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Transcript of Promotion. Agenda u Topic 19: The Marketing Communications Program (Chapter 18) u Topic 20:...
Promotion
Agenda
Topic 19: The Marketing Communications Program (Chapter 18)
Topic 20: Advertising (Chapter 20) Video: TV commercials Topic 21: Sales Promotion (Chapter 20) Video Case: Rollerblade Topic 22: Personal selling/ Salesforce
management (Chapter 19)
Topic 19
The Marketing Communications Program
Promotion
Promotion is the element is an organization’s marketing mix that serves to inform, persuade, and remind the market regarding the organization and/or its products and services
Marketing Communication Methods Personal selling
– personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships
Advertising– any paid form of non-personal presentation and promotion
of ideas, goods, or services by an identified sponsor
Sales promotion– short-term incentives to encourage the purchase or sales of
a product or service
Marketing Communication Methods (cont.)
Public relations– planned communication effort by an organization to
contribute to generally favorable attitudes and opinions toward an organization and its products
– Example: Labatt sponsors the Montreal International Jazz Festival
Publicity– special form of public relations that involves news stories
about an organization or its products
Marketing communication process
Message as
intended
Message as
receivedDecoding
Messagechannel
Encoding
ResponseFeedback
Noise
Marketing communication process (cont.)
Message as intended: original promotional idea in marketer’s mind
Encoding: changing an idea into a specific form of message Message channel: the media and vehicle of the message Decoding: process of a receiver’s perception and interpretation of the
message Message as received: the message perceived and interpreted by a receiver Response: change of a receiver’s knowledge, beliefs, attitude, feelings,
and behavior Feedback: the part of the receiver’s response communicated back to the
sender Noise: the unplanned distortion during the communication process
Goals of Promotion
Economic perspective– increase a product’s sales volume at given price by
shifting the demand curve to the right– affect the demand elasticity for a product so that it
is more inelastic when the price is increased and more elastic when the price is decreased
Marketing perspective– to inform, persuade, and remind prospective
customers about a company and its products
A shift in the demand curve to the right
Changing the elasticity of the demand curve
Price
Quantity
Demand with promotion
Demand without
promotion
Price
Quantity
Demandwith promotion
Demand without
promotion
Marketing Communication Mix
A combination of personal selling, advertising, sales promotion, public relations, and publicity
Factors to be taken into consideration– Target market– Nature of the product– Stage of the product life cycle– Promotional fund available
Marketing Communication Mix:Factors to be considered
Target market– Readiness to buy
» awareness knowledge liking preference conviction purchase
Other target market factors
Personal selling AdvertisingGeographical scope small local national
Type of customersbusiness buyers;
intermediaries consumersConcentration of the market high low
Marketing Communication Mix:Factors to be considered (cont.)
Stage of the Product life cycle
Advertising Other promotion
Introduction
primary-demand advertising to consumers
heavy personal selling to intermediaries
Growthselective-demand advertising
Maturitypersuasive advertising
increased sales promotion
Decline reminder advertisingdecreased promotional effort
Marketing Communication Mix:Factors to be considered (cont.)
Nature of product
Funds available
Personal selling AdvertisingUnit value high lowDegree of customization customized standardizedPresale & postsale service high low
Marketing Communication Mix: Push Strategy
involves “pushing” the product through distribution channels to final consumers
a push strategy directs promotional efforts at channel members to induce them to carry the product and to promote it
ProducerRetailers &wholesalers
Consumers
Producer marketing activities
(personal selling,
trade promotion, other)
Reseller marketing activities
(personal selling, advertising
consumer promotion, other)
Marketing Communication Mix: Pull strategy
involves building up consumer demand, which in turn motivates retailers and wholesalers to carry the product
a pull strategy has the promotion directed at the final consumers to induce them to buy the product
ProducerRetailers &wholesalers
Consumers
Producer marketing activities
(consumer advertising, sales promotion, other)
demand demand
Marketing Communication Mix: Push and Pull strategy
Push strategy is effective when– there is no brand loyalty in a category
– brand choice is made in the store
– impulse item
– product benefits are well understood
Pull strategy is effective when– there is high brand loyalty
– high involvement in the category
– people perceive difference between the brands
– people choose brand before they go to the store
Marketing Communication Budget Percentage of sales
– setting the promotion budget as a certain percentage of current or forecasted sales
– Advantages» simple to use
» setting the cost of marketing communication in relations to sales income
– Disadvantages» sales as a cause of promotion rather than sales as a result of
promotion
» budgeting based on availability of funds rather than on market opportunity or long-term plans
» the basis for choosing a specific percentage?
Marketing Communication Budget (cont.) All available funds
– frequently used for new products with the objective to build sales and market share rapidly
– Disadvantage» uncertain annual promotion budget
Follow competition– setting the promotion budget to match competitors’
outlays
– Disadvantages» competitors’ decision might not be appropriate
» competitors’ goal might be different
Marketing Communication Budget (cont.) Task or Objectives
– Setting promotion budget by1. defining specific objectives
2. determining the tasks that must be performed to achieve these objectives
3. estimating the costs of performing these tasks
– Advantages» emphasis on the relationship between promotional cost and
promotional outcome
– Disadvantages» difficult to use
Topic 20
Advertising
Advertising
Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor
All advertisements have four common features– a verbal and/or visual message– a sponsor who is identified– delivery through one or more media– payment by the sponsor to the media carrying the
message
Types of Advertising
Target audience– Consumer advertising generally appears in mass media
and is directed to end consumers
– Business-to-Business advertising is directed to a business market
What is being advertised– Product advertising is designed to promote the sale of a
specific product or service
– Institutional Advertising promotes the firm or tries to create a positive image
Types of Advertising (cont.)
