Chp 14 Promotion and Pricing


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  • 1. Promotion is the function of informing, persuading, and influencing a purchase decision. 2. Some promotional strategies try to develop primary demand or consumer desire for a general product category. 3. In a process of integrated marketing communications (IMC), marketers coordinate all promotional activities-- advertising, sales, promotion, personal sales presentations, and public relations-- to execute a unified, customer-focused promotional strategy.
  • An integrated marketing communications strategy that focuses on customer needs to create a unified promotional message. With IMC, marketers create a unified personality for the good, brand, or service they promote. Designing Effective Integrated Marketing Communications Programs: 1. A good IMC program provides a unifying framework within which an organization can develop promotional strategies to reach many different market segments. 2. Marketers weave the various elements of the strategy-- personal selling, advertising, sales promotion, publicity, and public relations-- into an integrated communications plan.
  • Promotional strategy objectives vary among organizations-- some use promotion to expand their markets, others to defend their current positions.
  • Providing Information-- a major portion of US advertising is information oriented and includes newspaper ads, grocery store ads, and schedules and ticket information for plays, movies, and concerts. Differentiating a Product a. Promotion can also be used to differentiate a firm’s goods and services from the competition by applying the concept of positioning-- marketers attempt to establish their own places in the minds of customers. b. The idea is to communicate to prospective purchasers, meaningful distinctions about the attributes, price, quality, or use of a good or service.
  • Increasing Sales-- the most common objective of a promotional strategy. Stabilizing Sales a. Sales stabilization is another goal of promotional strategy. b. Firms often use sales contests during slack periods, motivating salespeople by offering prizes such as vacation trips, television sets, cell phones, and cash to those who meet certain goals. c. Advertising supports other promotional efforts to stabilize sales.
  • Accentuating the Product’s Value a. Some promotional strategies enhance product values by explaining often unrecognized ownership benefits, and others focus on low-price aspects of value. b. The creation of brand equity also enhances a product’s image and increases its desirability.
  • Today’s marketers can promote their products in many ways, and the lines between the different elements of the promotional mix are blurring. The increasing complexity and sophistication of marketing communications requires careful promotional planning to coordinate IMC strategies. Product Placement: Paying for placement of ones products in movies and TV Guerrilla Marketing: low-cost marketing efforts designed to get consumer’s attention in unusual ways.
  • 1. Advertising refers to paid, non-personal communications usually targeted at large numbers of potential buyers. 2. Advertising expenditures can vary considerably from industry to industry, from company to company, and from one advertising medium to another.
  • 1. a form of institutional advertising that is growing in importance, advocacy advertising, promotes a specific viewpoint on a public issue as a way to influence public opinion and the legislative process 2. Both not-for-profit organizations and businesses use advocacy advertising, also called cause advertising.
  • 1. Daily and weekly newspapers continue to dominate local advertising, as marketers can easily tailor newspaper advertising for local tastes and preferences. 2. Successful newspaper advertisers make newsworthy announcements in their ads, such as sales, the opening of new stores, or the launch of new products. 3. Most newspapers now maintain Web sites to complement their print editions, some of which offer separate material and features.
  • 1. America’s leading advertising medium, as the ads can be classified as network, national, local, and cable. 2. The major networks-- ABC, NBC, CBS, Fox, Warner Brothers, and United Paramount Network-- represent about 28% of all television ads. 3. Among the heavy users of network television advertising are auto manufacturers, financial services companies, and fast-food chains. 4. The variety of channels on cable and satellite networks lets advertisers target specialized markets and reach selected demographic groups, often very small ones.
  • 1. Often can customize their publications and target advertising messages to different regions of the country. 2. One method places local advertising in regional editions of the magazine. 3. Other magazines attach wraparounds-- half-size covers on top of full-size covers-- to highlight articles inside that relate to particular areas; different wraparounds appear in different parts of the country.
  • Advertisers are exploring new forms of outdoor media, many of which involve technology: a. computerized paintings b. video billboards c. trivision that displays three revolving images on a single billboard d. moving billboards mounted on trucks
  • Other marketers are combining direct mail and interactive advertising by sending prospective customers computer disks or DVDs containing marketing messages with opportunities to respond.
  • Sponsorships play an important role in relationship marketing: bringing together the event, its participants, and the sponsoring firms, and allowing marketers to reach a narrow but highly desirable audience.
