Chapter 17


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Chapter 17

  1. 1. McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
  2. 2. Consumer Behavior and Promotion Strategy Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 17
  3. 3. Types of Affective Response
  4. 4. <ul><li>Marketers develop promotions to communicate information about their products and to persuade consumers to buy them </li></ul><ul><ul><li>Advertising </li></ul></ul><ul><ul><li>Sales promotions </li></ul></ul><ul><ul><li>Personal selling </li></ul></ul><ul><ul><li>Publicity </li></ul></ul><ul><li>Successful products and brands require promotions to create and maintain a differential advantage over their competitors </li></ul>Types of Promotion
  5. 5. Advertising <ul><li>Any paid, nonpersonal presentation of information about a product, brand, company, or store </li></ul><ul><ul><li>Usually has an identified sponsor </li></ul></ul><ul><ul><li>Characterized as image management </li></ul></ul><ul><ul><ul><li>Creating and maintaining images and meanings in consumers’ minds </li></ul></ul></ul><ul><ul><li>Ultimate goal is to influence consumer’s purchase behavior </li></ul></ul><ul><ul><li>May be conveyed via a variety of media </li></ul></ul>
  6. 6. <ul><li>Direct inducements to the consumer to make a purchase </li></ul><ul><ul><li>Difficult to define sales promotions due to many types </li></ul></ul><ul><ul><li>Key aspect of sales promotions is to “move the product today, not tomorrow” </li></ul></ul><ul><ul><li>Most sales promotions are oriented at changing consumers’ immediate purchase behaviors </li></ul></ul><ul><ul><li>Coupons remain the most popular form of sales promotions </li></ul></ul>Sales Promotion
  7. 7. Personal Selling <ul><li>Direct interactions between a potential buyer and a salesperson </li></ul><ul><ul><li>What makes it a powerful promotion method? </li></ul></ul><ul><ul><ul><li>May increase consumers’ involvement with the product and/or decision process </li></ul></ul></ul><ul><ul><ul><li>Interactive communication allows salespeople to adapt their sales presentation to individual customer needs </li></ul></ul></ul>
  8. 8. Personal Selling cont. <ul><ul><li>Certain consumer products are traditionally promoted through personal selling </li></ul></ul><ul><ul><li>For other businesses, a form of personal selling by telephone, called telemarketing, has become popular </li></ul></ul><ul><ul><li>Direct mail has increased in popularity to counteract increasing restrictions on telemarketing </li></ul></ul>
  9. 9. <ul><li>Any unpaid form of communication about the marketer’s company, products, or brands </li></ul><ul><ul><li>Can either be positive or negative </li></ul></ul><ul><ul><li>Can sometimes be more effective than advertising because consumers may not screen out the messages so readily </li></ul></ul><ul><ul><li>Publicity can be considered more credible than advertising as it is not represented by the marketing organization </li></ul></ul>Publicity
  10. 10. <ul><li>Ideally, marketing managers should develop a coherent overall promotion strategy that integrates the four types of promotions into an effective promotion mix </li></ul><ul><ul><li>A controversy continues in marketing about the relative importance of advertising vs. sales promotions </li></ul></ul><ul><ul><li>The promotion mix of the future is likely to be more eclectic with many more options </li></ul></ul><ul><ul><li>Advertising seems to be having a declining influence on consumers’ behavior due to various factors </li></ul></ul>The Promotion Mix
  11. 11. A Communication Perspective <ul><li>The cognitive processing model of decision making is relevant to an understanding of the effects of promotions on consumers </li></ul><ul><ul><li>Consumer’s must be exposed to the promotion information </li></ul></ul><ul><ul><li>Attend to the promotion communication and comprehend its meanings </li></ul></ul><ul><ul><li>The resulting knowledge, meaning, and beliefs must be integrated with other knowledge to create </li></ul></ul><ul><ul><ul><li>brand attitudes </li></ul></ul></ul><ul><ul><ul><li>make purchase decisions </li></ul></ul></ul>
  12. 12. A Communication Perspective cont.
