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Your Last Exam Ever!
| Term | Definition |
|---|---|
| Marketing communication | is the process by which information about a firm and its offerings is disseminated to selected markets. |
| Marketing Communications Mix | The specific mix of advertising, personal selling, sales promotion, and public relations a company uses to pursue its communication objectives. |
| Integrated Marketing Communications | The concept under which a company integrates and coordinates its many communications channels to deliver a clear, consistent, and compelling message about the company and its products. |
| Communication is necessary to inform consumers of | The company’s marketing mix, The availability of a product, The unique benefits of the product (USP), The where and how of obtaining and using the product, Pricing and promotions |
| Step 1 | Identifying the Target Audience (What are the information requirements of the target audience?) Affects decisions related to what, how, when, and where message will be said, as well as who will say it. |
| Step 2 | Determining Communication objectives |
| Buy Readiness Stages | Awareness, Knowledge, Liking, Preference, Preference, Conviction, Purchase. |
| Consistent | Among themselves and with other marketing elements. |
| Quantifiable | For measurement and control purposes. |
| Step 3 | Designing a Message |
| AIDA framework | guides message design (Attention, Interest, Desire, Action) |
| Messages should be | Believable, distinctive, meaningful |
| Message content contains | appeals or themes designed to produce desired results. Rational appeals, Emotional appeal, Love, pride, joy, humor, fear, guilt, shame. |
| Step 4 | Choosing a communication tool |
| Personal communication channels | Personal selling, Includes face-to-face, phone, mail, and Internet chat communications, Word-of-mouth influences, Buzz marketing cultivates opinion leaders, Nonpersonal communication channels, Advertising, sales promotion, public relations |
| Step 5 | Collecting Feedback. Recognition, recall, and behavioral measures are assessed. May suggest changes in product/communication |
| Affordability Method | Budget is set at a level that a company can afford |
| Percentage-of-Sales Method | Past or forecasted sales may be used |
| Competitive-Parity Method | Budget matches competitors’ outlays |
| Objective-and-Task Method | Specific objectives are defined, Tasks required to achieve objectives are determined, Costs of performing tasks are estimated, then summed to create the promotional budget. |
| Marketers of consumer products and services spend more for | advertising. |
| Marketers of industrial products and services spend more for | personal selling. |
| Advertising | Reaches large, geographically dispersed audiences, often with high frequency, Low cost per exposure, though overall costs are high, May stimulate short-term sales, Impersonal; one-way communication |
| Push Strategy | The offering is pushed through a marketing channel to buyers in a sequential fashion. |
| Pull Strategy | Buyers demand the product from intermediaries, pulling the offering through a marketing channel. |
| Six Types of Mass Media | TV, Radio, Newspaper, Magazine, Outdoor, Internet. |
| Vehicles | Specific entities in which ads can appear. |
| Mass Appeal | Vehicles that appeal to a broad audience. |
| Selective Appeal | Vehicles that appeal to a narrow audience. |
| Horizontal Media | Reaching only one level of a marketing channel. |
| Vertical Media | Reaching more than one level of a marketing channel. |
| Cost | Expressed as cost per thousand readers or viewers to facilitate cross-vehicle comparisons. |
| Reach | The number of buyers potentially exposed to an advertisement in a particular vehicle. |
| Frequency | Is the number of times buyers are actually are exposed to an ad in a given time period. Total Exposure= Reach X Frequency. |
| Audience | The more closely target market’s characteristics match thoseof a vehicle’s audience, the more appropriate the vehicle. |
| Blitz Strategy | Concentrating advertising dollars in a relatively short time period when new products or services are introduced. |
| Continuity Strategy | Spending advertising dollars over the long term to maintain continuity. |
| Pulse Strategy | Concentrating its advertising but also attempts to maintain some continuity. |
| Media Timing Strategies | Blitz, Pulse, and Continuity. |
| Media Selection Decisions are based off | cost, reach, audience, frequency. |
| Personal Selling | Most effective tool for building buyers’ preferences, convictions, and actions. Personal interaction allows for feedback and adjustments. Most expensive of the promotional tools. |
| Sales Promotion | May be targeted at the trade or ultimate consumer. Makes use of a variety of formats |