  • Directory advertising includes the familiar Yellow Pages listings in telephone books and thousands of other types of directories, most presenting business-related promotions.
  • Sales promotion consists of forms of promotion such a coupons, product samples, and rebates that support advertising and personal selling. Both retailers and manufacturers use sales promotions to offer consumers extra incentives to buy.
  • a. Sweepstakes choose winners by chance and require no product purchase. b. With contests, companies cannot predict the number of people who will correctly complete a puzzle or gather the right number of symbols from scratch-off cards. c. Sweepstakes and contests can reinforce a company’s image and advertising message, but consumer attention may focus on the promotion rather than the product.
  • A company gives away useful merchandise carrying its name, logo, or business slogan. Like premiums, specialties should reinforce the brand’s image and its relationship with the recipient.
  • 1. sales promotion geared to marketing intermediaries rather than to customers 2. Marketers use trade promotion to encourage retailers to stock new products, continue carrying existing ones, and promote both new and existing products effectively to customers.
  • 1. A high-tech version of POP advertising is the use of kiosks that display product information and promotional offers. 2. Manufacturers and importers often host or exhibit at trade shows to promote goods or services to members of their distribution channels.
  • A. Considered by many companies as the key to marketing effectiveness B. Personal selling can occur in several environments, each of which can involve B2B to business-to-consumer selling C. Sales representatives who make sales calls on prospective customers at their homes or businesses are involved in field selling D. Over-the-counter selling describes sales activities in retailing and some wholesale locations, where customers visit the seller’s facility to purchase items E. Telemarketing sales representatives make their presentations over the phone
  • Order Processing a. most often related to over-the-counter selling in retail and wholesale firms b. The salesperson identifies customer needs, points out merchandise to meet them, and processes the order Creative Selling a. a persuasive type of promotional presentation, which promotes a good or service whose benefits are not readily apparent or whose purchase decision requires a careful analysis or alternatives b. Sales of intangible products, such as insurance, rely heavily on creative selling.
  • Firms use elaborate booklets, graphic techniques, and multimedia presentations to demonstrate products for customers.
  • Salespeople use a variety of closing techniques: a. The “if I can show you…” technique-- identifies the prospect’s major concern in purchasing the good or service and then offers convincing evidence of the offering’s ability to resolve it. b. The alternative-decision technique poses choices for the prospect, either of which favors the seller. c. The SRO (standing room only) technique-- the seller warns the prospect to conclude a sales agreement immediately because the product may not be available later, or an important feature, such as its price, will soon change. d. A seller can use the silence technique since discontinuing the sales presentation forces the prospect to take some type of action, making either a positive or negative decision. e. An extra-inducement close offers special incentives designed to motivate a favorable buyer response.
  • a. personal selling conducted entirely by telephone b. provides a firm’s marketers with a high return on their expenditures c. provides a firm’s marketers with an immediate response d. provides a firm’s marketers an opportunity for personalized, two-way conversation
  • Team Selling Has enhanced many companies’ abilities to meet customers’ needs in sales situations involving new, complex, and ever-changing technologies Sales Force Automation a. SFA software packages help sales managers develop account territories, plan sales campaigns, perform detailed analyses of sales trends, and forecast future sales. b. SFA improves the consistency of the sales approach, speeds response times, and reduces the sales cycle.
  • 1. Refers to an organization’s non-paid communications with its various public audiences, including: customers, vendors, news media, employees, stockholders, the government, the general public 2. Public Relations is an efficient, indirect communications channel for promoting products 3. The PR department links a firm with the media by providing the media with news releases and video and audio clips, as well as holding news conferences to announce new products, formation of strategic alliances, management changes, financial results, and similar developments.
  • Many people view advertising negatively, labeling it as propaganda rather than information, and criticizing its influence on customers, its potential for creating unnecessary needs and wants, its overemphasis on sex and beauty, and its delivery of inappropriate messages to children.
  • To woo young customers, advertisers often make ads as un-ad-like as possible-- designing messages that resemble entertainment.
  • The idea of school as a safe haven where kids and young adults are exposed only to messages tailored to their mental development seems quaint in light of the promotional book covers, posters, and even curriculum materials provided to today’s schools.
  • A. Marketers attempt to accomplish certain objectives through their pricing decisions. B. Pricing objectives vary from firm to firm, and many companies pursue multiple pricing objectives.
