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Promotion and Pricing Strategies

This document provides an overview of Chapter 14 which discusses promotion and pricing strategies. It outlines the learning goals which include explaining integrated marketing communications and the promotional mix. It also summarizes different types of advertising, sales promotion, personal selling, and public relations. Pricing strategies and how firms set prices are also covered.

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Chapter 14 Promotion and Pricing Strategies Learning Goals Discuss how integrated marketing communications relates to a firm’s overall promotion strategy. Explain promotional mix and outline the objectives of promotion. Summarize the different types of advertising and advertising media. Outline the roles of sales promotion, personal selling, and public relations. Describe pushing and pulling promotional strategies. Discuss the major ethical issues involved in promotion. Outline the different types of pricing strategies. Discuss how firms set prices in the marketplace, and describe the four alter- native pricing strategies. Discuss consumer perceptions of price. 1 2 3 4 5 6 7 8 9
15-2 Chapter OverviewChapter Overview  PromotionPromotion: function of informing, persuading, and influencing the consumer’s purchase decision  MarketingMarketing CommunicationsCommunications: transmission from a sender to a receiver of a message dealing with the buyer-seller relationship
15-3 Integrated Marketing CommunicationsIntegrated Marketing Communications  Coordination of all promotional activities – media advertising, direct mail, personal selling, sales promotion, and public relations – to produce a unified customer-focused promotional message Success of any IMC program depends critically on identifying the members of an audience and understanding what they want
15-4  Importance of TeamworkImportance of Teamwork IMC requires a total strategy including all marketing activities, not just promotion Successful implementation of IMC requires that everyone involved in every aspect of promotion – public relations, advertising, personal selling, and sales promotion – function as a team
15-6 Chrysler Crossfire: Using a Web Site and a Toll-free Number in an IMC Campaign
15-7 • Role of Databases in Effective IMCRole of Databases in Effective IMC ProgramsPrograms – With the growth of the Internet, marketers have been given the power to gather information faster and to organize it easier than ever before – By sharing this knowledge appropriately among all relative parties, a firm can lay the foundation for a successful IMC program
15-8 The Communications Process • An effective promotional message accomplishes three tasks: – It gains the receiver’s attention – It achieves understanding by both receiver and sender – It stimulates the receiver’s needs and suggests an appropriate method of satisfying them
The Top 5The Top 5 Airlines!Airlines! Traveler Magazine FlynnFlynn The bikesThe bikes the prosthe pros use.use. 25% Off Coupon • AdvertisingAdvertising • Personal sellingPersonal selling • PublicityPublicity • Sales promotionSales promotion Communication Techniques
Promotional MixPromotional Mix
Purposes of PromotionPurposes of Promotion To tell consumers about a company’sTo tell consumers about a company’s …… GoodsGoodsServicesServicesImagesImagesIdeasIdeas
Purposes of PromotionPurposes of Promotion To persuade consumers to buyTo persuade consumers to buy
Promotion’s Recipe for Success: Mix various communication activities together and serve to potential customers until desired outcome is achieved.
The Combination, or Blend, ofThe Combination, or Blend, of Marketing Communication Channels IsMarketing Communication Channels Is Called the...Called the...
ImportanceImportance of theof the PromotionalPromotional MixMix • Plays a key role in obtainingPlays a key role in obtaining and keeping customersand keeping customers • Enables businesses toEnables businesses to communicate effectively withcommunicate effectively with customerscustomers • Informs consumers aboutInforms consumers about goods/services and persuadesgoods/services and persuades them to buythem to buy
THE PROMOTIONAL MIX Promotional mix Combination of personal and no personal selling techniques designed to achieve promotional objectives. Personal selling Interpersonal promotional process involving a seller’s face-to- face presentation to a prospective buyer. • No personal selling Advertising, sales promotion, direct marketing, and public relations.
Major Decisions in Advertising Objectives SettingObjectives Setting Budget DecisionsBudget Decisions Message DecisionsMessage Decisions Media DecisionsMedia Decisions Campaign EvaluationCampaign Evaluation
Informative Advertising Build Primary Demand Informative Advertising Build Primary Demand Persuasive Advertising Build Selective Demand Persuasive Advertising Build Selective Demand Comparison Advertising Compares One Brand to Another Comparison Advertising Compares One Brand to Another Reminder Advertising Keeps Consumers Thinking About a Product. Reminder Advertising Keeps Consumers Thinking About a Product. Advertising Objectives • Specific Communication Task • Accomplished with a Specific Target Audience • During a Specific Period of Time
Advertising and the Product Life Cycle • Informative advertising Used to build initial demand for a product in the introductory phase of the product life cycle. • 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-fal fairness treatment • Comparative advertising Compares products directly with their competitors either by name or by inference. • Reminder-oriented advertising Appears in the late maturity or decline stages of the product life cycle to maintain awareness of the importance and usefulness of a product. -Telco call rate ad
The Five Ms of Advertising Mission Sales goals Adver- tising objectives Money Factors to consider: Stage in PLC Market share and con- sumer base Competition and clutter Advertising frequency Product substituta- bility Message Message generation Message evaluation and selection Message execution Social-responsibility review Media Reach, frequency, impact Major media types Specific media vehicles Media timing Geographical media allocation Measure- ment Communi- cation impact Sales impact
Advertising Budget Factors Stage in the Product Life Cycle Market Share & Consumer Base Competition & Clutter Advertising Frequency Product Substitutability
Typical Message Execution Styles Typical Message Execution Styles Testimonial Evidence Testimonial Evidence Slice of LifeSlice of Life Scientific Evidence Scientific Evidence LifestyleLifestyle Technical Expertise Technical Expertise FantasyFantasy MusicalMusical Personality Symbol Personality Symbol Mood or Image Mood or Image Turning the “Big Idea” Into an Actual Ad to Capture the Target Market’s Attention and Interest. Advertising Strategy-Message Execution
Advertising Program EvaluationAdvertising Program Evaluation Communication Effects Is the Ad Communicating Well? Communication Effects Is the Ad Communicating Well? Advertising Evaluation Sales Effects Is the Ad Increasing Sales? Sales Effects Is the Ad Increasing Sales?
