Mkt 300 - Final Exam

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Ad Response function

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-a phenomenon in which spending for advertising and sales promotion increases sales or market share up to a certain level but then produces diminishing returns

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Institutional Advertising

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-A form of advertising designed to enhance a company's image rather than promote a particular product

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Product Advertising

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-A form of advertising that touts the benefits of a specific good or service

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Advocacy Advertising

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-A form of advertising in which an organization expresses its views on controversial issues or responds to media attacks

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Pioneering Advertising

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-A form of advertising designed to stimulate primary demand for a new product or product category

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Competitive Advertising

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-A form of advertising designed to influence demand for a specific brand

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Comparative Advertising

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-A form of advertising that compares two or more specifically named or shown competing brands on one or more specific attributes

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Ad Campaign

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-A series of related advertisements focusing on a common theme, slogan, and set of advertising appeals

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Advertising Objective

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-A specific communication task that a campaign should accomplish for a specified target audience during a specified period

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Advertising Appeal

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-a reason for a person to buy a product

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Unique Selling Proposition

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-a desirable, exclusive, and believable advertising appeal selected as the theme for a campaign

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Media Planning

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-the series of decisions advertisers make regarding the selection and use of media, allowing the marketer to optimally and cost-effectively communicate the message to the target audience

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Media Mix

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-the combination of media to be used for a promotional campaign

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Cost per contact

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-the cost of reaching one member of the target market

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Reach

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-the number of target consumers exposed to a commercial at least once during a specific period, usually four weeks

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Frequency

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-the number of times an individual is exposed to a given message during a specific period

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Audience Selectivity

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-the ability of an advertising medium to reach a precisely defined market

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Media Schedule

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-designation of the media, the specific publications or programs, and the insertion dates of advertising

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Continuous media schedule

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-a media scheduling strategy in which advertising is run steadily throughout the advertising period; used for products in the later stages of the product life cycle

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Flighted media schedule

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-a media scheduling strategy in which ads are run heavily every other month or every two weeks, to achieve a greater impact with an increased frequency reach at those times

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Pulsing media schedule

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-a media scheduling strategy that uses continuous scheduling throughout the year coupled with a flighted schedule during the best sales periods

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Seasonal media schedule

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-a media scheduling strategy that runs advertising only during times of the year when the product is most likely to be used

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Sales Promotion

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-Marketing communication activities that typically apply short-term incentives to motivate customers or channel members to purchase (consumer & trade promotion)

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Consumer Sales Promotion

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-sales promotion activities targeting the ultimate consumer

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Trade Sales Promotion

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-sales promotion activities targeting a marketing channel member, such as a wholesaler or retailer

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Sales Promotion tools

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-Coupons
-Rebates
-Premiums
-Loyalty Marketing programs
-Contests/Sweepstakes
-Sampling
-Point of Purchase Display
-Online sales promotion

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Loyalty Marketing Programs (sales promotion tool)

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-A promotional program designed to build long-term, mutually beneficial relationships between a company and its key consumers

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Point-of-Purchase (P-o-P) display

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-A promotional display set up at the retailer's location to build traffic, advertise the product, or induce impulse buying

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Trade Sales promotional tools

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-Trade Allowance
-Push Money
-Training
-Free Merchandise
-Store Demonstrations
-Business Meetings, Conventions, Trade shows

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Trade Allowance

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-A price reduction offered by manufacturers to intermediaries, such as wholesalers and retailers

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Push Money

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-Money offered to channel intermediaries to encourage them to "push" products - that is, to encourage other members of the channel to sell the products

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Personal Selling

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-Direct communication between sales rep and customer(s) in an attempt to influence each other

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Advantages of Personal Selling

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-Provides a detailed explanation or demonstration of the product
-The sales message can be varied according to the motivations and interests of each prospective customer
-Can only be directed to qualified prospects
-Personal Selling costs can be controlled by adjusting the size of the sales force in 1 person increments
-Considerably more effective than other forms of promotion in obtaining a sale and gaining a satisfied customer

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-Product has high value
-its a custom-made product
-the product is technically complex
-Customers are concentrated

(Ex: insurance policies, custom windows, airplane engines)

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Personal Selling is more important IF:

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-Product has low value
-its a standardized product
-the product is easy to understand
-customers are geographically dispersed

(Ex: soap, magazine, subscriptions, cotton T-shirts)

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Advertising and Sales Promotion are more important IF:

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Relationship Selling (Consultative Selling)

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-A sales practice that involves building, maintaining, and enhancing interactions with customers in order to develop long-term satisfaction through mutually beneficial partnerships

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1) Generating leads
2) Qualifying leads
3) Approaching the customer and probing needs
4) Developing and proposing solutions
5) Handling objections
6) Closing the sale
7) Following up

