MK Final Exam Guide PDF

**Course Content from MK12-MK22** - ~~IMC and IMC Planning~~ - ~~Marketing Channels~~ - Pricing Strategy - Sales Forecasting - Demand curve - Margins and Markups - IMC Tutorial (Awareness, CPM, CPC) - Retail Environments (ACV) - Creative Workshops - ~~Personal Selling a...

**Course Content from MK12-MK22** - ~~IMC and IMC Planning~~ - ~~Marketing Channels~~ - Pricing Strategy - Sales Forecasting - Demand curve - Margins and Markups - IMC Tutorial (Awareness, CPM, CPC) - Retail Environments (ACV) - Creative Workshops - ~~Personal Selling and Sales Force~~ **Why are Marketing Channels used?** - *Why do we need marketing channels?* - Distributors help business as an intermediary, they can condense orders and ship them to customers - Flow of goods, relationship to retailors, and market information is important from intermediaries - Types of Channels: - [Direct]: Manufacturer straight to consumer - [Indirect]: manufacturer -\> wholesaler/distributer -\> Retailer -\> Consumer - *What are the types of marketing channel structures?* - [Independent marketing Channel:] - Independent members maximizing their own profits - Manufacturer, retailer, wholesaler, all independently prioritize maximizing their own profits - These channels often lack strong control since each member may have conflicting goals - [Administered Vertical Marketing System] - Independent with dominant member holding significant power over other members - [Contractual Vertical Marketing System] - Independent with contracts to reduce conflict - [Corporate Vertical Marketing System] - Channel owned by own company - *What determines channel power?* - [Control over resources] - If supplier has control over necessary part of a product, they have power over the manufacturer who needs the part - [Expertise and Knowledge] - One member may depend on another for market knowledge - [Relationships and Networks] - Certain members have relationships with government entities, suppliers, manufacturers, retailers, etc. that provides leverage - *What are the different sources of channel power?* - [Reward Power] - Stems from the ability of one channel member to provide benefits to another in exchange for compliance - They can offer discounts, better priority for goods - [Coercive Power] - Using threats or punishments to get another channel member to comply - Threatening to pull product from the shelves, choose a different manufacturer, etc. - [Referent Power] - Desire of one channel to be associated with another channel because of reputation, prestige, success - Brand may want to be involved in a certain higher end store and is willing to compromise more to stay in the store's shelves - Small retailer may want to carry large brand name to bring in sales - [Expert Power] - Based on knowledge and skill possessed by one channel member that the other values - Manufacturer may have technical skills that retailers rely on for information and training - [Information Power] - Comes from the ability to control and share valuable information - Retailer/wholesaler may have market information that is critical for the manufacturer - [Legitimate Power] - Comes from formal agreements or contracts that gives one channel member the right to influence the other - Manufacturer may be contractually obligated to offer a certain price, ship items in a specific timeframe, etc. to the retailer - *What causes channel conflict?* - [One member feels hindered by another's action] - Disagreement about prices - Retailer wants discounts to move products out of the store while the manufacturer wishes to maintain a premium price - *Retailer Strategy* 1. Choosing retail partners 2. Identifying types of retailers 3. Developing a retail strategy 4. Managing an omnichannel strategy **What is involved in setting price?** - *What are the considerations for setting price?* - 5 C's of Pricing: Framework that systematically considers everything that goes into setting a price - [Company]: Directly linked to company objectives: max profit, drive sales volume, beat competitors - Tesla changing pricing to increase sales volume and beat competitors to dominate market - [Cost]: Knowing production costs, breakeven point - [Customers:] Setting price consumers are willing to buy, economic and psychological factors combined - Price elasticity is important, high elasticity higher the price - [Competition]: Monopoly Matrix - [Monopoly]: One firm controls the market - [Oligopolistic Competition]: A handful of firms control the market - [Monopolistic Competition]: May firms sell differentiated products at different prices - [Pure Competition]: Many firms sell commodities for the same price - [Channel Members]: Players involved in getting product out to the consumer - Markups are added throughout every step, which affects price for the consumers - *What is the difference between margin and markup?* - Mark up is calculated with the base number - Margin is calculated from total number - *How do you convert between margin and markup?* - Do the in-class exercise - *How does a cumulative demand curve work?* - - *How does profit maximization work?* - Businesses use different strategies for different products, seasons, customers, demographics, etc. as a way to increase profits - Sometimes this strategy involves selling lower quantities at higher prices, lower price at higher quantities, changing pricing based on areas - *How does price bundling work?