Chapter 13: Promotion, Pricing

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Chapter 13: Promotion, Pricing

  1. 1. Chapter 13 Promotion and Pricing Strategies
  2. 2. Learning Objectives1 Discuss how integrated marketing 5 Outline the different types of pricing communications relates to a firm’s overall objectives. promotional strategy and explain the concept of a promotional mix along with 6 Discuss how firms set prices in the outlining the objectives of promotion. marketplace, and describe the four alternative pricing strategies.2 Summarize the different types of advertising and advertising media. 7 Discuss consumer perceptions of price.3 Outline the roles of sales promotion, personal selling, and public relations in a promotional strategy.4 Describe pushing and pulling promotional strategies.
  3. 3. Promotions Promotion is the function of informing, persuading, and influencing a purchase decision.s Integrated marketing communications (IMC) is the coordination of all promotional activities— media advertising, direct mail, personal selling, sales promotion, and public relations—to produce a unified, customer-focused message.
  4. 4. Integrated Marketing Communicationss Must take a broad view and plan for all form of customer contact.s Create unified personality and message for the good, service, or brand.s Elements include personal selling, advertising, sales promotion, publicity, and public relations.
  5. 5. Promotional Mixs Promotional mix- combination of personal and nonpersonal selling components designed to meet the needs of their firm’s target customers and effectively and efficiently communicate its message to them.s Personal selling- the most basic form of promotion: a direct person-to-person promotional presentation to a potential buyer.s Nonpersonal selling- advertising, sales promotion, direct marketing, and public relations.
  6. 6. Components of the Marketing Mix
  7. 7. Objectives of Promotional Strategies
  8. 8. Promotional Plannings Product placement- marketers pay placement fees to have their products showcased in various media, ranging from newspapers and magazines to television and movies.s Guerilla marketing- innovative, low-cost marketing efforts designed to get consumers’ attention in unusual ways.
  9. 9. Advertisings Advertising- paid nonpersonal communication usually targeted at large numbers of potential buyers. s Advertising expenditures are great– carmakers spend $20 billion per year. s Consumers are bombarded with many messages. s Firms need to be more and more creative and efficient at getting consumers’ attention.
  10. 10. Types of Advertisings Product advertising- messages designed to sell a particular good or services Institutional advertising- messages that promote concepts, ideas, philosophies, or goodwill for industries, companies, organizations, or government entitiess Cause advertising- institutional messaging that promotes a specific viewpoint on a public issue as a way to influence public opinion and the legislative process s Avon Foundation
  11. 11. Advertising and the Product Life Cycles Informative advertising- used to build initial demand for a product in the introductory phases Persuasive advertising- attempts to improve the competitive status of a product, institution, or concept, usually in the growth and maturity stagess Comparative advertising- compares products directly with their competitors either by name or by inferences Reminder-oriented advertising - appears in the late maturity or decline stages to maintain awareness of the importance and usefulness of a product
  12. 12. Advertising Media Pie
  13. 13. Types of Advertising s Magaziness Television s Consumer publications and trade s Easiest way to reach a large journals number of consumers s Can customize message for s Most expensive advertising different areas of the country medium s Direct Mails Newspapers s Average American receives 550 s Dominate local advertising pieces annually s Relatively short life span s High per person cost, but can bes Radio carefully targeted and highly effective s Commuters in cars are a captive audience s Outdoor Advertising s Internet radio offers new s $5.9 billion annually opportunities s Requires brief messages s Internet Advertising s Search engine marketing, display ads, classified ads
  14. 14. Types of Advertisings Online and Interactive Advertising s Viral advertising creates a message that is novel or entertaining enough for consumers to forward it to others, spreading it like a virus. s Many consumers resent the intrusion of pop-up ads that suddenly appear on their computer screen.s Sponsorship s Providing funds for a sporting or cultural event in exchange for a direct association with the event. s Benefits: exposure to target audience and association with image of the event.s Other Media Options s Marketers look for novel ways to reach customers: infomercials, ATM receipts, directory advertising.
  15. 15. Sales Promotions Sales promotion consists of forms of promotion such as coupons, product samples, and rebates that support advertising and personal selling.
  16. 16. Customer-Oriented Promotionss Premiums, Coupons, Rebates, Samples s Coupons attract new customers but focus on price rather than brand loyalty. s Rebates increase purchase rates, promote multiple purchases, and reward product users. s Three of every four consumers who receive a sample will try it.s Games, Contests, and Sweepstakes s Introduction of new products. s Offer cash, merchandise, or travel as prizes to participating winners. s Subject to legal restrictions.s Specialty Advertising s Promotional items that prominently display a firm’s name, logo, or business slogan.
  17. 17. Trade-Oriented Promotionss Sales promotion geared to marketing intermediaries rather than to consumerss Encourage retailers: s To stock new products s To continue carrying existing ones s To promote both new and existing products effectively to consumers