Objectives of Promotional Strategy
Providing Information • Major portion of U.S. advertising provides information about a product. Differentiating a Product • Communicate to buyers meaningful distinctions about the attributes, price, quality, or use of a good or service. Increasing Sales • Most common objective of a promotional strategy. Stabilizing Sales • Stable sales evens out the production cycle, reduces some management and production costs, and simplifies financial, purchasing, and marketing planning. Accentuating the Product’s Value • Explaining hidden benefits of ownership.
Promotional Planning • Product placement Marketers pay placement fees to have their products showcased in various media, ranging from newspapers and magazines to television and movies. • Guerilla marketing Innovative, low-cost marketing efforts designed to get consumers’ attention in unusual ways.
ADVERTISING Advertising Paid nonpersonal communication delivered through various media and designed to inform, persuade, or remind members of a particular audience. • Consumers receive 3,500 to 5,000 marketing messages each day. • Television networks earn $22 billion annually from advertising.
• In U.S., automotive, retail, and communications companies spend nearly $4 billion annually on advertising.
Types of Advertising • Product advertising Messages designed to sell a particular good or service. • Institutional advertising Messages that promote concepts, ideas, philosophies, or goodwill for industries, companies, organizations, or government entities. • Cause advertising Form of institutional messaging that promotes a specific viewpoint on a public issue as a way to influence public opinion and the legislative process.
Advertising Media • All media offer advantages and disadvantages
Television • Easiest way to reach a large number of consumers. • Variety of channels on cable and satellite networks allows advertisers to target specialized markets and demographics. • Most expensive advertising medium. Newspapers • Dominate local advertising. • Easy to coordinate with other promotional efforts. • Relatively short life span. Radio • Average household owns five radios. • Commuters in cars are a captive audience. • Satellite radio offers new opportunities.
Magazines • Consumer publications and trade journals. • May be able to customize message for different areas of the country. Direct Mail • Average American receives 550 pieces annually, including 100 catalogs. • High per person cost, but can be carefully targeted and highly effective. • Direct Marketing Association helps marketers combat negative attitudes by offering its members guidelines on ethical business practices. Outdoor Advertising • $3.2 billion annually, majority for billboards. • Requires brief messages. • Can be opposed by preservation and conservation groups.
Online and Interactive Advertising • Viral advertising Creates a message that is novel or entertaining enough for consumers to forward it to others, spreading it like a virus. • Spreading the word costs the advertiser nothing. • Not all online advertising is well received. • Many consumers resent the intrusion of pop-up ads that suddenly appear on their computer screen. Sponsorship • Providing funds for a sporting or cultural event in exchange for a direct association with the event. • Benefits: Exposure to target audience and association with image of the event. Other Media Options • Marketers look for novel ways to reach customers. • Examples: infomercials, ATM receipts, directory advertising.
SALES PROMOTION Sales promotion Nonpersonal marketing activities other than advertising, personal selling, and public relations that stimulate consumer purchasing and dealer effectiveness.
Why the increase in Sales Promotion? • Growing retailer power • Declining brand loyalty • Increased promotional sensitivity • Brand proliferation • Fragmentation of consumer market • Short-term focus • Increased managerial accountability • Competition • Clutter
Consumer Promotion Consumer-Promotion Objectives Consumer-Promotion Tools Point-of-Purchase Displays Point-of-Purchase Displays PremiumsPremiums Price PacksPrice Packs Cash RefundsCash Refunds CouponsCoupons SamplesSamples Patronage Rewards GamesGames SweepstakesSweepstakes ContestsContests Advertising Specialties Advertising Specialties Patronage Rewards Entice Consumers to Try a New Product Entice Consumers to Try a New Product Lure Customers Away From Competitors’ Products Lure Customers Away From Competitors’ Products Get Consumers to “Load Up’ on a Mature Product Get Consumers to “Load Up’ on a Mature Product Hold & Reward Loyal Customers Hold & Reward Loyal Customers Consumer Relationship Building Consumer Relationship Building
Consumer-Oriented Promotions Premiums, Coupons, Rebates, Samples • Two of every five promotion dollars are spent on premiums, items given free or at reduced price with the purchase of another product. • Coupons attract new customers but focus on price rather than brand loyalty. • Rebates increase purchase rates, promote multiple purchases, and reward product users. • Three of every four consumers who receive a sample will try it. Games, Contest, and Sweepstakes • Often used to introduce new goods and attract new customers. • Subject to legal restrictions. Specialty Advertising • Gift of useful merchandise carrying the name, logo, or slogan of an organization.-key ring, tea shirt, bag etc
Trade-Promotion Objectives Trade-Promotion Tools Specialty Advertising Items Specialty Advertising ItemsContestsContests Free GoodsFree Goods Buy-Back Guarantees Buy-Back Guarantees AllowancesAllowances Price-OffsPrice-Offs Patronage Rewards Push MoneyPush Money DiscountsDiscounts PremiumsPremiums Displays Persuade Retailers or Wholesalers to Carry a Brand Persuade Retailers or Wholesalers to Carry a Brand Give a Brand Shelf SpaceGive a Brand Shelf Space Promote a Brand in Advertising Promote a Brand in Advertising Push a Brand to ConsumersPush a Brand to Consumers Trade Promotions
Trade-Oriented Promotions • Sales promotion geared to marketing intermediaries rather than to consumers. • Encourage retailers in several ways: • To stock new products. • To continue carrying existing ones. • To promote both new and existing products effectively to consumers. • Point-of-purchase (POP) advertising Displays or demonstrations that promote products when and where consumers buy them, such as in retail stores. • Promote goods and services at trade shows.
