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Unformatted text preview: Final Exam study guide link Friday, November 14, 2014 7:29 PM -­‐do7di6469q/ Key Terms with e xamples Chapter 14: Pricing Concepts For Establishing V alue 1. Price: price, money, time 2. Profit orientation: target profit pricing, maximizing profits, target return pricing 3. Target profit pricing: firms use price to stimulate a certain level of sales at a certain profit/unit 4. Maximizing profits: finding a mathematical model to find the right price that will maximize profits ( difficult) 5. Target return pricing: rate at which profits are generated relative to investments. Percentage of sales. 6. Sales orientation: Coke might introduce new products to increase sales rather than profits 7. Premium pricing: for whom price doesn’t matter. High quality products. 8. Competitor orientation: beat your competition first 9. Competitor parity: prices similar to competitors. 10. Status quo pricing: changing prices only to meet competition. When Delta increases its average fares, American Airlines and United often follow with similar increases. V alue is implicit. 11. Customer orientation: value to products and services. When CarMax promises no-­‐haggle pricing structure, it's customer orientation because it adds value to used-­‐car buyers by making their process easy. Another could be offering a high value product at low price for the customer. 12. Demand Curve: quantity demanded at diff. prices. 13. Prestige products or services: purchase for status than the functionality of it. Faberge, the French jeweler known for making jeweled eggs for the Russian Tsar and considers itself so prestigious that it doesn’t have a physical store 14. Price e lasticity of demand: change in quantity demanded/change in price 15. Elastic: when price elasticity is < -­‐1 ( price sensitive) 16. Inelastic: price elasticity > -­‐1 ( price insensitive) 17. Income e ffect: income goes down, then you buy more ramen… 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. Faberge, the French jeweler known for making jeweled eggs for the Russian Tsar and considers itself so prestigious that it doesn’t have a physical store Price e lasticity of demand: change in quantity demanded/change in price Elastic: when price elasticity is < -­‐1 ( price sensitive) Inelastic: price elasticity > -­‐1 ( price insensitive) Income e ffect: income goes down, then you buy more ramen… Substitution e ffect: orange juice has many substitutes, so if Tropicana raises its prices then ppl will switch to other brands. Cross-­‐price e lasticity: change in demand for one product in response to change in price of the other Complementary products: price of one goes up then demand for the other goes down ( demand curves + related) Substitute products Variable costs Fixed costs Total cost Break-­‐even analysis Break -­‐even point Contribution per unit Monopoly: one provide of power in each region of country Oligopolistic competition: few firms dominate market. Soft drink market and commercial airline travel Monopolistic competition: many firms sell similar but not homogenous products. Product differentiation appeals!! -­‐Hundreds of firms make wristwatches, thus the market is highly differentiated. Timex watches tell time, have stop watch, and sporty design Pure competition: substitutable products and price set according to laws. Grains, gold, meat, spices Everyday Low pricing: Walmart. Adds value by reducing search costs High/Low pricing: temporary low prices Reference price: regular price vs. discounted on price tags Market penetration strategy: setting price low to introduce product. V endors of security software adopt this tactic: by adding Microsoft's antivirus package, to a computer software bundle at no extra cost Experience curve e ffect: sales grow, costs drop Price skimming: fans of Call of Duty wait in line for hours and willing to pay the highest prices, but the price goes down later Loss leader pricing: cost below store's cost Bait-­‐and-­‐switch: Google's alleged attempt to manipulate their algorithms when bidding for ad words Price discrimination: illegal. Larger firms receive lower prices Price fixing: horizontal vs. vertical Horizontal price fixing: Six south African airlines were accused of colluding to hike the fare prices for flights within country during world cup 40. 41. 42. 43. 