Advertising & Sales Promotion

What is advertising
sender
It is successful when what the sender wants to say is correctly interpreted by the receiver

encode
TV, print, WOM, Internet ,POS =ATL/BTL Manage the Noise ,filters

medium

decode

receiver

Advertising Functions
Informing Persuading Reminding Adding Value Assisting Other Company Efforts

Advertising Functions
Informing
‡ Makes consumers aware, educates them about the features and benefits, and facilitates the creation of positive brand images ‡ Facilitates the introduction of new brands and increases demand for existing brands ‡ Performs another information role by:

Advertising Functions
Persuading ‡ Persuades customers to try advertised products and services ‡ Primary demand demand: ‡ Secondary demand demand:

Persuading
Gillette MACH3

Advertising Functions
Reminding ‡ Keeps a company¶s brand fresh in the consumer¶s memory ‡ Influences brand switching by:

Advertising Functions
Adding Value ‡ Three basic ways by which companies can add value
± innovating ± improving quality ± altering consumer perceptions

‡ Advertising adds value to brands by:

Advertising Functions
Assisting Other Company Efforts ‡ Advertising is just one member of the marketing communications team ‡ Sometimes, an assister that facilitates other company efforts in the marketing communications process ‡ Examples?

The Advertising Management Process
Advertising Strategy
‡ Setting Objectives ‡Formulating Budgets ‡Creating Ad messages ‡Selecting Ad Media and Vehicles

Strategy Implementation

Assessing Ad Effectiveness

Whole Egg Theory
‡ 1972 by Ed Ney, then president of Y&R International.
± offer integrated services-not just advertising but direct, PR, sales promotion and others-Mr. Ney refers to it as "the Whole Egg." ± During the mid-1970s, Y&R buys numerous companies specializing in non-consumer advertising marketing disciplines, such as healthcare communications shop and direct response agency The name and the concept catch on.
The concept of IMC starts catching on , though it might not ,be from one agency .So agencies from specialised became diversified

Integrated Marketing Communication
‡ Involves coordinating various promotional tools ,marketing activities to form a message , rather than only relying on media advertising
± ± ± ± ± ± Get the consumer at touch-points Avoid duplication Consistent message for the product /brand Maximise the ROI ,more cost effective Leverage on changing environment /behavior Focus on actual purchase /trials

IMC Overview

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Tools of -IMC
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Advertising Direct marketing Interactive/internet marketing Sales promotion PR WOM Personal selling BTL POS

IMC ±planning model
‡ Review of marketing plan
± SWOT :environment/competition/TG/product/distribution/ manpower«

‡ Define the product message /TG/objective ‡ Understand the best mix of IMC basis the product /message /TG ‡ Understand the budget ‡ Develop IMC
± Message /strategy/tools of IMC/adapting the message

‡ Integrate the IMC strategy/execution ‡ Monitor/evaluate & control the IMC

IMC -process
Identify Markets Segmentation -geographic/ Demographic/ Psychographic /VALS/ Behavior /benefit TG Positioning -product/pricing TG/benefits IMC decision Review Monitor modify Product Decision Pricing Decision Channel/ Distribution Decision

Opportunity

Competition Target market

Consumer business

IMC-participants
‡ ‡ ‡ ‡ ‡ Advertisers Agencies Media companies Marketing communication specialists Collateral services

IMC objectives
‡ ‡ ‡ ‡ ‡ ‡ ‡ Stage of the product in PLC Awareness Recall Trials Informative Consumption Repeat purchase

Types of agencies/revenue
‡ Types
± ± ± ± Full services Creative boutiques Media buying services Specialized
‡ Direct response/PR/interactive/brand management/collateral/MR

‡ Payment mechanism
± Commission ± Retainer ship ± Retainership + commission

Why agencies lose clients
‡ Do not understand the TG /product /market well ‡ Do not control their business intelligently/poor recommendation ‡ Poor service ‡ Poor Communication ‡ Personality clashes ‡ Changes in management /manpower ±agency/client ‡ Conflict of interest

How agencies get clients
‡ ‡ ‡ ‡ ‡ Referrals Solicitations Presentations PR Image

Persuasion matrix
Dependent variables-steps in being persuaded source Message presentation

