: population; tweens; teens; generation y (millennials, 1979-1994, tech-savvy); generation x (1965-1978); baby boomers (1946-1964); Hispanic Americans; African Americans; Asian Americans Economic factors: consumers’ incomes; purchasing power; inflation; recession Technological factors: research; stimulating innovation Political and legal factors: federal laws; state laws; regulatory agencies (like the FDA) Competitive Factors: competition for market share and profits; global competition
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Export/Import
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Export: selling domestically produced products to buyers in other countries Low risk/low return
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License
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the legal process whereby a licencor allows another firm to use its manufacturing process, trademarks, patents, trade secrets, or other proprietary knowledge.
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Contract manufacture
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private label manufacturing by a foreign company.
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Joint venture
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when a domestic firm buys part of a foreign company or joins with a foreign company to create a new entity.
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Direct investment
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active ownership of a foreign company or of overseas manufacturing or marketing facilities. High risk/high return
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Global product and promotion (product adaption, product invention, product one message, promotion adaptation)
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Product adaptation: altering a basic product slightly to meet local conditions (McDonald’s alters their menu based on the country they are in) Product invention: either creating a new product for a market or drastically changing an existing product (Pringles chip flavors have been drastically changed depending on the country they are sold in) Product one message: developing a single product for all markets and promoting it the same way all over the world (Head & Shoulders is marketed the same way in China as it is in the US) Promotion adaptation: maintaining the same basic product but alter the promotional strategy (bicycles can be used for transportation or for recreational purposes)
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Basis for segmentation – Who we are – What/how we buy
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Who we are: geography, demographics (age, gender, race, ethnicity), psychographics (personality attributes, motives, lifestyles) What/how we buy: benefits sought, usage rate 80/20 principle – dividing a market by the amount of product bought or consumed.
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Important: information reduces risk.
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New product development process
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New-product strategy Idea generation Idea screening Business analysis Development Test marketing Commercialization New product
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Branding (marks, names, line extension co-branding, private label, benefits of… etc.)
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See following flashcards.
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Brand name
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That part of a brand that can be spoken, including letter, words, and numbers
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Brand mark
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The elements of a brand that cannot be spoken
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Brand equity
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The value of company and brand names
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Co-branding
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– Utilizing two different brand names – Tide and Febreze laundry detergent – HP and beats audio
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Line extension
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– Closely related to existing products in line – Meets different customer needs – Many “new products” are line extensions – Compete more broadly in category – Careful not to “overextend” – leads to inefficiency Ex: Doritos JACKED, Ragu super chunky mushroom, Sun dryer sheet smell variations
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Global brand
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A brand where at least a third of the earnings come from outside its home country
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Value of Branding for Consumers
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– Helps speed consumer purchases by identifying specific preferred products – Provides a form of self-expression and status – Evaluates product quality to reduce the risk of purchase – Confidence, assurance
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Value of Branding for Marketers
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– Identifies and differentiates a firm’s products from competing products – Helps in the introduction of new products – Facilitates the promotion of all same-brand products – Fosters the development of brand loyalty
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….
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How services differ from goods: Intangible Inseparable Heterogeneity Perishability
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Intangible
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The inability of services to be touched, seen, tasted, heard, or felt in the same manner that goods can be sensed.
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Inseparable
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The inability of the production and consumption of a service to be separated; consumers must be present during the production. Ex: haircuts, surgery
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Heterogeneity
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diverse in character or content. The variability of the inputs and outputs of services, which causes services to tend to be less standardized and uniform than goods. Ex: physicians in a group practice or barbers in a barbershop differ within each group in their technical and interpersonal skills.
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Perishable
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The inability of services to be stored, warehoused, or inventoried. Ex: an empty hotel room or airplane seat produces no revenue that day
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Discrepancies SCM overcomes: – Quantity – Assortment – Temporal – Spatial
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– Quantity (Manufacturers make a lot all at once and ship it out to retailers) – Assortment (Retailers break that bulk down and provide assortments of red, green, blue) – Temporal (Time issues: what we want when we want it. Seasonal purchasing) – Spatial (Space issues: they may make everything in China, but we are here in America)
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Creston Vineyards and White Rock
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– Multiple channels – Wholesalers – Agents/brokers – Private label to Retailer Trader Joe’s – Direct to consumers – Wine Club
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4 Functions of Intermediaries – Direct Channel – Retailer Channel – Wholesaler Channel – Agent/broker Channel
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Direct: Producer->Consumers Retailer: Producer->Retailers->Consumers Wholesaler: Producer->Wholesaler->Retailers->Consumers Agent/broker: Producer->Agent/Broker->Wholesaler->Retailer->Consumers
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When you use a wholesaler, when a broker
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See chart in notes. Lecture 11/7
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Types of distribution: – Intensive – Selective – Exclusive
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See following flashcards.
