Chapter 12 Promotion Through the Marketing Channels.
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Transcript of Chapter 12 Promotion Through the Marketing Channels.
Chapter 12Chapter 12
Promotion Through the Marketing Channels
Major Topics for Major Topics for Promotion through Marketing Promotion through Marketing
ChannelsChannels1.Marketing Communication Tools2.Promotion Objectives3.Push Promotion and Pull
Promotion**1) Push/Pull Ratio Considerations2) Push/Pull and Channel Cooperation
4.Push Promotion5.Research Findings on Push
Promotion*6.Pull Promotion
1. Marketing Communication Tools
• Advertising
• Direct Marketing
• Sales Promotion*
• Publicity/Public Relations
• Personal Selling**
cf) Another Categorizations of Sales Promotion
Channel Member SupportChannel Member Support 1122
Why is channel member support program one of the major tools of the manufacturer’s
promotional mix?
Why is channel member support program one of the major tools of the manufacturer’s
promotional mix?
Most products and services are not sold directly to final customers.
Most products and services are not sold directly to final customers.
5
2. Promotional Objectives• Stimulating (more) sales• Differentiating offerings• Sharing information• Accentuating a market offering’s value• Stabilizing seasonal demand These are all for Consumer Promotions
For Trade (Channel) Promotion• More Reseller Compliance (“More Effort”)• More Reseller Representation (“Right Effort”)
1212
Pull Strategy
3. Pull Strategy &3. Pull Strategy &Push StrategyPush Strategy
Push Strategy
Manufacturer builds strong consumer demand for a
product to force members to automatically promote
the manufacturer’s product because it is in their obvious
self-interest to do so.
Manufacturer builds strong consumer demand for a
product to force members to automatically promote
the manufacturer’s product because it is in their obvious
self-interest to do so.
Manufacturer develops mutual effort & cooperation in the
development & implementation of promotional strategies by working directly with members to develop
strong & viable promotional support.
Manufacturer develops mutual effort & cooperation in the
development & implementation of promotional strategies by working directly with members to develop
strong & viable promotional support.
1212 Promotional Strategies in Promotional Strategies in Channels**Channels**
Pull Strategy
Manufacturer
Channel members
Final users(consumer or industrial)
Final users(consumer or industrial)
Channel members
Manufacturer
Push Strategy
1*
2
3
*Numbers indicate sequence of flows
Promotion flowNegotiation flowProduct flow
1
2 3
8
Push/Pull Ratio Considerations*
1. Promotion Objectives
2. Budgetary constraints
3. Nature of the product offering
4. Product life cycle
5. Product valuation
6. Relative Power in Channel
12124. Push Promotion: 4. Push Promotion: Promotion Promotion ThroughThrough Channel Channel
MembersMembers
Stand a higher probability of being favorably received by the channel members
Strategies that are part of an overall
program of manufacturer support of channel
member needs
Strategies that are part of an overall
program of manufacturer support of channel
member needs
Strategies that involve channel members
Strategies that involve channel members
&
Basic Push Promotional Basic Push Promotional StrategiesStrategies
1.Cooperative Advertising2. Promotional Allowances3. Slotting Fees4. Displays & Selling Aids5. In-store Promotions6. Contests & Incentives*7. Special Promotional Deals &
Merchandising Campaigns All involves “money”
1122Cooperative AdvertisingCooperative Advertising
TypicalStrategy:
A sharing in the cost on a 50–50basis up to some percentage of
the retailer’s purchases from the manufacturer
Administration:1. Effective administration by
manufacturer is necessary to avoid abuses & to help securecooperation from channel members
2. Channel manager must be sensitive
to channel members’ primary concern
about this strategy
Promotional AllowancesPromotional Allowances 1122
TypicalStrategy:
Manufacturer offers channel membera direct cash payment or a certain
percentage of the purchases on particular products
Administration: Manufacturer should conductresearch to determine whether it
is getting its money’s worth interms of retailer cooperation and
follow-through
Slotting FeesSlotting Fees 1122
TypicalStrategy:
Payments by manufacturers to persuade channel members, especially
retailers, to stock, display, andsupport new products
Administration: Joint sponsorship of researchbetween retailers and manufacturerson effects of slotting fees on varioustopics could help alleviate conflict
* Antitrust implication
Displays & Selling AidsDisplays & Selling Aids 1122
TypicalStrategy:
Include point-of-purchase (POP) displays, dealer identification signs,
promotional kits, special in-store displays, & mailing pieces
Administration: Channel manager should make the effort to see whether the firm’s
selling aids and displays are serving any useful purpose
In-Store PromotionsIn-Store Promotions 1122
TypicalStrategy:
Short-term events designed to createadded interest and excitement for the manufacturer’s products
Administration: The planning of a successfulin-store promotion should always
include considerations of thepotential benefits for the
retailers involved.
