Selected Topics
Promotion Topics:
Retailing Topics (Theories of Retailing Institutional Change): Graphic illustrations for these theories can be found under the Retailing Lecture material listed in Lecture Topics section.

Marketing Research:

Marketing Management:

Promotion Topics

Immunization Effect

The immunization effect focuses on the structure of the message.  In particular, the concern is whether the marketer should develop a one-sided or two-sided message.  A one-sided message only presents positive statements about the market offering.  A two-sided message presents both positive and negative statements about the market offering.

All products have good (positive) and bad (negative) characteristics (e.g., higher quality products cost more).  The decision that the marketer must make is whether to develop a one-sided or two-sided communication.  In most cases, a one-sided communication is developed.

If the marketer expects the competition to attack the negative features of a particular market offering, then a two-sided communication should be developed.  By giving some attention to the negative features of the market offering, purchasers will be immunized against later attack on these negative features by the competition.  L'Oreal ads indicate that the product may cost more, but concludes with the words, " . . . but I'm worth it."  As a result, if the competition attacks L'Oreal on its price, the ad will not be very effective, since L'Oreal purchasers knew this fact before the purchase and would have concluded that they are worth the extra cost.  Thus, L'Oreal purchasers have been immunized from later attack by the competition.

This effect may also explain why health warnings on cigarette packages and in advertisements in Canada and the U.S. are not very effective with respect to smokers.  Smokers have, in some way, rationalized that they are immune to such health concerns.  When Volkswagen automobiles were first sold in North America, the ads made mention of the size and unconventional design of the car (i.e., the negative features), compared to the larger and attractive designs of the North American cars.  The safety hazard of the location of the gas tank on the 1970s Ford Pinto automobile would have been a negative feature Ford might have considered addressing in the ads, but using a soft approach. If the Ford Pinto were hit from behind, the gas tank could rupture and cause a fire.  Ford might have addressed this concern by recommending safe driving.  Buckley's cough syrup uses a two-sided communication in its ads by stating the following, "It tastes awful.  And it works."  In this way, the company immunizes its target market from attacks by the marketers of "pleasant" tasting cough syrup.  Buckley's is also relying on the consumer's belief that a "medicine" must taste terrible in order to be effective.

A consumer who has not been inoculated with respect to the negative features of a product will be more susceptible to later attempts at attitudinal or behavioural persuasion than those who have faced such communication.  In such a situation, brand or product switching is more likely.

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Sleeper Effect

The sleeper effect focuses on the nature of the communicator in a communication rather than on the content or structure of the communication.  A communicator in an advertisement can be perceived in a positive, negative, or neutral way by a consumer.  Obviously, marketers want to avoid negative communicators and would not intentionally select such a person as a spokesperson for the product.  Using a positive communicator, however, can be more expensive than using a neutral communicator.  The role of the communicator in an ad is to get the consumer's attention and/or to persuade the consumer (i.e., to accept the information being presented).

If the person in an advertisement has no meaning to the consumer, then that spokesperson is considered to be a neutral communicator.  If the consumer views the communicator in a negative way and is discouraged from purchasing the market offering because of the presence of this individual, then the spokesperson is considered to be a negative communicator to this market.  Finally, if the consumer views the communicator in a positive way and is more likely to be persuaded to make a purchase or to pay attention to the ad because of the presence of this spokesperson, then the communicator is considered to be a positive communicator.

Sports personalities and television and movie stars are often used as positive communicators (e.g., Candice Bergen, Bill Cosby, Wayne Gretzky, Tiger Woods). Unfortunately, such personalities do not come cheap.  Furthermore, the marketer must be aware that a positive communicator can become a negative communicator (e.g., Ben Johnson, PeeWee Herman, Michael Jackson, Anita Bryant, O.J. Simpson, Mike Tyson).

What the research shows is that, relative to a neutral communicator, a positive communicator will increase the acceptance of a communication and a negative communicator will decrease the acceptance of the communication.  The positive communicator, therefore, has a prestige effect and the negative communicator has a negative effect in terms of message acceptance.

Over time, if the communicator is not reinstated in the communication, there is a separation in the minds of the consumer between the communication and the communicator.  As a result, the prestige effect will wear off and the negative effect will wear off.  Thus, relative to the neutral situation, the acceptance level of the positive communicator situation will decrease and the acceptance level for the negative communicator situation will increase.  The wearing off of the prestige effect and the wearing off of the negative effect is what is referred to as the sleeper effect.