  • Pricing to Meet Competition a. Some firms set their prices to meet their competition. b. It is illegal to work together to agree on prices or to force retailers to sell at a set price. c. De-emphasize the price element of the marketing mix and focus competitive efforts on non-price variables. d. Widespread use of the Internet is expected to increase the pricing to meet competition. Prestige Objectives--Marketers recognize the role of price in communicating an overall image for the firm and its products.
  • Pricing requires considerable input from many functional areas, such as accounting, finance, marketing and production. By applying theoretical concepts of supply and demand a. assumes that a market price will be set at the point where the amount demanded and the amount supplied are in equilibrium b. a popular demand-and-supply exchange is Internet auctions
  • 1. Since determining how much of a product will sell at a certain price requires difficult analysis, economic theory is of limited practical value. 2. Therefore, cost-based analyses are used more frequently. 3. Includes all costs associated with offering a product in the market, including: production, transportation, marketing expenses, the markup B covers any unexpected or overlooked expenses and provides a profit
  • 1. Involves a consideration of two types of costs, including: a. variable costs B change with the level of production, such as raw materials and labor b. fixed costs B remain stable regardless of the production level 2. The breakeven point is the level of sales that will generate enough revenue to cover all of the company’s fixed and variable costs. 3. Sales beyond the breakeven point generate profits. 4. Marketers determine the profits or loses that would result from several different proposed prices. 5. This comparison at different prices helps to determine the best price, one that would attract enough customers to exceed the breakeven point and earn profits. 6. Many firms determine demand by developing estimates through consumer surveys, interviews and assessments of prices charged by competitors, which results in the determination of a modified breakeven analysis.
  • Skimming Pricing Strategy a. sets an intentionally high price relative to the prices of competing products b. often works for introduction of a distinctive good or service with little or no competition c. helps establish high-end products d. Has several advantages, including: allows a manufacturer to recover its development costs quickly lets a firm maximize revenue from a new product before competitors enter the market permits marketers to control demand in the introductory stage and then adjust production to match demand e. Disadvantages include attracting competition. Penetration Pricing a. sets a low price as a major marketing weapon b. often utilized when there is lots of competition c. Prices may be increased after consumers have developed some recognition of and preference for the product. d. assumes the below-market price will aid in market growth e. success depends on generating large numbers of consumer trial purchases
  • Competitive Pricing a. try to reduce the emphasis on price competition by matching other firms’ prices b. concentrate their own marketing efforts on the product, distribution, and promotional elements of the marketing mix
  • Chp 14 Promotion and Pricing

    1. 1. Part 4 Marketing Management
    2. 2. Chapter 14 Promotion and Pricing Strategies
    3. 3. Chapter Objectives <ul><li>Discuss how integrated marketing communications relates to a firm’s promotional strategy. </li></ul><ul><li>Explain the concept of a promotional mix and outline the objectives of promotion. </li></ul><ul><li>Summarize the different types of advertising and advertising media. </li></ul><ul><li>Describe the role of sales promotion, personal selling, and public relations in promotional strategy. </li></ul><ul><li>Identify the Profitabilitynfluence the selection of a promotional mix. </li></ul><ul><li>Discuss the major ethical issues involved in promotion. </li></ul><ul><li>Outline the different types of pricing objectives and discuss how firms set prices in the marketplace. </li></ul><ul><li>Summarize the four alternative pricing strategies. </li></ul><ul><li>Discuss consumer perceptions of price. </li></ul>
    4. 4. 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>
    5. 5. 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>
    6. 6. The Promotional Mix <ul><li>Promotional Mix —combination of personal and nonpersonal selling techniques designed to achieve promotional objectives. </li></ul><ul><li>Personal Selling —interpersonal promotional process involving a seller’s face-to-face presentation to a prospective buyer. </li></ul><ul><li>Nonpersonal selling —consists of advertising, sales promotion, direct marketing, and public relations </li></ul>
