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MAR 455 > Exam 3 > Flashcards

Exam 3 Flashcards

1
Q

Sales Promotion

A

Short-term incentives to encourage the purchase or sale of a product or service

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2
Q

Strengths of Sales Promotions

A
  • something for nothing
  • get immediate action

Highly Effective for:

  • New Product
  • Product Improvement
  • Improving Market Position
  • Increase Store Distribution
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3
Q

Sales Promotions are highly effective for

A

Highly Effective for:

  • New Product
  • Product Improvement
  • Improving Market Position
  • Increase Store Distribution
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4
Q

Limitations of Sales Promotions

A
  • Short-term
  • Other Promotional Tools in Conjunction
  • Hurt image (for high-end)
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5
Q

Sales Promotions have low effect for:

A
  • established products
  • declining market share
  • product categories which are common for having sales promotions
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6
Q

Sales Promotion Examples

A
  • Betty Crocker: “try new betty crocker cereals! save $0.50 coupon”
  • Try America Online (AOL) - “50 hours free to sign up now”
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7
Q

Strategic Perspective: Critical Factors (Imitation)

A

Competitors will imitate when there is:

  • no preemption of scarce resources
  • -> Solution: exclusive access
  • a high degree of market dependence on the ppart of one or more competitors
  • -> Multi-product firms are less likely to match a promotion, while single product firms will match promotion
  • market power asymmetry
  • ->when the promo initiator has high power, the competitor is less likely to retaliate or imitate
  • high similarity between competitor and pioneer
  • ->similarities in customers, suppliers, capabilities, etc. will lead to faster imitation
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8
Q

Strategic Perspective: Critical Factors (Fast Consumer Response)

A

Consumers’ response will be faster when:

  • the product falls into the impulse purchase category
  • ->spur of the moment purchases more likely to be made with a deal. self indulgent products.
  • buyers can stockpile
  • ->promo. product can be bought and saved for future use
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9
Q

General Objectives of Sales Promotion

A
  • support sales force
  • get support from channel
  • increase sales to consumers
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10
Q

Specific Objectives of Sales Promotions

A
  • build consumer awareness
  • support shelf space
  • increase use of point of purchase
  • induce sampling
  • supplement a media campaign
  • increase size of purchase
  • attract consumer away from another brand
  • preempt competitor by inducing consumer stock up.
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11
Q

Market Development Matrix

A

CDI. | HIGH | LOW

BDI. | H,H | H,L

HIGH | |

LOW | L,H | L,L

      |                     |

      |                     |

^^MATRIX

BDI= %Brand Sales in that mkt / % US pop. in that market

CDI= % product category sales in that mkt / % US pop. in

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12
Q

BDI

A

Brand Development Index

BDI= %Brand Sales in that mkt / % US pop. in that market

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13
Q

CDI

A

Category Development Index

CDI= % product category sales in that mkt / % US pop. in that market

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14
Q

Market Development Matrix: Low CDI, Low BDI

A
  • Distribution expansion (all markets)
  • Add Sales Reps
  • Targeted retailers
  • Promotion allowances
  • Mailed coupons
  • Spot TV
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15
Q

Market Development Matrix: Low CDI, High BDI

A
  • Promotion allowances and cents-off deals
  • Newspaper coupons
  • Retail display emphasis (point of purchase)
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16
Q

Market Development Matrix: High CDI, Low BDI

A
  • Distribution expansion (selected markets)
  • Mailed coupons
  • Heavy spot TV
  • Promotional allowances
  • Seasonal premiums
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17
Q

Market Development Matrix: High CDI, High BDI

A
  • Promotion allowance and cents-off deals
  • Retail display emphasis (point of purchase)
  • Seasonal premiums
  • Spot TV (selected markets)
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18
Q

Types of Consumer Targeted Promotions

A
  • Packaging
  • In-store demonstrators
  • premiums
  • trading stamps
  • price-off promotions
  • sampling
  • coupons
  • money refund offers
  • contests & sweepstakes
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19
Q

Types of Company Salespeople Targeted Promotions

A
  • Sales Meetings
  • Sales manuals
  • Sales portfolios
  • Product Models
  • Contests and Incentives
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20
Q

Types of Channel (Distribution) Targeted Promotions

A
  • Sales Meetings
  • Point of Purchase Material
  • Trade Shows & Exhibits
  • Contests
  • Push Money (incentivize sales person to push the product
  • Dealer Loaders (Give dealers incentives)
  • Business catalogs
  • Trade Deals: buying allowance, adv. and display allowance, buy back allowance, free goods, count and recount
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21
Q

Tips on Strategies and Tactics for Premiums

A

Match fit to target audience: fit between premium offer and product. well known brand name.

