Marketing Chapter 14-18

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Promotional Mix
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The combination of one or more of the communication tools used to inform, persuade, or remind perspective buyers 1. Inform perspective buyers about the benefits of the products 2. Persuade them to try it 3. Remind them later about the benefits they enjoyed by using the product
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Communication **The Sender and Receiver must have a mutually shared field of experience: A similar understanding and knowledge they apply to the message
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The process of conveying a message to others; it requires: SIX elements 1. Source 2. Message 3. Channel of communication 4. Receiver 5. Process of encoding and decoding *** Look at photo 2 fields of experience. Source –> Encode –> Into the Channel of communication (Where message is) * noise surrounding it –> Decode –> Receiver–> Response–> Feedback –> Back to the source
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Promotion: Promotional Strategies
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– Color (Each color has a different meaning) Green: Growth, Calm. refreshed, health, nature Yellow: Energy, Joy, aggravation Black: Confident, power – Archetypes (Symbol that is associated with a brand) – Common life events (Getting married, first kid, death) – Common stories (Familiar Disney stories, movies, etc)
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Promotion: Communication Process
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– Communication loop – Encode, decode, source, receiver, channel of communication – Noise – Fields of experience – Feedback loop
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Promotional Mix: Advertising (product advertising) The biggest difference with product promotion is that your message focuses on a specific product. While you can use your brand reputation to enhance the value perception of a given product, each product must have its own marketable qualities. Companies use a variety of attributes to position their products as unique, different or better than the competition. You can separate your product by promoting superior attributes, quality materials, advanced technology, new features or nutritional value, as in the case of food.
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– PIONEERING(Promotion employed in informing the prospects about a new product. It aims at customer education and usually involves expensive and sustained advertising campaign) – INFORMATIONAL (Promotion that educates the public on (1) what are the benefits and features of a product, (2) what it does or can do, (3) how it compares with competing or similar products in value and benefits, and (4) where it can be bought. It is normally followed by persuasive and brand-building advertising) – COMPETITIVE (Promotional technique in which an advertiser claims the superiority of its product over competing product(s) by direct or indirect comparison. If other products are mentioned by their name (and not as ‘brand X,’ ‘brand Y,’ etc.) the owners of those brands may challenge the fairness of the comparison in a court. Also called comparative advertising or comparison advertising) – PERSUASIVE (A type of product promotion that attempts to influence a consumer in favor of a purchasing particular good or service. A business might engage in informative or persuasive advertising to encourage first time customers to try its product, in addition to reminding customers to purchase a product they have previously bought) REMINDER (A marketing strategy typically consisting of brief messages sent with the objective of reminding a target consumer group about a product or service or of introducing a new theme into an existing marketing program. Reminder advertising might be used by a business that has already invested considerable resources in initially promoting their product or service and still wishes to maintain its competitiveness)
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Promotional Mix: Institutional Advertising Institutional promotion is used to convey your company’s brand message to target customers. While it doesn’t directly result in sales, the idea is that by promoting your company and its values, you appeal to customers that appreciate what you have to offer. Similar to the “Midas Touch” of the classic childhood fable, if you develop a strong reputation for your company and brand, you inherently increase the value of each product that bears your name.
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ADVOCACY (Advertising used in supporting a particular cause, point of view, or a matter of public importance or interest) PIONEERING COMPETITIVE REMINDER
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Promotional Mix: Sales Promotion – CONSUMER ORIENTED
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– Coupons – Deals – Samples – Rebates – Sweepstakes – Premiums – Loyalty Program – Product Placements
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Promotional Mix: Sales Promotion – TRADE ORIENTED
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– Allowances and Discounts – Cooperative Advertising – Training of Distributors Salesforce
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Promotional Mix: Public Relations
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– Publicity tools (News release, news conference, public service announcements (PSAs)
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Promotional Mix: Personal Selling & Sales Management
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– Different types of personal selling (essential differences) – Relational selling (product-oriented –> Relationship Oriented) – Team Selling – Personal Selling Process 1. Prospecting 2. Qualifying 3. Pre-Approach 4. Approach
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Integrated Marketing
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The concept of designing marketing communications programs that coordinate all promotional activities 1. Advertising 2. Personal selling 3. Sales promotion 4. Public Relations 5. Direct Marketing *All to provide a consistent message across all audiences
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Interactive Marketing 2 way seller electronic communication between a buyer and a seller
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– Choice Board: – Personalization – Collaborative Filtering
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Multi-Channel Strategy
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The blending of different communication and delivery channels that are mutually reinforcing in attracting, retaining, and building relationships with consumers
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Price
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– Breakeven point – Elasticity (Is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price) *Graph curves down – Demand
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Place: Functions of marketing channels
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– Transactional (Buying, selling, risk taking) – Logistical (Assorting, storing, sorting, transporting) – Facilitating (Financing, grading, marketing information and research)
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Place: Marketing Channels
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– Direct Channel vs. Indirect – Multichannel Marketing – Dual Distribution – Vertical Integration – 3 group cases
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Encoding
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The process of having the sender transform an idea into a set of symbols
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Decoding
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Is the reverse, or the process of having the receiver take a set of symbols, the message, and transform the symbols back to an idea Performed by: the receivers according to their own frame of reference –> Their attitudes, values, and beliefs Example: The North Face “Never Stop Exploring” – What do you think?
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Feedback Loop:
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A response and feedback. A RESPONSE: is the impact the message had on the receiver’s knowledge, attitudes, or behaviors FEEDBACK: Is the sender’s interpretation of the response and indicates whether the message was decoded and understood as intended
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Noise
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Extraneous factors that can work against effective communication by distorting a message or the feedback received – Printing mistake, words or pictures that fail to communicate the message clearly – Salesperson’s message is misunderstood by a prospective buyer – Accent, or communication style
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Mass Selling: They are used with groups of prospective buyers
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– Advertising – Sales promotion – Public relations
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Personal selling: Customized interaction between a seller and prospective buyer
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– Face to face – Telephone – Interactive electronic communication
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Advertising – Mass Communication
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Any paid form of non personal communication about an organization, product, service, or idea by an identified sponsor *Must pay for ad space. Exception is PSA (donated) *Non-personal: Mass Media (TV, radio, magazines- do not have an immediate feedback loop like personal selling) STRENGTHS: Attention getting- Efficient means of reaching a large group of people WEAKNESSES: High absolute costs, Difficult to receive good feedback
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Personal Selling – Customized
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The 2 way flow of communication between a buyer and a seller, often in a face to face encounter, designed to influence a person’s or a group’s purchase decision PAYMENT: Fees paid to salespeople as either salaries or commissions STRENGTHS: immediate feedback, very persuasive, can select audience, can give complex info WEAKNESS: Extremely expensive per exposure, messages may differ between sales people (flexibility)
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Public Relations: Mass
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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 PAYMENT: No direct payment to media STRENGTHS: Often most credible source in the consumers mind WEAKNESS: Difficult to get media cooperation
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Sales Promotion: Mass – Coupon, rebate, sample
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A short term offer designed to arouse interest in buying a product or service PAYMENT: Wide range of fees paid, depending on promotion selected STRENGTHS: Effective at changing behavior in short run, very flexible WEAKNESS: Declining customer response, Database management is expensive
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Direct Marketing: Customized – Face 2 face – Direct mail – Catalogs – Telephone solicitations – Online 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 *Can be customized for specific target markets PAYMENT: Cost of communication through mail, telephone, or computer STRENGTH: Messages can be prepared quickly, Facilitates relationship with consumer WEAKNESS: Declining customer response, Database management is expensive (keeping it up to date), privacy
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Publicity – Promotional campaigns – Publicity + Advertising with the same message = positive response to the message
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A non-personal, indirectly paid presentation of an organization, product or service EXAMPLES: News story, editorial, or product announcement PAYMENT: *Does not get paid, but attempts to get the medium to run a favorable story “indirectly paid” ADVANTAGE: Credibility – restaurant, airline WEAKNESS: Lack of control over it – Social media and blogs you don’t know what the public will talk about positive or negatively
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Promotional Mix
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The combination of one or more promotional tools it chooses to use Must consider: 1. Balance of the elements – Factors that effect this: The stage of product life cycle, the characteristics of the product, the decision stage of the buyer, and even the channel of distribution 2. Coordinating a consistent promotional effort is necessary – A promotional planning process designed to ensure integrated marketing communications can facilitate this goal
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Target Audience
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Directed at the “ultimate consumer” or an “intermediary” (wholesaler, or industrial distributor), or to both -Directed at buyers of consumers of products often use – — -mass media – b/c the # of potential buyers is large -Personal selling: used at the place of purchase – retail store -Business Buyers: Trade Marketing – “Restaurant Business Magazine” *Intermediaries -Intermediaries: allowed mark-up, merch. support, return policies
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Generation Y *Marketers use mobile marketing for them *Short and fast messages
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“Digital natives” who have grown up with technology – They have and use laptops, HD TVs, smartphones, use social media, mobile coupons – Media Multitasking (use more than one at once) 1/3 of all this takes place while watching TV
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American Marketing Association Stats on Technology
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25% has access to and uses the internet 65+% Use mobile phones 331 million phones in US, 45% use smartphones
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Product Life Cycle: Intro Stage (1)
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Informing customers in an effort to increase their level of awareness in the primary promotional objective – Free samples – Advertising – Salesforce calling on intermediaries * In general, all of the promotional mix elements are used at this time
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Product Life Cycle: Growth Stage (2)
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To persuade the consumer to buy the product Advertising is used to communicate brand differences, and personal selling is used to solidify the channel of distribution – to intermediaries Ex. How to differentiate Dog Chow attributes from those of competing brands
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Product Life Cycle: Maturity (3)
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Need is to maintain existing buyers, remind existing buyers of the products existence – Sales promotion in the form of: Discounts, coupons, and events – Limited personal selling – Direct Mail reminders
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Product Life Cycle: Decline (4)
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Period of phase out for the product, and *little money is spent in the promotional mix
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Push Strategy * Personal selling and sales promotions play major roles
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Directing the promotional mix to channel members to encourage them to order and stock a product Manufacturer –> (use personal selling to intermediaries) –> Wholesaler –> Retailer –> Consumer ex. Ford provides provides support and incentives- recieve and incentive when near their goal, larger when exceed sales expectations *Intended to encourage workers to “push” ford products through the channel of consumers
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Pull Strategy * Opposite of push * Mainly advertising directed at consumers
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Directing the promotional mix at ultimate consumers to encourage them to ask the retailer for the product Consumer –> Retailer –> Wholesaler –> Manufacturer Retailers order the product from wholesalers and thus the item is pulled through the intermediaries Ex. Pharmaceutical companies now spend more than $4.2 billion annually on DIRECT-TO-CONSUMER prescription drug advertising – Encourage consumers to ask a doctor for a certain drug by name “pulling it through the channel”
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Developing an (IMC) Integrated Marketing Communication *Variety of promotion alternatives to provide a consistent message across audiences Promotion to sales ratio = Total promotion expenditures/total sales – Plan – Implement – Evaluate
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Is the application of consistent brand messaging across both traditional and non-traditional marketing channels and using different promotional methods to reinforce each other. 1. Developing (planning) 2. Executing (implementing) 3. Assessing the program (evaluate)
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(IMC) Integrated Marketing Communication 1. Developing the promotion program (Planning)
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– Identify the Target audience Behavioral targeting: Collecting info about your web browsing behavior to determine the banner and display ads that you will see -. Specify the objectives – Set the budget – Select the right promotional tools – Design the promotion – Schedule promotion
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(IMC) Integrated Marketing Communication 2. Implementation
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– Pretest the promotion – Carry out the promotion
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(IMC) Integrated Marketing Communication 3. Evaluation
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– Post test the promotion – Make needed changes
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Hierarchy of effects
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The sequence of stages that a prospective buyer goes through: 1. Awareness: The consumer’s ability to recognize and remember the product or brand name 2. Interest: An increase in the consumers desire to learn about some of the features of the product or brand 3. Evaluation: The consumers appraisal of the product or brand on important attributes 4. Trial: The consumers actual first purchase and use of the product or brand 5. Adoption: Through a favorable experience on the first trial, the consumer’s repeated purchase and use of the product or brand * For a new brand, it applies to the brand itself
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Promotion Objectives should: posses 3 qualities
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1. Be designed for a well defined target market, 2. Be measurable 3. Cover a specified time period
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Setting the promotion sales budget * Only the “Objective and task” method takes into account what the company wants to accomplish and requires that the objectives be specified
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– % of sales “This years budget will be 3% of last years gross sales” – Competitive Parity: matches the competitors absolute level of spending or the proportion per point of market share – All you can afford: Common to many businesses, Allows $ to be spent ONLY after all other budget items, such as manufacturing costs are covered – Objective and task: *THE BEST APPROACH 1. Determines its promotion objectives 2. Outlines the tasks to accomplish those objectives 3. Determines the promotion cost of performing those tasks
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Selecting the right promotional tools *analytical approach and experience are important * access relative importance of the various tools
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1. Once a budget has been determined 2. Five basic IMC tools (Advertising, personal selling, sales promotion, public relations, and direct marketing- can be specified) Example: The Olympics- Because it is done every 2 years, the promotion is continuous during “on” and “off” years – Variety of audiences – Place importance on PR and Publicity
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Designing the Promotion * Primary role in determining the message that is communicated to the audience
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Personal selling efforts depend on the characteristics and skills of the sales person – Coupons, samples, sweepstakes, – PR: News releases – Direct marketing: Depend on, written, verbal, and electronic forms of delivery *All of the promotion tools have many design alternatives ex. Advertising: fear, humor, attractiveness CHALLENGE: To design each promotional activity to communicate the same message
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Scheduling the Promotion *Important to determine the most effective timing of their use
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Describes the order of each promotional tool, and the frequency of each *Designed to generate interest, bring consumers into theaters, encourage additional features after seeing the film Ex. Movies 1. 6 months before released, release video footage on a TV show 2. TV commercial 3. Video games 4. Retail stores to promote movie goods 5. Free giveaways 6. Online promotions to encourage to buy the DVD REDUCE EFFORTS: Sports, airlines, ski resorts after the “off” season INCREASE PROMOTION: Retail store, health clubs – when new competitors enter the market
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Media Agency Horizon * Create a process that facilitates their design and use – IMC Audit
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Worked for Geico – YouTube, Hulu postings Success: From focusing on increasing brand sales, awareness, and purchase intent – Account managers, channel experts, media specialists, integrated prospective that uses all forms of promotion – IMC Audit: Analyzes the internal communication network of the company – evaluates customer database, assess messages in recent advertising, PR releases, packaging, websites, email, sales promotions, direct mail, ^^Increasingly popular now with so much social media “accelerator” watch out for them as they: move content from medium to medium, without any influence or control over the message
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Growth Direct Marketing
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8.3% of the total US GDP E-Mail: used by 93% of markets, and gets a 1.7% response rate May integrate direct marketing: Porshe used TV commercials and direct mail brochures Mobile direct sales growing at 31% Social network growing a 17%
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The Value of direct Marketing * Great customer service – Live Help icon to chat
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Is its level of use 53% have ordered merchandise by mail 64% shop online spend $144 billion on products available through offers 24% if see a good post will buy it from social media BENEFITS: Don’t have to go to a store, 24 hours a day, saves time, avoid hassle with sales people, save money, it’s fun, more privacy
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Direct Orders
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The result of direct marketing offers that contain all the info necessary for a potential buyer to make a decision to purchase and complete the transaction Priceline.com “Price breaker RSS” discounted fairs if can travel fast
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Lead Generation
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The result of an offer designed to generate interest in a product or service and a request for additional information ex. 4 seasons hotel now sells private residences and send direct mail to prospective residences – asking them to request any additional information
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Trafic Generation
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The outcome of a direct marketing offer designed to motivate people to visit a business ex. Home Depot uses opt-in email alerts that announce special sales that attract customers to the store – Target uses direct mail to traffic in new and remodeled stores
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Technical, global, and ethical issues in direct marketing
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Data needed: Lifestyles, media use, demographics, – Price, quantity, and brand, are best collected from the business where purchases are made *Increase in postage rates, and the declining economy – made direct marketing info more valuable
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Direct Mail Disadvantages
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Italy and Denmark require “opt-in” must give permission for personal information – Mail, telephone, and internet systems aren’t as developed in other countries – improved reliability, more security have slowed rates – Payment: availability of credit cards varies across the world *Global and domestic concerns about privacy – Data Protective Directive, FTC concerned too
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2003 National do not call registry
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Big Questions: What info is private? – Do-not mail – Do not track – cookies But marketers argue will this, they will receive messages and advertising that better suit them *DMA Choice, helps them to decide what they want and don’t want notifications from
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14. What are the 6 elements required for communication to occur?
