Lesson 40 promotion-decisions and strategies
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Lesson 40 promotion-decisions and strategies Lesson 40 promotion-decisions and strategies Document Transcript

  • Marketing Management Unit 4 Delivering Marketing Programs Chapter 14 - Promotion-Decisions and Strategies Lesson 40 - Process for effective communicationStudents in this chapter you would following - directed towards helping a company justify its You would know how communication works existence and maintain healthy, positive relation- You would be able to determine the major ships between itself and various groups in the steps in developing an integrated marketing marketing environment. To develop and imple- communications program ment effective promotional activities, a firm must You will understand who should be respon- use information from the marketing environment, sible for marketing communication planning often obtained from its marketing information State what steps are involved in developing system. The degree to which marketers can ef- an advertising program fectively use promotion to maintain positive rela- You would know what is driving the growing tionships with environmental forces depends use of sales promotion, and how sales pro- largely on the quantity and quality of information motion decisions are made an organisation takes in. You would understand how companies ex- Let us now define promotion ploit the potential of public relations and pub- licity Promotion is communication about an You would be able to determine how compa- organization and its products that is intended nies use integrated direct marketing for com- to inform, persuade, or remind target market petitive advantage membersWhat Is Promotion ? A promotion mix (sometimes called a marketingLet us study about -marketing communications communications mix) is the particularwhich is one of the four major elements of the combination of promotional methods a firm usescompany’s marketing mix. to reach a target market. In this chapter, weCan you attempt to define promotion ? Promo- examine the process for effective communicationtion in marketing terms……….. and promotion methods of advertising, personal selling, sales promotion, and public relations.Promotion’s role is to communicate with Let us begin by discussing the process ofindividuals, groups, or organisations to di-rectly or indirectly facilitate exchanges by in- effective communication.forming and persuading one or more of theaudiences to accept an organisation’s prod- WHAT IS EFFECTIVEucts. COMMUNICATION ?To facilitate exchanges directly, marketers com- THE COMMUNICATION PROCESS:municate with selected audiences about their All of us are a part of communication processcompanies and their goods, services and ideas. of marketers as consumers .Today there is aMarketers indirectly facilitate exchanges by fo- new view of communication as a interactive dia-cusing information about company activities and logue between the company and its customersproducts on interest groups, current and potential that takes place during the pre-selling, selling,investors, regulatory agencies, and society in gen- consuming, and post-consuming stages. Compa-eral. nies must ask not only “How can we reach our customers?” but also, “How can our customersPromotion can play a comprehensive communi- reach us”’cation role. Some promotional activities can be16.101G © Copy Right : Rai University 421
  • Marketing ManagementCOMMUNICATION PROCESS feedback channels. To monitor the responses. TheHave you observed that the product’s styling more the sender’s field of experience overlapsand price, the shape and color of the pack- with that of the receiver, the more effective theage, the salesperson’s manner and dress, the message is likely to be.store decore, the company’s stationer – all Sometimes the target audience may not receivecommunicate something to buyers? Every the intended message. Why do you think so ?:brand contact delivers an impression that canstrengthen or weaken a customer’s view of the Some of the possible reasons could be –company. The whole marketing mix must be in-tegrated to deliver a consistent message and stra- Selective attention: People are bombarded withtegic positioning. many commercial messages a day, of which only a few are consciously noticed and provoke someThe starting point is an audit of all the potential reaction. Selective attention explains why ads withinteractions target customers may have with the bold headlines promising something, such as “Howproduct and the company. For example, some- to Make a Million,” have a high likelihood of get-one interested in purchasing a new computer ting attention.would talk to others, see television ads, read ar-ticles, look for information on the Internet, and Selective distortion: People will retain in long-observe computers in a store. Marketers need to term memory only a small fraction of the mes-assess which experiences and