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Brand

A brand is the identity of a specific product, service, or business [1] page needed

A brand can take many forms, including a name, sign, symbol, color combination or slogan. The word branding

began simply as a way to tell one person's cattle from another by means of a hot iron stamp. A legally protected

brand name is called a trademark . The word brand has continued to evolve to encompass identity - it affects the personality of a product, company or service.

A concept brand is a brand that is associated with an abstract concept, like breast cancer awareness or

environmentalism, rather than a specific product, service, or business. A commodity brand is a brand associated

with a commodity. Got milk? Is an example of a commodity brand?

Concepts

Brand is the personality that ident ifies a product, service or company (name, term, sign, symbol, or design, or combination of them) and how it relates to key constituencies: customers, staff, partners, investors etc.

Some people distinguish the psychological aspect, brand associations like thoughts, feelings, perceptions, images,

experiences, beliefs, attitudes, and so on that become linked to the brand, of a brand from the experiential aspect.

The experiential aspect consists of the sum of all points of contact with the brand and is known as the brand

experience. The psychological aspect, sometimes referred to as the brand image, is a symbolic construct created

within the minds of people, consisting of all the information and expectations associated with a product, service or

the company(ies) providing them.

People engaged in branding seek to develop or align the expectations behind the brand experience, creating the

impression that a brand associated with a product or service has certain qualities or characteristics that make it

special or unique. A brand is therefore one of the most valuable elements in an advertising theme, as it demonstrates

what the brand owner is able to offer in the marketplace. The art of creating and maintaining a brand is called brand

management. Orientation of the whole organization towards its brand is called brand orientation.

Careful brand management seeks to make the product or services relevant to the target audience. Brands should be

seen as more than the difference between the actual cost of a product and its selling price - they represent the sum of

all valuable qualities of a product to the consumer.

A brand which is widely known in the marketplace acquires brand recognition. When brand recognition builds up

to a point where a brand enjoys a critical mass of positive sentiment in the marketplace, it is said to have achieved

brand franchise. One goal in brand recognition is the identification of a brand without the name of the company

present. For example, Disney has been successful at branding with their particular script font (originally created for

Walt Disney's "signature" logo), which it used in the logo for go.com.

Consumers may look on branding as an important value added aspect of products or services, as it often serves to

denote a certain attractive quality or characteristic (see also brand promise). From the perspective of brand owners,

branded products or services also command higher prices. Where two products resemble each other, but one of the products has no associated branding (such as a generic, store-branded product), people may often select the more

expensive branded product on the basis of the quality of the brand or the reputation of the brand owner.

Brand awareness



Brand awareness refers to customers' ability to recall and recognize the brand under different conditions and link to

the brand name, logo, and jingles and so on to certain associations in memory. It helps the customers to understand

to which product or service category the particular brand belongs and what products and services are sold under the

brand name. It also ensures that customers know which of their needs are satisfied by the brand through its products(Keller). Brand awareness is of critical importance since customers will not consider your brand if they are not

aware of it.[3]

.

Brand promise

The marketer and owner of the brand have a vision of what the brand must be and do for the consumers.[4]

Brand promise is what a particular brand stands for (and has stood for in the past). It has its roots from the identitythat it gains over a period of time. Usually, brand promise is an attribute common to 'Parent' brands. Herein, the

brand may broadly stand for Quality, Performance, Trust, or False promises. However, the extensions, or the brands

under the parent brand umbrella, may stand individually for a particular trait which it has delivered over the years,

for example, 'the best sparkling teeth', or 'the trusted bank to bank with for centuries', et al.

Global brand

A global brand is one which is perceived to reflect the same set of values around the world. Global brands transcendtheir origins and create strong enduring relationships with consumers across countries and cultures. They are brands

sold in international markets. Examples of global brands include Facebook , Apple, Coca-Cola, McDonald's,Mastercard, Gap and Sony. These brands are used to sell the same product across multiple markets and could be

considered successful to the extent that the associated products are easily recognizable by the diverse set of

Benefits of global branding

In addition to taking advantage of the outstanding growth opportunities, the following drives the increasing interest

in taking brands global:

y Economies of scale (production and distribution)

y Lower marketing costs

y Laying the groundwork for future extensions worldwide

y Maintaining consistent brand imagery

y Quicker identification and integration of innovations (discovered worldwide)

y Preempting international competitors from entering domestic markets or locking you out of other geographic markets

y Increasing international media reach (especially with the explosion of the Internet) is an enabler

y Increases in international business and tourism are also enablers

Global brand variables

The following elements may differ from country to country:

y Corporate slogan

y Products and services

y Product names

y Product features

y Positionings

y Marketing mixes (including pricing, distribution, media and advertising execution)



These differences will depend upon:

y Language differences

y Different styles of communication

y Other cultural differences

y Differences in category and brand development

y Different consumption patternsy Different competitive sets and marketplace conditions

y Different legal and regulatory environments

y Different national approaches to marketing (media, pricing, distribution, etc.)

Local brand

A brand that is sold and marketed (distributed and promoted) in a relatively small and restricted geographical area.

A local brand is a brand that can be found in only one country or region. It may be called a regional brand if the area

encompasses more than one metropolitan market. It may also be a brand that is developed for a specific national

market; however an interesting thing about local brand is that the local branding is more often done by consumers

than by the producers. Examples of local brands in Sweden are Stomatol, Mijerierna etc.[5] [6]

Ambient brand

An ambient brand is a movement, where the brand is organized around values and social needs instead of promotinga specific product. It is a virtual space, defined by values and occupied by a community of likeminded people.

Whereas a traditional brand is entirely dependent on products and their parent corporations, an ambient brand is an

independent social movement that companies can participate in. They are not selling products, they are allowing

their company to participate in a social movement and allow their brand to be identified with this. It exists as a

shared values space where consumers gather, converse and ultimately transact with organizations that appear to be

in alignment with the values associated with that community. Corporations do not create ambient brands. They must

qualify for inclusion within them by demonstrating that they share the values and will service the interests of their

associated communities.

Relationship between trademarks and brand

The brand name is quite often used interchangeably with "brand", although it is more correctly used to specificallydenote written or spoken linguistic elements of any product. In this context a "brand name" constitutes a type of

trademark , if the brand name exclusively identifies the brand owner as the commercial source of products or

services. A brand owner may seek to protect proprietary rights in relation to a brand name through trademark

registration and such trademarks are called "Registered Trademarks". Advertising spokespersons have also become part of some brands, for example: Mr. Whipple of Charmin toilet tissue and Tony the Tiger of Kellogg's Frosted

Flakes. Local branding is usually done by the consumers rather than the producers.

