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    3.MACROENVIRONMENT

    Natural environment:

    Marketers need to be aware of the threats and opportunities associated

    with four trends in the natural eniron!ent"

    Shortage of raw materials#ir!s en$a$ed in R%& hae an

    e'cellent opportunit( to deelop substitute !aterials. Increased energy costs

    Anti-pollution pressures

    Governmental protections

    Technological environment:

    The !arketer should !onitor the followin$ trends in technolo$(" the pace

    of chan$e the opportunities for innoation) ar(in$ R%& bud$ets and

    increased re$ulation.

    Accelerating Pace of Technological Change:Man( of toda(*s

    co!!on products were not aailable +, (ears a$o. More ideas are

    bein$ worked on the ti!e la$ between new ideas and their

    successful i!ple!entation is decreasin$ rapidl(- and the ti!e

    between introduction and peak production is shortenin$considerabl(. o!e hope that this trend will reduce auto pollution

    brin$ the fa!il( closer to$ether and create !ore ho!e centered

    entertain!ent and actiit(. It will also hae substantial i!pact on

    shoppin$ behaior and !arketin$ perfor!ance. nlimited !pportunities for innovation: Virtual realit( has

    alread( been applied to $atherin$ consu!er reactions to new

    auto!obile desi$ns) kitchen la(outs) e'terior ho!e desi$ns) and

    other potential o/erin$s. "arying #$% &udgets:

    Increased #egulation of Technological change:As products

    beco!e !ore co!ple' the public needs to be assured of their

    safet(. Marketers !ust be aware of these re$ulations when

    proposin$ deelopin$ and launchin$ new products.

    Political-legal 'nvironment

    This eniron!ent is co!posed of laws) $oern!ent a$encies) and

    pressure $roups that in0uence and li!it arious or$ani1ations and

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    indiiduals. o!eti!es these laws also create new opportunities for

    business.

    Increase in (usiness legislation

    Growth of special interest groups

    +. MARETIN4 REEARC5

    )ar*eting research is the s(ste!atic desi$n) collection) anal(sis) andreportin$ of data and 6ndin$s releant to a speci6c !arketin$ situationfacin$ the co!pan(.

    &e6ne the proble!" specif( decision alternaties) state research

    ob7ecties.

    &eelop the Research 8lan" data sources) research approach) research

    instru!ents) sa!plin$ plan) contact !ethods.

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    Research Approaches" Obseration) focus $roup) sure() behaioral data)

    e'peri!entation.

    Research Instru!ents" :uestionnaires) :ualitatie Measures)Technolo$ical &eices.

    Samples: probabilit( ; si!ple rando!) strati6ed rando!) cluster< and

    non probabilit( ; conenience) 7ud$!ent) =uota Identif( and pro6le distinct $roups of bu(ers who di/er in their

    needs and preferences> elect one or !ore !arket se$!ents to enter> Establish and co!!unicate the distinctie bene6ts of the !arket

    o/erin$

    TE8"

    2. Market e$!entation2.2 identif( bases for se$!entin$ the !arket2.9 &eelop se$!ent pro6les

    9. Market Tar$etin$9.2 &eelop !easure of se$!ent attractieness9.9 elect tar$et se$!ents

    3. Market positionin$3.2 &eelop positionin$ for tar$et se$!ents

    3.9 &eelop a !arketin$ !i' for each se$!ent

    + @EVE@ O# MICROMARETIN4"

    Segment )ar*eting: A !arket se$!ent consists of a lar$e identi6able

    $roup within a !arket with si!ilar wants) purchasin$ power)

    $eo$raphical location) bu(in$ attitudes or bu(in$ habits.

    Niche )ar*eting: A niche is !ore narrowl( de6ned $roup) t(picall( a

    s!all !arket whose needs are not well sered. Marketers usuall( identif(

    niches b( diidin$ a se$!ent into sub se$!ents or de6nin$ a $roup

    seekin$ a distinctie !i' of bene6ts. Niches are fairl( s!all and attract

    er( few co!petitors. Niche !arketin$ re=uires !ore decentrali1ation

    and chan$es in the wa( nor!al business is done. Niche !arketers

    understand their custo!ers so well that custo!ers willin$l( pa( a

    pre!iu!.

    ocal )ar*eting: Marketin$ pro$ra!s bein$ tailored to the needs and

    wants of local custo!er $roups H tradin$ areas) nei$hbourhood)

    indiidual stores. &isadanta$es of local !arketin$ are H it dries up the

    !anufacturin$ and !arketin$ cost b( reducin$ the econo!ies of scale)lo$istical proble!s beco!e !a$ni6ed and a brands oerall i!a$e !a(

    be diluted if the product and !essa$e di/er in di/erent localities.

