Chapter 18, Promotion Process, Sales Promotion and Publicity, Class Notes
Definition:
To communicate with individuals, groups or organizations to
directly or indirectly facilitate exchanges by informing and
persuading one or more audiences to accept an organization's
products.
-Companies must communicate with their customers, this
communication should not be left to chance.
Design communication to your specific target audience:
- Target Market
- Part of Target Market
- Different stakeholders of your organization.
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Marketers need to coomunicate, therefore need a medium to facilitate
communication.
$235 bn predicted to be spent in 1994 on advertising WW
$94 bn in US.
Pay for media (1994)
- TV $27.1b 1994
- Newspapers $25b*1993
- Radio $9.57 b 1993
- Magazines $7.62 b 1993
Marketers need to communicate, therefore provide funds for Event
Sponsorship
Handout...Projected surplus for 96 summer Olympics
no tax payer money needed to finance the games.
Cost $1.54 bn, financed mostly by marketers wanting to use the Olympics
as a medium to communicate to customers.
Employment
sales people
advertising agencies etc.
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Handout...Chrysler market Cirrus...
This article illustrates a number of elements in the communication process.
Nine elements to the communication process.
Sender Chrysler and Receiver Target Market (35-50yr aspire
BMW/Lexus) are the major parties in the communication process.
Message New Car, Cirrus, comfort of a Lexus and handling of a BMW
for less money and the media TV, direct mail, Brooks Brothers etc
are the major communication tools.
4 more major functions:
- Encoding--putting thought into symbolic form. Advertising
Agencies creating radio commercials, TV commercials, prepare direct mail
pieces, sales pitch etc
- Decoding--consumer interprets message. Understanding
the target market's perception
process is critical.
- Response--reaction of the receiver
buy or not to buy, take next step down AIETA, go to the showroom etc.
- Feedback--response communicated back to the sender
1-800 #s, increase in sales. Number of customers in show room etc.
Better for Personal Selling, not advertising
Last element is Noise in the system, more noise with non-personal
communication
Sender needs to know:
- what audiences they want to reach
- what responses they want.
- how the target audience decodes messages
- what media will effectively reach the target audience
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Organizations combine specific ingredients of the promotional mix to promote a particular
product.
All promotionals tools (promotional mix):
must blend harmoniously into an effective communication strategy, to meet
the promotional objectives.
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Definition:
Paid form of non personal communication about an organization or
its products that is transmitted to a target audience through a
mass/broadcast medium.
Pros
- Flexibility allows you to focus on a small, precisely defined segment
(School newspapers) or a mass market (baseball show = Males, 35-50).
- Cost efficient-reach a large number at a low cost per person,
allows the message to be repeated, and can improve public image.
- Allows for repeating the message-lets the buyer receive and
compare the messages of various competitors.
- Very expressive, allows for dramatization.
- Also used to build a long term image of a product.
- Trigger quick sales, Sears advertising a weekend sale.
Cons
- Absolute $ outlay very high, make a national TV ad. approx $150,000, local
ad. $60,000. 30 second spot, Superbowl $1.1 m 1995
- Rarely provides quick feedback, or necessarily any feedback
- Less persuasive than personal selling
- Audience does not have to pay attention
- Indirect feedback (without interactivity)
Cirrus...used national advertising, local, direct mail, posters etc.
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Occurs through personal communication in an exchange situation.
- More specific communication aimed at one or more persons.
- Effective at building buyers preferences, convictions and actions.
- Cost per person is high, most expensive promotional tool.
- Greater impact on consumers
- Provides immediate feedback
- Allows marketers to adjust message quickly to improve communication.
- Buyer feels a great need to listen and respond.
- Long term commitment is needed to develop a sales force.
Cirrus..sales representatives in show rooms.
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News story form about an organization or its products or both (MBA,
Philadelphia Inquirer), through mass medium at no charge.
Sponsor does not pay (generally), may be expected/required to run
advertisements in the media. Can be positive and negative.
Pepsi Syringe.
Believable
Cirrus...Articles in Car and Buyer, WSJ, and this article etc.
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Definition:
Materials that act as a direct inducement, offering added value, or
incentive for the product, to resellers, sales persons or consumers.
Designed for immediate (short term) increase in product sales.