  18. 18. Personal Sellings A person-to-person promotional presentation to a potential buyer s Many companies consider personal selling the key to marketing effectiveness. s A seller matches a firm’s goods or services to the needs of a particular client or customer. s Today, sales and sales-related jobs employ about 16 million U.S. workers. s Businesses often spend five to ten times as much on personal selling as on advertising.s Example: Selling to the government or military.
  19. 19. Sales Taskss Order Processing s Identifying customer needs, pointing out merchandise to meet them, and processing the orders Creative Selling s Promotes a good or service whose benefits are not readily apparent or whose purchase decision requires a close analysis of alternativess Missionary Selling s Indirect form of selling in which the representative promotes goodwill for a company or provides technical or operational assistance to the customers Telemarketing s Personal selling conducted entirely by telephone, which provides a firm’s marketers with a high return on their expenditures, an immediate response, and an opportunity for personalized two- way conversation
  20. 20. The Sales Process
  21. 21. Prospecting, Qualifying, and Approachings A good salesperson varies the sales process based on customers’ needs and responses.s Prospecting- identifying potential customerss Qualifying- identifying potential customerss Approaching- analyzing available data about a prospective customer’s product lines and other pertinent information
  22. 22. Presentation and DemonstrationPresentations Salespeople communicate promotional messages. They may describe the major features of their products, highlight the advantages, and cite examples of satisfied consumers.Demonstrations Reinforces the message that the salesperson has been communicating.
  23. 23. Handling Objections and Closings Use objections as an opportunity to answer questions and explain how the product will benefit the customer.s The closing is the critical point in the sales process.s Even if the sale is not made, the salesperson should regard the interaction as the beginning of a potential relationship.
  24. 24. Follow-Ups An important part of building a long-lasting relationship.s May determine whether the customer will make another purchase.
  25. 25. Public Relationss Public relations- a public organization’s communications and relationships with its various audiences. s Is an efficient, indirect communications channel for promoting products. It can publicize products and help create and maintain a positive image of the company.s Publicity- nonpersonal stimulation of demand for a good, service, place, idea, event, person, or organization by unpaid placement of information in print or broadcast media. s Good publicity can promote a firm’s positive image. s Negative publicity can cause problems.
  26. 26. Promotional Strategys Pushing strategy- relies on personal selling to market an item to wholesalers and retailers in a company’s distribution channels. s Companies promote the product to members of the marketing channel, not to end users.s Pulling strategy- promote a product by generating consumer demand for it, primarily through advertising and sales promotion appeals. s Potential buyers will request that their suppliers—retailers or local distributors—carry the product, thereby pulling it through the distribution channel.s Most marketing situations require combinations of push and pull strategiess Cooperative advertising- allowances provided by marketers in which they share the cost of local advertising of their firm’s product or product line with channel partners.
  27. 27. Pricing Objectives in theMarketing Mix
  28. 28. Pricing Objectivess Price- exchange value of a good or service.s Profitability objectives s Maximize profits by reducing costs. s Maintain price while reducing package size.s Volume objectives s Base pricing decisions on market share goals. s Pricing to meet competition s Meeting competitors’ price. s Competitors cannot legally work together to set prices. s Competition can result in a price war.
  29. 29. Pricing StrategiesPrestige Objectivess Establishing a relatively high price to develop and maintain an image of quality and exclusiveness.s Recognition of the role of price in communicating an overall image for the firm and its products.s Products that are limited in distribution or so popular that they become scarce generate their own prestige.
  30. 30. Cost-Based Pricings Formulas that calculate total costs per unit and then add markups to cover overhead costs and generate profits. s TOTAL COSTS PLUS MARKUPs Actual markup used varies by such factors as brand image and type of store. s Typical markup for clothing is determined by doubling the wholesale price (the cost to the merchant).
  31. 31. Break-Even Analysiss Breakeven analysis- pricing technique used to determine the minimum sales volume a product must generate at a certain price level to cover all costs.
  32. 32. Break-Even Analysis
  33. 33. Alternative Pricing Objectivess Skimming pricing s Setting an intentionally high price relative to the prices of competing products s Helps marketers set a price that distinguishes a firm’s high-end product from those of competitorss Penetration pricing s Setting a low price as a major marketing weapon s Often used with new productss Everyday low pricing and discount pricing s Maintaining continuous low prices rather than relying on short-term price-cutting tactics such as cents-off coupons, rebates, and special sales s Discount pricing - businesses hope to attract customers by dropping prices for a set period of times Competitive pricing s Reducing the emphasis on price competition by matching other firms’ prices s Concentrating marketing efforts on the product, distribution, and promotional elements of the marketing mix
  34. 34. Consumer Perceptions of Prices Price-quality relationships s Consumers’ perceptions of quality closely tied to price s High price = prestige and higher quality s Low price = less prestige and lower qualitys Odd pricing s Setting prices in uneven amounts or amounts that sound less than they really are s Example: $1.99 or $299

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