Promotion

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Promotion
Personal Selling Mass Selling Advertising Publicity Sales Promotion

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Promotion communication of information influence the buyer

3 methods Personal Selling Mass Selling Sales Promotion

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Elements of the Promotion Mix

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Advertising
Ingredients of the Promotion Mix

Public Relations

Personal Selling

Sales Promotion

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Goals and Tasks of Promotion

Informing Reminding

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Target Audience

Persuading

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Personal Selling direct communication between seller and buyer face2face contact Usually used to sell industrial goods and services Also used to sell some expensive consumer items, eg. Cars, computer systems

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Mass Selling communicating with large numbers of potential customers non -personal selling used when the target market is large and dispersed Advertising is a form of Mass Selling

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Advertising the main form of mass selling any paid form of nonpersonal communication eg. Techniques include billboard ads and TV commercials

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Publicity
The generation of awareness about a product beyond regular advertising methods.

Usually less costly than advertising because sometimes the message is spread for free by a newspaper article or TV story.

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Publicity
Examples of Publicity famous person photographed using your product your product mentioned in National News in a positive way your product featured in a movie TV commentary about aspects of your product trade magazines carrying a story
eg. Road and Track doing a feature on the new Landrover

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Publicity
Publicity can be negative eg. If a famous movie star gets electrocuted using your product, this can cause people to NOT want to buy it this would be a major problems eg. If your product is sabotaged - this could include tampering with medical products ie. Tylenol eg. If there are negative rumours about the ingredients in your product eg. If there are negative ingredients about the moral aspects of your company

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Promotion People
Sales Managers Advertising Managers Sales Promotion Managers

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Promotion People
Sales Managers Are concerned with managing personal selling In small companies this person also does the advertising and sales promotion

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Promotion People
Advertising Managers They manage the mass selling activities They chose the company to make the commercials Pick the billboard signs etc. If the company is big enough they hire an outside agency They may also do publicity as well

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Promotion People
Sales Promotion Managers They manage the Sales Promotion activities They decide about in-store coupons, prizes, incontests etc. They spend a lot of time visiting the retail outlets where the product is sold

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People in Sales Promotion

Sales Promotion Managers - they deal with
Point-of-purchase advertising specialty advertising samples coupons premiums loyalty points / air miles rebates contests

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Sales Promotion includes:

Point-of-purchase advertising Point-of specialty advertising samples coupons premiums loyalty points / air miles rebates contests

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Relationship between Advertising and the Product Life Cycle

Not mentioned in your textbook

Chpt 13 in the Marketing 106 course Copyright, Professor W.T.G. Richardson, Seneca College

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Informing
people have to know about it, in order to buy it
Advertising that seeks to develop demand through presenting factual information on the attributes of a product or service. Tends to be used in promoting NEW products. Use in the Introductory Stage of PLC

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Persuading
when competition offers similar product, you have to persuade them to try yours
Advertising that emphasizes using words and/or images to try to create an image for a product and to influence attitudes about it. Used by Coke and Pepsi re: lifestyle ads. Used after the Introductory Stage of the PLC

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Honda Small Car ..To be

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The New V- Rod in India! V-

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Recreation in Toulouse

Transport in Rajkot

Exercise in Chicago

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Fisher Price Toys!

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Reminding
when new competition comes along, you have to remind customers of your greater experience, advantages etc.

Advertising whose goal is to reinforce previous promotional activity by keeping the products or services name in front of the public.

Used in the Maturity Period and the Decline Stage of the PLC.

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AIDA and the Hierarchy of Effects

Purchase Conviction

Preference Liking

Knowledge Awareness

Attention

Interest

Desire

Action

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Pushing through the promotion channel

Producer personal selling 2 wholesaler retailer customer

Promotion techniques used

run ads in trade magazines to make wholesalers aware of the product provide incentives to retailers to carry the item
cases it buys page 466 free case of drinks with each 2

run contests for salespeople to win prizes for selling the product

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Pulling through the promotion channel

Producer personal selling 2 wholesaler retailer customer

Promotion techniques used

run TV commercials so customers directly learn about the product - then they go to the store and ask for it, or call around to find out where it is sold give free samples to potential customers

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Pulling through the promotion channel

Producer personal selling 2 wholesaler retailer customer

Sometimes you do pulling when the Middlemen cannot be pushed, that is they already have a competitors product, so the way to get Middlemen to WANT to carry the product, is to have customers ask for it.

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Potential Mail Recipients

Once your name is on a list for a newspaper subscription, your name and address can be sold to another company who will mail you information to try and convince you to buy their product. Buying and selling lists (databases) of such names is big business.