44. bidding for ad words Price discrimination: illegal. Larger firms receive lower prices Price fixing: horizontal vs. vertical Horizontal price fixing: Six south African airlines were accused of colluding to hike the fare prices for flights within country during world cup Vertical price fixing: manufacturers and retailers collude MSRP Chapter 18: Advertising, Public Relations, and Sales Promotions advertising A paid form of communication from an identifiable source, delivered through a communication channel, and designed to persuade the receiver to take some action, now or in the future. advertising plan A section of the firm's overall marketing plan that explicitly outlines the objectives of the advertising campaign, how the campaign might accomplish those objectives, and how the firm can determine whether the campaign was successful. advertising schedule The specification of the timing and duration of advertising. body copy The main text portion of an ad. brand elements Characteristics that identify the sponsor of a specific ad. cause-related marketing Commercial activity in which businesses and charities form a partnership to market an image, a product, or a service for their mutual benefit; a type of promotional campaign. ○ Chili's restaurant chain partnered with St. Jude's Research Hospital contest A brand-sponsored competition that requires some form of skill or effort. continuous schedule Runs steadily throughout the year and therefore is suited to products and services that are consumed continually at relatively steady rates and that require a steady level of persuasive or reminder advertising. ○ Procter & Gamble advertises its Tide brand of laundry detergent continuously coupon Provides a stated discount to consumers on the final selling price of a specific item; the retailer handles the discount. cross-promoting Efforts of two or more firms joining together to reach a specific target market. ○ J Crew teamed with Belstaff, Levi's, Barbour, Timex, and Sperry Top-Sider to offer exclusive products in J Crew Stores and website Provides a stated discount to consumers on the final selling price of a specific item; the retailer handles the discount. cross-promoting Efforts of two or more firms joining together to reach a specific target market. ○ J Crew teamed with Belstaff, Levi's, Barbour, Timex, and Sperry Top-Sider to offer exclusive products in J Crew Stores and website deal A type of short-term price reduction that can take several forms, such as a "featured price," a price lower than the regular price; a "buy one, get one free" offer; or a certain percentage "more free" offer contained in larger packaging; can involve a special financing arrangement, such as reduced percentage interest rates or extended repayment terms. emotional appeal Aims to satisfy consumers' emotional desires rather than their utilitarian needs. -Halle Berry's new perfume is love event sponsorship Popular PR tool; occurs when corporations support various activities (financially or otherwise), usually in the cultural or sports and entertainment sectors. ○ Red Bull flighting An advertising schedule implemented in spurts, with periods of heavy advertising followed by periods of no advertising. ○ Suntan lotion headline In an advertisement, large type designed to draw attention. informational appeal Used in a promotion to help consumers make purchase decisions by offering factual information and strong arguments built around relevant issues that encourage them to evaluate the brand favorably on the basis of the key benefits it provides. -Exxon Mobil attempts to explain technical aspects of its products, like Li ion batteries, H2 technology, biofuels, and CO2 capture technologies, to convince consumers that the company is environ. friendly informative advertising Communication used to create and build brand awareness, with the ultimate goal of moving the consumer through the buying cycle to a purchase. -Retailers often use this to tell customers about upcoming sales event institutional advertisements A type of advertisement that informs, persuades, or reminds consumers about issues related to places, politics, or an industry (e.g. Got Milk? ads). -to increase milk consumption lift Additional sales caused by advertising. loyalty program Specifically designed to retain customers by offering premiums or other incentives to customers who make multiple purchases over time. mass media lift Additional sales caused by advertising. loyalty program Specifically designed to retain customers by offering premiums or other incentives to customers who make multiple purchases over time. mass media Channels that are ideal for reaching large numbers of anonymous audience members; include national newspapers, magazines, radio, and television. media buy The actual purchase of airtime or print pages. (LARGEST EXPENSE IN AD BUDGET) media mix The combination of the media used and the frequency of advertising in each medium. -Macy's heavy tv, radio, print, and billboards ads during holiday selling season b/w Thanksgiving and the end of the year media planning The process of evaluating and selecting the media mix that will deliver a clear, consistent, compelling message to the intended audience. niche media Channels that are focused and generally used to reach narrow segments, often with unique demographic characteristics or interests. ○ Specialty TV channels (Home and Garden TV) and magazines like 'Skateboarder' or 'Cosmo Girl' ○ McD's billboard in a specific community would target a more focused niche market persuasive advertising Communication used to motivate consumers to take