Independent variables ±communication components
message channel receiver destination

attention

comprehension

yielding

retention

behavior

Source
‡ Direct /indirect ‡ Credible
± Expertise ± trustworthiness

‡ Attractiveness
± similarity ± Likeability ± celebrity

‡ power

SourceCelebrity endorsement
‡ ‡ Stage of the product - It depends on what stage of the product life cycle is the brand in. Is it a strategic decision over 4, 5 years- brand value must remain consistent with the value of the celebrity being endorsed in terms of personality, positioning. So even if the celebrity changes the values remain consistent .. Celebrity±brand match: , strong enough so that the endorsements are able to strongly influence the thought processes of consumers and create a positive perception of the brand ? Constant monitoring mechanism : Are we able to monitor the behavior, conduct and public image of the celebrity continuously to minimize/maximize any potential. Brand over endorser: should ensure that this does not happen by formulating advertising collaterals and other communications Celebrity endorsement is just a channel: it is one part of the communication mix that falls under the broader category of marketing. I have observed that the teams/ sales /CP Celebrity ROI: should have a system combining quantitative and qualitative measures to measure the overall effect of celebrity endorsements.

‡

‡ ‡ ‡

‡

Channel factors = medium to deliver the message
‡ Personal ‡ Non-personal

± ATL ±type of medium /program ± BTL ± Noise ± Clutter

So Advertising «.
‡ Includes all activities involved in presenting a non-personal, sponsor-identified, paid-for message about a product or organization. ‡ Can classify it by: ± The target audience: consumers or businesses ± Product/service vs. organization/company ± Objective: Primary or selective demand

The Nature of Advertising is..
‡ advertising is distinguished from other forms of promotion as follows ‡ it has a verbal and/or visual message ‡ the sponsor of the message is identified ‡ delivery is through recognizable media ‡ there is payment by the advertiser to the media for carrying the message ‡ advertisers are increasingly being able to reach specific audiences with tailor-made messages

Advertising to Target Audiences
‡ advertising can be classified by the target audience to which it is directed ‡ consumer advertising generally appears in mass media and is directed to end consumers: may be product or institutional in nature ‡ business-to-business advertising is often called trade advertising and is directed to a business market

What is Being Advertised?
‡ product advertising is designed to promote the sale of a specific product or service: direct-action, ± may be direct-action quick-response ± may be indirect-action over a longer time indirect‡ institutional advertising promotes the firm or tries to create a positive image: ± may promote customer service ± or send a public service message

Comparative Advertising
‡ Selective-demand advertising Selective‡ Involves comparing a product to its competing brand ‡ May be:
± Direct, naming competitors outright ± Less direct, alluding to competitors (e.g., ³leading brand´, ³Brand X´) but not naming them

Co-operative Advertising
‡ co-operative advertising involves the sharing of cothe cost of advertising by two or more sponsors: vertical), ± a manufacturer and retailers (vertical or ± a group of retailers (horizontal (horizontal)

What are the Objectives?
‡ primary-demand advertising is intended to primarystimulate use of a category of products ‡ selective-demand advertising is intended to selectiveencourage purchase of a particular brand or the products and services of a specific firm

Setting Advertising Objectives
‡ Expression of management consensus ‡ Guides the budgeting, message, and media aspects of advertising strategy ‡ Provide standards against which results can be measured

Advertising Objectives
WHO WHAT WHERE WHEN How Often
Several categories of advertising objectives guide advertising strategy

Advertising Objectives
WHO WHAT WHERE WHEN How Often
Specify target market

Advertising Objectives
Kellogg¶s Special K
Target women in the age group 16-35 who are concerned with their physical appearance

Advertising Objectives
Quaker Oats
Target middle-aged males who are robust yet concerned with their health

Advertising Objectives
WHO WHAT WHERE WHEN How Often
‡What emphasis? ‡What goals?
Emphasis: Emphasis the features and benefits to be emphasized and the emotions to be evoked Goals: Goals objectives that need to be accomplished at the present stage in a brand¶s life cycle

Advertising Objectives
WHO WHAT WHERE WHEN How Often
Which geographic markets need to be emphasized?

Advertising Objectives
WHO WHAT WHERE WHEN How Often
What months or seasons are best?

Advertising Objectives
WHO WHAT WHERE WHEN How Often
How often should the brand be advertised?

Budgeting Considerations in Practice

‡ What is the Ad objective? ‡ How much are competitors spending? ‡ How much money is available?