[

The act of associating a product or service with a brand has become part of pop culture. Most products have somekind of brand identity, from common table salt to designer jeans. A brandnomer is a brand name that has

colloquially become a generic term for a product or service, such as Band-Aid or Kleenex, which are often used to

describe any brand of adhesive bandage or any brand of facial tissue respectively.

Brand identity

The outward expression of a brand, including its name, trademark, communications, and visual appearance.[8]

Because the identity is assembled by the brand owner, it reflects how the owner want s the consumer to perceive the



brand - and by extension the branded company, organization, product or service. This is in contrast to the brand

image, which is a customer's mental picture of a brand.[8] The brand owner will seek to bridge the gap between the

brand image and the brand identity.

Effective brand names build a connection between the brand personalities as it is perceived by the target audience

and the actual product/service. The brand name should be conceptually on target with the product/service (what the

company stands for). Furthermore, the brand name should be on target with the brand demographic.

[9]

Typically,sustainable brand names are easy to remember, transcend trends and have positive connotations. Brand identity is

fundamental to consumer recognition and symbolizes the brand's differentiation from competitors.

Brand identity is what the owner wants to communicate to its potential consumers. However, over time, a product's

brand identity may acquire (evolve), gaining new attributes from consumer perspective but not necessarily from the

marketing communications an owner percolates to targeted consumers. Therefore, brand associations become handy

to check the consumer's perception of the brand.[10]

Brand identity needs to focus on authentic qualities - real characteristics of the value and brand promise being

provided and sustained by organizational and/or production characteristics.[11][12]

The visual brand identity manual for Mobil Oil (developed by Chermayeff & Geismar ), one of the first visual

identities to integrate logotype, icon, alphabet, color palette, and station architecture to create a comprehensiveconsumer brand experience.

The recognition and perception of a brand is highly influenced by its visual presentation. A brand¶s visual identity isthe overall look of its communications. Effective visual brand identity is achieved by the consistent use of particular

visual elements to create distinction, such as specific fonts, colors, and graphic elements. At the core of every brand

identity is a brand mark, or logo.

Brand parity

Brand parity is the perception of the customers that some brands are equivalent.[13]

This means that shoppers will

purchase within a group of accepted brands rather than choosing one specific brand. When brand parity is present,

quality is often not a major concern because consumers believe that only minor quality differences exist.

Expanding role of brand

When the technique of branding first started, it was meant to make identifying and differentiating a product easier.

Over time, brands came to embrace a performance or benefit promise, for the product, certainly, but eventually also

for the company behind the brand. Today, brand plays a much bigger role. Brands have been co-opted as powerfulsymbols in larger debates about economics, social issues, and politics. The power of brands to communicate a

complex message quickly and with emotional impact and the ability of brands to attract media attention, make them

ideal tools in the hands of activists--and hacktivists.[14]

Branding approaches

Company name

Often, especially in the industrial sector, it is just the company's name which is promoted (leading to [cit at ion needed ] one

of the most powerful statements of branding: saying just before the company's downgrading, "No one ever got fired

for buying IBM"). This approach has not worked as well for General Motors, which recently overhauled how its

corporate brand relates to the product brands.[15] Exactly how the company name relates to product and services

names is known as brand architecture. Decisions about company names and product names and their relationship

depend on more than a dozen strategic considerations.[16]



In this case a strong brand name (or company name) is made the vehicle for a range of products (for example,

Mercedes-Benz or Black & Decker ) or a range of subsidiary brands (such as Cadbury Dairy Milk, Cadbury Flake or

Cadbury Fingers in the United States).

Individual branding

M ain ar t icl e: Individual branding

Each brand has a separate name (such as Seven-Up, Kool-Aid or Nivea Sun (Beiersdorf )), which may compete

against other brands from the same company (for example, Persil, Omo, Surf and Lynx are all owned by Unilever ).

Attitude branding and iconic brands

Attitude branding is the choice to represent a larger feeling, which is not necessarily connected with the product or

consumption of the product at all. Marketing labeled as attitude branding include that of Nike, Starbucks, The Body

Shop, Safeway, and Apple Inc.. In the 2000 book N o Logo,[17]

Naomi Klein describes attitude branding as a "fetish

strategy".

"A great brand raises the bar -- it adds a greater sense of purpose to the experience, whether it's the challenge to do

your best in sports and fitness, or the affirmation that the cup of coffee you're drinking really matters." )

The color, letter font and style of the Coca-Cola and Diet Coca-Cola logos in English were copied into matchingHebrew logos to maintain brand identity in Israel.

Iconic brands are defined as having aspects that contribute to consumer's self-expression and personal identity.

Brands whose value to consumers comes primarily from having identity value are said to be "identity brands". Some

of these brands have such a strong identity that they become more or less cultural icons which makes them "iconic brands." Examples are: Apple, Nike and Harley Davidson. Many iconic brands include almost ritual-like behaviour

in purchasing or consuming the products.

There are four key elements to creating iconic brands (Holt 2004):

1. "Necessary conditions" - The performance of the product must at least be acceptable, preferably with a

reputation of having good quality.

2. "Myth-making" - A meaningful storytelling fabricated by cultural insiders. These must be seen as

legitimate and respected by consumers for stories to be accepted.3. "Cultural contradictions" - Some kind of mismatch between prevailing ideology and emergent

undercurrents in society. In other words a difference with the way consumers are and how they wish they

were.



4. "The cultural brand management process" - Actively engaging in the myth-making process in making sure

the brand maintains its position as an icon.

"No-brand" branding

Recently a number of companies have successfully pursued "no-brand" strategies by creating packaging that

imitates generic brand simplicity. Examples include the Japanese company Muji, which means "No label" in English(from ± "Mujirushi Ryohin" ± literally, "No brand quality goods"), and the Florida company No-Ad

Sunscreen. Although there is a distinct Muji brand, Muji products are not branded. This no-brand strategy means

that little is spent on advertisement or classical marketing and Muji's success is attributed to the word-of-mouth, a

simple shopping experience and the anti-brand movement.[18][19][20] "No brand" branding may be construed as a type

of branding as the product is made conspicuous through the absence of a brand name. "Tapa Amarilla" or "Yellow

Cap" in Venezuela during the 80´s is another good example of no-brand strategy. It was simple recognized by the

color of the cap of this cleaning products company.

Derived brands

In this case the supplier of a key component, used by a number of suppliers of the end-product, may wish to

guarantee its own position by promoting that component as a brand in its own right. The most frequently quoted

example is Intel, which positions itself in the PC market with the slogan (and sticker) "Intel Inside".

Brand extension and brand dilution

The existing strong brand name can be used as a vehicle for new or modified products; for example, many fashion

and designer companies extended brands into fragrances, shoes and accessories, home textile, home decor , luggage,

(sun-) glasses, furniture, hotels, etc.

