An explanation of various marketing terms

Published Date: 23 Mar 2015

is the use of consumer-direct channels to reach and deliver goods and services to customers without using marketing middlemen."Direct Marketing" is the use of consumer-direct channels to reach and deliver goods and services to customers without using marketing middlemen.

Direct marketing implies marketing to the consumers directly without secondary media such as TV commercials. Direct Marketing includes the distribution of fliers, displaying signs such as "weekly specials" inside the store. It is used to target customers who cannot resist a good deal or bargain. Some Direct marketers use their customer database to contact them for special offers. They tailor their marketing offers and communications to the needs of individual buyers. Direct Marketing is generally used by small to medium size companies that do not have the budget for expensive commercial.

There are many forms of direct marketing. The major types are as follows:

Direct mail - the advertiser contact prospective customers by sending some form of advertisement through the mail. Music and book clubs, magazine clearing house, and credit card companies make use of direct mail.

Catalogue marketing - companies mail catalogues to consumers and to businesses or make them available at retail stores, and consumers make their purchase from the catalogues. For example, Sears and Canadian Tire's catalogue shopping. Catalogue retailers appear well suited to operating on the internet as they has the systems and distribution experience required for such an undertaking.

Telemarketing - using the telephone and call centers to sell directly to prospects and existing consumers. Companies use call centers for Inbound (receiving calls from customers) and outbound (initiating calls to prospects and customers) telemarketing.

Direct marketing has been a major growth area in retailing. Its advantages related particularly to its ability to direct the marketing effort to those consumers who are most likely to respond positively. It also offers products and services in a way that is most convenient for the consumer.

2. _____ consist(s) of a collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade.

"Sales promotions" consist of a collection of incentive tools, mostly short term, designed to stimulate quicker or greater purchase of particular products or services by consumers or the trade.

Sales promotion as tools and techniques used to stimulate demand, encourage purchase or sales of a product or services, reward royal customers and attract switchers from competitors,. Advertising provides information on a product or promote a brand. Sale promotion offers reasons to buy now.

Here are a few examples of sales promotions: Coupons delivered in the newspaper offering discount on your favourite coffee. An e-mail from Amazon.ca offers free shipping on your next purchase over $35. Sales promotion uses different mix of promotional tools designed to stimulate customers to buy a product.

There are two categories of sales promotion tools:

The consumer promotions tools - aimed at consumers directly such as; price discount or same price for the twice the amount of the product, discount coupons, cash refund from the manufacturer, patronage rewards such as doubling the amount of air miles, sweepstakes such as possible chance to win a trip to Disneyland and free gift, getting something from the purchase.

A trade promotions tools - This is used by the manufacturers to target the retailers and wholesalers rather than consumers. Trade promotions encourage the retailers to provide more shelf space to its own brand by providing a volume discount or buy-back guarantees to the retailer if the product is not sold within a specific time period after the promotion. This is to ensure the retailers and wholesalers to get products on the shelf and visible to the consumers.

There are several factors to be considered when deciding which particular incentive to use; volume of the incentive, conditions for participation, timing and duration of the promotion, method of distribution, & budget for the sales-promotion.

3. Some companies set their promotion budget to achieve share-of-voice parity with competitors. This is called the _____ method.

Some companies set their promotion budget to achieve share-of-voice parity with competitors. This is called the "Competitive Parity" Method.

After determining company's advertising objectives, the next steps are setting its advertising budget for each product and market. "Competitive Parity" is one of the adverting budget setting methods used to determine promotion budget that matches competitors' outlays.

Company gather information on competitor marketing objective and activities to set their own marketing budgets.

There are two arguments support this method (Kotler, 13/e, chapter 17):

Competitors' budgets serve as a benchmarking of the industry.

Avoid promotion war by spending what the competitors spend.

In reality, there is no evidence indicating all competitors are equal and competitive parity will discourage promotional war. Each company's dynamic, goals and objectives are different.

This is one of the many marketing strategies. It is very difficult to determine if this method of promotional budgeting actually maintain equal market share or avoid promotional war as company reputations, resources, opportunities, and objectives different so much that competitor advertising budgets are hardly a guide. For example, if the total marketing advertising for the automotive industry is 500 millions, will advertising by Ford with 50 million dollars will capture 10% of the market share?

4. A program designed to promote or protect a company's image or its individual products is called _____.

A program designed to promote or protect a company's image or its individual products is called "public relation".

Public relations is a broad communications effort designed to build or maintain a favourable image for an organization and favourable relationship with its various public - customers, prospects, shareholders, employees, labour unions, the local community, and government.

