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USC / Marketing / MKTG 350 / What is promotion in marketing mix?

What is promotion in marketing mix?

What is promotion in marketing mix?

Description

School: University of South Carolina
Department: Marketing
Course: Principles of Marketing
Term: Spring 2019
Tags: Marketing
Cost: 50
Name: MKTG 350 - Exam 1 Study Guide
Description: This study guide covers material expected to be covered on the 1st Exam including Chapters 1, 2, 4, 5, and 6.
Uploaded: 02/13/2019
12 Pages 36 Views 2 Unlocks
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Marketing 350 Exam 1 Study Guide 


What is promotion in marketing mix?



Chapter 1: 

Marketing – the activity, set of institutions, and processes for creating,  capturing, communicating, delivering, and exchanging offerings that have  value for customers, clients, partners, and society at large.

Core Aspects of Marketing:

Marketing –

∙ Helps create value

∙ Is about satisfying customer needs and wants

∙ Entails an exchange

∙ Requires product, price, place, and promotion decisions ∙ Can be performed by both individuals and organizations ∙ Affects various stakeholders

Marketing Mix – Product, Price, Place, Promotion


How do firms co create value with consumers?



∙ Product – creating value

o Goods, Services, Ideas

o The fundamental purpose of marketing is to create value by  developing a variety of offerings

∙ Price – capturing value

o Everything a customer gives up (time, money, energy) is in  exchange for the product

o Reflective of the value to the customer

∙ Place – delivering value (also supply chain management) o Represents all the activities necessary to get the product to the  right customer when that customer wants it

o Commonly deals with specifically with retailing and marketing  channel management (a.k.a. supply chain management) ∙ Promotion – communicating value, integrating marketing  communications


What are the four eras of marketing?



o Communication by marketer that informs, persuades, and  reminds potential buyers about a product or service so as to  influence their opinions and elicit response If you want to learn more check out How does public finance aid the government in providing goods and services to the public?

Market – group of customers with common problems to solve or needs to  solve or needs to satisfy, money to spend, and the authority to spend that  money

Supply Chain Management – the set of approaches and techniques that firms employ to efficiently and effectively integrate their suppliers, manufacturers, warehouses, stores, and other firms involved in the transaction into a

seamless value chain in which merchandise is produced and distributed in  the right quantities, the right locations, and at the right time, while  minimizing systemwide costs and satisfying the service levels required by  the customers.

Value -  

Value co-creation – creating value along with the customer, meaning that the customer is part of the development process

B2B, B2C, C2C

∙ Business-to-Business marketing – businesses selling products to  other businesses

∙ Business-to-Consumer marketing – businesses selling to  consumers

∙ Consumer-to-Consumer marketing – consumers selling to other  consumers

Production Era

∙ Assemblies line and the beginning of manufacturing

∙ Companies using a production mentality are all about making  product

Sales Era

∙ Focus shifted from making a better product to selling it

∙ Convincing customers they need something they don’t want ∙ All about salespeople Don't forget about the age old question of Can heterogeneous mixtures be separated by physical means?

Marketing Era

∙ “Customer is King”

∙ Outwardly focused

Value-based Marketing Era

∙ All about the customer’s needs still

∙ Still selling what you need, but trying to increase the value ∙ Efficiencies

Value driven companies

1. They share information about their customers and competitors  across their own organization and with other firms the help them  get the product or service to the marketplace

∙ Marketing analytics – companies collect massive amounts  of data about how, when, why, where, and what people  

buy

2. They strive to balance their customers’ benefits and costs ∙ Value-oriented marketers constantly measure that benefits  that customers perceive against the cost of their offerings

∙ “Bang for the Buck”

3. They concentrate on building relationships with customers ∙ Relational Orientation

i. Relational marketing

1. Where you have a customer coming back over  

time

a. Transactional relationship

ii. A method of building a relationship with customers  

based on the philosophy that buyers and sellers  

should develop a long-term relationship

iii. More value over their lifetime Don't forget about the age old question of Define the scope of electromagnetic spectrum.

