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Chapter 6

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University of Waterloo
BIOL 376

Chapter 6 – Developing and Promoting Goods and Services (pg. 132- 146) Promotion – Any technique designed to sell a product. It is part of the communication mix: the total message a company sends to consumers about its product. The two general values to be gained from any promotional activity, regardless of the particular strategy or tools involved: communicating information and creating satisfying exchanges. From an information standpoint, promotions seek to accomplish four things with potential customers: - Make them aware of products - Make them knowledgeable about products - Persuade them to like products - Persuade them to purchase products The ultimate objective of any promotion is to increase sales. However, marketers also use promotion to communicate information, position products, add value, and control sales volume. Product Positioning – The establishment of an easily identifiable image of a product in the minds of consumers Today’s value conscious customers gain benefits when the promotional mix is shifted so that it communicates value – added benefits in its products. Push Strategy – A promotional strategy in which a company aggressively pushes its product through wholesalers and retailers, which persuade customers to buy it. Pull Strategy – A promotional strategy in which a company appeals directly to customers, who demand the product from retailers, which demand the product from wholesalers There are four types of promotional tools: advertising, personal selling, sales promotions, and publicity and public relations. The best combination of these tools – the best promotional mix – depends on many factors. The most important is the target audience. In establishing a promotional mix, marketers match promotional tools with the five stages in the buyer decision process: 1. Buyers must first recognize the need to make a purchase. At this stage, marketers must make sure that buyers are aware of their products. Advertising and publicity, which can reach many people quickly, are important 2. Buyers also want to learn more about available products. Advertising and personal selling are important because both can be used to educate consumers 3. Buyers compare competing products. Personal selling can be vital. Sales representatives can demonstrate product quality and performance in comparison with competitors’ products. 4. Buyers choose products and purchase them. Sales promotion is effective because it can give consumers an incentive to buy. Personal selling can help by bringing products to convenient purchase locations 5. Buyers evaluate products after purchase. Advertising, or even personal selling, is sometimes used to remind consumers that they made wise purchases. Advertising – Promotional tool consisting of paid, non-personal communication used by an identified sponsor to inform an audience about a product Informative Advertising – An advertising strategy, appropriate to the introduction stage of the product life cycle, in which the goal is to make potential customers aware that a product exists Persuasive Advertising – An advertising strategy, appropriate to the growth stage of the product life cycle, in which the goal is to influence the customer to buy the firm’s product rather than the similar product of a competitor Comparative Advertising – An advertising strategy, appropriate to the maturity stage of the product life cycle, in which the goal is to influence the customer to switch form a competitor’s similar product to the firm’s product by directly comparing the two products Reminder Advertising – An advertising strategy, appropriate to the latter part of the maturity stage of the product life cycle, in which the goal is to keep the product’s name in the minds of customers Advertising Medium – The specific communication device – television, radio, newspapers, direct mail, magazines, billboards – used to carry a firm’s advertising message to potential customers Types of media advertising include, newspapers, television, direct mail, radio, magazines, word of mouth, outdoor advertising, the internet, virtual advertising Direct Mail – Printed advertisements, such as flyers, mailed directly to consumers’ homes or places of business Word Of Mouth – opinions about the value of products passed among consumers in informal discussions Ecommerce – Buying and selling processes that make use of electronic technology Internet Marketing – The promotional efforts of companies to sell their products and services to consumers over the internet Internet advertising offers advantages for both buyers and sellers. For buyers, advantages include convenience, privacy, selection useful information, and control. For sellers, advantages include reach, direct distribution, reduced expenses, relationship building, flexibility, and feedback. While internet marketing has some obvious advantages for both buyers and sellers, it also has weaknesses, including profitability problems, information overload, and limited markets. Media Mix – The combination of media through which a company chooses to advertise its products Regardless of the media used, advertisements fall into one of several categories Brand Advertising – Advertising that promotes a specific brand name product Product Advertising – A variation on brand advertising that promotes a general type of product or service Advocacy Advertising – Advertising that promotes a particular viewpoint or candidate Institutional Advertising – Advertising that promotes a firm’s long term image, not a specific product Retail Advertising – Advertising by retailers designed to reach end-users of a consumer product Co-operative Advertising – Advertising in which a manufacturer together with a retailer or a wholesaler advertise to reach customers Trade Advertising – Advertising by manufactures designed to reach potential wholesalers and retailers Industrial Advertising – Advertising by manufacturers designed to reach other manufacturers’ professional purchasing agents and managers of firms buying raw materials or components Advertising Campaign – The arrangement of ads in selected media to reach target audiences A campaign typically includes six steps: 1. Identifying the target audience 2. Establishing the advertising budge 3. Defining the objectives of the advertising messages 4. Creating the advertising messages 5. Selecting the appropriate media 6. Evaluating advertising effectiveness Advertising Agencies – A firm that specializes in creating and placing advertisements in the media for clients Personal Selling – Promotional tool in which a salesperson communicates one-on-one with potential customers Sales Force Management – Setting goals at top levels of an organization; setting practical objectives for salespeople; organizing a sales force to meet those objectives; implementing and evaluating the success of a sales plan Managers of both telemarketers and traditional salespeople must consider the ways in which personal sales activities are affected by the differences between consumer and industrial products: - Retail selling is selling a consumer product for the buyer’s personal or household use - Industrial selling is selling products to other businesses, either for the purpose of manufacturing other products or for resale Improving sales efficiency requires marketers to consider salespeople’s tasks. Three basic tasks are generally associated with selling: order processing, creative selling, and missionary selling. Sales job usually require salespeople to perform all three tasks to some degree, depending on the product and the company. Order Processing – In personal sales, the receiving and follow through on handling and delivery of an order by a salesperson Creative Selling – In personal sales, the use of techniques designed to persuade a customer to buy a product when the benefits of the product are not readily apparent or the time is very expensive Missionary Selling – In personal sales, the indirect promotion of a product by offering technical assistance and/or promoting the company’s image Prospecting – In personal sales, the process of identifying potential customers Qualifying – In personal sales, the process of determining whether potential customers have the authority to buy and the ability to pay for a product The approach refers to the first few minutes that a salesperson h
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