This document discusses various promotion strategies and elements. It covers the role of promotion in informing, persuading and reminding the market. The main promotional mix elements are described as personal selling, advertising, sales promotion, direct marketing and public relations. Considerations for choosing the right promotional element include the target market, product nature, product life cycle stage and budget. Both push and pull strategies are outlined. Methods for setting the promotional budget and measuring advertising effectiveness are also discussed.

1. MARK4210, 2014 Spring, L1/L2
MARK4210: Strategic Marketing
2014 Spring, Section L1/L2
[Class #18]
Promotion Strategies

2. 2
MARK4210, 2014 Spring, L1/L2
Communicating
Promotion
Communicating
value
Creating
Value
Product Price
Capturing
value
Distribution
Delivering
value
The Role of Promotion
 Inform, persuade & remind the market about the
organization and/or its products

3. 3
MARK4210, 2014 Spring, L1/L2
Promotional Mix Elements
Element Description
Personal
selling
Presenting a product to a prospective customer by a
firm’s sales representative, usually face-to-face; often
used for ‘purchasing’ intermediaries
Advertising
Paid, non-personal mass communication, in which the
sponsor is clearly identified; often used for end-users
Sales
promotion
Demand-stimulating activity designed to supplement
advertising and complement personal selling
Direct
Marketing
Directly selling goods to consumers rather than via
retailers – usually by direct-mail, telephone selling, or
the internet
Public
Relations
Planned communication effort by an organisation to
contribute to generally favourable attitudes and opinions
toward an organisation and its products
Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia

4. 4
MARK4210, 2014 Spring, L1/L2
Promotional Mix Elements (2)
Source: Integrated Marketing Communications and Direct Marketing, Kerin, Hartley, Rudelius, McGraw-Hill

5. 5
MARK4210, 2014 Spring, L1/L2
9-5
Choosing the Right Promotional
Element – Considerations (1)
1. The target market
 Household versus business customers
 Number and concentration of customers
 Determine customer’s readiness to buy (stage of
purchase behavior): Awareness  Knowledge 
Liking  Preference  Conviction  Purchase
Sources: Essential Marketing Skills, Peter Rix, McGraw Hill Australia; Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009

6. 6
MARK4210, 2014 Spring, L1/L2
9-5
Choosing the Right Promotional
Element – Considerations (2)
2. The nature of the product
 Durable versus non-durable
 Unit value of the product (purchase amount)
 Amount of product customization
 Amount of pre-sale and post-sale service required
 Perceived risks
Sources: Essential Marketing Skills, Peter Rix, McGraw Hill Australia; Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009

7. 7
MARK4210, 2014 Spring, L1/L2
9-5
Choosing the Right Promotional
Element – Considerations (3)
3. The stage of the product’s life cycle
 Market share
 Industry concentration
 Intensity of competition
 Product demand
4. Budget
Sources: Essential Marketing Skills, Peter Rix, McGraw Hill Australia; Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009

8. 8
MARK4210, 2014 Spring, L1/L2
Choosing the Right Promotional Mix
– Consumer Purchase Decision
PRE-PURCHASE
 Advertising is most
valuable
 Informs potential
customers about the
existence of the product
and the seller
PURCHASE
 Importance of personal
selling is highest
 Sales promotion can
encourage demand
POST-PURCHASE
 Personal contact after
the sale leads to buyer
satisfaction.
 Advertising & personal
selling helps reduce
post-purchase anxiety
Source: Integrated Marketing Communications and Direct Marketing, Kerin, Hartley, Rudelius, McGraw-Hill

9. 9
MARK4210, 2014 Spring, L1/L2
9-8
Push vs. Pull Strategy: Push
Strategy Characteristics
 Producer creates demand for product
 Aims promotional activity to channel member(s)
 Each channel member promotes to next channel
member
 Demand ‘pushed’ down distribution channel
 Consumer influenced by retailer’s advertising
Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia

10. 10
MARK4210, 2014 Spring, L1/L2
Push vs. Pull Strategy: Pull Strategy
Characteristics
 Producer creates demand for product
 Aims promotional activity directly at the consumer
 Consumer demands product from retailer
 Demand ‘pulled’ up the distribution channel
Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia

11. 11
MARK4210, 2014 Spring, L1/L2
Push versus Pull Strategy:
Illustration
Source: Integrated Marketing Communications and Direct Marketing, Kerin, Hartley, Rudelius, McGraw-Hill

12. 12
MARK4210, 2014 Spring, L1/L2
Push vs. Pull Strategy:
Considerations on When to Use
 Degree of brand loyalty
 Degree of brand differentiation
 Purchase behavior – planned or impulsive
 Whether sales assistance is needed in making the
choice/ purchase
Source: Marketing Management, Kotler & Keller, Pearson, 2012

