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Chapter 14
Promotion and Pricing Strategies
5 Describe pushing and pulling
promotional strategies.
1
Discuss how integrated marketing
communications relates to a firm’s
overall promotion strategy.
2 Explain promotional mix and
outline the objectives of promotion.
Summarize the different types of
3 advertising and advertising media.
4
Outline the roles of sales
promotion, personal selling, and
public relations.
6 Discuss the major ethical issues
involved in promotion.
7
Outline the different types of
pricing strategies.
Discuss how firms set prices in
8 the marketplace, and
describe the four alternative pricing strategies.
9 Discuss consumer
perceptions of price.
Promotion The function of informing, persuading, and influencing a purchase
decision.
Integrated marketing communications (IMC) Coordination of all promotional
activities—media advertising, direct mail, personal selling, sales promotion,
and public relations—to produce a unified customer-focused message.
INTEGRATED MARKETING
COMMUNICATIONS
• Must take a broad view and plan for all form of customer contact.
• Create unified personality and message for the good, service, or brand.
• Elements include personal selling, advertising, sales promotion,
publicity, and public relations.
THE PROMOTIONAL MIX
Promotional mix Combination of personal and nonpersonal selling techniques
designed to achieve promotional objectives.
Personal selling Interpersonal promotional process involving a seller’s face-toface presentation to a prospective buyer.
• Nonper sonal selling Advertising, sales promotion, direct marketing, and public
relations.
Objectives of Promotional Strategy
Promotional Planning
• Product placement Marketers pay placement fees to have their products
showcased in various media, ranging from newspapers and magazines to
television and movies.
• Guer illa mar keting Innovative, low-cost marketing efforts designed to get
consumers’ attention in unusual ways.
ADVERTISING
Advertising Paid nonpersonal communication delivered through various media
and designed to inform, persuade, or remind members of a particular audience.
Types of Advertising
• Product advertising, institutional advertising, cause advertising
Advertising and the Product Life Cycle
• Informative advertising Build initial demand for a product.
• Persuasive advertising Improve the competitive status of a product.
• Reminder-oriented advertising Maintain awareness of the importance
and usefulness of a product.
Advertising Media
• All media offer advantages and disadvantages
SALES PROMOTION
Sales promotion Nonpersonal marketing
activities other than advertising,
personal selling, and public relations
that stimulate consumer purchasing
and dealer effectiveness.
Consumer-Oriented Promotions
Premiums, Coupons, Rebates, Samples
• Two of every five promotion dollars are spent on premiums, items given free or
at reduced price with the purchase of another product.
• Coupons attract new customers but focus on price rather than brand loyalty.
• Rebates increase purchase rates, promote multiple purchases, and reward product
users.
• Three of every four consumers who receive a sample will try it.
Games, Contest, and Sweepstakes
• Often used to introduce new goods and attract new customers.
• Subject to legal restrictions.
Specialty Advertising
• Gift of useful merchandise carrying the name, logo, or slogan
of an organization.
Trade-Oriented Promotions
• Sales promotion geared to marketing intermediaries rather than to consumers.
• Encourage retailers in several ways:
• To stock new products.
• To continue carrying existing ones.
• To promote both new and existing products effectively to consumers.
• Point-of-purchase (POP) adver tising Displays or demonstrations that promote
products when and where consumers buy them, such as in retail stores.
• Promote goods and services at trade shows.
PERSONAL SELLING
• A person-to-person promotional presentation to a potential buyer.
• Usually used under four conditions:
• Customers are relatively few in number and geographically concentrated.
• The product is technically complex, involves trade-ins, and requires special
handling.
• The product carries a relatively high price.
• It moves through direct-distribution channels.
• Example: Selling to the government or military.
Sales Tasks
• All involve assisting customers in some way.
Order Processing
• Identifying customer needs, pointing out merchandise to
meet them, and processing the order.
Creative Selling
• Promoting a good or service whose benefits are not readily
apparent or whose purchase decision requires a close
analysis of alternatives.
Missionary Selling
• Representative promotes goodwill for a company or
provides technical or operational assistance to the customer.
Telemarketing
• Personal selling conducted by telephone; regulated by the
Federal Trade Commission’s 1996 Telemarketing Sales Rule.
The Sales Process
Public Relations
Public relations Public organization’s communications and relationships with its
various audience.
• Helps a firm establish awareness of goods and services and builds a positive
image of them.
Publicity
Publicity Stimulation of demand for a good, service, place, idea, person, or
organization by disseminating news or obtaining favorable unpaid media
presentations.
• Good publicity can promote a firm’s positive image
• Negative publicity can cause problems.
PROMOTIONAL STRATEGY
Pushing and Pulling Strategies
• Pushing str ategy Relies on personal selling to market an item to wholesalers
and retailers in a company’s distribution channels.
• Companies promote the product to members of the marketing channel, not to
end users.
• Pulling str ategy Promote a product by generating consumer demand for it,
primarily through advertising and sales promotion appeals.
• Potential buyers will request that their suppliers—retailers or local
distributors—carry the product, thereby pulling it through the distribution
channel.
• Most marketing situations require combinations of pushing and pulling
strategies, although the primary emphasis can vary.
ETHICS IN PROMOTION
Puffery and Deception
• Puffer y Exaggeration about the benefits or superiority of a product.
• Deception Deliberately making promises that are untrue, such as guaranteed
weight loss in five days, get-rich-quick schemes for would-be entrepreneurs,
or promised return on investments.
Promotion to Children and Teens
• Children and teens have enormous purchasing power but cannot analyze
advertising messages.
Promotion in Public Schools and on College
Campuses
• Schools earn income from in-school advertising, but it is generating
backlash.
PRICING OBJECTIVES IN THE
MARKETING MIX
Price Exchange value of a good or service.
PRICING STRATEGIES
• Pricing is influenced by people in different areas of a company.
Price Determination in Practice
Cost-based pricing Adding a percentage (markup) to the base cost of a product
to cover overhead costs and generate profits.
• Actual markup used varies by such factors as brand image and type of store.
• Example: Typical clothing markup by retailers is double the wholesaler price.
Breakeven Analysis
Breakeven analysis Pricing technique used to determine the
minimum sales volume a product must generate at a certain
price level to cover all costs.
Alternative Pricing Strategies
Skimming Pricing
• Setting an intentionally high price relative to the prices of competing products.
Penetration Pricing
• Setting a low price as a major marketing weapon.
Everyday Low Pricing and Discount Pricing
• ELP Maintaining continuous low prices rather than relying on short-term pricecutting tactics such as cents-off coupons, rebates, and special sales.
• Discount pricing Attracting customers by dropping prices for a set period of
time.
Competitive Pricing
• Reducing the emphasis on price competition by matching other
firms’ prices.
CONSUMER PERCEPTIONS OF PRICE
Price-Quality Relationships
• Consumers’ perceptions of quality closely tied to price.
• High price = prestige and higher quality.
• Low price = less prestige and lower quality.
Odd Pricing
• Setting prices in uneven amounts or amounts that sound less than they really are.
• Example: $1.99 or $299.
• Also used as a signal a product is on sale.