  13. 13. The Communication Process <ul><li>Developing successful promotion strategies is mainly a communication problem </li></ul><ul><ul><li>Key factors </li></ul></ul><ul><ul><ul><li>Source </li></ul></ul></ul><ul><ul><ul><li>Encode </li></ul></ul></ul><ul><ul><ul><li>Transmit </li></ul></ul></ul><ul><ul><ul><li>Receiver </li></ul></ul></ul><ul><ul><ul><li>Decode </li></ul></ul></ul><ul><ul><ul><li>Action </li></ul></ul></ul><ul><ul><li>Particularly important stages for success </li></ul></ul><ul><ul><ul><li>Encoding </li></ul></ul></ul><ul><ul><ul><li>Decoding </li></ul></ul></ul>
  14. 14. Goals of Promotion Communications <ul><li>Goals of promotion communications </li></ul><ul><ul><li>Effects can be ordered in hierarchical sequence of events or actions that are necessary before consumers can or will purchase a brand </li></ul></ul><ul><ul><ul><li>Consumers must have a recognized need for the product category or product form </li></ul></ul></ul><ul><ul><ul><li>Consumers must be aware of the brand </li></ul></ul></ul>
  15. 15. Goals of Promotion Communications cont. <ul><ul><ul><li>Consumers must have a favorable brand attitude </li></ul></ul></ul><ul><ul><ul><li>Consumers must have an intention to purchase the brand </li></ul></ul></ul><ul><ul><ul><li>Consumers must perform various behaviors to purchase the brand </li></ul></ul></ul>
  16. 16. Stimulate Category Need <ul><li>Need to create beliefs about the positive consequences of buying and using the product category or form </li></ul><ul><ul><li>Marketers need to create beliefs about the positive consequences of buying and using the product category or form </li></ul></ul><ul><ul><li>Typically use advertising to stimulate category need </li></ul></ul>
  17. 17. Brand Awareness <ul><li>A general communication goal for all promotion strategies </li></ul><ul><ul><li>Level of brand awareness necessary for purchase varies depending on how and where consumers make their purchase decisions </li></ul></ul><ul><ul><li>Ask consumers to state the brand names they can remember or recognize as familiar </li></ul></ul><ul><ul><li>A company’s brand awareness strategy depends on how well known the brand is </li></ul></ul>
  18. 18. Brand Attitude <ul><li>Create a brand attitude </li></ul><ul><li>Maintain existing favorable brand attitudes </li></ul><ul><li>Increase the existing brand attitude </li></ul><ul><li>Cannot analyze consumers’ brand attitudes in an absolute or very general sense without specifying the situational context </li></ul>
  19. 19. Brand Purchase Intention <ul><li>Most promotion strategies are intended by marketers to increase or maintain the probability that consumers will buy the brand </li></ul><ul><ul><li>To develop effective promotion strategies directed at brand purchase intention, marketers must know when BI are formed by most of the target customers </li></ul></ul>
  20. 20. Brand Purchase Intention cont. <ul><ul><li>More typically, formation of a brand BI is delayed until well after exposure to advertising, when the consumer is in a purchase context </li></ul></ul><ul><ul><li>Personal selling and sales promotion are usually designed to influence purchase intentions at the time of exposure to the promotion information </li></ul></ul>
  21. 21. Facilitate Other Behaviors <ul><li>Some promotion strategies are designed to facilitate behaviors other than purchase </li></ul><ul><ul><li>Sales promotions and publicity are likely to have little influence on these other behaviors, but advertising and personal selling strategies may increase their probability </li></ul></ul>
  22. 22. The Promotion Environment <ul><li>Includes all stimuli associated with the physical and social environment in which consumers experience promotion strategies </li></ul><ul><li>Two environmental factors can influence advertising and sales promotion strategies </li></ul><ul><ul><li>Promotion clutter </li></ul></ul><ul><ul><li>Level of competition </li></ul></ul>
  23. 23. Promotion Clutter <ul><li>The growing number of competitive strategies in the environment </li></ul><ul><ul><li>Possible that clutter created by multiple ads during commercial breaks and between TV programs will reduce the communication effectiveness of each ad </li></ul></ul><ul><ul><li>Also affects other types of promotion strategies, especially sales promotions </li></ul></ul>