Mars extended its brand to ice cream, Caterpillar to shoes and watches, Michelin to a restaurant guide, Adidas and

Puma to personal hygiene. Dunlop extended its brand from tires to other rubber products such as shoes, golf balls,

tennis racquets and adhesives.

There is a difference between brand extension and line extension. A line extension is when a current brand name isused to enter a new market segment in the existing product class, with new varieties or flavors or sizes. When Coca-

Cola launched "Diet Coke" and "Cherry Coke" they stayed within the originating product category: non-alcoholic

carbonated beverages. Procter & Gamble (P&G) did likewise extending its strong lines (such as Fairy Soap) into

neighboring products (Fairy Liquid and Fairy Automatic) within the same category, dish washing detergents.

The risk of over-extension is brand dilution where the brand looses its brand associations with a market segment,

Multi-brands

Alternatively, in a market that is fragmented amongst a number of brands a supplier can choose deliberately tolaunch totally new brands in apparent competition with its own existing strong brand (and often with identical

product characteristics); simply to soak up some of the share of the market which will in any case go to minor

brands. The rationale is that having 3 out of 12 brands in such a market will give a greater overall share than having1 out of 10 (even if much of the share of these new brands is taken from the existing one). In its most extreme

manifestation, a supplier pioneering a new market which it believes will be particularly attractive may choose

immediately to launch a second brand in competition with its first, in order to pre-empt others entering the market.

Individual brand names naturally allow greater flexibility by permitting a variety of different products, of differing

quality, to be sold without confusing the consumer's perception of what business the company is in or diluting

higher quality products.



Once again, Procter & Gamble is a leading exponent of this philosophy, running as many as ten detergent brands in

the US market. This also increases the total number of "facings" it receives on supermarket shelves. Sara Lee, on the

other hand, uses it to keep the very different parts of the business separate ² from Sara Lee cakes through Kiwi

polishes to L'Eggs pantyhose. In the hotel business, Marriott uses the name Fairfield Inns for its budget chain (and

Ramada uses Rodeway for its own cheaper hotels).

Cannibalization is a particular problem of a "multibrand" approach, in which the new brand takes business awayfrom an established one which the organization also owns. This may be acceptable (indeed to be expected) if there is

a net gain overall. Alternatively, it may be the price the organization is willing to pay for shifting its position in the

market; the new product being one stage in this process.

Private labels

With the emergence of strong retailers, private label brands, also called own brands, or store brands, also emerged asa major factor in the marketplace. Where the retailer has a particularly strong identity (such as Marks & Spencer in

the UK clothing sector) this "own brand" may be able to compete against even the strongest brand leaders, and may

outperform those products that are not otherwise strongly branded.

Individual and organizational brands

There are kinds of branding that treat individuals and organizations as the products to be branded. Personal branding

treats persons and their careers as brands. The term is thought to have been first used in a 1997 article by Tom

Peters.[21] Faith branding treats religious figures and organizations as brands. Religious media expert Phil Cooke has

written that faith branding handles the question of how to express faith in a media-dominated culture.[22] Nation

branding works with the perception and reputation of countries as brands.

Crowd sourcing Branding

These are brands that are created by the people for the business, which is opposite to the traditional method where

the business creates a brand. This type of method minimizes the risk of brand failure, since the people that might

reject the brand in the traditional method are the ones who are participating in the branding process.

Nation Branding (Place Branding & Public diplomacy)

Nation branding is a field of theory and practice which aims to measure, build and manage the reputation of

countries (closely related to place branding). Some approaches applied, such as an increasing importance on the

symbolic value of products, have led countries to emphasis their distinctive characteristics. The branding and image

of a nation-state "and the successful transference of this image to its exports - is just as important as what they

actually produce and sell

Advertising

Advertising is a form of communication intended to persuade an audience (viewers, readers or listeners) to purchase

or take some action upon products, ideas, or services. It includes the name of a product or service and how that

product or service could benefit the consumer, to persuade a target market to purchase or to consume that particular brand. These messages are usually paid for by sponsors and viewed via various media. Advertising can also serve to

communicate an idea to a large number of people in an attempt to convince them to take a certain action.

Commercial advertisers often seek to generate increased consumption of their products or services through branding,

which involves the repetition of an image or product name in an effort to associate related qualities with the brand in

the minds of consumers. Non-commercial advertisers who spend money to advertise items other than a consumer

product or service include political parties, interest groups, religious organizations and governmental agencies.

Nonprofit organizations may rely on free modes of persuasion, such as a public service announcement.



Modern advertising developed with the rise of mass production in the late 19th and early 20th centuries. Mass media

can be defined as any media meant to reach a mass amount of people. Different types of media can be used to

deliver these messages, including traditional media such as newspapers, magazines, television, radio, outdoor or

direct mail; or new media such as websites and text messages.

Public service advertising

The advertising techniques used to promote commercial goods and services can be used to inform, educate andmotivate the public about non-commercial issues, such as HIV/AIDS, political ideology, energy conservation and

deforestation.

Advertising, in its non-commercial guise, is a powerful educational tool capable of reaching and motivating large

audiences. "Advertising justifies its existence when used in the public interest²it is much too powerful a tool to use

solely for commercial purposesPublic service advertising, non-commercial advertising, public interest advertising,cause marketing, and social marketing are different terms for (or aspects of) the use of sophisticated advertising and

marketing communications techniques (generally associated with commercial enterprise) on behalf of non-

commercial, public interest issues and initiatives.

Marketing mix

The marketing mix has been the key concept to advertising.. The marketing mix consists of four basic elements

called the four P¶s Product is the first P representing the actual product. Price represents the process of determining

the value of a product. Place represents the variables of getting the product to the consumer like distribution

channels, market coverage and movement organization. The last P stands for Promotion which is the process of

reaching the target market and convincing them to go out and buy the product.[8]

Advertising theory

y Hierarchy of effects model[9]

It clarifies the objectives of an advertising campaign and for each individual advertisement. The model suggests that

there are six steps a consumer or a business buyer moves through when making a purchase. The steps are:

1. Awareness

2. Knowledge

3. Liking

4. Preference

5. Conviction

6. Purchase

y Means-End Theory

This approach suggests that an advertisement should contain a message or means that leads the consumer to a

desired end state.

y Leverage Points

It is designed to move the consumer from understanding a product's benefits to linking those benefits with personal

values.

y Verbal and Visual Images



[edit] Types of advertising

Paying people to hold signs is one of the oldest forms of advertising, as with this Human billboard pictured above

A bus with an advertisement for GAP in Singapore. Buses and other vehicles are popular mediums for advertisers.

