MAR3023 (Brady) Exam 4 - Exam 4 Study guide - Brady PDF

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Exam 4 Study guide - Brady...

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MAR3023 – Basic Marketing Concepts – EXAM #4 **: on Brady’s Review Sheet & you NEED to know it – which is pretty much everything o Integrated Marketing Communications  Integrated Marketing Communications  What is a promotion? **  Textbook Definition: Communication to build and maintain relationships by informing and persuading one or more audiences  Brady’s Definition: encouragement of the progress, growth or acceptance of something; furtherance  What is the purpose of promotion? **  Promotion is one of the four elements of the marketing mix – The communication link between sellers and buyers for the purpose of influencing, informing, or persuading a potential buyer’s purchasing decision**  Promotion Mix**: a combination of promotional methods used to promote a specific product  Advertising: is a paid, non-personal communication about an organization and its products transmitted to a target audience through mass media  Examples: television, radio, the Internet, newspapers, magazines, video games, direct mail, outdoor displays, and signs on mass transit vehicles  Personal Selling: is a paid, personal communication that seeks to inform customers and persuade them to purchase products in an exchange situation  Kinesic Communication: communicating through the movement of head, eyes, arms, hands, legs or torso  Proxemic Communication: communicating by varying the physical distance in face-to-face interactions  Tactile Communication: communicating through touch  Public Relations: is a broad set of communication efforts used to create and maintain favorable relationships between an organization and its stakeholders  Examples: annual reports, brochures, event sponsorship and sponsorship of socially responsible programs aimed at protecting the environment or helping disadvantaged individuals  Sales Promotion: is an activity or material that acts as a direct inducement offering added value or incentive for the product to resellers, salespeople or customers  Examples: free samples, games, rebates, sweepstakes, contests, premiums and coupons 

Integrated Marketing Communications (IMC)**

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Textbook Definition: The coordination of promotion and other marketing efforts for maximum informational and persuasive impact Brady’s Definition: When companies coordinate all of their promotional messages to create one voice in how they approach customers.  Example: The Terry Tate Office Linebacker commercials for Reebok  Example: Taco Bell had a sales promotion with the Red Sox where if the team stole a base during the 2007 MLB World Series baseball game, they would give away a free crunchy taco to every person in America; “90ft. To Free Tacos For America” – Taco Bell had a very integrated message they were trying to send consumers in a very coordinated way; very successful promotion Why do companies use IMC? **  Everything companies do within their promotional efforts, from the sales promotions and advertisements that they run to the PR and selling they do, focuses on delivering one efficient message to consumers

Traditional Promotion Mix** **Know the difference between IMC and Traditional Promotion Mix**  Historically, companies would think differently about the different channels they were using to get messages to consumers – they would look at all of the promotional efforts (some listed below) separately which would result in their messages actually being counterproductive  IMC takes all of the promotional efforts and fits them neatly together so that they’re really coordinated and consumers understand the message they’re getting from the firm. Also, those same messages are consistent among whatever channel the consumer interacts with. All of it fits together so the whole is better than just some of the parts.  Media Advertising  Publicity, Point of Purchase, Sales Promotion, Packaging, Direct Response, Interactive Marketing, Direct Marketing, Public Relations and Special Events  Goals of IMC** o 1. Consistent message to customers o 2. Coordinate/manage promotional efforts o 3. Synchronization of promotional elements o 4. Use more precisely targeted promotional tools  Example: Coca-Cola introducing Coke Zero – they were selling diet drinks to guys with the Tab (pink can mainly attracting women) – made the Coke Zero can a guy’s color:

black, had men come in to look and help pick the packaging design and didn’t use the word ‘diet’ (diet vs. zero). They also sponsored NASCAR 