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A: A source, message, a channel of communication, a receiver, and the process of encoding and decoding
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14. A difficulty for US companies advertising in international markets is that the audience does not share the same ——–
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A: Field of experience
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14. A misprint in a newspaper ad is an example of?
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Noise
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14. Explain the difference between advertising and publicity when both appear on the TV
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A: Since advertising space is on TV is PAID FOR, a firm can control what it wants to say and to whom and how often the message is sent over a broadcast, cable, satellite, or local TV network PUBLICITY: is an “indirectly paid” presentation of a message about a firm or its products or services, the firm has LITTLE CONTROL over what is said to whom or when. Instead, it can only suggest to the TV medium that it run a favorable story on the firm or its offerings
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14. Cost per contact is high with the —– element of the promotional mix
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A: Personal Selling
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14. Which promotional element should be offered only on a short term basis?
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A: Sales promotion
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14. Promotional programs can be directed to ——— , ——, or both
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A: The ultimate consumer The intermediary (Wholesaler, or industrial distributor)
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14. Describe the promotional objective for each stage of the product life cycle
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A: Introduction – to inform Growth: To persuade Maturity: To remind Decline: To phase out
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14. Explain the differences between a push and a pull strategy
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Push strategy: A firm directs the promotional mix to channel members to gain their cooperation in ORDERING & STOCKING the product Pull strategy: A firm directs the promotional mix at ultimate consumers to encourage them to ASK RETAILERS for the product, who then order it from the wholesaler or the firm itself
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14. What are the stages of hierarchy of effects?
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Awareness Interest Evaluation Trial Adoption
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14. What are the 4 approaches to setting the promotion budget?
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% of sales Competitive parity All you can afford Objective and task
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How have advertising agencies changed to facilitate the use of IMC programs?
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A: Some agencies have adopted 1. A total communications solutions approach that includes all forms of promotion 2. An IMC audit to analyze the internal communication network of their clients 3. The use of both pretesting and post-testing to improve the effectiveness of IMC program
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14. The ability to design and use direct marketing programs has increased with the availability of—- and —–
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A: Customer information databases, new printing technologies
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14. What are the 3 types of responses generated by direct marketing activities?
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A: Direct orders Lead generation Traffic generation
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IMC
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Integrated Marketing Communication
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15: Explain the difference between product advertising and institutional advertising and the variations within each type
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A: Product advertisements focus on selling a good or service and take THREE FORMS: – Pioneering advertising: Tell people what a product is, what it can do, and where it can be found – Competitive advertising: Persuade the Target Market to pick the firms brand rather than a competitor’s, and reminder advertisements reinforce previous knowledge of a product
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15: Describe the steps used to develop, execute, and evaluate an advertising program
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A: The promotion decision process can be applied to each of the promotional elements. 1. Identify the target audience 2. Specify the advertising objectives 3. Set the advertising budget 4. Design the advertisement 5. Create the message 6. Select the media 7. Schedule the advertising Executing the program requires pretesting, and evaluating the program requires post testing
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15: Explain the advantages and disadvantages of alternative advertising media
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A: TV advertising reaches large audiences and uses pictures, print, sound, ad motion Disadvantages: Expensive and perishable – Radio: inexpensive and can be placed quickly, but it has no visual element and it is perishable – Magazine: Can target specific audiences and can convey complex info, but it takes a long time to place the ad and is relatively expensive – Newspapers: Provide excellent coverage of local markets and can be changed quickly, but they have a short life span and poor color – Yellow Pages: Has a long use period and is available 24 hours per day Disadvantages: There is a many variations of it, they cannot be updated frequently -Internet: Can be interactive, but its effectiveness is difficult to measure -Outdoor: Provides repeat exposures, but its message must be very short and simple -Direct Mail: Can be targeted at very selective audiences, but its cost per contact is high
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15:Discuss the strengths and weaknesses of consumer oriented
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A: Coupons encourage retailer support but may delay consumer purchases. Deals reduce consumer risks but reduce perceived value* Premiums offer: Consumers additional merchandise they want, but they may be purchasing only for the premium Contests: Create involvement but require creative thinking Sweepstakes: Encourage repeat purchases, but sales drops after the sweepstakes Samples: Encourage product trial, but are expensive Loyalty programs: Help create loyalty but are expensive to run Displays: Provide visibility but are difficult to place in retail space Rebates: Stimulate demand but are easily copied Product placements: Provide a positive message in a noncommercial setting that is difficult to control
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15:Trade-Oriented sales promotions: Include:
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(A): Allowances and discounts: which increase purchases but may change retailer ordering patterns (B): Cooperative advertising: Which encourages local advertising (C): Sales force training: Which helps increase sales by providing the salespeople with product information and selling skills
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15: Recognize Public Relations as an important form of communication
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A: PR activities usually focus on communicating positive aspects of the business. A frequently used PR tool is publicity. Publicity tools include news releases and news conferences Nonprofit organizations often use public service announcements
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15:What is the difference between pioneering advertising and competitive ads?
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A: Pioneering ads: Used in the introductory stage of the product life cycle tell people what a product is, what it can do, and where it can be found Competitive ads: Promote a specific brand’s features and benefits to persuade the target market to select the firm’s brand rather than that of a competitor
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15:What is the purpose of an institutional advertisement?
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A: Is to the build good will or an image for an organization
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15:The Federal Communications Commission suggest that’s advertising programs be based on
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A: Market research about the target audience
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15: Describe the 3 common forms of advertising appeals:
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1. Fear appeals: Which suggest to the consumer that he or she can avoid some negative experience through the purchase and use of a product or service, a change in behavior, or a reduction in the use of a product 2. Sex Appeals: Which suggest to the audience that the product will increase the attractiveness of the user 3. Humorous Appeals: Which imply either directly or subtly that the product is more fun or exciting than competitors’ offerings
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15: You see the same ad in Time and Fortune magazines and on billboards and TV: Is this an example of reach or frequency?
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A: Reach: Using more of the same media type (magazines) as well as using more of different types of media (magazines, billboards, and TV) – Is an attempt to maximize the # of individuals in a target market are exposed to the advertisement Frequency: Uses the same medium/media more than once to present the advertising message.
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15:Why has the internet become a popular advertising medium?
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A: The internet offers a visual message, can use both audio and video, is interactive through rich media, and tends to reach younger consumers
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15: Describe the THREE approaches to scheduling advertising
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A: The three approaches are 1. Continuous (steady): When advertising is run at a continuous or steady schedule throughout the year because seasonal factors are unimportant 2. Flighting (intermittent): When periods of advertising are scheduled between periods of no advertising to reflect seasonal demand 3. Pulse (burst): Which is when a flighting schedule is combined with a continuous schedule because of increases in demand, heavy periods of promotion, or introduction of a new product
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15: Explain the difference between pretesting and post-testing advertising copy
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A: Pretests: Are conducted before ads are placed in any medium to determine whether they communicate the intended message or to select among alternative versions of the ad Post-tests: Are shown to the target audience to determine whether it accomplished its intended purpose
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15: What is the difference between aided and unaided recall post-tests?
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A: Aided recall: Involves showing an ad to respondents who then are asked if their previous exposure to it was through reading, viewing, or listening Unaided recall: Specifically asking respondents if they remember an as without any prompting to determine if they saw or heard its message
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15: Which sales Promotional tool is most common for new products?
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Samples
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15: Which Trade Promotion Is used to encourage the local advertising efforts of resellers?
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Cooperative Advertising
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15: What is a news release?
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A: Is an announcement regarding changes in the company or the product line
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15: What type of publicity tool is used most often by nonprofit organizations?
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Public Service Announcement (PSAs)
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How social media came about “Web 2.0” “User-generated content”
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“Web 2.0” in 2004. Doesn’t describe any technical update of the WWW, but refers to functionalities that make possible today’s high degree of interactivity among users – Blogs and Wikis
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Blog
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A contraction of “web log” a web page that serves as a publicly accessible personal journal and online forum for an individual organization
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Social Media
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Online media where users submit comments, photos, and videos, often accompanied by a feedback process to identify “popular” topics – Games and virtual worlds – Facebook or YouTube = Social Network – Business firms call it “User generated content”
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Classifying Social Media
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MEDIA RICHNESS: The degree of acoustic, visual, and personal contact between 2 communication partners- face to face communications, say, being higher in media richness than telephone or email communications – The higher the media richness ad quality of the presentation, the greater the social influence that communication partners have on each other’s behavior SELF-DISCLOSURE: In any type of social media interaction, individuals want to make a positive impression to achieve a favorable image with others. This favorable image is affected by the degree of self-disclosure about a person’s thoughts, feelings, likes, and dislikes – where greater self- disclosure is likely to increase one’s influence on those reached
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Classifying social media specifically
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Blogs:- Flickr&Tumblr are high in self disclosure and low in media richness Wikipedia: Low on both factors LinkedIn: High in self disclosure YouTube &World of War Craft: Media Richness
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Comparing Social & Traditional Media 1. Ability to reach both large and niche (specialized) audiences:
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1. Ability to reach both large and niche (specialized) audiences: Both kinds of media can be designed to reach either. However, good execution is critical, and audience size is not guaranteed
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Comparing Social & Traditional Media 2. Expense and Access:
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Messages and ads in traditional media (newspapers or TV) generally are expensive to produce and have restricted access by individuals – also traditional media are typically owned privately or by the gov. – In contrast, messages on social media networks are generally accessible everywhere, and can be produced cheaply
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Comparing Social & Traditional Media 3. Training and number of people involved
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Traditional media typically requires specialized skills and training and often involves teams of people Social media: sending messages only requires limited skills so practically anyone can post a message that includes words and images
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Comparing Social & Traditional Media 4. Time to delivery
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Traditional: media can involve days or even months of continuing effort to deliver the communication and time lags can be extensive Social media: can post virtually instantaneously
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Comparing Social & Traditional Media 5. Permanence
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Traditional: once created, cannot be altered – once a magazine article is printed and distributed Social media: can alter it instantly, or delete
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Comparing Social & Traditional Media 6. Credibility and social authority
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Individuals and organizations can establish themselves as an “expert” in their given field, thereby becoming an “influencer” in that field example: The New York Times has immense credibility among newspaper media – with social media: a sender often simply begins to participate in the “conversation” hoping that the quality of the message will establish credibility with the receivers, thereby enhancing the sender’s influence
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Comparing Social & Traditional Media 7. Privacy
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Traditional: recipients completely anonymous – TV or radio Subscribers to newspapers or magazines are somewhat less so because publishers can sell subscription lists to advertisers Social media: Have much less privacy and anonymity. When they breach expectations for privacy, unethical outsiders can access users names
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What are some ways brand managers use Facebook to converse with a brand’s fans?