Virtually any medium can be used for advertising. Commercial advertising media can include wall paintings, billboards, street furniture components, printed flyers and rack cards, radio, cinema and television adverts, web banners, mobile telephone screens, shopping carts, web popups, skywriting, bus stop benches, human billboards,

magazines, newspapers, town criers, sides of buses, banners attached to or sides of airplanes ("logojets"), in-flightadvertisements on seatback tray tables or overhead storage bins, taxicab doors, roof mounts and passenger screens,

musical stage shows, subway platforms and trains, elastic bands on disposable diapers,doors of bathroom

stalls,stickers on apples in supermarkets, shopping cart handles (grabertising), the opening section of streaming

audio and video, posters, and the backs of event tickets and supermarket receipts. Any place an "identified" sponsor

pays to deliver their message through a medium is advertising.



national newspaper or magazine, to more narrowly targeted media such as local newspapers and trade

journals on very specialized topics. A form of press advertising is classified advertising,which allows

private individuals or companies to purchase a small, narrowly targeted ad for a low fee advertising a

product or service. Another form of press advertising is the Display Ad, which is a larger ad (can include

art) that typically run in an article section of a newspaper.

Billboard advertising: Billboards are large structures located in public places which display advertisements

to passing pedestrians and motorists. Most often, they are located on main roads with a large amount of

passing motor and pedestrian traffic; however, they can be placed in any locationwith large amounts of

viewers, such as on mass transit vehicles and in stations, in shopping malls or office buildings, and in

stadiums.

Mobile billboard advertising

Mobile billboards are generally vehicle mounted billboards or digital screens. These can be on dedicated

vehicles built solely for carrying advertisements along routes preselected by clients, they can also be

specially equipped cargo trucks or, in some cases, large banners strewn from planes. The billboards are

often lighted; some being backlit, and others employing spotlights. Some billboard displays are static,

while others change; for example, continuously or periodically rotating among a set of advertisements.

Mobile displays are used for various situations in metropolitan areas throughout the world, including:

Target advertising, One-day, and long-term campaigns, Conventions, Sporting events, Store openings and

similar promotional events, and Big advertisements from smaller companies.

In-store advertising

In-store advertising is any advertisement placed in a retail store. It includes placement of a product invisible locations in a store, such as at eye level, at the ends of aisles and near checkout counters, eye-

catching displays promoting a specific product, and advertisements in such places as shopping carts and

in-store video displays.

Coffee cup advertising

Coffee cup advertising is any advertisement placed upon a coffee cup that is distributed out of an office,

café, or drive-through coffee shop. This form of advertisingwas first popularized in Australia, and has

begun growing in popularity in the United States, India, and parts of the Middle East.[citation needed ]

Street advertising

This type of advertising first came to prominence in the UK by Street Advertising Services to create

outdoor advertising on street furniture and pavements. Workingwith products such as

Celebrity branding

This type of advertising focuses upon using celebrity power, fame, money, popularity to gain recognition

for their products and promote specific stores or products. Advertisers often advertise their products, for

example,when celebrities share their favorite products or wear clothes by specific brands or designers.



Celebrities are often involved in advertising campaigns such as television or print adverts to advertise

specific or general products. The use of celebrities to endorse a brand can have its downsides, however.

One mistake by a celebrity can be detrimental to the public relations of a brand. For example, following

his performance of eight gold medals at the 2008 Olympic Games in Beijing, China, swimmerMichael

Phelps' contractwith Kellogg'swas terminated, as Kellogg's did notwant to associate with him after he

w

as photographed smoking marijuana.

Pricing

Pricing is the process of determining what a company will receive in exchange for its products. Pricing factors aremanufacturing cost, market place, competition, market condition, and quality of product. Pricing is also a key

variable in microeconomic price allocation theory. Pricing is a fundamental aspect of financial modeling and is oneof the four Ps of the marketing mix. The other three aspects are product, promotion, and place. Price is the only

revenue generating element amongst the four Ps, the rest being cost centers.

Pricing is the manual or automatic process of applying prices to purchase and sales orders, based on factors such as:

a fixed amount, quantity break, promotion or sales campaign, specific vendor quote, price prevailing on entry,

shipment or invoice date, combination of multiple orders or lines, and many others. Automated systems require

more setup and maintenance but may prevent pricing errors. The needs of the consumer can be converted intodemand only if the consumer has the willingness and capacity to buy the product. Thus pricing is very important in

marketing.

Questions involved in pricing

Pricing involves asking questions like:

y Howmuch to charge for a product or service? This question is that a typical starting point for discussions

about pricing, however, a better question for a vendor to ask is - Howmuch do customers v alue the

products, services, and other intangibles that the vendor provides.

y What are the pricing objectives?

y Do we use profit maximization pricing?

y How to set the price?: (cost-plus pricing, demand based or value-based pricing, rate of return pricing, or

competitor indexing)

y Should there be a single price or multiple pricing?

y Should prices change in various geographical areas, referred to as zone pricing?

y Should there be quantity discounts?

y What prices are competitors charging?

y Do you use a price skimming strategy or a penetration pricing strategy?

y What image do you want the price to convey?

y Do you use psychological pricing?

y How important are customer price sensitivity (e.g. "sticker shock") and elasticity issues?

y Can real-time pricing be used?

y Is price discrimination or yield management appropriate?

y Are there legal restrictions on retail price maintenance, price collusion, or price discrimination?

What a price should do



A well chosen price should do three things:

y achieve the financial goals of the company (e.g., profitability)

y Fit the realities of the marketplace (Will customers buy at that price?)

y support a product's positioning and be consistentwith the other variables in the marketing mix

o price is influenced by the type of distribution channel used, the type of promotions used, and the

quality of the product price will usually need to be relatively high if manufacturing is expensive, distribution is

exclusive, and the product is supported by extensive advertising and promotional

campaigns

a low price can be a viable substitute for product quality, effective promotions, or an

energetic selling effort by distributors

From the marketer's point of view, an efficient price is a price that is very close to the maximum that customers are prepared to pay. In economic terms, it is a price that shifts most of the consumer surplus to the producer. A good

pricing strategy would be the one which could balance between the price floor (the price below which the

organization ends up in losses) and the price ceiling (the price beyond which the organization experiences a no

demand situation).

Terminology

There are numerous terms and strategies specific to pricing:

Effective price

The effect ive price is the price the company receives after accounting for discounts, promotions, and other

incentives.

Line Pricing

Line Pricing is the use of a limited number of prices for all product offerings of a vendor. This is a tradition started

in the old five and dime stores in which everything cost either 5 or 10 cents. Its underlying rationale is that theseamounts are seen as suitable price points for a whole range of products by prospective customers. It has the

advantage of ease of administering, but the disadvantage of inflexibility, particularly in times of inflation or unstable

prices.

