Chapman University Argyros School of Business and Economics Exam 3 Review PDF

Exam 3 Review Instructor: Mohammad Zia Final Exam (Exam 3) It’s comprehensive (all material from the beginning of the semester to the end, with more focus on material after Exam 2) Lecture slides Readings (Dolan) Cases (4 HBS) In-class Assignments Videos...

Exam 3 Review Instructor: Mohammad Zia Final Exam (Exam 3) It’s comprehensive (all material from the beginning of the semester to the end, with more focus on material after Exam 2) Lecture slides Readings (Dolan) Cases (4 HBS) In-class Assignments Videos …. Anything we covered/discussed in class The format is similar to the previous exams Closed-book/note/Internet Combination of MC, Short Answer, Essay, Calculations About 1 hours On Canvas Calculators and Scratch papers are Ok. Designing and Managing Integrated Marketing Channels Instructor: Mohammad Zia Learning Objectives: What are marketing channels? Channel’s role, importance and value Three Types of Channel Members Channel structure Direct Vs. indirect Channel design decisions Distribution intensity and retailer fit Pull Vs. Push Channel Alternatives Channel conflict, power, and integration Channel Conflict (Horizontal and Vertical) Channel Integration  Marketing Channels Marketing channels: Sets of interdependent organizations participating in the process of making a product or service available for use or consumption Three Types of Channel Members: 1. Merchants: wholesalers, retailers Buy, take title to, re-sell 2. Agents: Brokers, sales agents, manufacturer representative Search for customers, negotiate 3. Facilitators: transportation, banks, warehouses Sample Question What’s the difference between merchants and agents in a marketing distribution channel? Value, Role and Importance of Distribution Channels Connect produces to customers efficiently Handle transactions, logistics, financing, post-sale support Collect information Disseminate communications to stimulate demand Place orders with manufacturers Negotiate and reach agreements on price Assume risks  Channel Length: Direct vs. Indirect Channels Direc Internet, Sales Force t Manufacturer-owned Stores Indirect Sample Question Identify and explain two advantages of the direct distribution channel over indirect channels. Channel Design Decisions Start by analyzing your customers Where are my target customers located? What do they need? What is their behavior? Service? backup? Variety? Information? Fast delivery? Convenient location? Establish objectives and constraints Product characteristics: perishability, size, complexity, value Economic goals: Cost/Benefit of Channel Competitive factors Desired level of Control, Service, Coverage Exclusive distribution Selective distribution STIHL Intensive distribution Identifying and Evaluating Channel Alternatives Sales Agency or Sales Force? A Paper manufacture is deciding between… 1- Hiring 2 sales force (60K base salary + 5% commission) 2- Using Dunder-Mifflin sales agency ( 15% commission per batch) Each Bach costs $500 to produce and is priced at $1000 Sample Question Calculate the break-even sale quantity between the folling two distortion channels: 1- Hiring 2 sales force (60K base salary + 5% commission) 2- Using Dunder-Mifflin sales agency ( 15% commission per batch) Each Bach costs $500 to produce and is priced at $1000 Assume channels can generate the same amount of sales. Channel Conflict Channel conflict exists when one channel member’s actions prevent another channel member from achieving its goal Types of conflict: Horizontal channel conflict Between members at the same level E.g., two retailers, two Ford dealership Vertical channel conflict Between members at different levels E.g., retailer and manufacturer Causes of Channel Conflict Goal incompatibility Unclear roles and rights Disintermediation Profit Margin Conflict Adequate attention Sample question With an example, explain the difference between Horizontal and vertical channel conflict.  