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A: A brand manager can create awareness for a product service or brand by creating a Facebook page for it. Done well, this is a magnet for feedback. – FB allows brand managers to request a range of user data like addresses and phone numbers – with the users permission – Can also use FBs “sponsored stories” to buy and republish Facebook messages about their brands – The marketing challenge for a Facebook page is to post and create the content that will generate the best response. Most ads for a brand on Facebook site will appear on the right hand side of the page – An ADVANTAGE: of a Facebook ad for a brand is that it can migrate into FB conversations among friends – If a brand manager uses FB’s News Feed, which appears on every users home page, it can be used to highlight profile changes, identify upcoming events regarding the brand, and provide links so users can participate in the activity
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YouTube Brand Manager
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Small businesses will now be able to buy and manage key words for their video ads on YouTube. – can see the number of views, and how many times linked to your website, what key words are driving user visits
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Social Media and the Strategic Marketing Process
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Traditional: like magazine or Tv usually use one-way communication from sender to receiver who the marketer hopes will buy the product advertised – a little word of mouth chatting may occur among the “passive receivers” but communications generally end with the receiver Social Media: Deliberately seek to ensure that the message does not end with an individual receiver. Instead the goal is to reach “active receivers”, those who will become “influentials” and be “delighted” with the brand advertised – These will then become “evangelists” who will send messages to their online friends and then back to the advertiser about the joys of using the brand
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Personal Selling
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The 2 way flow of communication between a buyer and a seller, often in a face to face encounter, designed to influence a person’s or group’s purchase decision – Over the phone, video conference, internet enabled links
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Personal Selling – Sales Management
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Planning the selling program and implementing and evaluating the personal selling effort of the firm OBJECTIVES: Organizing sales force, recruiting, selecting, training, and compensating salespeople, evaluate performance of salespeople
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Personal Selling in Marketing
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1. Salespeople are the critical link between the firm and its customers. This role requires that salespeople match company interests with consumer needs to satisfy both parties in the exchange process 2. Salespeople ARE the company in a consumer’s eyes. They represent what a company is or attempts to be and are often the only personal contact a customer has with the company – IBM’s chief executive officer calls the company 40,000 strong salesforce “our face to the client” 3. Personal selling may play a dominant role in a firms marketing program. – Typically arises when a firm uses a push marketing strategy Example: Avon pays almost 40% of its total sales dollars to selling expenses – same with pharmaceutical
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Relationship Selling
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The practice of building ties to customers based on a salesperson’s attention and commitment to customer needs over time 1. Focuses on long term customers 2. Xerox, Motorola, American Express 3. Emphasizes the importance of learning about customer needs and wants and tailoring solutions to customer problems as a means to customer value creation
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Personal Selling: Order Taking – Undergo extensive training so that they can better assist callers with their purchase decisions
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A salesperson who processes routine orders or reorders for products that were already sold by the company. PRIMARY JOB: To preserve the ongoing relationship with existing customers and to maintain sales – They do little selling in a conventional sense. They engage in modest problem solving with customers – They often represent products that have few options, such as magazine subscriptions and highly standardized industrial products
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Order Taking: Outside Order Takers
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Visit customers and replenish inventory stocks of resellers, such as retailers or wholesalers example: Frito Lay sales people call on supermarkets connivence stores, and other establishments to ensure that the company’s line of snack products is in adequate supply – They also assist in arranging displays
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Order taking: Inside order takers – Order clerks or salesclerk
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Answer simple questions, take orders, and complete transactions with customers. – employed by companies that use INBOUND TELEMARKETING: the use of toll-free telephone #s that customers can call to obtain information about products or services and make purchases Inbound: good for “customer service” firms such as dell – In business 2 business settings, order taking arises in straight rebuy situations
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Order Taking: Order Getter – High degree of creativity and customer empathy – Selling complex or technical products – many options (need sales training)
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A salesperson who sells in a conventional sense and identifies prospective customers, provides customers with info, persuades customers to buy, closes sales, and follows up on customer use of a product or service – Can be inside (car salesperson) or outside (xerox salesperson)
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Order getter: In modified re-buy, or new-buy, or business to business selling
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An order getter acts as a problem solver who identifies how a particular product may satisfy a customers need ex. Purchase life insurance: An agent can provide a mix of plans to satisfy a buyers needs depending on income, stage of the family’s life cycle, and investment objectives
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Order Getter: Amount of time spent working
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Often work 50 hours per week – 41% of an average field sales representative’s time is actually spent selling by phone or face to face – Another 24% is devoted to generating leads and researching customer accounts – The remainder of a sales representative’s workweek is occupied by administrative tasks, meetings, service calls, travel, and training
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Order Getter: By outside salespeople
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Expensive The average cost of a single field sales call on a business customer is about $350, factoring the salesperson’s compensation, benefits, and travel and entertainment expenses – this cost illustrates why OUT BOUND telemarketing is popular
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Outbound Telemarketing
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The practice of using the telephone rather than personal visits to contact current and prospective customers – A much lower cost per sales call ($20-25) and little or no field expenses account for its widespread appeal
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Personal Selling Process
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Sales activities occurring before and after the sale itself SIX STAGES 1. Prospecting 2. Pre-approach 3. Approach 4. Presentation 5. Close 6. Follow-up
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Personal Selling Process 1. Prospecting
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OBJECTIVE: Search for and qualify prospects COMMENTS: Start of the selling process, prospects produced through advertising, referrals, and cold canvassing
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Personal Selling Process 2. Pre-approach
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OBJECTIVE: Gather information and decide how to approach the prospect COMMENTS: Information sources include personal observation. other customers, and own sales people *CRUCIAL: Knowing how the prospect prefers to be approached and what the prospect is looking for in product or service
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Personal Selling Process 3. Approach
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OBJECTIVE: Gain a prospect’s attention, stimulate interest, and make transition to the presentation COMMENTS: First impression is critical; gain attention and interest through reference to common acquaintances, a referral, or product demonstration
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Personal Selling Process 4. Presentation
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OBJECTIVE: Begin converting a prospect into a customer by creating a desire for the product or service COMMENTS: Different presentation formats are possible; -however, involving the customer in the product or service through attention to particular needs is critical – important to deal professionally and ethically with prospect skepticism, indifference, or objections
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Personal Selling Process 5. Close
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OBJECTIVE: Obtain a purchase commitment from the prospect and create a customer COMMENTS: Salesperson asks for the purchase; different approaches include the trial close and assumptive close
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Personal Selling Process 6. Follow-up
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OBJECTIVE: Ensure that the customer is satisfied with the product or service COMMENTS: Resolve any problems faced by the customer to ensure customer satisfaction and future sales possibilities
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Leads and Prospects: Are generated using several forces
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Example: Advertising may contain a coupon or a toll-free number to generate leads – Some companies use exhibits at trade shows, professional meetings, and conferences to generate leads or prospects – Staffed by salespeople: These exhibits are used to attract the attention of prospective buyers and spread information – Others use the internet for generating leads and prospects, – e-mail, social networks (LinkedIn), to connect to indivs. and companies that may be interested in their products or services
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Generate Leads: Cold canvassing “cold calling”
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Either in person or by telephone Means that a salesperson may open a directory, pick a name, and contact that individual or business – Despite its high refusal rate, cold canvassing can be successful *Is often criticized and is now regulated -75% think of it as an intrusion on their privacy – 72% find it distasteful
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The telephone consumer protection act 1991
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Contains provisions to curb abuses such as early morning or late night calling – additional federal regulations require more complete disclosure regarding solicitations, it allows consumer to avoid being called at any time through the “do not call registry” – imposes fines for violations – Direct TV was fined $5.3 million for making thousands of calls
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Pre-approach example: Merrill Lynch
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Will need information on a prospect’s discretionary income, investment objectives, and preference for discussing brokerage services over the telephone or in person – If they want it formal or informal – Preferable times to call “failure to learn as much as possible about the prospect is unprofessional and the ruin of a sales call”
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Presentation Stage: Tailoring a solution for a Customer’s needs *THREE major presentation formats
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At the core of the order-getting selling process, and its objective is to convert a prospect into a customer by creating a desire for the product or service 1. Stimulus- response 2. Formula selling 3. Need- Satisfaction
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Presentation stage 1. Stimulus- Response Format *salesperson dominates the conversation
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Assumes that given the appropriate stimulus by a salesperson, the prospect will buy The salesperson tries one appeal after another, hoping to hit the right button. example: A counter clerk at McDonalds is using this approach when he or she asks whether you’d like “french fries or a dessert” with your meal – This is what is called SUGGESTIVE SELLING – Not useful for many formal situations
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Presentation stage 2. Formula Selling Format *salesperson dominates the conversation
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Is based on the view that a presentation consists of information that must be provided in an accurate, thorough, and step by step manner to inform the prospect CANNED SALES PRESENTATION: a memorized, standardized message conveyed to every prospect – used frequently by firms in telephone and door to door selling of consumer products – Treats everyone the same, regardless of differences in needs or preferences for certain kinds of information
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Canned Sales presentation
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BENEFICIAL: When the differences between prospects are unknown or with novice salespeople who are less knowledgeable about the product and selling process than experienced salespeople LACKS: flexibility, and spontaneity and, does not provide for feedback from the prospective buyer (a critical component in the communication process and the start of a relationship)
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Presentation stage 3. Need-satisfaction presentation – Emphasizes problem solving and customer solutions
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Emphasizes probing and listening by the salesperson to identify the needs and interests of prospective buyers -Once these are identified, the salesperson tailors the presentation to the prospect and highlights product benefits that may be valued by the prospect. – Emphasizes problem solving and customer solutions, is the most consistent with the marketing concept and relationship building
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Need-satisfaction presentation Adaptive Selling
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A need-satisfaction sales presentation style that involves adjusting the presentation to fit the selling situation ex. Knowing when to offer solutions and when to ask for more information. – Sales research and practice WHO USE: Brokerage and insurance firms, AT&T, and Gillette
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Need-satisfaction presentation Consultive selling *Business 2 business selling
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A need-satisfaction sales presentation style that focuses on problem identification, where the salesperson serves as an expert on a problem recognition and resolution – Problem solution options are not simply a matter of choosing from an array of existing products or services, rather novel (haven’t had before) solutions often arise, thereby creating unique value for the consumer – Business 2 business – IBM, DHL, -Xerox “Our business is no longer about selling boxes. It’s about selling digital, network based information management solutions, this requires a highly customized and consultive selling process”
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Handling Objections
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Objections: are excuses for not making a purchase commitment or decision – Some objections are valid and are based on characteristics of the product or service or price. – However, many reflect prospect skepticism or indifference – Whether valid or not, experienced salespeople know that objections do not put an end to the presentation. Rather, techniques can be used to deal with them in a courteous, ethical, and professional manner
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Objections how to handle: Six techniques 1. Acknowledge and convert the objection 2. Postpone 3. Agree and neutralize 4. Accept the objection 5. Denial 6. Ignore the objection
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1. Acknowledge and convert the objection – using the objection as a reason for buying. “The price is too high” A: “Yes, the price is high b/c we use the finest materials. Let me show you…” 2. Postpone – When the objection will be dealt with later in the presentation “I’m going to address that point shortly, I think my answer would make better sense then” 3. Agree and neutralize: Salesperson agrees, and then shows that it is unimportant “That’s true. Others have said the same. But, they thought that the issue was outweighed by other benefits” 4. Accept the objection – Sometimes the objection is valid. Let the prospect express such views, probe for the reason behind it, and attempt to stimulate further discussion on the objection 5. Denial – When a prospect’s objection is based on misinformation and clearly untrue, it is wise to meet the objection head on with a firm denial 6. Ignore the objection – The is used when it appears that the objection is a stalling mechanism or is clearly not important to the prospect
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What does a solution really mean?
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1. Meets their requirements 2. Is designed to uniquely solve their problem 3. Can be implemented 4. Ensures follow up
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What does putting the customer into customer solutions have to do with selling?
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Three things stand out 1. Considerable time and effort is necessary to fully understand a specific customers requirements 2. Effective customer solutions are based on relationships among sellers and buyers 3. Consultive selling is central to providing novel solutions for customers, thereby creating value for them
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Prospect
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A potential customer
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Closing stage *MOST IMPORTANT
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Involves obtaining a purchase commitment from the prospect. This stage is the most important and the most difficult because the salesperson must determine when the prospect is ready to buy – Telltale signals indicating a readiness to buy include: Body language, statements “This equipment should reduce our maintenance costs” and questions “when could we expect delivery”
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Closing techniques
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1. Trial Close: Involves asking the prospect to make a decision on some aspect of the purchase “Would you prefer the blue or grey model?” 2. Assumptive Close: Asking the prospect to consider choices concerning delivery, warranty, or financing terms under the assumption that a sale has been finalized 3. Urgency Close: Is used to commit the prospect quickly by making reference to the timeliness of the purchase “The low interest financing ends next week” or “That is the last model we have in stock” *Only used if accurately reflect the situation, otherwise unethical
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Follow up: Solidifying the relationship * Today’s satisfied customers become tomorrows qualified prospects or referrals
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Follow up with courtship and marriage, by observing “The sale merely consummates the courtship. Then the marriage begins: How good the marriage is depends on how well the relationship is managed *Includes making making certain the customer’s purchase has been properly delivered and installed and difficulties experienced with the use of the item are addressed – Research shows: That the cost and effort to obtain repeat sales from a satisfied customer is roughly half of the necessary to gain a sale from a new customer
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Sales Plan Formulation: Setting Direction Sales Plan
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Sales Plan: A statement describing what is to be achieved and where and how the selling effort of salespeople is to be deployed 1. Set Objectives 2. Organizing the salesforce 3. Developing account management policies
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Sales Plan 1. Setting objective
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Specifies what is to be achieved Objectives are set for the total salesforce and for each salesperson Selling objectives: Can be -Output related and focus on dollar or unit sales volume, number of new customers added, and profit -Input related: and emphasize the # of sales calls and selling expenses – Output and Input related are used for the salesforce a a whole and for each salesperson – A 3rd objective: Behaviorally related: Is specific for each salesperson and includes his or her product knowledge, customer service satisfaction ratings, and selling and communication skills *Should be precise and measurable and specify the time period over which they are to be achieved. They serve as performance standards for the evaluation of the salesforce, and the 3rd function of sales management
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Sales Management Process Organizing the Salesforce 1. Geography
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1. Geography: 2. Customer 3. Product or Service Geography: Is the simplest organization, where the US, or the globe, is first divided into regions and each region is divided into districts or territories -Salespeople are assigned to each district with defined geographical boundaries and call on all customers and represent all products sold by the company ADVANTAGE: It can minimize travel time, expenses, and duplication of selling effort HOWEVER:, if a firm’s products or customers require specialized knowledge, then a geographical structure is not suitable
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Sales Management Process 2. Customer
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A customer sales organization is used when different types of buyers have different needs. In practice, this means that a different salesforce calls on each separate type of buyer or marketing channel example: Kodak recently switched from a geographical to a marketing channel structure with different sales teams serving specific retail channels: Mass merchandisers, photo specialty outlets, and food and drug stores – The rationale for this approach is that more effective, specialized customer support and knowledge are provided to buyers HOWEVER: This structure often leads to higher administrative costs and some duplication of selling effort, b/c two separate sales forces are used to represent the same product
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Sales Management Process 3. Product or Service
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Is used when specific knowledge is required to sell a product example: Maxim Steel has a salesforce that sells drilling pipe to oil companies and another that sells specialty steel products to manufacturers ADVANTAGE: That salespeople can develop expertise with technical characteristics, applications, and selling methods associated with a particular product or family of products HOWEVER: This structure also produces high administrative costs and duplication of selling effort because two company sales people may call on the same customer
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Major Account Management also called: Key account management
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The practice of using team selling to focus on important customers so as to build mutually beneficial, long-term, cooperative relationships, also called key account management INVOLVES: teams of sales, service, and often technical personnel who work with purchasing, manufacturing, engineering, logistics, and financial executives in customer organizations – Often assigns company personnel to a customer account, results in “customer specialists” who can provide exceptional service – Proctor and Gamble, Walmart, Home Depot all use this
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Cross-Functional Team Selling
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-75% of companies employ cross-functional teams of professionals to work with customers to improve relationships, find better ways of doing things, and create and sustain value for their customers – Xerox and IBM use this, -Proctor & Gamble uses teams of marketing, sales, advertising, computer systems, and supply chain personnel to work with its major retailers, *This has become a necessity as customers seek greater value for their money “Today, it’s not just about getting the best price, but getting the best value- and there are a lot of pieces to value.