Loss leader

A loss leader is a product that has a price set below the operating margin. This results in a loss to the enterprise on

that particular item in the hope that it will draw customers into the store and that some of those customers will buy

other, higher margin items.

Promotional pricing

Promot ional pricing refers to an instance where pricing is the key element of the marketing mix.

Price/quality relationship

The price/qual ity rel at ionship refers to the perception by most consumers that a relatively high price is a sign of

good quality. The belief in this relationship is most important with complex products that are hard to test, andexperiential products that cannot be tested until used (such as most services). The greater the uncertainty

surrounding a product, the more consumers depend on the price/quality hypothesis and the greater premium they are



prepared to pay. The classic example is the pricing of Twinkies, a snack cake which was viewed as low quality after

the price was lowered. Excessive reliance on the price/quantity relationship by consumers may lead to an increase in

prices on all products and services, even those of low quality, which causes the price/quality relationship to no

longer apply.

Premium pricing

Premium pricing (also called prestige pricing) is the strategy of consistently pricing at, or near, the high end of the possible price range to help attract status-conscious consumers. The high pricing of premium product is used to

enhance and reinforce a product's luxury image. Examples of companies which partake in premium pricing in the

marketplace include Rolex and Bentley. People will buy a premium priced product because:

1. They believe the high price is an indication of good quality;

2. They believe it to be a sign of self worth - "They areworth it;" it authenticates the buyer's success and

status; it is a signal to others that the owner is a member of an exclusive group;

3. They require flawless performance in this application - The cost of product malfunction is too high to buy

anything but the best heart pacemaker.

Demand-based pricing

Demand-based pricing is any pricing method that uses consumer demand - based on perceived value - as the central

element. These include: price skimming, price discrimination and yield management, price points, psychological

pricing, bundle pricing, penetration pricing, price lining, value-based pricing, geo and premium pricing. Pricing

factors are manufacturing cost, market place, competition, market condition, quality of product.

Multidimensional pricing

M ul t idimensional pricing is the pricing of a product or service using multiple numbers. In this practice, price no

longer consists of a single monetary amount (e.g., sticker price of a car), but rather consists of various dimensions

(e.g., monthly payments, number of payments, and a down payment). Research has shown that this practice can

significantly influence consumers' ability to understand and process price information [1]

Nine Laws of Price Sensitivity & Consumer Psychology

In their book, T he S t rat eg y and T act ic s of Pricing , Thomas Nagle and Reed Holden outline 9 laws or factors thatinfluence how a consumer perceives a given price and how price-sensitive s/he is likely to be with respect to

different purchase decisions:[2][3]

1. Reference Price Effect Buyers price sensitivity for a given product increases the higher the products price

relative to perceived alternatives. Perceived alternatives can vary by buyer segment, by occasion, and

other factors.

2. Difficult Comparison Effect Buyers are less sensitive to the price of a known / more reputable product

when they have difficulty comparing it to potential alternatives.

3. Switching Costs Effect The higher the product-specific investment a buyer must make to switch suppliers,

the less price sensitive that buyer is when choosing between alternatives.

4. Price-Quality Effect Buyers are less sensitive to price the more that higher prices signal higher quality.

Products for which this effect is particularly relevant include: image products, exclusive products, and

productswith minimal cues for quality.

5. Expenditure Effect Buyers are more price sensitive when the expense accounts for a large percentage of

buyers available income or budget.

6. End-Benefit Effect The effect refers to the relationship a given purchase has to a larger overall benefit,

and is divided into two parts: Deri v ed demand : The more sensitive buyers are to the price of the end



benefit, the more sensitive theywill be to the prices of those products that contribute to that benefit.

P ri ce proportion cost : The price proportion cost refers to the percent of the total cost of the end benefit

accounted for by a given component that helps to produce the end benefit (e.g., think CPU and PCs). The

smaller the given components share of the total cost of the end benefit, the less sensitive buyers will be

to the component's price.

7. Shared-cost Effect The smaller the portion of the purchase price buyers must pay for themselves, the

fewer prices sensitive they will be.8. Fairness Effect Buyers are more sensitive to the price of a product when the price is outside the range

they perceive as fair or reasonable given the purchase context.

9. The Framing Effect Buyers are more price sensitive when they perceive the price as a loss rather than a

forgone gain, and they have greater price sensitivitywhen the price is paid separately rather than as part

of a bundle.

Approaches

Pricing as the most effective profit level pricing can be approached at three levels. The industry, market, and

transaction level.

Pricing at the industry level focuses on the overall economics of the industry, including supplier pricechanges and customer demand changes.

Pricing at the market level focuses on the competitive position of the price in comparison to the value

differential of the product to that of comparative competing products.

Pricing at the transaction level focuses on managing the implementation of discounts away from the

reference, or list price, which occur both on and off the invoice or receipt?

Pricing tactics

Micromarketing is the practice of tailoring products, brands (micro brands), and promotions to meet the needs and

wants of micro segments within a market. It is a type of market customization that deals with pricing of customer/product combinations at the store or individual level.

Pricing mistakes

Many companies make common pricing mistakes. Bernstein's article "Supplier Pricing Mistakes outlines several

which include:

y Weak controls on discounting

y Inadequate systems for tracking competitor selling prices and market share

y Cost-Up pricing

y Price increases poorly executed

y World

wide price inconsistencies

y Paying sales representatives on dollar volume vs. addition of profitability measures



cannot be so large that there is not a reasonable chance of a significant loss to the insurer. If there is no such chanceof loss, the transaction may have the form of insurance, but not the substance.

6. Calculable loss: There are two elements that must be at least estimable, if not formally calculable: the probability of loss, and the attendant cost. Probability of loss is generally an empirical exercise, while cost has more to do with theability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with aclaim presented under that policy to make a reasonably definite and objective evaluation of the amount of the lossrecoverable as a result of the claim.

7. Limited risk of catastrophically large losses: Insurable losses are ideally independent and non-catastrophic, meaningthat the losses do not happen all at once and individual losses are not severe enough to bankrupt the insurer; insurersmay prefer to limit their exposure to a loss from a single event to some small portion of their capital base. Capital constrains insurers' ability to sell earthquake insurance as well as wind insurance in hurricane zones. In the U.S., flood risk is insured by the federal government. In commercial fire insurance it is possible to find single properties whosetotal exposed value is well in excess of any individual insurer's capital constraint. Such properties are generally shared among several insurers, or are insured by a single insurer who syndicates the risk into the reinsurance market.

Legal

When a company insures an individual entity, there are basic legal requirements. Several commonly cited legal principles of insurance include

1. Indemnity ± the insurance company indemnifies, or compensates, the insured in the case of certain losses only up tothe insured's interest.

