Promotion

Integrated Marketing Communications

Copyright 2006 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Chapter OverviewPromotion: function of informing, persuading, and influencing the consumers purchase decision

Marketing Communications: transmission from a sender to a receiver of a message dealing with the buyer-seller relationship


Integrated Marketing CommunicationsCoordination of all promotional activities media advertising, direct mail, personal selling, sales promotion, and public relations to produce a unified customer-focused promotional messageSuccess of any IMC program depends critically on identifying the members of an audience and understanding what they want


Importance of TeamworkIMC requires a total strategy including all marketing activities, not just promotionSuccessful implementation of IMC requires that everyone involved in every aspect of promotion public relations, advertising, personal selling, and sales promotion function as a team


The Communications ProcessAn effective promotional message accomplishes three tasks:It gains the receivers attentionIt achieves understanding by both receiver and senderIt stimulates the receivers needs and suggests an appropriate method of satisfying them


AIDA concept (Attention-Interest-Desire-Action) an explanation of the steps through which an individual reaches a purchase decisionSenderEncodingChannelDecodingResponseFeedbackNoise


Global Difficulties with the Communication ProcessIn China: KFCs slogan: Finger lickin good came out as Eat your fingers offAlso in China: Coca-Cola had thousands of signs made using the translation: Ke-kou-ke-laDepending on the dialect this means . . .Bite the wax tadpole, or Female horse stuffed with waxIn Taiwan: Pepsis slogan, Come alive with the Pepsi generation came out as Pepsi will bring your ancestors back from the dead


Objectives of PromotionProvide InformationInform the market about the availability of a particular good or serviceIncrease DemandSome promotions are aimed at increasing primary demand, the desire for a general product categoryMore promotions are aimed at increasing selective demand, the desire for a specific brand


Differentiate the ProductHomogenous demand for many products results when consumers regard the firms output as virtually identical to its competitors then, the firm has virtually no control over marketing variablesAccentuate the Products ValuePromotion can explain the greater ownership utility of a product to buyers, thereby accentuating its value and justifying a higher price


Stabilize SalesFor the typical firm, sales fluctuations may result from cyclical, seasonal, or irregular demandStabilizing these variations is often an objective of promotional strategy


Elements of the Promotional MixPromotional mix: blend of personal selling and nonpersonal selling designed to achieve promotional objectivesPersonal selling: interpersonal promotional process involving a sellers person-to-person presentation to a prospective buyerNonpersonal selling includes: Advertising, Product placement, Sales promotion, Direct marketing, Public relations


AdvertisingPaid, nonpersonal communication through various media by a business firm, not-for-profit organization, or individual identified in the message with the hope of informing or persuading members of a particular audience

Product PlacementMarketer pays a motion picture or television program owner a fee to display his or her product prominently in the film or show


Sales PromotionMarketing activities that stimulates consumer purchasing (includes: displays, trade shows, coupons, premiums, contests, product demonstrations, and various nonrecurrent selling efforts)Trade promotion


Direct MarketingDirect communications other than personal sales contact between buyer and seller, designed to generate sales, information requests, or store visits


Public relations: firms communications and relationships with its various publics

Publicity: stimulation of demand for good, service, place, idea, person, or organization by unpaid placement of commercially significant news or favorable media presentations


Guerilla Marketing: Unconventional, innovative, and low-cost marketing techniques designed to get consumers attention in unusual ways.


SponsorshipsProvision of funds for a sporting or cultural event in exchange for a direct association with the events or activity


Growth of SponsorshipsSponsorship has grown rapidly during the past 30 yearsCorporate sponsorship spending has increased faster than promotional outlays for advertising and sales promotionHow Sponsorship Differs from AdvertisingSponsors degree of controlNature of the messageAudience reactionAmbush marketing


Assessing Sponsorship ResultsMarketers utilize some of the same techniques to measure both advertising and sponsorshipThe differences between the two promotional alternatives often necessitate some unique research techniquesDespite the impressive visibility of special events like soccers World Cup and footballs Super Bowl, the demands do not necessarily lead directly to increased sales or improved brand awareness


Direct MarketingFew promotional mix elements are growing as rapidly as direct marketingRelated overall spending total $1.7 trillionDirect Marketing Communication Channels


Direct Mail Marketers combine information from internal and external databases, surveys, coupons, and rebates that require responses to provide information about consumer lifestyles, buying habits, and wants

CatalogsOver 10,000 different consumer mail-order catalogs and thousands more for business-to- business sales are mailed each year generating over $57 million in consumer sales and $36 million in B2B sales


Telemarketing: promotional presentation involving the use of the telephone for outbound contacts by salespeople or inbound contacts initiated by customers who want to obtain information and place orders


Direct Marketing via Broadcast Channels Broadcast direct marketing includes:Brief (30 to 90 and second) direct response ads on television or radioHome shopping channels like:Home Shopping Network (HSN)Infomercial: promotional presentation for a single product running 30 minutes or longer in a format that resembles a regular television program