Business-Promotion Objectives Business-Promotion Tools Generate Business LeadsGenerate Business Leads Stimulate PurchasesStimulate Purchases Reward CustomersReward Customers Motivate SalespeopleMotivate Salespeople ConventionsConventions Trade ShowsTrade Shows Sales ContestsSales Contests Business-to-Business Promotion
When might you decide to use Personal Selling? • Tight budget (straight commission) • Concentrated Market – Few buyers – High value product • Product must be customized • Personal contact important • Must demonstrate product • Product involves trade-in/up
Personal SellingPersonal Selling Determines client needs/wants and respondsDetermines client needs/wants and responds through planned, personalized communicationthrough planned, personalized communication that influences purchase decisions and enhancesthat influences purchase decisions and enhances future business opportunitiesfuture business opportunities Are you planning on replacing all of your computers at once? My budget won’t allow me to replace them all at once, but I want them to be compatible. You might want to consider leasing computers. You can get free service and upgrade to a newer model whenever you want!
PERSONAL SELLING • A person-to-person promotional presentation to a potential buyer. • Usually used under four conditions: • Customers are relatively few in number and geographically concentrated. • The product is technically complex, involves trade-ins, and requires special handling. • The product carries a relatively high price. • It moves through direct-distribution channels. • Example: Selling to the government or military.
Selling Advantages • Immediate feedbackImmediate feedback • FlexibilityFlexibility I like the sound of this stereo, but I think it’s a little large for my dorm room. We do carry a bookshelf model with similar sound quality. Selling Disadvantage On a per contact basis,On a per contact basis, selling is the most expensiveselling is the most expensive form of promotion.form of promotion.
Sales Tasks • All involve assisting customers in some way. Order Processing • Identifying customer needs, pointing out merchandise to meet them, and processing the order. Creative Selling • Promoting a good or service whose benefits are not readily apparent or whose purchase decision requires a close analysis of alternatives. Missionary Selling • Representative promotes goodwill for a company or provides technical or operational assistance to the customer. Telemarketing • Personal selling conducted by telephone; regulated by the Federal Trade Commission’s 1996 Telemarketing Sales Rule.
The Sales Process
The Sales Process • A good salesperson varies the sales process based on customers’ needs and responses. Prospecting, Qualifying, and Approaching • Prospecting Identifying potential customers. • Qualifying Identifying potential customers who have the financial ability and authority to buy. • Approaching Make careful preparations, analyzing available data about a prospective customer’s product lines and other pertinent information before making the initial contact.
The Sales Process • A good salesperson varies the sales process based on customers’ needs and responses. Presentation and Demonstration • Presentation Salespeople communicate promotional messages. They may describe the major features of their products, highlight the advantages, and cite examples of satisfied consumers. • Demonstration Reinforces the message that the salesperson has been communicating.
The Sales Process • A good salesperson varies the sales process based on customers’ needs and responses. Handling Objections • Use objections as an opportunity to answer questions and explain how the product will benefit the customer.
The Sales Process • A good salesperson varies the sales process based on customers’ needs and responses. Closing • The time at which the salesperson actually asks the prospect to buy. • Even if the sale is not made, the salesperson should regard the interaction as the beginning of a potential relationship.
The Sales Process • A good salesperson varies the sales process based on customers’ needs and responses. Follow-Up • An important part of building a long-lasting relationship. • May determine whether the customer will make another purchase.
Public Relations Public relations Public organization’s communications and relationships with its various audience. • Helps a firm establish awareness of goods and services and builds a positive image of them. Publicity Publicity Stimulation of demand for a good, service, place, idea, person, or organization by disseminating news or obtaining favorable unpaid media presentations. • Good publicity can promote a firm’s positive image • Negative publicity can cause problems.
PROMOTIONAL STRATEGY Pushing and Pulling Strategies • Pushing strategy Relies on personal selling to market an item to wholesalers and retailers in a company’s distribution channels. • Companies promote the product to members of the marketing channel, not to end users. • Pulling strategy Promote a product by generating consumer demand for it, primarily through advertising and sales promotion appeals. • Potential buyers will request that their suppliers—retailers or local distributors—carry the product, thereby pulling it through the distribution channel. • Most marketing situations require combinations of pushing and pulling strategies, although the primary emphasis can vary.