2. Insurable interest ± the insured typically must directly suffer from the loss. Insurable interest must exist whether property insurance or insurance on a person is involved. The concept requires that the insured have a "stake" in theloss or damage to the life or property insured. What that "stake" is will be determined by the kind of insurance involved and the nature of the property ownership or relationship between the persons.

3. Utmost good faith ± the insured and the insurer are bound by a good faith bond of honesty and fairness. Material factsmust be disclosed.

4. Contribution ± insurers which have similar obligations to the insured contribute in the indemnification, according tosome method.

5. Subrogation ± the insurance company acquires legal rights to pursue recoveries on behalf of the insured; for example,the insurer may sue those liable for insured's loss.

6. Causa proxima, or proximate cause ± the cause of loss (the peril) must be covered under the insuring agreement of the policy, and the dominant cause must not be excluded

Indemnification

Main article: Indemnity

To "indemnify" means to make whole again, or to be reinstated to the position that one was in, to the extent possible, prior to thehappening of a specified event or peril. Accordingly, life insurance is generally not considered to be indemnity insurance, but rather "contingent" insurance (i.e., a claim arises on the occurrence of a specified event). There are generally two types of insurance contracts that seek to indemnify an insured:

1. an "indemnity" policy, and 2. a "pay on behalf" or "on behalf of" [4] policy.

The difference is significant on paper, but rarely material in practice.

An "indemnity" policy will never pay claims until the insured has paid out of pocket to some third party; for example, a visitor toyour home slips on a floor that you left wet and sues you for $10,000 and wins. Under an "indemnity" policy the homeowner would have to come up with the $10,000 to pay for the visitor's fall and then would be "indemnified" by the insurance carrier for the out of pocket costs (the $10,000



Under the same situation, a "pay on behalf" policy, the insurance carrier would pay the claim and the insured (the homeowner inthe above example) would not be out of pocket for anything. Most modern liability insurance is written on the basis of "pay onbehalf" language

An entity seeking to transfer risk (an individual, corporation, or association of any type, etc.) becomes the 'insured' party oncerisk is assumed by an 'insurer', the insuring party, by means of a contract , called an insurance policy . Generally, an insurance

contract includes, at a minimum, the following elements: identification of participating parties (the insurer, the insured, thebeneficiaries), the premium, the period of coverage, the particular loss event covered, the amount of coverage (i.e., the amount to be paid to the insured or beneficiary in the event of a loss), and exclusions (events not covered). An insured is thus said to be" indemnified " against the loss covered in the policy.

When insured parties experience a loss for a specified peril, the coverage entitles the policyholder to make a claim against theinsurer for the covered amount of loss as specified by the policy. The fee paid by the insured to the insurer for assuming the risk is called the premium. Insurance premiums from many insured are used to fund accounts reserved for later payment of claims ²in theory for a relatively few claimants ² and for overhead costs. So long as an insurer maintains adequate funds set aside for anticipated losses (called reserves), the remaining margin is an insurer's profit

Types of insurance

Any risk that can be quantified can potentially be insured. Specific kinds of risk that may giverise to claims are known as perils. An insurance policy will set out in details which perils are

covered by the policy and which are not. Below are non-exhaustive lists of the many differenttypes of insurance that exist. A single policy may cover risks in one or more of the categories set

out below. For example, vehicle insurance would typically cover both the property risk (theft or damage to the vehicle) and the liability risk (legal claims arising from an accident). A home

insurance policy in the U.S. typically includes coverage for damage to the home and the owner's belongings, certain legal claims against the owner, and even a small amount of coverage for

medical expenses of guests who are injured on the owner's property.

Business insurance can take a number of different forms, such as the various kinds of professional liability insurance, also called professional indemnity (PI), which are discussed

below under that name; and the business owner's policy (BOP), which packages into one policymany of the kinds of coverage that a business owner needs, in a way analogous to how

homeowners' insurance packages the coverages that a homeowner needs.[18]

Auto insurance

Main arti cle: Vehi cle insurance



Workers' compensation, or employers' liability insurance, is compulsory in some countries

y Disability insurance policies provide financial support in the event of the policyholder becoming

unable towork because of disabling illness or injury. It provides monthly support to help pay

such obligations as mortgage loans and credit cards. Short-term and long-term disability policies

are available to individuals, but considering the expense, long-term policies are generally

obtained only by those with at least six-figure incomes, such as doctors, lawyers, etc. Short-term

disability insurance covers a person for a period typically up to six months, paying a stipend each

month to cover medical bills and other necessities.

y Long-term disability insurance covers an individual's expenses for the long term, up until such

time as they are considered permanently disabled and thereafter. Insurance companieswill

often try to encourage the person back into employment in preference to and before declaring

them unable towork at all and therefore totally disabled.

y Disability overhead insurance allows business owners to cover the overhead expenses of their

businesswhile they are unable to work.

y Total permanent disability insurance provides benefits when a person is permanently disabledand can no longer work in their profession, often taken as an adjunct to life insurance.

y Workers' compensation insurance replaces all or part of a worker'swages lost and

accompanying medical expenses incurred because of a job-related injury.

Casualty

Casualty insurance insures against accidents, not necessarily tied to any specific property. It is a broad spectrum of insurance that a number of other types of insurance could be classified, such

as auto, workers compensation, and some liability insurances.

y Crime insurance is a form of casualty insurance that covers the policyholder against losses

arising from the criminal acts of third parties. For example, a company can obtain crime

insurance to cover losses arising from theft or embezzlement.

y Political risk insurance is a form of casualty insurance that can be taken out by businesses with

operations in countries in which there is a risk that revolution or other political conditions could

result in a loss.

Life insurance

Life insurance provides a monetary benefit to a descendant's family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial,

funeral and other final expenses. Life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity.

Annuities provide a stream of payments and are generally classified as insurance because they

are issued by insurance companies, are regulated as insurance, and require the same kinds of actuarial and investment management expertise that life insurance requires. Annuities and



pensions that pay a benefit for life are sometimes regarded as insurance against the possibilitythat a retiree will outlive his or her financial resources. In that sense, they are the complement of

life insurance and, from an underwriting perspective, are the mirror image of life insurance.

Certain life insurance contracts accumulate cash values, which may be taken by the insured if the

policy is surrendered or which may be borrowed against. Some policies, such as annuities andendowment policies, are financial instruments to accumulate or liquidate wealth when it isneeded.

In many countries, such as the U.S. and the UK, the tax law provides that the interest on this cash

value is not taxable under certain circumstances. This leads to widespread use of life insurance asa tax-efficient method of saving as well as protection in the event of early death.

In the U.S., the tax on interest income on life insurance policies and annuities is generallydeferred. However, in some cases the benefit derived from tax deferral may be offset by a low

return. This depends upon the insuring company, the type of policy and other variables

(mortality, market return, etc.). Moreover, other income tax saving vehicles (e.g., IRAs, 401(k) plans, Roth IRAs) may be better alternatives for value accumulation.