Objectives of Ad– Primary-demand advertising is intended to stimulate use
of a category products
– Selective-demand advertising is intended to encourage purchase of a particular brand or the product and services of a specific firm
Co-operative advertising– co-operative advertising involves the sharing of the cost
of advertising by two or more sponsors: a manufacturer and retailers (vertical) or a group of retailers (horizontal)
Advertising Decision Process
Definingadvertisingobjectives
Establishingad budget
Creating a message
Selectingmedia
Evaluation
Defining Advertising Objectives
To inform– to inform consumers about a new product or
features and to build primary demand To persuade
– to build selective demand for a brand by persuading consumers
To remind– to keep consumers thinking about a product
Establishing Ad Budget
Percentage of sales All available funds Follow competition Task or objectives
Creating a message
A successful Ad must– hold the attention of the target audience– influence the target audience in desired way
Attention– Attract attention by using:
» novelty and contrast» eye-catching pictures and headlines» distinctive formats» message size and position» color,shape, and movement
Creating a message
Influence– Type of appeals used in ads
» comparative
» humor
» fear appeal
» mood
» celebrity endorsers
Selecting Media Media selection steps
– Decide type of media» magazines, newspapers, television, radio, direct mail,
world wide web
– Decide category of medium» general interest magazines, magazines for housewives
– Decide type of vehicle» specific type of magazine (e.g., Maclean’s, Toronto
Life)
Selecting Media Factors to be considered selecting media and
vehicles– objective of the ad
– audience coverage
– requirements of the message
– time and location of the buying decision
– media cost» Cost per thousand (CPM) person reached
oncirculatai
1000 cost adCPM
Selecting Media (Cont.)Type Advantages Disadvantages
Newspaperstimely; widely read; low circulation cost short ad life span
Televisionversatile; sound and motion; high attention
expensive; lack of permanence; inappropriate for complex message
Direct mail high selectivity high cost per exposure
Radiolow cost; high geographic and demographic selectivity
audio presentation only; low level of attention; short-life span
Magazines
high geographic and demographic selectivity; high quality reproduction; long life; high pass-along readership; suitable for complex message less flexible; untimely
Outdoor Adlow cost; flexible in geographic coverage only short messages
Evaluating the Ad effort
The effect of advertising on sales– It is difficult to measure– Sales are influence by all marketing mix
variables– Ads have different goals– Ads have an effect over time
Evaluating the Ad effort
Methods for Ad effectiveness evaluation– Direct test
» the effect of an ad to the sales volume
» possible where ad stimulate immediate sales
– Indirect test» Advertising recall test
Recognition, Aided recall, Unaided recall
– Pretests» Pre-Ad test Exposure to an ad Post-Ad test
Topic 21
Sales Promotion
Sales Promotion
Sales Promotion– demand-stimulating devices designed to
supplement advertising and facilitate personal selling
– Types» coupons, premiums, in-store display,trade shows,
samples, in-store demonstration, and contests
– sales promotions are short-term in orientation
Trade promotion and Consumer promotion
Manufacturers
Intermediaries
Consumers
Trade promotion
Consumer promotion
Sales Promotion Decision Process
Definingsales promotion
objectives
Determiningbudget
Selectingappropriatetechniques
Evaluation
Defining sales promotion objectives
Sales promotion goals– stimulating business-user or household demand
for a product– improving the marketing performance of
intermediaries and sales people– supplementing advertising and facilitating
personal selling
Selecting appropriate sales promotion techniques
Type of sales promotion– Sales promotion directed at consumers– Sales promotion directed at intermediaries– Sales promotion directed at producer’s own sales force
Factors to be considered for selecting sales promotional devices– nature of target audience– promotional objectives: push vs.pull– nature of the product– cost of device– current economic conditions
Selecting appropriate sales promotion techniques
Sales promotion directed at consumers (= consumer promotion)– Samples
» most effective, but most expensive
» in-store, by mail, attached to another product, attached to print ad
– Coupons» low redemption rate
» by mail, in newspapers and magazines, shelf-dispensers
Selecting appropriate sales promotion techniques
– Cash rebates» price reduction occurs after purchase
– Premiums (gifts)» goods offered free or at low-cost as an incentive to buy
a product
» e.g., free gifts for the purchase of cosmetics
– Prizes (contests, sweepstakes, games)» offering chance to win cash, trip, or merchandise as a
result of purchasing something
Selecting appropriate sales promotion techniques
– Point-of-Purchase displays/ demonstrations » displays and demonstrations at point-of-purchase
– Advertising specialties» useful articles (e.g., baseball caps, pens, key chains, t-
shirts) imprinted with an advertiser’s name
– Patronage rewards» cash or other rewards offered for regular use of
company’s products or services
» e.g., frequent flyer plans, coffee cards
Selecting appropriate sales promotion techniques
Sales promotion directed at intermediaries (= trade promotion)– discounts
» quantity discount
– allowances» advertising allowance
» display allowance
– free goods
Selecting appropriate sales promotion techniques
Sales promotion directed at producer’s own sales force– sales contests
» incentive programs for achieving pre-determined sales goals
– specialty advertising» e.g., pens, pencils, calendars, memo pad, etc.
Evaluation of sales promotion
It is easier to evaluate sales promotion results– most sales promotions have definite starting
and ending points– most sales promotions are designed to impact
sales directly
TV commercials
Two humor ads– Beer: Holster Pils– Airline
People pay attention Generate positive feeling Sometimes the message is not clear
TV commercials HBO Ads
– Why many ads do not deliver strong arguments
Ads
Attitude toward
the brand
Cognitive response
Attitudetoward Ad
TV commercials
Sprite– comparative advertising– persuasive goal