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7 steps in the Personal Selling Process

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Price

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-that which is given up in an exchange to acquire a good or service, typically money but also could be related to sacrifice (time and hassle); high prices symbolize quality

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Value

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-Is based upon Perceived Satisfaction and can change when price or benefits change

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Revenue

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(Price X Units) - Expenses = Revenue

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-Profit maximization
-Satisfactory profits
-Target return on Investment

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Profit-Oriented pricing objectives

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-Market share (a company's product sales as a % of total sales for that industry)
-Sales maximization

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Sales-Oriented pricing objectives

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-maintains existing prices or meets the competition's prices

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Status Quo pricing objectives

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-Demand
-Supply
-Equilibrium
-Elasticity of demand

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Determinants of Price

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Elasticity of Demand

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-a situation in which consumer demand is sensitive to changes in price

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Yield Management Systems

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-A technique for adjusting prices that uses complex mathematical software to profitably fill unused capacity by discounting early purchases, limiting early sales at these discounted prices, and overbooking capacity

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Markup Pricing

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-the cost of buying the product from the producer, plus amounts for profit and for expenses not otherwise accounted for

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Profit maximization

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-a method of setting prices that occurs when marginal revenue equals marginal cost

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Break-Even analysis

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-a method of determining what sales volume must be reached before total revenue equals total costs

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1) Introductory
2) Growth
3) Maturity
4) Decline

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Product life cycle stages

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1) Establish pricing goals
2) Estimate demand, costs, and profits
3) Choose a pricing strategy to help determine a base price
4) Fine-tune the base price with pricing tactics

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Steps in Setting a Price

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Price Skimming

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-charging a high introductory price, often coupled with heavy promotion
(above the market)

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Penetration Pricing

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-charging a relatively low price for a product initially as a way to reach the mass market
(below the market)

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Status Quo Pricing

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-charging a price identical to or very close to the competition's price
(at the market)

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Unfair trade practice acts

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-laws that prohibit wholesalers and retailers from selling below cost

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Price Fixing

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-an agreement between 2 or more firms on the price they will charge for a product

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Predatory Pricing

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-the practice of charging a very low price for a product with the intent of driving competitors out of business or out of a market

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1) Quantity discounts
2) Cash discounts
3) Functional discounts
4) Seasonal discounts
5) Promotional allowances

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5 Types of Discounts/Allowances

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Value-based pricing

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-setting the price at a level that seems to the customer to be a good price compared to the prices of other options

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1) FOB Origin pricing
2) Uniform delivered pricing
3) Zone pricing
4) Freight absorption pricing
5) Basing-point pricing

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5 types of Geographic pricing

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Single-price tactic

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-offers all goods and services at the same price (or perhaps 2 or 3 prices

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Flexible pricing (variable pricing)

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-different customers pay different prices for essentially the same merchandise bought in equal quantities

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Price lining

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-the practice of offering a product line with several items at specific price points

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Leader Pricing

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-a price tactic in which a product is sold near or even below cost in the hope that shoppers will buy other items once they are in the store

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Bait pricing

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-tries to get consumers into a store through false or misleading price advertising and then uses high-pressure selling to persuade consumers to buy more expensive merchandise

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Odd-Even pricing

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-uses odd-numbered prices to connote bargains and even-numbered prices to imply quality

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Price bundling

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-marketing 2 or more products in a single package for a special price

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Two-part pricing

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-a price tactic that charges 2 separate amounts to consume a single good or service

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Consumer Penalty

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-an extra fee paid by the consumer for violating the terms of the purchase agreement

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Product line pricing

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-setting prices for an entire line of products

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If products are Complimentary:

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-an increase in the sale of one good causes an increase in demand for the complementary product, and vice versa

(Ex: the sale of ski poles depends on the demand for skis, making these 2 items complimentary)

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Substitutes

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-2 products in a line can also be substitutes for each other. If buyers buy one item in the line, they are less likely to buy a second item in the line

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Neutral relationship

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-can exist between 2 products. In other words, demand for one of the products is unrelated to demand for the other

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Joint costs

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-costs that are shared in the manufacturing and marketing of several products in a product line

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FOB Origin pricing

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-requires the buyer to pay the freight costs from the shipping point (free-on-board)

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Uniform delivered pricing

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-the seller pays the freight charges and bills every purchaser an identical, flat freight charge

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Zone pricing

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-divides the US (or the total market) into segments or zones and charges a flat freight rate to all customers in a given zone

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Freight absorption pricing

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-the seller pays all or part of the actual freight charges and does not pass them on to the buyer

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Basing-point pricing

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-charges freight from a given (basing) point, regardless of the city from which the goods are shipped