| Public Relations | Highly credible. Many forms |
| Distribution | The physical flow of goods from producer to consumer. |
| Go-to-Marketing Strategy | Marketers use this term to describe how organizations select and employ marketing channels to cost-effectively deliver a value proposition to each of its target markets. |
| Communications Strategy | Determined by their willingness and ability to perform sales, advertising, and promotion activities. |
| Pricing Strategy | Influenced by their markup and discount policies. |
| Product Strategy | Impacted by their willingness to stock and customize products, Ability to augment products through installation/maintenance services, credit, etc. |
| Key Functions Performed by Channel Members | Information, Convenience, Variety, Promotion, Matching, Storage & Physical Distribution, Credit & after sales service. |
| Direct Channel | Employed when intermediaries are not available for reaching target markets or do possess capacity to service customers. |
| Indirect Channel | Employed when intermediaries are available for reaching target markets and possess the required resources. |
| Multichannel Distribution Systems | Also called hybrid marketing channels. Occurs when a firm uses multiple distribution channels, which may also include an electronic channel. |
| Intensive Distribution | Chosen when- The offering is purchased frequently, Buyers wish to expend little effort purchasing it, Example- Convenience goods |
| Selective and Exclusive Distribution | Chosen when- The product requires personal selling at the point of purchase, The brand requires an aura of exclusivity, Incentives to producer or retailer |
| Effective Distribution | means that a limited number of outlets at the retail level account for a fraction of the market potential. Example- A marketer distributes the product through 40 percent of available retail outlets, but these outlets account for 80 percent of the market. |
| Wholesalers | Specialty, General Merchandise, and General Line. |
| Specialty | Specializes in one or a few product items. |
| General Merchandise | Carries a wide assortment of products. |
| General Line | Carries a complete assortment of items in a single retailing field. |
| Channel Conflict | Occurs when channel members disagree on roles, activities, or rewards. |
| Horizontal conflict | occurs among firms at the same channel level |
| Vertical conflict | occurs among firms at different channel levels |
| Conventional distribution channel | Consists of one or more independent producer, wholesaler and retailers. Each is a separate business seeking to maximize their own profit. |
| Vertical Marketing System | One channel member owns the others, has contracts with them or has so much power that they must all cooperate. |
| Economic | The ability of a firm to reward or coerce other members due to its strong financial position or consumer franchise. |
| Expertise | A distinctive competence that provides a value-added service to channel members. |
| Channel Member Identification | Resellers may compete with others to carry a particular firm’s highly valued brand offerings. |
| Channel captain | is a member of a marketing channel who seeks to coordinate, direct, support, and influence the behavior of other channel members to reduce the likelihood of conflict. |
| Disintermediation | is the practice whereby a traditional intermediary member is dropped from a marketing channel and replaced by an electronic storefront. |
| Reasons for modifying the channel | Shifts in the geographical concentration of buyers, the inability of existing intermediaries to meet the needs of buyers, the cost of distribution, and a change in marketing strategy. |
| Marketing Channel | consists of individuals and firms involved in the process of making an offering available for consumption or use by consumers and industrial users. Producers Marketing intermediaries Consumers |
| Corporate Vertical Marketing System | The producer owns the retailer. Ex- Apple. |
| Contractual Vertical Marketing System | The producer signs a contract with the retailer. Ex- Best Buy. |
| Administered Vertical Marketing System | One channel member has a significant amount of power over the other channel members/retailers. |
| Price | The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service. |
| Pricing Objectives Include | Enhancing brand image, providing customer value, obtaining an adequate ROI or cash flow, increasing market share |
| Value | Perceived Benefits/Price |
| Price Elasticity of Demand (E) Formula | Percentage Change in Quantity demanded/ Precentage Change in Price |
| Price Elasticity of Demand | Measures how responsive consumer demand is to changes in an offering's price. Is the percentage change in quantity demanded relative to a percentage change in price. |