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Account Management Policies
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Policies that specify who salespeople should contact, what kinds of selling, and customer service activities should be engaged in, and how these activities should be carried out – Might state which individual in a buying organization should be contacted, the amount of sales and service effort that different customers should recieve, and the kinds of information salespeople should collect before or during a sales call EXAMPLE: Shows how different accounts or customers can be grouped according to level of opportunity and the firm’s competitive sales position. – When specific account names are placed in each cell, salespeople see clearly which accounts should be contacted, with what level of selling and service activity, and how to deal with them. High-high/high-low (account opportunity level): High frequencies of personal sales calls and increased time spent on a call High-low(compet. position of sales organization): Lower call frequencies Low-low: Contacted through telemarketing or direct mail rather than in person example: Union Pacific Railroad put it’s 20,000 smallest accounts on a telemarketing program. – survey indicated that 84% rated them “very effective” compared to 67% before the switch
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Sales Plan Implementation: Putting the plan into action
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The sales plan is put into practice through the tasks associated with sales plan implementation “Doing things right” *Whereas sales plan formation: focuses on “doing the right things” 1. Salesforce recruitment and selection 2. Salesforce training 3. Salesforce motivation and compensation
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Sales Plan Implementation: Putting the plan into action 1. Salesforce recruitment and selection
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It entails finding people who match the type of sales position required by a firm. – Recruitment and selection practices will differ greatly between order-taking and and order-getting sales. Therefore, it begins with a carefully crafted job analysis and job description followed by a statement of job qualifications JOB ANALYSIS: Is a study of a particular sales position, including how the job is to be performed and the tasks that help make up the job. Information from a job analysis is used to write a JOB DESCRIPTION: A written document that describes job relationships and requirements that characterize each sales position It explains: 1. To whom a salesperson reports 2. How a salesperson interacts with other company personnel 3. The customers to be called on 4. The specific activities to be carried out 5. the physical and mental demands of the job 6. The types of products and services to be sold
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Sales Management
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Effective recruitment and selection of salespeople
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1. Salesforce recruitment and selection: Statement of job qualifications
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Including the: Natural ability to do something, knowledge, skills, and a variety of behavioral characteristics
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Qualifications for order-getting sales positions
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Often mirror the expectations of buyers: 1. Imagination and problem solving 2. Strong work ethic 3. Honesty 4. Intimate product knowledge 5. Effective communication and listening skills 6. Attentiveness reflected in responsiveness to buyer needs and customer loyalty and follow-up Evaluate salespeople: Interviews, reference checks, background information
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Salesforce training
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Is an on-going process that affects both new and seasoned salespeople – covers much more than selling practices example: IBM (who sell consulting and various info technology services), take at least 2 weeks of in-class and internet based training on both consultive selling and the technical aspects of the business *On-the job training is the most popular type: Followed by individual instruction, taught by experienced salespeople – formal classes, seminars taught by sales trainers and computer based training are also popular
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Salesforce Motivation and Compensation MOTIVATION
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*Will not be successful if people are not motivated. To be motivated need: 1. A clear job description 2. Effective sales management practices 3. A personal need for achievement 4. Proper compensation, incentives, or rewards will produce a motivated person
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Compensation in sales force
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*Close attention must be given to how salespeople are financially rewarded for their efforts Three plans: 1. Straight Salary 2. Straight commission 3. A combination of salary and commission Straight Salary: Is paid a fixed fee per week, month or year Straight commission: Earnings are directly tied to the sales or profit generated Combination: Contains a specified salary plus a commission on sales or profit generated
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Straight salary
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ADVANTAGE: Easy to administer and gives management a large measure of control over how salespeople allocate their efforts HOWEVER: It provides little incentive to expand sales volume – It is used when salespeople engage in many non-selling activities such as account or customer servicing
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Straight Commission
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Provides the maximum amount of selling incentive HOWEVER: Can discourage sales people from providing customer service – Common when non-selling activities are minimal – most preferred by salespeople and attempt to build on the advantages of salary and commission plans while reducing potential shortcomings of each – A majority of companies use this today
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Nonmonetary rewards
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Given to salespeople for meeting or exceeding objectives Include: Trips, honor societies, distinguished salesperson awards, and letters of commendation example: Pink Cadillacs and Buicks and jewelry given by Mary Kay cosmetics
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Salesforce Evaluation: Measuring Results
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It is at this point that salespeople are accessed as to whether sales objectives were met and account management policies were followed – Both quantitive and behavioral measures are used to tap different selling dimensions
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Measuring results: Quantitative
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Are based on input and output related objectives set forth in sales plans INPUT related: Focus on the actual activities performed by sales people such as those involving sales calls, selling expenses, and account management policies – The # of sales calls made, and the # of reports submitted to superiors are frequently used input measures OUTPUT related: often appear in a sales quota SALES QUOTA: Contains specific goals assigned to a salesperson, sales team, branch sales office, or sales district for a stated time period – Dollar or unit sales volume, last year/current sales ratio, sales of specific products, new accounts generated, and profit achieved are typical goals – The time period can range from 1 month to 1 year
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Measuring Results: Behavioral Evaluation
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Assessment of: Attitude, attention to customers, product knowledge, selling and communication skills, appearance, and professional demeanor – Even though these assessments are sometimes subjective, they are frequently considered and in fact subjective, they are frequently considered and in fact, inevitable, in salesperson evaluation WHY?- These factors are often important determinants of quantitative outcomes – About 60% of U.S. companies now include customer satisfaction as a behavioral measure of salesperson performance example: At Microsoft, 1/2 of a salesperson’s commission is dependent on customer satisfaction ratings – Use marketing dashboards to track salesperson performance for evaluation purposes
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Salesforce Automation and Customer Relationship Management
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– Undergone a technological revolution, this has transformed the sales function in many companies and made the promise of customer relationship management a reality
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Salesforce Automation (SFA)
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The use of technology to make the sales function more effective and efficient – Applies to a wide range of activities, including each stage in the personal selling process and management of the salesforce itself Examples: Computer hardware and software for account analysis, time management, order processing follow up, sales presentations, proposal generation, and product and sales training *Each application is designed to ease administrative tasks and free time for salespeople to be with customers building relationships, designing solutions, and providing service
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Salesforce technology
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Technology has become an integral part of field selling. Today, most companies supply their field salespeople with laptop computers Example: Godiva Chocolate uses their laptops to process orders, plan time allocations, forecast sales, and communicate with Godiva’s personnel and customers *In a store: Can calculate the order cost, transmit the order, and obtain a delivery date within seconds – Provide interactive presentations: Effective for sales presentations and training its salespeople
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Salesforce communication
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Technology has changed the way that salespeople communicate with customers, other salespeople and sales support personnel and management *greatest = internet HP Enterprise Services: – Download client material, marketing content, account information, technical papers, and competitive profiles – Training classes can take anywhere ADVANTAGE: Boost selling productivity, improve customer relationships, and decrease selling costs
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17. Lesson 1: Discuss the nature and scope of personal selling and sales management in marketing
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A: Personal selling involves the TWO WAY FLOW OF COMMUNICATION: Between a buyer and a seller, often in a face to face encounter • Designed to influence a person’s or group’s purchase decision Sales management: Involves planning the selling program and implementing and controlling the personal selling effort of the firm • The scope of selling and sales management is apparent in 3 ways 1. Virtually every occupation that involves customer contact has an element of personal selling 2. Selling plays a significant role in a company’s overall marketing effort. Salespeople occupy a boundary position between buyers and sellers; they ARE the company to many buyers and account for a major cost of marketing in a variety of industries; and they can create value for customers 3. Through relationship selling, salespeople play a central role in tailoring solutions to customer problems as a means to customer value creation
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17. Lesson 2: Identify the different types of personal selling
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TWO TYPES EXIST: (A): Order taking (B): Order Getting Each type differs from the other in terms of actual selling done and the amount of creativity required to perform the sales tasks (A): Order Takers: Process routine orders or reorders for products that were already sold by the company. They generally do little selling in a conventional sense and engage in only modest problem solving with customers (B): Order Getters: Sell in a conventional sense and identify prospective customer, provide customers with information, persuade customers to buy, close sales, and follow up on customers use of a product or service • Involves a high degree of creativity* and customer empathy* and is typically required for selling complex or technical products with many options
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17. Lesson 3: Explain the stages in the personal selling process:
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A: The personal selling process consists of 6 stages 1. Prospecting: Involves the search for and qualification of potential customers 2. Pre-approach: Obtaining further information on the prospect and deciding the best method of approach 3. approach: The initial meeting between the sales person and prospect 4. Presentation: Converting a prospect into a customer by creating a desire for the product or service 5. close: Obtaining a purchase commitment from the prospect 6. Follow up: Making certain that the customer’s purchase has been properly delivered and installed and difficulties experienced with the use of the item are addressed
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17. Lesson 4: Describe the major functions of sales management
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Sales management consists of 3 interrelated functions 1. Sales plan formula: Setting objectives, organizing the sales force, and developing account management forces 2. Sales plan implementation: Sales force recruitment, selection, training, motivation, and compensation 3. Evaluation of the sales force: Focuses on quantitative assessments of sales performance and behavioral measures such as customer satisfaction that are linked to selling objectives and account management policies
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1. What is Personal selling?
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A: Personal selling involves the TWO WAY flow of communication between a buyer and a seller, often in a face to face encounter, designed to influence a person’s or group’s purchase decision
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2. What is involved in sales management?
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A: Sales management involves planning the selling program and implementing and evaluating the personal selling effort of the firm
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3. What is the principle difference between an order taker and an order getter?
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An order taker: processes routine orders or re-orders for products that were ALREADY SOLD by the company An order getter: Sells in a conventional sense and identifies prospective customers, provides customers with info, persuades customers to buy, closes sale, and follows up on customers use of a product or service
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4. What % of order-getting salesperson’s time is spent selling?
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41%
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5. What are the 6 stages of the personal selling process?
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A: 1. Prospecting 2. Pre-approach 3. Approach 4. Presentation 5. Close 6. Follow up
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6. Which presentation format is most consistent with the marketing concept? Why?
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A: The need-satisfaction presentation format: Emphasizes probing and listening by the salesperson to identify the needs and interests of prospective buyers and then tailors the presentation to the prospect and highlights product benefits, which is consistent with the marketing concept and its focus on relationship building
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7. What are the 3 types of selling objectives?
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1. Out-put related(dollars, or unit sales, new customers, profit) 2. Input-related (sales calls, selling expenses 3. Behavioral related (product knowledge, customer service, selling and communication skills)
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8. What are 3 factors that are used to structure sales organizations?
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A: Geography, customer product/ service
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Traditional Marketplace:
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Here buyers and sellers engage in face 2 face exchange relationships in a material environment -Characterized by physical facilities (stores and offices) and mostly tangible objects
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Marketspace
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An internet-enabled digital environment characterized by face to face exchange relationships and electronic images ad offerings
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Creating customer value in Marketspace
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Possibilities for customer value creation are greater in the digital marketspace than in the physical Marketspace *Consider time and place utility. In a marketspace direct on demand info is possible from marketers ANYWHERE, ANYTIME – WHY? b/c operating hours and geographical constraints don’t exist in a marketspace – possession utility is accelerated FORM UTILITY: is the best marketspace utility for marketers. internet can let them tell marketers exactly what they want
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Creating Individuality and Customer relationships in Marketspace
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To occur companies need: to interact with their customers by listening and responding to their needs – Must also treat customers as individuals and empower them to 1. Influence the timing and extent of the buyer-seller interaction 2. Have a say in the kind of products and services they buy, the information they receive, and in some cases the prices they pay
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Interactive Marketing
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Involves 2 way buyer – seller electronic communication in a computer mediated environment in which the buyer controls the kind and amount of information received from the seller – Is characterized by sophisticated choiceboard and personalization systems that transform information supplied by customers into customized responses to their individual needs
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Choiceboard *Style own shoe at Reebok – Marketer initiated
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An interactive, internet enabled system that allows individual customers to design their own products and services by answering a few questions and choosing from a menu of product or service attributes, prices, and delivery options Example: Dell you can design your own computer, style own shoes at Reebok, assemble own investment portfolios *Choiceboards collect precise information about the preferences and behavior of individual buyers, a company becomes more knowledgeable about a customer and better able to anticipate and fulfill that customer’s needs
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Collaborative Filtering *Choiceboard expanded – Marketer initiated
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A process that automatically groups people with similar buying intentions, preferences, and behaviors, and predicts future purchases Example Amazon.com “Customers who bought this item also bought…” – Gives marketers the ability to make a dead on sales recommendation to a buyer in- real time
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Personalization – Buyer initiated (consumer) – Aspect: Willingness to have tailored communications brought to his or her attention
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The consumer initiated practice of generating content on a marketer’s website that is custom tailored to an individuals specific needs and preferences Example: Yahoo.com allows users to create personalized “My Yahoo” pages, including specific stock quotes, weather conditions in any city in the world, and local TV schedules *In turn, Yahoo can use the buyer profile data entered when users register at the site to tailor e-mail messages, advertising, and content to the individual – post a happy birthday greeting on their birthday
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Permission Marketing
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Asking for a consent (opt-in) to receive e-mail and advertising based on personal data supplied by the consumer *Proven to build and maintain relationships Three rules: 1. Make sure opt-in customers receive only information that is relevant and meaningful to them 2. Their customers are given the option to opt-in or opt-out or change the kind, amount, or timing of information sent to them 3. Their customers are assured that their name or buyer profile data will not be sold or shared with others -this assurance is important because a majority of adult internet users express concern about the privacy of their personal information
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Creating an online customer experience
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A continuing challenge for companies is the design and execution of marketing programs that capitalize on the unique customer value-creation capabilities of internet technology – realize that applying this for time, place, form, and possession utility is just a starting point for creating a meaningful marketspace presence
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Customer experience
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The sum total of the interactions that a consumer has with a company’s website, from the initial look at a home page, through the entire purchase decision process SEVEN ELEMENTS: Context, content, community, customization, communication, connection, and commerce
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Customer experience Context
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A website’s aesthetic (beauty) appeal and functional look and feel reflected in site layout and visual design – FOCUS: Largely on the company’s offering, be its products, services, or information Example: Functional website: priceline.com Aesthetic website: Revlon *Context attempts to convey the core consumer benefit provided by the company’s offerings
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Customer experience Content
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Applies to all digital information on a website, including the presentation form – text, video, audio, graphics, -Content quality and presentation along with context dimensions combine to engage a website visitor and provide a platform for the 5 remaining design elements
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Customer experience Customization
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Is the ability of a sight to modify itself to, or be modified by, each individual user Examples: My Ebay, Yahoo!
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Customer experience Connection
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The network of linkages between a company’s site and other sites – These links are embedded in the website, appear as highlighted words, a picture, or graphic, and allow a user to effortlessly visit other sites with a mouse click *Is a major design element for informational sites such as The New York Times – can access the book review section and link to Barnes and Noble to order a book, or browse related titles w.o ever visiting a store
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Customer experience Communication
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The dialogue that unfolds between the website and it’s users consumers- particularly those who have registered at a website – expect that communciation to be interactive and individualized in real time much like a personal conversation – Some websites now enable a user to talk directly with a customer representative while shopping the site Example: 2/3 of the sales through Dell.com involve human sales representatives
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Customer experience Community
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Is popular because it has shown to enhance customer experience and build favorable buyer-seller relationships Examples: the Pampers Village by Proctor & Gamble, to the Harley Owners Group sponsored by Harley-Davidson
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Customer experience Commerce
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The website’s ability to conduct sales transactions for products and services with a mouse click. Online transactions are quick and simple in well-designed websites *Most websites do not include every design element. Although all have context and content, they differ in the use of the remaining. WHY?- Websites have different purposes Commerce: Only if emphasize the actual sale of products and services Communication: Advertising and promotion
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“stickiness” *Car websites especially
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The amount of time per month visitors spend on their website (minutes) – is used to gauge customer experience Average visits per visitor per month X Average time spent per visit (Minutes) To increase: look at web advertising, links to automobile manufacturer corporate websites, and broader print and electronic media advertising
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Who are online consumers?
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The subsegment of all Internet users who employ technology to research products and services and make purchases – As a group, are equally likely to be women and men and tend to be better educated, younger, and more affluent in the US population – This makes them an attractive market -20% of online consumers who spend $1,000 plus per year online, Account for 87% of total consumer online sales – Women tend to purchase more products and services online than men
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What online consumers buy?