Cirrus...Sweepstakes, cocktail parties, test drives
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A marketer must do the following while planning and sending
communications to a target audience:
- Identify the Audience
Individuals, groups, special publics or the general public.
Intermediaries vs Consumer
- Identify the Stage of Product Life Cycle
- Introductory
Inform
Publicity/Advertising/Sales force (interm.)/Sales promotion (free samples)
- Growth Persuade
Differentiate from competitors offering
- Maturity Remind
Reminder advertising, Sales promotion (coupons)
- Decline Cut budget
- Product Characteristics
- Complexity How much
information must be communicated. The more complex the message, the
greater the need to use personal selling.
- Risk Greater risk, greater need for personal selling
- Stages of Buying Decision
In many cases the final response sought is purchase, but purchase
is the result of a long process of consumer decision making. Need
to know where the target audience now stands (in the process), and
what state they need to be moved to.
Adoption Process
- Not Aware--Advertising/Publicity
- Aware--no knowledge Advertising/Publicity
- Interest--how do they feel? Personal Selling/SalesPromotion/Advertising
- Evaluation--should they try? sales promotion/personal selling
- Trial--test drive/sales promotion
- Adoption--do they purchase? Reminder/reinforce--advertising
Communication programs goal must lead consumers to take the final
step.
- Channel Strategies
-Push Vs Pull Policy
- Push-promotes product only to the next
institutions down the marketing channel. Stresses personal
selling, can use sales promotions and advertising used in
conjunction.
- Pull-promotes directly to consumers, intention is to
create a
strong consumer demand, primarily advertising and sales promotion.
Since consumers are persuaded to seek products in retail stores,
retailers will in turn go to wholesalers etc (use channels
overhead)
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Encompasses all promotional activities and materials other than
personal selling, advertising and publicity. Grown dramatically in
the last ten years due to short term focus on profits. Funds are
usually earmarked for advertising are transferred to sales
promotion.
Often used in conjunction with other promotional efforts.
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- 323 billion coupons were distributed 1993 nationally annually
(3,200/household), only 2.3% are redeemed.
- 9000 trade shows containing 10 exhibits or more/year. New York
auto show attracts more than a million people per year.
- $15-20 billion/year spent on point of purchase material in stores.
Why??
- companies are looking to get a competitive edge
- quick returns are possible for short term profits
- more consumers are looking for promotions before purchase
- channel members putting pressure on mf. for promotions
- advances in tech. make SP easier (ie coupon redemption)
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- Increase in sales by providing extra incentive to purchase. May
focus on resellers (push), consumers (pull) or both.
- Objectives must be consistent with promotional objectives and
overall company objectives.
- Balance between short term sales increase and long term need for
desired reputation and brand image.
- Attract customer traffic and maintain brand/company loyalty.
- Reminder functions-calendars, T Shirts, match books etc.
- Impulse purchases increased by displays
- Contests generate excitement esp. with high payoffs.
Limitations
- Consumers may just wait for the incentives
- May diminish image of the firm, represent decline in the product
quality.
- Reduces profit margins, customers may stock up during the
promotion.
- Shift focus away from the product itself to secondary factors,
therefore no product differential advantage.
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Sales Promotion Methods
-encourage/stimulate customers to patronize a specific retail store or to try a specific product.
Coupons:
Usually reduce the purchase price or offered as cash. Need
to state the offer clearly and make it easy to recognize.
Handout...Awash in Coupons...
Looks at the volume of coupons (323 bn) and the poor redemption rate
(less than 3%). Looks at more innovative media to deliver coupons
(currently over 80% are delivered via the Sunday paper)....in store by
the products, as customers exit the store based on purchases...discussed
delivering coupons to customers as they enter the store, using a card
that swipes to indicate past purchases. Past buying behavior is the
best predictor of future buying patterns!! Also discussed that they
may be delivered via TV, in conjunction with an advertisement.
Users only redeem coupons they would ordinarily purchase. 75% of
the coupons are redeemed by consumers who would buy the brand
already.
Stores/marketers are honoring competitors coupons etc.
Stores often don't have enough of the couponed item in stock.
Demonstrations:
Excellent attention getters. Labor costs are usually high.
