mcgraw-hill/irwin © the mcgraw-hill companies, inc., 2002 all rights reserved. 16-1 chapter...

© The McGraw-Hill Companies, Inc., 2002 All Rights Reserved.

16-16-11McGraw-Hill/Irwin

Chapter FourteenChapter Fourteen

Promotion & Promotion & Pricing Pricing

StrategiesStrategies



Promotional MixPromotional Mix

Personal SellingPersonal Selling Non-Personal Non-Personal SellingSelling

AdvertisingAdvertising Trade ShowsTrade Shows Direct MailDirect Mail Sales PromotionsSales Promotions

SamplesSamples CouponsCoupons Sweepstakes/Sweepstakes/

ContestsContests



Objectives of Objectives of Integrated Integrated MarketingMarketing

Build Brand EquityBuild Brand Equity Provide InformationProvide Information Manage Demand & Manage Demand &

Build SalesBuild Sales Differentiate ProductsDifferentiate Products Influence Perceptions, Influence Perceptions,

Attitudes, & Buyer Attitudes, & Buyer BehaviorBehavior



Components of Components of Integrated MarketingIntegrated Marketing

AdvertisingAdvertising Corporate Corporate

CommunicationCommunication Crisis Crisis

CommunicationCommunication E-CommerceE-Commerce Event Event

MarketingMarketing Internal Internal

CommunicationCommunication

Issues Issues ManagementManagement

MarketingMarketing MultimediaMultimedia Public RelationsPublic Relations Sales PromotionSales Promotion Strategic Strategic

PlanningPlanning Web DesignWeb Design



Advertising Advertising TodayToday

Persuasive CommunicationPersuasive Communication

Guerrilla marketingGuerrilla marketing Viral marketingViral marketing

InfomercialsInfomercials

InternetInternet

Global AdvertisingGlobal Advertising



Figure 16.3 Advertising Expenditure by Figure 16.3 Advertising Expenditure by MediaMedia



Automotive MarketingAutomotive Marketing

AutowrapAutowrap Sales PromotionSales Promotion

Tex Earnhardt rides a live bullTex Earnhardt rides a live bull Toyota dealer displays fiberglass Toyota dealer displays fiberglass

lionslions



Century’sCentury’s Top Ad JinglesTop Ad Jingles

““You deserve a You deserve a break today”break today”

““Be all you can Be all you can be”be”

““Pepsi-Cola hits Pepsi-Cola hits the spot”the spot”

““Mm Mm good!”Mm Mm good!” ““See the USA in See the USA in

your Chevrolet”your Chevrolet”

““I wish I were an I wish I were an Oscar Mayer wiener”Oscar Mayer wiener”

““Double your Double your pleasure, double pleasure, double your fun”your fun”

““Winston tastes Winston tastes good like a cigarette good like a cigarette should”should”

““It’s the real thing”It’s the real thing” ““A little dab’ll do yaA little dab’ll do ya””

Source: Source: Advertising Age



Thinking Out of the BoxThinking Out of the Box Kentucky Derby jockeys Kentucky Derby jockeys

Ads on pants for 1Ads on pants for 1stst time in 2004 time in 2004 Marlins painted poles like No.2 Marlins painted poles like No.2

pencils from Office Depot in pencils from Office Depot in 19941994

Spiderman on baseball fields – Spiderman on baseball fields – 20042004 $50-100,000 per team$50-100,000 per team Fenway Park & Yankee StadiumFenway Park & Yankee Stadium



Do Blatantly Sexy Do Blatantly Sexy Ads Turn You Off?Ads Turn You Off?

4

5145

4

72

24

01020304050607080

Strongly/SomewhatAgree

Strongly/SomewhatDisagree

Don't Know

Per

cen

t

Men Women

Source: Source: USA Today



Sex in AdvertisingSex in Advertising

BuyMusic.comBuyMusic.com Uncle Ben’s RiceUncle Ben’s Rice Gillette’s Satin CareGillette’s Satin Care Dow Jones NewsPlusDow Jones NewsPlus



Internet Internet Advertising- Advertising-

20042004 Will reach $22 billion in the U.S. Will reach $22 billion in the U.S. The rest of world will spend The rest of world will spend

$10.8 billion.$10.8 billion. $27 billion (10% of all U.S. ad $27 billion (10% of all U.S. ad

spending) will be siphoned from spending) will be siphoned from traditional mediatraditional media

Hardest hit: newspapers and Hardest hit: newspapers and direct maildirect mail

Source: Source: CIO Web Business, 10/1/1999



Office DepotOffice Depot 2003 Back to School starts July 2003 Back to School starts July

44thth

$7.7b school supply market$7.7b school supply market Integrated marketing campaignIntegrated marketing campaign

E-commerceE-commerce Direct marketingDirect marketing Radio, newspaper (including African-Radio, newspaper (including African-

American focus), & TV ads (including American focus), & TV ads (including Spanish-language stations)Spanish-language stations)



Steps in Personal Steps in Personal SellingSelling

Prospect/QualifyProspect/QualifyProspect/QualifyProspect/Qualify

PreapproachPreapproachPreapproachPreapproach

ApproachApproachApproachApproach

PresentatioPresentationn

PresentatioPresentationn

ObjectionsObjectionsObjectionsObjections

CloseCloseCloseClose

Follow-upFollow-upFollow-upFollow-up



Public Public RelationsRelations

StepsSteps ListenListen

Change/Change/DevelopDevelop

InformInform

PublicityPublicity FreeFree More Effective More Effective

Than AdThan Ad BelievableBelievable No ControlNo Control No RepetitionNo Repetition



PR in Not–for-profitPR in Not–for-profit 3-26-03 WSJ 3-26-03 WSJ Military are battling more than Military are battling more than

the enemy. Competing for the enemy. Competing for valuable press attention that valuable press attention that some believe can later pay off some believe can later pay off with fatter with fatter

budget allocations in Congress. budget allocations in Congress. The Army with over 400 The Army with over 400 embedded journalists appears embedded journalists appears to have won the war. to have won the war.



