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CLEP Principles of Marketing Study Notes

5 the receiver decodes the message in the context of

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5. The receiver decodes the message. In the context of the communication process, encoded does not mean using some kind of secret code. Converting thoughts and ideas into symbols-- for example, writing an email in plain English to someone-- is encoding . When the receiver gets the email, and interprets it to figure out what ideas the source was trying to convey, this is called decoding. 6. The Receiver or Audience
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Noise - Anything which hinders the communication process, and results in the receiver decoding a different message from what the source was trying to convey. Anything which interferes with or breaks down parts of the communication process, and may result in poorly encoded/decoded messages. Noise can result from many things-- for example, the medium of transmission not fully reaching the desired audience, or the source conveying meanings he did not intend to due to differences in cultural perceptions between the source and the receiver. Many industrial products--especially expensive equipment such as steam generators and aircraft--are sold through a direct channel from the producer to the buyer. With many industrial products, a direct channel is used--the product is sold directly to the buyers by the producers. This is good for large machinery and expensive equipment, and buyers of complex industrial products also can receive technical assistance from the manufacturer more easily in a direct channel. Major techniques for establishing a Promotion Budget include: 1. Percent-of-Sales technique - determining a promotion budget involves simply allocating a fixed percentage of the previous year's sales. More popular than the Objective and Task approach. The downside is that sales determine how much is spent on promotion, which means that when sales drop, the amount spent on promotion drops, which could further diminish sales. 2. Competitive Parity approach (aka: Competition Matching Approach) - involves trying to match competitors' budgets, either in terms of absolute dollars or to allocate the same percentage of sales for promotion as their competitors do. Not usually a good idea because a firm's competitors probably have different promotion objectives and different resources available for promotion. 3. Objective and Task procedure - where the tasks required to achieve promotional objectives are listed , and then the estimated costs for each of these tasks is added up to come up with the budget. Most logical way to calculate a promotion budget; however, it is not widely used because the costs to achieve certain objectives can be difficult to estimate . For example, determining how much money in advertising will raise market share from 5 to 7 percent can be very difficult, if not impossible. 4. All Available Funds technique - allocating all the money that is available after the other elements of the marketing plan have been funded. Often used by new firms who want to spend as much as they can afford on advertising.
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