    7. 7. <ul><li>Comparing the Components of the Promotional Mix </li></ul>
    8. 8. The Promotional Mix <ul><li>Objectives of Promotional Strategy </li></ul><ul><ul><li>Providing Information </li></ul></ul><ul><ul><li>Differentiating a Product </li></ul></ul><ul><ul><li>Increasing Sales </li></ul></ul><ul><ul><li>Stabilizing Sales </li></ul></ul><ul><ul><li>Accentuating the Product’s Value </li></ul></ul>
    9. 9. <ul><li>Five Major Promotional Objectives </li></ul>
    10. 10. 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>
    11. 11. 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>
    12. 12. 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>
    13. 13. 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><ul><ul><li>Guerrilla Marketing </li></ul></ul>
    14. 14. 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>
    15. 15. <ul><li>The 15 Largest Advertisers in the United States </li></ul>
    16. 16. Advertising <ul><li>Types of Advertising </li></ul><ul><ul><li>Product Advertising —consists of messages designed to sell a particular good or service </li></ul></ul><ul><ul><li>Institutional Advertising —involves messages that promote concepts, ideas, philosophies, or goodwill for industries, companies, organizations, or government entities </li></ul></ul>
    17. 17. Advertising <ul><li>Advocacy Advertising (Cause Advertising): promotes a specific viewpoint on a public issue as a way to influence public opinion and the legislative process </li></ul>
    18. 18. 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>
    19. 19. 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>
    20. 20. 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>
    21. 21. 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>
    22. 22. <ul><li>Advertising Media </li></ul>
    23. 23. 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>
    24. 24. 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>
    25. 25. 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>
    26. 26. 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>
    27. 27. 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>
    28. 28. 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>
    29. 29. 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>
    30. 30. 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>
    31. 31. 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>
    32. 32. 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>
    33. 33. Sales Promotion <ul><li>Consumer-Oriented Promotions </li></ul><ul><ul><li>Goals of a consumer-oriented sales promotion include: </li></ul></ul><ul><ul><ul><li>Getting new and existing customers to try or buy products </li></ul></ul></ul><ul><ul><ul><li>Encouraging repeat purchases by rewarding current users </li></ul></ul></ul><ul><ul><ul><li>Increasing sales of complementary products </li></ul></ul></ul><ul><ul><ul><li>Boosting impulse purchases </li></ul></ul></ul>
    34. 34. <ul><li>Spending on Consumer-Oriented Promotions </li></ul>
    35. 35. 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>
    36. 36. Sales Promotion <ul><li>Consumer-Oriented Promotions </li></ul><ul><ul><li>Games, Contests, and Sweepstakes </li></ul></ul><ul><ul><ul><li>Offering cash, merchandise or travel as prizes to participating winners </li></ul></ul></ul><ul><ul><ul><li>Often used to introduce new goods and services and to attract additional customers </li></ul></ul></ul><ul><ul><ul><li>Court rulings and legal restrictions have limited the use of contests </li></ul></ul></ul>
    37. 37. Sales Promotion <ul><li>Consumer-Oriented Promotions </li></ul><ul><ul><li>Promotional Products (Specialty advertising) </li></ul></ul><ul><ul><ul><li>Because these specialty advertising products are useful, people tend to keep and use them </li></ul></ul></ul><ul><ul><ul><li>Gives advertisers repeated exposure </li></ul></ul></ul><ul><ul><ul><li>Originally designed to identify and create goodwill for advertisers </li></ul></ul></ul><ul><ul><ul><li>Now generates sales leads and develops traffic for stores and trade show exhibitors. </li></ul></ul></ul>
    38. 38. Sales Promotion <ul><li>Trade-Oriented Promotions </li></ul><ul><ul><li>Trade promotion —sales promotion geared to marketing intermediaries </li></ul></ul><ul><ul><li>Used to encourage retailers to: </li></ul></ul><ul><ul><ul><li>Stock new products </li></ul></ul></ul><ul><ul><ul><li>Continue carrying existing ones </li></ul></ul></ul><ul><ul><ul><li>Promote products effectively to consumers. </li></ul></ul></ul>
    39. 39. Sales Promotion <ul><li>Trade-Oriented Promotions </li></ul><ul><ul><li>Point-of-purchase (POP) advertising— displays or demonstrations that promote products when and where consumers buy them </li></ul></ul><ul><ul><ul><li>Takes advantage of many shoppers’ tendencies to make purchase decisions in the store </li></ul></ul></ul><ul><ul><li>Trade shows —promote goods or services to intermediaries </li></ul></ul>
