Chapter 17


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Chapter 17

  1. 1. Chapter 17 Promotion - fourth element in marketing mix - consists of communication tools (advertising, personal selling, sales promotion, public relations, and direct-marketing) - Promotional Mix – combination of these communication tools - These tools are used to: o Inform prospective buyers about benefits of the product o Persuade them to try o Remind them later about the benefits they enjoyed using the product - Integrated Marketing Communications (IMC) – concept of designing marketing communications programs that coordinate all promotional activities to provide a consistent message across all audiences Communication Process Communication – process of conveying a message and requires 6 elements (source, message, channel of communication, receiver, process of encoding & decoding) - decoding is performed by the receives according to their own frame of reference (attitudes, values and beliefs) - sender and receiver must have a mutually shared field of experience (a similar understanding and knowledge they apply to the message) - feedback loop consists of response (impact the message had on the receiver’s knowledge, attitudes/behaviors) & feedback (the sender’s interpretation of the response and indicates whether the message was decoded as intended) Promotional Elements Advertising - anypaid form of nonpersonal communication about a product/idea - involves mass media, which are nonpersonal& do not have an immediate feedback loop - advantages: o attention-getting o communicate certain product benefits to prospective buyers o allows the company to decide what is the message, when to send its message Personal-setting - two way flow of communication between buyer and seller designed to influene a person’s purchase decision - usually face2face communication - advantages: o can control to whom the presentation is made, reducing the amount of wasted coverage o can see immediate reaction, if unfavorable modify message - disadvantage: o no consistent communication o high cost of personal selling (a cost-per-contact basis)
  2. 2. Public Relations - communication management that seeks to influence the feelings, opinion/beliefs held by consumers, customers, suppliers, employees about company and its products - tools such as special events, lobbying efforts, press conference, social media - publicity (nonpersonal, indirectly paid presentation) - difference between publicity and adveritising& personal-selling is the “indirectly paid” dimension. - advantage:credibility - disadvantage: lack of user’s control over it (no guarantee will turn on positive on media coverage) Sales Promotion - short-term inducement of value offered to arouse interest in buying product - used in conjunction with adveritising/personal-selling, sales promotion are offered to intermediaries & ultimate consumers - eg: coupons, samples, rebates, contests, sweepstakes - advantage: stimulate sales – not store loyal - disadvantage: gains are temporary, sales drop when deal ends, advertising support is needed to convert the consumer to a long-term buyer, if deal continuous – lose effectiveness, Direct Marketing (fastest growing form of promotion) - uses direct communication with consumers to generate a response in the form of an order for further information/ a visit to a retail outlet - include face2face selling, direct mail, catalogs, telephone solicitations, direct response advert & online marketing - advantage: can be customized to match needs of specific target markets, message can be developed & adapted quickly to facilitate one2one relationship with customers - disadvantage: direct makering require a comprehensive and up2date database (maintaining database – expensive & time-consuming), growing concern about privacy led to a decline in response rates among customers IMC – Developing Promotional Mix the promotional mix (combination of promotional tools), companies must balance the elements & coordinate the consistent promotional effort. Target Audience - promotional programs targeted to buyers use mass media because number of potential buyers is large - personal selling is used at the place of purchase, direct marketing used to encourage first-time/repeat purchase - advertising directed to business buyers is used in trade publications - buyers have specialized needs/technical questions. Personal selling important. - Intermediaries are focus of promotional efforts
  3. 3. Product Life Cycle Introduction Stage - inform consumers – increase awareness is the objective - all promotional mix elements are used Growth Stage - objective: to persuade to buy product than substitutes - seek to gain brand preference & solidify distribution - sales promotion – less important, publicity – not a factor (because it depends on novelty of product) - promotional element: advertising (stresses brand differences) - personal selling is used to solidify the channel of distribution - for consumer products: salesforce calls on wholesalers & retailers hoping to increase inventory levels and gain shelf space - for business products: salesforce tries to get contractual arrangements to be sole source of supply Maturity Stage - the need to maintain existing buyers, advertising role is to remind buyers of product’s existence - sales promotion (discounts & coupons) offered to ultimate consumers – maintain loyal buyers - direct marketing actions (direct mail) – maintain involvement