Product: dog food; premium offer: Collar with name tag

Price Value Relationship: price of your product and the premium offer value should have a spread between premium’s retail price and the cost of premium offer to the consumer (30-50%). if the premium item is worth $5-15, the product price should be $1.50-5

Full Example:
Product: Iams Dog food
Premium Offer: Iams dog collar with name tag. normal dog collar premium price: $15. Iams dog collar:$5

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22
Q

Evaluate Sales Promotion Effectiveness

A
  • New Buyers
  • Regular Buyers
  • Long Term Buyers
  • percent of brand sales bought on a deal
  • relationship between brand share increases and percent bought on deal
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23
Q

Calculating Loss/Gain of a Price Promotion

A

Manf. Loss/Gain= (Sales Price - Manf. Cost) x Units Sold
Retailer Loss/Gain= (Retail Price - Retail Cost) x Units Sold
Consumer Loss/Gain= (Reg. Price - Promo Price) x Units

Calculate all 3 with and without promotion to determine promotional impact

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24
Q

Consumer Franchise Building Activities

A
  • advertising
  • consumer sampling
  • manufacturer couponing with selling message
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25
Q

Non-Franchise Building Activities

A
  • Price-off Packs
  • Cooperative advertising with no selling message
  • Trade allowances
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26
Q

Everyday Low Price (EDLP)

A
  • promising consumers a low price without the need to wait for sale price events or comparison shopping.
  • saves retail stores the effort and expense needed to mark down prices in the store during sale events, as well as to market these events.
  • $0.40-0.75 of every trade promotional dollar remains with the trade and is not passed to the consumer
27
Q

FSI

A

Free Standing insert, printed ad that is placed into print media, unbound

28
Q

Valassis (FSI)

A

created FSI’s that contain bar-coded coupons that track publication name, zip code where the publication is distributed, and date of insertion

29
Q

Quality Tiers sand Effects on Price Change

A
  • High quality brands (or national brands) offering a price cut can influence consumers to switch brands, or influence non-purchasers to buy the product
  • Private label brands do not see the same gains in sales as large national brands
30
Q

Internet Marketing

A
  • internet is currently the #1 advertising media market share, with highest spending
  • China, India, US, Brazil top 4 internet users
  • Facebook #1 Social Media Platform, followed by Youtube, WhatsApp, FB messenger, WeChat, and Instagram
  • Social media advertising is 25% of total ad revenue
31
Q

Internet Marketing Advertising

A
  • Pay to attract views

- Benefit: inherent measurability

32
Q

Internet Marketing Prospect Fees

A
  • Pays for qualified leads, visits
  • Benefit: Greater Accountability

Ex: Edmunds.com for car buying.

33
Q

Internet Marketing Affiliates

A
  • Sales Commission

- Benefit: Similar to an outside sales force

34
Q

Risk and Payment Scheme

A

Increasing Risk Down the List

Sponsorship : Fixed
Banner Ads : Impressions
Prospect Fees : Click Through
Sales Commission : Purchase

35
Q

Objectives for Online Initiatives

A
  • Acquisition
  • Development
  • Retention
36
Q

Internet Marketing Acquisition

A

Achieved by

  • Web advertising
  • E-mail accounts
  • Free Trials
  • Referral Systems
  • Partners (Amazon)
37
Q

Internet Marketing Customer Development

A
  • Community and personalization spending
  • Affiliates expenses
  • get them to spend more time on the website and have positive feelings
38
Q

Internet Marketing Retention

A
  • Customer Support
  • Enhancement Spending
  • Effectiveness Spending
39
Q

Web Traffic Plan

A
  • Acquiring traffic is expensive
  • Retaining traffic is profitable
  • Site buys 1 million banner impressions until goal is reached
40
Q

Overt Deception

A

when you outright lie to consumers.

example: “Made in the USA” but it was actually made elsewhere

41
Q

Misleading representation

A

intentional or accidentally misleading consumers to believe something about a product

example:

  • all detergent –> actor wearing stained shirt, immerses shirt in water, add detergent, comes out clean
  • ACTUALLY, shirt was washed in machine
42
Q

Areas of Regulation in Marketing

A
  • Fairness: should the product shortcomings be publicized? (fairness to competitors or consumers)
    - corrective advertising
    - advertising to children
  • Health claims
  • Obscenity and Bad Taste
    - type of product advertised (cigarette ads banned on tv)
    - anti-trust violation
  • Vertical Cooperative Advertising
43
Q

Corrective advertising

A

FTC orders corrective advertising as a penalty in addition to fines for company that violates regulations and misleads consumers to create an unfair advantage. correct claim that isn’t true.

