Elements of the Promotion Mix

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					Elements of the Promotion Mix

                                Advertising



Ingredients                Public Relations
   of the
 Promotion
    Mix                    Personal Selling



                          Sales Promotion
 The Communication Process


                     Noise




Sender   Encoding   Channel   Decoding   Receiver




                    Channel
Goals and Tasks of Promotion

         Informing      Reminding



                  Target
                 Audience




                Persuading
 AIDA and the Hierarchy of Effects
                                                       Purchase
                                          Conviction


                                 Preference

                        Liking


            Knowledge

Awareness



    Attention              Interest           Desire   Action
When Elements of Promotion Are Most Useful

                                                                                Advertising
 Effectiveness




                                                                                Personal
                                                                                selling

                                                                                Sales
                                                                                promotion

                                                                                Public
                                                                                relations

                 Awareness Knowledge Liking Preference    Conviction Purchase



                    Very effective
                    Somewhat effective
                    Either not effective or inefficient
Factors that Affect the Promotion Mix
          Nature of the Product



          Stage in the Product
          Life Cycle


          Target Market Characteristics



          Type of Buying Decision




          Available Funds
                                      $$$
          Push–and–Pull Strategies
Creating a Promotion Plan

            Analyze the Marketplace


             Identify Target Market


            Set Promotion Objectives


           Develop Promotion Budget


             Choose Promotion Mix
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
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
Techniques for Setting Promotion Budgets



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


       Self-Regulation
       • National Advertising Division (NAD)

       • National Advertising Review Board (NARB)




       Federal Regulation
       • Federal Trade Commission (FTC)
                           Effects of Advertising

                                                                                    Diminishing
Return on Advertising Expenditures



                                                                                    returns
                                                                                    on additional
                                                                                    spending


                                     Increasing efficiency
                                     as ad budget becomes
                                     sufficient




                                                             Advertising Spending
  Major Types of Advertising

                                 Corporate Image

              Institutional
              Advertising
                               Advocacy Advertising
  Types
    of
Advertising
                                    Pioneering


               Product             Competitive
              Advertising

                                   Comparative
 Advertising Campaign Decision Process

             Determine the campaign objectives.




Make creative decisions.             Make media decisions.




                    Evaluate the campaign.
Common Advertising Appeals

Profit               Save money, keep from losing money

Health               Body-conscious, healthy

Love or Romance      Sell cosmetics and perfumes

                     Social embarrassment, growing old, losing
Fear                 health, power

Admiration           Celebrity endorsement effective

Convenience          Fast-food and microwave products

Fun and Pleasure     Vacations, beer, amusement parks

Vanity and Egotism   Expensive, conspicuous items
 Executional Styles for Advertising


             Scientific        Slice-of-Life
  Musical                                      Lifestyle




Demon-
                       Common                   Spokes-
                                                 person/
stration              Executional              Testimonial
                        Styles

 Mood or
                                               Fantasy
  Image
               Real/
             Animated
                                Humorous
              Product
             Symbols
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
The Tools of Public Relations
                          New Product Publicity


                           Product Placement

                          Customer Satisfaction
    Major                     Phone Lines
    Tools
  Used By                 Consumer Education
     PR
Professionals              Event Sponsorship


                           Issue Sponsorship


                                Web Sites
   Types of Consumer & Sales Promotion Goals
                    Type of buyer                                Desired results                                 Sales promotion examples
                    Loyal customers                              Reinforce behavior,     • Loyalty marketing programs,
                    People who buy your                          increase consumption,     such as frequent-buyer cards
                    product most or all                          change purchase timing    or frequent-shopper clubs
                    of the time                                                          • Bonus packs that give loyal
                                                                                           consumers an incentive to
                                                                                           stock up or premiums offered
                                                                                           in return for proofs-of-purchase
                    Competitor’s                                 Break loyalty, persuade •Sampling to introduce your
                    customers                                    to switch to your brand   product’s superior qualities
                    People who buy a                                                       compared to their brand
                    competitor’s product                                                 • Sweepstakes, contests, or
                    most or all of the time                                                premiums that create interest
                                                                                           in the product
                    Brand switchers                              Persuade to buy your    • Any promotion that lowers the
                    People who buy a                             brand more often          price of the product, such as
                    variety of products                                                    coupons, price-off packages,
                    in the category                                                        and bonus packs
                                                                                         • Trade deals that help make the
                                                                                           product more readily available
                                                                                           than competing products
                    Price buyers                                 Appeal with low prices  • Coupons, price-off packages,
                    People who                                   or supply added value     refunds, or trade deals that
                    consistently buy the                         that makes price less     reduce the price of brand to
                    least expensive brand                        important                 match that of the brand that
                                                                                           would have been purchased