ETHICS IN PROMOTION Puffery and Deception • Puffery Exaggeration about the benefits or superiority of a product. • Legal because it doesn’t guarantee anything but raises ethical questions. • May ultimately undermine the credibility of a firm’s marketing messages. • Deception Deliberately making promises that are untrue, such as guaranteed weight loss in five days, get-rich- quick schemes for would-be entrepreneurs, or promised return on investments.
Promotion to Children and Teens • Children and teens have enormous purchasing power. • Children cannot analyze advertising messages. • Can be socially responsible (e.g., healthy products). Promotion in Public Schools and on College Campuses • College students have $122 billion in buying power.
Mass media exposure Source: NMS Study TV is still a growing media
Cable TV Connection CnS Penetration Trend in TV owning Households Year Urban Rural All 2005 34.10% 7.20% 20.60% 2008 52.70% 21.10% 34.70% 2010 75.00% 37.00% 53.80% Upcoming Channels
• Bangladesh Beter – Many substations (Ka, Kha etc.) – Signal (Recent FM Version of Bangladesh Beter) • Radio Forti – Dhaka Sylhet Rajshahi – Chittagong Khulna Barishal – Cox’s Bazar Rajshahi • Radio Today – Dhaka Chittagong – Sylhet Khulna – Bogra Cox’s Bazar • Radio Amar - • ABC Radio • Radio Shadhin FM is growing
Print at a glance Newspaper : 297  National : 101  Regional : 196 Magazines : 174  Monthly : 30  Fort-nightly : 20  Weekly : 122 Source: Dept. of Film & Publications; NMS’10 Print reach is 28.1% Both male & female readership has increased
Team Unilever 63 2.7 million Top Local Websites Digital is the fastest growing Media Facebook is phenomenally popular among the online users
PRICING OBJECTIVES IN THE MARKETING MIX Price Exchange value of a good or service.
Profitability Objectives • Most common objective. • Some maximize profits by reducing costs rather than raising costs. • Sometimes maintain price while reducing package size or amount of product. Volume Objectives • Bases pricing decisions on market share goals.
Pricing to Meet Competition • Meeting competitors’ price so price becomes a nonissue in the buying decision. • Competitors cannot legally work together to set prices. • Competition can result in a price war. Prestige Objectives • Establishing a relatively high price to develop and maintain an image of quality and exclusiveness. • Recognition of the role of price in communicating an overall image for the firm and its products.
PRICING STRATEGIES • Pricing is influenced by people in different areas of a company. Price Determination in Practice Cost-based pricing Adding a percentage (markup) to the base cost of a product to cover overhead costs and generate profits. • Actual markup used varies by such factors as brand image and type of store. • Example: Typical clothing markup by retailers is double the wholesaler price.
Breakeven Analysis Breakeven analysis Pricing technique used to determine the minimum sales volume a product must generate at a certain price level to cover all costs. Finding the Breakeven Point
Breakeven Analysis Breakeven analysis Pricing technique used to determine the minimum sales volume a product must generate at a certain price level to cover all costs. Finding the Breakeven Point
Breakeven Analysis Breakeven analysis Pricing technique used to determine the minimum sales volume a product must generate at a certain price level to cover all costs. Finding the Breakeven Point
Alternative Pricing Strategies Skimming Pricing • Setting an intentionally high price relative to the prices of competing products. • Helps marketers set a price that distinguishes a firm’s high-end product from those of competitors. • Helps a firm recover its product development costs before competitors enter the field. Penetration Pricing • Setting a low price as a major marketing weapon. • Often used with new products.
Everyday Low Pricing and Discount Pricing • ELP Maintaining continuous low prices rather than relying on short-term price- cutting tactics such as cents-off coupons, rebates, and special sales. • Discount pricing Attracting customers by dropping prices for a set period of time. • Helps a firm recover its product development costs before competitors enter the field. Competitive Pricing • Reducing the emphasis on price competition by matching other firms’ prices. • Concentrate marketing efforts on the product, distribution, and promotional elements of the marketing mix.
CONSUMER PERCEPTIONS OF PRICE Price-Quality Relationships • Consumers’ perceptions of quality closely tied to price. • High price = prestige and higher quality. • Low price = less prestige and lower quality. Odd Pricing • Setting prices in uneven amounts or amounts that sound less than they really are. • Example: $1.99 or $299. • Also used as a signal a product is on sale.

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Promotion and Pricing Strategies

  • 1.
    Chapter 14 Promotion andPricing Strategies Learning Goals Discuss how integrated marketing communications relates to a firm’s overall promotion strategy. Explain promotional mix and outline the objectives of promotion. Summarize the different types of advertising and advertising media. Outline the roles of sales promotion, personal selling, and public relations. Describe pushing and pulling promotional strategies. Discuss the major ethical issues involved in promotion. Outline the different types of pricing strategies. Discuss how firms set prices in the marketplace, and describe the four alter- native pricing strategies. Discuss consumer perceptions of price. 1 2 3 4 5 6 7 8 9
  • 2.
