Quiz # 04

1. Quiz # 04 • Date: 07 August, 2014 (Thursday). • Syllabus: Chapter 11 & 12

2. Chapter 13 Promotion and Pricing Strategies

3. Promotion • 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

4. Integrated Marketing Communications (IMC) • 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

5. The Promotional Mix • Promotional Mix— combination of personal and nonpersonal selling components designed to meet the needs of a firm’s target customers and effectively and efficiently communicate its message to them. • Personal Selling— the most basic form of promotion: a direct person-to-person promotional presentation to a potential buyer. • Nonpersonal selling—consists of advertising, sales promotion, direct marketing, and public relations

6. Comparing the Components of the Promotional Mix

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

8. Five Major Promotional Objectives

9. 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

10. 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

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

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

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

14. 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

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

16. 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

17. 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

18. 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

19. 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

20. Advertising Media

21. 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

22. Advertising • Advertising Media • Internet • Online and interactive media have already changed the nature of advertising. Starting with simple banner ads, Internet advertising has become much more complex and sophisticated • The rising number of smart phones and tablets is affecting this increase, as is the rapid multiplication of social media An expensive advertising medium • Viral Advertising

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 • 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

25. 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 • 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

26. 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 • 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

27. 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

28. 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

29. Sales Promotion • Sales promotion— consists of forms of promotion such as coupons, product samples, and rebates that support advertising and personal selling. • Potential advantages: • Short-term increased sales • Increased brand equity • Enhanced customer relationships

30. 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

31. Spending on Consumer-Oriented Promotions

32. 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

33. 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

34. 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.

35. 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.

36. 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

37. 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

38. 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

39. 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. • Telemarketing- 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.

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

41. 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.

42. 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

43. Public Relations • Public Relations—organization’s communication and relationships with its various audiences. • Publicity—stimulation of demand for a good, service, place, idea, person, or organization by disseminating news or obtaining favorable unpaid media presentations.

44. Pushing and Pulling Strategies • Pushing strategy- personalselling to market an item to wholesalers and retailers in a company’s distribution channels. • Pulling strategy promoting a product by generating consumer demand for it, primarily through advertising and sales promotion appeals.

45. Promotional Strategies • Selecting a Promotional Mix • Guidelines for allocating promotional efforts and expenditures among personal selling and advertising: • What is your target market? • What is the value of the product? • What time frame is involved?

46. Ethics in Promotion • Promotion to Children and Teens • Risk of deception is especially great with promotion targeted to children and teens • Children not sophisticated at analyzing promotional messages

47. Ethics in Promotion • Promotion in Public Schools and on College Campuses • Includes promotional book covers, posters, and even curriculum materials provided to today’s schools • Some schools sign contracts that give certain brands exclusive access to their students • Can generate a backlash

48. Price in the Marketing Mix • Price—exchange value of a good or service. • Pricing Objectives

49. Price in the Marketing Mix • Profitability Objectives • Perhaps the most commonly used objective in firms’ pricing strategies • Some firms try to maximize profits by reducing costs rather than through price changes • Volume Objectives • Bases pricing decisions on market share • Market share: the percentage of a market controlled by a certain company or product

50. Price in the Marketing Mix • Price to Meet Competition • Seeks to meet competitors’ prices • Prestige Objectives • Prestige pricing encompasses the effect of price on prestige • Prestige pricing establishes a relatively high price to develop and maintain an image of quality and exclusiveness