Elements of the Promotion Mix

Advertising

Ingredients of the Promotion Mix

Public Relations

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

$$$

PushandPull 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
Return on Advertising Expenditures
Diminishing 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 Advertising

Competitive

Comparative

Advertising Campaign Decision Process

Determine the campaign objectives.

Make creative decisions.

Make media decisions.

Evaluate the campaign.

Common Advertising Appeals

Profit Health
Save money, keep from losing money Body-conscious, healthy

Love or Romance Fear

Admiration Convenience Fun and Pleasure Vanity and Egotism

Sell cosmetics and perfumes

Social embarrassment, growing old, losing health, power Celebrity endorsement effective Fast-food and microwave products Vacations, beer, amusement parks Expensive, conspicuous items

Executional Styles for Advertising

Scientific Musical

Slice-of-Life Lifestyle

Demonstration

Common Executional Styles

Spokesperson/ Testimonial

Mood or Image

Fantasy Real/ Animated Product Symbols

Humorous

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

Major Tools Used By PR Professionals

Customer Satisfaction Phone Lines Consumer Education Event Sponsorship Issue Sponsorship Web Sites

Types of Consumer & Sales Promotion Goals

Type of buyer Loyal customers People who buy your product most or all of the time Desired results Sales promotion examples Reinforce behavior, Loyalty marketing programs, increase consumption, such as frequent-buyer cards change purchase timing or frequent-shopper clubs Bonus packs that give loyal consumers an incentive to stock up or premiums offered in return for proofs-of-purchase Break loyalty, persuade Sampling to introduce your to switch to your brand products superior qualities compared to their brand Sweepstakes, contests, or premiums that create interest in the product Persuade to buy your Any promotion that lowers the brand more often 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 Appeal with low prices Coupons, price-off packages, or supply added value refunds, or trade deals that that makes price less reduce the price of brand to important match that of the brand that would have been purchased

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

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 of Consumer Sales Promotions

Frequent Buyer Programs

Contests and Sweepstakes Samples Point-of-Purchase Displays

Tools for Trade Sales Promotion

Trade Allowances

Push Money

Training

Free Merchandise

Six Categories of Trade 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
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 Lone-wolf approach to the account Proposals and presentations based on pricing and product features Sales follow-up focused on product delivery

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 Team approach to the account 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

Source: Robert M. Peterson, Patrick L. Shul, and George H. Lucas, Jr., Consultative Selling: Walking the Walk in the New Sel ling Environment, National Conference on Sales Management, Proceedings, March 1996.

Steps in the Selling Process

Generating Sales Leads Qualifying Sales Leads

Basic Steps in the Selling Process

Making the Sales Approach Making the Sales Presentation Handling Objections Closing the Sale Following Up

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

Develop Compensation Plan

Train Sales Force

Recruit Sales Force

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

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 and Ethical Issues Related to Price

Price Fixing

Price Discrimination

Predatory Pricing

Discounts, Allowances, and Rebates

Cash Discount Quantity Discount Functional Discount EDLP

Price Reductions

Seasonal Discounts Promotional Allowances

Trade Loading

Rebates

Geographic Pricing
FOB Origin

Uniform Delivered

Pricing Tactics Based on Geography

Zone Pricing

Freight-Absorption

Basing-Point

Special Pricing Tactics

Two-Part Pricing

Single Price

Flexible Pricing

Bundle Pricing

Common Special Pricing Tactics

Professional Services

Odd-Even Pricing

Price Lining

Bait Pricing

Leader Pricing