action. -during growth and early maturity stages -Cover Girl often uses this point-of-purchase (POP) display A merchandise display located at the point of purchase, such as at the checkout counter in a grocery store. posttesting The evaluation of an IMC campaign's impact after it has been implemented. premium An item offered for free or at a bargain price to reward some type of behavior, such as buying, sampling, or testing. ○ Toys inside a cereal boxes, coupon for free milk of Cheerios, free perfume offers from Victoria's secret pretesting Assessments performed before an ad campaign is implemented to ensure that the various elements are working in an integrated fashion and doing what they are intended to do. product placement Inclusion of a product in nontraditional situations, such as in a scene in a movie or television program. ○ American Idol judges are seen drinking Coca Cola ○ Big Bang Theory: Sheldon's assertion to get access to the Cheesecake various elements are working in an integrated fashion and doing what they are intended to do. product placement Inclusion of a product in nontraditional situations, such as in a scene in a movie or television program. ○ American Idol judges are seen drinking Coca Cola ○ Big Bang Theory: Sheldon's assertion to get access to the Cheesecake Factory walk-in freezer product-focused advertisements Used to inform, persuade, or remind consumers about a specific product or service. -Pepsi Max ad is designed to generate sales for Pepsi Max public relations (PR) The organizational function that manages the firm's communications to achieve a variety of objectives, including building and maintaining a positive image, handling or heading off unfavorable stories or events, and maintaining positive relationships with the media. ○ Designers vice to have celebrities wear their fashions on the red carpet public service advertising (PSA) Advertising that focuses on public welfare and generally is sponsored by nonprofit institutions, civic groups, religious organizations, trade associations, or political groups; a form of social marketing. -betterment of the society -Yum Brands, corporation that owns Pizza Hut, Taco Bell, & KFC, created a World Hunger Relief with a focus on fighting hunger, not marketing products. puffery The legal exaggeration of praise, stopping just short of deception, lavished on a product. ○ Match.com claims it leads to better first date, it's puffery because BETTER is a subjective measure ○ Charmin's animated bears should leave few pieces of TP on their rears instead of no TP at all because they claim the brand leaves less TP pull strategy Designed to get consumers to pull the product into the supply chain by demanding it. pulsing Combines the continuous and flighting schedules by maintaining a base level of advertising but increasing advertising intensity during certain periods. ○ Airlines, hotels, and car rentals continuously advertise but increase during low demand periods push strategy Designed to increase demand by motivating sellers—wholesalers, distributors, or salespeople— to highlight the product, rather than the products of competitors, and thereby push the product onto consumers. rebates A consumer discount in which a portion of the purchase price is returned to the push strategy Designed to increase demand by motivating sellers—wholesalers, distributors, or salespeople— to highlight the product, rather than the products of competitors, and thereby push the product onto consumers. rebates A consumer discount in which a portion of the purchase price is returned to the buyer in cash; the manufacturer, not the retailer, issues the refund. ○ Consumer electronics offer mail-in rebates that may lower the price of the item significantly reminder advertising Communication used to remind consumers of a product or to prompt repurchases, especially for products that have gained market acceptance and are in the maturity stage of their life cycle. -appears in tv or print commercials -Kleenex achieved top-of-mind awareness in consumers sales promotion Special incentives or excitement-building programs that encourage the purchase of a product or service, such as coupons, rebates, contests, free samples, and pointof-purchase displays. sampling Offers potential customers the opportunity to try a product or service before they make a buying decision. social marketing The content distributed through online and mobile technologies to facilitate interpersonal interactions. subhead An additional smaller headline in an ad that provides a great deal of information through the use of short and simple words. sweepstakes A form of sales promotion that offers prizes based on a chance drawing of entrants' names. tracking Includes monitoring key indicators, such as daily or weekly sales volume, while the advertisement is running to shed light on any problems with the message or the medium. unique selling proposition (USP) A strategy of differentiating a product by communicating its unique