| Elastic Demand | The percentage change in quantity demanded is greater than the percentage change in price (E>1). A change in price will result in a large decrease in the quantity purchased |
| Inelastic Demand | The percentage change in quantity demanded is less than the percentage change in price (E<1). A change in price will result in a small or no decrease in the quantity purchased |
| Cross-elasticity | of demand relates the price elasticity simultaneously to more than one product |
| Unit Contribution | Unit Selling Price --Unit Variable Coasts |
| Break-even Formula | Unit Break-even Volume = Total Fixed Costs/Unit Selling Price - Unit Variable Costs |
| Percentage Change in Unit Volune to Break Even on A Price Change | - (Percentage Price Chang)/ (Original Contribution Margin) + (Percentage Price Change) |
| Full Cost Price Strategies | Those that consider both variable and fixed costs (also called direct and indirect). |
| Variable-Cost Price Strategies | Those that take into account only the direct variable costs associated with an offering. |
| Mark-up Pricing | Is determined simply by adding a fixed amount to the cost of the product. |
| Break-Even Pricing | Equals the per-unit fixed costs plus the per unit variable costs of an offering. |
| Rate-of-Return Pricing | Obtain a pre-specified rate of return on investment (ROI) for the organization. |
| Mark-up: Percentage of the Cost | Unit Selling Price - Per Unit Cost/ Per Unit |
| Mark-up: Percentage of the Price | Unit Selling Price - Per Unit Cost/ Unit Selling Price |
| Rate of Return Pricing | Investment+ (ROI X Investment) + (Unit cost X Quantity)/ Quantity |
| Stimulate Demand | Since variable cost prices are lower than full-cost prices, the assumption is that they will increase demand. |
| Shift Demand | Shifts demand from one time period to another. |
| Lowest-Priced Product Price | Is the traffic builder designed to capture the attention of the hesitant or first-time buyer. |
| Highest-Priced Product Price | Is typically positioned as the premium item in quality and features. |
| Price Differentials for Products in the Line | Should make sense to customers and reflect differences in their perceived value of the products offered |
| Captive-Product Pricing | Pricing the basic product low, but related items at a higher price. |
| Bait Pricing | Attract customers to store with a lower priced item so that they buy higher priced ones |
| Skimming Pricing Strategy | The price for a new product is set very high initially and is typically reduced over time. |
| Penetration Pricing Strategy | An offering is introduced at a low price. |
| Intermediate Pricing Strategy | The price is set between the two extremes and is used in the vast majority of initial pricing decisions. |
| Skimming Pricing Strategy is Appropriate When: | Demand is likely to be price inelastic, it can be protected from competition by patent or copyright, and production capacity is constrained. |
| Penetration Pricing Strategy is Appropriate When: | Demand is likely to be price elastic, it is not protected by patent or copyright, competitors are expected to enter the market quickly, and the firm's major objective is to obtain a large market share. |
| Price War | involves successive price cutting by competitors to increase or maintain their unit sales or market share. |
| Strategic Control | "Doing the right things." Assesses the direction of the organization evidenced by implicit or explicit goals, objectives, strategies and capacity to perform in the context of changing environments and competitive actions. |
| Operations Control | "Doing things right." Assesses how well the firm performs marketing activities as it seeks to achieve planned outcomes. Is the company working according to plan? |
| Strategic Change | Is the change in the environment that will affect the long-run well-being of the firm. Represents opportunities or threats to an organization, depending on its competitive posture. Ex) The aging of the US Population. |
| Market Evolution | Results from changes in demand for a product class. |
| Technological Innovation | Creates strategic change as newer technologies replace older ones. |
| Market Redefinition | Results from changes in the product demanded by buyers or promoted by competitors. |
| Marketing Channel Change | The increasing role of Internet technology |
| Operations Control | The goal of operations control is to improve the productivity of marketing efforts. Ways to identify and allocate costs are: Marketing-Cost Analysis, Sales Analysis, Marketing Channel Analysis, Product-Service Mix Analysis, Customer Profitability An. |
| Marketing-Cost Analysis | Trace, assign, or allocate costs to a specified marketing activity or segment. Accurately display the financial contribution of activities or entities to the organization. |