impressions will sages that reach them. If the receiver’s initialhave the most influence at each stage of the buy- attitude toward the object is positive and he oring process. This understanding will help them she rehearses support arguments, the messageallocate communications dollars more efficiently. is likely to be accepted and have high recall. If the initial attitudes negative and the person re-Marketers also need to understand the fundamen- hearses counterarguments, the message is likelytal elements of effective communications. Fig- to be rejected but to stay in long-term memory.ure above shows a communication model with Because persuasion requires the receiver’s re-nine elements. Two represent the major parties hearsal of his or her own thoughts, much of whatin a communication – sender and receiver. Two is called persuasion is actually self- persuasionrepresent the major communication tools – mes-sage and media. Four represent major communi- Let us now focus about effective communica-cation function – encoding, deconding, re- tions ?sponse, and feedback. The last element in thesystem is noise (random and competing mes- How To Develop Effective Communica-sages that may interfere with the intended com- tions?munication). I am sure all of you would want to know about developing effective communications . Let usThe model emphasizes the key factors in effec- discuss about it step by step.tive communication. Senders must know whataudiences they want to reach and what responses 1. Identify the target audience -The processthey want to get. They must encode their mes- must start with a clear target audience in mind:sages so that the target audience can decode potential buyers of the company’s products, cur-them. They must transmit the message through rent users, deciders, or influencers; individuals,media that reach the target audience and develop groups, particular publics, or the general public.422 © Copy Right : Rai University 16.101G
  • Marketing ManagementThe target audience is a critical influence on the message will require solving four problems: whatcommunicator’s decisions on what to say, how to say ( message content,) how to say it logicallyto say it, when to say it, where to say it, and to ( message structure ), how to say it symbolicallywhom to say it. ( message format), and who should say it ( message source).2. Determine the communication objectives- The marketer can be seeking a cognitive, af- Message content: In determining messagefective, or behavioral response. That is, the content, management searches for an appeal,marketer might want to put something into the theme, idea, or unique selling proposition (consumer’s mind, change an USP). There are three types of appeals: ra- tional, emotional, and moral. Message structure Effectiveness depends on structure as well as content Message format The message format needs to be strong. In a print ad, the communicator has to decide on headline, copy, illustration, and color. For a radio message, the commu- nicator has to choose words, voice qualities, and vocalizations. The “sound” of an an- nouncer promoting a used automobile has to be different from one promoting a new Cadillac. If the message is to be carried on television or in person, all these elements plus body language ( nonverbal clues) have to be planned. Presenters have to pay attention to facial expressions, gestures, dress, posture, and hairstyle, If the message is carried by the product or its packaging, the communi- cator has to pay attention to color, texture, scent, size, and shape Message source Message delivered by at- tractive or popular sources achieve higher attention and recall. This is why advertisers often use celebrities .What is important is the spokesperson’s credibility. Pharmaceutical companies what doctors to testify about prod- uct benefits because doctors have high cred- ibility. Anti drug crusaders will use ex-drug addicts because they have higher credibility for students than teachers do. What factors underlie source credibility? The three most often identified are expertise, trustworthiness, and likability.19 attractive- ness. 4. Select the communication channels - The communicator must select efficient channels to3. Design the message - Having defined the carry the message. For example, pharmaceuti-desired response, the communicator moves to cal company salespeople can rarely wrest moredeveloping an effective message. Ideally, the than five minutes’ time from a busy physician.message should gain attention, Hold interest, Their presentation must be crisp, quick, and con-arouse desire, and elicit action Formulating the vincing. This makes pharmaceutical sales calling16.101G © Copy Right : Rai University 423