    40. 40. 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>
    41. 41. Personal Selling <ul><li>Sales Tasks </li></ul><ul><ul><li>Order Processing —selling, mostly at the wholesale and retail levels, that involves identifying customer needs, pointing them out to customers, and completing orders </li></ul></ul><ul><ul><li>Creative Selling —personal selling involving situations in which a considerable degree of analytical decision making on the buyer’s part results in the need for skillful proposals of solutions for the customer’s needs </li></ul></ul>
    42. 42. Personal Selling <ul><li>Sales Tasks </li></ul><ul><ul><li>Missionary Selling —indirect form of selling in which specialized salespeople promote goodwill among indirect customers, often by assisting customers in product use </li></ul></ul>
    43. 43. Personal Selling <ul><li>The Sales Process </li></ul><ul><ul><li>Seven Steps in the Sales Process </li></ul></ul>
    44. 44. Personal Selling <ul><li>The Sales Process </li></ul><ul><ul><li>Prospecting, Qualifying, and Approaching </li></ul></ul><ul><ul><ul><li>Prospecting involves identifying potential customers </li></ul></ul></ul><ul><ul><ul><li>Qualifying involves identifying potential customers who have the financial ability and authority to buy. </li></ul></ul></ul><ul><ul><ul><li>Before making the initial contact: </li></ul></ul></ul><ul><ul><ul><ul><li>Careful preparations are made </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Available data about a prospective customer and other pertinent information is analyzed </li></ul></ul></ul></ul>
    45. 45. Personal Selling <ul><li>The Sales Process </li></ul><ul><ul><li>Presentation and Demonstration </li></ul></ul><ul><ul><ul><li>Involves communicating promotional messages </li></ul></ul></ul><ul><ul><ul><li>Major features of the product, highlights of the advantages, and examples of satisfied consumers are typically presented </li></ul></ul></ul><ul><ul><ul><li>Involves the prospect in the sales presentation </li></ul></ul></ul><ul><ul><ul><li>Reinforces the message that the salesperson has been communicating </li></ul></ul></ul>
    46. 46. Personal Selling <ul><li>The Sales Process </li></ul><ul><ul><li>Handling Objections </li></ul></ul><ul><ul><ul><li>Allows sales personnel to remove obstacles and complete the sale </li></ul></ul></ul><ul><ul><ul><li>Can become a positive part of the sales process </li></ul></ul></ul><ul><ul><ul><li>Allows the salesperson to present additional information </li></ul></ul></ul>
    47. 47. Personal Selling <ul><li>The Sales Process </li></ul><ul><ul><li>Closing </li></ul></ul><ul><ul><ul><li>Critical point in a selling relationship— the time at which the salesperson actually asks the prospect to buy </li></ul></ul></ul><ul><ul><ul><li>If the presentation effectively matches product features to customer needs, the closing should be a natural conclusion. </li></ul></ul></ul>
    48. 48. Personal Selling <ul><li>The Sales Process </li></ul><ul><ul><li>Follow-up </li></ul></ul><ul><ul><ul><li>Salesperson’s actions after the sale may well determine whether the customer will make another purchase </li></ul></ul></ul><ul><ul><ul><li>Building a long-term relationship </li></ul></ul></ul><ul><ul><ul><li>By calling soon after a purchase, the salesperson provides psychological reinforcement for the customer’s decision to buy </li></ul></ul></ul><ul><ul><ul><li>Also gives the seller a chance to correct any problems </li></ul></ul></ul>
    49. 49. 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>
    50. 50. Personal Selling <ul><li>Recent Trends in Personal Selling </li></ul><ul><ul><li>Relationship Selling —when a salesperson builds a mutually beneficial relationship with a customer through regular contacts over an extended period </li></ul></ul><ul><ul><li>Consultative selling —meeting customers’ needs by listening to them, understanding and caring about their problems, paying attention to details, suggesting solutions, and following through after the sale </li></ul></ul>
    51. 51. Personal Selling <ul><li>Recent Trends in Personal Selling </li></ul><ul><ul><li>Team selling —joins salespeople with specialists from other functional areas of the firm to complete the selling process </li></ul></ul><ul><ul><li>Sales force automation (SFA)— incorporates a broad range of tools, from e-mail, telecommunications devices like pagers and cell phones, and laptop computers to increasingly sophisticated software systems that automate the sales process </li></ul></ul>
    52. 52. 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>
    53. 53. 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>