* - Combine several products and sell them together at a lower price than they would be individually - Sweetens the deal and encourages consumers to buy more - [Pure Components]: everything is individual - [Pure Bundling]: Only sold as a package deal - [Mixed Bundling]: Can either buy the bundle or choose each item individually - Can target different customer needs and potentially increase profit - Increase customer range, strategically price - *What are the advantages/disadvantages of EDLP vs high/low pricing?* - [EDLP- Advantage] - Saves customers the search costs of finding the lowest overall prices - Consistent demand and sales - Reduced marketing expenses: requires less promotion - Stronger customer loyalty - [EDLP- Disadvantages] - Lower profit margins - Perception of lower quality - Difficulty competing with high/low pricing: H/L can still attract customers with large discounts at certain times - [High/Low- Advantages] - Attract price-sensitive customers - Create excitement and a sense of urgency: Consumers are pushed to buy quickly in fear that the sale will end - Ability to clear out inventory: Can clear up space for items that aren't selling quickly enough - [High/Low- Disadvantages] - Fluctuating demand and sales - Higher marketing costs: must promote and advertise the campaigns - Potential for customer frustration: constant changing of pricing can make customers feel frustrated - Risk of price war: Competitors can offer even larger discounts and can lead to a price war - Can attract customers that are not loyal to the brand **What is integrated marketing communications?** - *What are elements of IMC strategy?* - Elements of the IMC strategy is the AIDA Model/Purchase Funnel - [Awareness]: Creating a new brand and getting consumers to know what your company does - [Interest]: Once people know about your business, generate interest in what you sell - [Desire]: Consumers desire your good once they have interest - [Action]: Final step, the action where consumers decide to buy your product - *What are the objectives of promotional communications?* - Create a marketing plan that is unified through every channel: Billboards, website, social media, etc. - Understand target audience before deciding how to market product - Like trying to sell a skateboard on a knitting website, the product does not fit the venue of sales - Make measurable strategy towards marketing that can be evaluated later to see whether the strategy is effective - [CPM]: Cost to reach 1,000 people within the target audience - [CPC] (Cost per click): Can be used as a comparison between different ads - [Frequency]: Numbers of times target consumers are exposed to an ad within a certain timeframe - [Reach]: Percent of people in the target audience that have seen your advertisements in a certain period of time - Objectives - Increase awareness - Prompt trial - Increase repeat - Increase sales - Increase customer loyalty - *What is difference between push and pull marketing?* - [Push Media]: Pushing product onto the shelves of stores - Trade shows - [Pull Media]: Pulling consumer towards your product to generate interest - Paid (YouTube Ads, Influencer posts), Owned (Website, Business cards), Earned (Promotion from past consumers, Yelp reviews, Word of Mouth) - *When would a firm use continuous, flighting or pulsing advertising schedule?* - *How is awareness calculated? How is CPM calculated?* - *Calculate awareness when provided: vehicle, circulation, % in target market, costs (as in IMC tutorial)* - *What are different types of advertising* - [Paid:] Media/advertisement that you pay for - Social media ads, billboards - [Owned:] Media that you own - Facebook page, blog - [Earned:] - Twitter comments, online forums **When is personal selling important?** - What is the selling process? - Generate and qualify leads - Pre-Approach - Need to rehearse and do homework about the customer, what are their pain points, research the industry - Sales presentation and Overcoming Reservations - Showcase the product and service and explain the value the product brings - Bringing them towards a decision that is beneficial for both parties - Closing the sale - Follow up - Reduces post purchase dissonance - What are the functions of sales management? - Structure the team itself - Recruiting and retaining top talent - Training - Product knowledge, training, time management, negotiation techniques - How are sales forces organized? - Structure through product line, geographic region, product type - What are ways to incentivize the sales force? - Straight salary: Fixed amount regardless of sales performance - Straight commission: earned based on what you sell - Combination plan: blends both methods - Most popular plan - 73% of firms use some sort of variation on this plan, requires balance between security and motivation - What are pros and cons of incentive structure? - Straight salary: - Pro: Security, know exactly what you are getting every paycheck - Con: May lack motivation, no need to hustle - Straight commission: - Pro: earning potential is huge, very motivating - Con: if sales are slow, income is low - Combination Plan: - Pro: security with base salary plus potential upside of commission - Con: one size does not fit all, each company needs to understand what mix would work best for their sales force