2 General Promotional Strategies (that companies can use to approach marketing communications for customers)** **Know differences between & examples of Push & Pull Policy**  Push Policy: when companies promote a product only to the next institution (pushing them) down the marketing channel  The producer promotes the product to wholesalers, the wholesalers promote it to retailers and the retailers promote it to consumers  Examples: o Trade shows where companies try to attract retailers and wholesalers to be interested in their product & personal selling o “Push Money” aka. ‘spiffs’ – an extra commission paid to employees to push products  Pull Policy: promoting a product directly to consumers to develop strong demand that pulls products through the marketing channel; pretty much the opposite of Push Policy where companies are promoting directly to consumers, trying to create consumer demand to the point where it’s actually the consumers that pull the product through the marketing channel  Where the consumers get so excited about products that they ask retailers specifically about them and when the retailers get asked enough about a specific product, they go out and find a manufacturer for that product so they can meet consumer requests  Examples: o Children’s Toys – Toy manufacturers try to get kids SO excited about toys they bug their parents about it until their parents get so tired of hearing about it that they go out and buy that toy specifically o Ford Australia only produces a car when one is ordered by a customer; demand is literally pulled my customer; Dell does same thing

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Communication Process**  The process that describes the exchange of information between two or more people; describes the process that companies use to get messages to consumers  **Messages are sent through channels  What is considered a channel? **  Letters, email, in-person, internet or TV ad

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Elements of the Communication Process**

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**NOISE: anything that interferes with or distorts the message 1. Sender/Source: process starts at the top with the “Sender/Source” that has the information they want to convey to the end receiver; could be a company, salesperson or even a celebrity  Q-Scores: Every celebrity has a Q-score and it helps companies determine which celebrities are going to command the most money to endorse a particular product o Q stands for ‘quality’ & there are two factors that are considered to calculate a Q-score:  1. Consumers level of familiarity with a name, % of who has heard of him/her  2. The number of respondents who indicate that a person, program or character is a favorite  The score is calculated by dividing the two numbers o Said to be better than Nielsen ratings o Example: Lebron James’ Q-score was very high when he first entered the NBA. When he left for Miami the way he did, his Q-score significantly decreased but now people are forgetting how he left Cleveland and his Q-score has gone back up.

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2. Encoding: the process of putting words, thoughts, messages into symbolic form in such a way that they will be understood by the receiver/consumer; the sender encodes and formats the information they have so that it can be sent down the channel (encoding done by creating an ad or writing it down); symbols are particularly good 3. Message Development: the message has to be developed… The Channel: how the communication travels from the source to the receiver  2 Types of Channels o Non-personal Channels: no personal contact with customer; ex. Print, broadcast o Personal Channels: involves direct contact; ex. Direct selling, salespeople, WOM, ‘Buzz Marketing’ Buzz Marketing: a subset of ‘viral marketing’ wherein companies hire socially active consumers to promote products to their friends, relatives and acquaintances; there are so many advertisements now that consumers don’t really pay attention to them so much anymore forcing companies to use buzz marketing to re-create that stir and excitement by consumers through WOM advertising and undercover marketing  Consumers are typically unaware that the person is on the ‘payroll’  Examples: o Sony Ericsson paid undercover marketers to act like tourists (at Disney, Paris, etc.) to promote their new digital camera phone o Proctor & Gamble (P&G)’s ‘Tremor’ company employed 250,000 teens between the ages of 13-19 to promote its products (ex. Pantene shampoo, Pringles, Covergirl) Tremor also has other customers (like, 500,000 Moms on the payroll as undercover promoters too) and charges $1 million per campaign

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4. Media: then delivered by some form of media

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5. Decoding: the process of transforming the message back into thought 

The key is for the decoded message to resemble the encoded message; if customers don’t understand the message the way the company intended, usually because of noise, problems will occur

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6. Feedback: the receiver’s response to the message; once the consumer has made sense of the message, they can offer feedback by either buying or not buying the product or by word-of-mouth 7. Sender/Source: comes back full circle & starts all over again