Budgeting Methods
‡ Percent-of-Sales Budgeting ‡ Objective-and-Task Method ‡ Competitive Parity Method (match competitors method) ‡ Affordability Method

Percentage-of-Sales Budgeting
‡ A company sets a brand¶s advertising budget by simply establishing the budget as a fixed percentage of past or anticipated sales volume ‡ Criticized as being illogical Why??

Objective-and-Task Method
‡ The most sensible and defendable advertising budgeting method ‡ Specify what role they expect advertising to play for a brand and then set the budget accordingly

The Competitive Parity Method
‡ Sets the ad budget by basically following what competitors are doing

Affordability Method
‡ Only the funds that remain after budgeting for everything else are spent on advertising ‡ Only the most unsophisticated and impoverished firms ‡ However, affordability and competitive considerations influence the budgeting decisions of all companies

DAGMAR-defining advertising goals for measuring advertising results

‡ Communication objective which is SMART
± Objectives /measurable ± Clear TG ± Benchmark & results desired ± Specific time frame ± Budgets
‡ Top down/% of sales/affordability ‡ Allocation amongst elements of IMC

Medium

Objective

Frequency of message

TV

Reminder for the brand

Pulsing /just enough to enable recall

Press /print

Talk imagery Quite regular in the target markets /talk about SKU features Generate a recall and spur a purchase decision High visibility in malls/shopping arcades All areas where consumers can be influenced and where products are available

OOH medium (best is drops down scrollers at malls / Dispensing units at outlets

Consumer connect activities

Establish a direct contact

Sales at schools Dedicated program for identified cities/schools in India Exhibition Consumer touch poins

Consumer -5 stage decision making process
Problem recognition
Stock out /desire/new need /Dissatisfaction/marketer induced /New products

W O M

Information search

Personal experience , family, market info, advertising , Influencers, peer group , trade ,existing users«

Evaluate alternatives

Evoke set , criteria defining need , demographics ,budgets, Urgency of the need -want /motivation for the need Decision to buy , decision to buy a particular brand , budget ,time taken to actually buy after the decision ;changes with the Product /budget /urgency Cognitive dissonance-satisfaction /dissatisfaction

Purchase decision Post purchase evaluation

Consumerinternal psychological process
Maslow¶s hierarchy ;psychoanalytic theory , MR (In depth int Projective technique, association tests, FGD

Motivation
Sensation ; selecting information ; interpreting information It is a filter of the receiver for information from the sender ..e.g. can be selective perception /selective exposure/ Selective comprehension /selective retention Mnemonics /sublime perception is used to create stimuli For awareness Multi attribute model; changes strategies/execution of msg

Perception

attitude Integration learning

Consumer combine info /characteristics of a product & Compare ; heuristics is also used
Behavior approach , cognitive learning

Consumerlearning ± Behavior Approach
‡ Theories are based on STIMULI orientation RESPONSE

± Classical conditioning-learning is an associative process. It assumes the individual is a passive participant who simply receives stimuli . 2 things are important
‡ Contiguity ± unconditioned/conditioned stimuli must be close in time & space ..proximity /physical presence ‡ Repetition ± frequency of association . More often the unconditioned/conditioned stimuli occur ±there would be an association
± E.g. Pavlov experiment : Bell is a conditioned stimuli to unconditioned stimuli :food & unconditional response :saliva

‡ Advertisers use images/figures/celebration to build as association which evokes a response from the consumer

Consumerlearning ± Behavior Approach
‡ Theories are based on STIMULI orientation RESPONSE

± Operant conditioning ±here the individual actively operates or acts on some aspect of the environment for the learning to occur. The individual¶s response is instrumental in getting a positive reinforcement (reward) or negative reinforcement (punishment)
‡ reinforcement is important
± Can be continuous ± Can be partial or intermittent ± All of it might lead to shaping of behavior patterns

ConsumerCognitive Learning theory
goal Purposive behavior insight Goal achievement

-Perception /formation of belief / attitude development /environment integration all are important to the decision making process All the 5 stages of consumer decision making process are relevant Culture Sub-culture EXTERNAL FACTORS INFLUENCING CONSUMER BEHAVIOUR Social class Reference groups Situationaldeterminants

Consumer ± decision making process
‡ Problem recognition need/repeat purchase/desire/greed
± maslow¶s hierarchy ± Psychoanalalytic theory ±Sigmund Freud ± MR probes needs-in depth interview/FGD/association tests/projecting techniques