| Product-Service Mix Analysis | Assess the performance of Productss/services in the relevant markets via sales volume analysis and market share analysis. Appraise the financial worth of products/services via contribution margin approach. |
| Growth or Decline in Unit Sales Volume | A quantitative indicator of the acceptance of offerings in their relevant markets. |
| Proportion of Sales from Each Offering | Pareto’s Law or the “80–20 rule”— 80 percent of sales or profits come from 20 percent of the firm’s products. |
| Product-Service Mix Analysis | Complements sales volume as a measure of performance. Indicates whether a firm is gaining or losing ground in comparison with competitors.Can be computed by geographic area, customer or channel type. Can lead to misleading results. |
| Sales Analysis | Its purpose is to direct attention to both behavioral aspect of sales and cost aspect of sales. |
| Behavioral Aspect of Sales | Consists of sales effort and allocation of selling time. |
| Cost Aspect of Sales | Consists of expenses from the performance and administration of the sales function. |
| Measures to assess sales performance include: | Sales revenue, gross profit, sales call frequency, penetration of accounts in a sales territory, selling and sales administration expenses. |
| Marketing Channel Analysis | Two types of costs to identify and trace to marketing channels: order getting costs and order servicing costs. |
| Order Getting Costs | Include sales expenses and advertising allowances. |
| Order Servicing Costs | Include packing and delivery costs, warehousing expenses, and billing costs. |
| Customer Profitability Analysis | A profitable customer is a person, household, or company that, over time, yields a revenue stream that exceeds, by an acceptable amount, the organization’s cost of attracting, selling, and servicing that customer. |
| Customer Profitability Analysis Formula | = Customer Gross Margin - (Customer Acquisition Costs + Customer Retention Costs) |
| How to manage low profit or unprofitable customers: | Drop them to eliminate their costs entirely, charge them higher prices to increase profits, reduce the cost of serving them to make them more profitable. |
| Global Marketing | involves the performance of activities designed to build the marketing mix for a company’s products & services in more than one country for a profit |
| Global marketing involves two related strategic decisions: | Where to compete and how to compete. |
| The decision to go global reasons: | Gain access to new buyers, lower costs of resources/raw materials, spread business risk across a wider market base, capitalize on a firm's distinctive competencies. |
| Quantitative Criteria | Market and profit potential, variables: demographics and usage, country income |
| Qualitative Criteria | Sociocultural factors that underlie behaviors, technological infrastructure, trade laws and regulations, strength of competitors (local and foreign) |
| Exporting | Involves producing offerings in one country and selling them in another country.Requires the least number of changes in its offering, organization, and marketing practices. Can be direct or indirect. Tariffs and quotas involved. |
| Licensing | Is a contract where a firm (licensee) is given the rights to intellectual property (patents, trademarks, trade secrets, etc.) by the owner (licensor) in turn for a royalty or fee. |
| Advantages of Licensing | Is a low-risk, quick, and capital-free entry into a foreign market |
| Disadvantages of Licensing | Less control, reduced profits, maybe creating future competition, if licensee is a poor choice may harm brand |
| Contract Manufacturing | A domestic firm contracts with a foreign firm to manufacture its offerings. The offering is then sold in the foreign country and/or exported back to the domestic country. |
| Franchising | Includes soft drink, hospitality, retailing, fast food, car rental, and other consumer or business services |
| Joint Venture | Occurs when a foreign and a local company invest together to create a new entity in the host country. Allows the two firms share ownership, control, and profits of the entity.Used when one firm does not have the required resources to enter a market alone |
| Direct Investment | Involves a domestic firm investing in and owning a foreign subsidiary or division, Is the most risky and requires the most commitment, Requires a strong understanding of local market conditions (customers, environment) |
| Product Extension | Selling the same offering in other countries. Works best when the offering’s target market is alike across countries and cultures. |
| Product Adaptation | Changing an offering in some way to match a country’s climate or consumer preferences |
| Product Invention | Inventing new offerings to satisfy common needs across countries |