  • Marketing Managementextremely expensive. The industry has had to ex- KNOWING THE ROLE OFpand its battery of communication channels. These PROMOTIONinclude placing ads in medical journals, sending Do you know that Promotion is commonly thedirect mail ( including audio and videotapes ), object of two misconceptions.passing out free samples, and even telemarketing. People take note of highly visible promotional5. Establish the total marketing communi- activities, such as advertising and personalcation budget - One of the most difficult mar- selling, and conclude that these make up theketing decisions is determining how much to spend entire field of marketing.on promotion. John Wanamaker, the department- People sometimes consider promotional ac-store magnate, once said, “ know that half of my tivities to be unnecessary, expensive, and theadvertising is wasted, but I don’t know which cause of higher prices.half.” Neither view is accurate. The role of promotion is to facilitate ex-6. Deciding on the marketing communica- changes directly or indirectly by informingtions mix - Companies must allocate the pro- individuals, groups, or organizations and in-motion budget over the give promotional tools – fluencing them to accept a firm’s productsadvertising, sales promotion, public relations and or to have more positive feelings about thepublicity, sales force, and direct marketing. Here firm.is how one company touches several bases. a. To expedite exchanges directly, marketers con-Let us now study about Integrated Marketing vey information about a firm’s goods, services,Communications. and ideas to particular market segments.What Is Integrated Marketing Communications? b. To bring about exchanges indirectly, market-A. Integrated marketing communications is the ers address certain interest groups, regulatorycoordination of promotion efforts to ensure the agencies, investors, and the general public.maximum informational persuasive impact oncustomers. c. he broader role of promotion, therefore, is to maintain positive relationships between a com-B. A major goal of integrated marketing commu- pany and groups in the marketing environment.nications is to send a consistent message to cus-tomers. d. Marketers must carefully plan, implement, and coordinate promotional communications to makeC. This approach fosters long-term customer re- the best use of them.lationships and the efficient use of promotional i The effectiveness of promotional activitiesresources. depends greatly on the quality and quantity of information available to marketers aboutD. The concept of integrated marketing commu- the organization’s marketing environment.nications has been increasingly accepted for a ii (Marketers must gather and use informationnumber of reasons. about particular audiences to communicate Mass media advertising is used less today successfully with them. because of its high costs and less predictable audience sizes. The Promotion Mix: An Overview Marketers can now take advantage of more Have you heard of promoton mix ? let us know precisely targeted promotional tools, such as it a little better ……….. cable TV, direct mail, CD ROMS, the Internet, special interest magazines, and Marketers can use several promotional methods voice broadcasts. to communicate with individuals, groups, and or- Database marketing is also allowing market- ganizations. ers to be more precise in targeting individual customers.424 © Copy Right : Rai University 16.101G
  • Marketing Management Advertising, personal selling, sales promotion, Here is something interesting for you …… and publicity are the four major elements in an organization’s promotion mix. APPLICATION EXERCISE : Review the fol- lowing article. Bring out the key points. DiscussTwo, three, or four of these ingredients are used your points of agreement and disagreement .in a promotion mix, depending on the type of prod-uct and target market involved. Promotion plot Should FMCG’s stop Mindless Promotions? Sanjiv Kakkar GM, Sales and Cus-Factors Affecting The Selection Of tomer Development (Personal Products)-The Promotion Mix Elements Hindustan Lever LtdWe will broadly look at some of the major con-siderations in promotion.:- The early and mid nineties were boom times. Marketers never had it so good. The economy Promotion Resources, Objectives, and was liberalising and growing rapidly, media ex- Policies plosion was fuelling consumer aspirations and a–A limited promotional budget affects the num- cut in excise duties was resulting in a decline inber and types of promotion mix components af- real prices. Everything marketers touched turnedfordable to a firm. to gold. Marketers began to believe that they were infallible!