1. CUSTOMER LIFETIME VALUE

4. They take advantage of new technologies and connect with their  customers using social and mobile media

∙ Almost all marketers use social media for business

∙ Internet advertisement has exploded over the last 10

years We also discuss several other topics like When do we need post hoc test?

Customer Relationship Management (CRM)

∙ A business philosophy and set of strategies, programs, and systems  that focus on identifying and building loyalty among the firm’s most  valued customers If you want to learn more check out What are three examples of ecosystem services?

Chapter 2: 

Marketing Strategy

1. Identify your target market so you know who customers are a. Not realistic to sell to everybody, so which group of customers  can I sell to the best

2. Develop the marketing mix (4 P’s) to satisfy the target market 3. Determine the basis upon which your firm plans to build a sustainable  competitive advantage

a. Advantage over the competition not easily copied

Sustainable competitive advantage – advantage over the competition not  easily copied

4 Macro Strategies for Developing Customer ValueIf you want to learn more check out What are the rules of significant figures?

o Customer Excellence

 Retaining loyal customers

o Locational Excellence

 Many say “the 3 most important things in retailing are  

location, location, location”

 Competitive advantage based on location is not easily  

duplicated

o Operational Excellence

 Efficient operations -> excellent supply chain management  Able to keep overhead costs low

 Result of operational excellence is low prices

∙ Good operations = low prices

 Low prices are not sustainable

o Product Excellence

 Products with high perceived value and effective branding  and positioning

Target market – Group of customers to best sell your product to

Marketing plan – Written document every company should be doing for every product

Mission statement – A written-down, broad description of a firm’s objectives  and the scope of activities it plans to undertake

Growth strategies

∙ Market Penetration

o Current product, current market

o Existing marketing mix

o Existing customers

o In what way is a sale a market penetration strategy?

o Sales Promotion

∙ Product Development

o Current Market, new product

o New product or service

o Current target market

∙ Market Development

o Current market, new market

o What can a company do to continue to grow in a difficult retail  environment?

∙ Diversification

o New market, new product

o New product or service

o New market segment

o Related diversification

 Taking advantage of knowledge or expertise that you  

already have

o Unrelated Diversification

3 phases of strategic marketing process

∙ Planning Phase

o Step 1: Define the Business Mission

 Mission statement for a company

o Step 2: Conduct a Situation Analysis

 SWOT Analysis

∙ Implementation Phase

o Step 3: Identifying and Evaluating Opportunities Using STP  Segmentation -> Targeting -> Positioning

∙ Must be in this order

∙ Segmentation

o When we take heterogeneous market and  

subdivide it into smaller segments

∙ Targeting

o Picking the segment that gives you the best  

chance for success

∙ Positioning

o Develop a clear, distinctive, desirable  

understanding of your product compared to the

competitors  

o The place a product occupies in the mind of the

consumer

o Price is one way to position

o Most common is features

∙ Control Phase

o Step 4: Implement Marketing Mix and Allocate Resources  Product and Value Creation

∙ Successful products and services are those that  

customers perceive as valuable enough to buy

 Price and Value Capture

∙ Price must allow for customers to perceive good  

value for the product they receive

 Place and Value Delivery

∙ The product must be readily accessible

 Promotion and Value Communication

∙ Advertising, personal selling, sales promotion, public  

relations, direct marketing, and online marketing  

(including social media)

o Step 5: Evaluate Performance Using Marketing Metrics

 A metric is a measuring system that quantifies a trend,  dynamic, or characteristic

 Metrics are used to explain why things happened and also  project the future

 Evaluating Performance

∙ Who is accountable for performance?

∙ Performance objectives, marketing analytics, and  

metrics

∙ Financial performance metrics

∙ Portfolio analysis

∙ Strategic Business Unit (SBU)

SWOT – Situational Analysis of Internal Strengths and Weaknesses and  External Opportunities and Threats for a company

BCG portfolio analysis

∙ Relative Market Share vs. Market Growth Rate

o Stars

 High relative market share and high market growth rate o Question Marks

 Low relative market share and high market growth rate

 Toughest Category to decide on

o Cash Cows

 High relative market share and low market growth rate

 Isn’t growing but it is the market share leader

 Product practically sells itself

 Extra resources to support the Stars

o Dogs

 Low relative market share and low market growth rate

 Usually goes away from the product line

SBU – a division of the firm itself that can be managed and operated  somewhat independently from other divisions and may have a different  mission or objectives