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*Although research has been documented the most frequently purchased products and services bought online, marketers also need to know WHY these items are popular in the digital marketspace SIX GENERAL CATEGORIES: account for over 80% of online consumer buying today and for the foreseeable future 1. Items for which the product information is an important part of the purchase decision, but pre-purchase trial is not critical – items such as: computers, computer accessories, and consumer electronics fall into this category – so do books
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What online consumers buy? 2. Audio or video demonstration is important
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example: DVDs
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What online consumers buy? 3. Items that can be delivered digitally
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examples: Computer software, music, video, and electronic ticketing – Apple.com, Itunes, Netflix.com, Ticketmaster.com
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What online consumers buy? 4. Food, beverages, and gifts
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What online consumers buy? 5. Items that are regularly purchased, and where connivence is very important
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Example: Many consumer packaged goods, such as grocery products, personal care items, and office products
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What online consumers buy? 6. Highly standardized products and services for which information about the price is important
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Examples: Certain kinds of home improvement products, small appliances, casual apparel, and toys
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Today’s Internet Mom
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– 95% of mothers with children under 18 years old will be online regularly by 2015 – Typically 38 years old, college educated, married – usually on between 5am-noon – 75% of moms go online with a specific task or goal in mind (not surfers) – Average of 6.9 hours per week online connecting with family and friends – 84% stay connected through e-mail and 69% through social networks – Primary look for besides their Childs health: 1. Discounts, shopping deals 2. Cooking, baking, diet info 3. family activities, entertainment, travel 4. Holiday planning, activities, 5. Beauty style suggestions 6. Financial planning *Helps them make lives more manageable so they can spend more time with their families
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Why consumer shop and buy online
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SIX THINGS 1. Convenience 2. Choice 3. Customization 4. Cost 5. Control
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Why consumer shop and buy online Convenience
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Can visit the website to scan and order from among thousands of displayed products without traffic, finding a parking space, walking through long aisles, and standing in store checkout lines *Must be easy to locate and navigate on website
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BOTS
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Electric shopping agents or robots that comb websites to compare prices, and product or service features
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8 second rule
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Customers will abandon their efforts to enter and navigate a website if download time exceeds 8 seconds – The more clicks and pauses required to access information, or to make purchases, the more likely it is a consumer will exit a website
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Why consumer shop and buy online Choice
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1. Exists in the product or service selection offered to consumers – Buyers desiring selection can avail themselves of numerous websites for almost anything they want ex. online buyers of consumer electronics can shop individual manufacturers such as Bose.com – showcases more than 1,000 products each week 2. The interactive capabilities invite customers to engage in an electronic dialogue with marketers for the purpose of making informed choices – choice assistants – success of Zappos.com – The company offers an online chat room that enables prospective buyers to ask questions and receive answers in real time – Carefully designed search capabilities permit consumers to review products by brand and particular items
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Why consumer shop and buy online Customization
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– makes possible a highly interactive and individualized information and exchange environment for shoppers and buyers Customerization: The growing practice of not only customizing a product or service, but also personalizing the market and overall shopping and buying interaction for each customer – Seeks to do more than offer consumers the right product, at the right time, and at the right price – It combines choiceboard and personalization systems to expand the exchange environment beyond a transaction *and makes shopping and buying an enjoyable, personal experience
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Why consumer shop and buy online Communication
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THREE forms: 1. Marketer-to-consumer e-mail notification 2. Consumer-to-marketer buying and service requests 3. Consumer-to-consumer chat rooms and instant messaging, plus social network – FB, Twitter *Increases consumer convenience, reduce info search costs, and make choice assistance and customization possible Example: Blogs
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Web Communities
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Websites that allow people to congregate and exchange views on topics of common interest example: Coca-Cola has MyCoke.com and iVillage.com
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Spam
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Electronic Junk E-mail *Has prompted many websites to institute policies and procedures to prevent spammers from spamming their subscribers 2004: CAN-SPAM (controlling the assault of Non-solicited porn and marketing) became effective and restricts info collection and unsolicited e-mail promotions on the internet
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“Buzz”
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Term for word of mouth “If you have an unhappy on the internet, he doesn’t tell 6 friends, he tells 6,000!” Influential for: cars, toys, electronics, pharmaceuticals, health and beauty products, and health care services – Create buzz through viral marketing
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Viral Marketing 1. Marketers can embed a message in the product or service so that customers hardly realize they are passing it along
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An internet enabled promotional strategy that encourages users to forward marketer- initiated messages to others via email, social network, and blogs 1. Marketers can embed a message in the product or service so that customers hardly realize they are passing it along example: Hotmail, which was one of the 1st companies to provide free internet based email. Each outgoing email would say :Get your private, free email from MSN Hotmail” – Today, Windows live Hotmail has more than 350 million users
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Viral Marketing 2. Can make the website so compelling that viewers want to share it with others
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2. Can make the website so compelling that viewers want to share it with others Careerbuilders.com has done this with it’s Monk email site, which allows users to send personalized, private-themed e-cards for all occasions – More than 100 million Monk emails have been sent since 2006
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Viral Marketing 3. Offer Incentives
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3. Offer Incentives – Discounts, sweepstakes, free merchandise Example: Burger king asked: “What do you love more, your friend or the whopper?” In it’s Whopper sacrifice campaign FB users were asked to “unfriend” 10 people in exchange for a free burger
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Why consumer shop and buy online Cost
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Can be purchased at the same price or even cheaper online than in stores Lower prices also result from Internet-enabled software which permits DYNAMIC PRICING: The practice of changing prices for products and services in real time in response to supply and demand conditions – Is a form of flexible pricing and can often result in lower prices TYPICALLY USED: For pricing, time sensitive items such as airline seats, scarce collectible items, and out of date items – last years computer models – Ticketmaster uses this in response to demand *Cost of time spent, and hassle is reduced
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Why consumer shop and buy online Control
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The control it gives them over their shopping and purchase decision process – Use the internet to seek info, evaluate alternatives, and make purchase decisions on their own time, terms, and conditions Example: Studies show: that shoppers spend an average of 5 hours researching cars online before setting foot in a showroom
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Cookies – control
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Computer files that a marketer can download onto the computer of an online shopper who visits the marketer’s website – expressed product preferences, personal data, passwords, and credit card numbers – they also make behavioral targeting possible CONTROVERSY: summed up by an authority on technology “At best cookies make for a user friendly web world: like a sales clerk who knows who you are. At worst, cookies represent a potential loss of privacy”
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Behavioral Targeting – control
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Uses info provided by cookies for directing online shoppers whose behavioral profiles suggest they would be interested in such advertising
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When and where online consumers can Buy
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About 80% of online retail sales occur Monday -Friday – The busiest shopping day is Wednesday -35% of retail store sales are registered on the weekend – Saturday is the most popular shopping day – M-F online shopping and buying often occur during normal work hours – some 30% of online consumers say they visit websites from their place of work – why sales so high during the work week FAVORITE: During the workweek: Event tickets, auctions, online periodical subscriptions, flowers and gifts, consumer electronics, and travel BROWSED AT HOME: Health and beauty items, apparel and accessories, and music and video
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Internet privacy and safety
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Pew Internet & American Life Project Poll: 76% of online consumers had privacy concerns/ security FTC: 46% of fraud complaints are internet related, costing consumers $560 million – also millions lost through identity theft – Should the gov. pass internet safety laws? – 70% favor – TRUSTe awards its trademark to companies who comply with standards of privacy protection and disclosure
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Cross-Channel Shopper
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An online consumer who researches products online and then purchases them at a retail store -51% of US online consumers are cross-channel shoppers – represents both genders, and are only slightly younger than online consumers – they tend to have a higher education, earn significantly more money, and are more likely to embrace technology in their lives than online consumers who do not cross shop *They want the right product at the right time and don’t want to wait several day for delivery 1. The desire to compare products among different retailers 2. The need for more information than is available in stores 3. The ease of comparing their options without having to trek to multiple retail locations *Retail Sales revenue from cross-channel shoppers is estimated to be about 5 times greater than online retail stores
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Implementing Multichannel marketing *70% of US online retail sales are made by companies that practice multichannel marketing – register over 90% of the sales in 2015
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Multichannel marketing: Is the blending of different communication and delivery channels that are mutually reinforcing in -attracting, retaining, and building relationships with consumers who shop and buy in the traditional marketplace and online – the cross channel shopper Websites = multichannel because they can serve as: 1. Transactional websites 2. Promotional websites
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Multichannel marketing with Transactional Websites
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Transactional websites: Are essentially electronic storefronts FOCUS: Primarily on converting an online browser into an online catalog, or in-store buyer using the website design elements described before MOST COMMON: Store and catalog retailers, and direct selling companies, such as – Tupperware Example Victorias Secret: 60% of its website customers are men, most of whom generate new sales volume for the company LESS USE BY: Manufacturers of consumer products – reoccurring issue for manufacturers: is the threat of CHANNEL CONFLICT, and the potential of harming relationships with their retailing intermediaries
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Example of Manufacturer using Transactional Website
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Callaway golf company Markets its golf merchandise on callawaygolf.com but, relies on a retailer close to the buyer to fill the order – the retailer: Ships the order to the buyer within 24 hours and is credited with the sale The majority of retailers that sell Callway merchandise participate in this relationship, including retail chains – Dick’s sporting goods “This arrangement allows us to satisfy the consumer but to do so in a way that didn’t violate our relationship with our loyal trade partners – 15,000 outlets that sell our products” *They list stores on their website where there merchandise can be bought *MOST: Manufacturers using multichannel marketing channels employ websites for advertising and promotion purposes
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Multichannel Marketing with promotional Websites
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Promotional websites: Have a very different purpose than transactional. – They advertise and promote a company’s products and services and provide info on how items can be used and where they can be purchased – they often engage the visitor in an interactive experience involving games, contests, quizzes, with electronic coupons and other gifts as prizes Example: Procter & Gamble maintains separate websites for many of its leading brands including: Scope getclose.com and Pampers Pampers.com – 70% of Hyundai leads come from it’s website – 80% of people who visit clinique.com later purchase one of their products at a department store -37% on non-clinique buyers make a Clinique purchase after visiting the website
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18. Lesson 1: Describe what interactive marketing is and how it creates customer value, customer relationships, and customer experiences
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A: Involves a TWO WAY BUYER SELLER electronic communication in a computer mediated environment in which they buyer controls the kind and amount of information received from the seller • It creates customer value: By providing time, place, form, and possession utility for consumers • Customer relationships are created and sustained through 2 unique capabilities of internet technology: Interactivity and individuality • From an interactive marketing perspective: Customer experience represents the sum total of interactions that a customer has with a company’s website, from the initial look at a home page through the entire purchase process o Companies produce a customer experience through 7 website design elements: Context, content, community, customization, communication, connection, and commerce
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18. Lesson 2: Explain why certain types of products and services are particularly suited for interactive marketing
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A: One category consists of items for which product information is an important part of the purchase decision, but pre-purchase trial is not necessarily critical 2. Involves items for which audio or video demonstration is important 3. Contains items that can be digitally delivered 4. Unique items 5. Items that are regularly purchased and where convenience is very important 6. Highly standardized items for which information about the price is important
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18. Lesson 3: Describe why consumers shop and buy online and how marketers influence online purchasing behavior (SIX C’S)
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SIX: Convenience, choice, customization, communication, cost, and control Marketers have capitalized on these reasons through a variety of means • For example: They provide choice assistance using CHOICEBOARD: and collaborative filtering technology, which also provides opportunities for customization • Company hosted web communities and viral marketing practices capitalize on the communications dimensions of Internet-enabled technologies • Dynamic pricing provides real-time responses to supply and demand conditions, often resulting in lower-prices to consumers • Permission marketing is popular given consumer interest in control
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18. Lesson 4: Define Cross-Channel shoppers and the role of transactional and promotional websites in reaching these shoppers
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A cross channel shopper is: An online consumer who researches products online and then purchases them at a retail store • These shoppers are reached through multichannel marketing • Websites play a multifaceted role in multichannel marketing because they can serve as either a delivery or a communication channel • In this regard, transactional websites are essentially electronic storefronts, they focus on converting an online browser into an online catalog or in-store buyer using the website design elements described earlier On the other hand, promotional websites: serve to advertise and promote a company’s products and services and provide information on how items can be used and where they can be purchased
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1. The consumer-initiated practice of generating content on a marketer’s website that is custom tailored to an individuals specific needs and preferences
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Personalization
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2. Companies produce a customer experience through what 7 website design elements?
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A: The 7 website design elements are: Context, content, community, customization, communication, connection, and commerce
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3. What is viral marketing?
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A: Viral marketing is an internet enabled promotional strategy which encourages individuals to forward marketer-initiated messages to others via email
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4. What are the 6 reasons consumers prefer to shop and buy online?
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A: Convenience, choice, customization, communication, cost, and control
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5. A cross-channel shopper is
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A: An online consumer who reaches product online and then purchases them in a retail store
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6. Channel conflict between manufacturers and retailers is likely to arise when manufacturers use what websites?
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A: Transactional
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Role of Pepsi brand manager
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Composes title, copy, and images of the ad – Specifies the web address to which its ads should link based on the brand’s social media marketing goals INCREASE AWARENESS: And build a fan base, might link the Pepsi website or its FB, Twitter ENCOURAGE SALES: Must link the ad to a coupon code, a specific product on the Pepsi website, or other promotional offer Then defines the characteristics of the one or more market segments she wants to reach on the social media – Starts with: Demographic characteristics like geographic region, sex, age range, and education – Then adds factors like: Relationship status and user interests
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Role of Social Media
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Fb generates revenue by: Selling ads that appear along the right hand section throughout the website – the ads sell directly to it’s advertisers in both cost per click, and cost per thousand metrics Mid 2012: FB charged Pepsi $8 every 1,000 times their sponsored story ads were viewed or loaded on their main news feed – So $1 million bought 125 million views or impressions for FB, advertisers – Question: How many of these impressions led to a sale, or if traditional media are better? Example: $1 million gets an advertiser two 30 second TV commercials on “American Idol” or 6.5 full-page color ads in People Magazine *FB will determine the most effective placement for the ads based on the demographic and other user criteria Ex. Pepsi with “Live for Now” Pop Culture – easy to share on social media
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Measuring the Results of Social Media Programs
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Divided into: 1. Those linked to inputs or costs 2. Those tied to the outputs or revenues resulting from social media IDEAL: for both conventional and social media is –> One that ties actual sales revenues to the cost of the ad or other promotion – with the explosion in the growth of social media, marketing and brand managers are being challenged to connect the cost of these new social network promotions to the sales they generate ‘ RESULT: Has been an emergence of many new performance measures, often requiring a whole new language
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Performance measures linked to inputs or costs
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1. A measure tied only to costs (the cost per thousand measure) CPM 2. A measure linked more closely to sales revenue generated from the social media (Cost per click) CPC 3. Cost per action CPA
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Performance measures linked to inputs or costs 1. Cost per thousand (CPM)
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“I will pay 0.50 for every 1,000 times this ad loads, up to $100 per month” PROVIDES: small websites that sell ads directly, (may be using a 3rd party service) USES IT: Advertisers who want to “build awareness” ADVANTAGE: Simple to use DISADVANTAGE: Impressions don’t always lead to sales
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Performance measures linked to inputs or costs 2. Cost Per click (CPC)
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“I will pay $1.00 for every visitor who clicks on this ad and goes from your website to mine” PROVIDES: Most websites use this method – executed by a 3rd party like Google/AdWords USES IT: Advertisers who want to pay for success, but may not be able to track sales from advertisement to purchase ADVANTAGE: Only pay for a visitor who has expressed an interest in my ad DISADVANTAGE: Ads may not display if they are a poor fit for the viewing audience – Can be social Media – FaceBook
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Performance measures linked to inputs or costs 3. Cost per action (CPA)
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“I will pay $5 for every purchase that originated from an ad on your site” PROVIDES: Usually executed through 3rd parties; Google, AdSense USES IT: Sophisticated advertisers who want to pay for success ADVANTAGE: Only pay for what works DISADVANTAGE: Similar to CPC but *harder to track and more expensive per action
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Performance Measures Linked to Outputs or Revenues
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1. FANS: The # of people who have opted in to a brand’s messages through a social media platform 2. SHARE OF VOICE: The brand’s share or % of all the online social media chatter related to, say, its product category or topic 3. PAGE VIEWS: The # of times a FB page is loaded in a given time period 4. VISITORS: The total # of visitors to a FB page in a given time period – if someone visits 3 times in one day then is counted 3 times 5. UNIQUE VISITORS: The total # of times that a unique visits a FB page in a given time period *If they visit 3 times then only counted once 6. AVERAGE PAGE VIEWS PER VISITOR: Page views divided by visitors in a given time period 7. INTERACTION RATE: The # of people who interact with a post (like, make a comment, etc.) divided by the total # of people seeing the post 8. CLICK-THROUGH RATE (CTR): % of recipients who have clicked on a link on the page to visit a specific site 9. FAN SOURCE: Where a social network following comes from: With fans coming from a friend being more valuable than those coming from an ad * Sales revenue from social media do not show up in these measures * Much easier to electronically track the social network users who click on a website or ad than it is to track consumers who receive traditional media
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Specialized Focus for other Social Networks
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ADVANTAGES: of social media is that communities can form around ideas and commonalities, regardless of the physical location of their members -Smaller networks like Pinterest may be more successful for some products and services, although FB and YouTube may garner the majority of traffic – Many of the items that people pin, you can buy online as well. It has become a major sales driver for retailers and manufacturers -BRAND MANAGER: Can post images of their company’s products on their Pinterest board and link them to their website
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Greenpeace vs. Nestles Kit Kat: A Nightmarish Meltdown
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A: Greenpeace created its “killer” campaign against Nestlé’s Kit Kat candy bar because it used palm oil from palm trees in Indonesia- ones that were not only cut down, but also were home to orangutans In March 2010, Nestle reported that 18% of its palm oil was “non-sustainable” – meaning its suppliers were cutting down rainforests in places such as Indonesia w/o enough concern for the environmental harm or equivalent remediation – Home to orangutans – Nestle said that it’s goal was to be using “100% sustainable palm oil by 2015” GREENPEACE ACTIONS: – They are a social and environmental advocacy organization, decided that Nestles act was moving too slowly. – Launched a “shock campaign” against them “Caught Red Handed, how Nestle’s use of Palm Oil is having a devastating impact on rainforests, the climate and orangutans” – Posted a very graphic video on YouTube – People started leaving complaints on Kit Kat’s FB page – Nestle received 200,000 emails 1-800 customer service was jammed by protest calls EFFECTS: Increased online attention and animosity (strong hostile) – At Nestles request, Greenpeace removed the video, – But views on other websites blew up even more in the next 24 hours -Green Peace had “bran-jacked” them – Nestle’s management capitulated, it took steps to drop palm oil suppliers linked to deforestation – *in effect recognizing the power of social media
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Social Media Lessons for Brand Managers
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Rather than being aggressive, brand managers should respond to a crisis situation with transparency and an approachable tone – Also, a brand manager facing a crisis situation should communicate directly with “key-influencers”, emphasizing the company’s concern about the issue, and communicate often – Using: Blogs, Twitter, FB, YouTube CRITICAL: To have an emergency social media plan for the brand in place, BEFORE and after an actual crisis erupts
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The Convergence of Real and Digital Worlds
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What scientists call “Mirror world” or “Smart Systems” Example: Placing your order for jeans or providing your demographic characteristics and personal interests when joining FB: Involves converting real world decisions or personal characteristics into a digital format that starts to approximate your own personal world *This is a result of an unlimited rapid increase of interlinked smartphones, tablet devices, sensors, special identification tags, databases, algorithms, apps
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“Smart System”
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Is a computer based network that triggers actions by sensing changes in the real or digital world 1. The convergence of the real and digital worlds 2. How this convergence links social media to marketing actions 3. Where all of this may be headed in your future
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Apps (Mobile apps or applications)
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Are small, downloadable software programs that run on smart phones and tablet devices *When Apple launched its iPhone in 2007 it didn’t think apps would be very important… WRONG! – By mid 2012 it’s app store was selling and offering over 650,000 apps – Google Android: Has over 500,000 apps – Many apps are video games SIX TOP APPS: Draw something, words with friends, tiny wings, pandora, temple run, hanging with friends * Product life cycle of video game apps is often 2-3 years or less – Draw something was downloaded 35 million times in the first 6 weeks of it’s existence – in 2012 it created Words With Friends –> #1 free app for apple and paid for Android
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*Elements Causing the Convergence of Real and Digital Worlds
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– Sensors for smart systems: digital coupons – Quick Response codes (QR Codes), bar codes, RFID’s – Search algorithms and models – GPS – Social Media – Internet and wireless networks – Smartphones, tablets, cameras – Databases on consumers, inventories – Application software (apps)
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*Elements Causing the Convergence of Real and Digital Worlds –> Typical marketing actions
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– Qualify leads and target online ads using personal data and “likes” from social media users – Use bar codes, QR codes, and RFID scans to inform customers and take orders – Show ads, prices, and locations – Offer digital coupons and discounts for location check-ins and loyalty programs – Tailor digital messages to vending machines customers using smart system scans of faces
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Mobile Marketing: Tightening Links to Marketing actions THREE smartphone apps
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Convergence of the real and digital world led to: an increase in the use of mobile marketing – which is any marketing activity conducted through several internet networks to which consumers are continuously connected using a personal mobile device Apps: 1. Price-comparison searches: Scans product bar codes and research 500,000 stores, synchronizing searches between your computer and smart phone 2. Location-based promotions: Use your GPS-enabled smartphone for location check-ins to receive discounts at stores such as JC Penny Loyalty programs: Win Loyalty points for walking into stores like Target or Macy’s and receive discounts for them *These apps have all been exploding in recent years – causing problems for brick and mortar retailers (store front)
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Where to Now?