Sales PromotionSales Promotion Internal & ExternalInternal & External SamplingSampling Word-Of-MouthWord-Of-Mouth Viral Viral

Marketing/SwagMarketing/Swag TechnologyTechnology TestimonialsTestimonials



Celebrity Celebrity EndorsersEndorsers

CelebrityCelebrityCatherine Zeta Catherine Zeta

JonesJones

Kristie AlleyKristie Alley

Jason AlexanderJason Alexander

Britney SpearsBritney Spears

Geoffrey the GiraffeGeoffrey the Giraffe

ProductProduct(s)(s)



Push/PullPush/Pull

Push – personal selling to Push – personal selling to market a product to market a product to wholesalers & retailerswholesalers & retailers

Pull – promote a product by Pull – promote a product by generating consumer demand generating consumer demand for it, primarily through for it, primarily through advertising & sales promotionsadvertising & sales promotions



Promotional Promotional StrategiesStrategies

Push StrategyPush Strategy

Pull StrategyPull Strategy

PromotioPromotionn

DistributionDistribution

Retail Retail StoreStore

CustomerCustomer

PromotioPromotionn



Top Sports Top Sports EndorsersEndorsers

AthleteAthleteLebronLebronKobe BryantKobe BryantMicheal JordanMicheal JordanTiger WoodsTiger WoodsArnold PalmerArnold PalmerAndre AgassiAndre Agassi

EndorsementsEndorsements$90.0 Million (2003)$90.0 Million (2003)$47.0 Million (2002)$47.0 Million (2002)$24.0 Million (2002)$24.0 Million (2002)$63.0 Million (2003)$63.0 Million (2003)$16.0 Million (2002)$16.0 Million (2002)$14.0 Million (2002)$14.0 Million (2002)

Source:Source: Fortune Magazine



Hollywood as a Big AdHollywood as a Big Ad MiscellaneousMiscellaneous

Reese Pieces in Reese Pieces in E.T.E.T. Red Stripe inRed Stripe in The Firm The Firm

AccessoriesAccessories Ray-BanRay-Ban

Charlie’s AngelsCharlie’s Angels Men in BlackMen in Black

FashionFashion Grant, Dean, KellyGrant, Dean, Kelly Sex and The CitySex and The City Legally Blonde 2Legally Blonde 2

Stila, OPI nail polish, Stila, OPI nail polish, Reem Acra bridal gownReem Acra bridal gown



Pricing StrategiesPricing Strategies

SkimmingSkimming PenetrationPenetration



Breakeven ChartBreakeven Chart(Figure 14.9)(Figure 14.9)

$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

0

10,0

00

20,0

00

30,0

00

40,0

00

50,0

00

Fixed CostTotal CostTotal Revenue

Tota

l R

even

ue o

r Tota

l C

ost

Tota

l R

even

ue o

r Tota

l C

ost

Number of UnitsNumber of Units



Pricing Using Pricing Using Breakeven AnalysisBreakeven AnalysisProblemProblem Should we charge $2 or $3 per box?Should we charge $2 or $3 per box?

CostsCosts Total Fixed CostsTotal Fixed Costs $400,000$400,000

Variable CostVariable Cost $ 1 per box$ 1 per box

Market Market Research Research ForecastForecast

Company can sell: 290,000 boxes at $2 @Company can sell: 290,000 boxes at $2 @

210,000 boxes at $3 @210,000 boxes at $3 @

Breakeven point = Breakeven point = total fixed costtotal fixed cost

price - variable cost price - variable cost

(per unit) (per unit) (per unit)(per unit)

$2 price = $2 price = $400,000$400,000 400,000 units to 400,000 units to breakevenbreakeven

$2 - $1$2 - $1

$3 price = $3 price = $400,000$400,000 200,000 units to 200,000 units to breakevenbreakeven

$3 - $1$3 - $1

BreakevenBreakeven

AnalysisAnalysis



What They Cost What They Cost When First When First IntroducedIntroduced

1927 1927 Transatlantic CallTransatlantic Call $ 75/3 min.$ 75/3 min.

19471947 Microwave OvenMicrowave Oven $ $ 3,0003,000

19641964 FAX unit rentalFAX unit rental $ $ 850/month850/month

19701970 Pocket CalculatorPocket Calculator $ 150$ 150

19741974 VCR TapeVCR Tape $ $ 5050

Source: World Features Syndicate

mcgraw-hill/irwin © the mcgraw-hill companies, inc., 2002 all rights reserved. 16-1 chapter...

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