13. 13
MARK4210, 2014 Spring, L1/L2
Setting the Promotional Budget
 Percentage of sales method
• Determine past or anticipated sales and apply a
percentage
 All available funds (or what can be afforded)
• Use all available funds on the promotional campaign
 Competitive Parity
• Match competition – promotions based on market share
of competitors, or actual expenditure if known
 Task or objective method (build-up)
• Determine needed promotion tasks or objectives
• Determine cost to perform tasks or meet objective
Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia

14. 14
MARK4210, 2014 Spring, L1/L2
Personal Selling: Sales Force
Strategic Considerations
 Priority/emphasis between maintaining existing
accounts versus converting new customers
 Increasing sales force productivity, e.g., leveraging
technology and innovative sales techniques
 Targeting the ‘right’ people in the customer
organization
 Sales force size
 Sales force motivation (financial, non-financial
incentives)
 Sales force supervision – includes territory
assignment, control, and communication
Source: Strategic Marketing Asia Edition, Jain & Haley, Cengage Learning, 2009

15. 15
MARK4210, 2014 Spring, L1/L2
Advertising: Types
 Consumer versus business advertising
 Emotional & rational vs informational
 Product versus institutional advertising
 Focus on particular product or brand, and
information and goodwill to company
 Stimulate demand for generic or specific brands
 Primary-demand versus selective-demand (brand)
advertising
Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia

16. 16
MARK4210, 2014 Spring, L1/L2
Advertising and the Product Life
Cycle
 Informative advertising
• Build initial demand during introductory phase of life cycle
 Persuasive advertising
• Improve the competitive status of a product, usually
during growth and maturity stages of product life cycle
 Comparative advertising
• Compares products directly with their competitors
 Reminder-oriented advertising
• Maintain awareness of the importance and usefulness of
a product, especially during late maturity or decline
stages of product life cycle
Source: Contemporary Business, David L. Kurtz, Louis E. Boone, Cengage Learning, 2009

17. 17
MARK4210, 2014 Spring, L1/L2
Advertising: Measuring Effectiveness
 Direct tests
• Measure or predict the sales volume stemming from an
advertising campaign
• Tabulate number of inquiries from a direct-response
campaign
 Indirect tests
• Measures something other than actual sales (e.g., recall
tests)
Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia

18. 18
MARK4210, 2014 Spring, L1/L2
Sales Promotions: Considerations
 What are our promotional objectives?
 Who is our target market?
 Can our product be sampled?
 What will it cost to use the right promotional tool?
 What is the current economic condition?
Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia

19. 19
MARK4210, 2014 Spring, L1/L2
Sales Promotions: Consumer-
oriented
 Premiums, Coupons, Rebates, Samples
• Coupons attract customers but focus on price rather than
brand loyalty
• Rebates increase purchase rates, promote multiple
purchases, and reward product users
 Games, Contests, and Sweepstakes
• Introduction of new products
• Subject to legal restrictions
 Specialty Advertising
• Gift of useful merchandise carrying the name, logo, or
slogan of an organization
Source: Contemporary Business, David L. Kurtz, Louis E. Boone, Cengage Learning, 2009

20. 20
MARK4210, 2014 Spring, L1/L2
Sales Promotions: Trade-oriented
 Sales promotions geared to distribution
intermediaries (NOT consumers)
 Objectives:
• To encourage stocking of new products
• To encourage continued stocking of existing products
• To encourage (sometimes “pressure”) intermediaries to
promote products to consumers
Source: Contemporary Business, David L. Kurtz, Louis E. Boone, Cengage Learning, 2009

21. 21
MARK4210, 2014 Spring, L1/L2
Public Relations: Examples
 Supporting charitable projects
 Supplying volunteers or other resources
 Participating in community-service events
 Sponsorship
 Providing information to customers via newsletters.
 Publicity can be achieved by:
• structured news-release to the media
• coordinating personal communication with a group
• coordinating one-to-one personal communication
(lobbying)
Source: Essential Marketing Skills, Peter Rix, McGraw Hill Australia

22. 22
MARK4210, 2014 Spring, L1/L2
Announcements & Reminders
 PharmaSim Team Live Play Round 1 ends April 14 @8pm
• Round 1 data/results will be erased (!), make sure you
download/record beforehand
 PharmaSim Team Live Play Round 2
• Starts April 22 @ 7am – Ends May 8 @ 8pm
• NO replay, NO restarts, NO consultation
• In-class team discussions on April 25 (Fri) & April 30 (Wed),
LSKG005 -- NO consultations; attendance checked
 PharmaSim Final Report – email to dtlim@ust.hk (copy all
members) by May 9 class
 Guest Speaker on April 23 (Wed), 7-820pm, LTB
• Mr. Larry CHAN, Digital Marketing Manager, L’Oreal
• Attendance checked (or valid documented excuse)
• Replaces afternoon session (no class)