Burial insurance is a very old type of life insurance which is paid out upon death to cover finalexpenses, such as the cost of a funeral. The Greeks and Romans introduced burial insurance circa

600 AD when they organized guilds called "benevolent societies" which cared for the survivingfamilies and paid funeral expenses of members upon death. Guilds in the Middle Ages served a

similar purpose.

Property

This tornado damage to an Illinois home would be considered an "Act of God" for insurance purposes

Property insurance provides protection against risks to property, such as fire, theft or weather damage. This may include specialized forms of insurance such as fire insurance, flood insurance,

earthquake insurance, home insurance, inland marine insurance or boiler insurance. The term proper ty insurance may, like casualty insurance, be used as a broad category of various subtypes

of insurance, some of which are listed below:



US Airways Flight 1549 was written off after ditching into the Hudson River

y Aviation insurance protects aircraft hulls and spares, and associated liability risks, such as

passenger and third-party liability. Airports may also appear under this subcategory, including

air traffic control and refuelling operations for international airports through to smaller

domestic exposures.

y Boiler insurance (also known as boiler and machinery insurance, or equipment breakdowninsurance) insures against accidental physical damage to boilers, equipment or machinery.

y Builder's risk insurance insures against the risk of physical loss or damage to property during

construction. Builder's risk insurance is typically written on an "all risk" basis covering damage

arising from any cause (including the negligence of the insured) not otherwise expressly

excluded. Builder's risk insurance is coverage that protects a person's or organization's insurable

interest in materials, fixtures and/or equipment being used in the construction or renovation of

a building or structure should those items sustain physical loss or damage from an insured

peril.[20]

y Crop insurance may be purchased by farmers to reduce or manage various risks associated

w

ithgrowing crops. Such risks include crop loss or damage caused by weather, hail, drought, frost

damage, insects, or disease.[21]

y Earthquake insurance is a form of property insurance that pays the policyholder in the event of

an earthquake that causes damage to the property. Most ordinary home insurance policies do

not cover earthquake damage. Earthquake insurance policies generally feature a high

deductible. Rates depend on location and hence the likelihood of an earthquake, as well as the

construction of the home.

y Fidelity bond is a form of casualty insurance that covers policyholders for losses incurred as a

result of fraudulent acts by specified individuals. It usually insures a business for losses caused

by the dishonest acts of its employees.



Hurricane Katrina caused over $80bn of storm and flood damage

y Flood insurance protects against property loss due to flooding. Many insurers in the U.S. do not

provide flood insurance in some parts of the country. In response to this, the federal

government created the National Flood Insurance Program which serves as the insurer of last

resort.

y Home insurance, also commonly called hazard insurance, or homeowners insurance (often

abbreviated in the real estate industry as HOI), is the type of property insurance that covers

private homes, as outlined above.

y Landlord insurance covers residential and commercial propertieswhich are rented to others.

Most homeowners' insurance covers only owner-occupied homes.

Fire aboardMV Hyundai Fortune

y Marine insurance and marine cargo insurance cover the loss or damage of vessels at sea or on

inlandwaterways, and of cargo in transit, regardless of the method of transit. When the owner

of the cargo and the carrier are separate corporations, marine cargo insurance typicallycompensates the owner of cargo for losses sustained from fire, shipwreck, etc., but excludes

losses that can be recovered from the carrier or the carrier's insurance.Many marine insurance

underwriters will include "time element" coverage in such policies,which extends the indemnity

to cover loss of profit and other business expenses attributable to the delay caused by a covered

loss.



The subprime mortgage crisis was the source of many liability insurance losses

y Public liability insurance covers a business or organization against claims should its operations

injure a member of the public or damage their property in some way.

y Directors and officers liability insurance (D&O) protects an organization (usually a corporation)

from costs associatedwith litigation resulting from errors made by directors and officers for

which they are liable.

y Environmental liability insurance protects the insured from bodily injury, property damage and

cleanup costs as a result of the dispersal, release or escape of pollutants.

y Errors and omissions insurance is business liability insurance for professionals such as insurance

agents, real estate agents and brokers, architects, third-party administrators (TPAs) and other

business professionals.

y Prize indemnity insurance protects the insured from giving away a large prize at a specific event.

Exampleswould include offering prizes to contestants who can make a half-court shot at abasketball game, or a hole-in-one at a golf tournament.

y Professional liability insurance, also called professional indemnity insurance (PI), protects

insured professionals such as architectural corporations and medical practitioners against

potential negligence claims made by their patients/clients. Professional liability insurance may

take on different names depending on the profession. For example, professional liability

insurance in reference to the medical profession may be called medical malpractice insurance.

[edit] Credit

Main arti cle: Credit insurance

Credit insurance repays some or all of a loan when certain circumstances arise to the borrower such as unemployment, disability, or death.

y Mortgage insurance insures the lender against default by the borrower.Mortgage insurance is a

form of credit insurance, although the name "credit insurance" more often is used to refer to

policies that cover other kinds of debt.

y Many credit cards offer payment protection planswhich are a form of credit insurance.



MARKET RESEARCH

A Processof defining a marketing problem & opportunity, systematically collecting and analyzing

information, & recommending actions to increase organizations marketing activities.

X-STICS OF A GOOD RESEARCH

y must be conducted in a systematic manner y involves a series of steps/processesy data may be available from different sources

y research applies to any aspect of marketing that needs informationy findings must be communicated to the appropriate decision maker

STEPS INVOLVOLED IN MARKETING RESEARCH

1. Defining and Locating the problem

Its objective is to search information needed to solve the market problems.

Planning to meet unsatisfied needs in the target market

1. Assess the decision factors2. Different sets of variables, alternatives and uncertainties that combine to give the

outcome of a decision.

Al t ernat ives---decision maker has controlUncer t aint ies--uncontrollable factors

1. Assess the decision factors

Different sets of variables, alternatives and uncertainties that combine to give theoutcome of a decision.

Al t ernat ives---decision maker has controlUncer t aint ies--uncontrollable factors

Decision maker must:

1. Determine the principal alternatives that can be considered reasonable approaches to

solving the problem...i.e. reasonable outcomes of research.

2. The major uncertainties that can affect particular alternative and result in it being a

good or a poor solution to a problem.

3Collect Relevant Information

Using quesstionares and also interviewing.