    Individual )ar*eting: lti!ate leel of !arketin$ H Lse$!ent of one)

    Lcusto!ised !arketin$) Lone>to>one !arketin$.

    8atterns of Market e$!entation

    Da( to build up !arket se$!ents Hpreference segments. Three di/erent

    patterns

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    /omogeneous Preferences: Markets where all custo!ers hae

    rou$hl( sa!e preference. The !arket shows no natural se$!ents.

    %i0used Preferences: Consu!er preferences are scattered

    throu$h out the space H consu!ers ar( widel( in their

    preferences. The 6rst brand to enter the !arket is likel( to position

    itself in the centre to appeal the !ost people. A brand in the

    centre !ini!i1es the total custo!er dissatisfaction.

    Clustered Preferences:The !arket reeals distinct preference

    clusters H natural market segments.The 6rst 6r! to enter the

    !arket has three options"

    o Position in the center to appeal to all groups. It will deelop onl( one

    brand) co!petitors would enter and introduce brands in the other

    se$!entso Position in the largest market segment H concentrated !arketin$

    o Develop several products positioned in a dierent segment.

    Customeri1ation:

    Co!bines operationall( drien !ass custo!i1ation with custo!i1ed

    !arketin$ in a wa( that e!powers consu!ers to desi$n the product and

    serice o/erin$ of their choice.

    E##ECTIVE E4MENTATION CRITERIA

    MARET TAR4ETIN4. COVERA4E TRATE4IE

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    8ATTERN O# TAR4ET MARET E4MENTATION

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    23 C#A.TING T/' AN% P!SITI!NING

    Positioning: is the act of desi$nin$ the co!pan(Gs o/erin$ and i!a$e

    to occup( a distinctie place in the !ind of the tar$et !arket.

    &i/erentiation strate$ies"

    > Product: 8roduct di/erentiation can be !ade on the basis of for!)

    features) 8erfor!ance) confor!ance) durabilit() reliabilit()

    reparabilit() st(le) and desi$n3

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    > Personnel: Co!panies can $ain stron$ co!petitie adanta$ethrou$h hain$ better trained people. etter>trained personnele'hibit J characteristics"

    Courtes(" Respectful) friendl( and considerate

    Co!petence" kill and knowled$e

    Credibilit(" Trustworth( Reliabilit(" perfor! serice consistentl( and accuratel(

    Responsieness" :uick response to custo!er proble!s

    Co!!unication" Make an e/ort to understand the custo!er and

    co!!unicate clearl(.> Channel: Co!panies can $ain co!petitie adanta$e throu$h the

    wa( the( desi$n their distribution channels* coera$e) e'pertise

    and perfor!ance.

    > Image: u(ers respond di/erentl( to co!pan( and brand i!a$es.

    Identity and Image need to be distin$uished.

    Identit( is the wa( the co!pan( ai!s to identif( or position itself

    or its product.

    I!a$e is the wa( the public perceies the co!pan( and its

    products.

    An e0ective image does 3 thin$s" Establishes product character and alue proposition

    Cone(s the character in distinctie wa( so as not to confuse it

    with co!petitors* &eliers and e!otional power be(ond !ental i!a$e.