44
Q

Ad. Screening process

A
  • Big 3 networks have large commercial clearing departments to screen ads
  • Now, ⅓ of national ads are first aired on cable without much screening. cable industry trying to increase self-regulation
45
Q

Puffery

A

legal advertising technique that uses ‘puffed up’ or exaggerated claims in general terms about a product or service that are a matter of opinion, or subjective, in nature. The claims can neither be proven nor disproven. For example, a company can claim they make the best blankets in the world.

46
Q

Robinson-Patman Act

A

Vertical Cooperative Advertising
- payments should be made on “proportionally equal” basis. FAIRNESS AT RETAIL LEVEL IS CRITICAL.

example: P&G wants to give money to supermarkets to incentivize the purchase diapers (coupons). must give money to all supermarkets in the region, unless it creates an unfair advantage.

47
Q

signal-theory

A

way to collude without obvious communication

48
Q

Federal Food, Drug and Cosmetic Act

A

must have:

  • labeled truth in packaging
  • nutritional information
  • unit pricing –> per square foot, per ounce etc.
    - promotes price competition, benefits consumer
  • measuring advertising deception –> “Natural”, “Low-fat”
49
Q

Socio-Economic Issues

A

Two Fundamental Premises (assumptions):

  • High & Rising standard of living is a valid social goal
  • Profit is an accurate measure of extent to which a business organization has succeeded in meeting consumer desires and thereby contributing to a rising standard of living
50
Q

Function of Advertising

A

Promotion is then defensible to the extent it performs the following functions:

  • motivates consumer to increase standard of living
  • provide information to consumers
  • provide a stimulus for firms to produce new products at 1. lowered prices, and 2. prevent monopoly and strengthen competition
51
Q

Motivation to increase standard of living

A
  • makes you want more things, shows you a path to get there
  • some stimulus is required to influence buyers to attain higher incomes and to spend these on goods and services. promotion provides this impetus.
  • striving for higher living is intrinsic in the US, so it’s doubtful advertising establishes this desire
  • *advertising reinforces our basic desires and directs them to specific products
52
Q

Provision of buying information

A
  • advertising provides information useful in buying decisions
  • advertisements can provide useful information, especially when a deliberate effort is made to discover the buyer’s evaluative criteria
53
Q

New Product Development (promotions)

A
  • buyer interest does not attain sufficient intensity in the absence of promotion to justify investment in new products
  • advertising provides the stimulus, and a quick and economical way of reaching a mass market with information and persuasive communication
  • competitive advertising would be wasteful unless the manufacturer can claim product differences (superiority)
54
Q

Promotion Effect on Prices

A
  • Promotion facilitates economies of scale –> lowers prices
  • Advertising increases prices by adding to costs*
  • Advertising encourages product differentiation – helps brand loyalty – charge higher prices
  • Advertising cannot maintain consumer brand loyalty with a bad product
55
Q

Effects on Competition and Market Structure

A
  • Advertising facilitates and strengthens competition.. facilitates disseminating product improvements, incentive for innovation
  • large companies drive out weaker competitors through sheer financial power
  • Necessary volume of advertising creates barrier to entry (but large investments needed to do business in general; advertising is not alone)
56
Q

Role of Public Relations

A
  • Publicity
  • Institutional Advertising
  • To Achieve Good Public Relations
57
Q

Public Relations

A

Establish needs and wants of publics, and match company policies and practices and communicate to publics

58
Q

Company Publics

A
  • Employees
  • Customers
  • Stockholders
  • Suppliers
  • Government
  • Local Community
  • Financial Community
  • The Press
59
Q

Developing a PR Program

A
  1. Information gathering through environmental monitoring, public relations audits, and communications audit
  2. Set PR objectives
  3. Formulate and Implement PR program such as publicity, institutional advertising, etc.
  4. Program effectiveness measures
60
Q

Characteristics of Publicity

A
  • Editors control time, space and content of release
  • High credibility –> looks like news item
  • picks up authority and prestige of media may attract top management better than ads
61
Q

Clipping Service

A

measures returns from publicity

62
Q

Corporate Advertising

A

make the organization favorably known, not a specific product or service

63
Q

Types of Institutional Ads

A
  • Patronage Ad –> name and activity, encourages consumers to patronize the firm
  • Identification
  • Goodwill ads
  • Idea/Issue ad –> advocates a viewpoint
64
Q

Corporate Positioning: Visibility and Credibility

A

Visibility Low | High
Credibility |
High Undiscovered | Unparalleled
———————————————————————————
Low Unknown | Undesireable

MAR 455 (1 decks)

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