‡ ‡ ‡ ‡ ‡

Information search Alternatives evaluation Purchase decision Post purchase evaluation ±cognitive dissonance Recommendation-WOM

Internal psychological process
‡ Motivation ‡ Attitudes/beliefs /baggage ‡ Culture
± Subculture/social class/reference groups/influencers

‡ ‡ ‡ ‡

Perception-visual/sensory/psychological Attitude formation Integration Learning

Models of response processtraditional
AIDA model Hierarchy effects model Innovation adoption model Information Processing model

Cognitive stage

attention

Awareness knowledge

awareness

Presentation Attention comprehension

Affective stage

Interest Desire

Liking Preference conviction

Interest evaluation

Yielding retention

Behavioral stage

action

purchase

Trial adoption

behavior

3 order model of information processing ± Michael Ray
High Low high (learning model ) Cognitive Affective Conative (low involvement model) Cognitive Conative affective

low

(dissonance /attribution model) Conative Affective Cognitive

FCB grid-consumer response -Richard Vaughn of Foote, Cone & Belding advertising agency
thinking Feeling

High involvement

Informative -IT/cars Media- long copy Creative ±info demo

Affective fashion/j wellery/mobikes media-large space /image creative- exceptional impact

Low involvement

Habit formation -household products Media-small space ads Creative -reminder

Self-satisfaction -cigarettes/liquor/candy Media-billboard/POS/newspaper Creative -attention

Basic emotion Joy Trust Fear Surprise Sadness Disgust Anger Anticipation

Basic opposite Sadness Disgust Anger Anticipation Joy Trust Fear Surprise

dvanced emotion Optimism Love Submission Awe Disappointment Remorse Contempt Aggressiveness

Composed of... Anticipation + Joy Joy + Acceptance Acceptance + Fear Fear + Surprise Surprise + Sadness Sadness + Disgust Disgust + Anger Anger + Anticipation

Advanced opposite Disappointment Remorse Contempt Aggressiveness Optimism Love Submission Awe

Creative Communication ?
Is the product positioned simply , with clarity Does it show a a clear benefit Does it contain a powerful idea Does it talk about the brand personality Is it unexpected /memorable Is it focused Does it reward the viewer with something ± tangible/intangible ‡ Is it visually exciting /attention grabbing ‡ Is it well made ‡ ‡ ‡ ‡ ‡ ‡ ‡

Creative Strategy -planning involves :
‡ Challenge
± Brief, TG, SMART objectives ± Research =product/competition/TG habits & behavior/media
‡ Quanti -quali/ focus groups/ethnographic (observing consumer in the natural environment) ‡ Evaluate storyboards/concept testing /animate

‡

Risks
± Ability to do the right thing , not necessarily the obvious

‡

Personnel
± Client, agencies, consumer

‡

Process
± Rigor, time , budgets, understanding of the personnel /audience ,media type
‡ Young¶s model :immersion, digestion, incubation, illumination, verification ‡ Graham Wallas : Preparation, incubation, illumination, verification

Creative Strategy -development involves
‡ Communication of a product is developing a series of messages (which make up an IMC ) which is a set of interrelated ideas and coordinated activities that revolve on the core central theme during a specified period ‡ Developing the unifying theme is the critical objective of a campaign

Copy Platform
‡ 2 critical components of the copy platform are the development of the major selling ideas and the creative strategy development
± ± ± ± ± ± ± ± Basic problem IMC objectives TG Major selling idea USP /Positioning The brand image desired Creative strategy , the inherent drama Supporting information required

Creative -Appeal
‡ ‡ ‡ ‡ ‡ Informational/ Rational Emotional Rational + Emotional Reminder Teaser

Communication -Execution
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Straight /factual Scientific/technical Demonstration Comparison Testimonial Slice of life Animation Personality symbol Fantasy Drama Humor Combinations

Creative ±Tactics..eg
‡ Print
± ± ± ± ± ± ± ± Headlines :direct/indirect/sub heads Body copy Visual elements layout Video Audio ± voice-over/needle-drop/jingle Script Production ± PPC/production/post production

‡ TV

Creative approach - Client Evaluation
‡ Is the creative approach consistent with the brief , brand objectives ‡ Is it consistent with the creative strategy objective ?Does it say what was intended? ‡ Is it appropriate for the TG? ‡ Does it communicate clearly /convincingly? ‡ Does the creative execution overwhelm the brand / brand objectives ?celebrity endorsements? ‡ Is it appropriate for the media environment? ‡ Is it truthful and tasteful ?
± Can be checked through
‡ Informal discussion /research /informal feedback /test market