    P#!%CT I.' C4C' )A#5'TING ST#AT'GI'S

    To sa( that a product has a life c(cle is to assert four thin$s">> 8roduct has a li!ited life> 8roduct sales pass throu$h distinct sta$es) each posin$ di/erent

    challen$es) opportunities) and proble!s to the seller> 8ro6ts rise and fall at di/erent sta$es of the product life c(cle

    > 8roducts re=uire di/erent !arketin$) 6nancial) !anufacturin$)purchasin$ and 5R strate$ies in each sta$e

    .!# STAG'S !. A P#!%CT I.' C4C'

    2. Introduction" A period of slow sales $rowth as the product isintroduced in the !arket. 8ro6ts are non e'istent at this sta$ebecause of the hea( e'penses done for the product introduction

    9. Growth" > period of rapid !arket acceptance and substantial pro6ti!proe!ent

    3. )aturity"> period of slowdown in the sales $rowth because the

    product has achieed acceptance b( !ost potential bu(ers. 8ro6tsdecline or stabili1e

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    +. %ecline"> ales show a downward drift and pro6ts erode

    8OITIONIN4 AN& @I#E 8RO&CT CC@E

    . S'TTING P#!%CT ST#AT'G4

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    A product:is an(thin$ that can be o/ered to a !arket to satisf( a want

    or need) includin$ ph(sical $oods) serices) e'periences) eents)

    persons) places) properties) or$ani1ations) infor!ation and ideas.

    Product evels

    There are ? followin$ leels"63 Core (ene7t: funda!ental serice or bene6t that the custo!er os

    reall( bu(in$.

    83 &asic product: the for! taken b( the serice or bene6t.

    93 ',pected product: a set of attributes and conditions that e'pected

    b( the bu(er.

    +3 Augmented product: a product that e'ceeds custo!er*s

    e'pectations. This is the leel at which all co!petition takes place

    ;howeer in @&Cs co!petition takes place at the e'pected product leel &urabilit(

    > Tan$ibilit(

    > se

    a. Non-dura(le goods> tan$ible $oods nor!all( consu!ed in one or

    few uses. Make the! aailable in !an( locations) char$e a s!all !arkup

    and adertise heail(. E.$. beer) soap.

    b. %ura(le goods- tan$ible $oods that surie !an( uses. Re=uire

    !ore personal sellin$ % serice) co!!and a hi$her !ar$in and

    $uarantees. E.$. refri$erators) clothin$.

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    c. Services- intan$ible) inseparable) ariable and perishable products.

    Re=uire =ualit( control) supplier credibilit( and adaptabilit(. E.$. haircuts

    and repairs.

    CONMER 4OO& C@AI#ICATION

    a. Convenience Goods- purchased fre=uentl() i!!ediatel( and with

    !ini!u! of e/ort. E.$ tobacco) soaps) newspapers.

    b. Shopping Goods- products are co!pared on the basis as suitabilit()

    =ualit() price and st(le. E.$. furniture) clothin$.

    c. Speciality Goods- $oods with uni=ue characteristics or brand

    identi6cations for which the custi!er is willin$ to !ake a special

    purchasin$ e/ort. E.$. cars) stereo) photo$raphic co!ponents.

    d. nsought Goods- consu!er does not know about or does not

    nor!all( think of bu(in$. Re=uire adertisin$ and personal sellin$. E.$.s!oke detectors) life insurance) ce!eter( plots) enc(clopedias.

    8RO&CT MIPE

    product mi,

    product assortment

    depth

    length

    width

    consistency

    Product-line length

    A product line is too short if pro6ts can be increased b( addin$ ite!s- the

    line is too lon$ if pro6ts can be increased b( droppin$ ite!s.

    A co!pan( len$thens its product line in two wa(s" b( line stretchin$ and

    line 6llin$.

    @ine stretchin$ occurs when a co!pan( len$thens its product line

    be(ond its current ran$e.

    Down market stretch

    A co!pan( positioned in the !iddle !arket !a( want to introduce alower price line for an( of three reasons"

    2. The co!pan( !a( notice stron$ $rowth opportunities in the down

    !arket as !ass retailers attract a $rowin$ no. of shoppers who want

    alue>priced $oods.

    9. The co!pan( !a( wish to tie up lower>end co!petitors who !i$ht

    otherwise tr( to !oe up!arket.

    3. The co!pan( !a( 6nd that the !iddle !arket is sta$natin$ or

    declinin$.

    Upmarket stretch

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    Co!panies !a( wish to enter the hi$h end of the !arket for !ore

    $rowth) hi$her !ar$ins) or si!pl( to position the!seles as full>line

    !anufacturers.