| Product | consists of the complete bundle of benefits or satisfaction provided to target markets by an organization. |
| Product Mix/Portfolio | The totality of an organization’s offerings is known as its product or service mix/portfolio. |
| Product Line | A family of closely related products. |
| Product Items | A specific product or service that has a particular name, size, or price. |
| Width | The number of product lines. |
| Depth | The number of items in each line. |
| Bundling | involves the marketing of two or more product or service items in a single “package” that creates a new product |
| Idea Generation | Internal: R&D and employees, External: customers, competitors, distributors, and suppliers |
| Idea Screening | ____ are _____ based on organizational definition, organizational capability, prospective buyers. Development costs increase over time and ideas deemed incompatible with organizational definition and capability are quickly eliminated. |
| Business Analysis | Assess financial viability based on estimated sales, costs, and profits. |
| Market Testing | May include product concept or buyer preference tests in a laboratory situation or field test market.Ideas that pass through this stage are commercially introduced into the marketplace. |
| Life Cycle | plots sales of a product (a brand of coffee) or a product class (all ground coffee brands) over a period of time. |
| Introduction Stage | Focus on stimulating trial and creating awareness of the new product by: Advertising to create awareness, promotion, obtaining adequate distribution. |
| Growth Stage | An increasing share of volume is due to repeat purchases.Marketers focus on retaining existing buyers through: Offering modifications and improvements, competitive pricing, building brand image, cutting back on promotions. |
| Maturity-Saturation Stage | Product – Diversify brand and models Price – Set to match or beat competition Advertising – Stress brand differences and benefits Sales Promotion – Increase to encourage brand switching |
| Decline Stage | Marketers decide to harvest or eliminate the offering. |
| Harvesting | is the strategic decision to reduce the investment in a business entity in the hope of cutting costs and/or improving cash flow. |
| Elimination | means that the offering is dropped from the firm’s offering mix. |
| Trading Up | Involves adding new features and higher-quality materials or augmenting the product with additional services. |
| Trading Down | Is the process of reducing the number of features or quality of an offering. |
| Positioning | Locating a brand in consumers’ minds over and against competitors in terms of attributes and benefits that the brand offers. |
| A positioning statement identifies: | The target market and needs satisfied The product (service) class or category in which the organization’s offering competes The offering’s unique selling proposition |
| Brand | is a name, term, sign symbol, or design or a combination of these that identifies the maker or seller of a product or service. |
| Brand Equity | The power of the brand. The added value given to products beyond the functional attributes. The extent to which customers are willing to pay more for the brand. A reflection of consumers’ trust of the brand name. |
| Advantages of strong brand equity | High consumer awareness Strong brand loyalty Helps when introducing new products Less vulnerable to price competition Have an economic value |
| Brand equity three step process | 1) Develop positive brand awareness 2) Position he brand 3) Create a psychological bond with consumers |
| Thinking | Focuses on a brand’s perceived quality, credibility, and superiority relative to other brands |
| Feeling | Relates to the consumer’s emotional reaction to a brand |
| Multiproduct Branding | A company uses one name for all its products in a product class. |
| Multibranding | A company gives each product or product line a distinct name. Is a useful strategy when each brand is intended for a different market segment or uniquely positioned in the marketplace. |
| Private Branding | A company supplies a reseller with a product bearing a brand name chosen by the reseller. |
| Line Extension | Occurs when an organization introduces additional products with the same brand name in a product class that it currently serves. |
| Brand Extension | Is the practice of using a current brand name to enter a completely different product class. |
| Fighting/Flanker Brand | Creates new brands for an existing product class that attracts specific consumer segments not served by an organization’s existing products/brands.Represents a defensive move to counteract competitors |
| New Brand | Involves the development of a new brand and often a new product class that has not been previously served by the organization. |
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