Chapter 14 Promotion and Pricing Strategies
Integrated Marketing Communications <ul><li>Promotion—communication link between buyer and seller that performs the functi...
Integrated Marketing Communications <ul><li>Coordination of all promotional activities – media advertising, direct mail, p...
The Promotional Mix <ul><li>Promotional Mix —combination of personal and nonpersonal selling techniques designed to achiev...
<ul><li>Comparing the Components of the Promotional Mix </li></ul>
<ul><li>Five Major Promotional Objectives </li></ul>
The Promotional Mix <ul><li>Objectives of Promotional Strategy </li></ul><ul><ul><li>Providing Information </li></ul></ul>...
The Promotional Mix <ul><li>Objectives of Promotional Strategy </li></ul><ul><ul><li>Increasing Sales </li></ul></ul><ul><...
The Promotional Mix <ul><li>Objectives of Promotional Strategy </li></ul><ul><ul><li>Accentuating the Product’s Value </li...
The Promotional Mix <ul><li>Promotional Planning </li></ul><ul><ul><li>Increasing complexity and sophistication of marketi...
Advertising <ul><li>Advertising —paid nonpersonal communication delivered through various media and designed to inform, pe...
Advertising <ul><li>Advertising and the Product Cycle </li></ul><ul><ul><li>Product and Institutional Advertising fall int...
Advertising <ul><li>Advertising and the Product Cycle </li></ul><ul><ul><li>Persuasive Advertising —attempts to improve th...
Advertising <ul><li>Advertising and the Product Cycle </li></ul><ul><ul><li>Reminder-oriented advertising —often appears i...
Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Must choose how to allocate advertising budget </li></ul></ul>...
<ul><li>Advertising Media </li></ul>
Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Newspaper </li></ul></ul><ul><ul><ul><li>Continue to dominate ...
Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Television </li></ul></ul><ul><ul><ul><li>America’s leading na...
Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Radio </li></ul></ul><ul><ul><ul><li>Average U.S. household ow...
Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Magazines </li></ul></ul><ul><ul><ul><li>Includes consumer pub...
Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Direct Mail </li></ul></ul><ul><ul><ul><li>Average American ho...
Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Outdoor Advertising </li></ul></ul><ul><ul><ul><li>Just over 2...
Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Online and Interactive Advertising </li></ul></ul><ul><ul><ul>...
Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Sponsorship —involves providing funds for a sporting or cultur...
Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Other Media Options </li></ul></ul><ul><ul><ul><li>Infomercial...
Sales Promotion <ul><li>Sales promotion —nonpersonal marketing activities other than advertising, personal selling and pub...
<ul><li>Spending on Consumer-Oriented Promotions </li></ul>
Sales Promotion <ul><li>Consumer-Oriented Promotions </li></ul><ul><ul><li>Premiums —items given free or at a reduced pric...
Personal Selling <ul><li>Personal selling —interpersonal promotional process involving a seller’s face-to-face presentatio...
Personal Selling <ul><li>The Sales Process </li></ul><ul><ul><li>Seven Steps in the Sales Process </li></ul></ul>
Personal Selling <ul><li>Recent Trends in Personal Selling </li></ul><ul><ul><li>Telemarketing </li></ul></ul><ul><ul><ul>...
Public Relations <ul><li>Public Relations —organization’s communication and relationships with its various audiences. </li...
Promotional Strategies <ul><li>Selecting a Promotional Mix </li></ul><ul><ul><li>Guidelines for allocating promotional eff...
Promotional Strategies <ul><li>Pushing and Pulling Strategies </li></ul><ul><ul><li>Push strategy </li></ul></ul><ul><ul><...
Price in the Marketing Mix <ul><li>Price —exchange value of a good or service. </li></ul><ul><li>Pricing Objectives </li><...
Price in the Marketing Mix <ul><li>Profitability Objectives </li></ul><ul><ul><li>Perhaps the most commonly used objective...
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Copyright © 2005 by South-Western, a division of Thomson ...

