Comm 320 Exam 1 Study Guide

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COMM 320
Lee Ahern

COMM 320.1 | Fall 2013 | Dr. Ahern | Exam 1 Study Guide 1. Definitions a. Marketing: an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization. b. Advertising: the activity or profession of producing advertisements for commercial products or services. i. Non-personal ii. Paid iii. Persuasive in nature iv. Identified sponsor c. Integrated Marketing Communications: a strategic business process used to plan, develop, execute and evaluate coordinated, measurable, persuasive brand communication programs with consumers, customers, prospects employees and other relevant external and internal audiences. 2. Elements of modern marketing mix a. The 4 Ps of marketing i. Product ii. Price iii. Place (distribution) iv. Promotion b. Traditional media advertising: traditional advertising is becoming a smaller part of the marketing mix i. Television ii. Radio iii. Newspapers iv. Magazines v. Outdoor/Transits c. Direct marketing: form of advertising that allows businesses and nonprofits to communicate straight to the customer, with advertising techniques that can include text messages, email, interactive consumer websites, online display ads, fliers, catalog distribution, promotional letters, and outdoor advertising d. Public relations: the professional maintenance of a favorable public image by a company or other organization or a famous person. 3. Brands and brand equity a. Definitions of modern brands i. Ogilvy: “Image means personality. Products, like people, have personalities, and they can make or break them in the marketplace. The personality of a product is an amalgam of many things—its name, its packaging, its price, the style of its advertising, and above all, the nature of the product itself.” ii. Arens: “That combination of name, words, symbols, or design that identifies the product and its source and distinguishes it from competing products. Without brands, consumers couldn’t tell one product from another, and advertising them would be impossible.” iii. Functional definition: A brand is a conceptual entity that focuses the organization of marketing activities—usually with the purpose of building equities for that brand in the marketplace. A brand is the central organizing concept of modern advertising and marketing. b. Ways to calculate or estimate brand equity i. What a brand is “worth” – how much was invested to build the brand (bricks & mortar, advertising, marketing, distribution) ii. Present value of expected future profit from a branded product – present value of expected future profit from a non-branded (generic) product iii. The excess paid for a company above its balance sheet value (in accounting terms, “goodwill”) c. Ways to increase brand equity i. Increasing sales ii. Increasing market share and profit iii. Product improvements/innovations iv. Adding “meaning” to the brand through advertising, sponsorships, relationship building or other deliberate marketing and public relations efforts d. What brands mean to different actors in the marketing process i. Marketers 1. To marketers, brands are business units 2. The brand management system (originating with P&G in the 1930s) has become a common approach to organizing multi- brand companies 3. At single-brand companies, the marketing department is the brand management department ii. Agencies 1. To advertising agencies, brands are clients 2. Within an ad agency, a client brand is called an account 3. Marketer =>$$=> Agency 4. To create brand image iii. Media 1. To media companies, brands are customers 2. Media companies SELL space or time to brand marketers 3. Marketer (usually via agency) =>$$=> Media 4. To distribute brand image iv. Consumers 1. To consumers, brands are symbols 2. Brands help consumers make social meaning out of the product choices they face 4. Marketer organization a. Centralized i. Pros: Better communication, fewer personnel, continuity of staff, more top involvement management ii. Cons: Less goal involvement, longer response time, can’t do multiple product lines b. Decentralized i. Pros: concentrated attention, rapid problem response, and increased flexibility ii. Cons: Ineffective decision making, internal conflicts, misallocation of funds, lack of clear authority c. Brand management system i. Decentralized system ii. Competitive brands within a company d. Single-brand companies i. Example: Starbuck’s ii. A single company that specializes in signature products e. Megabrands i. Example: Virgin ii. A single brand that owns numerous sub-companies with the same name 5. IMC elements a. Direct marketing tools i. Direct mail ii. Internet sails iii. Shopping channels iv. Catalogs v. Direct response advertising vi. Phone/personal sales vii. Direct marketing helps eliminate the middleman b. Consumer and trade promotions i. Consumer-oriented tools (for end users): 1. Coupons 2. Samples 3. Premiums 4. Contests/Sweepstakes 5. Refunds/Rebates 6. Bonus Packs 7. Loyalty Bonuses 8. Events ii. Trade-oriented tools (for resellers): 1. Trade allowances 2. POP displays 3. Training programs 4. Trade shows 5. *Blank* Advertising iii. Relationship to Push and pull strategies 1. Promotion to push goods through channels = Trade-oriented 2. Promotion to pull goods through channels = Consumer-oriented c. Public relations i. Publicity vehicles 1. Feature articles 2. News releases 3. Press conferences 4. Interviews 5. Special events ii. Special publications iii. Community activities iv. Corporate advertising v. Cause-related marketing vi. Public affairs activities vii. Special event sponsorship 6. Agency structure and compensation a. The main areas of traditional full-service agency i. Account Service 1. The link between agency and client 2. Managed by the account executive ii. Marketing Services 1. Research department 2. May include account planners 3. Media department to obtain media space and time iii. Creative Services 1. Creation and execution of ads 2. Copywriters, artists, other specialists b. ATL v. BTL i. Above the line 1. Paid 2. Trad’l media advertising ii. Below the line 1. Unpaid 2. Sales promotion 3. Internet 4. Personal selling 5. PR 6. Packaging 7. Point-of-sale 8. Email marketing 9. Direct response marketing c. Media commission compensation system i. Qualified agencies were paid 15% of the cost of media 1. Thereby the cost of the agency was “invisible” to the client 2. Remained the industry standard for decades 3. Fueled the growth of advertising agencies ii. As the amount of media, the opportunities for advertising, and the cost of advertising increased 1. Agency compensation increased iii. Agency commission system 1. The commission system made ad agencies successful 2. Attracted the best talent iv. New types of promotion were making other approaches more attractive 1. Marketers were becoming more and more interested in BTL (Below the line) 2. Agencies were most interested in ATL (Above the line) v. Such a good thing could not last forever 1. Rising cost of media 2. Pressure from marketers 3. Competition among agencies 4. The necessity to find pricing structures for BTL services vi. Over a 30-year period from the 1970s through the 2000s (but mainly from the mid-1980s to about 2000) the media commission collapsed in favor of fee-for-service and other compensation models d. Modern compensation systems i. Fixed fees (75% of arrangements in 2010) 1. Straight-forward hourly fee a. Like law firms and other professions b. Does not appreciate quality of work ii. Sales commissions (15%) 1. Agency is compensated as a percentage of sales for the brand(s) they manage a. This compensation model is gain momentum iii. “Cost Plus” models 1. Agency is compensated for costs incurred in production of campaign, plus additional
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