Creative Brief

What is . . . ‡ The objective ‡ The target audience ‡ The message theme ‡ The support ‡ The constraints
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The Support
The support claims highlighted in this advertisement is that MicroThins are:
30% thinner 40% lighter 4 times more scratch resistant 10 times more impact resistant 99.9% UV protection Anti-reflective

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Creative Brief - Del Monte
‡ The Objective ± increase awareness of the smaller-size cans with pull-top lid. ‡ Target Audience ± senior citizens, especially those that live alone and suffer from arthritis. ‡ Message Theme ± the new cans not only contain a smaller portion but are easier to open. ‡ Support ± 30¢ intro coupon to encourage usage. ‡ Constraints ± copyright logo, toll free #, Web site, legal requirements of a coupon, and what is meant by a small serving.
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Del Monte Advertisemen t
Based on the Creative Brief in the previous slide.

5-72

Left ± Right Brain Ads
‡ ³Left brain´ advertisement 
Logical, rational side of brain  Manages numbers, letters, words, and concepts  Rational appeal

‡ ³Right-brain´ advertisement 
Emotional side of brain  Manages abstract ideas, images, and feelings  Emotional appeal
5 - 73

An Advertising Campaign (Steps 1 and 2)
1. Transforming a theme into a coordinated advertising program to accomplish a specific goal. 2. Objectives of the campaign determined by firm¶s overall marketing strategy. Typical objectives are:
± ± ± ± ±

Support personal selling Improve dealer relations Introduce a new product Counteract substitution Expand use of a product category

The Advertising Campaign (Steps 3 and 4)
‡ Creating a message that: ± Gets and holds the attention of the intended audience. ± Influences the audience in the desired way. ‡ Selecting media involves: ± The choice of a medium such as television, radio, newspaper, or magazine. ± The specific category of the selected medium to be used, such as special interest (Chatelaine) vs. general interest magazines (Maclean¶s). ± The specific media vehicles.

The Campaign Budget
‡ A budget must be allocated among the various activities comprising the overall promotional program. ‡ Promotional budgets can be extended with co-operative advertising.

Advertising Goal
‡ A specific communication task to be achieved to a specific degree to be communicated to a specific target audience in a specific period of time.

How much to spend?
‡ µHalf my advertising is wasted, but the trouble is I do not know which half - John Wanamaker

Advertising Management
‡ ‡ ‡ ‡ Evaluate role of advertising in IMC program. Select in-house or external agency. Develop advertising management strategy. Develop creative brief.

5 - 79

External Agencies
Boutique ------------------ Full-service ‡ Advertising agencies ‡ Media service companies ‡ Direct marketing agencies ‡ Consumer and trade promotion specialists ‡ Public relations firms

5 - 80

Choosing an Agency
1. 2. 3. 4. 5. 6. 7. Set goals. Select process and criteria. Screen initial list of applicants. Request client references. Reduce list to 2-3 viable agencies. Request creative pitch. Select agency.

5 - 81

Evaluation Criteria
Selecting Advertising Agency
‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ ‡ Size of agency Relevant experience Conflicts of interest Creative reputation Product capabilities Media purchasing capabilities Other services available Client retention rates Personal chemistry

5 - 82

Advertising Planning and Research
‡ General pre-planning input ‡ Product specific-research ± Major selling idea ‡ Qualitative research ± Anthropology ± Sociology ± Psychology ‡ Value and lifestyle model (VALS)
5 - 83

Key Advertising Personnel
Client Marketing Manager Client Marketing Manager Client Marketing Manager

Account Executive Creative Director Traffic Manager Media Buyers & Planners

Creative

Creative

Creative

Creative
5-84

Steps in Advertising Campaign Management
1. Review communication market analysis. 2. Establish advertising portion of IMC objectives. 3. Review advertising budget. 4. Select media. 5. Prepare creative brief.

1. Communication Market Analysis
Review

‡ ‡ ‡ ‡ ‡

Competitors Opportunities Target markets Customers Product positioning

5 - 86

2. Advertising Goals
‡ To build brand image
± Top of mind ± First choice

‡ ‡ ‡ ‡

To inform To persuade To support other marketing efforts To encourage action
5 - 87

3. Advertising Budget
Manner of Distribution:
Continuous schedule Flighting schedule Pulsating schedule

5 - 88

Media selection
‡ The most cost effective media mix to ensure achievement of the advertising goal.