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Mobile Marketing: Is its unique ability to empower users by connecting with them individually and continuously – learning about their likes and personal characteristics and sharing this information with online friends and (often) marketers selling products FUTURE: – New, creative ways to personalize media connections – An increasing number of purchases made with a fob ( a small device with embedded software) or a smartphone linked to a credit card – An enhanced focus on socially networked “communities” like neighborhoods, loyal users of a brand, and alumni associations – groups with people with common interests – An increased emphasis on measuring the marketing return on investment for social media initiatives
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Tesco Home Plus – South Korean Supermarket
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Shoppers use their smartphones to scan images on the wall of a subway station to buy grocery products while waiting for their train – They use the smartphone app to pay for it, and the groceries are delivered to their door right after they get home
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Futuristic example of Digital Convergence
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A vending machine scans your face to identify your age, sex and changes its display (this already exists in Japan) – Gives you a quantity discount for buying two of your favorite candy bars (It knows your FB likes) – While showing an electronic dinner coupon for one nearby between 7-9 pm that evening
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“Smart Systems” impact on Entrepreneurship and Small Businesses
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This is b/c, unlike huge cash investment needed to start a brick and mortar business, today’s social media enable new businesses to begin life on a financial shoestring Example: Launch of Bitter Girls is example of a low cost start up – “My Better Self” A blog to help teenage girls boost self-confidence
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The Global Marketing Reach of Social Media
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Computers, TV, the internet, smartphones, tablet devices, and social media have changed forever the way businesses around the world market products and services – T-mobile promotion illustrates the impact of social media on global marketing strategies – T-Mobile and it’s global satellite- TV service were trying to reach consumers in the Czech republic – so they decided to feature Chuck Norris, the US action movie hero from 1980s *His movies were hits among Czechs from children to adults – Surpassed T-Mobiles expectations – had to add extra people to answer customer service and FB questions – More than 40,000 people became fans of it on FB – 4.5 million people viewed the ads on YouTube – Neighvoring poles and Slovaks loved it too
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PRODUCT ADVERTISEMENTS Take 3 forms:
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Pioneering (informational) Competitive (persuasive) Reminder
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Pioneering advertising
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Used in the introductory stage of the product lifestyle, PIONEERING advertisements tell people what a product is, what it can do, and where it can be found THE KEY OBJECTIVE: (such as Campbell’s new slow kettle soups) is to inform the target market Have been found to be: interesting, convincing, and effective Advertising that promotes a specific brand’s features and benefits is
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Competitive Advertising
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COMPETITIVE. The OBJECTIVE: of these messages is to persuade the target market to select the firms brand rather than its competitor. An increasingly common form of competitive advertising is COMPARATIVE ADVERTISING: which shows one brands strengths relative to those of its competitors The 1&1 ad for example highlights the competitive advantages of their domain registration service compared to GoDaddy and network Solutions Studies indicate that comparative ads attract more attention and increase the perceived quality of the advertisers brand, although the impact may vary by product type, message content, and audience gender Firms that use comparative advertising need market research to provide legal support for their claims
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REMINDER ADVERTISING:
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is used to reinforce previous knowledge of a product The Red Bull as shown reminds consumers about a special event – in this case Valentines day Reminder advertising is good for products that have achieved a WELL RECOGNIZED POSITION and are in the same phase of their product life cycle REINFORCEMENT: Is used to assure current users that they made the right choice Ex. In Dial Soap ad “Aren’t you glad you use Dial. Don’t you wish everybody did?”
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INSTITUTIONAL ADVERTISEMENTS:
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OBJECTIVE: Is to build goodwill or an image for an organization rather than promote a specific good or service Has been used by companies such as: Texaco, Pfizer, and IBM to build confidence in the Company’s name. Often this form of advertising is used to support the public relations plan or counter adverse publicity Four alternative forms of institutional advertisements are often used: ADVOCACY, PIONEERING, COMPETITIVE, REMINDER
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ADOVCACY ADVERTISEMENTS:
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State the position of a company on an issue Chevron’s “We Agree” campaign places ads stating its position on issues such as renewable energy, growth, and jobs, and community development Another form of advocacy is used when organizations make a request related to a particular action or behavior, such as a request by the American Red Cross for blood donations
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PIONEERING INSTITUTIONAL ADVERTISEMENTS:
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Like the pioneering ads, for products discussed earlier, are used for announcements about what a company is, what it can do, or where it is located Recent Bayer ads stating “We cure more headaches than you think” are intended to inform consumers that the company produces many products in addition to aspirin Bridgestone uses pioneering institutional ads in its “One Team One Planet” campaign to inform people about its rubber tree farms, tire recycling’s, and environmentally friendly factories
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COMPETITIVE INSTITUTIONAL advertisements:
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promote the advantages of one product class over another and are used in markets where different product classes compete for the same buyers Americas Milk processors and dairy farmers use their “Got Milk?” campaign to increase demand for milk as it competes against other beverages REMINDER INSTITUTIONAL advertisements: Like the product form, simply bring the company’s name to the attention of the target market again The army branch of the U.S. Military sponsors a campaign to remind potential recruits of the opportunities in the Army
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DEVELOPING THE ADVERTISING PROGRAM IDENTIFYING THE TARGET AUDIENCE
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To develop an effective advertising program, advertisers must identify the target audience. All aspects of an advertising program are likely to be influenced by the characteristics of the prospective consumer. Understanding the lifestyles, attitudes, and demographics of the target market is essential Dr. Pepper for example promoted its reduced calorie soda, Dr. Pepper Ten, to 25-34 year old men, -while Kraft targeted 20-30 year old women for its greek yogurt Athenos *Both campaigns emphasized advertising techniques that matched the audience – a mobile “man cave” parked at baseball fields and car shows for men, and a Facebook page with nutritional information for women
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IDENTIFYING THE TARGET AUDIENCE Example: Gatorade, Nike
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Similarly, the placement of the advertising depends on the audience When Gatorade introduced G Series Fit is placed ads in E! and MapMyFitness.com to reach “fitness” athletes who exercise regularly Even scheduling can depend on the audience -Nike schedules advertising, sponsorships, deals, and endorsements to correspond with the Olympics to appeal to “hard-core” athletes
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IDENTIFYING THE TARGET AUDIENCE: Eliminate Bias
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To eliminate possible bias, that might result from subjective judgements about some population segments, the Federal Communications Commission suggests ***that advertising program decisions be based on market research about the target audience
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SPECIFY ADVERTISING OBJECTIVES
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The guidelines for setting promotion objectives described in chapter 14 also apply to setting advertising objectives. This step helps advertisers with other choices in the promotion decision process, such as selecting media, and evaluating a campaign
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Advertising with an objective of creating awareness:
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for example, would be better matched with a magazine than a directory such as the Yellow Pages The association of Magazine Media believes objectives are so important that it offers an award each year to the campaign that demonstrates “Both creative excellence and effectiveness in meeting campaign objectives” -Similarly, the Advertising, Research Foundation sponsors an Advertising Effectiveness Forum to “advance the practice of measuring and evaluating the effectiveness of advertising and marketing communication”
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SETTING THE ADVERTISING BUDGET: Super Bowl
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During the 1990 Super Bowl, it cost companies $700,000 to place a 30 second ad By 2012 the cost of putting a 30 second ad was $3.5 million **The reason for the escalating cost is the growth in the number of viewers: 111 million people, or about 50% of the viewing public, watch the game In addition, the audience is attractive to advertisers because research indicates it is equally split between men and women and many viewers to look forward to watching the ads and then using Social Media to share comments with friends -More than 50% of the Super Bowl XLVI ads mentioned a website, about 15% included prompts for Facebook or Twitter, and 10% included QR codes or text messages
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Super Bowl TV ads effects:
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The ads are effective too: The most recent commercials generated 985,000 social media comments, including 10,000 tweets per second during the last 3 minutes of the game As a result, the Super Bowl attracts many advertisers such as Anheuser-Busch, Chrysler, M&M, Coca-Cola, E*Trade, careerbuilder.com The consumer generated Doritos ad of a grandmother who used a sling-wearing baby to snatch a bag of Doritos was rated the highest and won 1$ million
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DESIGNING THE ADVERTISEMENT
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An advertising message usually focuses on the key benefits of the product that are important in a progressive buyer in the making trial and adoption decisions. The message depends on the general form or appeal used in the ad and the actual words included in the ad
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MESSAGE CONTENT:
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Most advertising messages are made up of both informational and persuasion elements Information and persuasive content can be combined in the form of an appeal to provide a basic reason for the consumer to act Although the marketer can use many different types of appeals, common advertising appeals include, fear, sex, and humor
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ADVERTISING APPEALS – 3
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Fear Sex Humor
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FEAR APPEALS:
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suggest to the consumer that he or she can avoid some negative experience through the purchase and use of a product or service, a change in behavior, or a reduction in the use of a product Ex. Auto safety ads that depict an accident or an injury, political candidate endorsements that warn against the rise of the other, unpopular ideologies, or social cause ads warning of the serious consequences of drug and alcohol use When using fear appeals, the advertiser must be sure that the appeal is strong enough to get the audience’s attention and concern, but not so strong that it will lead them to tune out the message In fact, research on antismoking ads indicates that stressing the severity of long-term health risks may actually enhance smoking’s allure among youth
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SEX APPEALS:
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Suggest to the audience that the product will increase the attractiveness of the user Sex appeals can be found in almost any product category, from automobiles to toothpaste The contemporary women’s clothing store Bebe, for example designs its advertising to “attract customers lifestyle” Studies indicate that sex appeals increase attention by helping advertising stand out in todays cluttered media environment Unfortunately, sexual content does not always lead to changes in recall, recognition, or purchase intent Experts suggest that sexual content is most effective when there is a strong fit between the use of a sex appeal ad and the image and positioning of the brand, as seen in the candies ad “Candies girls think every aisle is a runway”
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HUMOROUS APPEALS:
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Imply either directly or subtly that the product is more fun or exciting than competitors offerings As with fear and sex appeals, the use of humor is widespread in advertising and can be found in many product categories You may have smiled at the popular Geico ads that use caveman, a gecko, a stack of money with eyes named kash, and a Rod Sterling look alike actor. These ads use humor to differentiate the company from its competitors The ads have been so popular that geico has created viral videos and posted them on video-sharing websites such as you-tube, where millions of viewers watch them within days You may have a favorite humorous ad character, such as the energizer bunny, the AFLAC duck, or Travelocity’s gnome IMPROVES: the effectiveness of their ads, although some studies suggest that humor wears out quickly, losing the interest of consumers PROBLEM: with humorous appeals is that their effectiveness may vary across cultures if used in a global campaign
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CREATING THE ACTUAL MESSAGE
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Copywriters are responsible for creating the text portion of the messages in advertisements. Translating the copywriters ideas into an actual advertisement is a complex process Designing quality artwork, layout and production for advertisements is costly and highly time consuming The American Association of Advertising Agencies reports that high quality TV commercials typically costs about $324,000 to produce a 30 second ad One reason for the high cost is that as companies have developed global campaigns, the need to shoot commercials in several locations has increased. Audi recently filmed commercials in Germany, Australia, and Morocco, Actors are also expensive: Compensation for a typical TV ad is $16,000 Advertising agency Wieden and kennedy was recently designated Advertising Age magazines US Agency of the year for it’s creative approach to bringing “brands closer to consumer”
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CREATING THE ACTUAL MESSAGE: Examples from brands
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Ex. Of the agency’s approach include “Imported from Detroit” for Chrysler “The man your Man Could Smell like” for Old spice “Curve ID” For Levis They were also recognized for their use of digital and social media The old spice television campaign for example, was followed by an online “response” campaign that generated 40 million views in one week, a 2,700 percent increase in Twitter followers, an 800 % increase in FB fan interaction, a 300% increase in traffic to Oldspice.com, and a 107% increase in sales
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SELECTING THE RIGHT MEDIA
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Every Advertiser must decide where to place it’s advertisements. The alternatives are the advertising media: The means by which the message is communicated to the target audience Newspapers, magazines, radio, and TV are examples of advertising media This decision on media selection is related to the target audience, type of product, nature of the message, campaign objectives, the available budget, and the costs of alternative media In deciding where to place advertisements, a company has several media to choose from and a number of alternatives, or vehicles, within each medium USE A MIX: of media forms and vehicles to maximize the exposure of the message to the target audience while at the same time minimizing costs *These 2 conflicting goals are of central importance to media planning Because advertisers try to maximize the # of individuals in the target market exposed to the message, they must be concerned with reach
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REACH: Because advertisers try to maximize the # of individuals in the target market exposed to the message, they must be concerned with reach
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is the # of different people or households exposed to an advertisement The exact definition of reach sometimes varies among alternative media Newspapers of use reach to describe their radio stations, in contrast, or describe their reach using the term RATING: the % of households in a market that are tuned to a particular radio or TV station In general, advertisers try to maximize reach in their target market at the lowest cost
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FREQUENCY
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– this is because consumers often do not pay close attention to advertising messages, some of which contain large amounts of relatively complex information The average # of times a person in the target audience is exposed to a message or advertisement Like reach, greater frequency is generally viewed as desirable. Studies indicate that with repeated exposure to advertisements consumers respond more favorably to brand extensions When reach (expressed as a % of the total market) is multiplied by frequency, an advertiser will obtain a commonly used reference # called
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GROSS RATING POINTS (GRPs):
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To obtain the appropriate # of GRP’s to achieve an advertising campaigns objectives, the media planner MUST BALANCE REACH AND FREQUENCY The balance will also be influenced by cost
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COST PER THOUSAND (CPM):
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refers to the cost of reaching 1,000 individuals or households with the advertising message in a given medium (M is the Roman numeral for 1,000)
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What is the best way to reach 1,000? Viewers
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Cost per thousand impressions = Advertising cost / impressions generated in 1,000s Your challenge: is to determine the most efficient use of your advertising budget Your findings: Bloomberg Business week magazine: Cost of ad: $156,800 Audience size: 980,000 Cost per 1,000 impressions: $160 USA Today Newspaper: Cost of ad: $242,600 Audience size: 1,981,016 Cost per 1,000 impressions: $122 Super Bowl TV: Cost of Ad: $3,500,000 Audience size: 111,300,000 Cost per 1,000 impressions: $31 Your Action: You see that there is a large variation in the cost of reaching 1,000 potential customers (CPM) and also in the absolute cost of the advertising Although advertising during the Super Bowl would cost the smallest amount at $31, it also has the largest absolute cost! Your next step will be to consider other factors such as your total available budget, the profiles of the audience each alternative reaches, and whether the type of message you want to deliver is better communicated in print or on TV.