-
Major airlines, helps foster customer loyalty to a specific company.
Credit card companies. Trading stamps-Co-ops back in England, foster
retail loyalty.
Blockbuster's new credit card offers company products based on card usage.
Cindy Crawford "Why wait for whats coming to you" Co-Branded with
immediate rewards...this is what is very appealing about this
card...immediate reward, as opposed to having to build up points for an
air flight etc.
Airlines have had to raise the threshold of their award programs
35,000 from 20,000, 2 free round trip tickets due to $3+trillion liabilities
Long Distance telephone also offer free air miles, >$25/mo = airmiles
Frequent User cards are used to collect information for companies
enabling them to better target their
customers.
Point of Purchase Display:
Outside signs, window displays, counter pieces, display racks. 90% of
retailers believe that point of purchase materials sell products.
Essential for product introductions. Also with 2/3 of purchasing
decisions made in the store, they are important.
Free Samples:
Stimulate trial of product. Increase sales volume at
the early stage of the product life cycle
and obtain desirable distribution.
Most expensive sales promotion technique.
Not appropriate for mature products and slow turnover products.
Handout...With Sampling there is too a free lunch
Discusses the pros and cons of free sampling.
Money Refunds/Rebates:
Submit proof of purchase and mail specific refund, usually need multiple
purchase for refund. Helps promote trial use, due to the complexity of
the refund, it has little impact.
Customers have a poor perception of rebate offered products.
Used extensively in the Auto and Computer industry.
Premium Items:
Offered free or at minimum cost as a bonus. Used to
attract competitors customers, different sizes of established
products.
Gas stations give free glasses--basics buy!!
McDonalds premium items are considered collectors items by some!
Flintstones program last year with McDonalds.
Burger King with the Lion King movie
Last summer the following tie-in premium programs.
- Casper with Pepsi, Pizza Hut, Choice Hotels
- Congo with Taco Bell
- Batman Forever with McDonalds, Kelloggs, Six Flags, Sears
- Pocahontas with Chrysler, Nestle,General Mills, Burger King
- Mighty Morphin with McDonalds
Cents-off Offer:
Strong incentive for trying a product-very similar to coupons, but are a
part of the package.
Consumer Contests and Sweepstakes:
Consumers compete based on their analytical or creative skills. Must be
accurate or you will anger customers/retailers.
Sweepstakes are prohibited in some states.
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Push Policy emphasizes promotions focused on the next
intermediary.
Trade Sales Promotion Techniques-stimulate wholesalers and
retailers to carry products and to market them aggressively.
Producers use sales promotion techniques to encourage resellers to
carry their products and to promote them more effectively.
Allowances and Discounts:
- Merchandise...reimburse for extra retail support, i.e.
advertising, shelf space
- Case...discount on cases ordered in specific period.
- Finance...Paying for financial costs/losses associated with
consumer sales promotions.
Cooperative Advertising:
Manufacturer agrees to pay a certain amount of retailers media.
Training of Sales Staff
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At no charge (most of the time) Part of public relations, a broad
set of communication activities used to create and maintain
favorable relations between the organization and its publics:
- customers
- employees
- stockholders
- government officials
- society in general
Need to cultivate effective media relations, and targeting
publicity to key markets are viewed as the highest priorities.
Handout...Communicators Guide To Publicity
What is news?
Planning Publicity Program
Writing a news release
Photographs
Radio and TV News
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- Publicity is primarily informative
- Advertising is informative and persuasive
- Publicity is more subdued
- Publicity does not identify the sponsor
- Publicity is free (??!)
- Publicity is part of a program or print story and appears more objective
- Publicity is not subject to repetition
- Publicity is more credible
- Little control over publicity
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Handout...The Right Moves Babes
Discusses how Pepsi dealt with the Syringe incident, using primarily
publicity to overcome bad publicity.
Bad news receives much attention in the media. Need to deal with
bad publicity.
First, need to try to reduce the # of incidents that produce
negative publicity (effective TQM etc.), use policies and procedures to
cover negative publicity.
Expedite coverage as opposed to blocking it.
Avoid rumors and misinformation.
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Media must judge publicity to be news worthy, timely, interesting
and accurate.
Cannot control the content or timing.
May delete the most important part.
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