    15-2 Chapter OverviewChapter Overview PromotionPromotion: function of informing, persuading, and influencing the consumer’s purchase decision  MarketingMarketing CommunicationsCommunications: transmission from a sender to a receiver of a message dealing with the buyer-seller relationship
  • 3.
    15-3 Integrated Marketing CommunicationsIntegratedMarketing Communications  Coordination of all promotional activities – media advertising, direct mail, personal selling, sales promotion, and public relations – to produce a unified customer-focused promotional message Success of any IMC program depends critically on identifying the members of an audience and understanding what they want
  • 4.
    15-4  Importance ofTeamworkImportance of Teamwork IMC requires a total strategy including all marketing activities, not just promotion Successful implementation of IMC requires that everyone involved in every aspect of promotion – public relations, advertising, personal selling, and sales promotion – function as a team
  • 6.
    15-6 Chrysler Crossfire: Usinga Web Site and a Toll-free Number in an IMC Campaign
  • 7.
    15-7 • Role ofDatabases in Effective IMCRole of Databases in Effective IMC ProgramsPrograms – With the growth of the Internet, marketers have been given the power to gather information faster and to organize it easier than ever before – By sharing this knowledge appropriately among all relative parties, a firm can lay the foundation for a successful IMC program
  • 8.
    15-8 The Communications Process •An effective promotional message accomplishes three tasks: – It gains the receiver’s attention – It achieves understanding by both receiver and sender – It stimulates the receiver’s needs and suggests an appropriate method of satisfying them
  • 9.
    The Top 5TheTop 5 Airlines!Airlines! Traveler Magazine FlynnFlynn The bikesThe bikes the prosthe pros use.use. 25% Off Coupon • AdvertisingAdvertising • Personal sellingPersonal selling • PublicityPublicity • Sales promotionSales promotion Communication Techniques
  • 10.
  • 11.
    Purposes of PromotionPurposesof Promotion To tell consumers about a company’sTo tell consumers about a company’s …… GoodsGoodsServicesServicesImagesImagesIdeasIdeas
  • 12.
    Purposes of PromotionPurposesof Promotion To persuade consumers to buyTo persuade consumers to buy
  • 13.
    Promotion’s Recipe for Success: Mixvarious communication activities together and serve to potential customers until desired outcome is achieved.
  • 14.
    The Combination, orBlend, ofThe Combination, or Blend, of Marketing Communication Channels IsMarketing Communication Channels Is Called the...Called the...
  • 15.
    ImportanceImportance of theof the PromotionalPromotional MixMix •Plays a key role in obtainingPlays a key role in obtaining and keeping customersand keeping customers • Enables businesses toEnables businesses to communicate effectively withcommunicate effectively with customerscustomers • Informs consumers aboutInforms consumers about goods/services and persuadesgoods/services and persuades them to buythem to buy
  • 16.
    THE PROMOTIONAL MIX Promotionalmix Combination of personal and no personal selling techniques designed to achieve promotional objectives. Personal selling Interpersonal promotional process involving a seller’s face-to- face presentation to a prospective buyer. • No personal selling Advertising, sales promotion, direct marketing, and public relations.
  • 17.
    Major Decisions inAdvertising Objectives SettingObjectives Setting Budget DecisionsBudget Decisions Message DecisionsMessage Decisions Media DecisionsMedia Decisions Campaign EvaluationCampaign Evaluation
  • 18.
    Informative Advertising Build PrimaryDemand Informative Advertising Build Primary Demand Persuasive Advertising Build Selective Demand Persuasive Advertising Build Selective Demand Comparison Advertising Compares One Brand to Another Comparison Advertising Compares One Brand to Another Reminder Advertising Keeps Consumers Thinking About a Product. Reminder Advertising Keeps Consumers Thinking About a Product. Advertising Objectives • Specific Communication Task • Accomplished with a Specific Target Audience • During a Specific Period of Time
  • 19.
    Advertising and theProduct Life Cycle • Informative advertising Used to build initial demand for a product in the introductory phase of the product life cycle. • 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-fal fairness treatment • Comparative advertising Compares products directly with their competitors either by name or by inference. • Reminder-oriented advertising Appears in the late maturity or decline stages of the product life cycle to maintain awareness of the importance and usefulness of a product. -Telco call rate ad
  • 20.
    The Five Msof Advertising Mission Sales goals Adver- tising objectives Money Factors to consider: Stage in PLC Market share and con- sumer base Competition and clutter Advertising frequency Product substituta- bility Message Message generation Message evaluation and selection Message execution Social-responsibility review Media Reach, frequency, impact Major media types Specific media vehicles Media timing Geographical media allocation Measure- ment Communi- cation impact Sales impact
  • 21.
    Advertising Budget Factors Stagein the Product Life Cycle Market Share & Consumer Base Competition & Clutter Advertising Frequency Product Substitutability
  • 22.
    Typical Message Execution Styles Typical Message Execution Styles Testimonial Evidence Testimonial Evidence Slice ofLifeSlice of Life Scientific Evidence Scientific Evidence LifestyleLifestyle Technical Expertise Technical Expertise FantasyFantasy MusicalMusical Personality Symbol Personality Symbol Mood or Image Mood or Image Turning the “Big Idea” Into an Actual Ad to Capture the Target Market’s Attention and Interest. Advertising Strategy-Message Execution
  • 23.