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DIFFERENT MEDIA ALTERNATIVES TELEVISION
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TV is a valuable medium because it communicates with sight, sound, and motion Print advertisements alone could never give you the sense of a sports car accelerating from a stop or cornering at a high speed Network TV reaches 96.7% of all households – 114.7 million more than any other advertising option There are also many opportunities for out of home TV viewing as TVs can be seen in many bars, hotels, offices, airports, and on college campuses TVs Major disadvantage: COST The price of a prime time, 30 second ad can range from $502,900 to run on American Idol $203,078 on Greys Anatomy Because of these high charges, many advertisers choose less expensive “spot” ads, which run between programs, or 15 second ads rather than the traditional 30 or 60 second length Aprox. 25% of all TV ads are now 15 seconds long In addition, there is some indication that advertisers are shifting their interest to live events rather than programs that might be watched on a DVR days later
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TV ADVANTAGE VS> DISADVANTAGE
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ADVANTAGES: Reaches extremely large audience, uses picture, print, sound and motion for effect, can target specific audiences DISADVANTAGES: High cost to prepare the ads, short exposure time and perishable message, difficult to convey complex info
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RADIO ADVANTAGE VS> DISADVANTAGE
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ADVANTAGES: Low cost, can target specific local audiences, ads can be placed quickly, can use sound ,humor, and intimacy effectively DISADVANTAGES: No visual element, short exposure time and perishable message, difficult to convey complex info
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MAGAZINES ADVANTAGE VS> DISADVANTAGE
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ADVANTAGES: Can target specific audiences, high-quality color, long life of ad, ads can be clipped and saved, can convey complex info DISADVANTAGES: Long-time needed to place ad, relatively high cost, competes for attention with other magazine features
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NEWSPAPERS: ADVANTAGE VS> DISADVANTAGE
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ADVANTAGES: Excellent coverage of local markets, ads can be placed and changed quickly, ads can be saved, quick consumer response, low cost DISADVANTAGES: Ads compete for attention with other newspaper features, short lifespan, poor color
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YELLOW PAGES: ADVANTAGE VS> DISADVANTAGE
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ADVANTAGES: Excellent coverage of geographic segments, long use period, available 24/7 DISADVANTAGES: Proliferation of competitive directories in many-markets, difficult to keep up to date
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INTERNET ADVANTAGE VS> DISADVANTAGE
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ADVANTAGES: Video and audio capabilities, animation can capture attention, ads can be interactive and link to advertiser DISADVANTAGES: Animation and interactivity require large files and more time to load, effectiveness is still uncertain
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OUTDDOR ADVANTAGE VS> DISADVANTAGE
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ADVANTAGES: Low cost, local market focus, high visibility, opportunity for repeat exposures DISADVANTAGES: Message must be short and simple, low selectivity of audience, criticized as a traffic hazard
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DIRET MAIL ADVANTAGE VS> DISADVANTAGE
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ADVANTAGES: High selectivity of audience, can contain complex info and personalized messages, high-quality graphics DISADVANTAGES: High-cost per contact, poor image (junk mail)
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TV ads: Wasted Coverage
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WASTED COVERAGE: having people outside the market for the product see the ad The cost and wasted coverage problems of TV can be reduced through specialized cable and satellite channels than on the broadcast networks Is often less expensive on cable and satellite channels than on broadcast networks According to the national Cable and Telecommunications Association, there are 565 cable networks such as ESPN, MTV, Lifetime, Oxygen, the Food Network, the History channel etc. that reach very narrowly defined audiences
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TV ads: “Tagging”
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Cable networks are also “tagging” their programs to allow advertisers to place ads in scenes with particular themes Advertisements for Golf equipment, for example might be placed after a program that shows characters playing golf
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INFOMERCIALS:
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Are program length (30 mins) ads that take an educational approach to communication with potential customers You may remember seeing products such as the Magic Bullet, Thigh Master, and OxiClean They are increasingly popular because the slow economy has reduced the average cost of a 30-minute block of TV to an average price of $425 RADIO The US has more than 24,700 radio stations. These stations consist of AM, FM, HD and Internet stations
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THE MAJOR ADVANTAGE OF RADIO:
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is that it is a segmented medium. For example, the Farm radio Network, the Family Life Network, Business talk radio, and the performance Racing network and all listened to by different market segments The large # of media options today has reduced the amount of time spent listening to radio The average 18-24 year old still listens to radio an average of 12.5 hours per week, making radio an important medium for business with college students as a target market
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DISADVANTAGE OF RADIO
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It has limited use for products that must be seen Another problem is the ease with tuning out of a commercial by switching stations Satellite and Sirius XM offers more than 135 commercial free digital, coast to coast channels to consumers for a monthly fee. It is also a medium which competes for peoples attention as they do other activities such as driving, working, or relaxing Radio listening time reaches its peak during the morning drive time 7-8am, remains high during the day, and then begins to decline in the afternoon, (after 4pm).
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MAGAZINES
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MAGAZINES They have become a very specialized medium primarily because there are currently more than 16,500 magazines Some can be read entirely electronically, or have even dropped their print format The marketing advantage of this medium is the great # of special interest publications that appeal to narrowly defined segments. Runners read Runners world, Sailors buy yachting, children subscribe to Sports Illustrated for kids. More than 829 publications focus on travel, 128 are dedicated to interior design and decoration, and 140 are related to golf Each magazine’s readers often represent a unique profile Perceived to be more “trustworthy” “inspirational” and engaging than other media The cost of advertising in national magazines is a disadvantage, but many national publications publish regional and even metro editions, including Latin American, Canadian, Asian, South Pacific, European and U.S. Editions
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OTHER MEDIA
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OTHER MEDIA As traditional media have become more expensive and cultured, advertisers have been attracted to a variety of nontraditional advertising options called: Out of home advertising or Place-based media Messages are placed in locations that attract a specific target audience such as airports, doctors offices, health clubs, and theaters, grocery stores, store fronts and even the bathrooms of bars, restaurants and night clubs Soon there will advertising on video screens on gas pumps, ATMS, elevators, and increasingly it will be interactive The $2.5 billion industry has attracted advertisers such as AT&T ad JCPenny which use out of home advertising to reach mobile professionals in health clubs, airports, and hotels Research suggests that creative use of out of home advertising such as pre-show theater ads, enhances consumer recall of the ads
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SCHEDULING THE ADVERTISING – 3 things
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There is no correct schedule to advertise a product, but 3 factors must be considered 1. Buyer Turnover 2. Purchase Frequency 3. Forgetting Rate
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BUYER TURNOVER:
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Which is how often new buyers enter the market to buy the product – The higher the buyer turnover, the greater amount of advertising required*
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PURCHASE FREQUENCY:
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The more frequently the product is purchased, the less repetition is required.
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FORGETTING RATE:
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The speed at which buyers forget the brand if the advertising is not seen
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1. CONTINUOUS (STEADY) SCHEDULE:
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When seasonal factors are unimportant, advertising is run at a continuous or steady schedule throughout the year
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2. FLIGHTING (INTERMEDIATE) SCHEDULE:
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Periods of advertising are scheduled between periods of no advertising to reflect seasonal demand
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3. PULSE (BURST) SCHEDULE:
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A flighting schedule is combined with a continuous schedule because of increases in demand, heavy periods of promotion, or the intro of the new product
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FOR EXAMPLE: Scheduling advertising
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Products such as breakfast cereal shave a stable demand throughout the year and would typically use a continuous schedule of advertising – In contrast, products such as snow skis and suntan lotions have seasonal demand periods
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– Pulse advertising:
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Some products such as toys or automobiles require this to facilitate sales throughout the year and during special periods of increased demand (such as holidays or new car introductions) — Some evidence suggests that pulsing schedules are superior to other advertising strategies *In addition, research indicates the effectiveness of a particular ad wears out quickly, and therefore, many alternative forms of a commercial may be more effective
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Executing the advertising program
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involves pretesting the advertising copy and actually carrying out the advertising program – John Wanamaker, the founder of Wanamaker’s Department Store in Philadelphia, remarked “I know half of my advertising is wasted, but I don’t know what half” By evaluating the advertising efforts, marketers can try to ensure that their advertising expenditures are not wasted *Evaluation is done usually at 2 separate times: Before and after the advertisements are run in the actual campaign. Several methods used in the evaluation process at the stages of idea formulation and copy development are used below
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PRETESTING THE ADVERTISING
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Pretests: Are conducted before an advertisement is placed in any medium to determine whether it communicates the intended message or to select among alternative versions of the advertisement
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PORTFOLIO TESTS:
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are used to test copy alternatives. The test ad is placed in a portfolio with several other ads and stories, and consumers are asked for their impressions of the ads on several evaluative scales, such as from “very informative” to “not very informative”
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JURY TESTS:
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Involve showing the ad copy to a panel of consumers and having them rate how they liked it, how much it drew their attention, and how attractive they thought it was. This approach is similar to the portfolio test in that the consumer reactions are obtained. However, unlike the portfolio test, a test ad is not hidden with other ads
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THEATER TESTS:
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Theater testing is the most sophisticated form of pretesting. Consumers are invited to view new TV shows or movies in which test commercials are also shown. Viewers register their feelings about the ads either on a handheld electronic recording devices used during the viewing or on questionnaires after
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CARRYING OUT THE ADVERTISING PROGRAM
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The responsibility for actually carrying out the advertising program can be handled by one of 3 types of agencies 1. The full service agency 2. Limited Service agency 3. In-House agency
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1. The FULL SERVICE AGENCY:
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Which provides the most complete range of services, including: Market research, media selection, copy development, artwork, and production – In the past agencies that assisted a client by both developing and placing ads often charged a commission of 15% of the media costs – As corporations introduced integrated marketing approaches, however, many advertisers switched from paying commissions to incentive plans based on performance – These plans typically pay for agency costs and a 5-10% profit, plus bonuses if specific performance goals related to the brand preference, lead generation, sales, and market share are met – In the future, clients may move to a value-based approach where compensation is dependent on sales of the advertised product or brand
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2. LIMITED-SERVICE AGENCIES:
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Specialize in one aspect of the advertising process, such as providing creative services to develop the advertising copy, buying previously un-purchased media (media agencies), or providing internet services (internet agencies) – Limited service agencies that deal in creative work are compensated by a contractual agreement for the services performed
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3. IN HOUSE AGENCIES:
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Made up of the company’s own advertising staff may provide full services or a limited range of services
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POST-TESING THE ADVERTISING
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Posttests: Tests conducted after an advertisement has been shown to the target audience to determine whether it has accomplished its intended purpose
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AIDED RECALL:
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After being shown an ad, respondents are asked whether their previous exposure to it was through reading, viewing, or listening
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The STARCH TEST
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uses aided recall to determine the % of those.. 1. Who remember seeing a specific magazine ad (noted) 2. Who saw or read any part of the ad identifying the product or brand (seen-associated) 3. Who read any part of the ad’s copy (read some) 4. Who read at least half of the ad (read most) Elements of the ad are then tagged with the results
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UNAIDED RECALL:
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A question such as “What ads do you remember seeing yesterday?” Is asked for respondents without any prompting to determine whether they saw or heard advertising messages
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ATTITUDE TESTS:
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Respondents are asked questions to measure changes in their attitudes after an advertising campaign, such as whether they have a more favorable attitude toward the product advertised
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INQUIRY TESTS:
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Additional Product information, product samples, or premiums are offered to an ad’s readers or viewers. Ads generating the most inquiries are presumed to be the most effective
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SALES TESTS:
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Involve studies such as controlled experiments (ex. Using radio ads in one market and newspaper ads in another and then comparing the results) and consumer purchase tests (measuring retail sales that result from a given advertising campaign) – The most sophisticated experiment experimental methods today allow a manufacturer, a distributer, or an advertising agency to manipulate an advertising variable (such as schedule or copy) through cable systems and observe subsequent sales effects by monitoring data collected from checkout scanners in markets
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Sales promotion
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has become a key element of the promotional mix, which now accounts for more than $71.9 billion in annual expenditures – In a recent survey, by Promo Magazine, marketing professionals reported that approximately 32% of their budgets were allocated to advertising, 37% to consumer promotion, 24% to trade promotion, and 7% to other marketing activities
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The allocation of marketing expenditures
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reflects the trend toward integrated promotion programs which include a variety of promotional elements. Selection and integration of the many promotion techniques require a good understanding of the advantages and disadvantages of each kind of promotion
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CONSUMER ORIENTED SALES PROMOTIONS
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Consumer-oriented sales promotions (Consumer promotions): Are sales tools used to support a company’s advertising and personal selling. The alternative consumer-oriented sales promotion tools include: coupons, deals, premiums, contests, sweepstakes, samples, loyalty programs, point-of-purchase displays, rebates, and product placements
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Coupons
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are sales promotions that usually offer a discounted price to the consumer, which encourages trial. Approximately 332 billion coupons worth $470 billion are distributed in the US each year* – Most coupons are distributed as freestanding inserts in newspapers, and reach 60 million households each week – Research indicates that 81% of consumers use coupons – Coupon redemption rates have been increasing in recent years as the weak economy has increased the attractiveness of coupons – Consumers redeemed $2.8 billion of the coupons, which was approximately $8.57 per person – Companies that have increased their use of coupons include: Proctor & Gamble, Nestle, Kraft, while top retailers for coupon redemption were Walmart and Kroger – The # of coupons generated at the websites: Valpak.com and coupon.com and on mobile phones has been increasing although they account for less than 2% of all coupons – The redemption rate for online coupons, however, is substantially higher than other forms of coupons. Groupon and other daily coupon services generated $873 million in sales last year and expect the market to reach $3.9 billion by 2015 – This growth has attracted competitors such as Living Social and Facebook – Coupons are often far more expensive than the face value of the coupon. A 25 cent coupon can cost 3 times as much after paying for the advertisement to deliver it, dealer handling, clearinghouse cost, and redemption – In addition, misredemption, or attempting to redeem a counterfeit coupon or a valid coupon when the product was not purchased, should be added to the cost of the coupon – The coupon Information Corporation estimates that companies pay out refunds worth hundreds of millions of dollars each year as a result of coupon fraud. Recent growth in coupon fraud has marketers considering adding holograms and visual aids to coupons to help cashiers identify valid coupons
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Deals
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are short-term price reductions, commonly used to increase trial among potential customers or to retaliate against a competitors actions Ex. If a rival manufacturer introduces a new cake mix, the company responds with a “two packages for the price of one” deal. – This short term price reduction builds up the stock on the kitchen shelves of cake mix buyers and makes the competitors introduction more difficult
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PREMIUMS:
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A promotional tool often used with consumers is the premium, which consists of merchandise offered free or at a significant savings over its retail price. – This latter type of premium is called self-liquidating because the cost charged to the consumer covers the cost of the item. – Ex. McDonalds used a free premium in a promotional partnership with 20th Century Fox during the release of Rio. Collectable toys that portrayed the movie characters were given away free with the purchase of a Happy Meal – What are the most popular premiums? They are apparel, writing instruments, shopping bags, cups, and mugs and desk accessories. – By offering a premium, companies encourage customers to return frequently to use more of the product – Research suggests that deal prone consumers and value seekers are attracted to premiums
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Contests
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represent a 4th sales promotion tool in which consumers apply their skill or analytical or creative thinking to try to win a prize. – This form of promotion has been growing as requests for videos, photos, and essays are a good match with the trend toward consumer-generated content – Ex. PepsiCo sponsored the “Crash the Super Bowl” contest, asking people to create their own 30-second as about Doritos and Pepsi Max – A panel of judges selected 10 finalists from the 5,600 entries, and the public voted online for its favorite. The winner aired on the Super Bowl, and when one of the ads hit No.1 on USA Today’s Super Bowl Ad Meter, it was awarded a $1 million bonus!