Channel Integration and Systems Conventional marketing channel Double marginalization Vertical Marketing Systems Producer, wholesaler(s), and retailer(s) acting as a unified system Corporate VMS Single ownership (Sears, Sherwin-Williams, Apple, Starbuck) Contractual VMS Franchise organizations Pepsi Case Pepsi Co.'s channel structure On-premise, vending, retail stores Relationship with Bottlers/Distributors Pull versus Push strategy Distribution intensity Sample Question A firm uses TV advertising to appeal to its final customers and build demand for the product. This is an example of a push strategy. False Sample Questions True or False? A firm uses indirect distribution channel to obtain closer contact with its customers. False Convenience products usually use selective distribution. False Multiple choice: Among different types of channel alternatives, ……….has the lowest cost per transaction Telemarketing, Sales force, Internet, Distributors, Wholesalers Franchise organizations (such as Subway, Pepsi Bottlers, etc.) are …….Vertical Marketing Systems Contractual, Administered, Corporate, All of the above Integrated Marketing Communications (Chapter 19) Instructor: Mohammad Zia Learning Objectives: The Role of Marketing Communications: inform, persuade, and remind IMC Mix : Advertising, Sales Promotions, PR, Sales Force, Events and Experiences, Digital marketing (Online, Mobile, Social) Communication process: IMC and Buyer-Readiness Stage Developing Effective Communications Target Audience, Objectives, Creative Strategy, Message source Budgeting IMC IMC and Product Life Cycle The Role of Marketing Communications Marketing communications The means by which firms attempt to inform, persuade, and remind consumers about the products and brands they sell. Select the Communications Channels Sample Question Sales promotions can be easily duplicated by competitors and abused by final customers. TRUE IMC and Buyer-Readiness Stage Developing Effective Communications Loyalty and Usage Establish need Build awareness Change attitude Influence purchase Creative Strategy: Informational Appeal Transformational Appeal Affordable method Percentage-of-sales method Competitive-parity method Objective-and-task method Sample Question What are the steps involved in developing an effective marketing communication campaign?  Creative Strategy Informational Appeals Assumes customers are rational and use their logics. Attributes, benefits of product: Product demonstrations, Problem solution ads, Product comparison ads (comparative advertising) Testimonials and celebrity endorsements Transformational Appeals Non-product-related benefits and image Showing types of people who use the brand, kind of experiences it results Negative Appeals (fear, guilt, shame,…) Progressive Positive Appeals (humor, love, pride, joy, sexual…)  Message Source Credibility Expertise Trustworthiness Likability Super Bowl Commercials 2019 Choices of Message Source Increase sales of juices, which have been flat The firm’s CEO recently. Our juices comes in a wider selection of unusual flavors, compared to competitors. A celebrity An expert Promote a private business college with highly practical education successful in helping A spokesperson its graduates get good jobs. A real customer An actor/model Your firm produces the world’s first truly effective ‘toothpaste chewing gum’ The firm’s employees A character To help promote independent butchers Just the product/logo (no people in the ad) Establish the Marketing Communications Budget 1. Affordable method 2. Percentage-of-sales method 3. Competitive-parity method 4. Objective-and-task method 1. A local accountant works out that she should have around $20,000 spare this year to invest in local advertising and to hold two seminars. 2. The highest proportion of Kellogg’s promotional budget is spent on Corn Flakes (its biggest seller), followed by Rice Bubbles, and only a little is spent on its breakfast bars (which only achieve small sales), and so on. 3. A small chain of restaurants decides to increase its promotional spend as its advertising is not being noticed due to the heavy advertising of its major competitors. 4. A shoe company decides to increase its advertising budget to $1m to support the launch of their new tennis shoes. Their goal is to achieve a 5% market share within the first three months. Sample Question A local accountant works out that she should have around $20,000 spare this year to invest in local advertising and to hold two seminars. This is sort of budgeting and funding the the promotional activities is called: 1. Affordable method 2. Percentage-of-sales method 3. Competitive-parity method 4. Objective-and-task method IMC and Product Life Cycle Sample Questions Multiple Choice: A local accountant works out that she should have around $20,000 spare this year to invest in local advertising and to hold two seminars. Which IMC budgeting methods is being used by the