    Two-way stretch

    Co!panies serin$ the !iddle !arket !i$ht decide to stretch their line

    in both directions.

    TDO DA 8RO&CT

    D5AT I T5E #I#T5 8F

    Pac*aging: so!eti!es called the 6fth 8) is all the actiities of desi$nin$

    and producin$ the container for a product.

    #actors Contributin$ to the E!phasis on 8acka$in$"

    2. elf erice H 8acka$in$ beco!es an Li!pulse purchase sti!ulus

    9. Consu!er aQuence H 8eople are willin$ to pa( !ore for attractiepacka$in$

    3. Co. and brand i!a$e H contribute to brand reco$nition

    +. Innoation opportunit( H cope for innoation

    e( decidions " Dhat the packa$e should do i1e) di!ensions)attributes) etc En$ineerin$ testin$ Consu!er testin$

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    8acka$in$ Ob7ecties

    Identif( the brand

    Cone( descriptie and persuasie infor!ation

    #acilitate product transportation and protection

    Assist at>ho!e stora$e Aid product consu!ption

    #unctions of @abels

    Ma( perfor! an( of the foll #unctions" Identi6es the product) $rades the

    product) describes the product) pro!otes the product.

    . %'"'!PING P#ICING3 ST#AT'GI'S AN% P#!G#A)S

    8rice is the !arketin$>!i' ele!ent that produces reenue- the others

    produce cost. 8rice is also one of the !ost 0e'ible ele!ents" It can be

    chan$ed =uickl() unlike product features and channel co!!it!ents. At

    the sa!e ti!e) price co!petition is the nu!ber one proble! facin$ the

    co!panies. et !an( co!panies do not handle pricin$ well.

    COMMON 8RICIN4 MITAE

    > &eter!ine costs and take traditional industr( !ar$ins

    > #ailure to reise price to capitali1e on !arket chan$es> ettin$ price independentl( of the rest of the !arketin$ !i'> #ailure to ar( price b( product ite!) !arket se$!ent) distribution

    channels) and purchase occasion.

    CONMER 8C5O@O4 AN& 8RICIN4

    Reference prices

    8rice>=ualit( inferences

    8rice endin$s

    8OI@E CONMER RE#ERENCE 8RICE

    L#air price

    T(pical price

    @ast price paid

    pper>bound price

    @ower>bound price

    Co!petitor prices

    E'pected future price

    sual discounted price

    2K

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    TE8 IN ETTIN4 8RICE

    elect the price ob7ectie

    &eter!ine de!and" ;8RICE ENITIVIT) ETIMATIN4 &EMAN&

    CRVE) 8RICE E@ATICIT O# &EMAN&

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    RVIVA@"Co!panies pursue surial as their !a7or ob7ectie if

    the( are pla$ued with oercapacit() intense co!petition or

    chan$in$ consu!er wants. 8ro6ts are less i!portant than surial.

    As lon$ as prices coer ariable costs and so!e 6'ed costs) the

    co!pan( sta(s in business. 5oweer) surial is a short>run

    ob7ectie- in the lon$ run) the 6r! !ust learn how to add alue or

    face e'tinction.

    MAPIMM CRRENT 8RO#IT" Man( co!panies tr( to set a price

    that will !a'i!i1e current pro6ts. The( esti!ate the de!and and

    costs associated with alternatie prices and choose the price that

    produces !a'i!u! current pro6ts) cash 0ows) or rate of return on

    inest!ent. This strate$( assu!es that the 6r! has knowled$e of

    its de!and and cost functions- in realit( these are diScult to

    esti!ate. ( e!phasi1in$ current 6nancial perfor!ance) theco!pan( !a( sacri6ce lon$ run perfor!ance b( i$norin$ the

    e/ects of other !arketin$>!i' ariables) co!petitorGs reactions)

    and le$al restraints on price.

    MAPIMM MARET 5ARE" o!e co!panies want to !a'i!i1e

    their !arket share. The( beliee that a hi$her sales olu!e will

    lead to lower unit costs and hi$her lon$ run pro6ts. The( set the

    lowest price) assu!in$ the !arket is price sensitie. Te'as

    Instru!ents ;TI< practices this market-penetration pricin$. TI willbuild a lar$e plant) set its price as low as possible) win a lar$e

    !arket share) e'perience fallin$ costs) and cut its price further as

    costs fall.

