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Hierarchy-of-effects models
Table 3.1 Hierarchy-of-effects models
Based on: Barry, T.E. and Howard, D.J. (1990), ‘A Review and Critique of the Hierarchy of Effects in Advertising’, International Journal of Advertising, 9, 121–35.
Purchase Decision
High LowDecision Complex LimitedMaking Decision Decision
Making MakingHabit Brand Inertia
Loyalty
Involvement
Communication Process
Sender Encoding
Message
Decoding Receiver
ResponseFeedback
Media
http://www.youtube.com/watch?v=YV8zGNe7Ebg http://www.youtube.com/watch?v=F8nQyPNuA5I
Purpose of Communication
Differentiate http://www.youtube.com/watch?v=ib-Qiyklq-Q http://www.youtube.com/watch?v=po0jY4WvCIc
Remind http://www.youtube.com/watch?v=HT3lWeJ1GT0
Inform http://www.youtube.com/watch?
v=uNcQaQZV67A
Persuade http://www.youtube.com/watch?v=at1y7iHmjXQ
Advertising
“Non- personal paid for communications targeted through mass media with the purpose of achieving set objectives such as creating awareness or encouraging trial. It is a means of reaching large audiences in a cost effective manner”
Sales Promotion
Offers buyers additional inducement to buyCan be targeted at consumers, intermediaries and the sales forceReach new customersReduce distributor riskReward behaviourRetentionAssist segmentationImprove efficiency
Public Relations
Attempts to shape attitudes and opinionsUsed to communicate with all stakeholdersUseful in profile strategyUsed in crisis management
Personal Selling
Involves face to face dialogueGives flexibility of messageImmediate feedback gainedVery useful in business to business marketsVery useful when products and services are complex
Direct marketing
Used to create a personal dialogue with customers and stakeholders (not through an intermediary)Widely usedTechnology enabled
More Profits, More Investment
IdentifyProspects
Target Media
Sell Products
Get CustomerInformation Build Database
& Analyse
Talk to CustomersRegularly
Cross-sell, Up-sellRenewal
Increase CustomerLifetime Value
Analyse Database
Spiral ofProsperity
Perceptual Mapping
More Perceptual Mapping
4 Cs Framework
Communications Deliver a Personal Message Reach a Large Audience Level of Interaction
CredibilityCost
Absolute Cost Cost per Contact Wastage Size of Investment
Control Ability to Target Flexibility
Factors affecting pricing decisions
Pricingdecisions
Internal factors -Marketing objectivesMarketing mixCostsOrganisation for pricing
External factors -Nature of market &demandCompetitionOther environmentalfactors
General Pricing Approaches
Cost-plus pricing Break-even analysis & target profit
pricing
Value-based pricingGoing-rate pricing Sealed-bid pricing
Breakeven ChartSales
Breakeven Point
Fixed Costs
Variable Costs
Total Costs£
Units
New Product Pricing Strategies
Market-skimmingHigh price charged‘Just’ worthwhile for some segments to adopt new productAs competitors enter market, price is lowered
Market-penetrationLow initial price chargedAttract large volume sales quicklyLarge market shareHigh volume sales save costsEconomies of scale on production and distribution
Product Mix Pricing Strategies
Product-line pricing setting price steps between products in a product line
Optional product pricing accessory products sold with main product
Captive product pricing product must be used with a main product
By-product pricing products produced as part of the process involved in
producing another product
Product-bundle pricing combining several products and setting a discounted
price
Nature Of Marketing Channels
Channel of Distribution A group of individuals and organisations
that direct the flow of products from producers to customers
Marketing Intermediary A middleman who links producers to other
middlemen or to those who ultimately use the product.