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Intensive distribution
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a form of distribution aimed at having a product available in every outlet where target customers might want to buy it.
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Selective distribution
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a form of distribution achieved by screening dealers to eliminate all but a few in any single area. Example: HBO selectively distributes its popular television shows through a series of its own subscription-based channels (HBO, HBO on Demand, and HBO Go for mobile devices) and sells subscriptions or single episodes through Apple, Amazon.com, and Sony’s online stores but does not stream them through Netflix or Hulu Plus.
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Exclusive distribution
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a form of distribution that establishes one or a few dealers within a given area. Example: Products such as Rolls-Royce automobiles, Chris-Craft powerboats, and Pettibone tower cranes are distributed under exclusive arrangements.
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DATA = Bar codes, RFID, EDI, logistic information systems
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RFID (radio-frequency identification)
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an inventory handling and tracking system that employs radio-frequency electromagnetic fields to transfer and read product data via an electronic tag.
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Electronic data interchange (EDI)
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information 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.
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Logistic Information Systems
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the link that connects all the logistics functions of the supply chain.
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RFID Video
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– How RFID benefits retail fashion â—‹ Reduced time to take inventory â—‹ More accuracy in taking inventory â—‹ Helps to find inventory very quickly â—‹ Enhanced customer shopping experience · Can have displays that recognize when you pick up a specific type of shoe and it will show on a screen more information about it – How it works â—‹ There is a serial number on each tag Can scan with RFID hand-held, many products at one time
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Disintermediation -> Channel conflict and power
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reduction in the use of intermediaries between producers and consumers, for example by investing directly in the securities market rather than through a bank
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Retailing Ownership Types: – Independent Retailer – Chain Store – Franchises
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Independent Retailer
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a retailer owned by a single person or partnership and not operated as part of a larger retail institution. Example: Local florists and ethnic food markets typically fit this classification.
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Chain Store
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a store that is part of a group of the same stores owned and operated by a single organization. (e.g. Marriott hotels, Hy-Vee, Gap, and Starbucks)
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Franchise
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a business where the operator is granted a license to operate and sell a product under a larger supporting organization. Example: Subway and Quiznos, 7-Eleven
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Non-store vs. Brick and Mortar
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Growth in E/M commerce (online: apparel, cosmetics, electronics) – but there is still over 87% still sold via brick and mortar (perishable goods like food, coffee, restaurants, gasoline)
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Private label merchandise growth and benefits
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Shopping, anywhere, everywhere, Omni channel, entertainment
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– Share of wallet – Showrooming – Comparison – Closing – Disintermediation The more individual time one spends with the customer, the higher likelihood of closing
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4 Functions of Retailers in the Supply Chain
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– Break bulk – Provide assortment (one-stop-shop) – Hold inventory – Perform services
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Franchisor benefits
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– Rapid growth – Shared risk – OPM (other people’s money) – Entrepreneurs work for YOU – Fees and royalties – Income streams
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Franchisee benefits
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– Proven concept – Known brand – Training, help with site selection – Only operate, not create – Shared risk
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Retail format/mix – Product – Pricing – Atmospherics – Placement – Store/site image – Promotion
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Promotion- integrated marketing communications
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A tangible representation of brand and identity – Every communication point with consumer/stakeholder â—‹ How you paint your trucks â—‹ Packaging and logos â—‹ Website and print materials â—‹ Retail atmosphere, CRM â—‹ Ads/sponsorship/product placement â—‹ Grapevine, Twitter, reviews, blogs â—‹ Community involvement
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Push and Pull Strategy
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Push: “Taking the product to the consumer.” Ex: Trade shows, showrooms, etc. Pull: “Getting the customer to come to you.” Ex: Ads and mass media promotion, word of mouth, discounts, etc.