How should you select media?
‡ Reach ‡ Frequency ‡ Impact

Reach
‡ No. of persons exposed to a particular media schedule at least once during a specified time period

Frequency
‡ No. of times within the specified period that a person is exposed to that message

Impact
‡ Qualitative value of an exposure through a given medium ‡ GRP (Gross rating points) = R * F ‡ Wt. GRP = R * F * I

Choosing Media
‡ ‡ ‡ ‡ Objectives of the ad. Audience coverage. Requirements of the message. Time and location of the buying decision. ‡ Media cost (CPM) ‡ Media characteristics.

Characteristics of Key Media

‡ ‡

‡

‡

‡

Newspapers: flexible, local Television: versatile, powerful but costly, fragmented Direct Mail: personal, selective, effective, but tough Radio: strong locally, cheap but single medium Magazines: top quality, little flexibility

More ..Key Media
‡ out-of-home advertising ‡ specialty advertising ‡ emerging media: ± World Wide Web ± infomercials ± place-based media ± videos and CD-ROMs ± yellow pages

Evaluating the Major Media
‡ newspapers are flexible and timely, have a local orientation and wide coverage, low cost ‡ television is versatile, but audience is now fragmented, reaches mass audiences ‡ direct mail is efficient, targets certain audience

More Media Evaluations

‡ radio stations target specific segments, low cost, local orientation, short message life ‡ magazines deliver quality advertising to specific segments, message stays around

The Changing Nature of Media
‡ ‡ ‡ ‡ ‡ ‡ ‡ media are becoming less mass, more targeted cable TV offers many specialty channels direct-to-home TV adds to fragmentation lots of new out-of-home media Yellow Pages and other directories on CD-ROM place-based media where they shop and live advertising on the Web works as Yellow Pages does - the customer seeks out the advertiser

Evaluating Advertising
‡ It is difficult to measure the sales effectiveness of advertising because:
± ± ±

Ads have different objectives. Ads can have an effect over time period. Measurement problems. Before an ad is presented. While it is being presented. After it has completed its run.

‡ Effectiveness can be tested:
± ± ±

SMART

Sales Promotion
‡ Whereas advertising gives a reason to buy, SP gives an incentive to buy

Sales Promotion

PERSONAL SELLING

ADVERTISING

PUBLICITY

SALES PROMOTION

Sales Promotion
Definition: any activity or material used as a direct inducement to purchase Objective: Bolster/complement other
promotional mix elements during a specific time period

Targeted toward:
‡ Sales force ‡ Wholesalers and retailers ‡ Consumers

Sales Promotion Methods for Consumers
Product sampling, demonstrations Coupons, refunds Rebates, cents-offContests, games & sweepstakes

Sales Promotion Methods for Consumers
Premiums Multiple purchase offers, Frequent-user incentives P-O-P material

Product placements/tie-ins

Classifying Types of Sales Promotion
Promotional pricing
Price reductions Free goods Tied offers Money off next purchase ‡ Loss leader pricing ‡ Cheap credit ‡ ‡ ‡ ‡

NonNon-price promotions

Sampling

‡ ‡ ‡ ‡ ‡

‡ Most effective in Contests the early stages of a new product launch Free gifts Self-supporting offers (#1 use for coupons) Multi-brand promos s ‡ Important for food products Guarantees and added ‡ Very expensive services

Rebates: A Consumer Information Source
‡ Buyers fill out rebate forms with names, addresses and household data about customers - directly targets price cuts to customers - 5-10% are redeemed (A Phantom discount)

Pepsi offers a $5 rebate on the Home Alone video

Rebates are often effective at changing purchase probabilities, even for big-ticket items

Coupons, too, can be effective at getting consumers to purchase specific products

Sales Promotion - Methods for the Trade
‡ ‡ ‡ ‡ Trade shows Contests, free merchandise Display equipment, P-O-P materials Cooperative advertising & promotions
± Vertical - channel members ± Horizontal - group of retailers

‡ Allowances (buying vol., buy-back, scan-back, merchandise) ‡ Premium or push money, slotting allowances

Trade Shows
NonSelling objectives Non-selling objectives Current customers
Maintain relationship Transmit messages to key accounts Remedy problems AddAdd-on sales Contact prospects Determine needs Transmit messages Commit to call back or sale Maintain image Test products Gather competitive intelligence Widen exposure Contact prospects Foster image building Test products Gather competitive intelligence