Product Lines – groups of associated items, such as those that consumers  use together or think of as part of a group of similar products

Chapter 4: 

Conscious Marketing – an approach to marketing that acknowledges four key  principles

1. Recognition of marketing’s greater purpose

2. Consideration of stakeholders and their interdependence 3. The presence of conscious leadership, creating a corporate culture

4. The understanding that decisions are ethically based

Marketing ethics – refers to those ethical problems that are specific to the  domain of marketing

Corporate social responsibility – Voluntary actions taken by a company to  address the ethical, social, and environmental impacts of its operations

Triple Bottom Line – A means to measure performance according to  economic, environmental, and societal criteria

Integrating Ethics into Marketing Strategy

o Planning Phase

o The mission or vision statement set the overall ethical tone for  planning

o Implementation Phase

o Should the firm be…

 Targeting this market with this product?

 Selling its product in this market in this manner?

 Relocating production to another country?

Ethical Decision-Making Metric

o The Publicity Test – Would I want to see this action I’m about to take on the front page of the local paper or in a national magazine? o The Moral Mentor Test – Would the person I admire the most engage in  this activity?

o The Admired Observer Test – Would I want the person I admire most to  see me doing this?

o The Transparency Test – Could I give a clear explanation for the action  I’m contemplating?

o The Person in the Mirror Test – Will I be able to look at myself in the  mirror and respect the person I see there?

o The Golden Rule Test – Would I like to be on the receiving end of this  action and all its potential consequences?

Chapter 5: 

Customer is at the center of marketing environment – they should be the  focus of everything we do

3 components of immediate environment

1. Company – successfully leveraging company capabilities 2. Competition – know their strengths, weaknesses, and likely reactions to firm’s marketing activities

3. Corporate Partners – Parties that work with the focal firm

6 macro-environment factors

∙ Culture – refers to shared meanings, beliefs, morals, values, and  customs of a group of people

o Country culture

 Subtler aspects can be difficult to navigate

 Sometimes best answer is to establish universal appeal  within specific identities of country culture

o Regional Culture

 For national and global chains, particularly important to  cater to regional preferences

∙ Demographics – characteristics of people which provide an easily  understood snapshot of the typical consumer in a specific target  market

o Gender

 Male and Female roles have been shifting

 Firms are careful about gender neutrality in positioning  their products

o Ethnicity

 By 2050, minorities will represent 50% of the population  Nearly 30% will be Hispanic

 Asian-American is the smallest subgroup but the fastest  growing

o Income

 Purchasing power is tied to income and income is tied to  purchasing behavior

o Education

 Education is related to income, which determines spending power

∙ Social Trends

o Health and Wellness Concerns

 Healthy living and lifestyles is becoming increasing  

popular throughout the United States

o Greener consumers

 Green marketing – strategic effort by firms to supply  

customers with environmentally friendly, sustainable  

merchandise and services

 Green washing – painting a product green to make a  

product look more environmentally friendly than it really is ∙ Economic Trends

o Currency Fluctuations – changes in the value of a country’s  currency relative to the currency of another country

 Can influence consumer spending

o Interest Rates – the cost of borrowing money

 The cost to the customer or the fee the bank charges  

those customers for borrowing the money

o Inflation – refers to the persistent increase in prices of goods and services

∙ Political and Regulatory Environment – Purpose of Legislation o FDA – Food and Drug Administration

 Prohibits the sale or manufacture of adulterated or  

fraudulently labeled food and drug products

o FTC – Federal Trade Commission

 Regulates unfair competitive practices and practices that  deceive or are unfair to consumers

o Sherman Anti-Trust Act

 Cannot have a monopoly in order to protect customers

o Robinson-Patman Act

 Prohibits price discrimination meaning that companies  

cannot charge different prices to different customers for  

the same product

∙ Technological Advances

o Technology has impacted every aspect of marketing with new  products, forms of communication, and retail channels

Chapter 6: 