with existing consumers & encourage repeat purchase - price cuts & discounts increase sales - salesforce seek to satisfy intermediaries Decline Stage - a period of phaseout for product, little money spent on promotional mix Product Characteristics - complexity o refers to technical sophistication, amount of understanding required to use it. o Greater emphasis on personal selling - Risk o Buyer: in terms of financial, social and physical risk. - Level of ancillary services o The degree of service/support required after the sale o Advertising is to establish seller’s reputation o Direct marketing used to describe how a product can be customized to individual needs o Personal selling to build buyer confidence & provide evidence of customer service Stages of Buying Decision Prepurchase Stage - advertising more helpful (inform customer of existence) - sales promotion(free samples) to gain low-risk trial
  4. 4. Purchase Stage - personal selling important, advertising less important - sales promotion (coupons, deals, rebates) encourage demand - direct marketing shorten time consumers take to adopt a product Postpurchase Stage - personal selling more, more satisfied - advertising – assure buyer made the right decision - sales promotion (coupons) & direct marketing reminders encourage repeat purchases from satisfied customers Channel Strategies Push Strategy - directing the promotional mix to channel members to gain their cooperation in ordering and stocking the product - personal selling & sales promotion important o salesperson call wholesalers to encourage orders & provide sales assistance o sales promotion (discounts) to encourage demand - goal: to get channel members to push it to customers Pull Strategy - directing its promotional mix at ultimate consumers to encourage the to ask retailers for the product Developing IMC Program Identifying the Target Audience - time and money permit
  5. 5. - behavioral targeting – collecting information about web-browsing behavior to determine banner and display ads Specifying Promotion Objectives - consumers can be said to respond in terms of a hierarchy of effects (sequence of stages a prospective buyer goes trough from initial awareness of a product) - Five stages: o Awareness – consumer’s ability to recognize and remember the product/brand name o Interest – an increase in the consumer’s desire to learn about some features of the product o Evaluation 0 the consumer’s appraisal of the product on important attributes o Trials – the consumer’s actual first purchase and use of the product o Adoption – through favorable experience on the first trail, the consumer’s repeated purchase and use of the product - Should have three qualities: o Be designed for a well-defined target audience o Be measurable o Cover a specific time period Setting Promotional Budget - percentage of sales o funds are allocated to promotion as a percentage of past/anticipated sales (dollars/units sold) o advantage: simple & provides a financial safeguard by tying the promotional budget to sales o fallacy: sales cause promotion – company may reduce promotion budget because of a downturn in past sales - competitive parity (matching competition/share of market) o matching the competitor’s absolute level of spending/the proportion per point of market share o competitor’s budget level should not be the only determinant – might have very different promotional objectives - All You Can Afford o Common to small business – money is allocated to promotion only after all other budget items are covered - Objective and Task (best approach) o Company determines its promotion objectives, outlines the tasks it will undertake to accomplish those objectives and determines the promotion cost of performing those task o Strengths of other budgeting methods are integrated into this approach
  6. 6. Selecting the right Promotional Tools - after determining budget, combination of IMC tools (personal selling, advertising, sales promotion, public relations & direct marketing) can be specified - analytical approach and experience important Designing the Promotion - adveritisng: advertising copy and the artwork that the large audience is intended to see/hear - personal selling: characteristics and skills of the salesperson - sales promotion: specific details of inducements (coupons, samples) - public relations: seen in tangible elements (news releases) - direct marketing: written, verbal & electronic forms of delivery - determines the message that Is communicated to the audience Scheduling the Promotion - determine the most effective timing of their use Executing & Assessing the Promotional Program - successful IMC programs: create a process that facilitates their design and use. - IMC audit – evaluate company’s current process. Analyzes the internal communication network of the company, identifies key audiences, evaluates customer databases, assesses messages in recent advertising, etc. - Ideal execution of a promotional program 0 pretest design before it is actually used to allow for changes that improve its effectiveness. - Posttests – evaluate the impact of each promotion and the contribution of the promotional toward achieving program objectives - To fully benefit from IMC, companies must create and maintain test-result database that allows comparisons of the relative impact of the promotional tools and their execution options in varying situations Direct Marketing (pg 450) Growth of Direct Marketing -