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