RETL 369 Chapter 4 Notes
RETL 369 Chapter 4 Notes RETL 369 001
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This 5 page Class Notes was uploaded by Cassie Newman on Tuesday September 13, 2016. The Class Notes belongs to RETL 369 001 at University of South Carolina taught by Michael Moody in Fall 2016. Since its upload, it has received 50 views. For similar materials see Retail Promotion in Retail at University of South Carolina.
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Date Created: 09/13/16
Bolded words = vocabulary introduced Retail Promotion (RETL 369) – Professor Michael Moody Chapter 4: The IMC Planning Process I. The IMC Planning Context A. Marketing departments will analyze several different types of customers when looking at how well each product or service meets their individual needs - Current customers: easiest group to study; examine what they buy, when they buy, where they buy, why they buy, and how they evaluate products - Former customers: companies seek them out to best understand why they no longer purchase the products they once did (whether due to competitors prevailing, distasteful advertising, etc.) - Potential new customers: may form new target markets to determine which customers to draw in and create messages directed towards this/these groups’ interests - Competitor’s customers: what leads these customers to choose another product and how, if at all, they could be convinced to switch product lines B. Competitors must also be examined in order for a company to learn what other potential customers see, hear, and read about the competition - Primary research should be conducted to gather direct information from vendors and suppliers that work with the competition as well as others with direct relationships to them - Secondary research of advertisements, promotions, annual reports, and web sites should be reviewed and analyzed to determine what consumers are drawn to and what statements the competition makes about their company/brand C. An analysis of a company’s communications involving every channel allows a focus on which marketing messages and components are most successful and whether or not they remain consistent II. Target Markets and Consumer Market Segmentation A. Target markets exist in two areas: consumer markets and business-to- business markets or “market segments” B. Market segments are several business or a group of consumers with distinct characteristics; to be considered a market segment, the group has to pass certain tests: - Businesses or group of consumers within the segment should be homogeneous (or have similar needs, attitudes, interests, and opinions) - Differs from the population as a whole - Be large enough to sensibly market to with separate marketing campaigns - Be reachable through a means of marketing or media C. Segments are oftentimes based on demographics, or population characteristics - Gender: men and women purchase different products, similar products with different features, and make purchasing decisions based on different desires; women make the majority of the purchasing decisions, however, men are beginning to shop more Bolded words = vocabulary introduced - Age: typically a demographic combined with gender, age concentrates on a certain category of consumers such as children, young adults, middle aged adults, and senior citizens (see “E.” on the next page) - Income: lower income homes focus on necessities whereas moving up in income allows sundry purchases such as vacations or more expensive items, or in the fairly high income homes even luxury items - Ethnic Groups: the U.S. becoming increasingly diverse poses advantages and disadvantages in that more opportunities are available to create specified target markets and messages, however, not all product categories can do so successfully D. Another way segments can be identified are psychographics, or patterns of responses that reveal the activities, interests, and opinions of a group; VALS lifestyles typology groups: - Innovators: successful, sophisticated, receptive to new technology, enjoy upscale products - Thinkers: educated, conservative, value knowledge and responsibility, look for durability, function, and value - Achievers: goal-oriented, conservative, committed to career and family, favor prestige products that demonstrate success to others - Experiencers: young, enthusiastic, impulsive, spend on fashion, entertainment, and socializing - Believers: conservative, conventional, focus on tradition, family, religion, and community, favor American-made products - Strivers: trendy, fun-loving, concerned with others’ opinions and approval, demonstrate ability to buy to peers - Makers: self-sufficient, skilled, energetic, respect authority, unimpressed by material possessions - Survivors: concerned with safety and security, focus on meeting needs, brand loyal, make discount purchases E. Segments based on generations are separated into six categories - Millennials (1978-2002): spend money on clothes, automobiles, college, televisions, and stereos; 90% live at home, in a dorm, or rent an apartment - Generation X (1965-1977): focus on family and children; spend on food, housing, transportation, and personal services - Younger Boomers (1954-1964): focus on home and family; spend on home mortgage, pets, toys, playground equipment, and large recreational items - Older Boomers (1952-1953): spend on upgrading homes, ensuring education and independence of their children, and luxury items - Seniors (up to 1951): most have fixed incomes; spend heavily on health care and related medical items F. Geographic segmentation, also known as geo-targeting, is done by marketing appeals made to consumers in a particular region where the impact of advertising will be maximized G. Geodemographic segmentation allows companies to identify potential customers using demographic, geographic, and psychographic information; it allows consumers to be matched to profiles of given target Bolded