Promotions Opportunity Analysis

Chapter ObjectivesPrepare a promotions opportunity analysis

Compare the relationship between a companys promotional effort and its competition

Identify the characteristics of various consumer segments

Promotions Opportunity AnalysisBeyond the world of advertising and personal selling, successful marketing efforts occur because someone identified an opportunity to make a quality contact with a customer

A promotions opportunity analysis is the process marketers use to identify target audiences for a company's goods and services and the communication strategies needed to reach these audiences

Promotions Opportunity Analysis must accomplish two objectives1. Determine which promotional opportunities exist for the company2. Identify the characteristics of each target audience so that precise advertising and marketing communication message can reach them

Steps - Promotions Opportunity Analysis

Conduct a Communication Market Analysis

Establish objectives

Create a budget

Prepare a promotional strategy

Match tactics with the strategy

Communication Market Analysis A Communication Market Analysis is the process of discovering the organizations strength and weaknesses in the area of marketing communication and combining that information with an analysis of the opportunities and threats present in the firm's external environment

Communication Market AnalysisStep One examines five areasCompetitors

Opportunities

Target markets

Customers

Product positioning

CompetitorsSources of information Secondary data(Advertisements, promotional materials, annual reports, prospectus for a publicly held corporation, websites) Others( trade journals, news articles, press releases ) Primary research ( visit store, meet wholesalers, distributors)Major competitors-domestic & foreignCommunication strategies of major competitorsIdentify

OpportunitiesCustomers that the competition is ignoring

Saturated markets with intense competition

Benefits not articulated clearly to various customer market segments

Different Marketing approach be used

Brand positioning not visible in clutter

Target MarketsRecognize needs of various consumer and business groups

Define target market more precisely

Decipher the needs and wants of individual groups

Demographic and psycho- graphic profile of each market

Customers-Types

Current company customers

Customers of competitors

Potential customers who have not purchased product

Product PositioningPerceptionIn mind of consumersRelative to competitionCreated by factors such asProduct quality, Price, Distribution, Image, Marketing communications

Positioning StrategiesAttributes

Competitors

Use or application

Price/Quality

Product user

Product class

Cultural symbol

Establish Communication ObjectivesStep TwoDevelop brand awarenessIncrease category demandChange beliefs or attitudesEnhance purchase actionsEncourage repeat purchasesBuild customer trafficEnhance firm imageIncrease market shareIncrease salesReinforce purchase decisions

***Benchmark measures

Create Communications Budget Step Three

What is the relation between promotional expenditures and sales?

Marginal Analysis CurveThreshold effectsDiminishing returnsSalesProfitsDollarsAdvertising and promotional expendituresA Sales Response Function Curve combined with the Downward Response curve and marginal analysisConcave DownwardResponse Curve

Factors Impacting Relationship Between Promotions and SalesCommunication goals-differ depending on the stage in the buying process that is being addressed(awareness, knowledge, liking,preference, conviction)Threshold effects -Early effects of advertising is minimal. With only advertisements, little behavioral response is expected but with other marketing tactics the point is reachedDiminishing returns-Part of the concave downward function, means that incremental increase in expenditures in advertising result in lower and lower increase in salesMarginal analysis shows that further advertising and promotional expenditures may even result in adverse effects on profitsCarryover effects-Promotions for products which are not frequently purchased must be designed to generate carryover effectWear out effects-Particular promotion becomes 'old' and 'boring' and may develop a negative attitudeDecay effects-Consumers begin to forget the message, when a company stops advertisingRandom events

Decay Effects Model

Types of Budget

Percentage of sales

Meet-the-competition

What we can afford

Objective and task

Payout planning-ratio of advertising to sales or market share

Quantitative models

Marketing BudgetsAdvertising 25%

Consumer promotions 25%

Trade promotions 50%

Create Communications StrategiesStep FourStrategies are broad, long-term guidelines concerning the essence of the company's marketing efforts

Fit with overall company message, image, and themes

Only changes in the marketplace, new competitive forces, or new promotional opportunities should cause companies to alter strategies

Match Tactics with StrategiesStep FiveTactics support strategiesExamples of tacticsSpecific advertisementsPersonal selling enticementsSales promotions(posters, point-of-purchase displays)Trade promotionsPrice of productsPackage design and labeling

Market Segmentation Is the process of identifying specific purchasing groups based on their needs, attitudes and interests

Consumer SegmentsDemographics(Gender, Age, Ethnic groups, Income)PsychographicsGenerationsGeographicGeodemographicsBenefitUsage

Psychographics

Emerge from patterns of responses that reveal a person's attitudes, interests and opinions (AIO)The SRI Consulting Business Intelligence provides a classification of lifestyles using psychographic segmentationInnovators-Successful, sophisticatedThinkers-Educated, practical consumersAchievers-Goal orientedExperiencers-Young, enthusiasticBelievers-Conservative, conventional consumersStrivers-Trendy, fun lovingMakers-Self sufficient consumersSurvivors-Safety & security

Generation SegmentationGeneration Y (18-24)-GadgetsGeneration X (25-34)-Family and childrenYounger Boomers (35-44)-mortgage expensesOlder Boomers (45-54)-luxurious itemsEmpty Nesters (55-64)-Investments,enjoy lifeSeniors (65+)-Health insurance

Geodemographic SegmentationCombinesDemographic census dataGeographic informationPsychographic information

PRIZM (Potential Rating Index by Zip Marketing)62 market segments

Benefit SegmentationFocuses on the advantages consumers receive from a product rather that the characteristics of consumers themselvesExampleWinners-Exercise to stay physically fitDieters-Exercise to maintain weight control and physical appearanceSelf-improvers- Exercise to feel better and to control medical costs

***Marketers can target messages for each market segment differently

Usage SegmentationIs based on customer usage or purchase

Goal is to provide the highest level of service to a firm's best customer(internal databases, bar-code scanners, point of sale systems, data from credit, debit cards)

Is designed to maximize sales to all user groups