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Sweepstakes
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are a sales promotion that require participants to submit some kind of entry but are purely games of chance requiring no analytical or creative effort by the consumer – Popular sweepstakes include HGTV “Dream Home Giveaway” which receives more than 76 million entries each year, and McDonalds Monopoly which offers a grand prize of $1 million
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Two variations of sweepstakes are popular now. 1. Are the ones that offer products that consumers value as prizes.
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Mars Chocolate for example, created a sweepstakes where consumers enter a UPC code from M&Ms products for a chance to win one of 5 Toyota Automobiles – Coca Cola had a similar sweepstakes called “My Coke Rewards” that allows a consumer to use codes from bottle caps to enter to win prizes or to collect points to redeem rewards
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Two variations of sweepstakes are popular now. 2. Are the sweepstakes that offer an “experience”
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– ex. American Idol and AT&T sponsor a sweepstakes for a chance to win a trip for 2 to the American Idol finale in LA – Coca-Cola and Celebrity Cruises created a sweepstakes where consumers enter for a chance to win a trip to the Olympics
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*FEDERAL LAWS: On CONSUMER ORIENTED SALES PROMOTIONS
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The Federal Trade Commission and state legislatures have issued rules covering sweepstakes, contests, and games to regulate fairness, ensure that the chance for winning is represented honestly, and guarantee that the prizes are actually awarded *Several well known sweepstakes created by Publishers Clearing House and Reader’s Digest have paid fines and agreed to new sweepstakes guidelines in response to regulatory Scrutiny
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SAMPLES:
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Another common consumer sales promotion is sampling: FREE TRIAL Which is offering the product free or at a greatly reduced price -Often used for new products, sampling puts the product in the consumers hands. – A trial size is generally offered that is smaller than the regular packaged size. If consumers like the sample, it is hoped that they will remember it and buy the product full size – When Mars changed its Milky Way Dark to Milky Way Midnight, it gave more than 1 million samples to college students at night clubs, several hundred campuses, and popular spring break locations *Awareness of the candy bar rose to 60% trial rose 166% and sales rose 25% Recent research indicates that 63% of college students who receive a sample will also purchase the product. Overall, companies invest more than $2.3 billion in sampling programs each year
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LOYALTY PROGRAMS
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Are a sales promotion tool used to encourage and reward repeat purchases by acknowledging each purchase made by a consumer and offering a premium as purchases accumulate – THE MOST POPULAR ONE: Are credit Card rewards programs – More than 75% of all cards offer incentives for use of their card – Citibank for ex. Offers “Thank you” points for using Citi credit or debit cards. The points can be redeemed for books, music, gift cards, cash, travel, and special limited time rewards – Airlines, retailers, hotels and grocery stores also offer popular ones – Specialty Retailers such as Toys R Us and BestBuy have enhanced their reward programs to add value to their offerings as they compete with low-cost merchandise – There are now more than 2.1 billion loyalty program memberships, for an average of 18 for each household in the US, which accumulate $48 billion worth of points each year
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POINT OF PURCHASE DISPLAYS
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In a store aisle, you often encounter a sales promotion called a “point of purchase” display. These product displays take the form of advertising signs which sometimes actually hold or display the product, and are often located in *High traffic areas such as the cash register or the end of the aisle – The point of purchase display for Nabisco’s annual back to school lunch box and after-school snacks and to provide storage for the products. – Annual expenditures on point of purchase promotions now exceed $20.3 billion and are expected to grow as point of purchase becomes integrated with all forms of promotion
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REBATES
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The cash rebate, offers the return of money based on proof of purchase. – Ex. Apple recently offered a 4100 rebate to consumers who purchased an Apple Computer and a printer during a 3 month promotional period – When a rebate is offered on lower priced items, the time and trouble of mailing in a proof of purchase to get the rebate check often means that many buyers never take advantage of it – However this “slippage” is less likely to occur with frequent users of rebate promotions. In addition, online consumers are more likely to take advantage of rebates
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PRODUCT PLACEMENT:
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Involves the use of a brand-name product in a movie, TV show, Video game, or commercial for another product. – It was Steven Spielberg’s placement of Hershey’s Reese’s Pieces in E.T. that first brought a lot of interest to the candy – Similarly, when Tom Crusie wore Ray-Ban sunglasses in Risky Business and its Aviator sunglasses in Top Gun, sales skyrocketed from 100,000 pairs to 7,000,000 pairs in 5 years – After Toy Story, Etch-A-Sketch sales increased 4,500% and Mr. Potato Head sales increased 800% – Product placement has also grown in TV programs. American Idol ranks No. 1 with Coca-Cola, Ford, and AT&T product appearances, followed by celebrity apprentice and The Biggest Loser – Companies are usually eager to gain exposure for their products, and studios believe that product placements can add authenticity to the film or program – The producers usually receive fees in exchange for the exposure. The latest James Bond film, for example, recently earned $45 million in product placement revenue
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Complaints that product placement has become excessive
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have led to the Federal Communications Commission to begin development of guidelines for TV product placement, while the British Government recently passed a law allowing product placement if a bold “P” logo is shown before and after the program
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Trade-Oriented sales promotions (trade promotions):
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Are sales tools used to support a company’s advertising and personal selling directed to wholesalers, retailers, or distributors – Some of the sales promotions just reviewed are used for this purpose. But three other common approaches are targeted uniquely to these: – 1. Allowances and Discounts – 2. Cooperative Advertising – 3. Training of distributors sales-forces
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Trade-Oriented sales promotions (trade promotions): – 1. Allowances and Discounts
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Trade promotions often focus on maintaining or increasing inventory levels in the channel of distribution – An effective method for encouraging such increased purchases by intermediaries is the use of allowances and discounts. However, overuse of these price reductions can lead to retailers changing their ordering patterns in the expectation of such offerings – Although there are many variations that manufacturers can use with discounts and allowances, three common approaches are the merchandise allowance, the case allowance, and the finance allowance
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Trade-Oriented sales promotions (trade promotions): – 2. Cooperative Advertising
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Resellers often perform the important function of promoting the manufacturer’s products at the local level – One common sales promotional activity is to encourage both better quality and greater quantity in the local advertising efforts through COOPERATIVE ADVERTISING These are programs by which a manufacturer pays a % of the retailers local advertising expense for advertising the manufacturer’s products – Usually the manufacturer pays a %, often 50%, of the cost of advertising up to a certain dollar limit, which is based on the amount of the purchases the retailer makes of the manufacturers products – In addition to paying for the advertising, the manufacturer often furnishes the retailer with a selection of different ad executions, sometimes suited for several different media – A manufacturer may provide, for example: several different print layouts as well as few broadcast ads for the retailer to adapt to use
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Trade-Oriented sales promotions (trade promotions): – 3. Training of distributors sales-forces
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One of the many functions the intermediaries perform is customer contact and selling for the producers they represent – Both retailers and wholesalers employ and manage their own sales personnel – A manufacturer’s success often rests on the ability of the resellers sales force to represent its products Thus, it is in the best interest of the manufacturer to help train the reseller’s sales force. Because the reseller’s sales force is often less sophisticated and knowledgeable about the products than the manufacturer may like, training can increase their sales performance Training: Training activities include producing manuals and brochures to educate the reseller’s sales-force. The sales-force then uses these aids in selling situations. Other activities include national sales meetings sponsored by the manufacturer and field visits to the reseller’s location to inform and motivate the salespeople to sell the products. – Manufacturers also develop incentive and recognition programs to motivate a reseller’s salespeople to their products
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Trade promotion: MERCHANDISE ALLOWANCE:
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Reimbursing a retailer for extra in-store support or special featuring of the brand -Performance contracts between the manufactuer and trade member usually specify the activity to be performed, such as a picture of the product in a newspaper with a coupon good at only one store – The merchandise allowance then consists of a % deduction from the list case price ordered during the promotional period – Allowances are not paid by the manufacturer until it sees proof of performance (such as a copy of the ad placed by the retailer in the local newspaper)
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Trade Promotion: CASE ALLOWANCE:
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Is a discount on each case ordered during a specific time period – These allowances are usually deducted from the invoice – A variation of the case allowance is the “free goods” approach, whereby retailers receive some amount of the product free based on the amount ordered, such as 1 case free for every 10 cases ordered
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Trade Promotion: FINANCE ALLOWANCE:
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Involves paying retailers for financing costs or financial losses associated with consumer sales promotions – This trade promotion is regularly used and has several variations – One type is the floor stock protection program- manufacturers give retailers a case allowance price for products in their warehouse, which prevents shelf stock from running down during the promotional period – Also common are freight allowances, which compensate retailers that transport orders from the manufacturer’s warehouse
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Public relations:
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Is a form of communication management that seeks to influence the image of an organization and its products and services – In developing a public relations campaign, several methods of obtaining non-personal presentation of an organization, product, or service without direct cost
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– PUBLICITY TOOLS:
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– PUBLICITY TOOLS: are available to the public relations director – Many companies frequently use the NEWS RELEASE: consisting of an announcement regarding changes in the company or the product line. The OBJECTIVE: of a news release: is to inform a newspaper, radio station, or other medium for of an idea for a story 3. A second common publicity tool is the NEWS CONFERENCE: Representatives of the media are all invited to an informational meeting, and advance materials regarding the content are sent. This tool is often used when new products are introduced or significant changes in corporate structure and leadership are being made
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NON-PROFIT:
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rely on PUBLIC SERVICE ANNOUNCEMENTS (PSAs): Which are free space or time donated by the media Ex. The charter of the American Red Cross prohibits any local chapter from advertising, so to solicit blood donations local chapters often depend on PSAs on radio or TV to announce their needs
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Google: “Quality Score”
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To predict how effective an ad will be – Click through rates – Advertiser History – Keyword performance “Just the right ad at the right time”
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Advantages of Personal Selling
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– high customer attention – Interactivity – Persuasive impact – potential for development of relationship – Adaptable – Opportunity to close the sale
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Disadvantages of Personal selling
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-high cost – Labor Intensive – Expensive – Can only reach a limited number of customers
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The nature of personal selling
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-Personal selling involves the 2 way flow of communication between a buyer and a seller often in a face 2 face encounter, designed to influence a person’s or groups purchase decision – Highly human-intensive activity, despite the use of technology – “Showrooming effect” – Business 2 business
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The nature of Sales Management
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Sales management involves planning the selling program and implementing and evaluating the personal selling effort of the firm – Set objectives – organize the salesforce – Recruiting – Selecting – Training – Compensating sales people – Evaluating the performance of indiv. sales people
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Personal Selling and Sales Management in Marketing Research
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SETTING OBJECTIVES: quota, unit vs. dollar sales, quality vs. quantity COMPENSATING SALES PEOPLE: quota based vs. commission, incentive design, monetary ($) vs. non-monetary, field experiment inbound vs. outbound RECRUITING: Team Building SELECTING: Promotion
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In-Bound Marketing
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Consumer driven, timely, content rich, solution based Examples: Blog, Social media, e-mail to approved list
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Out-Bound Marketing
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Marketer driven, disruptive, product based, hard sell Examples: Broadcast/print, cold call, telemarketing, trade show, e-mail blast to purchased list
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Training – personal selling & sales management
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Human resource, channel decision, Example: Field experiment in Kenya
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Evaluating the performance of indiv sales people
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– How to evaluate team performance vs indiv salespeople – How to avoid free-riding problems – performance based compensation evaluation
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Team Selling:
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Is used to service large complex accounts and can include: Sales, marketing, technical, R&D, Engineering, Operations, Finance
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Team Selling problems
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Customers who are used to working with one salesperson may become confused or overwhelmed Salespeople used to working alone can have difficulties working with and trusting teams Evaluating idiv. contributions can lead to compensation issues
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Qualifying
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Identifying good customers and screening out poor ones by looking at: Financial ability, volume of business, needs, location, growth potential
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Approach
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The proccess where the salesperson meets and greets the buyer and gets the relationship off to a good start, and involves the salesperson’s: appearance, opening lines, follow up remarks
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Interactive Selling
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The 2 way buyer seller ELECTRONIC communication in a computer-mediated environment in which the BUYER CONTROLS the kind and amount of information received from the seller CHARACTERIZED BY: Sophisticated choiceboard and personalization system that transform information supplied by customers into customized responses to their individual needs
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Collaborative Filtering
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Automatically groups people with similar buying intentions, preferences, and behaviors, and predicts future purchases Amazon: “Customers who bought this item also bought…”
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Choiceboard vs. Personalization
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Choiceboard: INTERACTIVE example: design your own shoes Personalization: Generate content on a marketers website that is custom tailored to an indivs specific needs and preferences
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BIG Data
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a broad term for data sets so large or complex that traditional data processing applications are inadequate example: American Express, Google
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RETAIL MIX
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Retail pricing Store location Retail communication Merchandise
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PROMOTIONAL MIX
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Advertising Personal Selling Public Relations Sales promotion Direct Marketing
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People who do selling
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Salespeople Sales representatives district managers account executives sales engineers agents account development reps stockbrokers real estate brokers
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Prospecting
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Identifies qualifying potential customers through referrals from: Customers, Suppliers, Dealers, Internet
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Expense breakdown: Cheapest to most expensive
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e-mail, social media, e-catalog, video, direct mail, phone contact, trade show, face to face sales call
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Customer experience
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Sum total of the interactions that a customer has with a company’s website, from the initial look at a homepage through the entire purchase decision process
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Commerce
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commerce refers to the exchange of goods, services or something of value, between businesses or entities.
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Best Buy case
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While the company’s sales online were up 23.5% from a year earlier, it was not enough to pull out a win overall due to lower in store sales – test frequently, learn quickly, and scale appropriately – Reinforce all marketing efforts across media channels – Critical to focus on meeting customer needs from a multi-channel perspective, and not focus solely on growing a particular channel
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Marketing: The 3 C’s
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Competencies, customers, competitors
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Marketing channels: Vertical integration
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the combination in one company of two or more stages of production normally operated by separate companies.
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Logistical
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Assorting, sorting, storing, transporting
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Facilitating
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financing, grading, marketing information and research
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Transactional
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buying, selling, risk taking
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Engagement marketing
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also known as: Experimental marketing, event marketing, on-ground marketing, Is a marketing strategy that directly engages consumers and and invites and encourages them to participate in an evolution of a brand
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Sales Promotion
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A short term offer designed to arouse interest in buying a product or service Pros: Effective at changing behavior in short run, very flexible Cons: Easily abused, Extreme couponing, can lead to promotional wars, easily duplicated
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Errors in communication
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ENCODE: Source may not transform the idea into an effective set of symbols CHANNEL: A properly encoded message may not be sen through the right channel Decode: The receiver may not transform the set of symbols into the intended idea FEEDBACK: May be so delayed or distorted that it is of no use to the sender

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