    MAPIMM MARET IMMIN4" Market ski!!in$ !akes sense

    under the followin$ conditions" ;2< A suScient nu!ber of bu(ers

    hae a hi$h current de!and- ;9< the unit costs of producin$ a

    s!all olu!e is not so hi$h and the( cancel the adanta$e of

    char$in$ what the traSc will bear- ;3< the hi$h initial price does

    not attract !ore co!petitors to the !arket- ;+< the hi$h priceco!!unicates the i!a$e of a superior product.

    8RO&CT>:A@IT @EA&ER5I8" A co!pan( !i$ht ai! to be the

    product>=ualit( leader in the !arket.

    8RICE>A&A8TATION TRATE4IE"

    4eo$raphical 8ricin$" This inoles in the co!pan( in

    decidin$ how to price its products to di/erent custo!ersin di/erent locations and countries. Another issue is how

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    to $et paid. This issue is critical when bu(ers lack

    suScient hard currenc( to pa( for their purchases.

    &iscountsAllowances

    > Cash discount> :uantit( discount

    > #unctional discount> easonal discount> Allowance

    8ro!otional 8ricin$> @oss>leader pricin$> pecial>eent pricin$> Cash rebates> @ow>interest 6nancin$> @on$er pa(!ent ter!s

    > Darranties and serice contracts> LReba7as

    &i/erentiated 8ricin$

    > Custo!er>se$!ent pricin$> 8roduct>for! pricin$> I!a$e pricin$> Channel pricin$> @ocation pricin$> Ti!e pricin$

    6;3 %'SIGNING AN% )ANAGING INT'G#AT'% )A#5'TING

    C/ANN'S

    MARETIN4 C5ANNE@ TEM" s(ste! is the particular set of

    interdependent or$ani1ations inoled in the process of !akin$ a

    product or serice aailable for use or consu!ption.

    A push strate$( uses the !anufacturerGs sales force) trade

    pro!otion !one() and other !eans to induce inter!ediaries to

    carr() pro!ote) and sell the product to end users

    A pull strate$( uses adertisin$) pro!otion) and other for!s of

    co!!unication to persuade consu!ers to de!and the product

    fro! inter!ediaries

    ER EP8ECTATION #OR C5ANNE@ INTE4RATION

    Abilit( to order a product online and pick it up at a conenient

    retail location

    Abilit( to return an online>ordered product to a nearb( store

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    nal(1e custo!er needs

    ate !a7or channel alternaties

    if( !a7or channel alternaties

    ablish channel ob7ecties

    Ri$ht to receie discounts based on total online and oQine

    purchases

    INCREAIN4 E##ICIENC

    C5ANNE@ MEMER #NCTION

    4ather infor!ation

    &eelop and disse!inate persuasie

    co!!unications

    Reach a$ree!ents on price and ter!s

    Ac=uire funds to 6nance inentories

    Assu!e risks

    8roide for stora$e

    8roide for bu(ersG pa(!ent of their bills

    Oersee actual transfer of ownership

    &EI4NIN4 A MARETIN4 C5ANNE@ TEM

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    C5ANNE@ ERVICE OT8T

    ot si1enu!ber of units the channel per!its a t(pical custo!er

    to purchase on one occasion

    on serices ;credit) delier() installation)

    repairs< proided b( the channel

    C5ANNE@ OECTIVE

    State in terms of targeted service output levels

    )inimi1e total cost and still provide desired levels of

    service output

    Channel !(>ectives vary with product characteristics

    Perisha(le products?more direct mar*eting

    &ul*y products?minimi1e shipping distance

    Nonstandard products?sold directly (y sales

    representatives

    Products re@uiring installation or maintenance

    service?sold and maintained (y company or

    franchised dealers

    I&ENTI#IN4 C5ANNE@ A@TERNATIVE

    > T(pes of inter!ediaries> Nu!ber of inter!ediaries> Ter!s and responsabilities

    CONMER MARETIN4 C5ANNE@

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    Intensie

    electie

    Intensie

    electie num(er of

    outletsE'clusie

    )ar*et',posure

    Strategies

    IN&TRIA@ MARETIN4 C5ANNE@

    NMER O#

    INTERME&IARIE"