–Objectives and policies influence the types ofpromotion selected. Hence, as market growth rates began to slow Characteristics of the Target Market down, marketers felt this was a temporary phe- nomenon. Declining growth rates could be cir-–Market size, geographic distribution, and cumvented through promotions that would in-demographics help dictate the choice of crease trade inventory, consumer upstocking andpromotion mix elements. market share. The patron of sales was enclosed Characteristics of the Product in one word: Promotions! Amidst persistent fearsWe will discuss these in detail in the forthcoming of recession, marketers continued to ignore thelessons. fundamental economic problem of declining mar- kets. Instead of fashioning a viable response to Business Products Consumer Personal Selling the fundamental problem, marketers embraced durables Exclusive distribu- tion, high priced products promotions to buy short-term volume. Scheme expenditure, as a percentage of total support, in- creased dramatically.However, as the slowdown was more fundamental in nature, the resultant Consumer goods Seasonal Products Highly personal effect of the promotional onslaught was merely products Intensively Distrib- an increase in trade and consumer inventory. Over uted ,low priced Convenience Advertisement a period of time, promotions became a zero sum products game. Increasingly, promotions were aimed at the16.101G © Copy Right : Rai University 425
  • Marketing Managementcompetitors rather than at the consumers. Instead justify what are essentially promotions that at-of exercising caution in the selective usage of tempt to buy volume. Every promotional act fall-promotions, marketers succumbed blindly to its ing in these categories should certainly emanateshort-term allure. In some categories, the from a well thought through promotional platformcommoditisation of brands had begun.Result: No for the brand that stems from or builds the equityimpact on shares; no impact on trend line of mar- of the brand.* Awareness of Action beingket growth; increase in trade inventory and con- taken to Meet Objectives: Depending on thesumer inventory. Promotions then degenerated promotional objective the right tool/scale of ac-further into a tool to buy trade focus and shelf tivity needs to be employed. With a wide varietyshare. The number of activities on brands in- of techniques available, it is quite conceivable forcreased enormously leading to activity fatigue in a young marketer to use a revolver to shoot downthe trade, consumer and sales force.In order to a low flying aircraft or the scattered blast of abeat activity fatigue innovation came into play - shotgun to shoot down a clear, well defined tar-scratch cards, games of chance, gold coins and get- Building Awareness: A variety of meansdiamond’s in the pack etc. The innovation fade could be used, from the more common marketwas however very rapid. Data suggested that place visibility - display contests - to sponsorshippromotions were increasingly influencing a very of events, direct marketing etc.- Building Trial:limited set of brand decisions or switches. The This is normally done through sampling, price offs,time for reflection had arrived!Caught between pack premiums, banded offers, cross promotionsthe tentacles of unaffordable levels of scheme and in shop promotions- Increasing Repeat Pur-expenditure and insignificant impact of promo- chase/loyalty/ depth of consumption: On-packtions marketers were forced to ask the basic ques- coupons that give money off on next purchase,tion - are promotions mindless? The answer for- collector schemes e.g. cards, stickers that aretunately is NO! The principles that govern pro- collected over a period of time, loyalty cards col-motions are no different from all else in life. Ac- lected over a period of time leading to a gift attivity carried out with full mindfulness - aware- the very end, reusable containers with lower pricedness of objectives, awareness of action being refill packs and extra product free are the moretaken to meet them and awareness of its conse- commonly employed tools- Competitive Re-quences - is meaningful activity. Promotional plans sponse: The approach employed most often dur-that follow these principles build and enhance ing a competitive launch is to take loyal consum-brand value over time.Consumer promotions play ers out of the market for an extended period ofa key role in the life cycle of a brand. The role time. This can be done through promotions likevaries according to the stage in the life cycle, Buy One Get One free, Price offs’, on pack dis-market situation and competitive scenario. Pro- counts on larger pack sizes and extra quantity ofmotions can have a significant impact on pen- product free- Distribution coverage Expansion/etration build for new brands and for stimulating Building Trade Involvement: Trade discounts togrowth in existing brands provided they are an- push the product through wholesale into the ruralchored on a well defined activation platform that hinterland to expand width of coverage, field forcebuilds brand equity.