  1. 1. Chapter 14 Promotion and Pricing Strategies
  2. 2. Integrated Marketing Communications <ul><li>Promotion—communication link between buyer and seller that performs the function of informing, persuading, and influencing a purchase decision. </li></ul><ul><ul><li>Focusing on Primary Demand </li></ul></ul><ul><ul><li>Focusing on Selective Demand </li></ul></ul>
  3. 3. Integrated Marketing Communications <ul><li>Coordination of all promotional activities – media advertising, direct mail, personal selling, sales promotion, and public relations – to produce a unified customer-focused message. </li></ul><ul><ul><li>Focuses on customer needs to create a unified promotional message </li></ul></ul><ul><ul><li>Firms need a broad view of promotion to implement IMC </li></ul></ul>
  4. 4. The Promotional Mix <ul><li>Promotional Mix —combination of personal and nonpersonal selling techniques designed to achieve promotional objectives. </li></ul><ul><ul><li>Personal Selling </li></ul></ul><ul><ul><li>Nonpersonal selling </li></ul></ul>
  5. 5. <ul><li>Comparing the Components of the Promotional Mix </li></ul>
  6. 6. <ul><li>Five Major Promotional Objectives </li></ul>
  7. 7. The Promotional Mix <ul><li>Objectives of Promotional Strategy </li></ul><ul><ul><li>Providing Information </li></ul></ul><ul><ul><ul><li>Major portion of U.S. advertising is information-oriented </li></ul></ul></ul><ul><ul><li>Differentiating a Product </li></ul></ul><ul><ul><ul><li>Positioning : establishing a place in the minds of customers by communicating meaningful distinctions about the attributes, price, quality, or use of a good or service </li></ul></ul></ul>
  8. 8. The Promotional Mix <ul><li>Objectives of Promotional Strategy </li></ul><ul><ul><li>Increasing Sales </li></ul></ul><ul><ul><ul><li>Most common objective of a promotional strategy </li></ul></ul></ul><ul><ul><li>Stabilizing Sales </li></ul></ul><ul><ul><ul><li>Sales contests often used during slack periods </li></ul></ul></ul><ul><ul><ul><li>Sales promotion materials often distributed to customers to stimulate sales during off-seasons </li></ul></ul></ul>
  9. 9. The Promotional Mix <ul><li>Objectives of Promotional Strategy </li></ul><ul><ul><li>Accentuating the Product’s Value </li></ul></ul><ul><ul><ul><li>Promotional strategies can enhance product values by explaining often unrecognized ownership benefits </li></ul></ul></ul>
  10. 10. The Promotional Mix <ul><li>Promotional Planning </li></ul><ul><ul><li>Increasing complexity and sophistication of marketing communications requires careful planning to coordinate IMC strategies </li></ul></ul><ul><ul><li>Product Placement </li></ul></ul>
  11. 11. Advertising <ul><li>Advertising —paid nonpersonal communication delivered through various media and designed to inform, persuade, or remind members of a particular audience. </li></ul>
  12. 12. Advertising <ul><li>Advertising and the Product Cycle </li></ul><ul><ul><li>Product and Institutional Advertising fall into one of three categories, based on whether the ads intend to inform, persuade, or remind </li></ul></ul><ul><ul><li>Informative Advertising —used to build initial demand for a product in the introductory phase of the product life cycle </li></ul></ul>
  13. 13. Advertising <ul><li>Advertising and the Product Cycle </li></ul><ul><ul><li>Persuasive Advertising —attempts to improve the competitive status of a product, institution, or concept, usually in the growth and maturity stages of the product life cycle </li></ul></ul><ul><ul><ul><li>Comparative Advertising —form of persuasive product advertising that compares products directly with their competitors </li></ul></ul></ul>
  14. 14. Advertising <ul><li>Advertising and the Product Cycle </li></ul><ul><ul><li>Reminder-oriented advertising —often appears in the late maturity or decline stages of the product life cycle to maintain awareness of the importance and usefulness of a product, concept, or institution </li></ul></ul>