attributes; often becomes the common theme or slogan in the entire advertising campaign. -Red Bull…Gives You wings -Ford…Built Tough -Oreo…Milk's favorite Cookie Chapter 17: Integrated Marketing Communications 1. AIDA model : think, feel, do 2. brand awareness: Coke has excellent brand 3. awareness, so less effort to market new product aided recall: Occurs when consumers recognize a name ( e.g., of a brand) Chapter 17: Integrated Marketing Communications 1. AIDA model : think, feel, do 2. brand awareness: Coke has excellent brand 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. awareness, so less effort to market new product aided recall: Occurs when consumers recognize a name ( e.g., of a brand) that has been presented to them. top-of-mind awareness: Harley Davidson whenever you hear US made motorcycles lagged effect: The delayed release of Toyota Prius v campaign Advertising Public Relations Sales promotions Personal selling: communication b/w buyer and seller. High costs. direct marketing: mail and catalogs sent through mal; email and mobile marketing mobile marketing: cell phones blog (Weblog): can announce special events, form a community. Kevin Smith tweeting about being kicked out of Southwest Airlines for his size and his requirement to purchase 2 seets. social media objective-and-task method : An IMC budgeting method that determines the cost required to undertake specific tasks to accomplish communication objectives; process entails setting objectives, choosing media, and determining costs. rule-of thumb methods 15. Budgeting methods that base the IMC budget on either the firm's share of the market in relation to competition, a : fixed percentage of forecasted sales, or what is left after other operating costs and forecasted sales have been budgeted. Measure of how often the audience is exposed to a communication within a specified period of time. 16. Frequency: Measure of how often the audience is exposed to a communication within a specified period of time. 17. Reach: Measure of consumers' exposure to marketing communications; the percentage of the target population exposed to a specific marketing communication, such as an advertisement, at least once. 18. gross rating points (GRP): Measure used for various media advertising—print, radio, or television; GRP = reach x frequency. 19. search engine marketing (SEM): Google Ad Words 20. Impressions: The number of times the ad appears in front of the user 21. click-through rate (CTR) : The number of times a user clicks on an online ad divided by the number of impressions 22. Relevance: how useful is the ad in the context of SEM 23. Return on investment = (Sales revenue -­‐ Ad cost)/Ad cost Chapter 12: Product online ad divided by the number of impressions 22. Relevance: how useful is the ad in the context of SEM 23. Return on investment = (Sales revenue -­‐ Ad cost)/Ad cost Chapter 12: Product 1. Pioneer: breakthrough product with new market. Apple Ipod 2. first movers: product pioneers. PoweradeIon4, Chobani Greek 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. Yogurt, Nature's Pride Fresh bread & rolls Innovator: first to be line for a product and high risk takers. Stading in line overnight to get the iphone 6 early adopter: wait & purchase product after careful review. Get product a week after it arrives. early majority: 34% of population and they wait till bugs are fixed. Firm not profitable until this group buys their products. ○ They have to hear personally before purchasing ○ Renting the latest Avengers movie during the first week it comes out on video. Thus, they experience little risk because all the reviews are in, and their costs are lower because they're renting the movie instead of going to theater late majority: last group to enter new product market. 34% of population. Once they enter, product has achieved! a. Purchase after a majority of the population has adopted the product b. Movie watchers wait until the newest movie is easy to find at rental store or put it on Netflix queue to be delivered after other consumers have seen it Laggard: Wait until Avengers shows up on TV…like the traditional products Reverse engineering: taking competitor's product and improving on it without infringement of their patents a. How apple improves based on Android phones Lead users: modify products to their own ideas. Test marketing: new product to a limited geographical area….test here and see how the demand is before introducing product to an entire market Trade promotions: get wholesalers or retailers to purchase through special pricing incentives Introductory price promotions: short term price discounts for retailers to try the product ○ Special display in grocery aisle, introductory celebration, or a party in conjunction with an interesting events like Academy Awards Trade show: buyers are exposed to various products and potential sellers Chapter 11: Product/Branding 1. Brand equity: set of as...
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