    Advertising Program EvaluationAdvertisingProgram Evaluation Communication Effects Is the Ad Communicating Well? Communication Effects Is the Ad Communicating Well? Advertising Evaluation Sales Effects Is the Ad Increasing Sales? Sales Effects Is the Ad Increasing Sales?
  • 25.
  • 26.
    Providing Information • Majorportion of U.S. advertising provides information about a product. Differentiating a Product • Communicate to buyers meaningful distinctions about the attributes, price, quality, or use of a good or service. Increasing Sales • Most common objective of a promotional strategy. Stabilizing Sales • Stable sales evens out the production cycle, reduces some management and production costs, and simplifies financial, purchasing, and marketing planning. Accentuating the Product’s Value • Explaining hidden benefits of ownership.
  • 27.
    Promotional Planning • Productplacement Marketers pay placement fees to have their products showcased in various media, ranging from newspapers and magazines to television and movies. • Guerilla marketing Innovative, low-cost marketing efforts designed to get consumers’ attention in unusual ways.
  • 29.
    ADVERTISING Advertising Paid nonpersonalcommunication delivered through various media and designed to inform, persuade, or remind members of a particular audience. • Consumers receive 3,500 to 5,000 marketing messages each day. • Television networks earn $22 billion annually from advertising.
  • 30.
    • In U.S.,automotive, retail, and communications companies spend nearly $4 billion annually on advertising.
  • 31.
    Types of Advertising •Product advertising Messages designed to sell a particular good or service. • Institutional advertising Messages that promote concepts, ideas, philosophies, or goodwill for industries, companies, organizations, or government entities. • Cause advertising Form of institutional messaging that promotes a specific viewpoint on a public issue as a way to influence public opinion and the legislative process.
  • 32.
    Advertising Media • Allmedia offer advantages and disadvantages
  • 33.
    Television • Easiest wayto reach a large number of consumers. • Variety of channels on cable and satellite networks allows advertisers to target specialized markets and demographics. • Most expensive advertising medium. Newspapers • Dominate local advertising. • Easy to coordinate with other promotional efforts. • Relatively short life span. Radio • Average household owns five radios. • Commuters in cars are a captive audience. • Satellite radio offers new opportunities.
  • 34.
    Magazines • Consumer publicationsand trade journals. • May be able to customize message for different areas of the country. Direct Mail • Average American receives 550 pieces annually, including 100 catalogs. • High per person cost, but can be carefully targeted and highly effective. • Direct Marketing Association helps marketers combat negative attitudes by offering its members guidelines on ethical business practices. Outdoor Advertising • $3.2 billion annually, majority for billboards. • Requires brief messages. • Can be opposed by preservation and conservation groups.
  • 35.
    Online and InteractiveAdvertising • Viral advertising Creates a message that is novel or entertaining enough for consumers to forward it to others, spreading it like a virus. • Spreading the word costs the advertiser nothing. • Not all online advertising is well received. • Many consumers resent the intrusion of pop-up ads that suddenly appear on their computer screen. Sponsorship • Providing funds for a sporting or cultural event in exchange for a direct association with the event. • Benefits: Exposure to target audience and association with image of the event. Other Media Options • Marketers look for novel ways to reach customers. • Examples: infomercials, ATM receipts, directory advertising.
  • 36.
    SALES PROMOTION Sales promotionNonpersonal marketing activities other than advertising, personal selling, and public relations that stimulate consumer purchasing and dealer effectiveness.
  • 37.
    Why the increasein Sales Promotion? • Growing retailer power • Declining brand loyalty • Increased promotional sensitivity • Brand proliferation • Fragmentation of consumer market • Short-term focus • Increased managerial accountability • Competition • Clutter
  • 38.
    Consumer Promotion Consumer-Promotion Objectives Consumer-Promotion Tools Point-of-Purchase Displays Point-of-Purchase Displays PremiumsPremiums Price PacksPricePacks Cash RefundsCash Refunds CouponsCoupons SamplesSamples Patronage Rewards GamesGames SweepstakesSweepstakes ContestsContests Advertising Specialties Advertising Specialties Patronage Rewards Entice Consumers to Try a New Product Entice Consumers to Try a New Product Lure Customers Away From Competitors’ Products Lure Customers Away From Competitors’ Products Get Consumers to “Load Up’ on a Mature Product Get Consumers to “Load Up’ on a Mature Product Hold & Reward Loyal Customers Hold & Reward Loyal Customers Consumer Relationship Building Consumer Relationship Building
  • 39.
    Consumer-Oriented Promotions Premiums, Coupons,Rebates, Samples • Two of every five promotion dollars are spent on premiums, items given free or at reduced price with the purchase of another product. • Coupons attract new customers but focus on price rather than brand loyalty. • Rebates increase purchase rates, promote multiple purchases, and reward product users. • Three of every four consumers who receive a sample will try it. Games, Contest, and Sweepstakes • Often used to introduce new goods and attract new customers. • Subject to legal restrictions. Specialty Advertising • Gift of useful merchandise carrying the name, logo, or slogan of an organization.-key ring, tea shirt, bag etc
  • 40.