Potential customers

Sales Promotion
‡Advantages:
‡Motivation method for special efforts ‡Short-term sales increase ‡Defined target audience ‡Defined role/objectives ‡Indirect roles (e.g., wider distribution)

‡Disadvantages:
‡Only short-term ‡Hidden costs ‡Confusion ‡Price cutting -Brand image ‡Postponement effect ‡Significant government regulation ‡Lack of effectiveness sometimes (learning effect)

A Benefit Congruency Framework of Sales Promotion Effectiveness
Are monetary savings the only explanation for consumer response to sales promotions? If not, how do the different consumer benefits of sales promotion influence its effectiveness? Six Benefits Savings Quality Convenience Value expression Exploration Entertainment

Positioning Map

Sales Promotions Benefit Matrix
High
*

Free Gifts Free Product Offers * * Sweepstakes * Coupons

Hedonic

Low Low

* *Price Reductions Rebates

Utilitarian

High

Role of The Promotion Mix
‡ Promotion is an organization¶s unique set of communications (stimuli) designed to influence (inform, persuade & remind) selected target audiences into desirable responses. ‡ Who says what to whom, in what setting , by which channels, with what purposes. ‡ Promotion facilitates (efficient) exchange

Advantages of SP
‡ ‡ ‡ ‡ ‡ ‡ Induces trials To reward loyal customers To induce stocking by the trade Adjust to short term variations in trade Liquidating inventories Preempting competition

Disadvantages of SP
‡ With too many promotion schemes µpromotion clutter¶ confuses consumers ‡ Attracts µbrand switchers¶ and µdeal prone¶ customers ‡ Dilutes brand equity ‡ Preponement of purchases ‡ Lowers margins ‡ Expensive and wasteful, when not handled properly

Types of SP
‡ Trade ‡ Consumer

Developing a SP campaign
‡ ‡ ‡ ‡ ‡ ‡ ‡ Planning the programme Duration Incentive to be given Assessing viability Pretesting Implementing and controlling Evaluation

Sales Promotion
‡ Demand-stimulating devices designed to supplement advertising and facilitate personal selling. ‡ Sales promotions include such things as coupons, in-store displays, premiums, trade shows, in-store demonstrations, and contests. ‡ The target for these activities may be middlemen, end users, or the producer¶s own salesforce.

Results of Sales Promotion
‡ It can produce short-term results. ‡ Competitors are using sales promotions. ‡ Sales promotions are attractive to priceconscious consumers. ‡ Can enhance/facilitate retail salesmanship which is often of low quality.

Key Reasons for Sales Promotion
‡ Stimulating end-user demand. ± Sampling program for new/improved product ‡ Improving the marketing performance of middlemen and salespeople.
±

Sell more, win a holiday trip.

‡ Supplementing advertising and facilitating personal selling.
±

Displays, promotional giveaways

Managing Sales Promotion
‡ Select from wide range of techniques, depending on your objectives ‡ Select promotional devices based on: ± Nature of target audience ± Your promotional objectives: Push vs. Pull. ± Cost of device-- sampling can get costly. ± Current economic conditions-- coupons, rebates work best in recessionary period. ‡ Evaluating Sales Promotion: ± Much easier than with advertising. ± Usually clear start, finish, goal.

Public Relations
‡ Involves a variety of programmes to promote or protect a company¶s image or products

Functions of PR
‡ ‡ ‡ ‡ ‡ Media relations Product publicity Corporate communications Lobbying Counseling

Public Relations
‡ A tool designed to influence favourably attitudes towards an organization, its products and policies. ‡ Public relations is often overlooked by management because of: ± Organization structure; not in marketing. ± Inadequate definitions; loosely defined. ± Unrecognized benefits; many non-believers.

Publicity
Publicity is a form of public relations that includes any communication about an organization or its products that is presented by the media but is not paid for by the organization.

Strengths of Publicity
‡ Can announce new products, recognize employees, report good results, breakthroughs. ‡ Key Benefits: ± Lower cost than advertising or personal selling. ± Increased readership; advertising ignored often. ± More information. ± Timeliness.

Weaknesses of Publicity
‡ ‡ ‡

Some loss of control over message. Limited exposure; only happens once. Not free; preparation costs.

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