What this concept means is that, if a positive communicator eventually becomes a negative communicator in the eyes of the consumer, all the marketer needs to do is to no longer use the communicator in question in the advertisement.  Over time, consumers will cease to associate the communicator with the market offering (e.g., O.J. Simpson and Hertz, Anita Bryant and the Florida Citrus Growers).  Of course, by re-instating the communicator in the ad will lead to the initial effects.

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Dyadic Interaction Model

A change agent can influence another individual using the following means (FPAC):
  1. Force
  2. Patronage
  3. Attractiveness [Similarity: Physical and Ideological] [Likability]
  4. Credibility [Technical Expertise] [Trustworthiness]
The salesperson is a change agent - attempting to persuade the customer to purchase from the represented company.  Under normal business circumstances, force is not a viable option for the salesperson (i.e., a salesperson cannot force a customer to make a purchase.)

Patronage. The salesperson uses patronage when he/she manipulates the terms of trade to persuade the customer to make a purchase.  A lower price, a bonus product, free delivery, free credit, and a free unit of the product for every 10 units of the product purchased are such examples.  The car salesperson often uses patronage by offering the lower price to close a sale.

Attractiveness.  There are two dimensions for the attractiveness component:

Further, the similarity dimension consists of: Physical similarity focuses on the physical characteristics of the two interacting parties (i.e., the salesperson and the customer).  Age, gender, race, height, and weight are some of the main physical characteristics that could be relevant to a selling situation.

Physical similarity can be particularly important during the initial contact between the two parties.  Customers tend to prefer to initially interact with salespeople who are physically similar to themselves.  A male shopping for lingerie for Valentine's Day is not at ease approaching a female salesperson for help.  A college student is more likely to interact with a life insurance salesperson who is a recent college graduate than with an older salesperson.  But why is it okay for a young male to purchase underwear in a store with elderly female clerks?

For long term interaction, ideological similarity is more important.  A similarity in terms of attitudes, beliefs, and values will increase the likelihood of repeat interactions.  The sales staff in a heavy metal record store is expected to be similar to its clientele.  It would not be wise to hire an anti-smoker to work in a cigar store or a member of the Women's Christian Temperance Movement to work in a liquor store.  The staff in a Guess fashion store is expected to be similar to its clientele in terms of physical and ideological characteristics.

Likability refers to the extent to which the sales person is looked upon in a favourable manner by the customer.  The salesperson can increase the degree of likability by supporting the self-image of the customer.  This can be accomplished by evaluating the decisions by the customer in a positive way (e.g., That dress looks good on you!  You've got good taste!)  A salesperson should not treat customers like Al Bundy, the shoe salesperson, does on the Married With Children television show.

Credibility.  The credibility component consists of:

Technical expertise refers to the level of product knowledge of the salesperson.  Trustworthiness focuses more on the intangible aspects of the sale [i.e., those aspects that the customer cannot immediately evaluate (e.g., future delivery date, whether the product will shrink if washed)].  Can the customer trust what the salesperson says?

Overall, being more positive on each of the components and dimensions identified in the Dyadic Interaction model will make the salesperson more effective during the selling process.

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Legal Aspect of Promotion

The Federal Competition Act is the appropriate source for the details of each of the above areas.

Proportionate Terms for Allowances. If a manufacturer offers co-operative advertising allowances to retailers, the amount of the allowance must be proportionate to the sale.  For example, if one retailer buys 10 cases of a product and a second retailer buys 100 cases, the latter retailer must not receive ten times the allowance received by the first retailer, and no more.  The allowance can also be based on the dollar value of the sale.

Misleading Advertising.  The claims in any advertisement must be based on fact, unless the focus is a superlative or an emotional expression (e.g., It tastes great.  I just love it.).  Puffery, an extension of the "truth" which a reasonable person would not expect to be true, has also been challenged in court successfully (e.g., Use UltraBrite toothpaste and you will catch a man!).

Testimonials.  If a spokesperson states that a product is the best he has tasted, this in fact must be true.  The spokesperson making any such claim must have actually used the product.  Using a picture of someone using a product cannot be used as a testimonial unless the individual in the picture agrees.

Pyramid Selling.  Any sales plan where the sale of the actual product is extremely minor is illegal where the primary intent is to recruit others to "sell" the product plan to others (i.e., to recruit others) rather than to actually sell the product acquired (e.g., in a sales kit).

