Integrated Marketing Communications: Promotional Mix and Pricing Strategies

1. Part 4 Marketing Management

2. Chapter 14 Promotion and Pricing Strategies

3. Chapter Objectives • Discuss how integrated marketing communications relates to a firm’s promotional strategy. • Explain the concept of a promotional mix and outline the objectives of promotion. • Summarize the different types of advertising and advertising media. • Describe the role of sales promotion, personal selling, and public relations in promotional strategy. • Identify the Profitabilitynfluence the selection of a promotional mix. • Discuss the major ethical issues involved in promotion. • Outline the different types of pricing objectives and discuss how firms set prices in the marketplace. • Summarize the four alternative pricing strategies. • Discuss consumer perceptions of price.

4. Integrated Marketing Communications • Promotion—communication link between buyer and seller that performs the function of informing, persuading, and influencing a purchase decision. • Focusing on Primary Demand • Focusing on Selective Demand

5. Integrated Marketing Communications • Coordination of all promotional activities – media advertising, direct mail, personal selling, sales promotion, and public relations – to produce a unified customer-focused message. • Focuses on customer needs to create a unified promotional message • Firms need a broad view of promotion to implement IMC

6. The Promotional Mix • Promotional Mix—combination of personal and nonpersonal selling techniques designed to achieve promotional objectives. • Personal Selling—interpersonal promotional process involving a seller’s face-to-face presentation to a prospective buyer. • Nonpersonal selling—consists of advertising, sales promotion, direct marketing, and public relations

7. Comparing the Components of the Promotional Mix

8. The Promotional Mix • Objectives of Promotional Strategy • Providing Information • Differentiating a Product • Increasing Sales • Stabilizing Sales • Accentuating the Product’s Value

9. Five Major Promotional Objectives

10. The Promotional Mix • Objectives of Promotional Strategy • Providing Information • Major portion of U.S. advertising is information-oriented • Differentiating a Product • 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

11. The Promotional Mix • Objectives of Promotional Strategy • Increasing Sales • Most common objective of a promotional strategy • Stabilizing Sales • Sales contests often used during slack periods • Sales promotion materials often distributed to customers to stimulate sales during off-seasons

12. The Promotional Mix • Objectives of Promotional Strategy • Accentuating the Product’s Value • Promotional strategies can enhance product values by explaining often unrecognized ownership benefits

13. The Promotional Mix • Promotional Planning • Increasing complexity and sophistication of marketing communications requires careful planning to coordinate IMC strategies • Product Placement • Guerrilla Marketing

14. Advertising • Advertising—paid nonpersonal communication delivered through various media and designed to inform, persuade, or remind members of a particular audience.

15. The 15 Largest Advertisers in the United States

16. Advertising • Types of Advertising • Product Advertising—consists of messages designed to sell a particular good or service • Institutional Advertising—involves messages that promote concepts, ideas, philosophies, or goodwill for industries, companies, organizations, or government entities

17. Advertising • Advocacy Advertising (Cause Advertising): promotes a specific viewpoint on a public issue as a way to influence public opinion and the legislative process

18. Advertising • Advertising and the Product Cycle • Product and Institutional Advertising fall into one of three categories, based on whether the ads intend to inform, persuade, or remind • Informative Advertising—used to build initial demand for a product in the introductory phase of the product life cycle

19. Advertising • Advertising and the Product 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 • Comparative Advertising—form of persuasive product advertising that compares products directly with their competitors

20. Advertising • Advertising and the Product Cycle • 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

21. Advertising • Advertising Media • Must choose how to allocate advertising budget • All media offer advantages and disadvantages • Must consider cost and which media is best suited for communication

22. Advertising Media

23. Advertising • Advertising Media • Newspaper • Continue to dominate local advertising • Ads easily tailored for local tastes and preferences • Can coordinate newspaper messages with other promotional efforts • Disadvantage: relatively short life span

24. Advertising • Advertising Media • Television • America’s leading national advertising medium • An expensive advertising medium • Price for a 30-second ad during weeknight prime time on network television generally ranges from $100,000 to more than $500,000

25. Advertising • Advertising Media • Radio • Average U.S. household owns five radios • Captive audience of listeners as they commute to and from work • In major markets, many stations serve different demographic groups with targeted programming

26. Advertising • Advertising Media • Magazines • Includes consumer publications and trade journals • Can often customize their publications and target advertising messages to different regions of the country • A natural choice for targeted advertising

27. Advertising • Advertising Media • Direct Mail • Average American household receives about 550 pieces of direct mail each year, including 100 catalogs • e-mail another option • Must overcome junk-mail and spam classification

28. Advertising • Advertising Media • Outdoor Advertising • Just over 2 percent of total advertising spending • Share is growing • Majority of spending is for billboards • Other types include: signs in transit stations, stores, airports, and sports stadiums • Disadvantages include: • Brief messages are required • Mounting concern for aesthetic and environmental issues