accountant? Affordable, Percentage-of-sales, Competitive-parity, Objective-and-task, Return on Investment True or False? In growth stage of PLC, the main objective of IMC should be to create primary demand False Adverting is an efficient way to reach large number of people TRUE Managing Digital Communications: Online, Social Media, and Mobile Instructor: Mohammad Zia Learning Objectives What are pros and cons of Digital Marketing communications? What are different digital tools and technologies for communicating to customers? Difference between SEO and SEM How doe second-price auction in online advertising work? Key concepts: Impression, Click, CTR, CPC, CPM, CPA What is Digital Marketing? Marketing of products or services using digital technologies (Internet, desktops, mobile phones, tablets, etc.) Search engine optimization (SEO) Search engine marketing (SEM) Content marketing Influencer marketing Social media marketing E-mail marketing Display advertising Video advertising In-game advertising Affiliate marketing Mobile marketing (SMS, MMS, Apps, Location-based) ++ Tailored messages, trace/track results, targeted, more scheduling/budgeting controls -- Can be screened out, bogus clicks, hacking/vandalism Sample Question Identify two pros and two cons of Digital Marketing over Traditional (offline) Marketing  Design the Perfect Website for Your Business 7 C’s : Context, Content, Connection, Community, Communication, Customization Ease of use (Simple is the best) Physical attractiveness Color palette and imagery Consistency Typography & Readability Mobile compatibility Easy loading Easy Navigation Communication How much information? Monetize website? S-Bottle Toggle 5-Award Winning Designs 2019 Trends  SEM and SEO Sponsored Sponsored Organic 2 Search Engine Optimization (SEO) Improving website’s “organic” ranking in search engine The Economics of Digital Advertising Impressions: An impression is counted each time your ad is shown. Clicks: a click on an ad Conversions: Ex: online purchases, calls to your business, email sign-ups, etc. Click-through Rate (CTR) = clicks / impressions Percentage of impressions that are clicked. Conversion Rate = conversions / clicks Percentage of click that are converted to a purchase Payment Schemes CPM: Cost per Thousand Impressions Advertiser pays an amount per 1000 times its ad was shown to customers Most popular in banner/display ads. CPC (or PPC): Cost per click (or, Pay per Click) Advertiser pays an amount whenever someone clicks on its ad. Most popular, especially in search ads. CPC can be high! CPA: Cost per Action Advertiser pays an amount only when the customer purchases or downloads an app, or makes a call etc. Sample Question An advertiser’s online ad is seen 1000 times and gets clicked 20 times, out of which only 2 clicks eventually result in a purchase. What is the click-through rate and conversion rate? CTR = 20/1000 = 2% CR = 2/20 = 10% Online Ad Auctions Ad positions are assigned to advertisers via an auction process: Auction is implemented by ad networks such as Google Advertisers place their bids for each “keyword” The advertiser with the highest bid gets the first (best) ad position. The advertiser with the 2nd highest bid gets the 2nd best ad position. … Many advertisers do not get any ad positions First-Price Ad Auction Each advertiser pays an amount equal to her bid Less popular Second-Price Ad Auction Each advertiser pays an amount equal to the bid of the next (lower-bid) advertiser. Most popular Sample Question In the eBay auction, the highest bidder gets the product, and pays an amount equal to the bid of the next-highest bidder. This is called a first-price auction. FALSE Ad Second-Price Auctions Advertiser 1 bids $1 Advertiser 2 bids $2 Slot 1 Advertiser 3 Advertiser 3 bids $3 Slot 2 Advertiser 2 If consumer clicks on his link… Advertiser 3 pays $2/Click Impressions, Clicks, Action CTR CPC, CPM, CPA CPC can be high! Maximize the Marketing Value of E-mails Give the customer a reason to respond Personalize the content of your e-mails Offer time-sensitive information Make it easy to opt and unsubscribe Combine e-mail and social media Call-To-Action Button Sample Questions Suppose Levi’s and AE bid, respectively, $2 and $3 for the keyword “quality jeans” in Google search ads platform. What would be the CPC for each click on AE’s link? $2 The SEO’s job is to manage the bids and come up with the best keywords to secure the best paid position in sponsored list of the search engine. False, that’s SEM’s job