    > E'clusie> electie> Intensie

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    .airly good

    to good

    Contracts

    )c%onaldBs

    Complete

    !ne company ownership

    .lorsheim

    Some to good

    'conomic power and leadership

    General 'lectric

    Characteristics

    Type of channel

    ittle or

    none

    None

    Typical inde-pendentsD

    Amount of cooperation

    Traditional"ertical mar*eting systems

    AdministeredContractualCorporate

    Control maintained (y

    ',amples

    C5ANNE@ MANA4EMENT &ECIION" selectin$ channel !e!bers)

    trainin$) !otiatin$) ealuatin$ and !odif(in$ channel !e!bers.

    C5ANNE@ INTE4RATION AN& TEM

    C5ANNE@. CON#@ICT

    Occurs when one !e!berGs actions preent another channel fro!

    achiein$ its $oal.

    Can be"

    > Vertical> 5ori1ontal> Multichannel

    Types of channel conEict:

    "erticalchannel con0ict H within di/erent !e!bersleels of the sa!echannel.e.$ 4M in con0ict with dealers) Coke in con0ict with bottlers./ori1ontal channel con0ict H within di/erent !e!bers at sa!e leels ofthe sa!e channel.e.$ Con0ict between di/erent #ord dealers

    )ulti channelcon0ict H within di/erent !e!bers I di/erent channels inthe sa!e !arket

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    e.$ co!pan( sellin$ throu$h specialt( showroo! and throu$h

    dealerships. This sets up di/erent prices within the sa!e !arket.

    663 %'SIGNING AN% )ANAGING INT'G#AT'% )A#5'TINGC!))NICATI!NS

    MARETIN4 COMMNICATION"are the !eans b( which 6r!s atte!pt to

    infor!) persuade) and re!ind consu!ers) directl( or indirectl() about the

    products and brands the( sell.

    MARETIN4 COMMNICATION MIP

    Adertisin$

    ales pro!otion

    Eents and e'periences

    8ublic relations and publicit(

    &irect !arketin$

    Interactie !arketin$

    Dord>of>!outh !arketin$

    8ersonal sellin$

    IMC I@& RAN&

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    E@EMENT IN T5E COMMNICATION 8ROCE

    ORCE O# NOIE

    #or a !essa$e to be e/ectie) the senders* codin$ process !ust !esh

    with the receier*s decodin$ process. The sender !a( not $et his or her

    !essa$e throu$h to the receier. The tar$et audience !a( not receie

    the intended !essa$e for an( of three reasons"

    electie attention"8eople are bo!barded b( about 2J),,, co!!ercial !essa$es a da( ofwhich , are consciousl( noticed and about 29 prooke so!e reaction.

    electie distortion"Receier*s will hear what 6ts in with their belief s(ste!. As a resultreceiers often add thin$s to the !essa$e that are not there and do notnotice other thin$s that are there.

    electie retention"8eople will retain in lon$>ter! !e!or( onl( a s!all fraction of the!essa$es that reach the!. If the receier*s initial attitude toward theob7ectie is positie and he or she rehearses support ar$u!ents) the!essa$e is likel( to be accepted and hae hi$h recall.

    RE8ONE 5IERARC5 MO&E@

    9J

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    TE8 IN &EVE@O8IN4 E##ECTIVE COMMNICATION

    > Identif( tar$et audience> &eter!ine ob7ecties> &esi$n co!!unications> elect channels> Establish bud$et" a/ordable) percenta$e of ales) Co!petitie

    8arit() Ob7ectie and Task> &ecide on !edia !i'> Measure results!ana$e IMC

    C5ARACTERITIC O# T5E MARETIN4 COMMNICATION MIP

    Pu(lic #elations and Pu(licity

    5i$h credibilit(

    Abilit( to catch bu(ers o/ $uard

    &ra!ati1ation

    'vents and ',periences

    Releant

    Inolin$

    I!plicit

    %irect )ar*eting

    9K

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    Custo!i1ed

    p>to>date

    Interactie

    Personal Selling

    8ersonal interaction

    Cultiation

    Response