Response Models**  This is how consumers respond to messages and the process that receivers have to go through to receive a message effectively.  Each Model has 3 successive stages:**  1. Cognitive Stage: the “thinking” stage – where the receiver becomes aware of the message  2. Affective Stage: the “feeling” stage – where the receiver forms a liking or preference for the ad object  3. Behavioral Stage: the “doing” stage – where the receiver acts on preference  THINK (Cognition)  FEEL (Affect)  DO (Behavior)  Example:  AIDA Model: the most popular response model developed for personal selling – represents the stages a salesperson must take a customer through to induce purchase o (Attention – Interest – Desire – Action)  THINK (Cognition): Attention & Interest  FEEL (Affect): Desire  DO (Behavior): Action

o Advertising & Public Relations  What is advertising? **  A paid form of non-personal communication that is transmitted to a target audience through mass media; the objective is to influence customer decision making and for companies to create positive images to consumers of what they’re trying to sell  **Effective advertising can influence customers’ purchasing behavior throughout their lifetimes  Most organizations, even nonprofits, engage in advertising 

Six Point Advertising Strategy**  1. Primary Purpose: What is the primary purpose of our ad?  2. Primary Benefit: What unique benefit can we offer customers?  3. Secondary Benefit: What other key benefits will customers receive from our products or services?  4. Target Audience: At whom (what market segments) are we aiming this ad?  5. Audience Reaction: What response do we want from our audience?

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6. Company Personality: What image do we want to convey in our ads?

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Advertising Mediums**  Movies, TV & Video Games: product placement, mentions, interactivity  Newspaper, Direct Mail & Magazines: coupons, flyers, classified ads  Sports: soccer, Nascar, volleyball – athletes (uniforms) are walking billboards

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Advertising Pervasiveness**  The average American is exposed to more than 3000 ads a day, this includes symbols and logos (not just commercials and ads) that you might see for a second in passing  Why is it so difficult for a company to get a customer to pay attention to their advertisement? **  People are being overwhelmed with the amount of promotional items they are exposed to every day

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Types of Advertising**  Product Advertising: promotes the uses, features and benefits of products  Pioneer/Primary Demand: tries to simulate demand for a product category rather than a specific brand by informing potential buyers about the product  Focuses on a product category  Ex. ‘Got Milk?’, Beef – promotes a whole product category like milk, not just one specific brand of milk  Advocacy Advertising: conveys a firm’s position on a public issue; associated with a particular cause  

Ex. Anheiser Busch & “Responsibility Matters” Against drunk driving and underage drinking

Competitive Advertising: points out a brand’s advantages relative to competing brands; most common type of advertising  3 Types of Competitive Advertising – o 1. Comparative Advertising: compares two or more brands (primary competitors) on one or more characteristics  Ex. Papa John’s ‘Better Ingredients, Better Pizza’ vs. Domino’s Pizza // Domino’s Oven Baked Sandwiches ‘The Taste That Beat Subway 2 to 1’ vs. Subway // Porsche vs. BMW

o 2. Reminder Advertising: reminds customers of an established brand’s characteristics and benefits  Ex. Mr. Clean ad in NY on street crosswalk o 3. Reinforcement Advertising: assures current users they have made the right choice  Ex. AT&T ‘You Made the Right Choice’ 

The Next Wave of Advertising**  Mobile Ads**  Advertisements sent to mobile phones or other wireless devices o First mobile ad was sent in 2000 o Mobile ads now account for 2% of the advertising market  Why are mobile ads the next wave of advertising? ** o Mobile Ads have rapidly increased because it cuts through the clutter of the 3000 ads we see every day and they can target the ad at the specific individual o Relatively cheap to place a mobile ad

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New Frontiers in Advertising**   

What is the current state? **  With all the advertising clutter, recall of a typical ad is only 10% Why is this not working? **  Trying to cut through the clutter of the 3000 ads we see daily What are companies doing that is new? **  Branded Entertainment: creates a show, series of shows or short movie to get you to pay attention to the message a company is sending o Recall of a ‘branded entertainment’ episode is 24% o Examples:  AXE Prank Ad – Unilever (which owns Axe) paid $50,000 to the University of Maryland for Collegehumor.com to host the prank; In return, the company was allowed to stream the prank video on its website and in conjunction with its brand that targets young males (Axe)  Gatorade’s “Replay” – there was a high school football game between two rival schools that ended in a tie and 10 years later