Referral Selling.  Offering a product or service free if one recruits others to buy the product or service is illegal (e.g., siding for your house).

Bait and Switch.  If a product is advertised at a very low price and the retailer (seller) has no intent of selling the product, only to get the customer into the store to try to sell him/her a more expensive product, such action is considered to be bait and switch.  Such behaviour is considered to be illegal.

Sale Above the Advertised Price.  It is illegal to sell a product above the advertised price.  If an error occurred in the advertisement, an immediate public notice correcting the error removes the liability of the seller.

Double Ticketing.  If two (or more) prices appear on a product or at the point of sale (e.g., on a sign), the lower (lowest) price applies, unless the lower price is unreasonable (e.g., someone switched prices).

Promotional Contests and Sweepstakes.  A promotional contest requires the participant to show some kind of skill to win.  A sweepstakes is based solely on luck.  In either case, the odds of winning and the nature of the prizes must be made public.

Tied Selling.  It is illegal to require a customer to buy another product (tied product)  in order to be able to buy the desired product (tying product).  For example, if Heinz required retailers to buy Heinz soup (low market share) in order to be able to buy Heinz Ketchup (high market share), such behaviour would be considered tied selling.

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Retailing Topics - Theories of Retail Institutional Change

Theory of Natural Selection.  The theory of natural selection indicates that those retail firms that adapt to a changing environment will survive and those that do not adapt will go out of business.  When a retail firm is first established, it is compatible with the current environment.  Over time, however, this environment will change, necessitating the need for the retail firm to change, as well [e.g., night clubs change with changes in the type of music (rock and roll, disco, heavy metal, etc.)].  KFCs evolution began when the Interstate bypassed the Colonel's first restaurant.

General-Specific-General Theory.  The GSG theory (also known as the accordion theory - contract and expand) starts with a general type of operation (e.g.., full-menu restaurant).  A marketer then takes just part of the menu of this general type of operation and sets up a specific type of operation  (e.g., hot dog stand).  A fastfood hamburger outlet is another example (e.g., McDonald's, which started with hamburgers, french fries, and milk shakes).  A donut shop is a specific type of operation that took just part of the market offering of a bakery.  Over time, however, as the market gets saturated and the marketer desires to continue increase sales and profit, action is taken to broaden the market offering.  This action of scrambled merchandising turns the specific operation into a general operation.  The McDonald's and Tim Hortons of today are quite different from when these operations first began.  Both operations are more like the original general operations.

Wheel of Retailing.  As retail formats mature, there is a tendency for these firms to improve the nature and quality of the operation (e.g., better quality products, better locations, more services), resulting in greater customer demand, higher operating costs, higher markups, and higher prices.  This evolutionary change opens up an opportunity at the bottom of the wheel, where an innovator that offers low prices can enter the market.

The classic example of a firm that followed the wheel of retailing is the supermarket.  In the early 1930s, there was a need for a low cost food provider, since the corner grocery store of the time was quite expensive to operate.  The forerunner of  the supermarket offered limited service, limited product offering, was located in out-of-the-way locations, but had lower prices.  In time, as the economy improved and customers demanded better retail facilities and services, the supermarkets moved to better locations, constructed better facilities, and improved the product and service bundle.  These changes resulted in higher costs, which in turn required higher markups, and which in turn required higher prices.  The high service supermarket is now located at the top of the wheel of retailing.  This evolution left an opportunity at the bottom of the wheel for a low-cost/low-price operator.  In the 1970s, the warehouse food store evolved because of the need for a low-cost food provider, due to the oil embargo and high inflation of the time.  Once this recession disappeared, the same fate faced most warehouse food stores.

The no-frills food stores of today have entered the market at the bottom of the wheel, often taking over facilities left vacant by former, full-service supermarkets (Loblaw's No Frills stores, A&P/Dominion Food Basics stores) or left vacant by factories (Knob-Hill Farms).  Evidence of some of these stores starting to move up the wheel of retailing is appearing, as the No Frills and Price Chopper stores are moving into newly constructed facilities.

Barber shops (Magic Cuts, Bo Rics, etc.) have also followed the wheel of retailing by going after the market left open by the costly "hairstylists."  Discount stock brokers (not provide information) and discount real estate agencies (only list house vs. actively sell) are other examples.

Not all retail operations have followed the wheel of retailing.  For the most part, shopping centres, particularly regional centres, have always been high cost operations.  However, some smaller discount shopping centres have appeared.