    54. 54. Promotional Strategies <ul><li>Pushing and Pulling Strategies </li></ul><ul><ul><li>Pushing strategy —promotional effort by a seller to members of the distribution channel intended to stimulate personal selling of the good or service, thereby pushing it through the channel </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>
    55. 55. Promotional Strategies <ul><li>Pushing and Pulling Strategies </li></ul><ul><ul><li>Pulling strategy —promotional effort by a seller to stimulate demand among final users, who will then exert pressure on the distribution channel to carry the good or service, pulling it through the distribution channel </li></ul></ul>
    56. 56. Ethics in Promotion <ul><li>Puffery and Deception </li></ul><ul><ul><li>Puffery —exaggerated claims of a product’s superiority or use of doubtful, subjective, or vague statements </li></ul></ul><ul><ul><li>Other promotional elements can also involve deception </li></ul></ul><ul><ul><ul><li>Salespeople have deceived customers with misleading information </li></ul></ul></ul>
    57. 57. Ethics in Promotion <ul><li>Promotion to Children and Teens </li></ul><ul><ul><li>Risk of deception is especially great with promotion targeted to children and teens </li></ul></ul><ul><ul><li>Children not sophisticated at analyzing promotional messages </li></ul></ul>
    58. 58. Ethics in Promotion <ul><li>Promotion in Public Schools and on College Campuses </li></ul><ul><ul><li>Includes promotional book covers, posters, and even curriculum materials provided to today’s schools </li></ul></ul><ul><ul><li>Some schools sign contracts that give certain brands exclusive access to their students </li></ul></ul><ul><ul><li>Can generate a backlash </li></ul></ul>
    59. 59. Price in the Marketing Mix <ul><li>Price —exchange value of a good or service. </li></ul><ul><li>Pricing Objectives </li></ul>
    60. 60. 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>
    61. 61. Price in the Marketing Mix <ul><li>Price to Meet Competition </li></ul><ul><ul><li>Seeks to meet competitors’ prices </li></ul></ul><ul><li>Prestige Objectives </li></ul><ul><ul><li>Prestige pricing encompasses the effect of price on prestige </li></ul></ul><ul><ul><li>Prestige pricing establishes a relatively high price to develop and maintain an image of quality and exclusiveness </li></ul></ul>
    62. 62. Pricing Strategies <ul><li>Price Determination in Practice </li></ul><ul><ul><li>Determined in two basic ways — </li></ul></ul><ul><ul><ul><li>By applying the theoretical concepts of supply and demand </li></ul></ul></ul><ul><ul><ul><li>By completing cost-oriented analyses </li></ul></ul></ul>
    63. 63. Pricing Strategies <ul><li>Price Determination in Practice </li></ul><ul><ul><li>Cost-based pricing —practice of adding a percentage of specific amounts (mark-up) to the base cost of a product to cover overhead costs and generate profits. </li></ul></ul>
    64. 64. <ul><li>The Markup Chain for a Hardcover Book </li></ul>
    65. 65. Pricing Strategies <ul><li>Breakeven Analysis —pricing technique used to determine the minimum sales volume a product must generate at a certain price level to cover all costs. </li></ul>Breakeven point Total Fixed Cost (in units) Contribution to Fixed Costs Per Unit Breakeven point Total Fixed Cost (in dollars) 1 – Variable Cost Per Unit/Price = =
    66. 66. <ul><li>Breakeven Analysis </li></ul>
    67. 67. Pricing Strategies <ul><li>Alternative Pricing Strategies </li></ul><ul><ul><li>Skimming pricing strategy —sets an intentionally high price relative to the prices of competing products </li></ul></ul><ul><ul><li>Penetration pricing strategy —sets a low price as a major marketing weapon </li></ul></ul>
    68. 68. Pricing Strategies <ul><li>Alternative Pricing Strategies </li></ul><ul><ul><li>Everyday Low Pricing and Discount Pricing —Strategy devoted to maintaining continuous low prices rather than relying on short-term price-cutting tactics </li></ul></ul><ul><ul><li>Competitive Pricing —product priced at the general level of competing offerings </li></ul></ul>
    69. 69. Consumer Perceptions of Prices <ul><li>Price-Quality Relationships </li></ul><ul><ul><li>Consumers’ perceptions of product quality is closely related to price </li></ul></ul><ul><ul><li>Most marketers believe that this perceived price-quality relationship holds over a relatively wide range of prices </li></ul></ul><ul><ul><li>In other situations, marketers establish price-quality relationships with comparisons that demonstrate a product’s value at the established price </li></ul></ul>
    70. 70. Consumer Perceptions of Prices <ul><li>Odd Pricing </li></ul><ul><ul><li>Odd pricing (charging $39.95 or $19.98 instead of $40 or 20) </li></ul></ul><ul><ul><li>Commonly-used retail practice, as many retailers believe that consumer favor uneven amounts </li></ul></ul>