* Awareness of Objectives: incentives, display contests are the more com-Promotions are an important element of the mar- monly employed means of achieving distributionketing mix and can serve many objectives- Build- width and depth- Visibility Activity: In store mer-ing awareness, trial, conversion, distribution cov- chandising, display contests that are either the-erage and visibility during launch of a new brand- matic or aimed at announcing a majorBuild retrial, consumption frequency and depth promotionThe era of mindless promotionsduring the re-launch of an existing brand- Re- would have come to an earlier halt had mar-ward loyal consumers of existing brands/build keters paid heed to the consequences ofdistribution width or depth- Manage a brand in a their actions - through a thorough evalua-declining market/situation - retaining loyal con- tion of promotions* Awareness of conse-sumers or keeping distribution width/depth intact- quences: The era of mindless promotions wouldResponse to a competitive threat that seeks to have come to an earlier halt had marketers paiderode shareThe last three are most often mis- heed to the consequences of their actions -used with marketers using “marketing speak” to through a thorough evaluation of promotions. The426 © Copy Right : Rai University 16.101G
  • Marketing Managementfactors to be kept in mind are- Evaluation: tech- sible to vary the marketing mix by state rathernique and action standards - should be agreed at than rely on promotional activity alone to buildthe conception of the promotion itself- Evalua- regional brands. This also entails shifting mar-tion should be done after an agreed time interval keting responsibility to operating teams based inwhen the full effects of the promotion will be the regions rather than run it as a central func-known- A clear evaluation of cost vs. benefits tion from the corporate office* Changing Na-i.e. objectives met but at what costWhat gives ture of Trade and Shopper: The relatively ho-hope for the future is that we have numerous mogenous nature of the trade in the country isexamples of promotions that worked - achieved changing rapidly with the emergence of moderndomination of consumer mindspace, drove aware- trade in pockets, key accounts in self service for-ness and built sales/share. Britannia Khao World mats and consolidation of large grocery outlets.Cup Jao, Lux Gold Star offer, Pepsi Hai Koi At the same time, we are seeing the rapid mush-Jawaab and Mera Number Kab Ayegaa are ex- rooming of outlets due to growth of urban cen-amples of promotions that stuck by certain rules tres. Shoppers and shopping behaviour are beingthat helped them to win in the marketplace:- A segmented by outlet type. This will have a hugeBig Activation Idea that linked back to and built impact on both the scale and type of promotions.the core equity of the brand. The Idea helped the Marketers will be forced to design and imple-brand to break through the clutter and grab the ment channel based promotions in order toconsumer emotionally- Aggressive support on maximise their effectiveness* Rural marketsmedia across media types to generate rapid contribute to over a third to half the salesawareness build. Rapid build up of awareness is for some brands. While designing promotionscritical as promotions are a short lived phenom- marketers have however treated them as adjunctsena- Substantial on ground promotional support of urban centres. As rural markets emerge asthough local market place events and enormous the powerhouse for future brand growth promo-visibility at retail outlets- Leveraging the national/ tions designed exclusively for these markets willlocal press and celebrities to drive awareness become the norm. Marketers will ignore this seg-build- Involvement of all channel partners by ment at their own peril.* Direct to Consumerincentivising them and giving them a chance to is an emerging channel to approach a selectwin the big prizes in the promotion. This helped target audience. As consumer needs becomebuild strong trade recommendation for the brand- sharply segmented and specialised products areConsumer prizes that were a combination of in- available to satisfy them, the use of this channelstant gratification as well as mega prizes at the will explode. Promotions in this channel are quiteclose of the promotion- A superb fulfilment pro- specialised but their effectiveness is well docu-gram that ensured prizes reached the consumers mented in the industrialised nations.Promotionson time As we look into the future we find a few that follow the basic tenets - a Big Idea that buildskey trends in the marketplace that will impact the equity of the brand, sharp clarity of objec-the nature and intensity of promotional activity.* tives and tools to be used and post promotionMicromarketing rather than Promotions: evaluation - will dominate the vast Indian BazaarThe sheer diversity of India poses a challenge to in the future. Mindlessness will give way tomarketers but also offers enormous opportunity Mindfulness!The views expressed in this articleto differentially target and grow select regions are the author’s own and may not representand states. As media becomes localised, it is pos- HLL’s views.16.101G © Copy Right : Rai University 427
  • Marketing Management Point to remember428 © Copy Right : Rai University 16.101G