29. Advertising • Advertising Media • Online and Interactive Advertising • Range from Web sites and CDs to information kiosks • Currently commands only 3 percent of media spending, but is the fastest-growing media segment

30. Advertising • Advertising Media • Sponsorship—involves providing funds for a sporting or cultural event in exchange for a direct association with the event • Sports sponsorships attract two-thirds of total sponsorship dollars • Primary benefits: exposure to the event’s audience and association with the image of the activity

31. Advertising • Advertising Media • Other Media Options • Infomercials: 30-minute programs that resemble regular TV programs, but are devoted to selling goods or services • Other Media options include: • Ads in movie theaters • Ads on airline movie screens • Printed programs, Subway tickets • Turnpike toll receipts • Automated teller machines

32. Sales Promotion • Sales promotion—nonpersonal marketing activities other than advertising, personal selling and public relations that stimulate consumer purchasing and dealer effectiveness. • Potential advantages: • Short-term increased sales • Increased brand equity • Enhanced customer relationships

33. Sales Promotion • Consumer-Oriented Promotions • Goals of a consumer-oriented sales promotion include: • Getting new and existing customers to try or buy products • Encouraging repeat purchases by rewarding current users • Increasing sales of complementary products • Boosting impulse purchases

34. Spending on Consumer-Oriented Promotions

35. Sales Promotion • Consumer-Oriented Promotions • Premiums—items given free or at a reduced price with the purchase of another product. • Coupons offer small price discounts • Rebates offer cash back to consumers • Sample—a gift of a product distributed by mail, door-to-door, in a demonstration, or inside packages of another product

36. Sales Promotion • Consumer-Oriented Promotions • Games, Contests, and Sweepstakes • Offering cash, merchandise or travel as prizes to participating winners • Often used to introduce new goods and services and to attract additional customers • Court rulings and legal restrictions have limited the use of contests

37. Sales Promotion • Consumer-Oriented Promotions • Promotional Products (Specialty advertising) • Because these specialty advertising products are useful, people tend to keep and use them • Gives advertisers repeated exposure • Originally designed to identify and create goodwill for advertisers • Now generates sales leads and develops traffic for stores and trade show exhibitors.

38. Sales Promotion • Trade-Oriented Promotions • Trade promotion—sales promotion geared to marketing intermediaries • Used to encourage retailers to: • Stock new products • Continue carrying existing ones • Promote products effectively to consumers.

39. Sales Promotion • Trade-Oriented Promotions • Point-of-purchase (POP) advertising— displays or demonstrations that promote products when and where consumers buy them • Takes advantage of many shoppers’ tendencies to make purchase decisions in the store • Trade shows—promote goods or services to intermediaries

40. Personal Selling • Personal selling—interpersonal promotional process involving a seller’s face-to-face presentation to a prospective buyer. Used most often when: • Customers are relatively few in number and geographically concentrated • Product is technically complex, involves trade-ins, and requires special handling • Product is high in price • Product moves through direct-distribution channels

41. Personal Selling • Sales Tasks • Order Processing—selling, mostly at the wholesale and retail levels, that involves identifying customer needs, pointing them out to customers, and completing orders • 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

42. Personal Selling • Sales Tasks • Missionary Selling—indirect form of selling in which specialized salespeople promote goodwill among indirect customers, often by assisting customers in product use

43. Personal Selling • The Sales Process • Seven Steps in the Sales Process

44. Personal Selling • The Sales Process • Prospecting, Qualifying, and Approaching • Prospecting involves identifying potential customers • Qualifying involves identifying potential customers who have the financial ability and authority to buy. • Before making the initial contact: • Careful preparations are made • Available data about a prospective customer and other pertinent information is analyzed

45. Personal Selling • The Sales Process • Presentation and Demonstration • Involves communicating promotional messages • Major features of the product, highlights of the advantages, and examples of satisfied consumers are typically presented • Involves the prospect in the sales presentation • Reinforces the message that the salesperson has been communicating

46. Personal Selling • The Sales Process • Handling Objections • Allows sales personnel to remove obstacles and complete the sale • Can become a positive part of the sales process • Allows the salesperson to present additional information

47. Personal Selling • The Sales Process • Closing • Critical point in a selling relationship— the time at which the salesperson actually asks the prospect to buy • If the presentation effectively matches product features to customer needs, the closing should be a natural conclusion.

48. Personal Selling • The Sales Process • Follow-up • Salesperson’s actions after the sale may well determine whether the customer will make another purchase • Building a long-term relationship • By calling soon after a purchase, the salesperson provides psychological reinforcement for the customer’s decision to buy • Also gives the seller a chance to correct any problems

49. Personal Selling • Recent Trends in Personal Selling • Telemarketing • Outbound telemarketing—when a sales representative calls you at your place of business • Inbound telemarketing—when the customer calls a toll-free phone number to get information or place an order.

50. Personal Selling • Recent Trends in Personal Selling • Relationship Selling—when a salesperson builds a mutually beneficial relationship with a customer through regular contacts over an extended period • 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