  15. 15. Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Must choose how to allocate advertising budget </li></ul></ul><ul><ul><li>All media offer advantages and disadvantages </li></ul></ul><ul><ul><li>Must consider cost and which media is best suited for communication </li></ul></ul>
  16. 16. <ul><li>Advertising Media </li></ul>
  17. 17. Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Newspaper </li></ul></ul><ul><ul><ul><li>Continue to dominate local advertising </li></ul></ul></ul><ul><ul><ul><li>Ads easily tailored for local tastes and preferences </li></ul></ul></ul><ul><ul><ul><li>Can coordinate newspaper messages with other promotional efforts </li></ul></ul></ul><ul><ul><ul><li>Disadvantage: relatively short life span </li></ul></ul></ul>
  18. 18. Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Television </li></ul></ul><ul><ul><ul><li>America’s leading national advertising medium </li></ul></ul></ul><ul><ul><ul><li>An expensive advertising medium </li></ul></ul></ul><ul><ul><ul><li>Price for a 30-second ad during weeknight prime time on network television generally ranges from $100,000 to more than $500,000 </li></ul></ul></ul>
  19. 19. Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Radio </li></ul></ul><ul><ul><ul><li>Average U.S. household owns five radios </li></ul></ul></ul><ul><ul><ul><li>Captive audience of listeners as they commute to and from work </li></ul></ul></ul><ul><ul><ul><li>In major markets, many stations serve different demographic groups with targeted programming </li></ul></ul></ul>
  20. 20. Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Magazines </li></ul></ul><ul><ul><ul><li>Includes consumer publications and trade journals </li></ul></ul></ul><ul><ul><ul><li>Can often customize their publications and target advertising messages to different regions of the country </li></ul></ul></ul><ul><ul><ul><li>A natural choice for targeted advertising </li></ul></ul></ul>
  21. 21. Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Direct Mail </li></ul></ul><ul><ul><ul><li>Average American household receives about 550 pieces of direct mail each year, including 100 catalogs </li></ul></ul></ul><ul><ul><ul><li>e-mail another option </li></ul></ul></ul><ul><ul><ul><li>Must overcome junk-mail and spam classification </li></ul></ul></ul>
  22. 22. Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Outdoor Advertising </li></ul></ul><ul><ul><ul><li>Just over 2 percent of total advertising spending </li></ul></ul></ul><ul><ul><ul><li>Share is growing </li></ul></ul></ul><ul><ul><ul><li>Majority of spending is for billboards </li></ul></ul></ul><ul><ul><ul><li>Other types include: signs in transit stations, stores, airports, and sports stadiums </li></ul></ul></ul><ul><ul><ul><li>Disadvantages include: </li></ul></ul></ul><ul><ul><ul><ul><li>Brief messages are required </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Mounting concern for aesthetic and environmental issues </li></ul></ul></ul></ul>
  23. 23. Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Online and Interactive Advertising </li></ul></ul><ul><ul><ul><li>Range from Web sites and CDs to information kiosks </li></ul></ul></ul><ul><ul><ul><li>Currently commands only 3 percent of media spending, but is the fastest-growing media segment </li></ul></ul></ul>
  24. 24. Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Sponsorship —involves providing funds for a sporting or cultural event in exchange for a direct association with the event </li></ul></ul><ul><ul><li>Sports sponsorships attract two-thirds of total sponsorship dollars </li></ul></ul><ul><ul><li>Primary benefits: exposure to the event’s audience and association with the image of the activity </li></ul></ul>
  25. 25. Advertising <ul><li>Advertising Media </li></ul><ul><ul><li>Other Media Options </li></ul></ul><ul><ul><ul><li>Infomercials: 30-minute programs that resemble regular TV programs, but are devoted to selling goods or services </li></ul></ul></ul><ul><ul><ul><li>Other Media options include: </li></ul></ul></ul><ul><ul><ul><ul><li>Ads in movie theaters </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Ads on airline movie screens </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Printed programs, Subway tickets </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Turnpike toll receipts </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Automated teller machines </li></ul></ul></ul></ul>