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Comparison of Direct Marketing and General Advertising

Direct Marketing Selling to individuals. Customers are often identifiable by name, address, and purchase behaviour. Products have added value or service. Distribution is important product benefit. The medium is the marketplace. Marketer controls product until delivery. Advertising used to motivate an immediate order or inquiry. General Advertising Mass selling. Buyers identified as broad groups sharing common demographic and psychographic characteristics. Product benefits do not always include convenient distribution channels. Retail outlet is the marketplace. Marketer may lose control as product enters distribution channel. Advertising used for cumulative effect over time to build image, awareness, loyalty, benefit recall. Purchase action deferred. Repetition used over time. Consumers feel less risk have direct contact with the product and direct recourse.

Repetition used within ad. Consumers feel high perceived risk product brought unseen. Recourse is distant.

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Adoption Process
Innovators Early Adopters Early majority Late majority Laggards, or nonadopters
- sales people concentrate their efforts here

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Setting the promotion budget

Most common method is based on using past percentages
- that is to say,,,,

If you sold $ 1,000,000 and you spent 20% on advertising, which = $200,000 then, if you spend $400,000 you should sell $2 million!

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Setting the promotion budget

Other methods - used in real world Matching what competition spends Based on what is required to get number of customers that will meet corporate objectives called the Task Method
- sometimes stated as a % of sales

Whereas advertising gives a reason to buy, SP gives an incentive to buy

It is part of the Marketing spend of all companies and these days SP spends in many companies exceed that of the adspends

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Why?
Internal External

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External reasons
Increase in number of brands Consumer is more price savvy Greater pressure from trade to liquidate stocks Add effectiveness declining owing to rising costs, media clutter and legal constraints

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SP is of two types
Trade Consumer

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Trade promotion
Liquidating heavy inventories Persuade retailers to carry stock, carry more than usual stock, promote brand franchise

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Consumer promotion
Stimulate purchase Induce trial Create new users Increase repurchase from occasional customers Reward loyal customers

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Forms of trade promotion

Bulk discounts Free materials Display windows Shelf hiring Lucky draws Mystery customer Redistribution incentives

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Forms of consumer promotion

Free samples Free gifts Coupons In-packs InPrice packs Price-offs PriceSweepstakes Bundling offers

The more the product s quality and its advertising persuasiveness fail to meet competition, the greater is the need for promotion to improve the price value relationship

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Promotion at different stages of the PLC

Introduction wise to use heavy promotion to induce trials and promote brand franchise Growth promotion should be limited ,if any Maturity Higher promotions required since the brand is under attack from competitors or product quality or advertising effectiveness is tapering off Decline Heavy promotions. Used only to retain a set of loyal customers. Prior to withdrawal of the product, it could be used as a one time stock clearance from the trade

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Essential elements for an effective SP programme

Significant value before promotion is effective Promotions must be part of an overall plan Every brand must have a promotion objective and a strategy statement A written tactical plan yardsticks time frame, costs, evaluation

Factual knowledge must be gathered to plan Specialized professional skill and knowledge must be applied to every promotion operations

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Final considerations
Don t promote if the product is not good Promotions rarely stop a declining sales curve It is very easy to lose the promotional gains made if your promotion has not been effective in retaining new customers. So the product has to speak for itself. The objective of the promotion is to wean away users from competition and create new users. Excessive promotions lead to diminishing returns and may devalue the brand

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Cont d
Promotions may be used in conjunction with advertising and other marketing communication tools It should be novel and attractive Ensure supply lines are good and adequate stock is available right through the promotion Cater for contingencies. Have escape routes built into the plan Trade has to be handled tactfully Reimburse incentives/ rewards/ gifts promptly Must be within the legal boundaries

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Creating a Promotion Plan

Analyze the Marketplace Identify Target Market Set Promotion Objectives Develop Promotion Budget Choose Promotion Mix

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Criteria for Setting Promotion Objectives

Promotion objectives should:

be measurable, concrete

be based on sound research, with a well-defined target audience

be realistic

reinforce the overall marketing plan and relate to specific marketing objectives

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Examples of Promotion Objectives

Objective: To Inform (Awareness)
To increase the top-of-mind awareness level for Peter Pan peanut butter from 16 percent to 24 percent

Objective: To Persuade (Attitudinal)

To increase the percentage of parents who feel that Peter Pan peanut butter is the best peanut butter for their children from 22 percent to 35 percent

Objective: To Remind
To remind consumers that Peter Pan peanut butter is the creamiest peanut butter and is available at their nearest grocery and convenience stores

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Techniques for Setting Promotion Budgets

Arbitrary Allocation All - You - Can - Afford Competitive Parity Percent of Sales Market Share Objective and Task

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Regulation of Promotion
Self-Regulation
National Advertising Division (NAD) National Advertising Review Board (NARB)

Federal Regulation
Federal Trade Commission (FTC)

Effects of Advertising
Return on Advertising Expenditures

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Diminishing returns on additional spending Increasing efficiency as ad budget becomes sufficient