  24. 24. Level of Competition <ul><li>A key aspect of the promotion environment </li></ul><ul><ul><li>Comparative advertising , featuring direct comparisons with competitive brands, has become more common </li></ul></ul><ul><ul><li>Promotion often becomes the key element in the marketers’ competitive arsenal in fiercely competitive environments </li></ul></ul>
  25. 25. Promotion Affect and Cognition <ul><li>Interpretation of promotion communications and integration processes are extremely important </li></ul><ul><li>Consumers’ comprehension processes vary in depth and elaboration, depending on their levels of knowledge and involvement </li></ul><ul><ul><li>Concepts relevant to understanding the effects of advertising </li></ul></ul><ul><ul><ul><li>Consumers’ attitudes toward ads </li></ul></ul></ul><ul><ul><ul><li>Persuasion processes </li></ul></ul></ul>
  26. 26. Attitude toward the Ad <ul><li>The affective evaluations of the ad itself can influence the attitudes toward the advertised product or brand </li></ul><ul><li>Ads that consumers like seem to create more positive brand attitudes and purchase intentions than ads they don’t like </li></ul><ul><li>A positive attitude toward an ad may not always lead to increased purchase of the brand </li></ul>
  27. 27. The Persuasion Process <ul><li>Changes in beliefs, attitudes, and behavioral intentions caused by a promotion communication </li></ul><ul><ul><li>The Elaboration Likelihood Model (ELM) </li></ul></ul><ul><ul><ul><li>Identifies two cognitive processes by which promotion and communication can persuade consumers </li></ul></ul></ul><ul><ul><ul><li>Also distinguishes between two types of information in the promotion communication </li></ul></ul></ul>
  28. 28. Two Routes to Persuasion in the ELM
  29. 29. Promotion Behaviors <ul><li>Different types of promotions can be used to influence the various behaviors in the purchase–consumption sequence </li></ul><ul><ul><li>Information contact </li></ul></ul><ul><ul><li>Word-of-mouth communication with other consumers </li></ul></ul>
  30. 30. Information contact <ul><li>Consumers must come into contact with promotion information for it to be successful </li></ul><ul><ul><li>Information contact with promotions may be </li></ul></ul><ul><ul><ul><li>intentional </li></ul></ul></ul><ul><ul><ul><li>most often incidental </li></ul></ul></ul><ul><ul><li>Placing information in consumers’ environments may be easy when target consumers can be identified accurately </li></ul></ul>
  31. 31. Promotion Behavior cont. <ul><ul><li>Cold calls vs. referrals and leads </li></ul></ul><ul><ul><li>Use of telemarketing </li></ul></ul><ul><ul><li>Consumers must also attend to the promotion messages </li></ul></ul><ul><ul><li>Level of attention also depends on how well promotion interacts with consumer characteristics such as intrinsic self-relevance and exiting knowledge </li></ul></ul>
  32. 32. Word-of-Mouth Communication <ul><li>Helps spread awareness beyond those consumers who come into direct contact with the promotion </li></ul><ul><ul><li>Placing promotion information in consumers’ environments, increases the probability that the information will be communicated to other consumers </li></ul></ul>
  33. 33. Managing Promotion Strategies <ul><li>Four key activities </li></ul><ul><ul><li>Analyze consumer–product relationships </li></ul></ul><ul><ul><li>Determine the promotion objectives and budget </li></ul></ul><ul><ul><li>Design and implement a promotion strategy </li></ul></ul><ul><ul><li>Evaluate the effects of the promotion strategy </li></ul></ul>
  34. 34. Analyze Consumer-product Relationships <ul><li>Requires identifying the appropriate target markets for the product </li></ul><ul><ul><li>Marketers should also understand the deeper symbolic meaning of their brand </li></ul></ul><ul><ul><li>The FCB grid </li></ul></ul><ul><ul><ul><li>Based on consumers’ involvement and their salient knowledge, meanings, and beliefs about the product </li></ul></ul></ul><ul><ul><ul><li>Think products </li></ul></ul></ul><ul><ul><ul><li>Feel products </li></ul></ul></ul><ul><ul><ul><li>The appropriate promotion strategy depends on the product’s position in the grid </li></ul></ul></ul>
  35. 35. Analyze Consumer-Product Relationships cont.