  26. 26. Sales Promotion <ul><li>Sales promotion —nonpersonal marketing activities other than advertising, personal selling and public relations that stimulate consumer purchasing and dealer effectiveness. </li></ul><ul><ul><li>Potential advantages: </li></ul></ul><ul><ul><ul><li>Short-term increased sales </li></ul></ul></ul><ul><ul><ul><li>Increased brand equity </li></ul></ul></ul><ul><ul><ul><li>Enhanced customer relationships </li></ul></ul></ul>
  27. 27. <ul><li>Spending on Consumer-Oriented Promotions </li></ul>
  28. 28. Sales Promotion <ul><li>Consumer-Oriented Promotions </li></ul><ul><ul><li>Premiums —items given free or at a reduced price with the purchase of another product. </li></ul></ul><ul><ul><li>Coupons offer small price discounts </li></ul></ul><ul><ul><li>Rebates offer cash back to consumers </li></ul></ul><ul><ul><li>Sample —a gift of a product distributed by mail, door-to-door, in a demonstration, or inside packages of another product </li></ul></ul>
  29. 29. Personal Selling <ul><li>Personal selling —interpersonal promotional process involving a seller’s face-to-face presentation to a prospective buyer. Used most often when: </li></ul><ul><ul><li>Customers are relatively few in number and geographically concentrated </li></ul></ul><ul><ul><li>Product is technically complex, involves trade-ins, and requires special handling </li></ul></ul><ul><ul><li>Product is high in price </li></ul></ul><ul><ul><li>Product moves through direct-distribution channels </li></ul></ul>
  30. 30. Personal Selling <ul><li>The Sales Process </li></ul><ul><ul><li>Seven Steps in the Sales Process </li></ul></ul>
  31. 31. Personal Selling <ul><li>Recent Trends in Personal Selling </li></ul><ul><ul><li>Telemarketing </li></ul></ul><ul><ul><ul><li>Outbound telemarketing —when a sales representative calls you at your place of business </li></ul></ul></ul><ul><ul><ul><li>Inbound telemarketing —when the customer calls a toll-free phone number to get information or place an order. </li></ul></ul></ul>
  32. 32. Public Relations <ul><li>Public Relations —organization’s communication and relationships with its various audiences. </li></ul><ul><li>Publicity —stimulation of demand for a good, service, place, idea, person, or organization by disseminating news or obtaining favorable unpaid media presentations. </li></ul>
  33. 33. Promotional Strategies <ul><li>Selecting a Promotional Mix </li></ul><ul><ul><li>Guidelines for allocating promotional efforts and expenditures among personal selling and advertising: </li></ul></ul><ul><ul><ul><li>What is your target market? </li></ul></ul></ul><ul><ul><ul><li>What is the value of the product? </li></ul></ul></ul><ul><ul><ul><li>What time frame is involved? </li></ul></ul></ul>
  34. 34. Promotional Strategies <ul><li>Pushing and Pulling Strategies </li></ul><ul><ul><li>Push strategy </li></ul></ul><ul><ul><ul><li>Cooperative advertising —allowances in which firms share the cost of local advertising of their product or line with channel partners </li></ul></ul></ul><ul><ul><li>Pull strategy </li></ul></ul>
  35. 35. Price in the Marketing Mix <ul><li>Price —exchange value of a good or service. </li></ul><ul><li>Pricing Objectives </li></ul>
  36. 36. Price in the Marketing Mix <ul><li>Profitability Objectives </li></ul><ul><ul><li>Perhaps the most commonly used objective in firms’ pricing strategies </li></ul></ul><ul><ul><li>Some firms try to maximize profits by reducing costs rather than through price changes </li></ul></ul><ul><li>Volume Objectives </li></ul><ul><ul><li>Bases pricing decisions on market share </li></ul></ul><ul><ul><li>Market share: the percentage of a market controlled by a certain company or product </li></ul></ul>

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