    Trade-Promotion Objectives Trade-Promotion Tools Specialty Advertising Items Specialty Advertising ItemsContestsContests Free GoodsFree Goods Buy-Back Guarantees Buy-Back Guarantees AllowancesAllowances Price-OffsPrice-Offs Patronage Rewards PushMoneyPush Money DiscountsDiscounts PremiumsPremiums Displays Persuade Retailers or Wholesalers to Carry a Brand Persuade Retailers or Wholesalers to Carry a Brand Give a Brand Shelf SpaceGive a Brand Shelf Space Promote a Brand in Advertising Promote a Brand in Advertising Push a Brand to ConsumersPush a Brand to Consumers Trade Promotions
  • 41.
    Trade-Oriented Promotions • Salespromotion geared to marketing intermediaries rather than to consumers. • Encourage retailers in several ways: • To stock new products. • To continue carrying existing ones. • To promote both new and existing products effectively to consumers. • Point-of-purchase (POP) advertising Displays or demonstrations that promote products when and where consumers buy them, such as in retail stores. • Promote goods and services at trade shows.
  • 42.
    Business-Promotion Objectives Business-Promotion Tools Generate BusinessLeadsGenerate Business Leads Stimulate PurchasesStimulate Purchases Reward CustomersReward Customers Motivate SalespeopleMotivate Salespeople ConventionsConventions Trade ShowsTrade Shows Sales ContestsSales Contests Business-to-Business Promotion
  • 43.
    When might youdecide to use Personal Selling? • Tight budget (straight commission) • Concentrated Market – Few buyers – High value product • Product must be customized • Personal contact important • Must demonstrate product • Product involves trade-in/up
  • 44.
    Personal SellingPersonal Selling Determinesclient needs/wants and respondsDetermines client needs/wants and responds through planned, personalized communicationthrough planned, personalized communication that influences purchase decisions and enhancesthat influences purchase decisions and enhances future business opportunitiesfuture business opportunities Are you planning on replacing all of your computers at once? My budget won’t allow me to replace them all at once, but I want them to be compatible. You might want to consider leasing computers. You can get free service and upgrade to a newer model whenever you want!
  • 45.
    PERSONAL SELLING • Aperson-to-person promotional presentation to a potential buyer. • Usually used under four conditions: • Customers are relatively few in number and geographically concentrated. • The product is technically complex, involves trade-ins, and requires special handling. • The product carries a relatively high price. • It moves through direct-distribution channels. • Example: Selling to the government or military.
  • 46.
    Selling Advantages • ImmediatefeedbackImmediate feedback • FlexibilityFlexibility I like the sound of this stereo, but I think it’s a little large for my dorm room. We do carry a bookshelf model with similar sound quality. Selling Disadvantage On a per contact basis,On a per contact basis, selling is the most expensiveselling is the most expensive form of promotion.form of promotion.
  • 47.
    Sales Tasks • Allinvolve assisting customers in some way. Order Processing • Identifying customer needs, pointing out merchandise to meet them, and processing the order. Creative Selling • Promoting a good or service whose benefits are not readily apparent or whose purchase decision requires a close analysis of alternatives. Missionary Selling • Representative promotes goodwill for a company or provides technical or operational assistance to the customer. Telemarketing • Personal selling conducted by telephone; regulated by the Federal Trade Commission’s 1996 Telemarketing Sales Rule.
  • 48.
  • 49.
    The Sales Process •A good salesperson varies the sales process based on customers’ needs and responses. Prospecting, Qualifying, and Approaching • Prospecting Identifying potential customers. • Qualifying Identifying potential customers who have the financial ability and authority to buy. • Approaching Make careful preparations, analyzing available data about a prospective customer’s product lines and other pertinent information before making the initial contact.
  • 50.
    The Sales Process •A good salesperson varies the sales process based on customers’ needs and responses. Presentation and Demonstration • Presentation Salespeople communicate promotional messages. They may describe the major features of their products, highlight the advantages, and cite examples of satisfied consumers. • Demonstration Reinforces the message that the salesperson has been communicating.
  • 51.
    The Sales Process •A good salesperson varies the sales process based on customers’ needs and responses. Handling Objections • Use objections as an opportunity to answer questions and explain how the product will benefit the customer.
  • 52.
    The Sales Process •A good salesperson varies the sales process based on customers’ needs and responses. Closing • The time at which the salesperson actually asks the prospect to buy. • Even if the sale is not made, the salesperson should regard the interaction as the beginning of a potential relationship.
  • 53.
    The Sales Process •A good salesperson varies the sales process based on customers’ needs and responses. Follow-Up • An important part of building a long-lasting relationship. • May determine whether the customer will make another purchase.
  • 54.
    Public Relations Public relationsPublic organization’s communications and relationships with its various audience. • Helps a firm establish awareness of goods and services and builds a positive image of them. Publicity Publicity Stimulation of demand for a good, service, place, idea, person, or organization by disseminating news or obtaining favorable unpaid media presentations. • Good publicity can promote a firm’s positive image • Negative publicity can cause problems.
  • 55.
    PROMOTIONAL STRATEGY Pushing andPulling Strategies • Pushing strategy Relies on personal selling to market an item to wholesalers and retailers in a company’s distribution channels. • Companies promote the product to members of the marketing channel, not to end users. • Pulling strategy Promote a product by generating consumer demand for it, primarily through advertising and sales promotion appeals. • Potential buyers will request that their suppliers—retailers or local distributors—carry the product, thereby pulling it through the distribution channel. • Most marketing situations require combinations of pushing and pulling strategies, although the primary emphasis can vary.