words = vocabulary introduced markets – PRIZM is a firm that identified 62 market segments in the U.S. based on zip codes and uniform characteristics H. Benefit segmentation focuses on the advantages consumers receive from a product or service instead of focusing on consumer characteristics and is most often seen in fitness I. Usage segmentation examines a group based on whether the consumers are heavy users, average users, casual or light users, or non-users III. Business-to-Business Market Segmentation A. Segmentation by industry is often based on the NAICS coding system and allows the marketing team to examine specific industries and even more specific segments within the industry categories B. Segmentation by size is based on factors such as a company’s sales volume or number of employees C. Segmentation by geographic location benefits businesses with customers highly concentrated in certain areas D. Segmentation by product usage allows companies to prepare marketing advertisements and materials for various consumer types E. Segmentation by customer value allows companies to be place in a category of low-, medium-, and high- value groups based on sales data IV. Product Positioning A. Product positioning is the perception in the consumer’s mind of the nature of a company and its products relative to the competition; the positioning is the company’s chance to make its products stand out through a variety of approaches - Product attributes: any characteristic that sets a brand apart from others - Competitors: contrast the company’s product against others - Use or application: create a memorable set of users or applications for a product - Price-quality relationship: offer products at the extremes of price ranges (high end will be focusing on quality, low end will be focusing on price) - Product user: specifies who may use the product - Product class: what category the products fall under - Cultural symbol: more difficult to do when positioning, but holds a strong advantage when accomplished - International positioning: when a firm expands into new countries, the positioning strategy must change with that of the consumer environment it has entered, yet keep the overall brand image and theme as consistent as possible - Image and brand: effective positioning should ultimately strengthen the position of the brand and organization and increase sales V. Marketing Communications Objectives and Advertisement Lifespan A. Marketing communication objectives guide account executives and advertising creatives in designing the advertising messages - Develop brand awareness - Increase category demand - Change customer beliefs or attitudes - Encourage purchase actions and repeat purchases - Build customer traffic Bolded words = vocabulary introduced - Enhance firm image - Increase market share and sales - Reinforce purchase decisions B. Benchmark measures are useful tools to marketing professionals because they represent a starting point that has been established in relation to a degree of change following a promotional campaign, allowing them to analyze the success and capture a baseline for future outcomes C. Threshold effects are during the point when an advertising or promotional program has begun to affect customer responses, while diminishing returns are seen when the amount invested is less than the profit gained - The sales-response function curve is an S-shaped curve that indicated when threshold effects are present and when diminishing returns are present - The concave downward function is a model of the diminishing returns of advertising expenditures on sales - A marginal analysis is a model that shows when additional expenditures on advertising and promotion have an adverse effect on profits D. Carryover effects are present when a consumer has been exposed to a company’s message for so long that the individual remembers the company when it is time to make a purchase E. Wear-out effects are the decline of effectiveness of advertising that occur when ads or campaigns become “old,” “boring,” or are just seen negatively after a period of time F. Decay effects are seen when a company stops advertising and consumers begin to forget the message VI. Types of Budgets A. Percentage-of-sales: budgeting based on sales from the previous year or anticipated sales for the next year B. Meet-the-competition: budgeting where expenditures are raised or lowered to match the competition C. “What we can afford:” budgeting that is set after all of the other budgets have been or are being determined and set and communications money is allocated based on what the company leaders feel they can afford to spend D. Objective-and-task: budgeting where management lists all of the communications objectives to pursue during the tear then calculates the cost of accomplishing those objectives E. Payout-planning: budgeting that establishes a ratio of advertising to sales or market share F. Quantitative models are computer simulations designed to model the relationship between advertising expenditures and sales/profits, but these models are often limited to larger organizations and are not precise models to follow directly VII. International Implications A. It is not most important to create a different, unique marketing message for each country or cultural group, but rather than the region will understand the message as intended Bolded words = vocabulary introduced B. Create a “borderless marketing plan” that uses the same basic approach for all markets of a company, following the “think globally but act locally” phrase concept C. Develop local partnerships through the help of a cultural assimilator, or a person familiar with the local language and culture of a given country that is employed to help marketing efforts in that region D. Come up with communication segmentation strategies and perform a market communications analysis before establishing objectives for the planning process
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