Electronic Direct Marketing ChannelsWeb advertising is an important component of electronic direct marketingE-mail direct marketing is a natural and easy extension of traditional direct mail marketingOther Direct Marketing ChannelsPrint media is generally not as effective as Web marketing or telemarketing for direct marketersMagazine and newspaper ads with toll-free telephone numbers, kiosks, and other media are still useful in many situations


Developing an Optimal Promotional MixFactors that influence the effectiveness of a promotional to mix:Nature of the marketNature of the productStage in the product life-cyclePriceFunds available for promotion


Nature of the marketPersonal selling may prove effective with a market composed of a limited number of buyersAdvertising is more effective when a market has large numbers of potential customers scattered over sizable geographic areasPersonal selling often works better for intermediary target marketsNature of the productHighly standardized products with minimal servicing requirements usually need less personal selling than custom products with complex features and/or frequent maintenance needsConsumer products are more likely to rely heavily on advertising than are business products


Stage in the product life-cyclePromotional mix must be tailored to the products stage in the product life-cycleIn the introductory stage, there is a heavy emphasis on personal selling to the to the intermediariesHowever, advertising and sales promotion help to create awareness and stimulate initial purchasesIn the growth and maturity stages, advertising gains relative importancePersonal selling efforts at marketing intermediaries to expand distribution is continuedIn the maturity and early decline stages, firms frequently reduce advertising and sales promotion expenditures


PriceAdvertising dominates the promotional mix for low-unit-value products due to the high personal contact costs of personal sellingConsumers a high-priced items like luxury cars expect lots of well-presented information via videocassettes, CDs, fancy brochures, and personal sellingFunds available for promotionA critical element in the promotional strategy is the size of the promotional budgetWhile the cost-per-contact of a $2 million, 30-second TV commercial during the Super Bowl is relatively low, such an expenditure exceeds the entire promotional budgets of many, if not most firms


Influencing FactorsPersonal SellingAdvertisingNature of the market Number of buyers Geographic concentration Type of customerLimited numberConcentratedBusiness purchaserLarge numberDispersedUltimate consumer

Nature of the product Complexity Service requirements Type of good or service Use of trade-ins Custom-made, complexConsiderableBusinessTrade-ins commonStandardizedMinimalConsumerTrade-ins uncommonStage in the product life cycleOften emphasized at every stage; heavy emphasis in the introductory and early growth stages in acquainting marketing intermediaries and potential consumers with the new good or serviceOften emphasized at every stage; heavy emphasis in the latter part of the growth stage, as well as the maturity and early decline stages, to persuade consumers to select specific brandsPriceHigh unit valueLow unit value


Pulling and PushingPromotional StrategiesPulling strategy: promotional effort by a seller to stimulate demand among final users, who will then exert pressure on the distribution channel to carry the good or service, pulling it though the marketing channelPushing strategy: promotional effort by a seller to members of the marketing channel intended to stimulate personal selling of the good or service, thereby pushing it through the marketing channel


Budgeting for Promotional StrategyPercentage-of-sales method

Fixed-sum-per-unit method

Meeting competition method

Task-objective method


MethodDescriptionExamplePercentage-of-sales methodPromotional budget is set as a specified percentage of either past or forecasted sales.Last year we spent $10,500 on promotion and had sales of $420,000. Next year we expect sales to grow to $480,000, and we are allocating $12,000 for promotion.Fixed-sum-per-unit methodPromotional budget is set as a predetermined dollar amount for each unit sold or produced.Our forecast calls for sales of 14,000 units, and we allocate promotion at the rate of $65 per unit.Meeting competition methodPromotional budget is set to match competitors promotional outlays on either an absolute or relative basis.Promotional outlays average 4 percent of sales in our industry.

Task-objective methodOnce marketers determine their specific, promotional objectives, the amount (and type) of promotional spending needed to achieve them is determined.By the end of next year, we want 75 percent of the area high-school students to be aware of our new, highly automated fast-food prototype outlet. How many promotional dollars will it take, and how should they be spent?


Figure 15.9Allocation of Promotional Budgets for consumer Packaged Goods


Measuring the Effectiveness of PromotionTwo basic measurement tools:Direct sales results measures the effectiveness of promotion by revealing the specific impact on sales revenues for each dollar of promotional spendingIndirect evaluation concentrates on quantifiable indicators of effectiveness like:Recall - how much members of the target market remember about specific products or advertisementsReadership size and composition of a messages audience


Measuring Online PromotionsEarly attempts at measuring online promotional efforts involved counting hits and visitsIncorporating direct response and comparing different promotions for effectivenessTwo major techniques for setting online advertising rates:Cost per impression (CPM), technique that related the cost of an ad to every thousand people who read itCost per response (click-throughs), which assumes that those who actually click on an ad want more information

Promotion

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