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Naked Brand- Key takeaways
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– Spending more than ever before, US #1 in Adv, #11 in R&D – Seeps into all corners of our life – Who controls the message? Answer: We do. How do we control it? The Internet- give online reviews. – Virgin Airline focus? “The spaces in-between; the little things” Airline Customer Satisfaction – Walmart bigger than Norway, Zappos more selective than Harvard – “Must have healthy society to have healthy business”
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Advertising is growing– why?
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– Proliferation of media – Fragmentation of mass market – Need for measurable results (direct marketing, sales promotions, loyalty programs) – Sheer excess of goods and services, desire for increased share and loyalty
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When to use what tools? (Advertising, Public Relations, Sales Promotion, and Personal Selling)
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Communication process â—‹ Complicated chart in textbook: sender, encoding, message channel, decoding, receiver, noise, feedback channel
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Sender (marketing manager, advertising manager, advertising agency, other consumers) -> Encoding the message (ad, sales presentation, store display, coupon, press release, social media) -> message channel (media, salesperson, retail store, local news) -> decoding the message (receiver interpretation of message) -> receiver (customers, viewers/listeners, news media, clients)
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Noise
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Other ads News articles Other store displays
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Feedback channel
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Market research Sales results Change in market share Social media
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What can communication do? Goals and tasks of IMC â—‹ Inform â—‹ Remind â—‹ Connect â—‹ Persuade
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– Informing the target audience â—‹ PLC Stages: introduction, early growth – Reminding the target audience â—‹ PLC Stages: maturity – Persuading the target audience â—‹ PLC Stages: growth, maturity – Connecting the target audience â—‹ PLC Stages: all
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Informative promotion
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– Increase awareness – Explain how product works – Suggest new uses – Build company image – Upcoming events – Video example: Cognizant advertisement – Video example: Sears black Friday advertisement
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Reminder promotion
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– Remind customers that product may be needed – Remind customers where to buy product – Maintain customer awareness – Video example: Reese’s advertisements (#1 candy brand) â—‹ Simple presentation of product
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Connect promotion
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– Form relationships through social media – Encourage transparent information exchange – Customers become brand advocates – Loyalty programs/memberships/MVC – HyVee fuel saver card – Video example: HyVee fuel saver program
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Persuasive promotion
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– Encourage brand switching – Change customer’s perception of product attributes – Influence immediate buying decisions – Persuade customers to call/visit website/go to store – Videos: â—‹ Duluth longtail t advertisement â—‹ Duluth buck naked underwear advertisement
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Advertising: Paid, controlled communication. From a sponsor, manufacturer, retailer or organization
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Institutional Advertising
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Enhances company’s image rather than touting a specific product. BP: “We changed our logo, we can change the world.” (Bogus) GE: “Imagination at Work”
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Product Advertising
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Touts benefits of existing product BP: gas stations themselves GE: washer and dryer
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Through a variety of media channels, how do we choose channel?
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– Reach and frequency (who do you want to reach and how many times?) â—‹ Once isn’t enough, repetition is good (expose 4-7 times per week) – Cost per contact (or 1000) – Media life span – Media flexibility (understand the way people buy and how to flexibly respond) â—‹ Depending on the weather (humid, hot), frizzy hair ads could be ran – Noise (how much background noise and clutter is there?) – Target audience consideration “Native Advertising”
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Media and creative strategy
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Feature benefits/unique selling proposition/appeals
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Advertising appeal: a reason for a person to buy a product. Unique selling proposition: a desirable, exclusive, and believable advertising appeal selected as the theme for a campaign. Example: Saddleback Leather says, “its products are extremely tough and rugged- just like the consumers who buy them.”
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Native advertising- Jon Oliver Video
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– Separation of news and advertising is no longer – Online advertisements are camouflaged as an article/news clip – Articles are sponsored by a company – Ads are baked into content as raisins are baked into cookies (no one wants them there) – Damaging trust with readers because it’s trickery – Point is: we are spending more and more on advertising
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Know that advertising is growing, but channels are constantly switching.
