Promotional Concepts & Strategies

1. Promotional Concepts & Strategies Ch. 17 ME

2. Section 17.1 Promotion and Promotional Mix

3. The Concept of Promotion • Promotion – is persuasive communication • Informs people about their products and services • To enhance public image and reputation, and persuade people that their products are valuable • Product Promotion – to convince prospects to select its products or services instead of a competitor’s brands • Promotional activities explain the major features and benefits • Helps companies foster good relations with existing customers • Institutional Promotion – is used to create a favorable image for a business, help it advocate change, or take a stand on trade or community issues • Example: maintaining an informational Web site

4. Type of Promotion in the Promotional Mix Personal Selling Advertising Direct Marketing Sales Promotion Public Relations

5. Type of Promotion in the Promotional Mix • Personal Selling – requires that a company employ sales representatives who generate and maintain direct contact with prospects and customers • Costliest form of promotion • Advertising – is a form of non-personal promotion • Pay to promote ideas • Can be found anywhere • Is “one-way” communication

6. Type of Promotion in the Promotional Mix • Direct Marketing – is a type of advertising directed to a targeted group of prospects and customers rather than to a mass audience • Two forms: • Direct Mail – sent via regular mail to a home or business • Electronic Direct mail – e-mail • Goal – to generate sales or leads for sales representatives to pursue • Gives recipients an incentive to respond • Is “one-way” communication

7. Type of Promotion in the Promotional Mix • Sales Promotion – represents all marketing activities – other than personal selling, advertising, and public relations – to stimulate purchasing and sales • According to American Marketing Association (AMA) • Objectives: • Increase sales • Inform potential customers about new products • Create a positive business or corporate image

8. Type of Promotion in the Promotional Mix • Public Relations (PR) – activities enable an organization to influence a target audience • Try to create a favorable image for a company, its products, or its policies • Goal – to cultivate media relations with reporters who cover a specific industry

9. Writing News Releases • News Release – is an announcement that is sent to the appropriate media outlets • Publicity – is one tactic that public relations professionals use • Placement - Involves bringing news or newsworthy information about an organization to the public’s attention • Main function – is to develop a positive perception or awareness of an organization in the marketplace • Advantages – free; viewed as more objective; appears more credible • Disadvantages – is content; not easily controlled; negative stories

10. The Concept of the Promotional Mix • Promotional Mix – a combination of strategies and a cost-effective allocation of resources • Business follow a series of steps that range from identifying the target to measuring the results • Strategies are designed to compliment one another • Elements must be coordinated • Sales personnel need to be aware • Promotional Budget – is a percentages of sales, or dictated by revenue and operational costs, to set an amount allocated for promotion use

11. The Concept of the Promotional Mix • The Push-Pull Concept • Push Policy – to promote a product to large retailers to sell its products, a manufacturer may to use a mix of personal selling, advertising and buying discounts • Is used only with the next partner in the distribution channel • Main Purpose – is to convince a retailer to stock the products being promoted • Pull Policy – use a different promotional mix of local and national advertising, in-store displays, sales promotion, and public relations to reach consumers • Directs promotion towards consumers

12. Section 17.2 Type of Promotion

13. Sales Promotion • Sales Promotion – are incentives that encourage customers to buy products or services • Used to encourage customers • Supported by advertising • Either business-to-business (B2B) or business-to-consumer (B2C)

14. Trade Promotions • Trade Promotions – are sales promotion activities designed to get support for a product from manufactures, wholesales, and retailers • More money is spent on promoting to businesses than consumers • Need good business ethics to be fair • Major Trade Promotions include: • Promotional allowances • Cooperative advertising • Slotting allowances • Sales force promotions • Trade show and conventions

15. Trade Promotions Promotional Allowances – represent cash payments or discounts given by manufacturers to wholesalers or retailers for performing activities to encourage sales Cooperative Advertising – a manufacturer supports the retailer by helping to pay for the cost of advertising its product likely Slotting Allowances – is a cash premium paid by a manufacturer to a retailer to help the retailer cover the costs of placing the manufacturer’s product on the shelves Sales Force Promotion – are awards given to dealers and employees who successfully meet or exceed a sales quota Trade Shows & Conventions – showcase a particular line of products

16. Consumer Promotions • Consumer Promotions – are sales strategies that encourage customers and prospects to buy a product or service • Support the components of the promotional mix • Major consumer sales devices include: • Coupons • Premiums • Deals • Incentives • Product Samples • Sponsorship • Promotional Tie-Ins, Cross-Promotion, & Cross-Selling • Product Placement • Loyalty Marketing Programs • Online Loyalty Marketing • Point-to-Purchase Displays

17. Consumer Promotions • Coupons – are certificates that entitle customers to cash discounts on goods or services • Premiums – are low-cost items given to consumers at a discount or for free • Three types are: • Factory Packs – are free gifts places in product packages • Traffic Builders – are low-cost • Coupon Plans – are ongoing programs offering a variety of premiums in exchange for labels or coupons obtained from a product or label

18. Consumer Promotions • Deals (price packs) – offer short-term price reductions that are marked directly on the label or package • Incentives – create customer excitement and increase sales • Are higher-priced products earned and given away through: • Contests – are games or activities that require the participant to demonstrate a skill • Sweepstakes – are games of chance • Rebates – are discounts offered by manufacturers to customers who purchase an item during a given time period

19. Consumer Promotions • Product Samples – is a free-trial size of a product sent through the mail, distributed door-to-door, or given away to retail stores and trade shows • Sponsorships – company pays a fee for the to promote itself and its products or services at or on a set location • Negotiate the right to use logos and names on retail products • High-profile promotional medium • Title Sponsor – is an organization that pays to have its name incorporated into the name of the sponsored location

20. Consumer Promotions • Promotional Tie-Ins (Cross-Promotion, & Cross-Selling) - involve sales promotional arrangements between one or more retailers or manufacturer • Partners combine their resources to conduct a promotion that will create additional sales for each partner • Can be complex and involve several companies • Increasingly popular on the internet • Product Placement – is a consumer promotion that involves using a brand-name product in a movie, television show, sporting event, or even in a commercial for another product

21. Consumer Promotions • Loyalty Marketing Program (frequent buyer program) – reward customers for patronizing a company • Customer Loyalty – means that customers are so satisfied with a brand or retailer that they continue to buy that brand or patronize that retailer even when they have other from which to choose • Online Loyalty Marketing – online version, offered by web only companies, of loyalty marketing • Point-of-Purchase Displays – are displays designed primarily by manufacturers to hold and display their products • Usually placed in high traffic areas and promote impulse purchases