Contests & IncentivesContests & Incentives 1122
TypicalStrategy:
Techniques that manufacturers useto stimulate channel member sales
efforts for their products
Administration:Manufacturer should put much
effort into determining the view of channel members
toward this form of promotion
Special Promotional Deals & Special Promotional Deals & Merchandising CampaignsMerchandising Campaigns
1122
TypicalStrategy:
Include a variety of push-type promotional deals such as discounts to channel members to encourage
them to order more products
Administration: Manufacturers need to developcarefully planned strategies that are
based on knowledge of channelmember needs and that take a
long-term perspective on promotionthrough the marketing channel
1212““Kinder & Gentler” Kinder & Gentler” Push Promotion Toos Push Promotion Toos
Training Programs
Quota Specification
Missionary Selling*
Trade Shows
Nonmonetary Promotions
1212Training ProgramsTraining Programs
Wholesale: Help wholesalers’ knowledge, selling techniques,and skill in counseling customers they call on
Retail: Help retailer’s product knowledge, selling techniques,
and counseling customers on product usage
Pro• Manufacturers can assist wholesalers & retailers by helping to offset the cost.
Con• Distributors have often little time for training.
1212
Sales volumes that manufacturers specify for channel members to generate during a certain time period
Pros• Can amount to asubstantial sum and can make a major difference in the dealers’ overall profit picture• Can be effective in improving channel member promotional support
Cons• If presented in a coercive fashion, it can produce ill will and conflict rather than support• Channel members may ignore quota if manufacturer’s line does not make up an important part of the member’s product mix
Quota SpecificationQuota Specification
1212
Manufacturer’s salespeople who are specially assigned to supplement the selling activities of channel members
Pros• A useful strategy when channel members lack sales capacity or competence to handle tasks assigned to them• Useful when channel members desire this service
Cons• Expensive• Can cause conflicts in the channel• Some members view these salespeople as intruding on the time of their own sales force
Missionary SellingMissionary Selling
1212
Annual events organized by associations in particular industries
Pros• Opportunity for manufacturer to sell existing & new channel members substantial quantities of new products face-to-face• A chance for manufacturers to socialize with channel members • Creates a sense of pride and belonging in channel members that sell its products
Trade ShowsTrade Shows
23
Promotional Strategies & Channel Cooperation
• Major Factors Driving the Extent of a Reseller’s Support for a Manufacturer’s Promotion: Big Issue Now**– Item importance– Promotion elasticity– Manufacturer’s brand support– Manufacturer’s reputation– Promotion wearout
**: My Research Findings
12125. Push Promotion Research 5. Push Promotion Research Findings*Findings*
Ad hoc, quick-fix, and frequently offered
push promotions do not foster high levels
of channel member support on aconsistent basis.
1.
1212
Push promotions should be viewed as
part of strategic channel management
rather than as mere tactical actions.
2.
Push Promotion Research Push Promotion Research FindingsFindings
Push Promotion Research Push Promotion Research FindingsFindings
1212
Manufacturers should study channel
members’ needs carefully beforelaunching major push
promotions.*
3.
1212
Post-promotion research is needed if
manufacturers expect to make steady
progress in improving theeffectiveness of push promotions.*
4.
Push Promotion Research Push Promotion Research FindingsFindings
6. Pull Promotion*
• Advertising (to consumers):– Important for demand generation purpose – Market pull through strong brand equity
• Sales Promotion (to consumers)
• Can be done by a Manufacturer and/or a Retailer
Point-of-PurchaseDisplays
Point-of-PurchaseDisplays
PremiumsPremiums
Price PacksPrice Packs
Cash RefundsCash Refunds
CouponsCoupons
SamplesSamples
Short-Term Incentives to Encourage Purchase or Sales of a Product or Service.
Consumer-Promotion Objectives
Consumer-Promotion Tools
Patronage Rewards
Patronage Rewards
GamesGames
RebatesRebates
ContestsContests
AdvertisingSpecialties
AdvertisingSpecialtiesPatronage Rewards
Entice Consumers to Try a New Product
Entice Consumers to Try a New Product
Lure Customers AwayFrom Competitors’ Products
Lure Customers AwayFrom Competitors’ Products
Get Consumers to “Load Up’on a Mature Product
Get Consumers to “Load Up’on a Mature Product
Hold & Reward Loyal Customers
Hold & Reward Loyal Customers
Consumer Relationship Building
Consumer Relationship Building
Consumer Sales Promotion
30
An Example: Car Marketing Channel*
FordFord
Dealer*Car
Buyer
Pull: Consumer Promotion (Cash back) Advertising
Push by a Maker: Incentive to Dealers
Push by a Dealer:Dealer Promotion
* Pass-through issue