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Public relations â—‹ Performance recognized NOT synonymous with bullshit â—‹ Internal & external. Generate publicity, educate, inform, sponsorships, philanthropy, lobbying, corporate communication. Multiple stakeholders
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Sales promotion
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– Activities to promote sales. Short-term incentive-based to motivate someone to buy more (of an item) or buy now. – Targets: consumers or the trade; e.g. pie rush Wednesday at Village Inn
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Point of sale interactions
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a touch point in stores or information kiosks that uses software to enable customers to easily provide information about themselves without feeling violated.
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Sampling
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Methods: – Direct mail – Door-to-door – The above two methods are rarely used, today – Packaging with another product – Retail store demonstration (best way to promote a product, but this method is expensive) – In a mall, you can also “steal” customers from other stores (Sarku Japan “stealing” customers from other fast food restaurants in the food court at the Coral Ridge Mall via food sampling)
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Sweepstakes and premiums
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– Know the laws – Vary by states – Licensing basketballs – Naming rights – Can be costly – Giveaway or self-liquidating? E.g. fast food store Nancy used to work for were selling 1000 basketballs per week, this incurred storage problems, of the basketballs. And the licensing of the different college teams was costly and time consuming to draft the paperwork
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Rebates/rewards
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– Perception of value, low execution of amounts under $10 – Slippage (not sure what this means, Nancy did not elaborate) – Kohl’s Cash is an example of a reward program – Many people don’t mail in the mail-in rebates Global value of airline miles is currently $700 billion (largest world currency)
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Price promotion
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are when products are offered at a discounted price. In the grocery stores, consumers can usually spot a price promotion on a product, because a big sign draws attention to the discounted price.
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Why are they growing?
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– Growing power of retailers – Brand proliferation, increased competition – Declines in brand loyalty – Advertising clutter – SHORT-TERM SALES NEEDS – Measurability can uncouple from “branding” (I just transcribed this sentence verbatim, from the slideshow, I’m not sure what it means.) – Usually in the form of price dropping
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Push and pull (trade and consumer)
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Consumer sales promotion is… Sales communication activities targeting the ultimate consumer (PULL) Trade sales promotion is… Sales promotion activities targeting a marketing channel (e.g. retailer) (PUSH)
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Loyalty programs â—‹ Purpose â—‹ How are they different than sales promotion/advertising/PR
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– Retaining an additional 5% of customers can increase profits by as much as 25% – Improving customer retention by 2% can decrease costs by as much as 10% – Loyalty programs reward loyal customers for making multiple purchases – Loyalty programs provide information about customers and trends
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Requirements for an effective loyalty program
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– Easy to understand – transparency – Tiered rewards/levels – Choices of rewards – Transferable points depending on the service (airline points -> hotel points) – Reward all transactions – Exit strategy?
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Personal selling (Consultative selling)
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a sales practice that involves building, maintaining, and enhancing interactions with customers in order to develop long-term satisfaction through mutually beneficial partnerships. The consultative salesperson: Expect expertise: Salesperson must know everything about… – Product or service – Customer – Competition – Industry
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Steps in selling process: Step 1: Generate leads Step 2: Qualify leads Step 3: Approach the customer and probing needs Step 4: Develop and propose solutions Step 5: Handle objections Step 6: Close the sale
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– Generate leads (find people who might want the product; go to the yellow-book white pages, go to a conference/trade shows, host an event for folks in that industry, advertise and hope people call you, look at directories) – Qualify leads (do they fit well? Do they have contracts expiring? Do they have enough money? Are you in this business for sure?) – Probe customer needs (find out what they want) – Develop solutions – Handle objections (a good salesperson will ask for the objections/issues that the customer has) – Close the sale – Follow up
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How to generate and qualify leads
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Generate: – Lead generation (prospecting): identification of those firms and people most likely to buy the seller’s offerings. – Referral: a recommendation to a salesperson from a customer or business associate – Networking: a process of finding out about potential clients from friends, business contacts, coworkers, acquaintances, and fellow members in professional and civic organizations. – Cold calling: a form of lead generation in which the salesperson approaches potential buyers without any prior knowledge of the prospects’ needs or financial status. Qualify: – Lead qualification: determination of a sales prospect’s (1) recognized need, (2) buying power, and (3) receptivity and accessibility
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Closing (how do you close, when do you close, what are the signs of closing)
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