4. Find a Solution



The best alternative that has been identified to solve the problem

5. Evaluate the results

Coke, do the results make sense, don't always accept them at face value

REVISION

Why New Products Fail

y Lack of differentiating advantage

y Poor marketing plany Poor timing

y Target market too smally Poor product quality

y No access to market

Buyers' Product Adoption Process

1. Awareness

Buyers become aware of the product

2. Interest

Buyers seek information and is receptive to learning about product

3. Evaluation

Buyers consider product benefits and determineswhether to try it

4. Trial

Buyers examine, test or try the product to determine usefulness relative to needs

5 . Adoption

Buyers purchase the product and can be expected to use it when the need for the general type

of product

Diffusion Process



Diffusion is the way that new products are accepted into a communIty

The manner in which different members of the target market often accept and purchase a product (go

through the adoption process)

1. Innovators

Techno-savvies first customers to buy a product, 2.5 % of consumers

2. Early Adopters

Tend to be opinion leaders. Adopt new products but use discretion, 13.5%

3. Early Majority

34% of consumers, first part of the mass market to buy the product

4. Late Majority

Less cosmopolitan and responsive to change, 34%

5 . Laggards

Price conscious, suspicious of change, 16%, do not adopt until the product has reached maturity.

Benefits of Branding

Provides benefits to buyers and sellers

TO BUYER:

y Help buyers identify the product that they like/dislike.

y Identify marketer

y Helps reduce the time needed for purchase.

y Helps buyers evaluate quality of products especially if unable to judge a products characteristics.

y Helps reduce buyers perceived risk of purchase.

y Buyer may derive a psychological reward from owning the brand,.

TO SELLER:

y Differentiate product offering from competitors

y Helps segment market by creating tailored images.

y Brand identifies the companys products making repeat purchases easier for customers.

y Reduce price comparisons



y Brand helps firm introduce a new product that carries the name of one or more of its existing

products...half as much as using a new brand, lower co. designs, advertising and promotional

costs.

y Easier cooperation with intermediarieswithwell known brands

y Facilitates promotional efforts.

y Helps foster brand loyalty helping to stabilize market share.

y Firms may be able to charge a premium for the brand.

Selecting a Brand Name

Criteria for choosing a name:

y Easy for customers to say, spell and recall (inc. foreigners)

y Indicate products major benefits

y Should be distinctivey Compatible with all products in product line

y Used and recognized in all types of media

y Availability, already over 400 car "name plates", this makes it difficult to select a new

one.y Use words of no meaning to avoid negative connotation, Kodak, Exxon

y Can be created internally by the organization, or by a consultancyy Legal restrictions, i.e. Food products must adhere to the Nutrition Labeling and

Education Act, 1990...May 8 1994

Scope and Importance of Advertising

Advertisements are important for:

y standardized products

y products aimed at large markets

y products that have easily communicated featuresy products low in price

y products sold through independent channel members and/or are new

Nature of Advertising

Used by many types of organizations including Churches, Universities, Civic groups and charities,

politicians!

Need to consider the following issues:

y Does the product possess unique, important features to focus on Unique Selling Point (USP)

y Are the hidden qualities important to the buyers



y Is the general demand trend for the product adequate

y Is the market potential for the product adequate

y Is the competitive environment favorable

y Is the organization able and willing to spend the required money to launch an advertising

campaign

USES OF ADVERTISING

1. Promoting Products or Organizations

y Product Adver t ising promotes goods and services.

2. Stimulating Primary and Selective Demand

First to introduce product needs to stimulate primary demand

For

electi v e demand, advertisers use Competitive advertising, brand uses, benefits not available

with

other brands

3. Offsetting Competitors Advertising

Defensive advertising, offset to lessen the effect of competitors advertising. Used in fastfood industry,

extremely competitive consumer products markets.

4. Making salespersons more effective

Tries to presale product to buyers by informing them of uses, features and benefits- encourage them to

contact dealers etc. Cars...bring to retail store.

5. Increasing use of product

Consumer can consume only so much of a product, this limits absolute demand. May need to convince

the market to use the product in more than one way.

6. Reminding and reinforcing customers

Reminder, need to keep company/product name at the forefront of consumers' minds in the

competitive marketplace. Reinforcement prevents cognitive dissonance.

7. Reducing Sales fluctuations

Increase sales during slow periodswill help increase production efficiency; IE advertising reduced prices

of lawn mowers in the winter months (reduce inventory costs). Coupons for Pizza onlyMon-Thurs.



STEPS OF DEVE LOPING AN ADVERTISING CAMPAIGN

1. Identify and Analyze the AdvertisingTarget

I.e. the group of pple aimed at.

2. Defining Objectives.

What the firm hopes to accomplish from the campaign, should be clear, precise and measurable.

3. Determine the Advertising Appropriation (budget)

Total amount of money that a marketer allocates for advertising in a specific period

4. Creating an Advertising Message

A function of the product's features, uses and benefits.Must be aware of the characteristics of target market, different message to different target market.

1. Components of the advert:o Headline

o Illustrationso SubHeadline

o BodyCopyo Signature

5. Developing a Media Plan

Sets forth the exact media vehicles to be used and dates and times of ads.

6. Executing the Campaign

7. Evaluating the effectiveness of the campaign

Measure the achievement of the objectives, assessing the effectiveness of the copy etc., and the media.

S electing Promotional Tools

A marketer must do the followingwhile planning and sending communications to a target audience:



1. Identify the Audience

Individuals, groups, special publics or the general public.

Intermediaries vs Consumer

2. Identify the Stage of Product Life Cycle

o Introductory Inform Publicity/Advertising/Sales force (interim.)/Sales promotion (free

samples)

o Growth P ersuade Differentiate from competitors offering

o Maturity Remind Reminder advertising, Sales promotion (coupons)

o Decline Cut budget

3. Product Characteristics

o Complexity Howmuch information must be communicated? The more complex the

message, the greater the need to use personal selling.

o Risk Greater risk, greater need for personal selling

4. Stages of Buying Decision

In many cases the final response sought is purchase, but purchase is the result of a long process

of consumer decision making. Need to know where the target audience now stands (in the

process), andwhat state they need to be moved to.

Adoption Process

o Not Aware--Advertising/Publicity

o Aware--no knowledge Advertising/Publicity

o Interest --how do they feel? Personal Selling/Sales Promotion/Advertising

o Ev aluation--should they try? sales promotion/personal selling

o T rial --test drive/sales promotion

o Adoption--do they purchase? Reminder/reinforce--advertising

Communication programs goal must lead consumers to take the final step.

5. Channel Strategies

-Push Vs Pull Policy

o P ush-promotes product only to the next institutions down the marketing channel.

Stresses personal selling, can use sales promotions and advertising used in conjunction.

o P ull -promotes directly to consumers, intention is to create a strong consumer demand,

primarily advertising and sales promotion. Since consumers are persuaded to seek

products in retail stores, retailerswill in turn go to wholesalers etc (use channels

overhead

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