Advertising Spending

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Major Types of Advertising

Corporate Image Institutional Advertising Advocacy Advertising Types of Advertising Pioneering Product Advertising

Competitive Comparative

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Common Advertising Appeals

Profit Health Love or Romance Fear Admiration Convenience Fun and Pleasure
Save money, keep from losing money Body-conscious, healthy Sell cosmetics and perfumes Social embarrassment, growing old, losing health, power Celebrity endorsement effective Fast-food and microwave products Vacations, beer, amusement parks

Vanity and Egotism Expensive, conspicuous items

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Executional Styles for Advertising

Scientific Musical Slice-of-Life Lifestyle

Demonstration

Common Executional Styles

Real/ Animated Product Symbols

Spokesperson/ Testimonial

Mood or Image

Fantasy Humorous

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Methods Used to Evaluate Advertising Campaigns

Pretests
Examples: Consumer jury tests Portfolio or unfinished rough tests Physiological tests

Post-tests
Examples: Recognition tests Recall tests Attitude measures Audience size measurement

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Type of buyer Loyal customers People who buy your product most or all of the time Competitors customers People who buy a competitors product most or all of the time Brand switchers People who buy a variety of products in the category Price buyers People who consistently buy the least expensive brand Desired results Reinforce behavior, increase consumption, change purchase timing Sales promotion examples

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Types of Consumer & Sales Promotion Goals

Loyalty marketing programs, such as frequent-buyer cards or frequent-shopper clubs Bonus packs that give loyal consumers an incentive to stock up or premiums offered in return for proofs-of-purchase Sampling to introduce your products superior qualities compared to their brand Sweepstakes, contests, or premiums that create interest in the product Any promotion that lowers the price of the product, such as coupons, price-off packages, and bonus packs Trade deals that help make the product more readily available than competing products Coupons, price-off packages, refunds, or trade deals that reduce the price of brand to match that of the brand that would have been purchased

Break loyalty, persuade to switch to your brand

Persuade to buy your brand more often

Appeal with low prices or supply added value that makes price less important

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Tools for Consumer Sales Promotion

Coupons

Six Categories of Consumer Sales Promotions

Premiums

Frequent Buyer Programs Contests and Sweepstakes Samples Point-of-Purchase Displays

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Tools for Trade Sales Promotion

Trade Allowances

Push Money

Training

Free Merchandise

Store Demonstrations Business Meetings, Conventions, Trade-Shows

Six Categories of Trade Sales Promotions

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Advertising Versus Personal Selling

Personal Selling is more important if...
The product has a high value. It is a custom-made product. There are few customers. The product is technically complex. Customers are geographically concentrated.

Advertising/Sales Promotion is more important if...

The product has a low value. It is a standardized product. There are many customers. The product is simple to understand. Customers are geographically dispersed.

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Traditional Personal Selling
Sell products (goods and services) Focus on closing sales Limited sales planning Spend most contact time telling customers about product Conduct product-specific needs assessment

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Differences Between Traditional & Relationship Selling

Relationship Selling
Sell advice, assistance, and counsel Focus on improving the customers bottom line Considers sales planning as top priority Spend most contact time attempting to build a problem-solving environment with the customer Conduct discovery in the full scope of the customers operations

Lone-wolf approach to the account Team approach to the account Proposals and presentations based on pricing and product features Sales follow-up focused on product delivery Proposals and presentations based on profit impact and strategic benefits to the customer Sales follow-up is long term, focused on long-term relationship enhancement

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Functions of Sales Management

Evaluate Sales Force Set Sales Objectives Structure Sales Force

Manage Turnover

Major Tasks of Sales Management

Determine Sales Force Size

Motivate Sales Force Train Sales Force Recruit Sales Force

Develop Compensation Plan

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Cost Determinants of Price

200

150 Dollars

MC ATC AVC

100

50 AFC 0 1 2 3 4 5 Quantity 6 7 8 9 10

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BreakBreak-Even Analysis
Total Revenue

Break Even Price ($)

Profits Total Costs

Fixed Costs Losses

Quantity (units)

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Legal and Ethical Issues in Pricing

Unfair Trade Practices
Key Legal and Ethical Issues Related to Price

Price Fixing

Price Discrimination

Predatory Pricing

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Discounts, Allowances, and Rebates

Cash Discount Quantity Discount Functional Discount Trade Loading EDLP Seasonal Discounts Promotional Allowances Rebates

Price Reductions

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Geographic Pricing
FOB Origin Uniform Delivered
Pricing Tactics Based on Geography

Zone Pricing Freight-Absorption Basing-Point

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Special Pricing Tactics

Two-Part Pricing Single Price Flexible Pricing

Bundle Pricing

Common Special Pricing Tactics

Professional Services

Odd-Even Pricing Bait Pricing Leader Pricing

Price Lining