Source: From Sales Promotion Essentials, 2E by Don. E. Schultz, William A. Robinson, and Lisa A. Petrison. Reprinted by permission of NTC Publishing Group, Lincolnwood, IL.
Tools for Consumer Sales Promotion

                                Coupons


                               Premiums
    Six
Categories               Frequent Buyer Programs
    of
Consumer                      Contests and
   Sales                      Sweepstakes
Promotions
                                Samples


                            Point-of-Purchase
                                Displays
  Tools for Trade Sales Promotion

    Trade Allowances


      Push Money
                                        Six
        Training                    Categories
                                         of
                                       Trade
    Free Merchandise                   Sales
                                    Promotions
  Store Demonstrations


   Business Meetings,
Conventions, Trade-Shows
Advantages of Personal Selling


               Detailed
             Information
                                 Message Control



                                      Targeted



                                  Cost Control
            Closing Sales
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.
       Differences Between Traditional & Relationship Selling

         Traditional Personal Selling                                                            Relationship Selling
         Sell products (goods and services)                                                      Sell advice, assistance, and counsel
         Focus on closing sales                                                                  Focus on improving the customer’s bottom line
         Limited sales planning                                                                  Considers sales planning as top priority
         Spend most contact time telling                                                         Spend most contact time attempting to build a
         customers about product                                                                 problem-solving environment with the customer
         Conduct “product-specific” needs                                                        Conduct discovery in the full scope of the
         assessment                                                                              customer’s operations
         “Lone-wolf” approach to the account                                                     Team approach to the account
         Proposals and presentations based                                                       Proposals and presentations based on profit
         on pricing and product features                                                         impact and strategic benefits to the customer
         Sales follow-up focused on product                                                      Sales follow-up is long term, focused on
         delivery                                                                                long-term relationship enhancement




Source: Robert M. Peterson, Patrick L. Shul, and George H. Lucas, Jr., “Consultative Selling: Walking the Walk in the New Selling Environment,”
National Conference on Sales Management, Proceedings, March 1996.
Steps in the Selling Process
                          Generating Sales Leads


                           Qualifying Sales Leads


  Basic                  Making the Sales Approach
 Steps in
                               Making the Sales
   the                          Presentation
 Selling
 Process                    Handling Objections


                               Closing the Sale


                                Following Up
 Functions of Sales Management


                                Set Sales
     Evaluate                   Objectives                    Structure
    Sales Force                                              Sales Force




Manage                   Major Tasks of                             Determine
                                                                   Sales Force
Turnover                     Sales                                     Size
                         Management

                                                                  Develop
 Motivate
                                                                  Compen-
Sales Force
                                                                 sation Plan
                  Train Sales                Recruit Sales
                     Force                      Force
          Cost Determinants of Price
           200



           150
                                                             MC
Dollars




                                                             ATC
           100
                                                             AVC


           50

                                                             AFC
            0
                 1    2   3   4      5       6   7   8   9        10
                                  Quantity
Break-Even Analysis

                                               Total Revenue


                              Break Even       Profits

                                                  Total Costs
 Price ($)




                                           Fixed Costs

             Losses




                      Quantity (units)
Steps in Setting the Right Price

             Establish Pricing Goals


            Estimate Demand, Costs,
                   and Profits


                Choose Strategy


              Fine-Tune Base Price


                Right $ $
            $ $ $ $ Price $ $
Legal and Ethical Issues in Pricing

                          Unfair Trade Practices



 Key Legal                     Price Fixing
and Ethical
  Issues
Related to
   Price                   Price Discrimination



                            Predatory Pricing
 Discounts, Allowances, and Rebates

    Cash
                                        EDLP
  Discount


  Quantity                            Seasonal
  Discount         Price              Discounts
                 Reductions
 Functional                       Promotional
  Discount                        Allowances


Trade Loading                         Rebates
Geographic Pricing

                        FOB Origin


                     Uniform Delivered
  Pricing
  Tactics
                       Zone Pricing
 Based on
 Geography
                     Freight-Absorption


                       Basing-Point
Special Pricing Tactics


                          Single
     Two-Part             Price              Flexible
      Pricing                                Pricing




Bundle
                       Common                    Professional
Pricing              Special Pricing               Services

                        Tactics

Odd-Even                                          Price
 Pricing                                          Lining
                 Bait              Leader
                Pricing            Pricing

				
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