The functions of public relations are the following:

Press relations management

Product publicity

Manage corporate internal and external communications

Lobby

Provide counselling regarding public issues, company positions to management

Unlike advertising, public relations needs not use the media to communicate its message. Good public relations can be achieved in many ways. Take for example the handling of cyanide laced Tylenol case. Johnson and Johnson decided to make public announcement on the product recalled. J&J removed over 100 million bottles of contaminated Tylenol, Motrin, and Benadryl. J&J than replaced them with better designed tamper free product to gain public confident. Not only is the product safer, they gain significant good public relation and market share for handling of the recall. On the flip side, certain model of Ford cars have the tendency to "explode" when it is rear ended. It was a poor engineering design. However, Ford adamantly refused to admit its fault resulting in poor public relationship with consumers and loosing market share to its competitors. Proper handling of crisis by the public relation can turn a negative situation to positive.

Company can also gain good public relationship in participating in community service events, sponsoring athletic teams, funding the arts exhibitions or music program in local community. Major companies often sponsor public events or special programs on television as part of their public relations efforts. For example, the Labatt hot-air balloon is a familiar example of a public relations device. Many large companies, such as Royal Bank of Canada and Air Canada, gain national attention through their sponsorship of organizations and events such as symphony orchestras and the Special Olympics. Culture organizations would not survive without major corporations' support.

5. _____ is/are any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor.

"Advertising" is any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor.

Advertising is a medium of mass communication that facilitates larger scale of marketing.

Manufacturers supply information through advertising about new products. Companies spend lots of money through TV, radio and newspapers advertising to gain sales promotion benefits. With the advance of internet, a new media is now available to reach huge segment of the population. Advertising is within the scope of promotion which is one element in the marketing mix. It is getting popularity in the present highly competitive and consumer oriented marketing. All products old or new, consumable or durable, cheap or costly need advertising to promotion their sales. New communication techniques are now used for making advertising attractive and agreeable. The core purpose of advertising is to provide information, to attract customer attention, to create awareness and finally to influence the consumer buying behaviour. Advertising is certainly needed in marketing but is equally important and essential in social, cultural and political aspects of our life.

Exercises:

1. Describe the eight major modes of communication in the communications mix.

Communications mix consists of the explicit mix of advertising, sales promotion, events and experiences, public relations and publicity, direct / interactive / word of mouth marketing, and personal selling that the company adopts to achieve its advertising and marketing objectives:

Advertising - A non-personal related presentation and ideas of good /service promotion that are paid by specific sponsor.

Sales promotion - Activities, including contests for salespeople, trade shows, in store displays, samples, premiums, and coupons that are created to facilitate program /campaign, and supplment personal selling of goods and services.

Events and experiences - Activities and programs that are sponsored by the company, specially designed to generate customer / brand interactions and connections.

Public relations and publicity - A broad communications effort designed to build and maintain a positive image for a company and its products. As well a non-paid media presentation about a product or organization.

Direct marketing - A form of non-store retailing that uses non-personal media to contact customers, for example, mail, telephone, fax, e-mail, or the Internet to obtain specific and potential customers' response or dialogue that, in turn purchase products without visiting retail stores.

Interactive marketing - Online activities and program designed to engage consumers.

Word of Mouth marketing - people-to-people oral, written, or electronic communications.

Personal selling - sales force representing the company; making personally interaction with one or more potential purchasers, and building customer relationships.

2. Name four common criticisms of direct marketing.

There are few aggressive direct marketers with sometimes questionable tactics could create the unpleasant experience for the consumers. Such irritable experience could range from simple excesses of information to unfair practices, to entirely deception and fraud. The four most common criticisms of direct marketing are the following:

Irritation - as most of us dislike TV commercials that are too long and insistent. Especially bothersome are the dinner time or late night phone calls.

Unfairness - some direct market taking unfair advantages of impulsive or fewer sophisticated buyers, TV shopping shows and program-long "infomercial" featuring smooth-talking hosts, elaborately staged demonstrations, claims of drastic price reductions, "while they last" time limitations, and unequalled ease of purchase to inflame buyers who have low sales resistance.

Deception and fraud - some merchant design mailers and write copy intended to mislead buyers. Sweepstake promoter Publishers Clearing House recently paid $52M to settle accusations that its high pressure mailings confused or misled consumers, especially the elderly, into believing that they had won prizes or would win if they bought the company's magazines. (The New York Times, June 2001 - Sweepstakes Group Settles with States)

Invasion of privacy - One of the most troublesome issues facing marketers relates to the behavior that threatens the customer's right to privacy. Today, companies are collecting information on customers from a number of sources and storing the data on databases to be used for marketing purposes. Some consumers object to businesses having the information in the first place and to their use of it to sell them things. The point is that the technology is available to permit the integration of databases, making information gathering about the characteristics of consumers and their households, and to match the information with the data about purchases, credit card usage, and other consumption behavior accessible.

3. List and discuss three elements that explain how many exposures, E, will produce a level of audience awareness, A.

The major steps involved in selecting the exact media vehicles to be used for advertising are:

Deciding on reach, frequency, and impact,

Selecting among major media types,

Choose specific media vehicles, and

Determine media timing

The effect of exposures on audience awareness depends on three elements, i.e. reach, frequency and impact.