  36. 36. Determine Promotion Objectives and Budget <ul><li>Promotion strategies may be designed to meet one or more of the following objectives </li></ul><ul><ul><li>To influence behaviors </li></ul></ul><ul><ul><li>To inform </li></ul></ul><ul><ul><li>To transform affective responses </li></ul></ul><ul><ul><li>To remind </li></ul></ul>
  37. 37. Managing Promotion Strategies cont. <ul><li>Marketers should determine their specific promotion objectives and the budget available to support them before designing a promotion strategy </li></ul><ul><li>Some promotions have multiple objectives </li></ul><ul><li>Some promotions are designed to first influence consumers’ cognitions in anticipation of a later influence on their overt behaviors </li></ul>
  38. 38. Design and Implement a Promotion Strategy
  39. 39. Designing Promotion Strategies <ul><li>Must be sensitive to the consumer-product relationships represented in different market segments </li></ul><ul><ul><li>Various consumer segments to be considered </li></ul></ul><ul><ul><li>Appropriate promotions depend on the type of relationship consumers have with the product or brand, especially their intrinsic self-relevance </li></ul></ul><ul><ul><li>Promotion methods vary in their effectiveness for achieving certain objectives </li></ul></ul><ul><ul><li>Promotion objectives will change over a product’s life cycle </li></ul></ul>
  40. 40. Developing Advertising Strategy <ul><li>Specify advertising strategy in terms of the type of relationship the consumer will have with the product or brand </li></ul><ul><ul><li>MECCAS model, based on consumers’ means-end chains, helps marketers understand the key aspects of ad strategy and make better strategic decisions </li></ul></ul><ul><ul><ul><li>Driving force </li></ul></ul></ul><ul><ul><ul><li>Leverage point </li></ul></ul></ul><ul><ul><ul><li>Consumer benefits </li></ul></ul></ul><ul><ul><ul><li>Message elements </li></ul></ul></ul><ul><ul><ul><li>The executional framework part of the creative strategy </li></ul></ul></ul>
  41. 41. The MECCAS Model
  42. 42. Developing Advertising Strategy cont. <ul><ul><li>Steps in creating an advertising strategy </li></ul></ul><ul><ul><ul><li>Consumer-product relationship </li></ul></ul></ul><ul><ul><ul><ul><li>Message elements </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Consumer benefits </li></ul></ul></ul></ul><ul><ul><ul><ul><li>The driving force </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Leverage point </li></ul></ul></ul></ul><ul><ul><ul><li>An advertising strategy should specify how a brand will be connected to the important ends the consumer wants </li></ul></ul></ul><ul><ul><ul><ul><li>Executional framework: the various details of the creative strategy </li></ul></ul></ul></ul><ul><ul><li>Marketers still must carefully analyze consumers and use their creative imaginations </li></ul></ul>
  43. 43. Developing Personal Selling Strategies <ul><li>ISTEA model ( impression, strategy, transmission, evaluation, and adjustment ) </li></ul><ul><ul><li>Suggests salespeople’s influences depend on their skills at performing five basic activities </li></ul></ul><ul><ul><ul><li>Developing useful impressions of the customer </li></ul></ul></ul><ul><ul><ul><li>Formulating selling strategies based on these impressions </li></ul></ul></ul><ul><ul><ul><li>Transmitting appropriate messages </li></ul></ul></ul>
  44. 44. Developing Personal Selling Strategies cont. <ul><ul><ul><li>Evaluating customer reactions to the messages </li></ul></ul></ul><ul><ul><ul><li>Making appropriate adjustments in presentation should the initial approach fail </li></ul></ul></ul><ul><ul><li>ISTEA model is consistent with the communication approach to consumer promotions </li></ul></ul><ul><ul><li>Model emphasizes analysis of the customer as the starting point </li></ul></ul>
  45. 45. A Model of the Personal Selling Process
  46. 46. Evaluate Effects of the Promotion Strategy <ul><li>Involves comparing its results with the objectives </li></ul><ul><ul><li>Determining promotion effects can be difficult </li></ul></ul><ul><ul><li>Promotion objectives stated in behavior terms can be hard to evaluate </li></ul></ul><ul><ul><li>In some cases, evaluation of promotion effects can be relatively straight-forward </li></ul></ul>
  47. 47. Measuring Advertising Effects <ul><li>Wide variety of approaches have been taken to measuring advertising effects </li></ul><ul><ul><li>Pretesting </li></ul></ul><ul><ul><li>Copy testing </li></ul></ul><ul><li>Three broad criteria used as indicators of advertising effectiveness: </li></ul><ul><ul><li>Sales </li></ul></ul><ul><ul><li>Recall </li></ul></ul><ul><ul><li>Persuasion </li></ul></ul>
  48. 48. Summary <ul><li>Discussed how knowledge about consumers’ affect and cognitions, behaviors, and environments can be used by marketers in developing more effective promotion strategies </li></ul><ul><li>Described four types of promotions </li></ul><ul><li>Detailed how the basic communication model can be used </li></ul>
  49. 49. Summary cont. <ul><li>Discussed important aspects of the promotion environment, affective and cognitive responses to promotions, and promotion-related behaviors </li></ul><ul><li>Examined a managerial model for designing and executing promotion strategies </li></ul>
  50. 50. Summary cont. <ul><li>Described the various goals and objectives marketers may have for promotion strategies </li></ul><ul><li>Looked at two special models for developing advertising strategies and personal selling strategies </li></ul><ul><li>Discussed how to evaluate the effectiveness of promotion strategies </li></ul>