5 steps in consumer decision making process

1. Need recognition

∙ Physical Needs – discrepancy b/w your current state and satisfied  state

∙ Functional Needs – all about how the product functions

∙ Psychological Needs – based on the products reputation 2. Information search

∙ Internal Search – think about products we’ve seen before and  look at recommendations

∙ External Search – buyer seeks information outside his or her  personal knowledge base to help make the buying decision ∙ Factors That Influence How Much We Search

i. Perceived Benefits vs Perceived Costs

ii. Locus of Control

1. Internal Locus of Control – more you work, more you  

achieve

2. External Locus of Control – fate, external factors

iii. Actual vs Perceived Risk

1. Performance risk – if you don’t search enough, you  

might buy a product that doesn’t work the way its  

supposed to

2. Physiological risk – if I can be harmed by a bad  

product, I am going to search more

3. Financial risk – if I search more I’ll find a less  

expensive product

3. Alternative Evaluation

∙ Universal Set – Everything, ALL

∙ Retrieved Set – Product brand names you can retrieve from  memory

∙ Evoked Set – Consideration set

i. Goal is eventually to get your product into the evoked set  ∙ Evaluate Criteria

i. Evaluating features of each product

ii. Determinant Attributes – important attributes that differ  among the alternatives

∙ Consumer Decision Rules

i. Compensatory Decision Rule – good attributes of the  

product compensate for the bad attributes

ii. Non-compensatory decision rule – good features can’t  

make up for the bad

4. Purchase and Consumption

∙ Increase Conversion Rate – trying to convert shoppers into  buyers

i. Reduce real or virtual abandoned carts

ii. Expand Product Line

iii. Enhance customer service

5. Post-Purchase

∙ Build realistic expectations -> demonstrate correct product use  -> stand behind the product or service -> encourage customer  feedback -> personally make contact with customers and thank  them for their support

∙ Post-Purchase Cognitive Dissonance

i. Firms attempt to reduce dissonance by reinforcing the  

decision

ii. Buyer’s remorse or Consumer doubt

∙ Post-Purchase Customer Loyalty – Marketers attempt to solidify a  loyal relationship

∙ Post-Purchase Undesirable Consumer Behavior

i. Negative Word of Mouth

Factors Influencing the Consumer Decision Process

∙ Maslow’s Hierarchy of Needs

o Physiological -> Safety -> Love -> Esteem -> Self-Actualization

∙ Attitude – a person’s enduring evaluation of his or her feelings about  and behavioral tendencies toward an object or idea – difficult to  change

o Affective – How we feel about something

o Behavioral – How we act towards something

o Cognitive – What we think about something

o Attitudes are formed in the order of: Cognitive, Affective,  Behavioral

∙ Psychological Factors

o Learning affects both attitudes and perception

o Lifestyle involves decisions in spending time and money ∙ Social Factors

o Family

 When families make purchase decisions, they often  

consider the needs of all the family members

 Childhood Consumer Socialization

∙ Buying the same brands as an adult as you did as a  

child

o Reference Groups

 Outside influences on our behavior

 Groups: Family, Friends, Coworkers, Famous People

 Provide: Information, Self-image

o Culture

 Cultures influence consumer behavior much like reference  groups

Situational Factors in the Consumer Decision Process

∙ Purchase Situation – if you were buying a gift, more thought would go  into the product selection

∙ Shopping Situation

o Store Atmosphere – Décor, Lighting, Music, Smell, Furniture o Salespeople

o Crowding – can be good or bad

o In-store demonstration

o Promotions – sales promotions

o Packaging

∙ Temporal State

o A purchase situation may have different appeal levels depending  on time of day and the type of consumer

Involvement – consumer’s degree of interest in the product or service ∙ High Involvement

o Important to consumer, potential risk, deeper processing, greater attention

∙ Low Involvement

o Less attention, peripheral processing, generates weak attitudes  and increased use of cues

Extended problem solving – big and meaningful purchase, highly involved w/  each step carefully considered

Limited problem solving – impulse buying or habitual decision making, most  purchases fall under this category

Habitual decision making – purchase by habit or routine, grab it and go

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