Reach (R) - is a measure of the percentage of households or target group who will be exposed to the advertising at least once during a specific period of time. For example, if a media plan targets the roughly 2 million of the teenager between the age of 15-18 years old, then a reach of 50 means that 50% or 1 million of the target audience will be exposed to some of the media vehicles in the media plan. Second, reach measures the accumulation of the audience over time. Because the reach is always defined for a certain period of time, the number of audience members exposed to the media vehicles in a media plan increases over time.

Frequency (F) - is the measure of how many times a person in the target group is exposed to the message in the advertising period. For example, the advertising company may want a person in the target group to see the advertising at least three times in the advertising period to get the desired impact.

Impact (I) - The qualitative value of a message. This is a measure of how the advertising affects the targeted audience. If the audience cannot remember the key message or the product being advertised, the impact is negligible. If the audience can remember or have the urge to buy or use the service being advertised, than the impact is very high. Sometime a catchy tune or phrase leaves a permanent image in the audience. For example, for products that need to be demonstrated, messages on TV may have the more impact than messages on radio because TV ads use visual and sound.

Therefore, total number of exposures (E) is "reach times the average frequency":

E = R x F , expressed as a percentage and it is also calle "Gross Rating Points (GRP)"

GRP is a measure the total "Rating Points" during an advertising campaign. A Rating Point is one percent of the potential audience. So if 10% of the targeted group see or hear the commercial during a TV or talk show than the Rating Points is 10. If, the next show has 50% of the targeted group tuned in, than the GRP is 60 (10 plus 50).

Advertiser uses all these measuring element mentioned to evaluate the success or failure of a advertising campaign.

4. What are the five major decisions, known as "the five M's" that marketing managers must make in developing an advertising campaign?

During the developing process of an advertisement program, marketing executives must always begin by determining the target segment and consumer motives. The five - Ms decisions model could assist through this process:

Mission: This refers to the purpose/goals of advertising strategy. The main purposes are to keeping customer informed through sales promotion, establishing brand awareness and loyalty, effect managing market competition, and introduce new products or services successfully. Other decisions are to be adjusted according to the decided advertising mission.

Money: This refers to the advertising budget allocation made by the company. Budget constraints are common in business and advertising and marketing can sometimes be ignored due to the lack of the immediate outcome. However, some resources should be allocated to build a brand and image of business in order to grow. To avoid losing market share, making marketing a priority and having a reasonable budget funding is a key part of the process.

Message: The created slogans, pictures, words, themes and so on that try to lure the customer is the message of advertising; they are the creative outcome of the advertising process. Attractive and meaningful messages give positive results, and the advertising becomes result-oriented. Furthermore, as long as the messages are in line with what the business stands for, any manner of theme could be implemented.

For example, the advertising message should be plain and easy to understand as the buyers are mainly children for product like chocolate and candies. The message is important. The buyers are mainly children and others of lower age groups or for the benefit (pleasure and satisfaction) of younger generation.

Media: This is about deciding which media will be used to carry the message. For example, radio broadcast, TV advertisements, mail drops, the internet,, telemarketing and face-to-face (in person) contact. Most media have measurable metrics to access their efficiency and the costs' effectiveness. The selection of the right media can be the key to a successful or failure of the advertising program.

For example, the media for consumer items like chocolate; advertising in the TV children cartoon channel, advertising in children books or newspaper supplements, giving out the sample to children at the grocery stores, etc.

Measure: the company must measure the effects of the program / campaign. This can be accomplished by tracking and measuring sales or trying to access interest through research. Often, it is tricky to determine how much advertisements actually impacted by the interest of customer vs. other external factors that played a part.

For example, post advertising sale can be use as the measuring effectiveness of chocolate advertising. New demand in new market segments or in new consumer age groups could also be use for the measuring of advertising campaign effectiveness.

In short, the 5Ms helping business to meet its strategic goals; by develop and maintain best-practice demand development programs that provide sustainable and measurable results.

5. What are the seven design elements that effective Web sites feature? Define each of these.

Consumers shop online because it is a convenience,, save time, easy price comparison, good selection and the allure of purchase control. As long as there's internet connection, consumer can easily shop from anywhere. This constitutes business to create a website that will direct traffic to their website, and by creating a positive experience that will generate returning customers. The seven design elements that effective Web site feature is:

Context - The layout and overall visual design of the website need to be clear and not overly crowded, easy to read and manage. The color scheme needs to be in line with for the marketing creative.

Commerce - A made safe website for commercial transactions.

Connection - the links that direct customers away to other websites.

Communication - website allows two way communications (business and customer). For example, a live chat with business representatives.

Content - website details such as the text, graphics, sound, music, and/or videos that are in-corporate and demonstrated on the web page.

Community - website with build-in live chat or message boards to allow interaction between customers.

Customization - the site can allow customers to personalize the site, or tailor itself to suit the individual user. For example, using various background colors and graphics to represent different language speaking customers around the world.