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Gatorade brought them back, trained them and gave both teams the chance to replay each other and determine a winner – this was done in an attempt to tie the drink back to its core market of athletes Advertainment: advertisements that don’t feel like advertisements; short clips you can watch on YouTube that still sends the intended message  Ex. The Guy Ritchie ft. David Beckham underwear commercial ad sponsored by H&M

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Scheduling Advertising  Continuous – advertisement runs steadily throughout the year  Goods for continuously used products  Ex. Laundry Detergent is used all year  Flighting – advertisements running in spurts; only some of the time  Ex. Heavy/no use - good for seasonal products  Pulsing – a combination of continuous and flighting; runs steadily but with bursts at certain times

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Measuring Advertising  How do we measure whether an ad is effective?  Reach: the percentage of consumers in the target audience exposed to a particular advertisement in a stated period; how many people in your target market that you reach at one time  Frequency: the number of times these targeted consumers are exposed to the advertisement  Effectiveness

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Advertising Effectiveness  Q: Is it more effective to reach 100 customers once or 25 customers 4 times?  A: The ideal number of times to reach people is 3 times – so the answer is 25 customers, 4 times  Krugman, 1972 did a lot of research and his results found: o Exposure #1: “What is it?” o Exposure #2: “What about it?” o Exposure #3: “What is it’s (purpose or decision)?”  Curiosity, Recognition, Decision Measuring Advertising Effectiveness  Pre-Test/Post-Test  Pre-Test: evaluation performed before a campaign begins; you test ad awareness, brand awareness, ad effectiveness, etc. consumer jury test (on your own)

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Post-Test: evaluation of advertising effectiveness after the campaign Recognition/Recall: respondents shown a portion of an ad – or sometimes a memorable image and asked:  1. RECOGNITION - Do you recognize this ad?  2. UNAIDED RECALL – Please type in the sponsor of this ad.  3. AIDED RECALL – Please choose the sponsor of this ad from the following list.

Nielsen Ratings**  Since there are an estimated 116,000,000 television households in the U.S: One rating point represents 1% of that number – 1.16 million households  What are Nielsen Ratings? **  An audience measurement system designed to assess the size and composition of TV audiences that are watching a particular show  How & Why are Nielsen Ratings Used? **  Traditionally, Nielsen relied on a combination of data from the ‘audimeter’ and consumer diaries o There were concerns over the accuracy of the diaries  Now, Nielsen uses a “people meter” that has the capability to measure each household member’s viewing habits o Each family member has a separate button that is pushed o Data are based on a nationwide sample of 10,000 ‘Nielsen families’ o Nielsen uses a sample of families in 55 markets to produce the overnight ratings o Nielsen now also produces commercial ratings that measure commercial viewership, adjusted for DVR recordings Print Media**  Facts:  Almost 80% of U.S. households subscribe to or purchase magazines  The average household purchases 6 magazines per year  54% of magazine revenues comes from ads  73% of business magazine revenue Print Media Circulation**  Primary Circulation – Subscribers of magazines  Pass Along Readership – the numbers of people who read the magazine after the primary subscriber

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Total Circulation – primary circulation times pass along readership. If subscribers = 1 million and pass along is 2, total circulation is 2 million; the total amount of people reading magazines

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Public Relations**  Communication efforts used to create and maintain favorable relations between an organization and its stakeholders  Examples:** o Starbucks, Palm, Botox and Segway were successfully launched entirely based on PR o Segway was introduced with no advertising but still generated 758 million impressions through publicity; valued at $70-$80 million o Wonderbra used media hype and a few billboards to become the #1 seller in its category o Rockport launched the idea of ‘fitness walking’ as a PR initiative and doubled its sales

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Publicity** 

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Communication about the organization and/or its products transmitted through mass media at no charge  Ex. News release, feature article, captioned photograph, press conference

PR vs. Publicity**  1. Publicity is more short term whereas PR extends over a period of time  2. Publicity is largely out of the control of the firm.  Control: Ads  PR  Publicity  3. PR is designed to be positive whereas publicity may not be positive  Tylenol, Perrier (found Benzene in the water in 1990) – this is now a Harvard Business Case  4. Publicity is considered to be more powerful than PR

o Personal Selling & Sales Management  What is personal s...