Dialectic Process.  Under the dialect process, there is a challenged institution (Thesis), which is challenged by another institution, the challenger (Anti-thesis).  The challenged institution needs to determine how to react to the challenger.  One response is to ignore the importance of the threat and do nothing.  A second response, which is consistent with the dialectic process, is to create a separate institution (organization) that reflects the positive aspects of the challenger and the challenged institution (Synthesis).  A third, and usually less costly, approach is to internally change the institution to incorporate the positive aspects of the two institutions, a response which is also consistent with the dialectic process.

The classic example involves drug stores (Thesis) being challenged by supermarkets (Anti-thesis), when the latter institutions started to carry more health and beauty aids (HBAs) by engaging in scrambled merchandising.  The opening of a pharmacy within the supermarket made matters even worse for the drug stores.  The reaction of the drug stores was to change the format of the drug stores to that of a drugmart, a new retail format for such stores (i.e., more self-service and more aisles of merchandise) (Synthesis).

This reaction of the drug stores made the drug marts the challenger and the supermarkets the challenged institution.  The reaction of the supermarkets was to create larger supermarkets (superstores) and to incorporate a pharmacy within the stores.  The reaction of the drugmarts, now the challenged institution, was to respond to the challenger (superstores) by creating larger drugmarts and engaging in more scrambled merchandising.  Drugmarts now carry many products traditionally sold by supermarkets. The end result is that both retail formats look quite different from their original formats.

The same situation occurred in the department store area.  The department stores were challenged by the discount stores (challenger).  The department stores reacted by creating discount department stores (Synthesis).  Eaton's department stores were challenged by such stores.  Eaton's set up a separate discount department store operation called Horizon Stores.  Unfortunately, since Eaton's had no experience in this area, the new operation failed.  Eaton's, as did other department stores, decided to incorporate a "discount" operation within their regular department stores (bargain basement, annex).

How do the actions of airlines reflect the dialectic process?

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Marketing Research

Marketing Research.  Marketing research is a task-oriented activity which focuses on finding the solution to an identified problem.  For example, what will happen to sales in units if the price is decreased by 25%?  Which colour of package will sell best: red, green, or yellow?

Validity.  If a marketing survey measures what it is suppose to measure, then the survey measures are valid (i.e., construct validity).  For example, if a survey is designed to measure brand image and self-image, does it in fact measure brand image and self-image?  If such is the case, then the measures are said to be valid.

Reliability.  If a survey instrument is administered to the same consumers a second time and the same results are obtained, then the instrument is said to be reliable (i.e., test-retest reliability).  Thus, reliability focuses on the consistency of results over time or testing sessions.

Note.  A measure that is valid is, by definition, reliable; however, a measure that is not reliable is, by definition, not valid.

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Marketing Management

Marketing Strategy.  A marketing strategy comprises a target market and a marketing mix.

Strategic Plan.  A strategic plan comprises a marketing strategy and the time frame to which the strategy applies.

Marketing Program.  A marketing program comprises all of the strategic plans of the organization.  It is the marketing program that seeks to accomplish the marketing objectives of the firm.  Air Canada services many target markets with a marketing mix for each market.  The various marketing strategies are put into place for a specified time period (strategic plans).  All of these marketing efforts (marketing program) are designed to accomplish the firm's marketing objective.

Marketing Information System.  A marketing information system is an ongoing data collection system.  The information collected can be used by marketing research and other divisions within the company to make decisions.  Information collected by marketing research can also become part of the marketing information system.

Marketing Budgeting Approaches.  The most recommended approach to setting the budget for marketing is the objective-task approach: decide what has to be accomplished and then determine what it will cost.  Unfortunately, the firm may not have the budget to accomplished the desired task (e.g., increase market share from 10% to 40% within one year).

Other common approaches to budgeting for marketing are competitive parity (match competition), percentage of sales (e.g., use 5% of sales for marketing activities).  The problem of the later approach is the fact that sales is a function of marketing effort (effect), not the cause of marketing effort.

International Expansion.  A firm entering a foreign market normally starts by exporting (producing the product domestically and then shipping it to the foreign country (export).  The most involved, and most costly, approach is to set up a foreign production operation owned directly by the company (foreign production).  Other approaches are to set up a joint venture with a company based in the foreign country (joint venture) or to license the production of the product in a foreign country (i.e., grant the right to produce your product to another company) (licensing).

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