  • 56.
    ETHICS IN PROMOTION Pufferyand Deception • Puffery Exaggeration about the benefits or superiority of a product. • Legal because it doesn’t guarantee anything but raises ethical questions. • May ultimately undermine the credibility of a firm’s marketing messages. • Deception Deliberately making promises that are untrue, such as guaranteed weight loss in five days, get-rich- quick schemes for would-be entrepreneurs, or promised return on investments.
  • 57.
    Promotion to Childrenand Teens • Children and teens have enormous purchasing power. • Children cannot analyze advertising messages. • Can be socially responsible (e.g., healthy products). Promotion in Public Schools and on College Campuses • College students have $122 billion in buying power.
  • 59.
    Mass media exposure Source:NMS Study TV is still a growing media
  • 60.
    Cable TV Connection CnSPenetration Trend in TV owning Households Year Urban Rural All 2005 34.10% 7.20% 20.60% 2008 52.70% 21.10% 34.70% 2010 75.00% 37.00% 53.80% Upcoming Channels
  • 61.
    • Bangladesh Beter –Many substations (Ka, Kha etc.) – Signal (Recent FM Version of Bangladesh Beter) • Radio Forti – Dhaka Sylhet Rajshahi – Chittagong Khulna Barishal – Cox’s Bazar Rajshahi • Radio Today – Dhaka Chittagong – Sylhet Khulna – Bogra Cox’s Bazar • Radio Amar - • ABC Radio • Radio Shadhin FM is growing
  • 62.
    Print at aglance Newspaper : 297  National : 101  Regional : 196 Magazines : 174  Monthly : 30  Fort-nightly : 20  Weekly : 122 Source: Dept. of Film & Publications; NMS’10 Print reach is 28.1% Both male & female readership has increased
  • 63.
    Team Unilever 63 2.7million Top Local Websites Digital is the fastest growing Media Facebook is phenomenally popular among the online users
  • 64.
    PRICING OBJECTIVES INTHE MARKETING MIX Price Exchange value of a good or service.
  • 65.
    Profitability Objectives • Mostcommon objective. • Some maximize profits by reducing costs rather than raising costs. • Sometimes maintain price while reducing package size or amount of product. Volume Objectives • Bases pricing decisions on market share goals.
  • 66.
    Pricing to MeetCompetition • Meeting competitors’ price so price becomes a nonissue in the buying decision. • Competitors cannot legally work together to set prices. • Competition can result in a price war. Prestige Objectives • Establishing a relatively high price to develop and maintain an image of quality and exclusiveness. • Recognition of the role of price in communicating an overall image for the firm and its products.
  • 67.
    PRICING STRATEGIES • Pricingis influenced by people in different areas of a company. Price Determination in Practice Cost-based pricing Adding a percentage (markup) to the base cost of a product to cover overhead costs and generate profits. • Actual markup used varies by such factors as brand image and type of store. • Example: Typical clothing markup by retailers is double the wholesaler price.
  • 68.
    Breakeven Analysis Breakeven analysisPricing technique used to determine the minimum sales volume a product must generate at a certain price level to cover all costs. Finding the Breakeven Point
  • 69.
    Breakeven Analysis Breakeven analysisPricing technique used to determine the minimum sales volume a product must generate at a certain price level to cover all costs. Finding the Breakeven Point
  • 70.
    Breakeven Analysis Breakeven analysisPricing technique used to determine the minimum sales volume a product must generate at a certain price level to cover all costs. Finding the Breakeven Point
  • 71.
    Alternative Pricing Strategies SkimmingPricing • Setting an intentionally high price relative to the prices of competing products. • Helps marketers set a price that distinguishes a firm’s high-end product from those of competitors. • Helps a firm recover its product development costs before competitors enter the field. Penetration Pricing • Setting a low price as a major marketing weapon. • Often used with new products.
  • 72.
    Everyday Low Pricingand Discount Pricing • ELP Maintaining continuous low prices rather than relying on short-term price- cutting tactics such as cents-off coupons, rebates, and special sales. • Discount pricing Attracting customers by dropping prices for a set period of time. • Helps a firm recover its product development costs before competitors enter the field. Competitive Pricing • Reducing the emphasis on price competition by matching other firms’ prices. • Concentrate marketing efforts on the product, distribution, and promotional elements of the marketing mix.
  • 73.
    CONSUMER PERCEPTIONS OFPRICE Price-Quality Relationships • Consumers’ perceptions of quality closely tied to price. • High price = prestige and higher quality. • Low price = less prestige and lower quality. Odd Pricing • Setting prices in uneven amounts or amounts that sound less than they really are. • Example: $1.99 or $299. • Also used as a signal a product is on sale.

Editor's Notes

  • #32 Local youth sport teams often seek financial support from area businesses for everything from uniforms and equipment to transportation to games and events. As a business owner, you can sponsor a team by paying for its jerseys and adding your logo to the back of the garments. You can also be the official sponsor for game transportation by financing the cost of transporting the team by bus or van.
  • #38 Retailer - scanner data, industry consolidation -MFGs want to break through Loyalty & Sensitivity & proliferation - we did that Frag - more media, more targeted Short-term&Account - US Business, stock mkt, not BE
  • #63 Ref??