BUAD 307 PROMOTION Lars Perner, Instructor 1

PROMOTIONElements of the Promotion Mix ● Advertising Strategies ●

Other Methods of Promotion

BUAD 307 PROMOTION Lars Perner, Instructor 2

Learning Objectives

• Identify obstacles that advertising messages face

• Identify the choices facing marketing managers regarding– Promotional objectives– Promotional message– Media choice– Advertising and promotion

spending

BUAD 307 PROMOTION Lars Perner, Instructor 3

Elements of the Promotion Mix

• Advertising• Sales Promotion

– Sales– Coupons– Rebates– Premiums

• Personal selling• Public relations• Direct marketing

BUAD 307 PROMOTION Lars Perner, Instructor 4

BUAD 307 PROMOTION Lars Perner, Instructor 5

Some Media Alternatives

• Television– Conventional advertisements– Infomercials– Sponsorship programming– “Placements”

• In programming • “Superimposed”

• Radio

• Magazines• Newspapers• Outdoor• Internet• Point-of-purchase• Other

– Movie theaters– On other products

BUAD 307 PROMOTION Lars Perner, Instructor 6

Reaching the Customer: Encoding, “Noise,” and “Decoding”

ENCODINGENCODINGTHE THE

MESSAGEMESSAGE

MESSAGEMESSAGECHANNELCHANNEL

DECODINGDECODINGTHETHE

MESSAGEMESSAGERECEIVERRECEIVER

CHANNEL CHANNEL FEEDBACKFEEDBACK

NOISENOISE

SENDERSENDER

Text, p. 211..

Marketing mgrAdvertising mgrAdvertising agency

AdvertisementCouponSales presentationPress releaseStore display

Media, SalespersonMedia, SalespersonRetail storeRetail storeNews programNews program

Receiver Interpretation of the message

CustomersMedia audienceNews mediaClients

Other adsNews articlesOther store displays

Note that things can go wrong in steps 2, 3, and 4. The message must compete with other ads and for limited customer attention. Repetition is crucial.

BUAD 307 PROMOTION Lars Perner, Instructor 7

Advertising Intensity and Return --A Typical RelationshipAdvertising Intensity and Return --A Typical Relationship

0

0.2

0.4

0.6

0.8

1

Res

pons

e (e

.g.,

sal

es,

reca

ll)

0 5 10 15 20 25 Amount of Advertising Spending

The “S”-Shaped Curve

Saturation Point

Relatively

high effecti

veness

Too little to domuch good

BUAD 307 PROMOTION Lars Perner, Instructor 8

Measuring Advertising EffectMeasuring Advertising Effect

• Several possible criteria:– Scanner data

• Individual TV exposure can be matched against actual purchases

• Available only for grocery products

• Can only be used for ads that have been running (otherwise, they would not have been able to influence actual purchases)

• Generally the preferred method when available

– Increase in sales (but it may be impossible to separate effects of different simultaneous ads and other factors)—NOT GENERALLY RELIABLE!

– Lab studies:• Recall• Attitude toward product• Preference

BUAD 307 PROMOTION Lars Perner, Instructor 9

Scanner Data Research

TELEVISIONTELEVISIONEXPOSUREEXPOSURE

DEMOGRAPHICDEMOGRAPHICINFORMATIONINFORMATION

ANALYSISANALYSIS

RECORDEDRECORDEDPURCHASESPURCHASES

HOUSEHOLDHOUSEHOLDFILEFILE

Purchase on occasion: Yes, noPurchase on occasion: Yes, noTime since previous purchaseTime since previous purchasePrevious purchasesPrevious purchasesCurrent priceCurrent pricePrevious pricePrevious priceCurrent promotional statusCurrent promotional statusPrevious promotional statusPrevious promotional statusCurrent display statusCurrent display statusPrevious display statusPrevious display statusDisplay status of competing Display status of competing brandsbrandsPromotional status of Promotional status of competing brandscompeting brandsCoupon used: Yes, noCoupon used: Yes, noCoupon available: Yes, noCoupon available: Yes, noCoupon available for other Coupon available for other brands? Yes, nobrands? Yes, noAmount of couponAmount of couponFamily sizeFamily size

OccupationOccupationFamily sizeFamily sizeIncomeIncomeHome ownershipHome ownership

No. of ads seen by No. of ads seen by shoppershopperAds seen for competing Ads seen for competing brandsbrands““Split cable”Split cable”

BUAD 307 PROMOTION Lars Perner, Instructor 10

The Personal Selling Process—Steps

1. Generate and qualify leadsa. Finding leads

b. Qualification process: Predictor of likelihood of purchase

2. Pre-approach and Customer Relations Management (CRM) systems

3. Sales Presentation and Overcoming Reservations

4. Closing the sale

5. Follow-Up