Two main types: Merchants Functional middlemen
Channel design decisions
Analyse customer service needs - marketing channels deliver appropriate value to the customerDefining channel objectives and constraints - which segments to serve and which channel to use for eachIdentifying key channel alternatives - direct marketing, broker, agent, intermediary, wholesaler, retailer, e-commerceEvaluating alternatives - economic, control, level of flexibility criteria
Channel For Consumer Products
Producer
Agents or Brokers
Wholesalers
Retailers
Consumers
Channel For Industrial Products
Producer
Agents
Industrial Distributors
Industrial DMUs
Channel Integration (Dibb, Simkin, Pride & Ferrell 2000)
VerticalThe combinationof two or morestages of the
channel underone management
HorizontalThe combination
of institutions at the same
level of channel operation under
one management
Supply chain
Suppliers Procurement- Manufacturing - Physical distribution
Channels Customers
Major Logistics Functions - Outsourcing
Order processingWarehousingInventoryTransportation Others
Services
Jon Kitto
Business Week said…Ask most executives how innovation can spur their growth, and they'll immediately think about changes in their product lineup. Wrong. They should be thinking "services." As a percentage of GDP today, services comprise 82% of our economic output. The number has been increasing for years. The crossover point from products to services actually happened in 1987. Yet when we think of innovation, most of us are still thinking products -- iPods, Mini Coopers, Treo's, and the like still dominate our mindshare about what's cool.
We are what we do… Not what we own… (Live Work)
Intangible Cannot be owned
Perishable Cannot be stocked
Variable Can be customised
Inseparable From the people who produce them
The extended marketing mix
The additional elements deal with the characteristics of services
People good training for service staff, appearance of staff, staff
carefully selected, and held more accountable
Process fast service tills, part time staff to cover highest periods of
demand, easy booking systems for appointments, on-line
Physical evidence internal and external appearance of premises, short
queues, modern equipment, pleasant waiting areas, add-ons, extras
Product PricePromotion Place
SERVQUAL
Determinants of perceived service quality
Dimensions of quality
Access
Credibility Knowledge Reliability Security
Competence
Communication
Courtesy
Responsiveness
Tangibles
Word of Past Buyers’ Advertising mouth experience needs
Expectedservice
Perceivedservice
Perceived servicequality
International
Jon Kitto
The trend towards globalisation
Domestic markets
Infrequent foreign marketing
Regular foreign marketing
International marketing
Global marketing
Factors for consideration
LanguageCulture & traditionLegal & regulatory requirementsBuying habits and motivational factors
Standards of livingMedia availability and usageThe competitive environment
Structural Choices
Exporting - sending products abroad and selling through intermediaries or own sales representatives
Licensing -form of joint venture, licensing the right to a local firm to use a process, trademark, etc for a fee or royalty
Joint ventures -joining with local firm to produce or market a product
Direct ownership - entering foreign market by developing manufacturing facilities
International Marketing Mix
Arguments for Adaptation
Differing customer needsInfrastructure variationsVarying levels of educationEconomic, cultural and political conditions varyInconsistent local management experience, abilities and skills
Arguments for Standardisation
Larger number of buyer similaritiesEasier to control campaigns from central sourceTechnological advances allow a consistent brand image to be maintainedEconomies of scale
Business-to-Business
Decision Making Unit (DMU)
User -end user, may initiate request and help specify
Influencer -technical personnel or specialists, help specify, provide information
Buyer -formal authority holders, help specify, select vendors, negotiate
Decider -final approver (often also buyer)
Gatekeeper -control information flow to others, can prevent sales people gaining access
Types of buying decision
Straight re-buy - goods re-ordered without modificationModified re-buy - opportunity for competitors to enter discussions, essential service quality is goodNew buy - greater risk or cost, the fuller decision making unit involved
Factors influencing industrial buying behaviour
ENVIRONMENTAL Levels of demand Economic prospects Interest rates The pace of technological change Political and legal structures Competitive structures
ORGANISATIONAL Objectives Policies Structures Systems & degree of centralisation Processes and procedures Managerial attitudes to risk Financial l resource Previous experiences
BUYING CENTRERoles in DMUGroup processesInterpersonalinteractions
INDIVIDUALPersonal objectivesJob positionAttitude to riskPrevious experiencesTechnical knowledgeMotivation
BUYINGDECISION
SOURCE: Adapted from Webster and Wind, 1972